Zurich American Insurance Company v. Coeur Rochester, Inc.

Filing 135

ORDERED THAT Zurich's 99 Objections to Evidence Submitted by Coeur Rochester in Opposition to Zurich American's Motion for Summary Judgment are OVERRULED. IT IS FURTHER ORDERED THAT Zurich's 119 Motion to Exclude Evidence of Coeur's Damages Pertaining to Bad Faith, Statutory Violations Claims (FRCP 37(c)) is DENIED as moot. IT IS FURTHER ORDERED THAT Zurich's 81 Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment (Plaintif f Zurich American's Claim for Declaratory Relief; Counterclaimant Coeur Rochester's Claim for Breach of Contract) is GRANTED. IT IS FURTHER ORDERED THAT Zurich's Motion for Partial Summary Judgment (Coeur Rochester's Claims for Bad Faith, Violation of Nev. Rev. Stat. § 686A.310, Punitive Damages) (#91) is GRANTED. IT IS FURTHER ORDERED THAT Coeur's 94 Motion for Partial Summary Judgment on Liability is DENIED. The Clerk shall enter judgment accordingly. Signed by Judge Edward C. Reed, Jr on 6/24/2010. (Copies have been distributed pursuant to the NEF - DRM)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 This diversity case arises out of a coverage dispute between an Plaintiff Zurich American Insurance ZURICH AMERICAN INSURANCE COMPANY, ) ) Plaintiff, ) ) vs. ) ) COEUR ROCHESTER, INC., ) ) Defendant. ) ) ) 3:08-CV-109-ECR-RAM UNITED STATES DISTRICT COURT DISTRICT OF NEVADA RENO, NEVADA

Order

15 insurer and its insured.

16 Company ("Zurich") filed suit for declaratory relief after denying a 17 claim filed by Defendant Coeur Rochester, Inc. ("Coeur") for loss or 18 damage of Coeur's insured property, a gold and silver mine. Coeur

19 counterclaimed, alleging breach of contract, bad faith, and unfair 20 claims practices. Both parties have filed motions for summary

21 judgment or partial summary judgment, and Zurich has raised several 22 evidentiary matters. 23 24 25 26 I. Factual and Procedural Background Coeur operates the Rochester and Nevada Packard Mine The motions are ripe, and we now rule on them.

27 ("Rochester Mine"), which consists of approximately 11,000 acres of 28 property near Lovelock, Nevada, on which Coeur both owns patented

1 mining claims and controls unpatented mining claims.

The Rochester

2 Mine includes the open-pit mine at issue in this case (the 3 "Rochester Pit"), which produces gold and silver ore. The usual

4 method of mining at the Rochester Pit, like any open-pit mine, 5 involves dynamite blasts. The blasts break ore from the ground in

6 the pit, which is then hauled away from the blast site for 7 processing. On September 21, 2006, a planned dynamite blast not

8 only dislodged the expected bench1 of ore on the pit floor, but also 9 resulted in the collapse of a section of the highwall2 above the 10 bench. After the collapse, it was determined that the highwall was

11 unstable, so that further mining of the affected area would be 12 unsafe. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In his deposition testimony, Casey Kiel, a Coeur employee, explains that mining in the Rochester Pit was conducted in sections, called "benches," measuring 25 feet in height and denoted by their lowest elevation. Thus, the "6100 bench" consisted of a section of rock with an elevation of 6100 feet at its bottom, and 6125 feet at its top. A bench is mined by drilling holes into the top of the bench, packing the holes with dynamite, setting off a blast, and then hauling away the broken and severed ore, or "muck," loosened by the explosion from ore that remained "in-wall." (See Kiel Depo. at 59:225 (#114-1).) This terminology appears to have been the cause of some confusion about whether the blasting on September 21, 2006, was conducted on the 6125 bench or the 6100 bench. (Compare P.'s MSJ at 4 (#82) (describing the blast as conducted on the 6125 bench) with D.'s Opp. at 9 (describing the blast as conducted on the 6100 bench); see also Kiel Depo at 59:2-9 (Zurich's counsel asks "the blasting . . . occurred on the 6125 bench; is that correct?" and Kiel responds "the 6125 is the top . . . for operations we considered that the 6100 bench, because that's where we had mined to and that's where the final elevation would be of that.").) It appears to be undisputed that the blast that caused the highwall collapse on September 21, 2006, was set off in holes drilled down from the 6125 foot elevation -- there is no evidence sufficient to support a different conclusion in our record. This would mean the blast was on the 6100 bench, as Mr. Kiel and Coeur use the term, and as we will use it in this Order. The term "highwall" refers to the face of unexcavated rock left in place as mining progresses downward into the pit.
2
2 1

Coeur later began operating the Rochester Pit again under a

1 revised mining plan, designed to avoid the danger of the unstable 2 highwall. This revised mining plan, however, required leaving a

3 substantial amount of high-grade ore in place, while mining lower4 grade replacement ore instead. 5 Coeur filed an insurance claim based on the policy issued to it

6 by Zurich ("the Policy"); the claim was for a total of $7,435,327. 7 Coeur's calculation of its damages has since been modified.3 Coeur

8 now asserts a claim for net revenue from ore lost or damaged in the 9 highwall collapse in the amount of $7,010,714, a sum which includes 10 $8,467,068 for high-grade ore that could not be mined because of the 11 collapse, minus $1,456,353 in lower-grade replacement ore mined as 12 mitigation of damages. (D.'s Opp. at 6 (#89).4 In the alternative,

13 Coeur asserts that it is entitled to collect the $7,010,714 under 14 the business interruption coverage of the Policy. 15 (#89).) (D.'s Opp. at 22

Also, Coeur seeks $51,839 in extra expenses incurred as a (Id. at 26.)

16 result of its mitigation efforts. 17

After an investigation, Zurich denied the claim on various (See Letter

18 grounds by means of a letter dated September 20, 2007.

19 from Tracy Smith to Carolyn Turner (Sept. 20, 2007) ("Denial 20 Letter"), Bithell Decl., Ex. T (#103-22).) Coeur disputed this

21 determination, but after further investigation, on December 5, 2007, 22 23 24 25 26 27 28 Zurich's objections to Coeur's evidence in support of its latest calculation of damages will be addressed below. We note that $8,467,068 minus $1,456,353 totals $7,010,715. The discrepancy between that amount and the $7,010,714 claimed by Coeur is apparently the result of a typo or mathematical error, or perhaps an artifact of rounding. (See D.'s Opp. at 6 (#89); Kiel Decl., Ex. 1 (#89-3).)
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1 Zurich informed Coeur that it had decided to adhere to its decision 2 to deny the claim. 3 On February 29, 2008, Zurich filed its Complaint (#1), seeking On

4 a declaratory judgment that Coeur's claim was properly denied.

