Arizona Limited Liability Company, D.C. No. 2:12-cv-00548-DGC v. ) MEMORANDUM ) PEERLESS INDEMNITY ) INSURANCE COMPANY, FKA ) Colorado Casualty…

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
HM HOTEL PROPERTIES, an ) No. 13-16790
Arizona Limited Liability Company, )
) D.C. No. 2:12-cv-00548-DGC
Plaintiff - Appellant, )
)
v. ) MEMORANDUM*
)
PEERLESS INDEMNITY )
INSURANCE COMPANY, FKA )
Colorado Casualty Insurance )
Company; DOES 1-50, inclusive, )
)
Defendants - Appellees. )
)
Appeal from the United States District Court
for the District of Arizona
David G. Campbell, District Judge, Presiding
Submitted November 18, 2015**
San Francisco, California
Before: O’SCANNLAIN, FERNANDEZ, and M. SMITH, Circuit Judges.
HM Hotel Properties, LLC (“Hotel”) appeals the district court’s grant of
FILED
DEC 07 2015
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
*This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**The panel unanimously finds this case suitable for decision without oral
argument. Fed. R. App. P. 34(a)(2).

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summary judgment to Peerless Indemnity Insurance Company (“Peerless”) in
Hotel’s action against Peerless for damages. We affirm.
(1) Hotel first asserts that the district court erred when it determined that
Peerless had not breached its insurance contract with Hotel by denying a claim for
damages to the hotel roof, which were allegedly caused by a hailstorm.1 More
particularly, Hotel asserts that the district court abused its discretion2 when it
determined that the evidence of a report by a witness for Hotel (Doug Settell) was
expert-opinion evidence.3 We disagree. The district court could properly decide
that the evidence in question was a detailed and complex opinion on the cost of
making repairs to the allegedly damaged roof, and required technical and
specialized knowledge4 beyond the ken of a lay witness.5 As the district court
1In this diversity action, we apply the substantive law of the State of
Arizona. See County of Orange v. U.S. Dist. Court (In re County of Orange), 784
F.3d 520, 523–24 (9th Cir. 2015). However, we apply federal procedural law,
including the Federal Rules of Evidence. See id.; Orr v. Bank of Am., NT & SA,
285 F.3d 764, 772 (9th Cir. 2002).
2See Wong v. Regents of Univ. of Cal., 410 F.3d 1052, 1060 (9th Cir. 2005);
Domingo ex rel. Domingo v. T.K., 289 F.3d 600, 605 (9th Cir. 2002); see also
United States v. Hinkson, 585 F.3d 1247, 1261–62 (9th Cir. 2009) (en banc).
3See Fed. R. Evid. 702.
4See id. at (a).
5See Fed. R. Evid. 701(c); Fed. R. Evid. 701 advisory committee’s notes to
(continued...)
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pointed out: the report in question contains, among other things, “a multi-page,
detailed breakdown of the work necessary to repair the roof and the cost of each
step, from removing roof tile, to the amount and cost of roofing felt, to the need for
hurricane clips and wind lock add-ons. . . . It includes a discussion of scaffolds,
cranes, and the amount of labor required for various steps.” Because the evidence
was expert in nature, the district court excluded it on the basis that Settell was not
disclosed as an expert witness in a timely fashion. See Fed. R. Civ. P. 26(a)(2)(A);
Fed. R. Civ. P. 37(c)(1); see also Yeti by Molly Ltd. v. Deckers Outdoor Corp., 259
F.3d 1101, 1106 (9th Cir. 2001). Absent that expert evidence, the record does not
contain any evidence of damages caused by Peerless’ alleged breach. Therefore,
Hotel did not satisfy the elements of a claim for breach of contract,6 and the district
court properly granted summary judgment on that claim.7
(2) Hotel next asserts that the district court erred when it granted
summary judgment on the claim that Peerless had violated the covenant of good
5(...continued)
2000 amendments; see also Range Rd. Music, Inc. v. E. Coast Foods, Inc., 668
F.3d 1148, 1153 (9th Cir. 2012).
6See Steinberger v. McVey, 318 P.3d 419, 434 (Ariz. Ct. App. 2014).
7See Celotex Corp. v. Catrett, 477 U.S. 317, 322–23, 106 S. Ct. 2548, 2552,
91 L. Ed. 2d 265 (1986).
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faith and fair dealing.8 We have carefully reviewed the record and we agree with
the district court that “the record provides no reasonable basis for a jury to
conclude” that Hotel’s claim was not fairly debatable9 or that Peerless did not
believe that it was fairly debatable.10 Moreover, from the record, “reasonable
jurors could [not] conclude that in the investigation, evaluation, and processing of
the claim, the insurer acted unreasonably and either knew or was conscious of the
fact that its conduct was unreasonable.”11 Thus, the district court did not err when
it granted summary judgment on the bad-faith claim.
AFFIRMED.
8See Zilisch v. State Farm Mut. Auto. Ins. Co., 995 P.2d 276, 279–80 (Ariz.
2000).
9Id. at 279.
10Id.
11Id. at 280.
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