Powers v. United Services Automobile Ass'n , 114 Nev. 690 ( 1998 )

OPINION

By the Court, Rose, J.:

Retired Air Force Colonel William Powers lived on his boat, the “Mikimbi.” On April 28, 1987, en route from Texas to Florida through the Gulf of Mexico, the Mikimbi sank. On May 2, 1987, Powers reported his loss to USAA, his insurer for thirty-five years. After USAA commenced its investigation, it accused Powers of intentionally sinking his own boat. On December 14, 1987, eight months after the Mikimbi sank, USAA denied Powers’ claim. In May 1989, USAA instigated criminal charges against Powers for pursuing an allegedly false insurance claim, including wire fraud and mail fraud. At trial, Powers was acquitted.

Powers then brought a civil action against USAA based on its conduct in handling his claim. A jury found that USAA acted in bad faith in failing to pay Powers’ claim, in breach of its fiduciary relationship with Powers, and had breached the insurance contract. The jury awarded Powers special, compensatory, and punitive damages; however, the district court denied Powers’ motion to amend the judgment to include post-judgment interest on the punitive damages.

Powers appeals the denial of his motion regarding post-judgment interest on punitive damages; USAA now cross-appeals the judgment. We affirm the jury’s verdicts and conclude that Powers was entitled to interest on the punitive damage award as of the date the judgment was entered.

FACTS

Retired Air Force Colonel William Powers lived on his boat, the “Mikimbi.” On the afternoon of April 28, 1987, en route from Texas to Florida through the Gulf of Mexico, Powers fell asleep aboard the Mikimbi. He awoke to the odor of smoke and went below to find water entering the engine room. The water was above his ankles. Powers noticed that an exhaust hose had disconnected from the engine so that fumes and sea water were being pumped into the engine room. He attempted to save his boat, unsuccessfully trying to reattach the hose and to close a gate valve at the thru-hull, which was frozen in the open position.

Powers felt extremely sick and confused from inhaling engine room fumes and carbon monoxide. He vomited a few times from his exertion and the fumes. In a panic, he finally stopped the water from continuing to siphon into the boat by cutting the hose at the valve near the thru-hull. Water was still coming into the boat because it was leaning to the port side with the thru-hull below sea level. Powers stuffed a sheet into the thru-hull, temporarily stopping water from entering the boat.

Powers then called the U.S. Coast Guard for help, and boarded a life raft with a few provisions. At the direction of the Coast Guard, a commercial fishing boat, captained by Richard Underwood, rescued Powers. After resting aboard the fishing boat, Powers re-boarded the Mikimbi in an attempt to save it. He found that the sheet previously stuffed into the thru-hull had come out, and more water had entered the boat. He stuffed more rags into the opening. At approximately 6:55 p.m., Powers informed the Coast Guard that the leak was under control. The Coast Guard parachuted an emergency water pump to Powers, who spent thirty minutes unsuccessfully attempting to retrieve the pump from the ocean. Powers then experienced chest pains. The Coast Guard insisted that Powers abandon his boat.

After Powers left, no one attempted to board the Mikimbi. The boat continued to take on water, and eventually sank at 11:30 that night. A Coast Guard helicopter flew Powers to land, where an ambulance took him to a nearby hospital. When his blood was tested at 12:30 a.m., it showed the presence of (1) carbon monoxide from breathing fumes and (2) elevated enzymes from muscle damage due to physical exertion. He spent the night in the intensive care unit and left the hospital the next day against medical advice. USAA never reviewed Powers’ medical records during its investigation of his claim.

On May 2, 1987, four days after the Mikimbi sank, Powers reported his loss to USAA, his insurer for thirty-five years. He believed that the woman to whom he described the incident did not understand his explanation of events. USAA then decided to assign Powers’ case to its “Claims Security Unit” (CSU), which investigates fraud. Wayne McNeely, a CSU special investigator, was designated as the chief investigator of Powers’ claim. In his May 1987 telephone conversation with McNeely regarding the sinking of the Mikimbi, Powers stated that the exhaust hose had “deteriorated” at the thru-hull. He used the term “deteriorated” to simplify his explanation (McNeely had no expertise in marine investigations), and because he was concerned that USAA would automatically deny his claim if he explained that he had deliberately cut the hose.