5 June 11, 2008, Coeur filed its Answer and Counterclaim (#8), seeking 6 damages for breach of contract, bad faith, and violation of Nevada's 7 Unfair Trade Practices Act, Nev. Rev. Stat. § 686A.310. 8 Zurich filed the pending "Motion for Summary Judgment or, in

9 the Alternative, Partial Summary Judgment [Plaintiff Zurich 10 American's Claim for Declaratory Relief; Counterclaimant Coeur 11 Rochester's Claim for Breach of Contract]" (#81) on September 1, 12 2009. 13 (#98). Coeur opposed (#89) the motion (#81), and Zurich replied Zurich also filed objections (#99) to certain evidence Coeur opposed

14 submitted by Coeur in opposition to the motion (#81).

15 (#113) Zurich's objections (#99), and Zurich replied (#125) 16 On September 28, 2009, Zurich filed a "Motion for Partial

17 Summary Judgment [Coeur Rochester's Claims for Bad Faith, Violation 18 of Nev. Rev. Stat. § 686A.310, Punitive Damages]" (#91). Coeur On

19 opposed (#103) the motion (#91), and Zurich replied (#115).

20 October 30, 2009, Zurich filed a "Motion to Exclude Evidence of 21 Coeur's Damages Pertaining to Bad Faith, Statutory Violations Claims 22 [FRCP 37(c)]" (#119). This motion (#119) seeks to exclude certain

23 evidence Coeur submitted in opposition to Zurich's motion for 24 partial summary judgment (#91). Coeur opposed (#126) the motion

25 (#119), and Zurich replied (#127). 26 27 28
4

1

Also on September 28, 2009, Coeur filed a "Motion for Partial Zurich opposed (#106) the

2 Summary Judgment on Liability" (#94). 3 motion (#94), and Coeur replied (#122). 4

Zurich requested (#100) oral argument on the pending motions We granted

5 for summary judgment and partial summary judgment. 6 (#129) the request (#100).

The parties presented their oral

7 arguments at a hearing on June 15, 2010, after which the Court took 8 the matter under submission. 9 10 11 II. Summary Judgment Standard Summary judgment allows courts to avoid unnecessary trials N.W. Motorcycle Ass'n v. The court

12 where no material factual dispute exists.

13 U.S. Dep't of Agric., 18 F.3d 1468, 1471 (9th Cir. 1994).

14 must view the evidence and the inferences arising therefrom in the 15 light most favorable to the nonmoving party, Bagdadi v. Nazar, 84 16 F.3d 1194, 1197 (9th Cir. 1996), and should award summary judgment 17 where no genuine issues of material fact remain in dispute and the 18 moving party is entitled to judgment as a matter of law. 19 CIV. P. 56(c). FED. R.

Judgment as a matter of law is appropriate where

20 there is no legally sufficient evidentiary basis for a reasonable 21 jury to find for the nonmoving party. FED. R. CIV. P. 50(a). Where

22 reasonable minds could differ on the material facts at issue, 23 however, summary judgment should not be granted. Warren v. City of

24 Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995), cert. denied, 116 S.Ct. 25 1261 (1996). 26 The moving party bears the burden of informing the court of the

27 basis for its motion, together with evidence demonstrating the 28
5

1 absence of any genuine issue of material fact. 2 Catrett, 477 U.S. 317, 323 (1986).

Celotex Corp. v.

Once the moving party has met

3 its burden, the party opposing the motion may not rest upon mere 4 allegations or denials in the pleadings, but must set forth specific 5 facts showing that there exists a genuine issue for trial. 6 v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Anderson

Although the

7 parties may submit evidence in an inadmissible form -- namely, 8 depositions, admissions, interrogatory answers, and affidavits -- 9 only evidence which might be admissible at trial may be considered 10 by a trial court in ruling on a motion for summary judgment. FED.

11 R. CIV. P. 56(c); Beyene v. Coleman Sec. Servs., Inc., 854 F.2d 12 1179, 1181 (9th Cir. 1988). 13 In deciding whether to grant summary judgment, a court must

14 take three necessary steps: (1) it must determine whether a fact is 15 material; (2) it must determine whether there exists a genuine issue 16 for the trier of fact, as determined by the documents submitted to 17 the court; and (3) it must consider that evidence in light of the 18 appropriate standard of proof. Anderson, 477 U.S. at 248. Summary

19 judgment is not proper if material factual issues exist for trial. 20 B.C. v. Plumas Unified Sch. Dist., 192 F.3d 1260, 1264 (9th Cir. 21 1999). "As to materiality, only disputes over facts that might

22 affect the outcome of the suit under the governing law will properly 23 preclude the entry of summary judgment." Anderson, 477 U.S. at 248.

24 Disputes over irrelevant or unnecessary facts should not be 25 considered. Id. Where there is a complete failure of proof on an

26 essential element of the nonmoving party's case, all other facts 27 become immaterial, and the moving party is entitled to judgment as a 28
6

1 matter of law.

Celotex, 477 U.S. at 323.

Summary judgment is not a

2 disfavored procedural shortcut, but rather an integral part of the 3 federal rules as a whole. 4 5 6 III. Discussion Both Zurich and Coeur seek summary judgment on Zurich's Id.

7 declaratory judgment claim and on the issue of liability with regard 8 to Coeur's breach of contract claim. 9 (#94).) (P.'s Mot. (#81); D.'s Mot.

In addition, Zurich seeks summary judgment on Coeur's

10 claims for bad faith and for violation of Nevada's Unfair Trade 11 Practices Act. (P.'s Mot. (#91).) We will discuss these matters,

12 and the related evidentiary motions filed by Zurich, separately. 13 14 A. Zurich's Objections (#99) Zurich presents several objections to evidence submitted by

15 Coeur in support of its opposition (#89) to Zurich's motion for 16 summary judgment (#81). Specifically, Zurich objects to a

17 spreadsheet attached as an exhibit to the Declaration of Casey Kiel 18 (#89-3), as well as portions of the Kiel Declaration itself. 19 Objections at 2 (#99).) (See

Zurich also objects to one paragraph of the (Id.) We will consider

20 Declaration of Alan Tattersall (#89-4). 21 each of these matters separately. 22 23 1. Exhibit to Kiel Declaration

Attached to the Kiel Declaration as Exhibit 1 is a spreadsheet

24 describing the damages Coeur alleges it suffered because of the 25 south highwall collapse. (Kiel Decl., Ex. 1 (#89-3).) This

26 spreadsheet has four separate boxes, the first three of which 27 calculate the net revenue from high-grade ore allegedly lost or 28
7

1 damaged as a result of the highwall collapse, while the fourth 2 accounts for the lower-grade replacement ore that Coeur mined 3 instead. (Id.) Zurich objects that when this document was

4 initially disclosed to them, the fourth box was omitted, and that 5 Coeur never disclosed the information contained therein pursuant to 6 Federal Rule of Civil Procedure 26. As such, Zurich argues that the

7 items described in the fourth box constitute a new damages claim not 8 disclosed during discovery, which should be excluded from evidence 9 pursuant to Federal Rule of Civil Procedure 37(c). 10 Coeur asserts, and Zurich does not dispute, that Coeur notified

11 Zurich of the omitted fourth box of the spreadsheet at a discovery 12 status conference on March 30, 2009. Coeur provided Zurich with the

13 full, corrected version of the spreadsheet on April 1, 2009, with a 14 letter explaining why the fourth box was omitted from the previously 15 provided version: it seems that there was a formatting error that 16 occurred in the conversion of the document from an Excel document to 17 a PDF document. (See Ramirez Decl., Ex. 3 (#114-3).) Zurich's

18 argument that the fourth box on the spreadsheet constitutes a new 19 claim, therefore, rests on a perceived distinction between 20 "providing" a document describing claimed damages to an opposing 21 party and "disclosing" such a document pursuant to Federal Rule of 22 Civil Procedure 26. 23 (See P.'s Reply at 3 (#125).)

