Court Opinion

ID: 9851365
Source: CourtListenerOpinion
Date Created: 2023-09-24 05:11:26.084345+00
Date Added: 2024-06-11T09:20:54.572627
License: Public Domain

BIVINS, Judge, Court of Appeals (concurring in part; specially concurring in part). I concur in the discussion and results as to issue I, “Policy Coverage” and issue IV, “Compensatory Damages Supported By Substantial Evidence.” I concur in the results reached as to issue II, “Punitive Damages Award,” issue III, “Attorney Fees,” and issue V, “Prejudgment Interest,” but base my decisions on different grounds. For the sake of clarity, I will use the same numbering and captions as appear in Justice Riordan’s opinion. II. Punitive Damages Award. Justice Riordan reverses the punitive damages award on the basis that Allendale had a legitimate reason to question compensatory damages as demonstrated by the difference between what UNC claimed and what the trial court awarded. While I agree that a well-founded ground for challenging the issue of compensatory damages may be considered in determining whether an insurer’s failure or refusal to pay a claim rises to the level that would warrant punitive damages, I do not believe that under the circumstances of this case that ground alone suffices to answer the question presented. It is the conduct of Allen-dale relating to its collapse coverage provision that must be analyzed in order to determine if the punitive damages may stand. If this were not so, then a defendant could defeat an award of punitive damages simply by challenging the compensatory damages claim. Could a drunken driver, for example, who left the roadway, cutting down pedestrians on the sidewalk, escape punitive damages simply by raising a legitimate challenge to the claim of pain and suffering by those who survived? It should be noted at the outset that UNC did not seek damages in tort for bad faith failure to pay its claim, see State Farm General Insurance Co. v. Clifton, 86 N.M. 757, 527 P.2d 798 (1974); rather, it sought punitive damages in. addition to the damages contemplated by the parties at the time of making the insurance contract. Such damages are recognized in a breach of contract action, but there must be a showing of malice or of reckless or wanton disregard of the insured’s rights. Clifton; Bank of New Mexico v. Rice, 78 N.M. 170, 429 P.2d 368 (1967); Loucks v. Albuquerque National Bank, 76 N.M. 735, 418 P.2d 191 (1966); NMSA 1978, UJI Civ. 18.27 (Repl.Pamp.1980). In discussing the type of conduct that would justify punitive damages, the court of appeals in Curtiss v. Aetna Life Insurance Co., 90 N.M. 105, 560 P.2d 169 (Ct.App.), cert. denied, 90 N.M. 7, 558 P.2d 619 (1976), said that “ ‘[a]n act characterized as “willfully” or “maliciously” * * * denotes the intentioned [sic] doing of a harmful act without just cause or excuse or an intentional act done in utter disregard for the consequences, * * Id. at 108, 560 P.2d at 172 (emphasis added), quoting Potomac Insurance Co. v. Torres, 75 N.M. 129, 131-32, 401 P.2d 308, 309 (1965). Curtiss upheld an award of punitive damages where the insurer intentionally refused to pay on a health policy claim, after plaintiff suffered a heart attack, because he was unable to take a physical examination. In the present case, the trial court awarded punitive damages, finding that Allendale denied coverage by relying on “a recognized ambiguity,” and that by its efforts to generate a basis for denial of liability, Allendale acted willfully, wantonly, maliciously, and in reckless disregard of the rights of its insured. The trial court also found that Allendale’s refusal to allow UNC’s claim was vexatious and without reasonable cause. In its findings of fact on punitive damages, the trial court relied on sixteen exhibits as illustrative of the conduct giving rise to the award. These exhibits fall into three categories: (1) internal memoranda reflecting that for some time prior to the Churchrock claim, Allendale and its parent company, Factory Mutual, had been concerned with the “catastrophic” claims under its collapse peril provision, (2) a legal opinion on a similar failure of a gypsum dike, known as the Beker claim, and (3) documents relating to UNC’s claim. The appellate courts in this state have previously held that: “[w]here all or substantially all of the evidence on a material issue is documentary * * * [we] will examine and weigh it, and will review the record, giving some weight to the findings of the trial judge on such issue, and will not disturb the same upon conflicting evidence unless such findings are manifestly wrong or clearly opposed to the evidence.” First National Bank in Albuquerque v. Energy Equities, Inc., 91 N.M. 11, 14, 569 P.2d 421, 424 (Ct.App.1977), quoting Valdez v. Salazar, 45 N.M. 1, 7, 107 P.2d 862, 865 (1940). Here, given the nature of conduct necessary to warrant a punitive damages award, the findings are wrong and opposed to the evidence. As to the first category of exhibits, Allendale experienced, starting in 1974, “dramatic increases” in “catastrophic collapse losses.” By March 1979 and before the Churchrock failure, Allendale had decided that, in order to keep its collapse losses within allowable limits, it would need to reduce those losses by $50 million over a five-year period, or $10 million a year. UNC argues that Allendale rejected legitimate methods of loss reduction