Although McNeely testified that at this point in the review of the claim, he had no reason to believe that Powers had intentionally sunk the Mikimbi, USAA began to investigate Powers’ finances looking for motive to file a fraudulent claim. In July 1987, two months after the Mikimbi sank, frustrated with USAA’s failure to pay his claim, Powers telephoned McNeely to explain how and why he had cut the exhaust hose. USAA decided to raise the Mikimbi from the ocean. Powers asked USAA to allow him to be present when the boat was raised and brought into port. USAA refused Powers’ request. At the end of September 1987, USAA raised and surveyed the Mikimbi outside of Powers’ presence.

USAA had hired a local salvager, Harry Davis, to oversee the raising and investigation of the Mikimbi, notwithstanding Davis’ lack of training as a marine investigator. Although Davis had told USAA that the boat could be raised at a cost of approximately $30,000, the actual cost to USAA of raising the Mikimbi (which involved numerous failed attempts) exceeded $200,000 — a cost approximately double the amount for which the Mikimbi had been insured. Don Wimberly, district manager of the CSU, wrote in an October 27, 1987 internal USAA memo that “Davis has completely misled us all for his own purposes on the cost of the [Mikimbi] project.”

USAA also allowed Davis to interview Captain Underwood— the only witness to the Mikimbi sinking who USAA interviewed. Davis recorded this interview on an audio tape; however, there was evidence that only selected portions of Captain Underwood’s statement were recorded. USAA failed to produce this tape at trial. USAA did not interview any other witnesses to the sinking of the Mikimbi. On October 2, 1987, Davis made a videotape of the Mikimbi, purportedly depicting the contents of the boat at the time it was raised. At trial, Davis admitted that his videotape was a “re-creation” and that he had moved items allegedly found on the boat for purposes of the videotape. On the tape, Davis held up a pipe wrench which he alleged had been found near the thru-hull and could have been used to shut the frozen gate valve. Powers maintained that no such wrench had been present on his boat at the time of sinking. At trial, Powers’ expert witness — a metallurgist — testified that the wrench depicted in the videotape did not show corrosion consistent with having been submerged on the boat in ocean water for five months. In any event, USAA failed to produce the wrench for analysis by Powers’ expert.

The videotape also depicted an “adaptor kit” — a large hose and two clamps which purportedly could have been used by Powers to repair the hose at the thru-hull. Again, Powers denied having had these items on his boat when it sank, and his expert testified that the condition of the clamps indicated that they had not been submerged in ocean water for five months. At trial, McNeely admitted that even had it been present on the Mikimbi, the “adaptor kit” would not have enabled Powers to repair a cut hose.

While investigating the Mikimbi, McNeely took numerous photographs of its interior. Powers told USAA that he had left almost all of his possessions on the Mikimbi and that various items had been stored in a cabinet above the stove. The cabinet consisted of three separate doors but only one un-partitioned cabinet. The McNeely/Davis inspection revealed that the cabinet was empty — supposedly evidence that Powers had removed all of his belongings before intentionally sinking his boat. McNeely’s photographs showed two of the three doors which were latched closed. However, no pictures were taken of the third door which had a broken latch and open door through which the cabinet contents could have fallen out during the numerous attempts to raise the boat.

The videotape and photographs also showed that hoses from the toilet and the raw water intake pump had been disconnected. Davis told McNeely that these hoses could have been intentionally disconnected as a means of sinking the boat. However, Powers maintained that water would not enter the boat if those hoses were disconnected — he explained that one of the hoses simply took waste from the toilet to a holding tank. McNeely never investigated these inconsistent positions and adopted Davis’ conclusions.

