Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_14-cv-03676/USCOURTS-cand-4_14-cv-03676-4/pdf.json

Parties Involved:
Allied Property and Casualty Insurance Company
Defendant
Globe Imports Limited
Plaintiff
Globe Properties
Plaintiff
Robert Maxon
Plaintiff
Nationwide Insurance
Defendant

Document Text:

United States District Court 

For the Northern District of California 

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IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF CALIFORNIA 

GLOBE IMPORTS LIMITED, INC., 

GLOBE PROPERTIES, and ROBERT 

MAXON, 

 

 Plaintiffs, 

 

 v. 

ALLIED PROPERTY AND CASUALTY 

INSURANCE CO. and NATIONWIDE 

INSURANCE, 

 Defendants. 

________________________________/ 

No. C 14-3676 CW 

FINDINGS OF FACT 

AND CONCLUSIONS OF 

LAW AFTER BENCH 

TRIAL 

A fire damaged two buildings and destroyed a third. All 

three buildings are owned by Plaintiff Globe Imports Limited, a 

division of which is Plaintiff Globe Properties. Docket No. 63, 

Joint Pretrial Conference Statement (JPCS) at 1.1

 At the time, 

Plaintiffs held a commercial property insurance policy with 

Defendant Nationwide Mutual Insurance Company.2 The parties 

dispute coverage for many of the costs related to repair and 

replacement of these buildings. 

For the bench trial in this matter, the Court instructed the 

parties to offer their direct testimony through the designation of 

declarations and deposition transcripts. The parties have filed 

trial briefs with these declarations, deposition transcripts and 

 1 All citations to the JPCS are to undisputed facts. 

2 Claims against the other named defendant, Allied Property 

and Casualty Insurance Company, were dismissed by stipulation. 

Docket No. 32. 

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documentary evidence and also include citations to the material 

that they submitted previously with the earlier motions. The 

parties were given the opportunity to cross-examine witnesses 

during the bench trial. The parties also filed post-trial briefs 

and written closing arguments. 

Nationwide objects to some of the evidence submitted by 

Globe. The Court has reviewed these evidentiary objections and 

has not relied on any inadmissible evidence. The Court will not 

discuss each objection individually. To the extent that the Court 

has relied on evidence to which one side has objected, such 

evidence has been found admissible and the objections are 

overruled. 

The Court now enters its findings of fact and conclusions of 

law. 

BACKGROUND FINDINGS OF FACT 

 On December 8, 2006, a fire in Eureka, California damaged two 

buildings and destroyed a third building owned by Globe. JPCS at 

1. One of the damaged buildings, Building 1, was located at 527, 

531 and 535 Third Street. Id. at 2. The other damaged building, 

Building 3, was located at 526 Opera Alley. Id. Building 2, the 

destroyed building, was located at 224, 226 and 236 G. Street. 

Id. 

I. Buildings 

Building 2 comprised a first floor used as a meat market, a 

second floor originally used as a dance hall with a sprung dance 

floor and a mezzanine area above the second floor. Docket No. 68, 

Maxon Dec. in Opp. ¶ 6; Transcript at 27:17-28:4. The stairway 

leading to the second floor had two landings. Maxon Dec. in Opp. 

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¶ 7. It was lined with ornate wainscot and heavy trims and 

finishes. Id. Heavy trim and wainscot were also prevalent at the 

top of the stairway, in the foyer and in adjacent dressing rooms 

with showers and bathrooms. Id. ¶¶ 7-8. The foyer opened into 

the dance hall, which was 3,516 square feet. Id. ¶ 9. The dance 

hall was surrounded by ornate framed plaster arches, wainscot, 

heavy trim and ornate plaster walls with large double hung 

windows. Id.; see also Ex. 56 at 7, 11. Three staircases led up 

to the mezzanine level, which comprised a balcony to observe the 

dance floor. Maxon Dec. in Opp. ¶ 10; see also Ex. 56 at 6. 

Building 2 was constructed using substantial amounts of old growth 

redwood. Docket No. 59, Penfold Dec. ¶ 9. 

Repairs have been performed on Buildings 1 and 3, but 

Building 2's reconstruction has not yet begun. A "different 

building" is going to take the place of Building 2. Transcript at 

27:12-14. Instead of two stories and a mezzanine, there will be 

three stories. Id. at 27:15-28:16. The new building will differ 

from the old in other ways. It will use drywall instead of lath 

and plaster. Id. at 29:1-3. Further, it will use a concrete mat 

slab, which means there will not be any redwood base beneath it, 

id. at 29:4-16, and there will be no redwood sheathing on the 

inside of the exterior or interior walls, Depo. Desig., Ex. A at 

113:15-20. The new building will also have steel framing, which 

Building 2 did not have. Id. at 112:23-25, 113:22-25. Using the 

steel will "deliver the same sense of quality, the esthetics, 

sound deadening, all those things." Id. at 114:5-7. 