because these would, taking a quote from one of defendant’s memoranda, “seriously impair [Allendale’s] marketing efforts.” UNC claims that Allendale embarked upon an illegitimate effort to refuse to pay valid collapse claims by leaving an ambiguous collapse provision in the policy, continuing to use it to entice customers, handling each “sticky” loss as it came along, preserving its ability arbitrarily to deny coverage, and forcing its confused insureds to litigate for collapse benefits which they thought that they had purchased. In short, the picture UNC paints, and the one apparently adopted by the trial court, is that of an insurance company luring its customers with an ambiguous coverage provision, taking their premiums, and then arbitrarily denying their claims, whether legitimate or not. A review of the evidence will not support such a characterization or the findings made. Contrary to UNC’s claim, the statement regarding impairment of marketing efforts was in reference to the unilateral withdrawal of the collapse coverage from all policies, not the rejection of legitimate methods of loss reduction. Withdrawal of this particular coverage was also rejected because of the time involved in securing approval within the Factory Mutual system (referring to other affiliates) as well as approval from the several states in which the companies did business. The goal of reducing collapse losses by $50 million over five years involved, contrary to the implication attached by UNC, legitimate underwriting techniques, such as raising premiums, increasing the deductible, or placing limits on liability. A fair reading of the document does not admit of any other interpretation. Nor will the evidence support a wholesale, arbitrary denial of collapse claims. UNC, in an effort to demonstrate that like claims were treated differently, points to an outside attorney’s opinion to an Allen-dale affiliate. In the letter opinion, the attorney concluded that the failure of the dike wall on the Beker claim would qualify as a collapse. Allendale contends that the affiliate disagreed with the opinion and paid the claim. Further, it argues that the policy in the Beker claim excluded coverage for a collapse, whereas the UNC policy covered collapse peril. Thus, by considering the loss not a collapse, Allendale contends that its treatment in both cases was consistent. While it would appear that Allendale is correct, it is unnecessary to resolve the question. Assuming UNC’s interpretation of the handling of the two claims is correct, one isolated instance does not establish a concerted effort arbitrarily to deny legitimate claims, nor does it evidence bad faith or willful conduct. Many factors may enter into the handling of a claim, not the least of which is the amount involved and whether a serious dispute exists as to the validity of the damages, as in the present case. Had Allendale embarked on a course of arbitrarily denying collapse claims without any basis, surely the extensive discovery in this case would have turned up more than the Beker claim. Finally, the trial court’s findings refer to loss claim documents relating to the Churchrock failure. Among these is an investigative report which suggests that Allen-dale attempted to soften certain words and phrases favorable to its position. Further, the “cut and paste” denial of liability letter (containing copies of policy provisions interspersed in the body of a letter) is referred to in the trial court’s findings. It is difficult to see where these documents, standing alone, provide any basis for a finding of wanton or malicious conduct. The denial letter sets forth rather thoroughly, if not exhaustively, Allendale’s position, but then suggests a meeting to review the points. Where the outcome of the action turned primarily on semantics, in both the legal as well as the engineering sense, it would not be unreasonable for a party carefully to choose words supportive of its position, as long as that position is fairly debatable. What the evidence does reflect is that Allendale was content to leave its collapse peril provision alone, without attempting to clarify the coverage, and “to handle each sticky situation as it developed.” Had Allendale utilized the claimed ambiguity to its advantage, while arbitrarily refusing to pay legitimate claims, as UNC claims, an argument might be made that such conduct would justify punitive damages. As discussed above, however, outside the Beker claim, the record does not reflect that type of conduct. As a matter of fact, the failure to redefine the collapse provision may have actually worked to the advantage of the insureds, as evidenced by the loss experiences. One Allendale memorandum referred to the collapse provision as a “bonanza * * * handed to the insured * * * [that] has certainly haunted us over and over.” In my opinion, the failure of Allendale to clarify the language of its policy falls short of the conduct necessary to justify an award of punitive damages. In fact, a perusal of the cases discussed by Justice Riordan under issue I, “Policy Coverage,” reveals that the collapse peril provision bears a striking resemblance to the language used by other companies. It was perhaps not so much the lack of clarity in the language of the exclusionary clause (i.e., “subsidence or any other earth movement”) that resulted in this litigation; rather, it was the