Rule 26 requires that "a party must . . . provide to the other

24 parties . . . a computation of each category of damages claimed by 25 the disclosing party." FED. R. CIV. P. 26(a)(1)(A)(iii). Rule 26

26 further requires that such a disclosure must be supplemented "in a 27 timely manner if the party learns that in some material respect the 28
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1 disclosure or response is incomplete or incorrect, and if the 2 additional or corrective information has not otherwise been made 3 known to the other parties during the discovery process or in 4 writing." FED. R. CIV. P. 26(e)(1)(A). Here, Coeur learned that its

5 initial disclosure was incorrect because of the formatting problem 6 that caused the omission of the fourth box of the spreadsheet. 7 providing the corrected document to Zurich, together with an 8 explanation of the reason for the correction, Coeur effectively 9 supplemented its initial disclosure. Furthermore, even accepting By

10 for the sake of argument Zurich's perceived distinction between 11 "provide" and "disclose" -- a distinction that is dubious at best, in 12 light of the appearance of the former word in the text of Rule 13 26(a) -- it is undisputed that the additional or corrective 14 information was made known to Zurich during the discovery process. 15 As such, Zurich's argument that Coeur failed to comply with Rule 26 16 is without merit. 17 Moreover, Zurich's contention in its Reply (#125) that "Rule

18 37(c) mandates the exclusion of evidence that that [sic] has not 19 been disclosed `as required by Rule 26(a) or (e)'" is a false 20 statement of the rule. (P.'s Reply at 3 (#125).) Rule 37(c)

21 requires exclusion only if the failure to disclose was not 22 "substantially justified or harmless," and even then sanctions other 23 than exclusion are available. See FED. R. CIV. P. 37(c)(1)(A-C).

24 Coeur does not contend that there was any justification for the 25 omission, it was simply an error. 26 error was entirely harmless. It appears, however, that the

Coeur informed Zurich of the missing

27 fourth box of the spreadsheet during discovery, and provided Zurich 28
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1 with the corrected spreadsheet.

If Zurich required additional

2 discovery based on the newly provided information, it could have 3 requested it, either by stipulation or by motion.5 The information

4 in the fourth box of the spreadsheet does not describe an additional 5 damages claim, but rather Coeur's attempt to mitigate its damages, 6 which reduced Coeur's claim against Zurich by $1,456,353. As such,

7 even if Coeur's actions with regard to the spreadsheet were to 8 constitute a violation of Rule 26 -- which they do not -- sanctions 9 pursuant to Rule 37 would be inappropriate.6 10 11 2. Kiel Declaration Zurich objects to paragraph 6 of the Kiel declaration, which

12 reads in full: "A portion of Coeur's claim is for the loss of ore 13 that had been broken and severed from the 6100 bench by the blast 14 just prior to the collapse." (Kiel Decl. ¶ 6 (#89-3).) Zurich

15 argues that this statement contradicts Mr. Kiel's deposition 16 17 18 19 20 21 22 23 24 25 26 27 28 It is worth noting that at Mr. Kiel's deposition on May 22, 2009, he was questioned about the incomplete version of the spreadsheet even though Zurich had been provided the version containing the initially omitted fourth box on April 1, 2009. Zurich's counsel's comments during the deposition confirm that he was aware that there were several versions of the document. Mr. Kiel asked to see "that net rev, the four box deal, the final net rev," to assist him in answering a question. (Kiel Depo. at 65-66 (#85-25).) Zurich's counsel responded: "Well, let's see. I have one version of it," referring to the three-box version, and then proceeded to question Mr. Kiel about that version. (Id. at 66.) Zurich's counsel thus had an opportunity to depose Mr. Kiel about the complete version of the spreadsheet, and chose not to make use of that opportunity. Not only are Rule 37 sanctions inappropriate, Zurich's objections to the spreadsheet attached as an exhibit to the Kiel Declaration are so profoundly lacking in merit that the Court has been forced to consider whether to require counsel for Zurich to show cause why they should not be sanctioned for violation of Federal Rule of Civil Procedure 11(b)(2). We have decided not to do so at this time. Counsel for Zurich are cautioned, however, that we may decide differently if they engage in further conduct of a similar nature.
10
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1 testimony.

Zurich asserts that Mr. Kiel testified that Coeur's

2 claim for "loss" of ore did not include any such broken and severed 3 ore, or "muck." Zurich asserts on this basis that paragraph 6 of

4 Mr. Kiel's declaration should be excluded from consideration on 5 summary judgment as a sham affidavit. 6 disagree. 7 At summary judgment, a district court may "disregard `sham' (Mot. at 2 (#99).) We

8 affidavits that contradict deposition testimony submitted solely to 9 generate [an] issue of fact for summary judgment purposes." Adler

10 v. Fed. Republic of Nigeria, 107 F.3d 720, 728 (9th Cir. 1997) 11 (citing Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 266-67 (9th 12 Cir. 1991)). A contradictory affidavit, however, is not necessarily Rather, the court must make a "factual

13 a sham affidavit.

14 determination that the contradiction was actually a `sham,'" as 15 opposed to an attempt to explain certain aspects of confused 16 deposition testimony, for example. Id. In making this

17 determination, the Court must consider, among other things, whether 18 "the party submitting the affidavit or declaration provides a 19 sufficient explanation for the contradiction." Martinez v. Marin

20 Sanitary Servs., 349 F. Supp. 2d 1234, 1242 (N.D. Cal. 2004). 21 During the portion of Mr. Kiel's deposition at issue, he was

22 being questioned by Zurich's counsel about the damages spreadsheet 23 discussed above -- specifically, the version that was initially 24 disclosed, missing the fourth section describing Coeur's mitigation 25 efforts. Zurich correctly notes that Mr. Kiel stated that "[t]here (Kiel Depo. at 67:21-22

26 is no muck included on this spreadsheet." 27 (#85-25).) 28

In context, however, Zurich's interpretation of Mr.
11

1 Kiel's statement is unpersuasive.

Zurich's counsel asked Mr. Kiel

2 to show him where on the spreadsheet was "set forth the amount of 3 muck that was left in the Coeur Rochester pit." (Id. at 66:4-6.) 4 Mr. Kiel indicated the box for the 6100 bench -- containing the 5 number 100,749, representing tons of ore in that bench -- but Mr. 6 Kiel conceded that not this entire amount was muck. 7 18, 67:5.) (Id. at 66:14-

Zurich's counsel pressed the matter, stating "I'm trying

8 to find out where on this spreadsheet is it stated the amount of 9 muck that was left in the Coeur Rochester pit." (Id. at 67:16-18.)