// 

// 

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II. Contract 

 Nationwide and Globe entered into a commercial property 

insurance contract for the period January 1, 2006 to January 1, 

2007. JPCS at 2. Under the Commercial Property Statement of 

Values, the contract contains a blanketed $4,501,700 limit. Id. 

Buildings 1 and 2 together are assigned a $1,775,300 value. 

Building 3 is assigned a $98,200 value. Id. The general coverage 

provisions are as follows: 

A. Coverage 

We [Nationwide] will pay for direct physical loss of or 

damage to Covered Property at the premises described in the 

Declarations caused by or resulting from any Covered Cause of 

Loss. 

1. Covered Property 

Covered Property, as used in this Coverage Part, means the 

type of property described in this Section A.1., and 

limited in A.2., Property Not Covered, if a Limit of 

Insurance is shown in the declarations for that type of 

property. 

a. Building, meaning the building or structure described in 

the Declarations . . . 

. . . 

2. Property Not Covered 

Covered Property does not include: 

. . . 

d. [W]alks, patios or other paved surfaces; 

. . . 

f. The cost of excavations, grading, backfilling or 

filling; 

g. Foundations of buildings, structures, machinery or 

boilers if their foundations are below: 

 1) The lowest basement floor; or 

 2) The surface of the ground, if there is no basement; 

h. Land (including the land on which the property is 

located) 

. . . 

m. Underground pipes, flues or drains; 

. . . 

Id. at 2-3. The contract provides that Nationwide "will determine 

the value of the Covered Property in the event of loss or damage" 

at "actual cash value." JPCS at 3. "Actual Cash Value" is 

defined as follows: 

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Actual cash value is calculated as the amount it would cost 

to repair or replace Covered Property, at the time of loss or 

damage, with material of the like kind and quality, subject 

to a deduction for deterioration, depreciation and 

obsolescence. Actual cash value applies to valuation of 

Covered Property regardless of whether the property has 

sustained partial or total loss or damage. 

 Globe purchased optional replacement cost coverage under the 

insurance contract. Id. at 2. The contract states: 

G. Optional Coverages 

If shown as applicable in the Declarations, the following 

Optional Coverages apply separately to each item. 

. . . 

3. Replacement Cost 

a. Replacement Cost (without deduction for depreciation) 

replaces Actual Cash Value in the Loss Condition, 

Valuation, of this Coverage Form. . . . d. We will not pay on a replacement cost basis for any loss 

or damage: 

(1) Until the lost or damaged property is actually 

repaired or replaced; and 

(2) Unless the repairs or replacement are made as soon 

as reasonably possible after the loss or damage. 

With respect to tenants' improvements and betterments, 

the following also apply: 

. . . 

(4) We will not pay for loss or damage to tenants' 

improvements and betterments if others pay for 

repairs or replacement. 

e. We will not pay more for loss or damage on a replacement 

cost basis than the least of (1), (2) or (3), subject to 

f. below: 

(1) The Limit of Insurance Applicable to the lost or 

damaged property; 

(2) The cost to replace the lost or damaged property 

with other property: 

a. Of comparable material and quality; and 

b. Used for the same purpose; or 

(3) The amount actually spent that is necessary to 

repair or replace the lost or damaged property. 

f. The cost to repair or replacement does not include the 

increased cost attributable to enforcement of any 

ordinance or law regulating the construction, use or 

repair of any property. 

Id. at 3-4.

The contract includes coverage for increased costs of 

construction in the Additional Coverages provisions: 

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e. Increased Cost of Construction 

(1) This Additional Coverage applies only to buildings 

to which the Replacement Cost Optional Coverage applies. 

(2) In the event of damage by a Covered Cause of Loss 

to a building that is Covered Property, we will pay the 

increased cost incurred to comply with enforcement of an 

ordinance or law in the course of repair, rebuilding or 

replacement of damaged parts of that property, subject 

to the limitations stated in e.(3) through e.(9) of this 

Additional Coverage. 

(3) The ordinance or law referred to in e.(2) of this 

Additional Coverage is an ordinance or law that 

regulates the construction or repair of buildings or 

establishes zoning or land use requirements at the 

described premises, and is in force at the time of loss. . . . (6) . . . If a damaged building is covered under a 

blanket Limit of Insurance which applies to more than 

one building or item of property, . . . the most we 

will pay under this Additional Coverage, for the 

damaged building, is the lesser of $10,000 or 5% 

times the value of the damaged building as of the 

time of loss times the applicable coinsurance 

percentage. 

This amount payable under this Additional Coverage is 

additional insurance. 

(7) With respect to this additional coverage; 

(a) We will not pay for the Increased Cost of 

Construction: 

i. Until the property is actually repaired or 

replaced, at the same or another premises; and 

ii. Unless the repairs or replacement are 

made as soon as reasonably possible after the 

loss or damage, not to exceed two years. We 

may extend this period in writing during the 

two years. 

. . . 

