                                                                           FILED
                            NOT FOR PUBLICATION                             APR 03 2012

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U .S. C O U R T OF APPE ALS




                            FOR THE NINTH CIRCUIT



FERNANDO AVILA and ROSARIO                       No. 10-16386
REYES, Co-Administrators of the
ESTATE OF MANUEL AVILA,                          D.C. No. 2:09-cv-00682-RCJ-
                                                 GWF
              Plaintiffs - Appellants,

  v.                                             MEMORANDUM *

CENTURY NATIONAL INSURANCE
COMPANY,

              Defendant - Appellee.



                  Appeal from the United States District Court
                            for the District of Nevada
                Robert Clive Jones, Chief District Judge, Presiding

                      Argued and Submitted August 31, 2011
                            San Francisco, California

Before: BERZON and BYBEE, Circuit Judges, and GRAHAM, Senior District
Judge.**




        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
       **
             The Honorable James L. Graham, Senior District Judge for the U.S.
District Court for the Southern District of Ohio, sitting by designation.
      The estate of Manuel Avila (“Estate”) appeals the district court’s grant of

summary judgment to Century National Insurance Co. (“Century”) on the Estate’s

breach of contract and violation of the implied covenant of good faith and fair

dealing (“bad faith”) claims regarding Century’s refusal to indemnify, defend, or

settle in connection with a suit brought by Dora Rodriguez against Manuel Avila.

The district court found that the Estate had failed to show that it or Manuel Avila

had suffered any economic or emotional distress damages caused by Century’s

refusal. We review the district court’s grant of summary judgment de novo. See

Balint v. Carson City, 180 F.3d 1047, 1050 (9th Cir. 1999) (en banc). We reverse.

      1. Regarding the breach of contract claim, we conclude that the district

court erred in granting Century summary judgment on the basis that the Estate

could show no economic damages. Nevada law awards expectation damages,

Colo. Env’ts, Inc. v. Valley Grading Corp., 779 P.2d 80, 84 (Nev. 1989), and we

find no authority suggesting that an insured’s financial status affects his right to be

reimbursed under a liability policy like the one in this case. On the contrary, under

a liability policy, an insurer has an obligation to pay for any legal liability

regardless of whether the insured has already paid the claim. See 2 A LLAN D.

W INDT, INSURANCE C LAIMS AND D ISPUTES § 6:5 (5th ed. 2012). As the Estate

conceded, the amount contested under the breach of contract claim stands at


                                            2
$135,000, or the amount of the policy less the amount Century paid to Rodriguez.1

We reverse the grant of summary judgment and remand to the district court for

further proceedings to determine whether the insurance contract covered the

Estate’s claim.

      2. Regarding the bad faith claim, we also conclude that the district court

erred in granting Century summary judgment based on a lack of economic and

emotional distress damages. We presume that Nevada would look to California

law in determining whether the bad faith claim would be viable. See U.S. Fid. &

Guar. Co. v. Peterson, 540 P.2d 1070, 1071 (Nev. 1975). Under California law,

because Manuel Avila was alive when Century refused to indemnify, defend, and

settle, whether or not he had any assets at the time would be irrelevant to Century’s

duties. See Shapero v. Allstate Ins. Co., 92 Cal. Rptr. 244, 247–48 & n.1 (Ct. App.

1971). If Century breached its implied covenant with Avila while he was alive,

then, under Nevada law, the Estate would retain any such claims as if Manuel

Avila were still alive. N EV. R EV. S TAT. § 41.100(3). Thus, Manuel Avila’s or the

Estate’s assets at any point in time would be irrelevant to Century’s liability for a


      1
         Although the parties discussed the issue of an offer of judgment by Century
that Rodriguez accepted, we have no evidence of its terms. Because the issue was
not raised before the district court and there are unresolved factual issues, we leave
it to the district court to resolve in the first instance. See Marx v. Loral Corp., 87
F.3d 1049, 1055 (9th Cir. 1996).

                                           3
breach of the implied covenant of good faith and fair dealing, and the Estate may

be able to claim damages based on a bad faith refusal to indemnify, defend, or

settle. We agree with the district court that, under Nevada law, ambiguity in the

insurance contract sufficient to preclude a directed verdict against the insurer on

the contract claim does not necessarily preclude a bad faith claim. See Albert H.

Wohlers & Co. v. Bartgis, 969 P.2d 949, 955–56 & n.2 (Nev. 1999). On the

record, there was a triable issue of fact regarding whether there was bad faith. We

reverse the grant of summary judgment on the bad faith claim and remand for

further proceedings to determine whether Century acted in bad faith and, if so, the

extent of any damages that the Estate suffered as a result.

      We also agree with the district court that the Estate remains eligible to

collect any emotional distress damages that Manuel Avila suffered if Century acted

in bad faith. We disagree, however, with its determination that there was

insufficient evidence to support an emotional distress claim. We find that there

was a genuine dispute of material fact over emotional damages because Fernando

Avila’s testimony was sufficient for a jury to reach the conclusion that Manuel

Avila was harmed by Century’s conduct. We reverse the district court’s

determination that there was no genuine dispute of material fact concerning




                                           4
emotional distress and remand for further proceedings to establish the extent of the

emotional distress damages if it is found that Century acted in bad faith.2

      REVERSED AND REMANDED.




      2
       The Estate, in its reply brief, raised the issue of whether it should be
allowed to conduct additional discovery related to emotional distress damages.
While such a claim would ordinarily be waived given that it was not raised in the
opening brief, because we remand for further proceedings, allowing further
discovery is now within the discretion of the district court.

                                          5
