Allocco

MEMORANDUM **

Cynthia Allocco appeals from the district court’s denial of her motion for a new trial following the entry of judgment after a bench trial awarding her short-term disability benefits, compensatory damages, and punitive damages. Metropolitan Life Insurance Company (“MetLife”) cross-appeals, arguing that the district court erred as a matter of law by precluding it from asserting that Allocco had failed to establish a contractual or special relationship with MetLife. We reverse and remand. Because the parties are familiar with the factual and procedural history of this case, we will not recount it here.

The district court erred in denying the motion for a new trial, a decision we review for abuse of discretion. De Saracho v. Custom Food Mach., Inc., 206 F.3d 874 , 880 (9th Cir.2000). The district court’s initial judgment, which included a punitive damage award without an award of compensatory damages, was impermissible under Arizona law. Wyatt v. Wehmueller, 167 Ariz. 281 , 806 P.2d 870, 874 (1991). 1 When that error was called to the district court’s attention, the court simply reallocated the damage award among the compensatory and punitive damage categories.…