(8) This Additional Coverage is not subject to the terms 

of the Ordinance or Law Exclusion, to the extent that 

such Exclusion would conflict with the provisions of 

this Additional Coverage. 

Id. at 5-6.

To date, Nationwide has paid $1,609,242 toward repairing 

Buildings 1 and 3 and for the actual cash value of Building 2. 

Id. at 6. Nationwide paid Globe an additional $93,347 for 

demolition, debris removal, fencing and security, bringing the 

total payment to $1,702,589. Id. It held back $92,035 from its 

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payment to Globe pursuant to contract provisions that require 

actual replacement of the building. Id.

STANDARD OF REVIEW AND CONCLUSIONS OF LAW 

"The burden is on an insured to establish that the occurrence 

forming the basis of its claim is within the basic scope of 

insurance coverage." Aydin Corp. v. First State Ins. Co., 18 Cal. 

4th 1183, 1188 (1998). However, an insurer bears the burden of 

showing that a policy exception or exclusion applies. See, e.g., 

Clemmer v. Hartford Ins. Co., 22 Cal. 3d 865, 880 (1978) (stating 

that the "burden of bringing itself within any exculpatory clause 

contained in the policy is on the insurer"); Prichard v. Liberty 

Mut. Ins. Co., 84 Cal. App. 4th 890, 910 (2000) ("The insurer has 

the burden of establishing the applicability of an exclusion."). 

"Replacement cost is the estimated cost to construct, at 

current prices, a building with utility equivalent to the building 

being appraised, using modern materials and current standards, 

design, and layout." Fire Ins. Exchange v. Super. Ct., 116 Cal. 

App. 4th 446, 468 (2004). 

FINDINGS OF FACT 

 The parties dispute several costs related to each of the 

three buildings. 

I. Building 1 

On December 10, 2007, Globe submitted to Nationwide a claim 

for $373,928 for repairs it had completed on Building 1. Ex. 1. 

The parties agree that $35,497 of the $373,928 was not covered 

under the Contract. Globe also claims that it is owed $86,690 for 

Robert Maxon's work as a Project Manager. The Court discusses 

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each disputed cost enumerated in the parties' Disputed Items Chart 

(Chart) below. Docket No. 102. 

a. Gas Relocation Service 

Globe submitted for reimbursement a cost of $2,824 for "GAS 

SERVICE RELOCATION/REARRANGEMENT COSTS." Ex. 1 at 3. Pacific Gas 

& Electric's invoice for this service was dated May 11, 2007. Id. 

The Court finds that this service relates to Unit 535, within 

Building 1, which had gas lines in it before the fire. Ex. 1 at 

64; Transcript at 364:12-16. The fire destroyed that gas line. 

Id. at 365:3-12. Although Nationwide argues that this cost 

related to adding a gas line to a different unit, the Court finds 

Globe's evidence and testimony more clear and credible. 

The Court finds that Globe is entitled to the cost of the gas 

relocation service because the loss of gas to Unit 535 was caused 

by the fire. See JPCS at 2. 

b. Gas Line Installation 

Globe had a gas line installed that serviced Building 1 and 

Building 3. The installation cost $5,666; that cost is divided in 

half between the two buildings. See Ex. 1 at 79. The work 

associated with this cost was two-thirds trenching and one-third 

gas piping installation. Transcript at 13:6-14:6; Ex. 1 at 80-82. 

The Court finds that Globe is not entitled to two-thirds of 

this amount because trenching, a form of excavation, is not 

covered under the contract. See JPCS at 3. It is, however, 

entitled to $944, the other third of the $2,788 attributable to 

Building 1. 

// 

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c. Re-Route Electrical 

The fire destroyed electrical service to Building 1. 

Transcript at 225:18-21. The parties stipulated at trial that 

much of the repair cost is excluded as excavation. Id. at 232:20-

25. The remaining costs, amounting to $1,287, were for materials, 

namely underground piping, fittings, couplers, connectors and sand 

backfill. See id. at 233:3-11. These costs fall under the 

coverage exceptions for backfilling and underground pipes. See 

JPCS at 3. Therefore, Globe is not entitled to any of these 

costs. 

d. Power from Transformer 

Before the fire, Buildings 1 and 3 combined received 600 amps 

of electrical power. Transcript at 15:7-16, 225:22-226:3. The 

Court finds the evidence supporting Nationwide's theory that 

Building 1 and Building 3 had 300 amps combined before the fire 

less credible than Globe's. Because the fire destroyed electrical 

service to Buildings 1 and 3, Kneaper Electric installed a 600-amp 

pull can, a 200-amp meter and a 100-amp meter that would service 

both buildings. Ex. 1 at 83; Transcript at 14:20-25, 15:5-6. 

Kneaper's services cost $12,804. Ex. 1 at 83. 

Because Kneaper replaced property that was damaged, rather 

than adding increased electrical power, Globe is entitled to this 

money under the contract. See JPCS at 2. 

e. Masonry Sealer 

Globe spent $116 on masonry sealer for the interior brick. 