strained construction Allen-dale attempted to place on that language. Nevertheless, while that construction or the failure to clarify the language of the policy might justify the trial court in finding Allendale’s failure to pay unreasonable, as discussed later under the attorney’s fee issue, it would not justify punitive damages. The situation here differs from those cases relied on by UNC, such as Sparks v. Republic National Life Insurance Co., 132 Ariz. 529, 647 P.2d 1127, cert. denied, 459 U.S. 1070, 103 S.Ct. 490, 74 L.Ed.2d 632 (1982). In Sparks, the insurance company, being fully aware of the grievous nature of the insured’s injuries and staggering medical bills, nonetheless decided to deny continuing benefits based on patently ambiguous and previously undisclosed provisions of the insurance policy. There was no economic coercion in the present case, only reliance on exclusionary language which the insurer probably should have known would be construed against it. To award punitive damages against a litigant for seeking construction of contract language would subject most contract disputes to these types of damages. I do not believe that punitive damages were ever intended to reach that far. There is an equally compelling reason why the punitive damages award cannot stand. This involves the definition of “collapse” and Allendale’s right to litigate whether the failure at Churchrock constituted a collapse. At the beginning of this discussion, I quoted from Curtiss that “willful” or “malicious” denotes the intentional doing of an act without just cause or excuse. This language recognizes that where a claim is “fairly debatable,” the insurer is entitled to debate it, whether the issue concerns a question of law or fact. Anderson v. Continental Insurance Co., 85 Wis.2d 675, 271 N.W.2d 368 (1978). See also Gulf Atlantic Life Insurance Co. v. Barnes, 405 So.2d 916 (Ala.1981). This principle has also been recognized and adopted by this court. In Anderson v. Dairyland Insurance Co., 97 N.M. 155, 637 P.2d 837 (1981), the court, citing with approval Crawford v. American Employers’ Insurance Co., 86 N.M. 612, 526 P.2d 206 (Ct.App.1974), rev’d on other grounds, 87 N.M. 375, 533 P.2d 1203 (1975), said that not all actions taken by an insurer to the detriment of its insured justify punitive damages. In Crawford, the court of appeals upheld the refusal by the trial court to submit to the jury the issue of punitive damages where the insurer knew two and one-half years before trial that a serious question of coverage existed. The Crawford court said, “[although the actions of the Insurer could be characterized as entirely self-interested they do not rise to the level of being ‘maliciously intentional, fraudulent, oppressive, or committed recklessly or with a wanton disregard of the Plaintiff’s rights.’ ” Id. at 621, 526 P.2d at 215, quoting Loucks v. Albuquerque National Bank, 76 N.M. 735, 418 P.2d 191 (1966). In order to examine the legitimacy of Allendale’s stand in defending against UNC’s claim, it is helpful to lay out again the collapse coverage provision: Collapse of buildings, structures or a material part thereof in excess of $25,000 for each occurrence, except that there shall be no liability for loss or damage caused by or resulting from flood, earthquake, landslide, subsidence or any other earth movement. Collapse shall not mean settling, cracking, shrinking, bulging, or expansion of pavements, foundations, walls, floors, ceilings or roofs. (Emphasis added.) Allendale denied coverage, first, on the ground that the failure of the dam did not constitute a “collapse”; and, second, if it did, the collapse was caused by “subsidence or any other earth movement,” which are excluded. Even if Allendale’s denial of coverage based on the exclusionary phrases, “subsidence or any other earth movement,” may have been unreasonable; Allendale was entitled to a factual determination as to whether the failure at Churchrock constituted a collapse. The collapse peril provision has spawned much litigation. See Annots., 72 A.L.R.2d 1287 (1960); 71 A.L.R.3d 1072 (1976). As the author of the annotation in 71 A.L.R.3d 1072 points out, the question of whether, in a given case, the loss comes within the collapse coverage provision turns on two overriding considerations. The first involves the form of the insuring clause. Some policies insure against collapse without defining that term by qualification or exclusion. Other policies contain qualifying or exclusionary language. For instance, the qualifying or exclusionary language might provide that “collapse” does not mean “setting, cracking, shrinking, bulging or expansion,” as the qualifying language does in the policy before us. The second overriding consideration affecting coverage involves how a court, in a given case, determines that “collapse” should be interpreted. Id. at 1075. Where the term “collapse” was used without qualifying language, courts are sharply divided in interpreting the term. Some courts take the position that “collapse” is an unambiguous term which denotes a falling in, loss of shape, or reduction to flattened form or rubble. See cases collected in 71 A.L.R.3d at 1079. In sharp contrast, a more liberal view has been taken by other courts, following the lead of Jenkins v. United States Fire Insurance Co., 185 Kan. 665, 347 P.2d 417 (1959). In Jenkins, the court ruled that the settling, cracking, bulging or breaking of all or part of the insured property, in a manner that materially impairs its basic structure or substantial integrity, is a “collapse” within the meaning of the policy if the occurrence is caused by unusual or extraordinary circumstances which were unforeseeable by the parties when they contracted. New Mexico followed Jenkins, in Morton v. Great American Insurance Co., adopting the Kansas court’s interpretation of “collapse.” 