In mid-October, USAA asked Powers to submit to an examination under oath; Powers complied. At this examination, Powers reiterated the manner in which the boat had sunk; his testimony was consistent with the information he had provided to McNeely in July, prior to the raising of the Mikimbi. Shortly after this examination, Powers asked USAA to seal the Mikimbi and allow the Coast Guard to perform an independent examination of its condition. USAA refused and left the boat and its contents in Davis’ custody.

On November 9, 1987, McNeely submitted his closing report in which he stated that the toilet and raw water intake hose had been disconnected, causing the boat to take on water. The report concluded that Powers had intentionally sunk the Mikimbi. Notwithstanding the fact that McNeely had no expertise in the investigation of boat sinkings, he admitted that he never attempted to confirm Powers’ contention that a siphon had occurred on the boat. The Mikimbi’s designer, William Crealock, testified in the instant case that a siphon could have occurred in the manner described by Powers.

McNeely concluded his report by stating that the investigation would be forwarded to the Insurance Crime Prevention Institute (ICPI) — an entity funded by insurance companies which investigates claims and refers cases to the FBI for possible criminal prosecution. On December 14, 1987, eight months after the Mikimbi sank, USAA denied Powers’ claim. The letter denying the claim stated that “false swearing, concealment or misrepresentation of any material fact” voided the insurance policy.

The ICPI forwarded Powers’ USAA file, including USAA’s conclusions, to the FBI. In May of 1988, an FBI investigator contacted McNeely. The federal investigator told McNeely that the disconnected hoses to which USAA had attached great significance, could have become disconnected during the numerous attempts to raise the Mikimbi. In May 1989, the FBI contacted Powers. When Powers and his wife arrived at the FBI for an interview, he was arrested. The U.S. Attorney’s Office filed criminal charges against Powers for pursuing an allegedly false insurance claim, including wire and mail fraud.

The federal trial commenced in March 1991. Davis testified in front of a federal grand jury and again at the federal trial; he was compensated by USAA on both occasions. At the federal trial, Davis presented the gate valve from the Mikimbi and demonstrated to the jury that it was not frozen. However, Powers’ defense included the testimony of a metallurgist who concluded that the valve had been tampered with after the Mikimbi had been raised as there was lubricant on the valve which would not be present after five months in ocean water.

A federal jury acquitted Powers on all charges. Notwithstanding Powers’ acquittal of criminal wrongdoing, USAA stood by its denial of his claim. Moreover, USAA continued to investigate the case and attempted to establish that Powers had hired Captain Underwood to sink the Mikimbi. USAA eventually abandoned this subsequent investigation, but still maintained that its denial of Powers’ claim was justified based upon his alleged “material misrepresentations.”

Just prior to his arrest in connection with the federal charges, Powers had filed the instant case against USAA alleging six causes of action: (1) breach of contract, (2) bad faith failure to pay Powers’ claim, (3) breach of fiduciary relationship, (4) malicious prosecution, (5) intentional infliction of emotional distress, and (6) violation of the Unfair Claim Settlement Practices Act. A jury found in Powers’ favor on the first three causes of action, rejected the final three causes of action, and awarded him special, compensatory, and punitive damages. However, the judgment did not award Powers post-judgment interest on the punitive damages.

Powers appeals on the ground that the district court erred in failing to award post-judgment interest on his punitive damages award; USAA cross-appeals the judgment awarding Powers compensatory and punitive damages.

DISCUSSION¹

The district court did not err in allowing the jury to determine whether Powers ’ misrepresentation was material

Powers initially told USAA that the exhaust hose aboard the Mikimbi had “deteriorated.” Two months later, he told USAA that he had cut the hose. The USAA policy insuring the Mikimbi contained the following provision: “False swearing, concealment or misrepresentation of any material fact by any covered person voids this policy.” At trial, Powers admitted that he had misrepresented the detachment of the hose because he was worried that USAA would summarily deny his claim. USAA asserts that this misrepresentation was material as a matter of law and that it was error to permit the jury to decide the issue of materiality. We disagree.