Transcript at 16:13-19; Ex. 1 at 126. The masonry sealer was 

applied to the brick to stop the efflorescence caused by excessive 

moisture following the fire. Transcript at 16:20-25, 60:11-25. 

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The Court finds that the masonry sealer was a necessary 

repair cost. See JPCS at 2, 4. Globe is entitled to $116. 

f. Demolition of Abandoned Gas and Water Lines 

For $252, Johnston Construction performed demolition of gas 

lines that were under Building 1 and that served Building 2. 

Transcript at 215:20-23; Chart. These lines were hanging from the 

crawl space, Transcript at 216:13-17, and were in the way of 

electrical work, id. at 216:17-18, 222:1-11. Using the crawl 

space was the most efficient method for the electrical rewiring. 

Id. at 222:8-11.

The Court finds that this cost was not necessary and 

therefore is not covered under the contract. Globe is not 

entitled to this money. 

g. Repairs for Roof Ponding 

A ponding problem occurred on the roof of Building 1 as a 

result of the new parapet wall and cricket system. Ex. 4 at 303. 

Building 1's roof had only limited ponding problems before the 

fire because it was an essentially flat roof with a slope. 

Transcript at 280:19-281:6. The parapet that had existed was 

damaged and destroyed by the fire. Id. at 68:22-24. 

Reconstruction of a parapet wall, particularly its bracing, 

blocked drainage from the roof. Transcript at 66:14-18, 67:2-6, 

69:2-5, 217:2-5. The ponding was so serious it caused water to go 

through skylights into Building 2. Id. at 63:12-64:14. The cost 

of these repairs was $5,965. Chart. 

The Court finds that the ponding problem was not a result of 

the fire. Therefore, this cost is not covered under the contract, 

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JPCS at 2, and Globe is not entitled to reimbursement for these 

repairs. 

h. Demolish and Remove Brick Footing 

Johnston Construction demolished and removed brick footing 

from Building 2 and charged $1,392. Ex. 1 at 146. This footing 

was very close to Building 1's east wall; removing it was required 

to perform repairs to the 2x6 laminated firewall. Transcript at 

211:10-18. Nationwide argues that the brick footing must have 

extended below the ground and, as a result, its removal required 

excavation. The Court is not persuaded. 

The Court finds that Nationwide did not satisfy its burden of 

showing that the excavation exception applies. Thus, Globe is 

entitled to this $1,392. 

i. Painting Expense 

In 2002, Building 1 had special interior painting with a lime 

peel texture and a light finish. Transcript at 212:8-12. The 

Court finds that special texturing existed because it finds Pete 

Johnston, Globe's general contractor, credible. The 2002 finish 

required at least one coat of primer and two finish coats, all 

sprayed and back rolled. Id. at 212:13-18. After the fire, the 

areas to be painted required much preparation, including cleaning, 

sanding and caulking. Id. at 370:14-18. Globe paid $57,236, the 

amount charged for the painting. Id. at 270:15-17, 372:19-21. 

Nationwide estimated that the painting should have cost $25,248. 

Id. at 270:18-20; Chart. 

Because repainting these interior walls required the special 

treatment described by Globe, the Court finds that this expense 

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was necessary. Globe is entitled to reimbursement for the money 

it paid. 

j. Management Fee 

Plaintiff Maxon claims a management fee in the amount of 

$86,690. Transcript at 69:21-24. Maxon's compensation as project 

manager for Globe was part of his normal salary as an employee of 

Globe, Depo. Desig., Ex. A at 18:11-14, and Globe incurred no 

additional costs for Maxon's work as project manager following the 

fire, id. at 184:4-8. 

 The Court finds that no management fee was "actually spent" 

that was "necessary to repair" the damaged property. JPCS at 4. 

Globe is not entitled to this money. 

 In sum, Globe is entitled to $329,038 in reimbursement for 

repairing Building 1. This sum is equal to the amount claimed 

($373,928) minus the agreed-upon non-covered costs ($35,497) minus 

the disputed costs to which Globe is not entitled ($9,3933). 

II. Building 2 

 Building 2, which was destroyed in the fire, has not yet been 

rebuilt. Instead, Globe and Nationwide propose competing bids. 

Nationwide hired Charles Allen, who prepared bids to reconstruct 

Building 2. Allen Dec. at 2:13-15. Allen was willing to perform 

any work at the prices listed in his bids. Id. at 2:16-18. 

Nationwide's numbers on the Chart are equal to Allen's bid numbers 

multiplied by 1.2 to account for ten percent profit and ten 

 3 As discussed above, this number includes $1,889 paid for 

gas line installation, $1,287 paid for rerouting electrical, $252 

paid for demolishing a gas and water line and $5,965 for repairing 

the roof ponding. 

