Cordova v. American Family Mutual Insurance Co.
700 F. App'x 762
9th Cir.2017Background
- Cordova was injured in a car accident with an underinsured driver and claimed underinsured motorist (UIM) benefits from his insurer, American Family.
- American Family denied Cordova’s UIM claim; Cordova sued for breach of contract, breach of fiduciary duty, breach of the implied covenant of good faith and fair dealing (bad faith), and violations of Nevada’s Unfair Claims Settlement Practices Act.
- The district court dismissed the fiduciary-duty claim, granted summary judgment to American Family on all claims except breach of contract, and submitted the contract claim to a jury.
- The jury awarded Cordova $351,550 for breach of contract; the district court reduced the award to $100,000 (the UIM policy limit), after applying a $25,000 agreed offset.
- On appeal, the Ninth Circuit held the district court improperly reduced the jury award by $226,550 and instructed entry of judgment for Cordova in the amount of $326,550 (jury award less the $25,000 offset), but affirmed summary judgment on punitive damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Recoverability of consequential damages beyond policy limits for breach of insurance contract | Cordova argued lost wages and pain and suffering caused by the denial are recoverable expectancy/consequential damages and may exceed policy limits | American Family argued damages must be limited to policy limits | Court: Consequential damages that naturally arise from breach are recoverable; jury could find lost wages and pain/suffering flowed from denial; reinstated original award less offsets (entry of $326,550) |
| Availability of punitive damages | Cordova sought punitive damages for insurer’s conduct | American Family argued punitive damages not available on contract claim and insufficient evidence of malice/oppression | Court: Punitive damages unavailable in contract action and Cordova failed to show oppression/fraud/malice; affirmed summary judgment on punitive damages |
| Relationship between contract and bad faith/statutory claims | Cordova contended bad faith/unfair practices warranted relief beyond contract remedy | American Family argued the remedies overlapped and summary judgment disposing of those claims was proper | Court: Because contract award reinstated, court did not decide merits of summary judgment on bad faith/statutory claims (but noted overlap) |
| Proper application of offsets to jury award | Cordova accepted $25,000 offset for prior recovery from tortfeasor/medical-costs provision | American Family applied larger reduction to match policy limits | Court: Parties agreed $25,000 offset applies; district court erred in deducting additional $226,550 to reach policy limit |
Key Cases Cited
- Rd. & Highway Builders, LLC v. N. Nev. Rebar, 284 P.3d 377 (Nev. 2012) (Nevada follows Restatement §347 expectancy-damages rule for contract actions)
- Hornwood v. Smith’s Food King No. 1, 772 P.2d 1284 (Nev. 1989) (defining consequential damages as those arising naturally from breach)
- Conner v. S. Nev. Paving, 741 P.2d 800 (Nev. 1987) (same)
- Powers v. United Servs. Auto. Ass’n, 962 P.2d 596 (Nev. 1998) (evidence required to show insurer intentionally denied claim to support punitive or bad-faith relief)
- United Fire Ins. Co. v. McClelland, 780 P.2d 193 (Nev. 1989) (bad-faith or statutory claim alone does not automatically permit punitive damages)
- S.J. Amoroso Constr. Co. v. Lazovich & Lazovich, 810 P.2d 775 (Nev. 1991) (punitive damages not available in contract actions)
- Wickliffe v. Fletcher Jones of Las Vegas, Inc., 661 P.2d 1295 (Nev. 1983) (standards for punitive damages require evidence of oppression, fraud, or malice)
- Reichert v. Gen. Ins. Co. of Am., 428 P.2d 860 (Cal. 1967) (illustrative authority that consequential damages for breach of contract by insurer can exceed policy limits)