77 N.M. 35, 419 P.2d 239 (1966). Because the substantial conflict in other jurisdictions which had interpreted “collapse” provided some evidence that the term, when standing alone, was ambiguous, Morton construed “collapse” in favor of the insured. Therefore, the qualifying language found in the more recent policies, and the one before us, was apparently added by insurance companies in response to Jenkins. Krug v. Millers’ Mutual Insurance Association, 209 Kan. 111, 495 P.2d 949 (1972). The qualifying language was intended to counter the ambiguity courts found in the word “collapse” standing alone. Id. Because this court relied on the Kansas case of Jenkins in construing the term “collapse” without the qualifying exclusionary language, it is important to this discussion of Allendale’s conduct to consider Krug. Krug construed “collapse” with the added qualifying exclusionary language. In Krug, summary judgment for the insurer was upheld. The policy in Krug, similar to Allendale’s policy, insured against “collapse (not settling, cracking, shrinkage, bulging or expansion) of building^) or any part thereof * * The lower court held that because the insured’s claim involved a loss caused by settling of his home, due to water leakage, the policy provision was not ambiguous. The insured could not recover on the theory that the exclusionary language referred only to normal settling and cracking. We need not decide whether New Mexico would go along with Krug in holding that the clause with the qualifying language is unambiguous; that issue is not now before us. This court, however, should decide, at the very least, that a fact question existed as to whether the Churchrock failure constituted a “collapse,” in order to determine whether the issue was “fairly debatable.” UNO’s Churchrock dam, a massive structure 5,700 feet in length and ranging from twelve to thirty-eight feet in height, was constructed in 1976. Its thickness varied from 180 feet at the base to sixty feet at the crest. In 1977, embankment cracking was observed at two locations. These cracks were repaired. A year later, additional cracking at the extreme southern end of the dam was observed. Engineering reports associated these cracks with differential settlement transverse to the embankment, due to differential wetting of the soils. Concerned with the cracking of the dam, UNC adopted a monitoring program and engaged an engineering company. On July 16, 1979, a leak was discovered in the dam near the southwest corner of the southernmost tailings pond. When first observed, the break was fifteen feet wide; eventually it opened to thirty-seven feet. Investigation as to cause reflected differential settlement at a transition zone between the bedrock and the alluvial soil under the dam. This differential settlement caused a crack in the dam which allowed the liquid waste to escape from the downstream face of the dam. The trial court found: 9. The breach was both a material and substantial impairment of the structural integrity of the dam and a falling down or caving in of a material portion of the tailings dam, and constituted a collapse. (Emphasis added.) While Allendale disagrees with this finding, because of the substantial evidence rule, it does not challenge it on appeal. Nevertheless, Allendale contends, and I agree, that it had a right to debate the fact issue as to whether or not the failure constituted a collapse. There was evidence, which if accepted, would have warranted a finding that the dam did not fall into a flattened mass, but rather developed a hole which grew over a period of time. The policy did not cover losses resulting from normal settlement, cracking or the like. Without citing any supporting authority, UNC counters saying that, “[w]here settling causes a collapse — that is, significant physical deformation and material impairment of the structural integrity — the collapse is covered.” At least one case suggests the contrary. In La Salle National Bank of Chicago v. American Insurance Co., 14 Ill.App.3d 1027, 303 N.E.2d 770 (1973), the court rejected a similar argument by the insured, holding in part that: [i]t is not at all clear that characterization of the * * * sinking as a collapse would operate to bring the loss within the policy since the underlying cause of such collapse would still be a settling of the supporting soil and with it, a portion of the building’s foundation and floors. Id. at 774. That case, like the one before us, involved settlement due to soil saturation. Even if UNO’s contention that a collapse occurs, regardless of the underlying cause, where there is significant physical deformation and material impairment of the structural integrity of the insured property, the fact finder must nevertheless determine how a mile-long earthen dam collapses. One expert engineer said that “collapse” is not normally used to describe a dam failure. Arguably, then, is