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percent overhead. Transcript at 152:19-24, 294:15-18. Globe 

hired Les Charter to provide a cost estimate to reconstruct 

Building 2. Charter Dec. ¶ 6. The parties agreed to apply a 

multiplier of 1.088 to Charter's estimates so that Charter's 

profit and overhead percentages align with Allen's. Transcript at 

153:5-10. The parties do not dispute that several costs amounting 

to $519,418 are due. Chart. The Court rules on the disputed 

costs below. 

a. Architecture/Engineering 

Globe's estimate is $295,509. Ex. 9 at 285. This number is 

twelve percent of the total bid. Transcript at 156:8-11, 186:22-

24. Charter testified that twelve percent is standard in the 

United States. Id. at 187:2-4. However, this percentage does not 

account for the difference in work required to rebuild a destroyed 

building rather than to build a new building. Id. at 157:10-13. 

Allen's bid for Nationwide is $63,100. Allen Dec. at ALLCO 230.4

The Court finds that Nationwide's price of $63,100 is 

appropriate under the contract's definition of replacement cost. 

See JPCS at 3.

b. Excavation, Fill, Demolition 

Globe's estimate lists a price of $27,125. The parties agree 

that this estimate breaks down as follows: $2,851 for gravel 

excavation, $2,685 for demolition and disposal of the perimeter 

foundation and $21,600 for demolition and disposal of the slab and 

 4 Allen's original bid for this item was $83,100. However, 

that bid included $20,000 for geotechnical work, a cost the 

parties no longer dispute. See Chart. Charter's original bid 

separated geotechnical work from this cost. Ex. 9 at 285. 

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footings. Globe now agrees that it is not entitled to $2,851 for 

gravel excavation, so its estimate is $24,285. Nationwide Br. at 

5. Nationwide's bid price is $17,762 for demolition of the slab 

alone. Allen Dec. at ALLCO 184.5

The Court finds that Nationwide did not satisfy its burden to 

show that demolition and disposal of the perimeter foundation 

constitutes excavation. Globe is entitled to the $2,685. 

However, the Court finds that Globe's higher price for demolition 

of the slab is not necessary. See JPCS at 3. Thus, Nationwide's 

price of $17,762 is appropriate. In sum, Globe is entitled to 

$20,447 for this cost.

c. Utilities Hook-Up 

Globe estimates that reconnecting power to Building 2 would 

cost $81,132. See Ex. 9 at 285 (before 1.088 multiplier); 

Transcript at 295:17-23. This estimate is based on two premises: 

that Building 2 originally had 400 amps of power and that Pacific 

Gas & Electric requires Globe to connect at a new power source 

that did not exist before the fire. Globe Br. at 9; Reply Br. at 

5-6. $38,175 of this sum is related to reconnecting to a new 

power source. Ex. 9 at 291. Nationwide estimates that the 

utilities hook-up would cost $11,736. Transcript at 295:9-15; 

Allen Dec. at ALLCO 185 (before 1.2 multiplier). Its estimate is 

based on the premise that Building 2 had only 200 amps of power 

before the fire and that an undamaged power source is available. 

Transcript at 298:12-23. 

 5 The amount listed is $14,802. This is before Allen's 

multiplier of 1.2 for profit and overhead was applied. 

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Regarding the amperage, the Court finds that Building 2 

originally had 400 amps, meaning no portion of Globe's estimate 

results from amperage additions. Id. at 229:9-10. The Court 

finds Russell Whittaker, the electrician who worked on Buildings 1 

and 3 after the fire, more credible than Allen on the issue of 

amperage.

Regarding the availability of the power source, the Court 

finds that Globe failed to meet its burden to prove that 

connecting to a new power source was "necessary" for replacement. 

JPCS at 3. Because Globe is not entitled to this portion of its 

estimate amount, it is entitled to $42,957 for this cost. 

d. Brick at Entry 

Globe estimates that this cost is $4,837. Ex. 9 at 285 

(before 1.088 multiplier). Nationwide estimates that this cost is 

$2,479. Allen Dec. at ALLCO 227 (before 1.2 multiplier). 

Globe did not carry its burden to prove that its higher cost 

is necessary, particularly in light of Allen's testimony that he 

would be willing to do this work at his bid price. See JPCS at 3; 

Allen Dec. at 2:16-18. Globe is entitled to $2,479 for this cost. 

e. Steel Vault and Door 

Globe's estimate for this cost is $25,509: $17,743 for the 

steel vault and $7,766 for the vault door. Ex. 9 at 285, 296 

(before 1.088 multiplier). Nationwide's estimate is $17,208. 

Allen Dec. at ALLCO 210 (before 1.2 multiplier). Nationwide's 

estimate is based on a door size smaller than Globe's. Compare 

Ex. 9 at 296 to ALLCO 210. 

