Glazing Concepts, Inc. v. Hanover Insurance

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES CO URT O F APPEALS
April 19, 2007
FO R TH E TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court

GLAZIN G CONCEPTS, IN C.,

Plaintiff-Appellant,

v. No. 06-6152
(D.C. No. CIV-05-70-HE)
HAN OVER INSURANCE (W .D. Okla.)
CO M PAN Y; BUCH AN AN , CLA RK E,
SCH LA DER LLP,

Defendants-Appellees.

OR D ER AND JUDGM ENT *

Before L UC ER O, Circuit Judge, BROR BY, Senior Circuit Judge, and
M cCO NNELL, Circuit Judge.

Plaintiff-appellant, Glazing Concepts, Inc., appeals the judgment of the

district court granting summary judgment and partial summary judgment to

defendants-appellees and refusing to order payment of prejudgment interest on

*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent w ith Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Glazing Concepts’ ultimate jury award. W e have jurisdiction under 28 U.S.C.

§ 1291 and affirm.

Glazing Concepts operated a glass business substantially damaged by a

tornado that struck M oore, Oklahoma, in M ay 2003. Glazing Concepts was

insured for various losses through a business owner’s special property policy

issued by defendant, Hanover Insurance Co. (Hanover). Shortly after the loss,

Hanover hired defendant Buchanan, Clarke, Schlader, L.L.P. (BCS), a certified

public accounting firm, to aid in analyzing the loss claims.

In November 2004, after much communication and negotiation between the

parties regarding the size of the various loss components, Glazing Concepts

submitted a proof of loss of business income and extra expense claims in excess

of $1,000,000. 1 Hanover rejected the proof of loss for various reasons, most

importantly because it disagreed with the amount of Glazing Concepts’ claim.

According to its calculations and aided by numbers provided by BCS, Hanover

determined that it ow ed G lazing Concepts a total of $258,212.11. Because

Hanover had already paid $256,704.00 for loss of business income and extra

expenses, it immediately sent Glazing Concepts a payment of the difference

($1,508.11) and assigned the bulk of the outstanding claim to its “For Discussion”

category for further analysis and negotiation.

1
At this point, Hanover had already paid claims for other items of loss; this
case involves only Glazing Concepts’ claims for business income loss and extra
expense.

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 Shortly after this exchange, Glazing Concepts filed suit against both

Hanover and BCS alleging a host of claims, including, but not limited to breach

of contract, bad faith, and professional negligence. The district court granted

summary judgment to BCS on all claims and partial summary judgment to

Hanover on plaintiff’s bad faith, conspiracy, and emotional distress claims.

Defendants were granted summary judgment on all demands for punitive

damages. The court delayed entry of these judgments until after trial on the

remaining claims.

At trial, the jury awarded Glazing Concepts $717,000 on the breach of

contract claim against Hanover. The district court entered judgment in favor of

Glazing Concepts on its jury verdict, as w ell as judgments in favor of defendants

on the previously granted summary-judgment motions. The district court later

granted Glazing Concepts’ motion for attorney fees in large part, but denied its

motion for prejudgment interest.

Glazing Concepts appeals the grants of summary judgment, contending that

its bad faith claims against Hanover and BCS should have gone to the jury, and

that the district court erred in finding that, even if there were a duty owing from

BCS to Glazing Concepts, Glazing Concepts failed to advance any factual basis

for its negligence claim against BCS. Finally, Glazing Concepts appeals the

district court’s denial of its motion for prejudgment interest.

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Summary judgment

W e review the district court’s summary judgment decisions de novo to

determine whether genuine issues of material fact exist, viewing the record in the

light most favorable to Glazing Concepts as the nonmoving party. Garrett v.

Hewlett-Packard Co., 305 F.3d 1210, 1216 (10th Cir. 2002). On appeal, Glazing

Concepts argues that, when all the evidence adduced at trial is considered, enough

evidence was advanced to raise issues of material fact sufficient to preclude

summary judgment in favor of either Hanover or BCS and that therefore its claims

of bad faith and negligence should have gone to the jury. W e disagree.

Our de novo review of the summary judgment materials presented to the

district court reveals no genuine issue as to any material fact and further

establishes that the movants were entitled to judgment as a matter of law. See

Fed. R. Civ. P. 56(c). W e agree with the district court that, as against both

defendants, Glazing Concepts’ allegations at issue on summary judgment were

conclusory and unsupported by specific facts. The affidavits submitted w ere mere

personal opinion, unsubstantiated by concrete evidence. This matter came dow n

to a dispute over coverage and nothing more. That dispute was settled by the

jury, but at the summary judgment stage, the issues of bad faith, conspiracy,

negligence, emotional distress, and damages based on those claims w ere properly

dismissed. Even if we were inclined to agree with Glazing Concepts that trial

evidence ultimately established a genuine issue of fact regarding bad faith which

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we are not, we are precluded from including that evidence in our review of the

grant of summary judgment. “[O]ur review of a grant of summary judgment is

limited to the record before the trial court at the time it made its ruling.”

