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Sierra Pacific Power Co. v. The Hartford Steam Boiler Inspection and Insurance Co.

United States District Court, D. Nevada

February 5, 2015

SIERRA PACIFIC POWER COMPANY, a Nevada Corporation, Plaintiff,
THE HARTFORD STEAM BOILER INSPECTION AND INSURANCE COMPANY, a Connecticut Corporation; and ZURICH AMERICAN INSURANCE COMPANY, a New York Corporation, as successor in interest to ZURICH INSURANCE COMPANY, U.S. Branch; Defendants.


LARRY R. HICKS, District Judge.

Before the Court is Defendants Hartford Steam Boiler Inspection and Insurance Company and Zurich American Insurance Company's (collectively "Defendants") Motion for Relief Under Rules 52(b), 58(e), and 60. Doc. #236.[1] Plaintiff Sierra Pacific Power Company ("Sierra Pacific") filed a Motion to Clarify the Court's December 5, 2014, Order (Doc. #238), and a Response to Defendants' Motion (Doc. #248). Defendants did not reply.

I. Factual Background and Procedural History

This case involves a dispute regarding insurance coverage that Sierra Pacific procured from Defendants. Sierra Pacific operates power generation stations in Nevada and California. Defendants insure Sierra Pacific's facilities, including the Farad Dam on the Truckee River in California ("the Dam"). The Dam was completely destroyed by a flood in 1997, at which point Sierra Pacific filed a claim for damages with Defendants.

Following a three-day bench trial on April 8 to 10, 2008, as well as written briefing and written closing arguments by the parties, the Court awarded declaratory relief and entered judgment in favor of Sierra Pacific in accordance with the Court's Findings of Fact and Conclusions of Law. Doc. #164; Doc. #165. Therein, the Court determined that the actual cash value ("ACV"), with proper deduction for depreciation, of the Dam was $1, 261, 000. Doc. #164 at 8. The Court also reaffirmed its earlier findings that Defendants' payment of $1, 011, 200 to Sierra Pacific in April 2001 did not constitute an agreement as to the ACV or satisfaction of ACV coverage under Defendants' policy. Id. at 4-5, 7. The Court further determined that the replacement cost of the Dam was $19, 800, 000. Id. at 5.

On October 10, 2008, Sierra Pacific filed a Motion to Reconsider the Court's determination of the Dam's ACV. Doc. #166. On July 10, 2009, the Court denied Sierra Pacific's Motion, finding that the Dam's ACV had already been litigated.[2] Doc. #182. The Court explained that "the most persuasive evidence before the [C]ourt concerning the [D]am's [ACV] is a letter in which [Sierra Pacific's] insurance broker [Mark Walters] stated to [Sierra Pacific's] claims manager [John Hargrove], We are only agreeing that the ACV is $1, 261, 200 and nothing else.'" Id. at 4-5 (citing Doc. #167, Ex. D at 1). The Court also found pertinent an email from Mark Walters to Sierra Pacific's former manager of claims and insurance Curtis Risley, agreeing to apply Defendants' depreciation factors to the Dam to reach an ACV of $1, 261, 000, subject to Sierra Pacific's claims manager's review. Id. at 5 n.4 (citing Doc. #167, Ex. C, p. 2).

Thereafter, the parties filed notices of appeal. Doc. #183; Doc. #187. On July 27, 2012, the Ninth Circuit Court of Appeals issued a Memorandum vacating the Court's finding that the ACV of the Dam was $1, 261, 200, and remanded so that the Court could determine the ACV based on reducing the replacement cost of $19, 800, 000 by the "appropriate" depreciation, and fashion an appropriate order tolling the three-year period for replacing the Dam. Doc. #213 at 17.[3] The Ninth Circuit rejected Sierra Pacific's argument that the Dam's ACV should be calculated as the full replacement cost without any depreciation. Id. at 6. The Ninth Circuit also rejected the argument that the parties had agreed to an ACV. Id. at 7 (noting that neither of the documents authored by Mark Walters evidenced Sierra Pacific's actual agreement to the ACV; rather, they represented only Sierra Pacific's insurance broker's recommendation to Sierra Pacific as to the ACV). The Ninth Circuit went on to reject the proposed ACV of $1, 261, 200 because it was not related to the figure found as the replacement cost ($19, 800, 000). Id.