10 In response to this comment by Zurich's counsel, Mr. Kiel stated 11 that there "is no muck included on this spreadsheet." 12 67:21-22.) 13 In context, it is apparent that Mr. Kiel was not disclaiming (Id. at

14 any amount of muck as an element of Coeur's claimed damages in this 15 case, as Zurich would have it. Rather, Mr. Kiel was acknowledging

16 that the total amount of claimed lost or damaged ore from the 6100 17 bench in the third section of the spreadsheet, 100,749 tons, was not 18 broken out anywhere on the spreadsheet into a separate section for 19 "muck" and a separate section for ore that remained "in-wall" as of 20 the time of the highwall collapse. In his declaration, Mr. Kiel

21 answers a question that Zurich's counsel never asked him: how much 22 of the ore listed at the 6100 bench consisted of muck? Mr. Kiel

23 states in his declaration that "a portion of Coeur's claim is for 24 loss of ore that had been broken and severed from the 6100 bench by 25 the blast just prior to the collapse," and specifies that this 26 amount was 89,768 tons, with a value of $348,787. (Id. ¶¶ 6-7.)

27 Thus, Mr. Kiel does not contradict his deposition testimony in his 28
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1 declaration, but rather explains it by expanding upon it.

To the

2 extent that Mr. Kiel's deposition testimony could be interpreted to 3 contradict his declaration, Coeur has provided a sufficient 4 explanation for the contradiction. Paragraph six of the Kiel

5 Declaration is not a "sham," and Zurich's objection to it will be 6 overruled. 7 Zurich also objects to paragraph 8 of Mr. Kiel's declaration,

8 which reads in full as follows: "Some of the broken and blasted ore 9 at the 6100 bench sustained direct physical damage by being covered 10 up by the slide material after the collapse." (Id. ¶ 8.) Zurich

11 objects to the use of the phrase "direct physical damage"; Zurich 12 argues that Mr. Kiel's characterization constitutes a legal 13 conclusion or an opinion about an ultimate issue in the case, which 14 should be excluded. 15 (P.'s Mot. at 3-4.)

Zurich's apparent point in raising this objection is well

16 taken: Mr. Kiel's use of the phrase "direct physical damage" is not 17 probative of the meaning of the phrase "direct physical damage" as 18 that term is used in the Policy, nor is it probative of whether any 19 ore suffered such damage as a result of the highwall collapse. 20 Nevertheless, Coeur does not offer Mr. Kiel's declaration as 21 evidence for that purpose (see D.'s Opp. at 10-11), nor will we 22 consider it for that purpose. The remainder of paragraph 8 is

23 essentially a gloss on what Mr. Kiel means by the phrase: he saw 24 broken and blasted ore covered up by slide material. As a lay

25 observation of what happened during the slide, this statement is 26 unobjectionable. Moreover, for reasons that will become apparent

27 below, the issue is moot: our rulings on the pending dispositive 28
13

1 motions do not turn on the issue of whether there was "direct 2 physical damage" to the ore or not. 3 will be overruled. 4 5 3. Tattersall Declaration Zurich objects to paragraph 7 of Mr. Tattersall's declaration, Zurich's objection, therefore,

6 which reads in part as follows: "On September 21, 2006, Coeur 7 conducted a production blast on the 6100 bench of the Rochester 8 Mine. The blast broke and severed ore from the 6100 bench." Zurich

9 contends that Mr. Tattersall testified at his deposition that 10 blasting was conducted on the 6125 bench on the day of the slide, 11 and that his declaration to the contrary should be stricken. 12 Mr. Tattersall's deposition testimony identifying the 6125

13 bench as the site of blasting on September 21, 2006, appears to have 14 been the result of a failure of memory. Though he answered Zurich's

15 counsel's questions referring to blasting on the 6125 bench on the 16 day of the highwall collapse, Mr. Tattersall also testified that he 17 did not recall for certain what bench was being worked on, and 18 suggested that Mr. Kiel, whose deposition was to be taken the next 19 day, would be a better source of information on that issue. 20 Tattersall Depo. at 274-275 (#85-24).) (See

As noted above, Mr. Kiel

21 explained in his deposition testimony that blasts set off in holes 22 drilled down from the 6125 foot elevation are on the 6100 shelf 23 according to the designations used by Coeur. To the extent that Mr.

24 Tattersall's declaration contradicts his deposition testimony, Coeur 25 provides a sufficient explanation for the contradiction, and we are 26 convinced the declaration is not a sham designed solely to generate 27 an issue of fact for summary judgment purposes. 28
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1

Moreover, Zurich has not pointed out, nor have we discovered,

2 any issue now pending before the Court, the resolution of which 3 changes as a result of striking or not striking this portion of Mr. 4 Tattersall's declaration. As such, Zurich's objection is moot and

5 would be overruled on that basis, even if it did not fail on its 6 merits. 7 8 B. Zurich's Liability under the Policy Both Zurich and Coeur have moved for summary judgment on the Zurich contends that

9 issue of Zurich's liability under the Policy.

10 it has no liability under the Policy; Coeur contends that Zurich is 11 liable for the entire value of the high grade ore that now cannot be 12 mined as a result of the highwall collapse, minus the value of 13 lower-grade ore mined in mitigation of those damages, but plus extra 14 expenses incurred as a result of those mitigation efforts. 15 P.'s Mot. (#81); D.'s Mot. (#94).) (See

For the reasons stated below,

16 Zurich has the better side of this dispute. 17 18 law. In diversity actions, federal courts apply substantive state Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78 (1938); Nitco

19 Holding Corp. v. Boujikian, 491 F.3d 1086, 1089 (9th Cir. 2007). 20 Under Nevada law, "[a]n insurance policy is a contract that must be 21 enforced according to its terms to accomplish the intent of the 22 parties." Farmers Ins. Exch. v. Neal, 64 P.3d 472, 473 (Nev. 2003).

23 When the facts are not in dispute, contract interpretation is a 24 question of law. Grand Hotel Gift Shop v. Granite State Ins. Co., The language of the insurance policy

25 839 P.2d 599, 602 (Nev. 1992).

