N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
KASPER SM OKE KASTLE, LLC , a n Ariz ona lim ite d lia

bility c om pa ny , Pla i ntiff-Appe lla

nt,
v. ATLANTIC C ASUALTY INSUR ANC E C OM PANY, a North C arolina c om pa ny , De fe nda n t-Appe l le e . No. 20-15296 D.C . No. 2:18-c v-00950-JAT
M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the Distric t of Ariz o na Dav id G. C am

pbe ll, Distric t Judge , Pre siding KASPER SM OKE KASTLE, LLC , a n Ariz ona lim ite d lia

bility c om pa ny , Pla i ntiff-Appe lle e , v. ATLANTIC C ASUALTY INSUR ANC E C OM PANY, a North C arolina c om pa ny , De fe nda n t-Appe l la

nt. No. 20-15797

D.C . No. 2:18-c v-00950-JAT



# FIL ED
MAY27 2021 M OLLY C. DW Y E R, CLERK U. S. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.Appe a l from the Unite d

Stat e s Distric t C ourt for the Distric t of Ariz o na Jam e s A. Te ilborg, Distric t Judge , Pre siding Argue d a nd Subm itte d M ay 4, 2021 Se attle , W a s hington B e fore : C HR ISTEN an d B ENNETT, C irc uit Judge s , a nd FR IEDM AN, ** Distric t Judge
. This c a se arise s from c la im s for bre a c h of a

n insura nc e c ontra c t a

nd ba d fa ith. A fire dam a ge d pla intiff Ka spe r Sm oke Ka stle , LLC ’ s (Ka spe r) c onve nie nc e store in Ariz ona . K a spe r sue d its insura nc e c a rrie r, Atla ntic C a s ua lty

Insura nc e C om pa ny (AC IC ), ove r a

disa gre e m e n t a

bout theva lue of Ka spe r’ s loss. Sitting in dive rsity , the distric t c ourt gra nte d sum m ary judgm e nt for AC IC on Ka spe r’ s ba d fa ith c l a im
. At tria l , a

jury awarde d Ka spe r $94,013.59 in da m a g e s on its bre a c h of
c ontra c t c la im
. Ka spe r a

ppe a ls, c onte n ding thedistric t c ourt e rre d by granting
sum m ary judgm e nt for AC IC on Ka spe r’ s ba d fa ith c la im . AC IC c ross-a ppe a ls,
c onte nding thedistric t c o urt a buse d its disc re tion by

de ny ing AC IC ’ s m otion in lim ine , a nd its re ne we d obje c tion a t tria l. B oth involve d

the distric t c ourt’ s de te rm i nations not to exc lude e vide nc e tha t Ka spe r re ta ine d posse ssion of som e of

* * The Honora

ble Pa ul L. Frie dm an, Unite d State s Distric t Judge for the Distric t of C olum

bia , sitting by

de signa t ion. 2the p rope rty , a n d tha t the prope rty ha d

be e n insuffic i e ntly c le ane d. W e have jurisdic tion pursua

n t to 28 U.S.C . § 1291, a

nd we a ffirm
. 1 1. W e re vie w de novo a distric t c o urt’ s de c ision to gra nt sum m ary judgm e nt. Branc h Bank

ing &Tr. C

o. v . D.M.S.I., LLC, 871 F.3d 751, 759 (9th C ir. 2017). Sum

m a ry judgm e nt is a

ppropria te whe n “ the re is no ge n

uine disputea s to a ny m a te ria l fa c t a

nd the m ova

nt is e ntitle d to judgm e nt a s a m atte r of la

w.” Fe d. R . C iv. P. 56(a ). The pa n e l vie ws the e v ide nc e in the light m ost fa v ora ble to the n on-m oving pa

rty . Frudde n v . Pilling , 877 F.3d 821, 828 (9th C ir. 2017). The distric t c ourt did not err by granting sum

m ary judgm e nt to AC IC on Ka spe r’ s ba d fa ith c la im . Ka spe r fa ile d to show AC IC “ k ne w or wa s c onsc ious of the fa c t tha

t its c onduc t

wa s unre a sona

ble ” a s re quire d by

Ariz ona la

w. Zilisc h v

. State Farm Mut. Auto. Ins. C

o . , 995 P.2d 276, 280 (Ariz
. 2000); se e also N arde lli
v . Me t ro. Grp. Prop. &

C as. Ins. , 277 P.3d 789, 794–95 (Ariz . C t. App. 2012). AC IC re c om

m e n de d thre e a djuste rs to Ka s pe r, and Ka spe r se l e c te d one of the m . The e vide nc e doe s not show tha t Ka spe r’ s first a djuste r, R e solution, wa s bia se d or othe rwise im

prope rly a ffilia te d with AC IC
. Afte r re c e iving thea djuste r’ s
va luation, AC IC m a de an inquiry into thea d

juste r’ s m e thodology be fore pa y ing

1 The pa rtie s a re fam i lia r with the fa c ts, a

nd we re c ount the m

only a s ne c e ssa ry to re solve the issue s on a ppe a l. 3the a djuste r’ s va luation to Ka spe r in full. Ka spe r obje c te d to R e solution’ s

