Opinion ID: 4387386
Heading Depth: 2
Heading Rank: 6

Heading: Actual Time of Repair

Text: Assuming, for the sake of argument, that there is coverage, the policy covers business interruption losses for 19 To the extent Ace argues that there was such an exclusion because the beads themselves suffered from an inherent defect, there is a triable issue of fact regarding the integrity of the beads. INGENCO HOLDINGS V. ACE AMER. INS. CO. 33 “only such length of time . . . as would be required with the exercise of due diligence and dispatch to rebuild or replace” damaged property. Ingenco did not resume operations at Cedar Hills for approximately sixteen months after the second, March 2011 shutdown. Nor did Ingenco perform any remedial work at the facility for approximately nine months, during which time Ingenco evaluated alternative options for nitrogen removal. Nevertheless, Ingenco seeks to recover for the entire sixteen-month shutdown period. Ace argues that Ingenco’s business interruption recovery should be limited to the “theoretical period of restoration.” The district court largely agreed with Ace, concluding that the applicable period “is limited to the hypothetical period of restoration.” Some courts have held that the applicable period for an insured to reenter business is the “theoretical replacement time.” Vermont Mut. Ins. Co. v. Petit, 613 F. Supp. 2d 154, 161 (D. Mass. 2009); W. & Clay, LLC v. Landmark Am. Ins. Co., No. C09-1423 MJP, 2011 WL 321740, at  (W.D. Wash. Jan. 28, 2011); SR Int’l Bus. Ins. Co. v. World Trade Ctr. Properties, LLC, No. 01 CIV.9291(MBM), 2005 WL 827074, at  (S.D.N.Y. Feb. 15, 2005). Nevertheless, Ingenco argues, based largely upon our memorandum disposition in Alevy v. All. Gen. Ins. Co., No. 95-56034, 1996 WL 623065 (9th Cir. Oct. 24, 1996), that the “actual replacement time” is relevant to the measure of Ingenco’s losses.20 The Alevy court observed that although theoretical replacement time would be an appropriate measure of actual insured losses where payment was to be made before rebuilding was complete, actual replacement time is a more logical “starting point in the analysis” where rebuilding has 20 Ingenco’s citation to the unpublished disposition in Alevy runs counter to Ninth Circuit Rule 36-3. See CTA9 Rule 36-3(a), (c). 34 INGENCO HOLDINGS V. ACE AMER. INS. CO. already occurred. Alevy, 1996 WL 623065, at –3; see also SR Int’l, 2005 WL 827074, at . Other courts have agreed that it makes “perfect sense” to look first to actual time of repair in cases where businesses have completed repairs or resumed operations by the time a court is presented with the task of interpreting coverage provisions. See, e.g. SR Int’l, 2005 WL 827074, at . Here, as in Alevy, repairs had already been made by the time Ace denied Ingenco’s claim. We conclude that under such circumstances, the actual time of repair has some bearing on what period “would be required with the exercise of due diligence and dispatch to rebuild or replace” damaged property. We further observe, however, that Ingenco does not argue, nor does any authority appear to state, that the applicable repair period should be measured by “actual replacement time” even where the actual time to repair is unreasonable.21 Thus, although Ingenco’s actual time to repair might be relevant to the question whether a sixteenmonth shutdown was consistent with “the exercise of due diligence and dispatch,” it is by no means dispositive. 21 Furthermore, to the extent Ingenco seeks to recover amounts beyond the theoretical replacement time because of Ace’s alleged delay in investigating and adjusting Ingenco’s claim, we note that even those courts that have applied theoretical replacement time as the measure of loss have provided for extensions of that time to account for an insurer’s delay. See, e.g., Vermont Mutual, 613 F. Supp. 2d 154 at 161 (“The period of restoration is a ‘theoretical replacement time,’ which a court may extend to account for an insurer’s failure to adjust [a] loss within a reasonable time.” (internal quotation and citations omitted)). INGENCO HOLDINGS V. ACE AMER. INS. CO. 35