Under most circumstances involving misrepresentations by an insured to an insurance company, it is “a question of fact for the jury to decide whether the variance between the representation and the existing facts was material.” Gerhauser v. N. B. & M. Ins. Co., 7 Nev. 174, 196 (1871). “The rule is well established that, if the materiality of the representations or statements depends upon inferences to be drawn from facts and circumstances proved, the question of materiality is one for the jury.” Smith v. N. A. A. I. Co., 46 Nev. 30, 43, 205 P. 801, 804 (1922). In both Gerhauser and Smith the materiality issue arose with respect to false statements made in insurance applications. It was acknowledged in Smith, that materiality could be judged as a matter of law in cases where the parties’ contract stipulated that certain facts were to be considered material; however, where “materiality must be shown by matters outside the terms of the contract, it is a question of fact.” 46 Nev. at 45, 205 P.2d at 805.

Unlike the situation in Gerhauser and Smith, the deception here relates to the claims process rather than to the application process, and it is only in the rarest of cases of this kind that the materiality issue can be taken from the jury. Further reluctance to remove this issue from the jury is fostered by reason of the fact that in this case a jury has already ruled on the issue and in Powers’ favor. As put in Gerhauser, the issue is whether there is a material “variance between the representation and the existing facts.” 7 Nev. at 196. Under our cases, then, it is the jury that must decide whether the false representation, that is, the “variance between the [false] representation and the existing [true] facts, is material,” which is to say, substantially related to or, as put in the jury instruction, “reasonably relevant to the insurance company’s investigation.”

We conclude that in this case whether Powers’ misrepresentation was material was a question of fact to be properly decided by a jury. USAA was not entitled to a determination that materiality was present in this case as a matter of law.

There was substantial evidence upon which the jury could have reasonably concluded that Powers’ misrepresentation was not material

A jury’s verdict will not be overturned if it is supported by substantial evidence unless the verdict was clearly erroneous when viewed in light of all the evidence presented. Bally’s Employees’ Credit Union v. Wallen, 105 Nev. 553, 779 P.2d 956 (1989). We conclude that there was substantial evidence upon which the jury could have determined that Powers’ misrepresentation was not material.²

The jury was instructed that: “ A fact is material if it concerns a subject reasonably relevant to the insurance company’s investigation, and if a reasonable person would attach importance to that fact. A representation is false when the facts fail to correspond with its assertions.” Stated another way, a misrepresentation is material “if the false statement concerns a subject relevant and germane to the insurer’s investigation as it was then proceeding.” Pacific Indem. Co. v. Golden, 985 F.2d 51, 56 (2d Cir. 1993). To be deemed a material misrepresentation, it must be shown that an insurer’s “investigation would have proceeded differently had” the insured told the truth. Id. at 56-57.

In the instant case, there was ample evidence upon which the jury could have concluded that USAA’s investigation of Powers would not have proceeded differently had he stated in May 1987 that he had cut the exhaust hose. Wimberly testified that he was suspicious of Powers’ claim from the onset due to the fact that the Mikimbi sank in calm waters. According to McNeely, USAA had decided to raise the Mikimbi prior to Powers’ telephone call in July 1987 wherein he explained that he had cut the exhaust hose. Following this conversation, USAA proceeded with its plans to raise the boat.

Furthermore, the jury could have easily concluded, based on the evidence, that the fact that the exhaust hose was cut rather than deteriorated was not “reasonably relevant” to USAA’s investigation. USAA’s investigation focussed on the manner in which the Mikimbi sank. The boat’s designer, William Crealock, testified that it was the fact that the exhaust hose slipped off of the engine manifold, combined with the fact that the valve at the thru-hull could not be closed, that caused the Mikimbi to take on water. The condition of the hose at the thru-hull (i.e., cut or deteriorated) was not a relevant factor in the sinking of the boat.

