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Evanston Ins. Co. v. Western Community Insurance Co.

United States District Court, D. Nevada

March 31, 2014

EVANSTON INSURANCE COMPANY, Plaintiff,
v.
WESTERN COMMUNITY INSURANCE COMPANY and DOES 1-10, inclusive, Defendants

Page 1065

For Evanston Insurance Company, Plaintiff: Nicholas M Wieczorek, LEAD ATTORNEY, Morris Polich & Purdy LLP, Las Vegas, NV.

For Western Community Insurance Company, Defendant: Leland E. Backus, LEAD ATTORNEY, Backus-Carranza, Las Vegas, NV.

OPINION

Page 1066

ORDER

Gloria M. Navarro, Chief United States District Judge.

Pending before the Court is the Motion to Dismiss for Lack of Jurisdiction (ECF No. 6) filed by Defendant Western Community Insurance Company (" Western" ). Plaintiff Evanston Insurance Company (" Evanston" ) filed a Response (ECF No. 8) and Western filed a Reply (ECF No. 11).

Page 1067

I. BACKGROUND

This case arises from a dispute over insurance coverage for ongoing litigation in Nevada state court related to defects in the construction of an apartment complex located in Pahrump, Nevada (" the Nevada Property" ). (Compl. ¶ 5, ECF No. 1.) The underlying action in Nevada state court involves a suit between the owner/developer of the Nevada Property and the general contractor for the construction of the Nevada Property, KOA Development, Inc. (" KOA" ). ( Id. ¶ ¶ 5, 6(a).) Construction on the Nevada Property commenced in February 2002, and KOA issued a notice of completion on January 21, 2003. ( Id. ¶ ¶ 6(a)--(b).) In 2005, problems with the construction were first discovered. ( Id. ¶ 6(c).) Later, in 2011, a consultant determined that " portions of the complex [were] unsuitable for tenant occupation." ( Id. ¶ 6(d).)

Plaintiff Evanston is an insurance company, incorporated under the laws of Illinois, that is licensed and authorized to conduct business in Nevada. ( Id. ¶ 1.) Previously, Evanston issued a " commercial general liability policy, No. 02GLP005945, to KOA, the general contractor and defendant in the underlying state action for the policy period of March 22, 2002 to March 22, 2003. ( Id. ¶ 7.) Pursuant to that policy, Evanston is currently defending KOA in the underlying state court construction defect action. ( Id. ¶ 8.)

Western is an insurance company incorporated under the laws of Idaho. ( Id. ¶ 2.) Western also issued a " commercial general liability policy, No. 8B894201," to KOA for the policy period of March 22, 2003 to March 22, 2007 (the " Western Policy" ). ( Id. ¶ 9.) The Western Policy allegedly " requires Western to pay those sums that th[e] insured becomes legally obligated to pay as damages because of property damage that takes place during its policy periods." ( Id. ¶ 10.) Evanston also asserts that " [t]he Western policy further requires Western to defend the insured, subject to specified conditions, against any suit seeking such damages." ( Id. ) Furthermore, Evanston alleges that KOA's insurance policy with Western " applies to property damage caused by an occurrence that takes place in the coverage territory, which includes Nevada." ( Id. )

Based on the Western Policy, Evanston commenced the instant action asserting two causes of action: (1) Declaratory Relief; and (2) Equitable Contribution. ( Id. ¶ ¶ 13-19.) Specifically, Evanston contends that some of the damage to the Nevada Property occurred during Western's policy period, yet Western denied coverage to KOA. (Compl. ¶ ¶ 11-12.)

In response to the commencement of this litigation, Western filed the instant motion requesting that the Court dismiss the action for lack of personal jurisdiction or, in the alternative, for improper venue. (Mot. to Dismiss, ECF No. 6.) To support this request, Western provides an affidavit of Clayton Brumett, the regional claims manager for Western. (Mot. to Dismiss 14:20-23, ECF No. 6.) The affidavit swears that Western does not conduct any business in Nevada, does not have any offices or agents in Nevada, is not licensed in Nevada, and does not direct advertising or any other sales efforts to Nevada. ( Id. at 14:23-15:3.) Rather, Western sells policies only in the states of Idaho and Washington. ( Id. at 15:4-5.) In fact, the policy that Western sold to KOA " was negotiated and issued to KOA in Idaho." ( Id. at 15:6-7.)

II. MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION

A. Legal Standard

A party may assert the defense of lack of personal ...


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