Globe did not carry its burden to prove that its higher 

estimated cost is necessary. See JPCS at 3. Allen's estimate 

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contained notes for measurements, explaining that he had 

determined that those measurements were the maximum size possible 

based on the foundation measured at the site, and on a floor plan 

and photos. Allen Dec. at ALLCO 210. Charter, on the other hand, 

got his dimensions from discussions and pictures. He does not 

recall more specifically how he calculated the dimension of the 

door. Transcript at 163:25-164:7. Therefore, Globe is entitled 

to Allen's estimate of $17,208 for this cost. 

f. Rough Lumber 

Globe estimates $588,696 for this cost. Ex. 9 at 285 (before 

1.088 multiplier). This estimate includes substantial amounts of 

old growth redwood. See id. at 300-05. Nationwide estimates 

$163,370. Chart. 

The Court finds that old growth redwood is not necessary to 

replace Building 2 with a building of equivalent utility, using 

modern materials and current standards, design and layout. See 

Depo. Desig., Ex. A at 114:2-8 ("my consultants say that the cost 

to do that out of wood and comparable materials and for a modern 

day structure, it can't be done. So we're using a steel and the 

componentry there to deliver the same sense of quality, the 

esthetics, sound deadening, all those things, we can achieve with 

a steel structure much more economically."). Therefore, Globe is 

entitled to Allen's bid of $163,370 for rough lumber. 

g. Redwood Floor Under Concrete Slab 

Globe estimates that it needs $62,872 for this cost. Ex. 9 

at 285 (before 1.088 multiplier). 

The Court finds that Globe did not carry its burden to prove 

that there was a redwood floor under the concrete slab that 

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warrants replacement. See JPCS at 3. Globe is entitled to no 

money for this cost. 

h. 1x8 Redwood Shiplap Siding 

Globe estimates it needs $49,903 for 1x8 redwood shiplap 

siding on three exterior walls. Ex. 9 at 285 (before 1.088 

multiplier). Before the fire, there had been exposed redwood 

shiplap on the north side of the building, Transcript at 84:22-

85:1, and redwood shiplap siding underneath a stucco exterior on 

the south and west walls, id. at 85:2-4. Globe's bid includes all 

three walls and was priced at $8.88 per square foot. Ex. 9 at 285 

(before 1.088 multiplier). Nationwide's bid is for $9,939, based 

on a $5.93 per square foot rate, and includes redwood shiplap only 

for the north wall. Allen Dec. at ALLCO 226 (before 1.2 

multiplier). 

The Court finds that unexposed redwood is not included within 

the measure of replacement cost under the contract. See JPCS at 

4. Further, Globe did not carry its burden to prove that its 

higher price per square foot was necessary or of comparable 

quality to the pre-fire exposed redwood shiplap. Therefore, Globe 

is entitled only to Nationwide's bid of $9,939. 

i. Main Stairway North End 

Globe estimates that it would take $24,178 to reconstruct 

this stairway. Ex. 9 at 285 (before 1.088 multiplier). Charter 

based that estimate on eyewitness accounts of the size and 

finishes. Transcript at 172:24-173:2. Nationwide's bid is 

$18,120. Allen Dec. at ALLCO 191-92 (before 1.2 multiplier). 

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Globe failed to carry its burden to prove that its higher 

cost is necessary for replacement. Globe is entitled only to 

$18,120 for the stairway. 

j. Open Web Pitched Trusses 

Globe estimates that it will need $25,629 for open web 

pitched trusses. Ex. 9 at 285 (before 1.088 multiplier). 

Nationwide estimated that they would cost $21,188. Chart; 

Nationwide Br. at 16. Nationwide points to no evidence in the 

record that explains its amount. 

Globe is entitled to the full amount of its estimate of 

$25,629. 

k. Rough Hardware 

Globe estimates that it will need $17,660 for rough hardware. 

Ex. 9 at 285 (before 1.088 multiplier). Charter typically uses a 

five percent measure but, where materials are more expensive, he 

lowers that number to three percent, which is what he did here. 

Transcript at 173:21-174:3. Nationwide estimates that it would 

cost $10,565. Chart; Nationwide Br. at 17. Nationwide points to 

no evidence in the record that explains its amount. 

Globe is entitled to the full amount of its estimate of 

$17,660.

l. Doors and Frames 

Globe estimates $50,909 for doors and frames. Ex. 9 at 285 

(before 1.088 multiplier). Charter's bid is based on prior 

projects he had worked on. Transcript at 176:12-18. He estimates 

that installing the doors would take eight hours per door, at 

forty dollars per hour. Id. at 177:17-178:7. For Nationwide, 

Allen estimates $19,238 for the doors and frames. Chart. Allen's 

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estimate is based on pre-hung, less expensive doors that, he 

estimates, take three hours to install. Transcript at 333:7-20; 

Allen Dec. at 10:22-26. 

Globe failed to carry its burden to prove that its higher 

cost is necessary for replacement. Globe is entitled to 

Nationwide's estimate of $19,238. 

m. Windows Custom Redwood 

Globe's estimate for this cost is $70,358. Ex. 9 at 286 

(before 1.088 multiplier). Charter received this price from a 

subcontractor who would replicate the window frames in 

photographs. Nationwide's estimate is $40,615. Chart. Allen's 

bid also relies on the photographs. Transcript at 334:21-24. 

