Sierra Pacific Power Co. v. Hartford Steam Boiler Inspect. , 673 F. App'x 739 ( 2016 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS DEC 23 2016
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
SIERRA PACIFIC POWER COMPANY, No. 15-15002
Plaintiff-Appellant, D.C. No.
3:04-cv-00034-LRH-RAM
v.
HARTFORD STEAM BOILER MEMORANDUM*
INSPECTION & INSURANCE CO. and
ZURICH AMERICAN INSURANCE
COMPANY,
Defendants-Appellees.
SIERRA PACIFIC POWER COMPANY, No. 15-15073
Plaintiff-Appellee, D.C. No.
3:04-cv-00034-LRH-RAM
v.
HARTFORD STEAM BOILER
INSPECTION & INSURANCE CO. and
ZURICH AMERICAN INSURANCE
COMPANY,
Defendants-Appellants.
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
Appeals from the United States District Court
for the District of Nevada
Larry R. Hicks, District Judge, Presiding
Argued and Submitted December 13, 2016
San Francisco, California
Before: GRABER and HURWITZ, Circuit Judges, and FOOTE,** District Judge.
After the Farad Dam was destroyed in 1997, its operator, Sierra Pacific Power
Company (“Sierra”), brought this action against the Hartford Steam Boiler
Inspection & Insurance Company and Zurich American Insurance Company (the
“insurers”), seeking a declaratory judgment about insurance coverage. In a prior
appeal, we affirmed the district court’s holding that Sierra could recover the actual
costs of reconstruction if it timely opted to rebuild the Dam. Sierra Pac. Power Co.
v. Hartford Steam Boiler Inspection & Ins. Co., 490 F. App’x 871, 879 (9th Cir.
2012). But we remanded to the district court to calculate the amount due to Sierra
under the insurance policies if it chose not to rebuild—Actual Cash Value
(“ACV”)—by deducting “the appropriate depreciation” from the estimated cost to
rebuild the Dam of $19,800,000. Id. On remand, the court found the appropriate
depreciation to be 50% on the Dam and 5% on a wing wall, and determined an ACV
**
The Honorable Elizabeth E. Foote, United States District Judge for the
Western District of Louisiana, sitting by designation.
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of $12,216,600. The court awarded prejudgment interest to Sierra both on the actual
costs of reconstruction and the ACV.
Sierra and the insurers each timely appealed. We have jurisdiction under 28
U.S.C. § 1291. We affirm in part and reverse in part, and remand for entry of a
judgment consistent with this memorandum disposition.
1. The district court’s depreciation findings are factual determinations, see
Jefferson Ins. Co. v. Superior Court, 475 P.2d 880, 883 (Cal. 1970), and therefore
reviewed for clear error, see Lozier v. Auto Owners Ins. Co., 951 F.2d 251, 253 (9th
Cir. 1992). The evidence supported the district court’s findings. Patrick Jeremy, an
experienced insurance adjuster with personal knowledge of the Dam, testified
without objection to the depreciation rates based on his knowledge of “the last time
[the Dam] was replaced and how long they had been lasting in the past.” Our review
of the record does not leave us with a “definite and firm conviction that a mistake
has been committed.” Granite State Ins. Co. v. Smart Modular Techs., Inc., 76 F.3d
1023, 1028 (9th Cir. 1996) (quoting Concrete Pipe & Prods. v. Constr. Laborers
Pension Tr., 508 U.S. 602, 623 (1993)).
2. We reject the insurers’ argument that Sierra, should it choose to rebuild the
Dam, is limited to a payment of $19,800,000. That figure is the present estimated
cost to rebuild, not the actual cost, which has not yet been incurred. The district
court held before the first appeal that “[t]he policies of insurance provide Sierra with
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full replacement cost coverage,” subject to policy limits. Because our prior
disposition affirmed the district court with respect to coverage for replacement cost,
Sierra Pac. Power Co., 490 F. App’x at 879, its original holding is the law of the
case, see Gonzales v. U.S. Dep’t of Homeland Sec., 712 F.3d 1271, 1277 (9th Cir.
2013).
3. The insurers argue that Sierra waived any claim to prejudgment interest by
not asserting that claim after the district court entered its original judgment. That
argument is correct with respect to the court’s award after remand of prejudgment
interest on the actual costs of reconstruction. Because we affirmed the district
court’s judgment as to those costs and Sierra made no claim for prejudgment interest,
Sierra may not now seek to expand our prior ruling. See United States v. Thrasher,
483 F.3d 977, 981 (9th Cir. 2007) (“[W]hatever was before this court, and disposed
of by its decree, is considered as finally settled.” (quoting In re Sanford Fork & Tool
Co., 160 U.S. 247, 255 (1895))). Even if not waived, a claim to prejudgment interest
would fail, as the actual reproduction costs are not yet a fixed sum. Fireman’s Fund
Ins. Co. v. Allstate Ins. Co., 286 Cal. Rptr. 146, 158 (Ct. App. 1991).
4. However, we affirm the district court’s award of prejudgment interest on
the ACV. At oral argument, counsel for the insurers stated that their only contention
was that Sierra had waived any right to prejudgment interest on the ACV by not
seeking it before the remand. A party may seek an award of prejudgment interest
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for the first time after the entry of judgment, see Osterneck v. Ernst & Whinney, 489
U.S. 169, 176 & n.3 (1989), and because the district court’s initial ACV award was
less than the applicable deductibles, Sierra plainly had no occasion to seek
prejudgment interest before the entry of a new judgment after our remand. Similarly,
the award of prejudgment interest on the ACV does not exceed the scope of the
remand, as our first disposition did not address this issue. See United States v.
Luong, 627 F.3d 1306, 1310 (9th Cir. 2010).
We therefore affirm the district court’s judgment as to the ACV and its award
of prejudgment interest on that amount. We reverse the award of prejudgment
interest on future reconstruction costs. We remand for the entry of an appropriate
judgment. Each party is to bear its own costs on appeal.
AFFIRMED in part, REVERSED in part, and REMANDED.
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