Cordova v. American Family Mutual Insurance Co.

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS NOV 7 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ANDREW CORDOVA, No. 16-15490
Plaintiff-Appellant, D.C. No.
2:13-cv-01111-KJD-VCF
v.
AMERICAN FAMILY MUTUAL MEMORANDUM*
INSURANCE COMPANY,
Defendant-Appellee.
Appeal from the United States District Court
for the District of Nevada
Kent J. Dawson, District Judge, Presiding
Argued and Submitted October 20, 2017
San Francisco, California
Before: IKUTA and HURWITZ, Circuit Judges, and GWIN,** District Judge.
After being involved in an automobile accident with an underinsured driver,
Andrew Cordova sought to recover from his insurer, American Family Mutual
Insurance Company, under an underinsured motorist (UIM) provision. After
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The Honorable James S. Gwin, United States District Judge for the
Northern District of Ohio, sitting by designation.
American Family rejected his claim, Cordova filed this action alleging breach of
contract, breach of fiduciary duty, breach of the implied covenant of good faith and
fair dealing, and violations of the Nevada Unfair Claims Settlement Practices Act,
Nev. Rev. Stat. § 686A.310. The district court dismissed Cordova’s claim for breach
of fiduciary duty and granted American Family’s motion for summary judgment on
all other claims except breach of contract. After a jury awarded Cordova $351,550
on the contract claim, the district court reduced the award to $100,000, the limits of
the policy’s UIM coverage. We affirm in part, reverse in part, and remand with
instructions.
1. The district court erred in deducting $226,550 from the jury’s damage
award.1 Nevada law follows the Restatement (Second) of Contracts § 347, which
provides that the prevailing party in a contract action can recover expectancy
damages. See Rd. & Highway Builders, LLC v. N. Nev. Rebar, 284 P.3d 377, 382
(Nev. 2012). Under the Restatement, expectancy damages include “any . . . loss,
including incidental or consequential loss, caused by the breach.” Restatement
(Second) of Contracts § 347 (Am. Law Inst. 1981). Consequential damages are
those that “may fairly and reasonably be considered as arising naturally” from the
breach. Hornwood v. Smith’s Food King No. 1, 772 P.2d 1284, 1286 (Nev. 1989)
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The parties agreed to an offset of $25,000, the amount Cordova previously
recovered from the tortfeasor and American Family under a medical costs provision
of the policy.
2
(per curiam) (quoting Conner v. S. Nev. Paving, 741 P.2d 800, 801 (Nev. 1987)).
The jury could reasonably have found that Cordova’s lost wages and pain and
suffering arose naturally from the denial of his claim. Cordova testified that he
would have received the necessary medical treatment “immediately” and returned to
work had American Family paid his claim when originally requested.2
2. The district court did not err in entering summary judgment for American
Family on Cordova’s prayer for punitive damages. Punitive damages are not
available in contract actions. See Nev. Rev. Stat. § 42.005(1); S.J. Amoroso Constr.
Co. v. Lazovich & Lazovich, 810 P.2d 775, 777–78 (Nev. 1991). Even assuming
arguendo that Cordova had a viable bad faith or statutory claim, that alone does not
establish entitlement to punitive damages. United Fire Ins. Co. v. McClelland, 780
P.2d 193, 198 (Nev. 1989) (per curiam). A plaintiff seeking punitive damages must
also provide substantial evidence of “oppression, fraud or malice, express or
implied.” Nev. Rev. Stat. § 42.005(1); see Wickliffe v. Fletcher Jones of Las Vegas,
Inc., 661 P.2d 1295, 1297 (Nev. 1983) (per curiam), superseded by statute on other
2
Although the Nevada Supreme Court has not yet addressed the issue, other
state courts have found consequential damages awarded for breach of contract can
exceed insurance policy limits. See, e.g., Reichert v. Gen. Ins. Co. of Am., 428 P. 2d
860, 864–67 (Cal. 1967) (en banc), vacated on other grounds on reh’g, 442 P.2d 377(Cal. 1968) (en banc); Rockford Mut. Ins. Co. v. Pirtle, 911 N.E.2d 60, 67–68 (Ind.
Ct. App. 2009); Ind. Ins. Co. v. Plummer Power Mower & Tool Rental, Inc., 590
N.E.2d 1085, 1089–92 (Ind. Ct. App. 1992); Lawton v. Great Sw. Fire Ins. Co., 392
A.2d 576, 611 (N.H. 1978).
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grounds as stated in Countrywide Home Loans, Inc. v. Thitchener, 192 P.3d 243,
253–54 & n.39 (Nev. 2008). Cordova did not provide evidence giving rise to a
genuine issue of material fact whether American Family “undertook an intentional
course of conduct designed to ensure the denial of [his] claim.” See Powers v. United
Servs. Auto. Ass’n, 962 P.2d 596, 604–05 (Nev. 1998), opinion modified on denial
of reh’g, 979 P.2d 1286 (Nev. 1999).
3. Other than punitive damages, Cordova’s bad faith and unfair practices
claims sought precisely the same relief as his contract claim. Because we hold today
that the original jury award should be reinstated (less agreed-upon offsets), we need
not decide whether the district court erred in granting summary judgment on the bad
faith and statutory claims.
We therefore AFFIRM the district court’s order entering summary judgment
for American Family on Cordova’s prayer for punitive damages and REVERSE the
district court’s judgment on the contract claim, with instructions to enter judgment
in favor of Cordova in the amount of $326,550 on his breach of contract claim.
4