Allen's testimony is credible because he was willing to perform 

the work for his bid price. See Allen Dec. at 2:16-18

Globe failed to carry its burden to prove that its higher 

cost is necessary for replacement. Globe is entitled only to 

Nationwide's estimate of $40,615. 

n. Skylights 

Globe's estimate for this cost is $3,869. Ex. 9 at 286 

(before 1.088 multiplier). Nationwide's is $1,968. Allen Dec. at 

ALLCO 228 (before 1.2 multiplier). 

Globe failed to carry its burden to prove that its higher 

cost is necessary for replacement. Globe is entitled to 

Nationwide's estimate of $1,968. 

o. Lath and Plaster 

Globe's estimate for this cost is $191,488. Ex. 9 at 286 

(before 1.088 multiplier). This estimate is based on the premise 

that 19,800 square feet require lath and plaster, id., at a price 

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of slightly more than $9.67 per square foot after the 1.088 

multiplier. Nationwide's estimate is $86,016, which includes 

$65,520 for 12,847 square feet of lath and plaster, Chart, and 

$20,496 for 8,867 square feet of sheetrock and texturing, 

Nationwide Br. at 19 & n.5. This amounts to slightly more than 

$5.10 per square foot after the 1.2 multiplier. The Court finds 

that 19,800 square feet of lath and plaster is required; 

Nationwide presented no evidence at trial explaining why sheetrock 

would suffice to replace lath and plaster in certain areas under 

the replacement cost measure. 

Globe failed to carry its burden to prove that its higher 

cost per square foot of lath and plaster is necessary for 

replacement purposes. Globe is entitled to Nationwide's postmultiplier pricing for 19,800 square feet, which totals $100,980. 

p. Sport Flooring 

Globe estimates that replacing a sprung dance floor will cost 

$86,188. Ex. 9 at 286 (before 1.088 multiplier). The sprung 

dance floor covered 3,516 square feet of Building 2's second 

floor. Ex. 9 at 313. The price per square foot is $24.513 after 

the 1.088 multiplier. Nationwide's estimate is $18,748 for sport 

flooring for the 934 square feet more recently used as a martial 

arts studio. Chart; Docket No. 82-1. 

Following a fire in 1976, the sprung dance floor was covered 

in plywood. Transcript at 138:7-9. Immediately before the 2006 

fire, Building 2's second floor had been used as a martial arts 

studio. Id. at 41:14-21. There was a partition between the 

action mat and the seating area, which was carpeted. Id. at 42:6-

16. On the other side of the martial arts studio was a storage 

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area. Id. at 42:17-25, 116:3-6. That wall had been there for at 

least fifteen years. Id. at 43:1-7. See also Ex. 56 at 7. 

Globe failed to meet its burden to prove that all the square 

footage of sprung dance floor is required to use it for the same 

purpose as before the fire. See JPCS at 3. Globe is entitled to 

934 square feet of sprung dance floor, Chart, at Globe's square 

footage cost, or $22,895. 

q. Resilient Floor 

Globe's estimate for this cost is $5,241. Ex. 9 at 286 

(before 1.088 multiplier). Nationwide's is $3,535. 

Because Nationwide presented no evidence at trial supporting 

its calculation, the Court finds that Globe is entitled to its 

estimate of $5,241. 

r. Fiber Reinforced Plastic Panels 

Globe estimates that $7,031 will be required to replace 1,454 

square feet of Fiber Reinforced Plastic (FRP) panels that existed 

in the butcher area in Building 2. Ex. 9 at 286 (before 1.088 

multiplier). Nationwide estimates that $3,365 will be required to 

replace 1,304 square feet of FRP. Allen Dec. at ALLCO 205, 212, 

214, 218, 219 (before 1.2 multiplier). 

Globe failed to carry its burden to prove that its higher 

cost is necessary for replacement. Globe is entitled to 

Nationwide's price of $3,365. 

s. Plumbing, Sinks, Floor Drain, French Drain, Restrooms 

Globe's estimate is $84,622. Ex. 9 at 286 (before 1.088 

multiplier), 323. Nationwide's estimate is $74,186, including 

$7,920 for underground sewer piping, which Nationwide argues is 

not covered. Nationwide Br. at 21.

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The Court finds that Globe is entitled to the full amount of 

its estimate: $84,622. Nationwide has not presented evidence that 

undercuts the necessity of any of the line items in Globe's 

estimate. 

t. Electrical 

Globe's revised estimate is lower than the one in its 

original estimation chart. Globe's price of nine dollars per 

square foot remains the same, see Ex. 9 at 324, but it revises its 

square footage to 9,700 square feet. The Court finds that Globe's 

estimate, based on this information, is $94,982. Nationwide's 

estimate is $63,283. Chart; Allen Dec.

