Court Opinion

ID: 4204918
Source: CourtListenerOpinion
Date Created: 2017-09-20 20:01:25.91921+00
Date Added: 2024-06-11T14:14:40.205445
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                        SEP 20 2017
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

MKB CONSTRUCTORS, a Washington                  No.    15-35291
joint venture,
                                                D.C. No. 2:13-cv-00611-JLR
                Plaintiff-Appellee,

 v.                                             MEMORANDUM*

AMERICAN ZURICH INSURANCE
COMPANY, an Illinois corporation,

                Defendant-Appellant.

                   Appeal from the United States District Court
                      for the Western District of Washington
                    James L. Robart, District Judge, Presiding

                      Argued and Submitted August 31, 2017
                               Seattle, Washington

Before: McKEOWN and GOULD, Circuit Judges, and FOOTE,** District Judge.

      A jury awarded MKB Constructors (“MKB”) $1,083,424.24 in

compensatory damages for breach of contract, $274,482.47 in compensatory

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
            The Honorable Elizabeth E. Foote, United States District Judge for the
Western District of Louisiana, sitting by designation.
damages under Washington’s Insurance Fair Conduct Act (“IFCA”), and $862,000

in enhanced damages under the IFCA. American Zurich Insurance Company

(“Zurich”) renewed its prior motion for judgment as a matter of law and moved for

a new trial, contending that there was insufficient evidence to support the jury’s

verdict. The district court denied both motions, and this appeal followed.

         In relevant part, the facts are as follows: MKB had contracted with the

Lower Yukon School District (“LYSD”), to complete the first phase of a

construction project. Under the contract MKB had to prepare a large gravel pad,

upon which additional buildings would eventually be erected. This involved

shipping by barge large quantities of gravel from sites in Alaska. MKB also had a

builder’s risk policy with Zurich that covered damage due to earth movement,

including settlement of the soil. At trial, MKB claimed, and the jury agreed, that it

was required to bear extra costs because settlement of the soil below the pad

required it to barge in extra gravel over and above what was required under the

terms of the contract. Zurich denies that soil settlement was responsible for these

costs.

         We review the denial of a judgment as a matter of law de novo. Castro v.

Cty. of Los Angeles, 833 F.3d 1060, 1066 (9th Cir. 2016). In assessing a renewed

motion for judgment as a matter of law a court asks whether the evidence,

“construed in the light most favorable to the non-moving party, permits only one

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reasonable conclusion, and that conclusion is contrary to the jury’s verdict.”

Pavao v. Pagay, 307 F.3d 915, 918 (9th Cir. 2002). Here, the jury was presented

with sufficient evidence for it reasonably to conclude that unforeseen soil

settlement caused MKB’s additional costs. At trial the jury was presented with

several different estimates of the amount of gravel that would have been required

in the absence of excessive settlement. Some of those estimates supported MKB’s

position that the total amount of gravel brought in exceeded what should have been

required under the terms of the contract. The jury could have reasonably believed

those estimates and found that MKB bore extra costs because of settlement.

      The district court also denied judgment as a matter of law with regard to

some incidental expenses included in the jury award. Because there was no

objection to these incidental expenses in the initial motion for judgment as a matter

of law under Rule 50(a), we could review these claims for plain error. EEOC v.

Go Daddy Software, Inc., 581 F.3d 951, 961 (9th Cir. 2009). However, we see no

error whatsoever, let alone plain error. In these instances too, the jury could have

reasonably concluded that the costs arose because of unforeseen soil settlement or

were otherwise covered under the policy. The costs for maintenance, depreciation

and payment of bank loans associated with leaving heavy equipment at the work

site during the winter season, could have been reasonably construed as covered

overhead costs. The increased costs associated with barging additional gravel from

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Nome instead of from St. Mary’s, could have reasonably been construed as arising

from the settlement. Similarly the additional survey costs were reasonably

awarded because those costs were incurred when MKB began to expect that excess

settlement was occurring. The markup and overhead costs could have been

reasonably awarded as covered overhead. Finally, the jury could have reasonably

accepted MKB’s testimony that it would not have pursued arbitration against

LYSD had Zurich not refused to pay out on the builder’s risk contract. Hence, the

jury was reasonable in awarding the $274,482.47 in arbitration costs as

compensatory damages under the IFCA.

      American Zurich next challenges the district court’s refusal to adopt its

proposed special verdict form. We reject this contention. A district court has

broad discretion to decide whether to have the jury return a special or a general

verdict. Floyd v. Laws, 929 F. 2d 1390, 1395 (9th Cir. 1991) (stating that district

court has “complete discretion” on such matters.). Here, the proposed special

verdict form spanned 11 pages, included 30 questions with differing answer

formats and that form easily could have misled the jury. The district court did not

abuse its discretion by rejecting this proposed form.

      Next, American Zurich claims that the IFCA damages awarded were grossly

excessive and violated its due process rights. This argument fails for two reasons.

First, the IFCA provides clear notice to insurers that they are subject to treble

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damages if they unreasonably deny a claim. RCW 48.30.015(2). Second, the

enhanced damages were less than the actual damages. American Zurich has

pointed to no authority overturning an award of punitive or enhanced damages

under such conditions, and has provided no valid reason to think that such an

award is so grossly excessive as to be unconstitutional under the standards

established by the Supreme Court in BMW of North America v. Gore, 517 U.S. 559

(1996) and State Farm Mutual Automobile Insurance Company v. Campbell, 538

U.S. 408 (2003).

      American Zurich also asks this court to revisit the district court’s denial of

its motion for summary judgment. We cannot properly do so. Once a claim is

presented to the jury, the trial record replaces the summary judgment record, and

an appellate court ordinarily lacks jurisdiction to review the denial of summary

judgment. Ortiz v. Jordan, 562 U.S. 180, 184 (2011). While there is an exception

for “purely legal” questions, the question at issue here—the sufficiency of the

evidence—does not fall under that exception. Id. at 188-89.

      Finally, American Zurich contends that the district court erred by sending

the question of enhanced damages to the jury, rather than having the court assess

those damages as provided by RCW 48.30.015(2). The Supreme Court has held

that “when Congress provides for enforcement of statutory rights in an ordinary

civil action in the district courts, where there is obviously no functional

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justification for denying the jury trial right, a jury trial must be available if the

action involves rights and remedies of the sort typically enforced in an action at

law.” Curtis v. Loether, 415 U.S. 189, 195 (1974). The Loether court went on to

explain that “actual and punitive damages” are “the traditional form of relief

offered in the courts of law” as opposed to courts of equity or admiralty. Id. at

196. The type of suit at issue here—effectively a tort action for damages caused

by an unreasonable breach of an insurance contract—is squarely a case at law,

rather than in equity or admiralty. The district court correctly held that the Seventh

Amendment required submitting the question of enhanced damages to the jury.

       AFFIRMED.

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