26 must be viewed "from the perspective of one not trained in law," and 27 we must "give plain and ordinary meaning to the terms." 28
15

Farmers

1 Ins. Exch., 64 P.3d at 473 (internal quotation marks omitted). 2 "Unambiguous provisions will not be rewritten; however, ambiguities 3 are to be resolved in favor of the insured." Id. (footnote

4 omitted); see also Fed. Ins. Co. v. Am. Hardware Mut. Ins. Co., 184 5 P.3d 390, 392 (Nev. 2008) ("In the insurance context, we broadly 6 interpret clauses providing coverage, to afford the insured the 7 greatest possible coverage; correspondingly, clauses excluding 8 coverage are interpreted narrowly against the insurer.") (internal 9 quotation marks omitted); Capitol Indemnity Corp. v. Wright, 341 F. 10 Supp. 2d 1152, 1156 (D. Nev. 2004) (noting that "a Nevada court will 11 not increase an obligation to the insured where such was 12 intentionally and unambiguously limited by the parties"). 13 The Policy is an "all-risk" policy: rather than providing

14 coverage by reference to "enumerated perils," as in a typical 15 liability policy, an all-risk policy covers against any fortuitous 16 loss or damage to covered property, while specific exclusions 17 "generally are the limitations on coverage." Jackson v. State Farm

18 Fire & Cas. Co., 835 P.2d 786, 789 n.4 (Nev. 1992) (citing Garvey v. 19 State Farm Fire & Casualty Co., 770 P.2d 704, 711 (Cal. 1989)). 20 Thus, the Policy covers "all risks of direct physical loss or damage 21 . . . from any external cause, except as specifically excluded." 22 (Policy at 2, 6 (#89-16).) The property covered by the Policy is

23 also described in broad terms, including, among other things, "[t]he 24 interest of [Coeur] in all Real and Personal Property owned by 25 [Coeur] . . . comprising a part of and/or appertaining to their 26 operations" at any location listed on a separate schedule, which the 27 parties agree includes the Rochester Pit. 28
16

(Id. at 6.)

1

Zurich contends that Coeur's claim for lost or damaged high-

2 grade ore was properly rejected because, inter alia, it falls under 3 several specific exclusions.7 We agree. Property specifically

4 excluded from coverage under the Policy includes "[c]urrency, deeds, 5 evidence of debt or title, notes, jewelry, precious stones, furs, 6 fine arts, gold, silver, platinum and other precious alloys or 7 metals except as provided elsewhere in this policy." (Id.) Though

8 Coeur frames its claim as one for high-grade ore, rather than for 9 gold or silver, the ore's only value is that of the precious metals 10 contained therein, less the cost of extraction. (See Depo. of

11 Carolyn Turner at 78:17-79:3 (#85-13); Depo. of Elizabeth Druffel at 12 46:25-49:1, 49:22-50:9 (#85-18); Kiel Decl., Ex. 1 (#89-3).) The

13 gold and silver in the ore is not transformed or changed during 14 processing; it is only separated from the rock in which it was 15 previously embedded.8 As such, based on the plain language of this

16 exclusion, the gold and silver contained in the claimed high-grade 17 ore is not property covered under the Policy. 18 19 20 21 22 23 24 25 26 27 28 Coeur has not asserted any right to recover on the basis of direct physical damage to the Rochester Pit itself from the highwall collapse, though it would seem that the collapse would constitute direct physical damage to real property. It may be that Coeur only holds an unpatented mining claim for the real estate at issue, and therefore does not have own any interest in the land itself, so as to potentially trigger coverage on that basis. Our record, however, is silent on this specific question. (See D.'s Countercls. ¶ 1 (#8) (stating that Couer both owns patented mining claims and controls unpatented mining claims in the area referred to as the Rochester Mine).) In any case, at every stage of this dispute, Coeur has sought to recover for allegedly lost or damaged ore, and we will consider its claim on that basis. Thus, the analogy suggested by Coeur at oral argument to wine produced from grapes or sugar from sugar beets is imprecise.
17
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1

Coeur invokes the doctrines of noscitur a sociis and ejusdem

2 generis, arguing that the exclusion is better read to apply only to 3 coins made of precious metals or "items of personal adornment," as 4 opposed to precious metals that remain unextracted from ore. 5 Opp. at 17-18 (#89).) (D.'s

At oral argument, Coeur refined this argument

6 somewhat, suggesting that the exclusion applies to items of personal 7 property, which can easily be removed or stolen. 8 however, are not persuasive. Coeur's arguments,

"Currency, deeds, evidence of debt or

9 title, notes" and "fine arts" are neither coins nor items of 10 personal adornment, and precious stones and precious metals are only 11 sometimes used for such purposes. Similarly, fine arts, gold,

12 silver, and other precious metals are only sometimes in forms that 13 can be considered personal property, easily removed or stolen. 14 Moreover, Coeur's arguments do not account for the last clause of 15 the exclusion: ". . . except as provided elsewhere in this policy." 16 The Policy specifically provides elsewhere for $2 million limit on 17 coverage for "Precious Metals (Coverage provided only while Precious 18 Metals situated in Pour Room at Lovelock, NV location)." 19 2 (#89-16).) (Policy at

This provision suggests that it is not the form that

20 the precious metals are in, but rather their location that 21 determines whether or not they are excluded from coverage under the 22 Policy -- or, more precisely, whether they are excepted from 23 exclusion from coverage. We conclude, therefore, that Coeur's claim

24 for lost or damaged high-grade ore was properly denied under the 25 Policy's exclusion for gold, silver, and other precious metals. 26 Zurich also could have properly denied all, or at least most,

27 of Coeur's claim for loss or damage to high-grade ore under the 28
18

1 exclusion for "[c]rude oil, natural gas, coal or other minerals 2 prior to recovery above ground." (Id. at 6.) Coeur argues that

3 this exclusion does not apply to open-pit mines, but only to 4 underground mines. (D.'s Opp. at 20-21 (#89).) This argument,

5 however, is unsupported by the plain language of the exclusion, 6 which makes no distinction between underground mines and open-pit 7 mines. Furthermore, even in an open-pit mine, the minerals that are

8 being extracted are underground, in the plain and ordinary meaning 9 of the term, until they are recovered -- hence the need to drill down 10 from the surface of the pit into a bench of ore and set off dynamite 11 blasts to sever it from deeper benches. Coeur has a plausible

12 argument that this exclusion does not apply to ore from the 6100 13 bench that was blasted and severed from the underlying benches 14 immediately prior to the south highwall collapse. On this view, the

15 ore in the 6100 bench was recovered above ground, at least 16 momentarily, before being covered by debris from the highwall 17 collapse.9 Nevertheless, only a small percentage of Coeur's total

18 claim is for ore that had been broken and severed from the 6100 19 bench. (See Kiel Decl. ¶ 5-7 (#89-3).) And, as discussed above,

20 the claim for even that small portion of the ore was properly denied 21 under the exclusion for gold, silver, and other precious metals. 22 Thus, Coeur's entire claim for $7,010,714 based on the value of gold 23 24 25 26 27 28 Zurich argues that "recovery above ground" does not occur until the broken and blasted ore is lifted off of the ground by loaders for placement in trucks; until then, the ore has merely been "loosened" from the underlying layers of ore. (P.'s Reply at 12-13 (#98).) In light of the requirement that ambiguous provisions be interpreted "to afford the insured the greatest possible coverage," Fed. Ins. Co., 184 P.3d at 392, Zurich has the weaker argument here.
19
9

1 and silver contained in allegedly lost or damaged ore was properly 2 denied pursuant to specific exclusions in the Policy.10 3 Coeur also asserts, in the alternative, that it is entitled to