M agnum Foods, Inc. v. Cont’l Cas. Co., 36 F.3d 1491, 1502 n.2 (10th Cir. 1994).

Prejudgment interest

An insured party in Oklahoma who prevails against its insurer is generally

entitled to recover prejudgment interest pursuant to Okla. Stat. tit. 36, § 3629(B ).

There is no dispute that Glazing Concepts was the prevailing party. The district

court, however, determined that because Glazing Concepts’ loss was unliquidated

and unascertainable and was, instead, an amount determinable only by the finder

of fact, Glazing Concepts w as ineligible for an award of prejudgment interest.

“A federal court sitting in diversity applies state law, not federal law,

regarding the issue of prejudgment interest.” Chesapeake Operating, Inc. v.

Valence Operating Co., 193 F.3d 1153, 1156 (10th Cir. 1999) (quotation omitted).

“A district court’s award of prejudgment interest is generally subject to an abuse

of discretion standard of review on appeal. However, any statutory interpretation

or legal analysis underlying such an award is reviewed de novo.” Driver M usic

Co. v. Com mercial Union Ins. Cos., 94 F.3d 1428, 1433 (10th Cir. 1996) (citation

omitted). An award of prejudgment interest under Okla. Stat. tit. 36, § 3629

is mandatory where a prevailing party has met the statutory requirements.

Cf. Stauth v. Nat’l Union Fire Ins. Co., 236 F.3d 1260, 1267 (10th Cir. 2001)

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(considering the fees and costs portion of § 3629). As a result, the district court

was required to award prejudgment interest only if Glazing Concepts satisfied the

legal requirements for recovery under § 3629, as developed in Taylor v. State

Farm Fire & Casualty Co., 981 P.2d 1253, 1260-61 (Okla. 1999). The question

therefore is whether Glazing Concepts’ loss, at the time the proof of loss was

denied, “was for a liquidated amount or for an amount that could be made

ascertainable by reference to well-established market values,” as required by

Taylor. Id. at 1261.

The policy in this case did not provide any upper limits for the coverages in

question. The business income coverage provided that Hanover would “pay for

the actual loss of Business Income you sustain due to the necessary suspension of

your ‘operations’ during the ‘period of restoration.’” Aplee. Supp. App. Vol. I

at 61. Similarly, the extra expense coverage provided, “W e w ill pay necessary

Extra Expense you incur during the ‘period of restoration’ that you would not

have incurred if there had been no direct physical loss or damage to property at

the described premises.” Id. at 62. This case went to trial because the parties

could not agree about how to calculate business income loss or on which items

should be included as recoverable extra expenses. The amended final pretrial

order stated, “The parties w ere unable to resolve their differences over the

amount, if any, owed under the business income and extra expense coverage of

the policy.” Aplee. Supp. App. Vol. II at 496 (emphasis added). The parties

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estimated that it w ould take two days of trial time to try the damages issue.

Id. at 522.

There was extensive testimony at trial by various professionals as to the

items properly included in each loss category and to the proper valuations to place

on those amounts. Particularly with regard to the business income loss, there was

conflicting testimony not only with regard to the amount of the loss but also as to

how those losses should be analyzed. Compare Trial Tr. Vol. II at 357-58 (expert

using “cost volume profit” analysis and arriving at a figure of $335,595); with id.

at 420-29 (CPA from BCS testifying that he initially analyzed business loss using

the “net plus” basis, changed to a “gross less method,” and eventually arrived at a

business income loss of “approximately” $161,000). In his closing, Glazing

Concepts’ counsel asked for a total award of $841,874; id. at 543; the jury

awarded $717,000. W hen a fact-finder has to weigh conflicting evidence to arrive

at the correct amount of damages due, the amounts are not liquidated or

“ascertainable by reference to well-established market values.” Taylor, 981 P.2d

at 1261 & n.45. In light of the uncertain nature of the damages owed Glazing

Concepts, the district court correctly refused to award prejudgment interest.

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 BCS’s motion to dismiss this appeal as frivolous is DENIED. The

judgment of the district court is AFFIRM ED.

Entered for the Court

M ichael W . M cConnell
Circuit Judge

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