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    Tuesday, October 16, 2018-12:32:07A.M.






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Union Bank asks court to deny request for prejudgment interest

UNION Bank of California has asked the federal court to deny Derron Gerard Flores’s request for a prejudgment interest in a lawsuit that seeks to collect principal and interest on a 1993 certificate of deposit or CD.

Flores is the administrator of the late former Saipan Mayor Donald G. Flores who sued the Union Bank to collect principal and interest on his $200,000, 32-day certificate of deposit.

Attorney Juan T. Lizama, representing the estate of the former mayor, has asked the District Court for the NMI to award his client prejudgment interest.

Juan T. LizamaJuan T. Lizama

Lizama said prejudgment interest is given to a plaintiff who receives money damages excess of any settlement offers made by a defendant prior to trial.

Lizama said the date when prejudgment interest takes effect is when the breach of contract accrues.

He said a jury could find that the breach of contract has accrued since Oct. 13, 1993 when the bank failed to notify Flores of its interest earned, and a need for him to come in and take his money if it was the intention of the bank not to renew and roll-over the CD.

He said the 9th Circuit allows recovery of prejudgment interest from the time that the creditor’s right to recover is vested, and this occurs at the time the amount of damages becomes certain or capable of being made certain, and not when the liability to pay those amounts is determined.

Union Bank, though attorney Sean E. Frink, said its objection is based on the assertion that CNMI law governs the rate of prejudgment interest, and CNMI case law requires expert testimony to establish that rate.

Frink said “determining the appropriate interest rate by applying the reasonably prudent investor standard during the applicable time period necessarily involves scientific, technical or other specialized knowledge testimony.”

He said the plaintiff failed to designate an expert and is consequently prohibited from presenting any expert testimony at trial.

There is no reasonable means for a jury to determine the appropriate prejudgment interest rate, Frink said, because it is the plaintiff’s burden to present evidence to support his claims and damages sought.

Frink said the plaintiff’s “apparent plan to just throw his unexplained proposed 2.5 percent, 9 percent, and 12 percent prejudgment interest rates at the jury and tell them ‘you pick it’ without any legal support or explanation is improper.”

Frink asked the court to deny the Flores estate’s petition for any form of prejudgment interest at trial.

On Nov. 8, 2013 the federal court granted summary judgment to Union Bank on all claims on the grounds of statute of limitations and laches.

But on March 4, 2016, after Derron Flores’s timely appeal, the Ninth Circuit remanded the case to the federal court for further proceedings.

The appellate court reversed the district court’s ruling that the statute of limitations began to run in 1999, saying that the statute of limitations period began on Sept. 22, 2008.

The case stemmed from the proceeds of a certificate of deposit or CD that Donald Flores purchased from Union Bank’s Oleai branch on Sept. 10, 1993 in his name in the amount of $200,000. He then gave the CD to his wife Cecilia who stored it in the family home.

The couple left for California for medical reason, but upon returning to Saipan on Feb. 10, 1998, Mrs. Flores could not remember where she put the CD.

The couple decided to go to the bank’s Oleai branch to talk to Lourdes Deleon Guerrero, the bank officer who had sold them the CD in 1993. Deleon Guerrero told them the bank had no record of the CD and advised them to bring in the original certificate when they found it.

According to the lawsuit, what Deleon Guerrero did not know or did not say was that an assistant bank manager, Vicky Concepcion, already cashed out the CD for someone who had telephoned the bank and identified himself as Donald Flores. But Donald Flores said he was not the caller.

In 2001, Union Bank sold its Saipan assets to First Hawaiian Bank and Concepcion was retained by FHB.

Mrs. Flores found the original CD in March 2008 and the couple went to see Concepcion at the bank. This time, Concepcion told them that the bank had no record of the CD and that the Floreses should contact Union Bank in California.

The lawsuit stated that Concepcion fraudulently concealed the fact that 10 years earlier she had cashed the CD for a caller pretending to be Donald Flores, and that Ken Kato, then the branch bank manager of Union Bank, worked with Concepcion in the alleged fraud.  

Donald Flores sued Union Bank in federal court in 2011. The court granted a summary judgment in favor of the bank on grounds that the statute of limitations had lapsed. Donald Flores then appealed but while the appeal was pending in 2014, he passed away and Mrs. Flores as administrator of his estate substituted as appellant.

When she passed away in 2015, Derron Flores, the only son of Donald and Cecilia Flores, was appointed as the administrator of the family’s estate.