va luation a

nd hire d a se c ond a djuste r, but AC IC re a sona bly de te rm ine d tha

t the
se c o nd a d juste r’ s va luation wa s too high be c a use the se c ond a djuste r did not inde pe nde ntly

a p pra i se the va lue of the prope rty , re ly ing inste a d on Ka spe r’ s sta te m e nts c onc e rning the prope rty ’ s re ta i l va lue
. 2. On the c ross-a

p p e a l, we re vie w for a

buse of disc re tion thedistric t
c ourt’ s de c ision to e xc lude e vide nc e for fa ilure to tim e ly disc lose , a

n d a showing of pre judic e is re quire d for re ve rsa l. Ollie r v . Sw e e tw ate r Union High Sch. Dist. , 768 F.3d 843, 859 (9th C ir. 2014). The distric t c ourt did not a buse its disc re tion by

de ny i ng AC IC ’ s m o tion in lim ine and re ne we d obje c tion a t tria l. The c ourt de te rm i ne d Ka spe r’ s
re pre se ntative te stifie d at his deposition, seve ra l we e ks be fore fa c t disc ove ry
c lose d, tha

t Ka s pe r wa s in posse ssion of som e of the busine ss pe rsona l prope rty . AC IC did not a sk for a

n e xte nsion of thedisc ove ry pe riod, se rve any

a dditiona l writte n disc ove ry

re que sts, or a

tte m pt to de te rm ine whe the r the prope rty ha d be e n prope rly c le ane d de spite Ka spe r’ s c la im , from the outse t , tha

t som e of the prope rty de e m e d c le ana

ble wa s a c tua lly

not sa lva g e a

b le at a ll. AC IC argue s tha t the distric t
c ourt’ s fa ilure to sta

te its re a soning for its ruling on the m otion in lim ine wa rrants
re ve rsa l a nd re m an d. This is inc orre c t. S e e Barranc o v . 3D Sy

s. C orp. , 952 F.3d
41122, 1128 n.4 (9th C ir. 2020) (“ The distric t c ourt did not err by ruling on B arran c o ’ s m otion in limine without e xpla ining its re a soning.” ). AC IC a l so a

rgue s the distric t c ourt did not c onside r whe the r Ka spe r de m onstra

te d good c a

use for its de la

y e d disc losure of its c ontinue d posse s sion of the b usine ss pe rsona l prope rty dam a ge d in the fire
. B ut the pla in te xt of Fe de ra l R ule of C ivil Proc e dure 37(c ) is in thedisjunc tive . It provide s tha t sa nc t ions a re to be im pose d for fa ilure to disc lose or supple m e nt the disc o ve ry or disc losure s
re quire d by

R ule 26 “ unle ss the fa ilure is substa ntia l ly justifie d or is ha

rm le ss.” A distric t c o urt m ay re ly

on e ithe r a

finding of good c a

use , or a finding tha

t fa ilure to tim e ly disc lose wa s ha

rm le s s, in de te rm i ning whe the r to im pose disc ove ry
sa nc tions pursua

nt to R ule 37. Ye ti by

Molly , Ltd. v . De c k

e rs Outdoor C

orp. , 259 F.3d 1101, 1107 (9th C ir. 2001). Thedistric t c o urt did not a

buse its disc re t ion by
c onc luding Ka s pe r m e t its burde n to show a ny de la y e d disc losure wa s ha

rm le ss be c a use Ka spe r disc lose d its posse ssion of the prope rty during W i llia

m Say e gh’ s de position. Ka spe r a lso a rgue d throughout the

litiga t ion tha t som e of the busine ss pe rsona l prope rty

wa s in fa c t not c le ana

b le , a nd c l a im e d m

uc h of the prope rty

wa s
nonsa l va ge a

b le
. C f. id. Fina lly , we c onc lude AC IC ha s wa ive d a ny argum e n t tha

t the distric t c ourt
e rre d by e xc l u ding Ja son M oshe r’ s re butta l te stim ony be c a use AC IC doe s not
5artic ulate this a rgum e nt until its re

ply brie f. Mille r v . Fairc hild Indus., Inc

. , 797 F.2d 727, 738 (9th C ir. 1986) (e xpla ining we do not “ ordina rily c onside r m atte rs
on a ppe a l tha t a re not spe c ific a lly

and distinc t ly

argue d in a

ppe lla nt's ope ning brie f” ). Furthe r, any

e rror wa s like ly

ha rm le ss be c a

use ne i the r party argue s tha t M oshe r wa s pre c lude d

from te s tify ing a s to his first inspe c tion of thesa m e prope rty . Se e Danie l v . C ole m an C o. , 599 F.3d 1045, 1048–49 (9th C ir. 2010) (“ Danie l wa s pe rm itte d to pre se nt substa n tia lly e quiva le nt e vide nc e at tria l to prove this ve ry point. . . . B e c a

use the e vide ntia

ry de c i sion [to e x c l ude a dditiona l
e vide nc e proving tha

t point] is unlike ly

to ha ve c a u se d Da nie l substa

ntia l pre j udic e , the c ourt’ s ruling doe s not c onstitute re ve rsible e rror.” ). AFFIRM E D. The pa

rtie s sha ll be a

r the ir own c osts on a

ppe a l.

6