We conclude that based upon substantial evidence, the jury could have found, applying the definition of materiality contained in Instruction No. 14, that Powers’ May 1987 misrepresentation was not material so as to void his policy.³

The jury was properly instructed that the relationship between USAA and Powers was fiduciary in nature; the jury could have properly found that USAA breached its fiduciary duty to Powers

Powers argued that USAA breached a fiduciary responsibility to him by refusing Powers’ requests (1) for copies of photographs Powers had been shown at the October 1987 examination under oath; (2) to be present when the Mikimbi was raised and not telling him where the boat was until three days after USAA had possession; and (3) to seal the Mikimbi to protect evidence Powers needed to defend against allegations that he had intentionally sunk his boat.

USAA contends that, while an insurer’s duty to an insured can be “akin” to that of a fiduciary in some respects, the insurer has no fiduciary duty to pay questionable claims. See Employers Insurance Co. of Wausau v. Albert D. Seeno Construction, 945 F.2d 284 (9th Cir. 1991). USAA contends that imposing a fiduciary duty to a first-party insured would require insurance companies to pay every claim presented by an insured. USAA argues that an insurance carrier owes a duty to its other policyholders not to dissipate its reserves by paying meritless claims. We are not persuaded by these arguments; in the instant case, the jury did not find a breach of fiduciary duty based on USAA’s failure to pay Powers’ claim, but upon its failure to comply with the reasonable requests of its insured.

The jury was instructed on this issue as follows:

The duty owed by an insurance company to an insured is fiduciary in nature. ... A fiduciary relationship exists when one has the right to expect trust and confidence in the integrity and fidelity of another. This special relationship exists in part because, as insurers are well aware, consumers contract for insurance to gain protection, peace of mind and security against calamity.

(Emphasis added). It is clear that the jury was properly instructed that an insurer’s duty to its policyholder is, as USAA concedes, “akin” to a fiduciary relationship.

Notwithstanding the language of this instruction, USAA argues that to affirm the jury’s verdict, we would have to recognize a “new tort” which requires the insurer to place the insured’s interests above its own. We cannot agree. Nevada has long recognized the special relationship between the insurer and its insured. Ainsworth v. Combined Ins. Co., 104 Nev. 587, 592, 763 P.2d 673, 676 (1988) (hereinafter “Ainsworth I”). In the instant case the jury was not asked to find that USAA breached a duty to place Powers’ interests over its own; rather, the jury was instructed to consider whether USAA’s refusal to comply with its insured’s requests for information relevant to his own claim constituted a breach of “the trust and confidence” an insured is entitled to place in his insurer.

In denying USAA’s motion for judgment notwithstanding the verdict or a new trial, the district court cited Tynes v. Bankers Life Co., 730 P.2d 1115, 1124-26 (Mont. 1986). The Montana court reviewed other states’ decisions regarding the nature of the fiduciary relationship between insurer and insured, and held that a special relationship between insurer and insured can be described as “fiduciary in nature,” although it is not identical to the fiduciary duty relationship of a trust. The court explained that this type of duty is basically a statement of the kind of good faith duty owed by an insurer to a first-party insured. Misconduct, such as misrepresenting or concealing facts to gain an advantage over the insured, is a breach of this kind of fiduciary responsibility. Tynes, 730 P.2d at 1126; see also Rawlings v. Apodaca, 726 P.2d 565, 571 (Ariz. 1986) (holding that although an insurer is not a fiduciary in the strict sense of the word, “it has some duties of a fiduciary nature” and these duties include an obligation to disclose relevant facts discovered during the investigation of a policyholder’s claim); Indus. Indem. of the N.W. v. Kallevig, 792 P.2d 520, 526 (Wash. 1990) (holding that the insurer’s duty to act in good faith is a fiduciary duty which is “fairly broad and may be breached by conduct short of intentional bad faith or fraud”).