 The Court finds that Globe is entitled to its revised 

estimate of $94,982. It is not persuaded otherwise by Allen's 

general testimony regarding building types. 

u. Site Fencing 

Globe estimates that it needs $9,450 for temporary site 

fencing. Ex. 6 at 21-22. Fencing is costing Globe $150 per 

month. See id. Nationwide's bid lists security fencing for the 

first eight months of work, but lists no price. Allen Dec. at 

ALLCO 184. 

The Court finds that Globe is entitled to eight months of 

fencing at $150 per month, or $1,200. Globe has not shown that 

fencing in excess of eight months is necessary to replace the 

building. 

v. Builder's Risk Insurance 

Nationwide's numbers, based on Allen's bids, include ten 

percent for overhead. This overhead amount includes insurance. 

Transcript at 344:11-16. Because Globe applied a multiplier to 

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Charter's estimates to match Nationwide's estimates, the Court 

finds that the multipliers added and used throughout trial include 

this form of insurance. For this reason, Globe is not entitled to 

any additional money. 

w. General Liability Insurance 

The Court finds that the multipliers used by the parties to 

align their estimates for overhead and profit purposes include 

this form of insurance. See Transcript at 344:11-16. For this 

reason, Globe is not entitled to any additional money.

x. Meat Lockers and Freezers 

There is no mention of meat lockers and freezers in any of 

the direct testimony submitted to the Court or in any of the pretrial papers, such as the disputed items chart submitted before 

trial. Nor is there an entry for them in Charter's bid. See Ex. 

9. Because Globe did not raise this issue in its direct case, the 

Court finds that it may not do so now. Globe is not entitled to 

any money for this item. 

y. Depreciation Holdback 

The parties agree that Globe will be entitled to a 

depreciation holdback of $92,035 once the building is completed. 

In sum, based on the Court's resolution of each of the 

disputed items, Globe is entitled to $1,275,433 for Building 2. 

This sum does not include the holdback that is not yet owed. 

III. Building 3 

a. Roof 

Globe paid $13,966 to Darin Thomsen Construction for reroofing Building 3. Ex. 2 at 160. Because the Court finds 

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Thomsen to be credible, it also finds that roof replacement was 

necessary. Globe is entitled to the full amount it paid. 

b. Gas Line Installation 

This cost is the other half of the gas line installation cost 

associated with both Building 1 and Building 3. As the Court 

found for Building 1, two-thirds of this amount is not owed 

because trenching is not covered under the contract. See JPCS at 

3. Globe is, however, entitled to $944, the other third.

c. Project Management 

 As with Building 1, the Court finds that no management fee 

was "actually spent" that was "necessary to repair" the damaged 

property. JPCS at 4. Globe is not entitled to this money. 

 In sum, Globe is entitled to $14,910 for Building 3 based on 

the Court's findings concerning the parties' disputed costs. 

IV. Pre-judgment Interest 

The Court concludes that damages for a breach of an 

obligation to pay money "is deemed to be the amount due by the 

terms of the obligation, with interest thereon." Cal. Civ. Code 

§ 3302; see also id. § 3287(a). The time for interest begins to 

run when the defendant knew the amount owed or could have computed 

it from reasonably available information. Chesapeake Indus., Inc. 

v. Togova Enters., Inc., 149 Cal. App. 3d 901, 907. Where an 

insurer contests its obligation to pay or the amount it owes, 

interest is calculated from the date the insurer was obliged to 

pay under its policy. See Oil Base, Inc. v. Transp. Indem. Co., 

148 Cal. App. 2d 490, 492 (1957). 

The Court finds that Globe is entitled to pre-judgment 

interest of ten percent per annum on the unpaid amounts for 

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Buildings 1 and 3 from December 10, 2007 and on the unpaid amounts 

for Building 2 from January 31, 2013. Cal. Civ. Code § 3289(b). 

CONCLUSION 

 Globe is entitled to $329,038 for the disputed costs 

attributable to Building 1, plus prejudgment interest of ten 

percent per annum from December 10, 2007. Globe is entitled to 

$1,275,433 for Building 2, which includes the costs listed in the 

Chart as undisputed, plus prejudgment interest of ten percent per 

annum from January 31, 2013 on the amount Nationwide has not yet 

paid. It does not include the depreciation holdback of $92,035 to 

which the parties agree Globe will be entitled once the building 

is completed. Globe is entitled to $14,910 for Building 3, plus 

prejudgment interest of ten percent per annum from December 10, 

2007. 

 Within fourteen days of this order, the parties shall submit 

a joint proposed judgment that clearly states in dollar amounts 

how much money Nationwide owes Globe, by building, based on the 

findings in this order. The dates and rates of interest should be 

stated. The judgment should also account for the $92,035 holdback 

amount owed. If the parties cannot agree, they must submit 

separate proposed judgments with an explanation of the 

differences. 

IT IS SO ORDERED. 

Dated: August 4, 2016 CLAUDIA WILKEN 

United States District Judge

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