4 recover on its claim pursuant to the business interruption 5 provisions of the Policy. The Policy provides coverage "against

6 loss resulting directly from the necessary interruption of business 7 caused by direct physical damage to or destruction of real or 8 personal property, except finished stock, by the peril(s) insured 9 against, during the term of this policy, on premises occupied by the 10 Insured and situated as described under the Property Insured." 11 (Policy at 15 (#89-16).) Business interruption coverage does not

12 apply, however, until the period of the interruption exceeds 360 13 hours. Zurich's liability is further limited to 100% of "gross

14 earnings," as that term is defined in the Policy, that would have 15 been earned during the twelve months immediately following the date 16 of the interruption, no matter how long the interruption continues. 17 (Policy at 3, 5 (#89-16).) 18 It is undisputed that Coeur's employees and equipment were put

19 back to work on other portions of the Rochester Mine shortly after 20 the highwall collapse, well within the 360 hour deductible. 21 argument, however, is that the highwall collapse permanently 22 interrupted its business by requiring abandonment of its previous 23 24 25 26 27 28 We need not address the parties' further arguments relating to other exclusions in the Policy, or the question of whether there was a "direct physical loss or damage" of the ore, in the meaning of the policy. We also emphasize that our analysis is based solely on the language of the policy itself and the undisputed facts: the parties' arguments regarding the meaning of the Policy based on evidence other than the language of the Policy itself are irrelevant, and were not considered.
20
10

Coeur's

1 mining plan.

This resulted in a reduction of gross earnings,

2 measurable by the difference between the value of ore that would 3 have been mined under the old mining plan, minus the value of lower4 grade ore mined instead under the revised mining plan -- in other 5 words, the same $7,010,714 as Coeur claims under the physical damage 6 provisions of the policy. 7 Business interruption insurance does not provide a guarantee

8 that the insured's business plan will be fully implemented as hoped, 9 as Coeur would have it. On its own terms, the Policy provides

10 coverage for losses resulting "directly from the necessary 11 interruption of business," that is, the interruption of mining 12 operations, not interruption of work pursuant to any particular 13 mining plan. See, e.g., Winters v. State Farm Fire & Cas. Co., 73

14 F.3d 224, 228-29 (9th Cir. 1995) (citing Pac. Coast Eng'g Co. v. St. 15 Paul Fire & Marine Ins. Co., 88 Cal. Rptr. 122 (Cal. Ct. App. 1970), 16 for the proposition that "business interruption insurance provides 17 coverage only for losses directly resulting from interruption of 18 business and not merely from interruption of work on a particular 19 product"); Buxbaum v. Aetna Life & Cas. Co., 126 Cal. Rptr. 2d 682, 20 691-692 (Cal. Ct. App. 2002) (rejecting law firm's claim under 21 business interruption policy because the policy provided coverage 22 "only for losses resulting directly from interruption of the 23 business, i.e., operation of the firm, and not merely from 24 interruption of the work being done on a particular client matter at 25 the time of the occurrence of a peril insured against") (quoting 26 27 28
21

1 Pac. Coast Eng'g Co., 88 Cal. Rptr. at 124.11

Business interruption

2 coverage is only available under the Policy when the "determined 3 period of interruption" of mining operations "exceeds 360 hours." 4 (Policy at 3 (#89-16).) Here, there was no such interruption of

5 greater than 360 hours; though mining operations had to be moved to 6 other, apparently less productive areas of the Rochester Mine, 7 Coeur's employees and equipment from the area affected by the 8 highwall collapse were back in business shortly after the collapse. 9 Thus, Coeur is not entitled to recover under the business 10 interruption provisions of the Policy. 11 Several courts have been sympathetic to the view espoused by

12 Coeur that such a conclusion in essence punishes Coeur for 13 attempting to mitigate its damages in a timely manner. See Maher v.

14 Cont'l Cas. Co., 76 F.3d 535, 539 n.1 (4th Cir. 1996); Am. Med. 15 Imaging Corp. v. St. Paul Fire & Marine Ins. Co., 949 F.2d 690, 69216 93 (3d Cir. 1991). We disagree. "If the insured continues to

17 operate despite physical damage, business interruption coverage does 18 not apply." Buxbaum, 126 Cal. Rptr. 2d at 693-94. An insured "is

19 not `punished' by continuing business at a lower level following an 20 21 22 23 24 25 26 27 28 As noted above, Nevada law applies in this case. Nevada case law interpreting business interruption clauses, however, is sparse. Where the Nevada Supreme Court has not addressed an issue, "we must use our best judgment to predict how that court would decide it." Capital Dev. Co. v. Port of Astoria, 109 F.3d 516, 519 (9th Cir. 1997) (quoting Allen v. City of L.A., 92 F.3d 842, 847 (9th Cir. 1996). In the context of interpreting insurance policy terms, the Nevada Supreme Court has often looked to persuasive precedent from other jurisdictions, especially California. See, e.g., Fed. Ins. Co., 184 P.3d at 395 (beginning a discussion of authority from other jurisdictions with analysis of California appellate court decision); Jackson, 835 P.2d at 789 n.4 (citing California appellate court decision regarding all-risk policies). We shall take a similar approach here.
22
11

1 event causing a physical loss or damage because, if in fact the 2 insured is able to continue business following the event, the 3 business interruption coverage never applied in the first place." 4 Id. at 694. Here, Coeur was forced to interrupt its business for a

5 short period of time, but was able to resume operations well within 6 the 360 hour deductible that applies to its business interruption 7 coverage. As such, the business interruption coverage of the Policy

8 never applied, and Coeur's claim on that basis was properly 9 rejected. 10 Coeur's claim for extra expenses associated with mitigating its

11 damages depends on Coeur having a viable claim under either the 12 physical damage provisions or the business interruption provisions 13 of the Policy. (See D.'s Opp. at 27 (#89) (arguing that the "Extra

14 Expense Coverage is contained in a separate section of the policy 15 and applies to losses under both the property damage and business 16 interruption coverage provisions").) Zurich disputes Coeur's

17 interpretation of the Policy with regard to extra expenses, arguing 18 that the extra expense coverage applies only to claims under the 19 business interruption provisions of the Policy, and not to the 20 physical damage provisions. (See D.'s Mot. at 31 (#82).) We have

21 concluded, however, that Coeur is not entitled to recover under 22 either theory. As such, there is no basis for Coeur to recover its

23 claimed extra expenses, and we need not resolve the dispute between 24 the parties regarding the applicability of the extra expense 25 provisions of the Policy. 26 In short, Coeur's claims under the Policy were properly Coeur's claim for lost or damaged ore falls
23

27 rejected by Zurich. 28

1 under one or more specific exclusions from coverage.