We conclude that the jury’s verdict was supported by substantial evidence that USAA concealed facts to gain an advantage over Powers, and that this misconduct constituted a breach of the fiduciary nature of its relationship with Powers. The jury could have reasonably concluded that USAA’s failure to comply with Powers’ request for photographs, to be present at the raising of his boat, and to have an outside party investigate the boat was not in keeping with a relationship of trust and confidence — fiduciary in nature — with its insured. Such a conclusion supports the jury’s finding of bad faith, of which the breach of fiduciary duty is a component.

We are not adopting a new cause of action based on an insurance company’s failure to put its insured’s interests above its own; we are merely recognizing that breach of the fiduciary nature of the insurer-insured relationship is part of the duty of good faith and fair dealing.⁴ Therefore, we need not address USAA’s contention that punitive damages were unfairly assessed on this verdict. Additionally, USAA argues that the jury’s verdict does not explain whether it found USAA liable for breaching the covenant of good faith and fair dealing or breaching a fiduciary duty. USAA contends that when there are two actions and no way to determine whether the jury found on one or the other, an error in either action requires a new trial. Lightenburger v. Gordon, 81 Nev. 553, 407 P.2d 728 (1965). However, the verdict indicates that the jury found USAA liable for both a breach of the covenant of good faith and fair dealing and a breach of its fiduciary relationship, granting compensatory and punitive damages awards to Powers for both. In this case we view the jury’s finding of a breach of fiduciary duty as buttressing the finding of bad faith.

Both parties stipulated to the form of the verdict, and USAA did not request that the court ask the jury to explain its punitive damage amount. The time to raise inconsistencies or irregularities in the form of a verdict is at trial. Eberhard Mfg. Co. v. Baldwin, 97 Nev. 271, 628 P.2d 681 (1981); see also Brascia v. Johnson, 105 Nev. 592, 596 n.2, 781 P.2d 765, 768 n.2 (1989) (holding that a party must challenge inconsistencies in a verdict before the jury is discharged, and failure to object while the jury is available to clarify its verdict constitutes waiver).

We conclude that the language in the verdict clearly states the jury’s finding and that USAA waived its right to question the form of the verdict by failing to object at trial.

There was substantial evidence that USAA acted in bad faith by denying Powers’ claim

A judgment will not be overturned if the jury’s verdict that an insurer acted in bad faith is supported by substantial evidence. United Fire Insurance Co. v. McClelland, 105 Nev. 504, 780 P.2d 193 (1989). In reviewing this evidence, this court must presume that the jury believed evidence favorable to that prevailing party and drew inferences in that party’s favor. Id.; see Ainsworth I, 104 Nev. at 590, 763 P.2d at 675. To establish a prima facie case of bad-faith refusal to pay an insurance claim, the plaintiff must establish that the insurer had no reasonable basis for disputing coverage, and that the insurer knew or recklessly disregarded the fact that there was no reasonable basis for disputing coverage.⁵ Falline v. GNLV Corp., 107 Nev. 1004, 823 P.2d 283 (1991).

We conclude that there was abundant evidence upon which the jury could have found that USAA knew or recklessly disregarded the fact that there was no reasonable basis for denying Powers’ claim. Experts in investigations management testified that USAA’s investigation was improper, incomplete, poorly done, in violation of USAA’s own procedures, and rendered the opinion that USAA’s conduct amounted to bad faith. Presuming that the jury believed evidence favorable to Powers, it was justified in concluding that USAA began its investigation by submitting the claim directly to its fraud unit, failing to review the evidence objectively. There was substantial evidence that had USAA undertaken an objective investigation, USAA would have discovered evidence to show that the claim should have been paid.

Among other things, McNeely admitted that there were erroneous conclusions in his closing report (e.g., that the disconnected toilet and raw water intake hoses caused the boat to sink); however, USAA made no effort to correct these known errors, even though this report was relied upon by federal authorities in pursuing criminal charges against Powers. Additionally, there was evidence that the gate valve, which had been kept in USAA’s custody, had been tampered with so as to further discredit Powers. Furthermore, the jury could have believed that the videotape contained numerous fabrications and was designed to provide USAA with a reason to deny Powers’ claim when no such reason actually existed. We conclude that the jury’s verdict that USAA is liable to Powers for bad faith is supported by substantial evidence and is not clearly erroneous.

