Court Opinion

ID: 3183205
Source: CourtListenerOpinion
Date Created: 2016-03-07 21:05:18.356158+00
Date Added: 2024-06-11T14:35:47.013513
License: Public Domain

NOT FOR PUBLICATION                             FILED
                    UNITED STATES COURT OF APPEALS                         MAR 07 2016

                            FOR THE NINTH CIRCUIT                       MOLLY C. DWYER, CLERK
                                                                         U.S. COURT OF APPEALS

SHARP PLUMBING, INC., a Nevada                   No. 14-15172
corporation,
                                                 D.C. No. 2:09-cv-00783-GMN-
             Third-party-plaintiff -counter-     GWF
defendant - Appellant,

 v.                                              MEMORANDUM*

NATIONAL FIRE & MARINE
INSURANCE COMPANY, a Nebraska
corporation,

             Third-party-defendant-
counter-claimant - Appellee.

                   Appeal from the United States District Court
                            for the District of Nevada
                 Gloria M. Navarro, Chief District Judge, Presiding

                     Argued and Submitted February 12, 2016
                            San Francisco, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: NOONAN and MURGUIA, Circuit Judges and MURPHY,** District
Judge.

      Plaintiff Sharp Plumbing, Inc. (“Sharp”) appeals from the district court’s

grant of summary judgment in favor of defendant National Fire & Marine

Insurance Co. (“National Fire”). The district court held that National Fire’s

commercial general liability policy unambiguously excluded from coverage claims

brought against Sharp in a class action for Sharp’s installation of defective

plumbing fittings. The district court also entered summary judgment for National

Fire on Sharp’s claims for insurance bad faith and violation of Nevada’s Unfair

Claims Practices Act, Nev. Rev. Stat. § 686A.310. We have jurisdiction under 28

U.S.C. § 1291. Reviewing de novo, Lyall v. City of Los Angeles, 807 F.3d 1178,

1185 (9th Cir. 2015), we affirm.

      1. Sharp agrees that National Fire’s policy provides coverage only if the

claims against Sharp in the class action alleged damage to property other than

Sharp’s own work product. Sharp argues that there is coverage because the

damage alleged in the class action was to the water in the homes through zinc

contamination. However, Sharp does not point to any evidence from the class

action litigation indicating that damage to water was ever an element of the harm

        **
             The Honorable Stephen Joseph Murphy III, United States District
Judge for the Eastern District of Michigan, sitting by designation.
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alleged in the suit. While the class action complaint and an expert affidavit alleged

that “dezincification” occurred when water ran through the plumbing fittings

installed by Sharp, there is no indication that the zinc in the water was itself a

harm. Rather, the consequences of dezincification were leaks, restricted water

flow, and breakage—not adultered water. Professor Stempel’s testimony, which

was based on little more than his post-hoc reading of the class action complaint,

does not change this result. See United States v. Tamman, 782 F.3d 543, 552 (9th

Cir. 2015) (“[A]n expert cannot testify to a matter of law amounting to a legal

conclusion.”).

      2. Even if Sharp had stated and preserved a cause of action for violation of

Nevada’s Unfair Claims Practices Act, Nev. Rev. Stat. § 686A.310., its claim

would fail because Sharp does not point to evidence that it completed and

submitted proof of loss requirements or that National Fire’s liability ever became

reasonably clear, which are elements of the statutory violations alleged by Sharp.

See Nev. Rev. Stat. § 686A.310(1)(d) (listing as an unfair practice “[f]ailing to

affirm or deny coverage of claims within a reasonable time after proof of loss

requirements have been completed and submitted by the insured” (emphasis

added)); id. § 686A.310(1)(e) (listing as an unfair practice “[f]ailing to effectuate

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prompt, fair and equitable settlements of claims in which liability of the insurer has

become reasonably clear” (emphasis added)).

      3. Nevada law imposes on insurers a covenant of good faith and fair

dealing, a violation of which can result in bad-faith tort liability. Allstate Ins. Co.

v. Miller, 212 P.3d 318, 324 (Nev. 2009). Courts have recognized that the

covenant “imposes a duty on the insurer to settle a claim against its insured within

policy limits whenever there is a substantial likelihood of recovery in excess of

those limits.” Johansen v. Cal. State Auto Ass’n Inter-Ins. Bureau, 538 P.2d 744,

747 (Cal. 1975). Generally, however, “an insurer has a duty to accept a reasonable

settlement offer only with respect to a covered claim.” DeWitt v. Monterey Ins.

Co., 138 Cal. Rptr. 3d 705, 707 (App. 2012) (internal quotation marks omitted).

      As discussed above, the claims against Sharp in the class action were not

covered by the National Fire policy. Even more problematic for Sharp is the fact

that National Fire ultimately settled the class action within policy limits. Sharp

points to no binding authority recognizing, under Nevada law, a claim for bad faith

refusal to settle even in the absence of coverage, much less when the insurer

ultimately settles within policy limits. Nor does Sharp argue that the Nevada

Supreme Court would adopt such a rule. See Orkin v. Taylor, 487 F.3d 734, 741

(9th Cir. 2007) (“If the state’s highest appellate court has not decided the question

                                            4
presented, then we must predict how the state’s highest court would decide the

question.”). As a result, Sharp’s claim for insurance bad faith fails.

AFFIRMED

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