Sharp Plumbing, Inc. v. National Fire & Marine Insurance , 633 F. App'x 441 ( 2016 )

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS MAR 07 2016
FOR THE NINTH CIRCUIT MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
SHARP PLUMBING, INC., a Nevada No. 14-15172
corporation,
D.C. No. 2:09-cv-00783-GMN-
Third-party-plaintiff -counter- GWF
defendant - Appellant,
v. MEMORANDUM*
NATIONAL FIRE & MARINE
INSURANCE COMPANY, a Nebraska
corporation,
Third-party-defendant-
counter-claimant - Appellee.
Appeal from the United States District Court
for the District of Nevada
Gloria M. Navarro, Chief District Judge, Presiding
Argued and Submitted February 12, 2016
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: NOONAN and MURGUIA, Circuit Judges and MURPHY,** District
Judge.
Plaintiff Sharp Plumbing, Inc. (“Sharp”) appeals from the district court’s
grant of summary judgment in favor of defendant National Fire & Marine
Insurance Co. (“National Fire”). The district court held that National Fire’s
commercial general liability policy unambiguously excluded from coverage claims
brought against Sharp in a class action for Sharp’s installation of defective
plumbing fittings. The district court also entered summary judgment for National
Fire on Sharp’s claims for insurance bad faith and violation of Nevada’s Unfair
Claims Practices Act, Nev. Rev. Stat. § 686A.310. We have jurisdiction under 28
U.S.C. § 1291. Reviewing de novo, Lyall v. City of Los Angeles, 807 F.3d 1178,
1185 (9th Cir. 2015), we affirm.
1. Sharp agrees that National Fire’s policy provides coverage only if the
claims against Sharp in the class action alleged damage to property other than
Sharp’s own work product. Sharp argues that there is coverage because the
damage alleged in the class action was to the water in the homes through zinc
contamination. However, Sharp does not point to any evidence from the class
action litigation indicating that damage to water was ever an element of the harm
**
The Honorable Stephen Joseph Murphy III, United States District
Judge for the Eastern District of Michigan, sitting by designation.
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alleged in the suit. While the class action complaint and an expert affidavit alleged
that “dezincification” occurred when water ran through the plumbing fittings
installed by Sharp, there is no indication that the zinc in the water was itself a
harm. Rather, the consequences of dezincification were leaks, restricted water
flow, and breakage—not adultered water. Professor Stempel’s testimony, which
was based on little more than his post-hoc reading of the class action complaint,
does not change this result. See United States v. Tamman, 782 F.3d 543, 552 (9th
Cir. 2015) (“[A]n expert cannot testify to a matter of law amounting to a legal
conclusion.”).
2. Even if Sharp had stated and preserved a cause of action for violation of
Nevada’s Unfair Claims Practices Act, Nev. Rev. Stat. § 686A.310., its claim
would fail because Sharp does not point to evidence that it completed and
submitted proof of loss requirements or that National Fire’s liability ever became
reasonably clear, which are elements of the statutory violations alleged by Sharp.
See Nev. Rev. Stat. § 686A.310(1)(d) (listing as an unfair practice “[f]ailing to
affirm or deny coverage of claims within a reasonable time after proof of loss
requirements have been completed and submitted by the insured” (emphasis
added)); id. § 686A.310(1)(e) (listing as an unfair practice “[f]ailing to effectuate
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prompt, fair and equitable settlements of claims in which liability of the insurer has
become reasonably clear” (emphasis added)).
3. Nevada law imposes on insurers a covenant of good faith and fair
dealing, a violation of which can result in bad-faith tort liability. Allstate Ins. Co.
v. Miller, 212 P.3d 318, 324 (Nev. 2009). Courts have recognized that the
covenant “imposes a duty on the insurer to settle a claim against its insured within
policy limits whenever there is a substantial likelihood of recovery in excess of
those limits.” Johansen v. Cal. State Auto Ass’n Inter-Ins. Bureau, 538 P.2d 744,
747 (Cal. 1975). Generally, however, “an insurer has a duty to accept a reasonable
settlement offer only with respect to a covered claim.” DeWitt v. Monterey Ins.
Co., 138 Cal. Rptr. 3d 705, 707 (App. 2012) (internal quotation marks omitted).
As discussed above, the claims against Sharp in the class action were not
covered by the National Fire policy. Even more problematic for Sharp is the fact
that National Fire ultimately settled the class action within policy limits. Sharp
points to no binding authority recognizing, under Nevada law, a claim for bad faith
refusal to settle even in the absence of coverage, much less when the insurer
ultimately settles within policy limits. Nor does Sharp argue that the Nevada
Supreme Court would adopt such a rule. See Orkin v. Taylor, 487 F.3d 734, 741
(9th Cir. 2007) (“If the state’s highest appellate court has not decided the question
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presented, then we must predict how the state’s highest court would decide the
question.”). As a result, Sharp’s claim for insurance bad faith fails.
AFFIRMED
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