The business

2 interruption provisions of the Policy were not triggered, because 3 Coeur's business was not interrupted for a period longer than the 4 applicable 360 hour deductible. Coeur's claim for extra expenses

5 fails because Coeur has no valid claim under either the physical 6 damage provisions or business interruption provisions of the Policy. 7 As such, Zurich is entitled to summary judgment in its favor on the 8 issue of liability under the Policy. 9 10 C. Coeur's Bad Faith Claim Zurich seeks summary judgement in its favor on Coeur's second

11 claim for relief for bad faith breach of an insurance contract. 12 Under Nevada law, bad faith is "an actual or implied awareness of 13 the absence of a reasonable basis for denying benefits of the 14 insurance policy." Allstate Ins. Co. v. Miller, 212 P.3d 318, 324

15 (Nev. 2009) (citing U.S. Fid. v. Peterson, 540 P.2d 1070, 1071 16 (1975)). Here, as discussed above, Zurich had a reasonable basis

17 for denying Coeur's claims, namely, Coeur is not entitled to recover 18 under the terms of the Policy. As such, Zurich is entitled to

19 summary judgment in its favor on this claim for relief. 20 21 D. Coeur's Claim Pursuant to Nev. Rev. Stat. § 686A.310. Zurich also seeks summary judgment on Coeur's claim for relief

22 pursuant to Nev. Rev. Stat. § 686A.310 regarding the manner in which 23 Zurich processed its claim. Our conclusions regarding the propriety

24 of Zurich's denial of the claim and lack of bad faith are not 25 dispositive of this issue. Unlike a cause of action for bad faith,

26 the provisions of Nev. Rev. Stat. § 686A.310 "address the manner in 27 which an insurer handles an insured's claim whether or not the claim 28
24

1 is denied."

Schumacher v. State Farm Fire & Cas. Co., 467 F. Supp.

2 2d 1090, 1095 (D. Nev. 2006) (citing Pioneer Chlor Alkali Co., Inc. 3 v. Nat'l Union Fire Ins. Co., 863 F. Supp. 1237, 1243 (D. Nev. 4 1994)). Coeur argues that Zurich breached six subsections of Nev. We will analyze each of these arguments

5 Rev. Stat. § 686A.310. 6 separately. 7 8

1. NEV. REV. STAT. § 686A.310(1)(a) Coeur argues that Zurich violated the subsection that defines

9 "misrepresenting to insureds or claimants pertinent facts or 10 insurance policy provisions relating to any coverage at issue" to be 11 an "unfair practice." NEV. REV. STAT. § 686A.310(1)(a). Coeur

12 points to two alleged misrepresentations of pertinent facts in 13 particular, both from the September 20, 2007, letter in which Zurich 14 denied Coeur's claim. (See Denial Letter (#103-22).) In each case, First is

15 Coeur complains that Zurich misrepresents Coeur's claims. 16 a passage that reads as follows: 17 18 19 20 21

[the claimed lost ore] has not itself suffered any "direct physical" loss or damage. Nor is Coeur presenting a claim for any such `direct physical' loss or damage' to that ore itself. Instead, Coeur is seeking to recover the lost mining value because of the ore's inaccessibility in the step-out and the berm. The mere detrimental economic impact because of Coeur's lost mining capacity does not present a claim for "direct physical" loss or damage to property . . . ." Coeur argues that, to the contrary, it has asserted

22 (Id. at 16-17.)

23 precisely a claim for "direct physical loss or damage to that ore 24 itself." Second, Coeur objects to the letter's next paragraph, in

25 which Zurich finds that, even if there were direct physical loss or 26 damage, such loss or damage would be properly denied pursuant to an 27 exclusion for damage resulting from "faulty workmanship," "faulty 28
25

1 methods of construction," and/or "faulty errors or omissions in 2 design." (Id. at 17.) Coeur argues that this assertion amounts to

3 a misrepresentation of Coeur's claim because Coeur never made a 4 claim for damage to the highwall, so as to trigger the provisions of 5 the Policy that could relate to the design or construction of the 6 highwall, but only made a claim for lost ore. 7 Coeur has not pointed out, nor have we discovered, any

8 authority supporting the notion that such statements could 9 constitute a violation of Nev. Rev. Stat. § 686A.310(1)(a). This

10 subsection prohibits such malfeasance as an insurer misrepresenting 11 the terms of an insurance policy to its insured, or misrepresenting 12 to its insured facts that are within the insurer's knowledge that 13 could give rise to coverage. See, e.g., Albert H. Wohlers & Co. v.

14 Bartgis, 969 P.2d 949, 961 (Nev. 1998) (insurer misrepresented to 15 the insured that a policy was similar to the insured's previous 16 policy and unilaterally inserted provisions into the policy without 17 disclosing their effect to the insured); Stalberg v. W. Title Ins. 18 Co., 282 Cal Rptr. 43, 50 (Cal. Ct. App. 1991) (under similar 19 provision of California law, finding substantial evidence of 20 violation where insurer created and recorded "wild" deeds containing 21 fictitious easements, and concealed this fact from its insured). 22 Zurich's characterizations of Coeur's claim in the Denial Letter are 23 not misrepresentations of the terms of the Policy or of pertinent 24 facts relating to coverage, but rather constitute Zurich's analysis 25 of the Policy and the facts pertinent to Coeur's claim. An

26 insurer's analysis of an insured's claim in a letter denying 27 coverage need not necessarily be framed in the manner that the 28
26

1 insured would prefer.

As such, Zurich is entitled to summary

2 judgment on Coeur's claim pursuant to Nev. Rev. Stat. 3 § 686A.310(1)(a). 4 5 2. NEV. REV. STAT. § 686A.310(1)(c) Coeur argues that Zurich violated the subsection that defines

6 "[f]ailing to adopt and implement reasonable standards for the 7 prompt investigation and processing of claims arising under 8 insurance policies" to be an "unfair practice." 9 § 686A.310(1)(c). NEV. REV. STAT.

Coeur's claim under this subsection relates

10 primarily to the qualifications and performance of the people 11 conducting the investigation of Coeur's claim.12 Coeur concedes

12 that Zurich did adopt and implement best practices guidelines in 13 April 2007. (D.'s Opp. at 27-28 (#103).) Coeur's argument is only

14 that Zurich's employees or agents violated those standards, which is 15 perhaps a subspecies of failure to implement reasonable standards, 16 though Coeur does not present, and we have not discovered, any 17 authority in support of that proposition. Moreover, there is no

18 indication that the qualifications or performance of the people 19 conducting the investigation of Coeur's claim had any bearing on the 20 outcome or timing of Zurich's coverage decision. Zurich did not

21 fail to investigate Coeur's claim appropriately; rather, Zurich 22 rejected Coeur's reasoning in support of its claim. Cf. Pioneer

23 Chlor Alkali, 863 F. Supp. at 1249 (finding genuine issue of fact 24 regarding section 686A.310(c) claim where there was some evidence 25 that the insurance company did not investigate all claimed theories 26 27 28 Coeur also repeats arguments that primarily relate to Nev. Rev. Stat. § 686A.310(1)(d). We will address these arguments below.
27
12

1 regarding cause of loss).

As such, Zurich did not violate this

2 subsection, and is entitled to summary judgment in its favor on this 3 issue. 4 5 3. NEV. REV. STAT. § 686A.310(1)(d) Coeur argues that Zurich violated the subsection that defines

6 "[f]ailing to affirm or deny coverage of claims within a reasonable 7 time after proof of loss requirements have been completed and 8 submitted by the insured" to be an "unfair practice." 9 STAT. § 686A.310(1)(d). NEV. REV.

