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Click here for the full text of this decision FACTS:In 1997, Aladdin Gaming LLC contracted with Fluor Daniel Inc. to redesign and rebuild the Aladdin Hotel and Casino in Las Vegas (the Aladdin Project). Fluor, the general contractor, retained Marsh USA Inc., an insurance broker, to administer the wrap-up insurance program for the Aladdin Project, known as a Controlled Insurance Program (CIP), which involved procuring different insurance policies covering various participants. As compensation, Marsh received a commission from the insurance companies and a flat fee from Fluor. The insurance provided as part of the CIP consisted of several types of policies, including but not limited to commercial general liability coverage, professional liability coverage, pollution liability coverage, subcontractor default coverage and excess liability coverage. Professional liability (PL) coverage insures against design errors and omissions. Under the contract between Fluor and Aladdin, PL coverage was required for Fluor, Aladdin and related entities, but not for subcontractors. In May 1998, St. Paul Fire & Marine Insurance Co. issued a PL policy that listed no subcontractors as additional named insureds. In December 1997, SMI Owen Steel Co. Inc.’s winning bid of $38.5 million enabled it to be retained as a subcontractor to design, engineer and install the Aladdin Project’s structural steel and foundation work. At that time, SMI signed a letter of intent with Fluor. In March 1998, SMI received an booklet from Marsh stating that enrolled subcontractors of all tiers would be covered by the CIP and provided PL coverage. In June 1998, SMI received a contractor handbook, prepared in part by Marsh, which again stated that enrolled subcontractors would be provided PL coverage under the CIP. However, the handbook cautioned that “if any part of the foregoing is in conflict with a provision of your subcontract agreement, the provisions of the subcontract agreement will govern.” In July 1998, SMI enrolled in the CIP and properly completed all enrollment forms. Although Marsh notes that SMI did not request PL coverage in its CIP enrollment forms, SMI argues that it was not required to complete additional forms to obtain the PL coverage. In August 1998, SMI signed its subcontract, which was retroactively effective to SMI’s December 1997 letter of intent. An attachment to SMI’s subcontract with Fluor described the CIP and stated that coverage for off-site work and “Design Professional Errors and Omissions Insurance” were “Not Included in the CIP.” Under an amendment to SMI’s subcontract, SMI was required to provide a certificate of insurance from McNamara/Salvia, SMI’s design consultant, showing that McNamara/Salvia had PL coverage and that SMI and Fluor were additional named insureds. This PL coverage, however, only protected SMI for vicarious liability. In October 1998, Marsh sent certificates of insurance to SMI stating that SMI was an additional named insured on Fluor’s PL policy. Unknown to SMI, in December 1998, Marsh’s project manager for the Aladdin Project, Phil Luecht, advised his employees to stop sending out certificates for PL coverage to subcontractors and to amend the contractor handbook. Despite this warning, in September 1999 Marsh sent yet another inaccurate certificate stating that SMI had PL coverage under the CIP. These two inaccurate certificates each contained a capitalized caveat: “This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies below.” SMI argues that the handbook and the two inaccurate certificates led it to detrimentally rely on Marsh to procure PL coverage. Marsh never obtained PL coverage for SMI from St. Paul or any other insurer. Four different insurance policies covered SMI under the CIP, including a subcontractor default policy. SMI contributed money in the form of bid deductions to purchase this CIP coverage, but SMI never made a bid deduction for PL coverage. From its inception, the Aladdin Project ran behind schedule. On or about June 1999, several of SMI’s subcontractors defaulted. As the construction continued, other subcontractors defaulted. Initially, St. Paul denied SMI’s claims for subcontractor default coverage, which caused SMI to file suit against St. Paul and Marsh in federal court in Galveston. Because of the multiple defaults of SMI’s subcontractors, Aladdin filed claims in an arbitration proceeding against Fluor. Subsequently, Fluor filed a related cross-action in the arbitration proceeding against SMI, alleging that SMI breached its contract, failed to properly design