Based upon our review of the record and the parties’ arguments on appeal, we conclude that there was substantial evidence to support the jury’s award of special and compensatory damages based upon USAA’s breach of the insurance contract, bad faith refusal to pay Powers’ claim, and breach of a fiduciary relationship. Furthermore, we will not disturb an award of punitive damages unless the trial record lacks substantial evidence to support it. First Interstate Bank v. Jafbros Auto Body, 106 Nev. 54, 56, 787 P.2d 765, 767 (1990).

We conclude that the evidence the jury could have believed supported a finding that USAA had been guilty of oppression, fraud or malice, express or implied. See NRS 42.005. There are numerous facts in the record, taken individually and cumulatively, which support such a determination. The evidence showed that USAA made numerous critical omissions in its investigative process; these omissions support a finding of oppression. A jury could also properly conclude USAA undertook an intentional course of conduct designed to ensure the denial of Powers’ claim and that such conduct constituted fraud and malice.

Perhaps the most egregious example of oppression, fraud and/or malice is contained in the USAA videotape of the newly raised Mikimbi. There was ample evidence upon which the jury could have concluded that USAA “enhanced” the actual contents of the Mikimbi in an effort to create support for its decision to deny Powers’ claim and to justify the forwarding of his claim to the ICPI and, ultimately, the U.S. Attorney’s Office. In this case, we conclude that punitive damages were indeed warranted.

The imposition of post-judgment interest on punitive damages is proper

NRS 17.130 outlines computation of a judgment and imposition of any interest thereon.⁶ The statute provides for interest to accrue on a judgment as of the date the complaint was served, although interest on certain parts of a judgment, such as damages not incurred until after the complaint was served, accrues as of the date those damages were actually sustained, see, e.g., Gibellini v. Klindt, 110 Nev. 1201, 1209, 885 P.2d 540, 545 (1994) (holding pre-judgment interest accrues on costs from time incurred after complaint served); LTR Stage Lines v. Gray Line Tours, 106 Nev. 283, 289, 792 P.2d 386, 389 (1990) (holding pre-judgment interest accrues on damages from time actually incurred after complaint served).

Powers argues that the plain language of the statute does not preclude post-judgment interest on punitive damages; rather, it provides for interest on a “judgment.” In the present case, the jury award included compensatory and punitive damages, cumulatively comprising the judgment in the case. Powers argues that every aspect of a judgment entered by the court should be-treated the same, and that interest should accrue on punitive damages as of the date the judgment is awarded.

We have held that pre-judgment interest does not accrue on punitive damages because a plaintiff is never entitled to punitive damages as a matter of right. Ramada Inns v. Sharp, 101 Nev. 824, 711 P.2d 1 (1985). We later expanded this rule to apply to post-judgment interest on punitive damages. Ainsworth v. Combined Ins. Co., 105 Nev. 237, 774 P.2d 1003 (1989), cert. denied, 493 U.S. 958 (1989) (hereinafter “Ainsworth II”). Powers asks this court to revisit the issue and consider the policies in favor of imposing post-judgment interest on punitive damages awards.

The purpose of post-judgment interest is to compensate the plaintiff for loss of the use of the money awarded in the judgment “ ‘without regard to the elements of which that judgment is composed.’ ” Air Separation v. Lloyd’s of London, 45 F.3d 288, 290 (9th Cir. 1995) (quoting Perkins v. Standard Oil Co., 487 F.2d 672, 675 (9th Cir. 1973)). In Air Separation, the Ninth Circuit also noted that failing to award post-judgment interest creates an incentive for the defendant to exploit the time value of money by frivolously appealing or otherwise delaying timely payment. Id. “Moreover, awarding post-judgment interest on exemplary damages is consistent with the purpose of post-, judgment interest — compensation to a successful plaintiff for the intervening time between entitlement to and actual payment of an award of damages.” Brown v. Petrolite Corp., 965 F.2d 38, 51 (5th Cir. 1992).

