Fed. Ins. Co. v. Coast Converters, 339 P.3d 1281

Coast Converters manufactured plastic bags and obtained an all-risk commercial policy from Federal Insurance providing $2M property-damage (PD) and $1.75M business-interruption/extra-expense (BI/EE) coverage; Coast later increased PD to $5M.
Electrical modifications at Coast’s new facility caused voltage fluctuations that damaged machinery and increased production of defective bags (excess "scrap").
Federal paid some amounts, allocating most payments (including for increased scrap) to the BI/EE limit until the BI/EE cap was reached; Federal refused to pay additional PD amounts.
Coast sued for breach of contract and UCPA violations; the district court submitted coverage (PD v. BI/EE) and applicable PD limit (2M v. 5M) to the jury.
Jury awarded Coast over $4M for breach and over $5M on the UCPA claim; the Supreme Court of Nevada concluded the district court erred in sending legal questions to the jury and vacated/reversed/remanded in part.

Issue	Coast's Argument	Federal's Argument	Held
Whether categorizing the loss (PD v. BI/EE) is a question of law or fact	Coverage determination should be left to the jury (factual dispute)	It is a question of law (contract interpretation)	Question of law; district court erred in submitting to jury
Which policy provision covers increased scrap	Scrap is PD (finished stock) and should be covered under PD limit	Scrap is an extra expense from continuing operations and is BI/EE	Factual issue: jury decides when insured knew continued production would cause excess scrap; legal consequence: scrap produced after that date is BI/EE; before that date is PD (finished stock)
Which PD policy limit (2M v. 5M) applies given ongoing damage	Jury’s verdict implies 5M applies; factual findings support increase	If appreciable damage was known before increase, 2M controls	Application of the manifestation rule is legal; jury finds manifestation date, court applies law: if damage known before increase, 2M applies; otherwise 5M applies
Validity of UCPA verdict and attorney-fee award	Insurer’s misallocation and handling violated the UCPA; fees appropriate	UCPA liability and fees depend on correct coverage determination and limits	UCPA verdict vacated and remanded because it depended on erroneous coverage submission; attorney-fee award vacated for further proceedings

City of Burlington v. Indem. Ins. Co. of N. Am., 332 F.3d 38 (2d Cir. 2003) (fortuity requirement for property-loss coverage)
Univ. of Cincinnati v. Arkwright Mut. Ins. Co., 51 F.3d 1277 (6th Cir. 1995) (deliberate actions producing predictable damages are generally not fortuitous)
Jackson v. State Farm Fire & Cas. Co., 108 Nev. 504, 835 P.2d 786 (1992) (adopting the manifestation rule for ongoing property damage)
Musser v. Bank of Am., 114 Nev. 945, 964 P.2d 51 (1998) (appellate court makes independent legal determinations on questions of law)
Powell v. Liberty Mut. Fire Ins. Co., 127 Nev., 252 P.3d 668 (2011) (unambiguous policy terms are enforced according to plain meaning)
Farmers Ins. Exch. v. Neal, 119 Nev. 62, 64 P.3d 472 (2003) (contract interpretation is a question of law)