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State Farm Fire and Casualty Company, An Illinois Corporation v. Alane T. Podoll and Matthew M. Murasako

December 2, 2011

STATE FARM FIRE AND CASUALTY COMPANY, AN ILLINOIS CORPORATION, PLAINTIFF,
v.
ALANE T. PODOLL AND MATTHEW M. MURASAKO, DEFENDANTS.



The opinion of the court was delivered by: David Alan Ezra United States District Judge

ORDER DENYING DEFENDANTS' MOTION TO DISMISS FOR LACK OF SUBJECT MATTER JURISDICTION

On December 2, 2011, the Court heard Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction. Richard B. Miller, Esq., appeared at the hearing on behalf of Plaintiff; Brian R. Jenkins, Esq., appeared at the hearing on behalf of Defendants. After reviewing the motion and the supporting and opposing memoranda, the Court DENIES Defendants' Motion to Dismiss. (Doc. # 8.)

BACKGROUND

Defendants Alane T. Podoll and Matthew M. Murasako (collectively, "Defendants" or "Insureds") purchased a residential property on Maui from Patrick and Rosineli Curell (collectively, "Curells"). (Doc. # 1 ¶ 9.) On or about March 15, 2011, the Insureds initiated a lawsuit against the Curells in state court alleging that the Curells made material false representations in connection with the sale of the property to the Insureds. (Id. ¶ 8; Doc. # 8 at 3.)

On July 12, 2011, the Curells filed a counterclaim against the Insureds. (Doc. # 8-3.) In their counterclaim, the Curells allege that they own and reside on the property adjacent to the Insureds' property and that the two lots share a common boundary with a fence. (Id. ¶¶ 1--2.) According to the Curells, in the summer of 2007, the Insureds began placing debris against, over, and through the fence between their respective properties and that this debris has damaged and impaired the enjoyment of their property. (Id.¶ 9.) They contend that this debris, which included pipe, wire, fence posts, and building materials piled in with green waste, blocked the natural drainage reserve area, created pest-related problems, raised health and safety issues, and greatly impaired the exclusive use and occupancy of their property. (Id. ¶¶ 9, 13, 24, 26.) They also contend that the Insureds have intentionally harassed the Curells by accusing them of making noise, making unfounded complaints about them to the Maui Police Department, making invalid complaints regarding alleged fire hazards to the County of Maui Fire Department, and improperly adding Rosineli Curell to a Temporary Restraining Order without basis. (Id. ¶¶ 28--29.) Based on these contentions, the Curells allege the following causes of action:

* Count I: Nuisance & Negligence (Id. ¶¶ 9--16.)

* Count II: Breach of Covenants, Conditions and Restrictions (Id. ¶¶ 17--19.)

* Count III: Injunctive Relief (Id. ¶¶ 20--24.)

* Count IV: Harassment & Intentional Infliction of Emotional Distress (Id. ¶¶ 25--31.)

In their counterclaim, the Curells pray for an injunction, special damages, general damages, attorneys' fees and costs of suit, and any further relief that the court deems just and proper. (Id. at 8.) In accord with Hawaii Revised Statute § 663-1.3(a), the state court counterclaim does not specify the amount of damages sought.

The Insureds tendered the defense of the counterclaim to their insurance carrier, State Farm Fire and Casualty Company ("Plaintiff" or "State Farm"). (Doc. # 8 at 4.) State Farm issued a homeowners policy to the Insureds. (Doc. # 12 at 3.) That policy, according to State Farm, includes liability coverage for third-party claims with a liability limit of $1 million. (Id.) State Farm also issued a personal umbrella liability policy to the Insureds. (Id.) According to the Insureds, State Farm accepted the defense of the counterclaim subject to a reservation of rights. (Id. at 4.)

On August 9, 2011, State Farm brought this declaratory judgment action against the Insureds seeking a determination that it has no duty to defend or indemnify the Insureds against the underlying counterclaim brought by the Curells. ("Compl.," Doc. # 1.) In the Complaint, State Farm alleges that this Court has jurisdiction pursuant to 28 U.S.C. § 1332 because "[t]here is complete diversity of citizenship between the parties, and the amount in controversy herein exceeds $75,000." (Id. ¶¶ 3--4.)

On September 6, 2011, Defendants filed the instant Motion to Dismiss for Lack of Subject Matter Jurisdiction. ("Mot.," Doc. # 8.) On October 31, 2011, Plaintiff filed a Memorandum in Opposition to the Motion. ("Opp'n.," Doc. # 12.) On November 7, 2011, ...


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