The federal court yesterday issued a ruling favorable to an insurance company that sued the owner of a clothing store in Garapan over the alleged intentional burning of the store last year.
U.S. District Court for the NMI Chief Judge Ramona V. Manglona denied Zhen Rui Brother Corp.’s motion for summary judgment.
Manglona ruled that plaintiff FirstNet Insurance Co. has presented more than sufficient evidence to establish a dispute over liability for the jury to resolve at trial.
The judge said it is undisputed that Zhen Rui Brother Corp.’s BL Clothing Store suffered substantial fire loss only a few months after the company took out the insurance policy.
Manglona said firefighters had to break open the doors of the building to gain access and only the store’s owner, Zheng Biao, and an employee had keys.
On the damages issue, Manglona said if Zhen Rui prevails at trial on liability, the amount of damages remains in dispute.
The judge said the insurance policy covered Zhen Rui’s inventory and equipment.
She said losses of inventory and equipment are losses of personal property.
Manglona said Zhen Rui is not seeking to recover lost profits, it is claiming loss of inventory and other tangibles that are clearly personal property.
“Zhen Rui has cited to no authority that would support a finding that the items whose value it seeks to recover are not personal property,” Manglona said.
The judge said because the value of the insurance policy is not a liquidated demand with respect to the personal property Zhen Rui claims it lost in the fire, damages remain in dispute.
On Oct. 30, 2010, a fire broke out at the BL Clothing Store.
In March 2011, the fire policy insurer, FirstNet sued Zhen Rui Brother Corp., for allegedly deliberately setting off the fire so that the owner could claim $404,718.53 in insurance proceeds.
Zhen Rui Brother Corp later filed a counterclaim against FirstNet, alleging breach of contract, breach of implied covenant of good faith and fair dealing, insurance bad faith, and unfair or deceptive business practices.
Zhen Rui, through counsel Ramon Quichocho, filed a motion for summary judgment. The company made two arguments.
As to liability, Quichocho argued that FirstNet has failed to establish that Zhen Rui caused the fire.
As to damages, Quichocho claimed that Zhen Rui suffered a “total loss” and that under the CNMI’s valued policy statute, it is entitled to the full value of the insurance policy as a liquidated demand for the total loss.
Quichocho asserted that under CNMI law there is no dispute as to the amount of damages.
FirstNet, through counsel Richard W. Pierce, argued that the insurance company is not liable to pay on the policy if the fire was caused by arson, and direct evidence points to arson and ample circumstantial evidence indicates that Zhen Rui willfully caused the fire.
As to damages, Pierce asserted that the CNMI valued-policy statute excludes loss of personal property which is the type of loss Zhen Rui claims, and that Zhen Rui’s insurance policy with FirstNet is not a valued policy.
In denying the motion, Manglona ruled that there is no need to determine whether the insurance policy is not a valued policy.
“Even if it were a valued policy, the lost property claimed by Zhen Rui would be excluded by operation of CNMI law,” Manglona said.