Coeur argues that its claim was submitted

10 on December 1, 2006, and that "detailed documentation" of the claim 11 was submitted in January 2007. The "detailed documentation" to

12 which Coeur refers, however, is only a brief letter summarizing 13 Coeur's understanding of the facts, and a brief summary of the 14 claim; it is not "detailed documentation" of the claim. In fact,

15 the first paragraph of the letter indicates that if Zurich were to 16 "desire more detail," Coeur would "attempt to accommodate [Zurich's] 17 request." (See Letter from Carolyn Turner to Joe Bauer (January 24, In the following months

18 2007), Bithell Decl., Ex. L (#103-14).)

19 Coeur submitted certain documentation in support of the revised 20 claim, but did not immediately complete its proof of loss 21 requirements; the evidence in the record supports Zurich's 22 contention that the proof of loss requirements were not completed 23 until July 11, 2007.13 (See D.'s Mot. at 27 (#92); Framson Decl.,

24 Ex. 23 (## 95-24) (summary of dates on which documentation from 25 26 27 28 Contrary to Coeur's assertion, presented at oral argument, it was perfectly appropriate for Zurich to wait for a complete assessment regarding the cause of the highwall collapse before affirming or denying coverage on Coeur's claim.
28
13

1 Coeur was received).) 2 on September 20, 2007.

As noted above, Zurich denied Coeur's claim Thus, there was a delay of just over two

3 months, from July 11, 2007, until September 20, 2007, between Coeur 4 completing its proof of loss requirements and Zurich's decision 5 regarding the claim. There is no authority in support of the notion

6 that such a short delay could support a claim under Nev. Rev. Stat. 7 § 686A.310(d), especially with regard to a large claim involving 8 relatively complex technical questions. Cf. Estate of Lomastro ex

9 rel Lomastero v. Am. Family Ins. Group, 195 P.3d 339, 351-52 (Nev. 10 2008) (finding genuine issue of material fact as to whether ten11 month delay without affirming or denying coverage on a claim 12 involving a single-vehicle rollover accident was unreasonable). 13 such, Zurich is entitled to summary judgment in its favor on this 14 claim. 15 16 4. NEV. REV. STAT. § 686A.310(1)(e) Coeur argues that Zurich violated the subsection that defines As

17 "[f]ailing to effectuate prompt, fair and equitable settlements of 18 claims in which liability of the insurer has become reasonably 19 clear" to be an "unfair practice." NEV. REV. STAT. § 686A.310(1)(e). Thus, Coeur's

20 As discussed above, Zurich is not liable here. 21 arguments relating to this subsection fail. 22 23 5. NEV. REV. STAT. § 686A.310(1)(f)

Coeur argues that Zurich violated the subsection that defines

24 "[c]ompelling insureds to institute litigation to recover amounts 25 due under an insurance policy by offering substantially less than 26 the amounts ultimately recovered in actions brought by such 27 insureds, when the insureds have made claims for amounts reasonably 28
29

1 similar to the amounts ultimately recovered" to be an "unfair 2 practice." NEV. REV. STAT. § 686A.310(1)(f). Again, Coeur's claims

3 under the Policy were properly rejected, so Zurich did not violate 4 this subsection. 5 6 6. NEV. REV. STAT. § 686A.310(1)(n) Coeur argues that Zurich violated the subsection that defines

7 "[f]ailing to provide promptly to an insured a reasonable 8 explanation of the basis in the insurance policy, with respect to 9 the facts of the insured's claims and the applicable law, for the 10 denial of his claim or for an offer to settle or compromise his 11 claim" to be an "unfair practice." NEV. REV. STAT. § 686A.310(1)(n).

12 As discussed above, Zurich's denial of Coeur's claim was reasonably 13 timely. Furthermore, the September 20, 2007, denial letter is a

14 detailed explanation of Zurich's basis for denying the claim, 15 examining in detail the Policy, the facts of Coeur's claim and the 16 applicable law. (Denial Letter, (#103-22).) Though the letter's

17 analysis reaches the same conclusion we have by means of somewhat 18 different reasoning, there is nothing inherently unreasonable or 19 absurd about Zurich's analysis. In short, there is no evidence in

20 the record that could support Coeur's claim that Zurich violated 21 this subsection. 22 23 D. Zurich's Motion to Exclude (#119) Zurich has moved to exclude certain evidence relating to

24 damages submitted by Coeur in support of its opposition to Zurich's 25 motion for summary judgment regarding Coeur's bad faith claim and 26 claim pursuant to Nev. Rev. Stat. § 686A.310. For the reasons

27 stated above, Zurich is entitled to summary judgment in its favor on 28
30

1 those claims, whether or not Coeur's evidence is excluded.

As such,

2 Zurich's motion (#119) is moot, and will be denied on that basis. 3 4 5 IV. Conclusion Zurich properly denied Coeur's claims under the Policy because

6 the alleged property damage was specifically excluded from coverage 7 and Coeur suffered no business interruption longer than the Policy's 8 360 hour deductible. Thus, Coeur's causes of action for breach of Further, the evidence in the record is

9 contract and bad faith fail.

10 insufficient to support any of Coeur's allegations under Nevada's 11 Unfair Trade Practices Act, Nev. Rev. Stat. § 686A.310. Zurich is

12 therefore entitled to summary judgment in its favor on its claim for 13 declaratory relief, and with regard to all of Coeur's counterclaims. 14 15 IT IS, THEREFORE, HEREBY ORDERED THAT Zurich's "Objections to

16 Evidence Submitted by Coeur Rochester in Opposition to Zurich 17 American's Motion for Summary Judgment" (#99) are OVERRULED. 18 19 IT IS FURTHER ORDERED THAT Zurich's "Motion to Exclude Evidence

20 of Coeur's Damages Pertaining to Bad Faith, Statutory Violations 21 Claims [FRCP 37(c)]" (#119) is DENIED as moot. 22 23 IT IS FURTHER ORDERED THAT Zurich's "Motion for Summary

24 Judgment or, in the Alternative, Partial Summary Judgment [Plaintiff 25 Zurich American's Claim for Declaratory Relief; Counterclaimant 26 Coeur Rochester's Claim for Breach of Contract]" (#81) is GRANTED. 27 28
31

1

IT IS FURTHER ORDERED THAT Zurich's "Motion for Partial Summary

2 Judgment [Coeur Rochester's Claims for Bad Faith, Violation of Nev. 3 Rev. Stat. § 686A.310, Punitive Damages]" (#91) is GRANTED. 4 5 IT IS FURTHER ORDERED THAT Coeur's "Motion for Partial Summary

6 Judgment on Liability" (#94) is DENIED. 7 8 9 10 11 DATED: June 24, 2010. 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
32

The Clerk shall enter judgment accordingly.

____________________________ UNITED STATES DISTRICT JUDGE