Court Opinion

ID: 2820637
Source: CourtListenerOpinion
Date Created: 2015-07-27 21:05:41.104664+00
Date Added: 2024-06-11T12:56:50.576725
License: Public Domain

NOT FOR PUBLICATION

                    UNITED STATES COURT OF APPEALS                             FILED
                           FOR THE NINTH CIRCUIT                                JUL 27 2015

                                                                          MOLLY C. DWYER, CLERK
GLENDALE & 27TH INVESTMENTS,                     No. 13-16063                U.S. COURT OF APPEALS

LLC, an Arizona limited liability
company,                                         D.C. No. 2:10-cv-00673-SRB

              Plaintiff - Appellee,
                                                 MEMORANDUM*
 v.

DELOS INSURANCE COMPANY,

              Defendant - Appellant.

                   Appeal from the United States District Court
                            for the District of Arizona
                    Susan R. Bolton, District Judge, Presiding

                        Argued and Submitted July 9, 2015
                            San Francisco, California

Before: GILMAN,** GRABER, and WATFORD, Circuit Judges.

      In August 2008, a storm hit Phoenix and damaged a number of properties,

including the Sterling International Hotel (the Property). Glendale & 27th

Investments, LLC (Glendale), the owner of the Property, immediately filed a claim

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
            The Honorable Ronald Lee Gilman, Senior Circuit Judge for the
United States Court of Appeals for the Sixth Circuit, sitting by designation.
with its property insurance carrier, Delos Insurance Co. (Delos). Delos sent out

several adjusters to inspect the damage over the next few weeks.

      The parties’ relationship rapidly deteriorated. Both sides retained counsel,

and serious disagreements arose regarding which structures on the Property were

covered by the insurance policy and how much of the damage was caused by the

storm. Delos’s final offer to settle the claim was $50,000, which Glendale

rejected.

      Almost a year and a half after the storm, Glendale sued Delos and several

other defendants. The matter went to trial in January 2013. All defendants other

than Delos settled with Glendale after the close of the evidence. Delos moved for

judgment as a matter of law, which the district court denied.

      The jury returned a verdict against Delos for $144,383 in compensatory

damages and $500,000 in punitive damages. In this timely appeal, Delos limits its

arguments to the issue of punitive damages.

      We review de novo the district court’s denial of a motion for judgment as a

matter of law. Hangarter v. Provident Life & Accident Ins. Co., 373 F.3d 998,

1005 (9th Cir. 2004). A renewed motion for judgment as a matter of law is

properly granted only “if the evidence, construed in the light most favorable to the

nonmoving party, permits only one reasonable conclusion, and that conclusion is

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contrary to the jury’s verdict.” Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir. 2002).

“A jury’s verdict must be upheld if it is supported by substantial evidence, which

is evidence adequate to support the jury’s conclusion, even if it is also possible to

draw a contrary conclusion.” Id.

      Delos offers two arguments on appeal: (1) there was insufficient evidence to

demonstrate that it had the “evil mind” necessary to impose punitive damages,

such that the question should not have been submitted to the jury; and (2) even if a

consideration of punitive damages was appropriate, the amount awarded by the

jury was unconstitutionally excessive. Neither argument is availing.

      Glendale presented evidence that Delos made intentional and material

misrepresentations in the administration of Glendale’s claim. When one adjuster

acknowledged that the storm had caused substantial damage and that extensive

repairs would be required, Delos sent in someone who concluded that the covered

damage was much less extensive. It then refused to provide Glendale with copies

of the annual reports prepared before the storm, which revealed that the property

was in a good, well-maintained condition just three months before the storm.

Delos also claimed to have conducted inspections that were simply never done, and

it misrepresented the contents of reports that it received from inspections that were

completed.

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      Although all of this could be interpreted as ordinary but questionable

insurance practices, reasonable minds could rely on these examples, among others,

to conclude that Delos “consciously pursued a course of conduct knowing that it

created a substantial risk of significant harm to others.” See Rawlings v. Apodaca,

726 P.2d 565, 578 (Ariz. 1986). We therefore conclude that the district court did

not err in sending the question of punitive damages to the jury.

      Nor did the jury award an unconstitutionally excessive amount of punitive

damages. The Supreme Court has recognized that “[s]ingle-digit multipliers are

more likely to comport with due process, while still achieving the State’s goals of

deterrence and retribution,” than are awards ranging into the double- and

triple-digit ratios. State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425

(2003). The ratio of punitive to compensatory damages in this case was roughly

3.5 to 1. Both the Supreme Court and this court have repeatedly held that ratios

such as these are constitutionally permissible. See, e.g., Planned Parenthood of

Columbia/Willamette Inc. v. Am. Coal. of Life Activists, 422 F.3d 949, 962

(9th Cir. 2005) (“In cases where there are significant economic damages and

punitive damages are warranted but behavior is not particularly egregious, a ratio

of up to 4 to 1 serves as a good proxy for the limits of constitutionality.” (citing

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State Farm, 538 U.S. at 425)). Delos has not demonstrated any compelling reason

for us to deviate from that conclusion in the present case.

      AFFIRMED.

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