In response to USAA’s contention that allowing interest to accrue on punitive damages would deter meritorious appeals, we note that the courts require defendants who appeal from a judgment for compensatory damages to pay interest, and that imposition is not considered to deter meritorious appeals. Moreover, a defendant whose conduct was egregious enough to warrant the imposition of punitive damages should not be given preferential treatment and be allowed to make money during the appellate process on what has been ordered to be paid to the plaintiff.

Based upon our review of the policies mentioned above, we believe that Ainsworth II should be modified to the extent that it denies successful litigants post-judgment interest on punitive damages. Accordingly, we conclude that Powers’ punitive damage award should have accrued post-judgment interest as of the date the judgment was entered.

CONCLUSION

We conclude that materiality of misrepresentation is a question of fact. We further conclude that there was substantial evidence upon which the jury could have concluded that Powers’ misrepresentation was not material.

We further conclude that, in limited circumstances, an insurer may be held liable for breaching its fiduciary responsibility to a first-party insured. The jury’s finding that USAA breached its relationship in this case was supported by substantial evidence. Further, the verdict properly identified the jury’s findings and award of damages.

Additionally, we conclude that the jury’s verdict regarding USAA’s bad faith was supported by substantial evidence and was not clearly erroneous. Finally, we conclude that Powers is entitled to post-judgment interest on his punitive damages award as of the date the district court entered the judgment.

Therefore, we reverse that portion of the district court’s judgment that awards punitive damages without post-judgment interest and remand to the district court to award punitive damages with post-judgment interest. We affirm the judgment in all other respects.

Shearing and Young, JJ., concur.

1 NRAP 28(h) designates the plaintiff below as the appellant, and the defendant below as cross-appellant, unless otherwise ordered. If we were to reverse Powers’ damages award on USAA’s cross-appeal, Powers’ issue on appeal concerning post-judgment interest would be moot. Accordingly, this opinion will first address the issues on cross-appeal, i.e., the validity of Powers’ damages award.

2 We reach this same conclusion and apply the same reasoning with regard to USAA’s assertions that Powers’ alleged initial concealment of the fact that the exhaust hose slipped off the engine manifold and that his failure to mention a siphon effect in his May 1987 conversation with McNeely were material. We note that the purported inconsistencies in Powers’ recounting of relevant events were presented to the jury.

3 We reject USAA’s contention that the district court erred in overruling USAA’s objections to the expert testimony on the issue of materiality. The admission of expert testimony lies within the sound discretion of the district court. Cf. Prabhu v. Levine, 112 Nev. 1538, 1547-48, 930 P.2d 103, 101-10 (1996). NRS 50.275 provides that “[i]f scientific, technical or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert . . . may testify to matters within the scope of such knowledge.” Moreover, NRS 50.295 permits an expert to give opinion testimony concerning the ultimate issues in a case. We conclude that the district court did not abuse its discretion in permitting experts for both USAA and Powers to testify as to the materiality of the misrepresentation at issue.

4 However, to the extent that the giving of the instruction defining the fiduciary relationship between Powers and USAA constituted error, we adopt the concurrence’s view that it was harmless.

5 We reject USAA’s contention that its actions were reasonable as a matter of law.

6 The relevant portion of NRS 17.130 states:

1. In all judgments . . . rendered by any court of justice, for any debt, damages or costs . . . the amount must be computed, as near as may be, in dollars and cents ....

2. When no rate of interest is provided by contract or otherwise by law, or specified in the judgment, the judgment draws interest from the time of service of the summons and complaint until satisfied, except for any amount representing future damages, which draws interest only from the time of the entry of the judgment until satisfied ....