On October 18, 2013, the Court held a Status Conference and ordered the parties to submit briefing on the issue of depreciation. Doc. #219. On November 18, 2013, Defendants filed a Memorandum Regarding Proper Depreciation to Apply to the Replacement Cost of the Farad Dam to Reach Actual Cash Value. Doc. #221. Also on November 18, 2013, Sierra Pacific filed a Memorandum Brief on Depreciation. Doc. #222. On December 3, 2013, Defendants and Sierra Pacific filed their respective Responses. Doc. #223; Doc. #224. On September 19, 2014, the Court held that based on the evidence presented at trial, it was appropriate to apply a 50% rate of depreciation for the in-river Dam and a 5% rate of depreciation for the wing wall, and that subtracting this depreciation from the full replacement cost yielded an ACV of $12, 216, 600. Doc. #225 at 7. Defendants and Sierra Pacific filed Motions to Amend the September 19, 2014, Order on October 16, 2014, and October 17, 2014, respectively. Doc. #228; Doc. #229.

On December 5, 2014, the Court affirmed that the ACV of the dam when it was destroyed was $12, 216, 600 and awarded prejudgment interest to Sierra Pacific on this amount less the $1, 600, 000 deductible, and less Defendants' $1, 011, 200 payment, beginning April 3, 2001. Doc. #235 at 7, 9-10. On December 31, 2014, Defendants filed a Motion to Amend under Rules 52(b), 58(e), and 60 (Doc. #236) and Sierra Pacific filed a Motion to Clarify (Doc. #238). Defendants argue (1) that the Court erred in awarding prejudgment interest, (2) that the Court erred in awarding prejudgment interest on sums that Defendants were not obligated to pay, (3) that if prejudgment interest is allowed, it should not begin to run until April 3, 2001, and (4) that any prejudgment interest should not run on amounts not incurred until after April 3, 2001. Doc. #237. Sierra Pacific argues that the Court properly awarded prejudgment interest, but asks the Court to clarify that prejudgment interest does not apply to sums not yet due, and does not begin to run until April 3, 2001. Doc. #248. Sierra Pacific also asks the Court to state that even if prejudgment interest was not available under California Civil Code § 3287(a), the Court still would have awarded prejudgment interest under § 3287(b). Id. Finally, Sierra Pacific requests clarification that the December 5, 2014, Order was not intended to amend any of the Court's September 30, 2008 Findings of Fact and Conclusions of Law.

II. Legal Standard

Upon motion by a party within twenty days of the entry of judgment, "the court may amend its findings-or make additional findings-and may amend the judgment accordingly." Fed.R.Civ.P. 52(b). Such a motion shall be accompanied by a motion for a new trial, or to alter or amend a judgment under Federal Rule of Civil Procedure 59(e). A party can also seek relief from final judgment under Federal Rule of Civil Procedure 60(b). "Reconsideration is appropriate if the district court (1) is presented with newly discovered evidence, (2) committed clear error or the initial decision was manifestly unjust, or (3) if there is an intervening change in controlling law." School Dist. No. 1J, Multnomah Cnty., Or. v. ACandS, Inc., 5 F.3d 1255, 1263 (9th Cir. 1993). "A Rule 59(e) motion may not be used to raise arguments or present evidence for the first time when they could reasonably have been raised earlier in the litigation." Carroll v. Nakatani, 342 F.3d 934, 945 (9th Cir. 2003). District courts have discretion regarding whether to grant a motion to amend under Rule 59(e) or 60(b). Wood v. Ryan, 759 F.3d 1117, 1121 (9th Cir. 2014).

III. Discussion

A. Defendants' Motion to Amend

California law provides that a plaintiff is entitled to recover interest on damages to which the plaintiff is entitled beginning on the date that damages become "certain, or capable of being made certain by calculation... except when the debtor is prevented by law, or by the act of the creditor from paying the debt." Cal. Civ. Code § 3287(a). "Damages are deemed certain or capable of being made certain within the provisions of [§ 3287(a)] where there is essentially no dispute between the parties concerning the basis of computation of damages if any are recoverable but where their dispute centers on the issue of liability giving rise to damage." Fireman's Fund Ins. Co. v. Allstate Ins. Co., 286 Cal.Rptr. 146, 158 (Cal.Ct.App. 1991) (quoting Esgro Cent., Inc. v. Gen. Ins. Co., 98 Cal.Rptr. 153, 157 (Cal.Ct.App. 1971)). Section 3287(a) "does not authorize prejudgment interest where the amount of damage, as opposed to the determination of liability, depends upon a judicial determination based upon conflicting evidence and is not ...

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