Fidelity Enterprises Ltd v National Union Fire Insurance Company of Pittsburgh [2015] GUSC 1 (29 January 2015)

IN THE SUPREME COURT OF GUAM

FIDELITY ENTERPRISES, LTD.,
a Guam Corporation,
Plaintiff-Appellant,

v.

NATIONAL UNION FIRE INSURANCE COMPANY
OF PITTSBURGH, PA., a Foreign Corporation,
Defendant-Appellee.

Supreme Court Case No. CVA14-006
Superior Court Case No. CV0753-05

OPINION

Filed: January 29, 2015

Cite as: 2015 Guam 1

Appeal from the Superior Court of Guam
Argued and submitted August 13, 2014
Dededo, Guam

Appearing for Plaintiff-Appellant: Wayson W. S. Wong, Esq. Law Offices of Wayson Wong Governor's Garden, Apt. A-1 196 Hesler Pl. Hagåtña, GU 96910

Appearing for Defendant-Appellee: Terence E. Timblin, Esq. Yanza, Flynn and Timblin, LLP 446 East Marine Corps Dr., Ste. 201 Hagåtña, GU 96910

BEFORE: ROBERT J. TORRES, Chief Justice; F. PHILIP CARBULLIDO, Associate Justice; and KATHERINE A. MARAMAN, Associate Justice.

MARAMAN, J.:

[1] In 2002, Super Typhoon Pongsona caused extensive damage to a business facility owned by Fidelity Enterprises, Ltd. ("Fidelity") and insured by National Union Fire Insurance Company of Pittsburgh, PA. ("National Union"). Because an agreement could not be reached on the amount of loss that Fidelity suffered from the typhoon, the parties initiated an appraisal process. Outside of the appraisal process, National Union paid Fidelity $382,544.00 in an effort to settle the insurance claims. Fidelity received the payment, but declined to accept the money as full payment. After two failed attempts at the appraisal process, Fidelity filed suit against National Union in the Superior Court of Guam to recover its remaining damages. In a special verdict, the jury awarded Fidelity $950,000.00 in damages. Subsequently, Fidelity filed a motion for prejudgment interest, which the trial court denied. Fidelity challenges the trial court's denial of its motion for prejudgment interest. For the reasons set forth below, we reverse.

I. FACTUAL AND PROCEDURAL BACKGROUND

[2] Fidelity operates its wholesale distribution business out of an office and warehouse in Barrigada. On December 8, 2002, as Super Typhoon Pongsona passed over Guam, it caused damage to Fidelity's business facilities. At all relevant times, Fidelity's facilities were insured for a sum of $1,700,000.00 by National Union against typhoon losses and damages as well as fire and other perils.

[3] In the event of damages to the structure, the insurance policy required Fidelity to provide National Union with a written proof of loss. The amount of loss for which National Union may be liable was to be payable within 60 days after receipt of proof of loss. If the parties could not agree on the amount of loss, the policy set out an appraisal procedure.

[4] The appraisal procedure stated, on written demand of either party, that each would select a competent and disinterested appraiser and notify the other of the appraiser selected within twenty days of such demand. The appraisers were then to select a competent and disinterested umpire. The umpire was to be utilized if the appraisers could not agree on the amount of loss after submitting their separate appraisals.

[5] On February 7, 2003, Fidelity submitted a sworn proof of loss claim to National Union, which stated the amount of damages was undetermined. Fidelity, in a March 23, 2003 letter to National Union, indicated it would claim $1,639,634.00 in losses, based on a calculation by Fidelity's appraiser, Ryder Hunt. National Union's appraiser, Alun Irvine, conducted a separate evaluation of the damaged property and determined the structure suffered $414,544.00 in damages. After accounting for the deductible, National Union offered Fidelity $382,544.00 as full settlement for the insurance claims. Fidelity rejected National Union's offer for full settlement, but demanded payment of the undisputed amount of $382,544.00. Fidelity then initiated the appraisal process, named Brian Molineaux as its appraiser, and submitted a proof of loss statement for $1,587,756.00. National Union named Gilbert Malmgren as its appraiser, and William Beyer was appointed as the umpire. On July 31, 2003, National Union paid Fidelity the undisputed amount of $382,544.00.

[6] Fidelity withdrew its demand for appraisal on October 14, 2003, and attempted to engage in negotiations with National Union. After unsuccessful negotiations, Fidelity retained attorney Wayson Wong and reopened the appraisal process, naming Mark Ruth as its appraiser. National Union named its same appraiser and renamed Mr. Beyer as umpire.

[7] Fidelity claims that during the appraisal, National Union made the process extremely difficult and expensive. Fidelity contends that National Union insisted that a formal appraisal, including attorneys and witnesses, be held in Hawaii. The cost of transporting and lodging the witnesses for a formal appraisal in Hawaii, Fidelity argues, would have been far too expensive. National Union disputes that they insisted upon a formal appraisal in Hawaii.

[8] On March 31, 2005, National Union informed Fidelity that the statute of limitations on Fidelity's claim had expired and that National Union was no longer liable. Despite National Union's repudiation of liability, it continued to participate in the appraisal process. On July 5, 2005, Fidelity withdrew its request for appraisal a second time.

[9] On August 1, 2005, Fidelity filed suit against National Union alleging, inter alia, breach of contract for failing to pay all covered losses under the insurance policy. On June 7, 2012, the trial court granted National Union's motion for partial summary judgment, dismissing four of Fidelity's claims, and the case moved forward on the breach of contract claim. After a trial on the merits, a jury returned a special verdict finding National Union liable in the amount of $950,000.00. Accounting for the $382,544.00 already paid by National Union and a $34,000.00 deductible, the trial court entered a judgment in favor of Fidelity in the amount of $533,456.00.

[10]