and fabricate its portions of the Aladdin Project and failed to perform satisfactorily its professional design and construction duties. St. Paul and SMI eventually reached a settlement in the Galveston suit. As part of this settlement, SMI released all claims against St. Paul, including claims for coverage under the subcontractor default and PL policies. St. Paul agreed to pay additional amounts if the arbitration among St. Paul, Fluor and SMI settled. Despite its settlement with St. Paul, SMI continued to pursue its claims against Marsh in the Galveston suit. The arbitration proceeding eventually settled. SMI’s share of the settlement was $3.5 million paid to Fluor and Aladdin. St. Paul paid $2.25 million of the amount, and SMI paid the remaining $1.25 million. SMI was forced to defend itself against Fluor in the arbitration proceeding without any defense or indemnity provided by the PL coverage that SMI believed was provided by the CIP. After SMI settled with St. Paul in the Galveston suit, SMI amended its complaint to assert tort and quasi-contractual claims based on Marsh’s alleged failure to procure PL insurance. SMI argued that if Marsh had secured PL coverage for SMI, then SMI would have been reimbursed for the attorneys’ fees incurred by SMI in the arbitration proceeding and the $1.25 million it contributed to the settlement with Fluor and Aladdin. SMI sought an additional $6.6 million in damages from Marsh because SMI released its claim for the unpaid subcontract value as part of its settlement with Fluor. These damages were not a part of SMI’s settlement with St. Paul. The case was tried by consent before a magistrate judge. The court ruled that Nevada substantive law applied. During the proceedings, Marsh twice moved for judgment as a matter of law, and the court denied both motions. The jury returned a verdict against Marsh on SMI’s claims for negligence. The jury also found that SMI was a third-party beneficiary of the oral contract between Fluor and Marsh and was entitled to recovery under the theory of promissory estoppel. SMI elected to recover on a theory of negligence, and the damages award was proportionately reduced by Nevada’s comparative negligence statute. The jury found SMI comparatively negligent for 12 percent of its damages. On July 31, 2006, SMI was awarded a final judgment of $7,839,131, including interest and costs. The court overruled Marsh’s postjudgment motions for judgment as a matter of law and for new trial. Marsh filed a timely appeal. HOLDING:Affirmed. Because of the absence of authority from the Nevada Supreme Court, the court made an Erie guess about how the Nevada Supreme Court would evaluate the causation and economic loss arguments related to the negligence claim. In at least three separate cases, the Nevada Supreme Court has recognized the viability of a claim against an insurance broker for negligent failure to procure insurance. Specifically, the court stated, the Nevada Supreme Court has recognized that an insurance broker “who undertakes to procure insurance for another owes an obligation to his client to use reasonable diligence in attempting to place the insurance and to seasonably notify the client if he . . . is unable to obtain the insurance.” In addition, the court stated that plaintiffs carry the burden of proof in Nevada regarding the causation element of a negligence claim. At trial, the court stated that SMI produced more than a scintilla of evidence indicating that: 1. Marsh and Fluor initially intended to obtain PL coverage for subcontractors of all tiers; 2. Marsh submitted a binder proposal to St. Paul requesting PL coverage for enrolled subcontractors; 3. the scope of coverage under the PL policy issued by St. Paul was negotiable; 4. a Marsh representative made a verbal assurance to SMI that “there was no need for professional liability insurance”; 5. the actual policy issued by St. Paul deleted the “insured versus insured” coverage exclusion through endorsement; and 6. the insurance information booklet, the contractor handbook, and the two certificates of insurance issued by Marsh all stated that SMI had PL coverage under the CIP. After conducting an “especially deferential” review of the evidence, the court concluded that a legally sufficient evidentiary basis supported a jury finding find that SMI proved the causation element of its negligence claim. Lastly, the court found that the Nevada Supreme Court would hold that the economic-loss doctrine did not bar SMI’s negligence claim. OPINION:Per curiam; Wiener, DeMoss, and Prado, JJ.

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