there any difference between a thirty-seven foot breach in a dam, caused by differential settlement due to moisture saturated soils, and a separation of a wall from a ceiling due to settlement caused by soil saturation. See Krug which held that, as a matter of law there was no coverage under similar policy language. See also Eaglestein v. Pacific National Fire Insurance Co., 377 S.W.2d 540 (Mo.App.1964). Moreover, because this court in Morton followed Kansas’ liberal approach (Jenkins ) in construing “collapse” without the qualifying exclusionary language, it would not be unreasonable for an insurer to seek a more restrictive construction with the additional language in light of the later Kansas case {Krug). This court in Morton, referring to the ambiguous term “collapse” without the qualifying exclusionary language, said, “[ajpplying well-established principles, the question of whether the condition of the building in the instant case is within the interpretations of the clause * * * is a question of fact for the trier of the facts.” 77 N.M. at 39, 419 P.2d at 242. If interpretation of the term “collapse” without the qualifying language is a question of fact, surely interpretation of the term with the qualifying language is also. Other courts have reached a similar result. In Bailey v. Hartford Fire Insurance Co., 565 F.2d 826 (2nd Cir.1977), summary judgment for the insurer was reversed because of the existence of fact questions and the unsettled state of the law. The court said: [t]o be sure, no hard and fast rule has emerged in New York nor in other jurisdictions. See 72 ALR 2d 1287. In sum, the expression ‘collapse of building or any part thereof’ in terms of insurance coverage, is a coat of varied colors. The question of what constitutes a collapse is largely one of degree. Id. at 830. See also Gullett v. St. Paul Fire & Marine Insurance Co., 446 F.2d 1100 (7th Cir.1971). UNC does not dispute the existence of a fact question, but contends that the trial court was compelled to find in its favor. UNC calls our attention to testimony by Dr. Sangrey, an engineer hired by Allen-dale, who said that to defend an overly restrictive definition or use of “collapse” would “prove fruitless” because of the “very wide use of the word by engineers.” Dr. Sangrey readily admitted, however, that he did not know how the term “relates to the insurance community”; that is, how it would be construed legally as applied to a given set of facts. Neither did Allendale, but faced with a demand in excess of $30 million, it was entitled to find out, particularly given the wide range of interpretations by courts as to the meaning of “collapse.” See 71 A.L.R.3d 1072-1104. The record reflects some question on the part of UNC and its representatives as to the merits of its claim during the investigatory stage. Also, the fact that UNC sued both Allendale, which provided collapse peril coverage, and Appalachian, which did not, provides some evidence that UNC was not absolutely certain of its position. Had there been no genuine issue as to liability, undoubtedly summary judgment would have been sought and perhaps granted. This did not occur. Because the question of whether the failure at Churchrock constituted a collapse presented a fact question which Allendale was entitled to debate, I would hold that as a matter of law, no punitive damages could be awarded. Quite aside from the fact that Allendale achieved, by going to trial, some measure of success in reducing UNO’s demand by over $5 million, it should be noted that according to the evidence, it would have been possible for the trial court to have decided in the insurer’s favor any one of several substantial compensatory damage items, which would have reduced the damages even more. Allendale urges this court to follow the lead of Indiana, Wisconsin and other jurisdictions by adopting a “clear and convincing evidence” standard for punitive damages claims. See, e.g., Travelers Indemnity Co. v. Armstrong, 358 Ind. 65, 442 N.E.2d 349 (1982); Wangen v. Ford Motor Co., 97 Wis.2d 260, 294 N.W.2d 437 (1980). Because the facts in this case would not justify an award of punitive damages under the lesser “preponderance of the evidence” standard, it is unnecessary to reach the question of whether it would justify such an award under a clear and convincing evidence standard. I would reverse the award of punitive damages and remand with instructions to delete that element from the judgment. III. Attorney’s Fees. Allendale first argues that the award of $3,210,759 on attorney’s fees cannot be sustained because it had a reasonable basis for denying coverage. That the actions or in-actions of Allendale did not rise to the level which would justify an award of punitive damages does not answer the question whether an award of attorney’s fees can be upheld. Different standards of conduct are involved. As previously discussed, in order to recover punitive damages, there must be a showing of malice or of reckless or wanton disregard of the insured’s rights. To allow an award of attorney’s fees, however, the insured need only prevail and show that the insurer “acted unreasonably in failing to pay the claim.” NMSA 1978, § 39-2-1. The appellate courts of this state have not had occasion to discuss this statute, although an award of attorney’s fees was upheld in Stock v. ADCO General Corp., 96 N.M. 544, 632 P.2d 1182 (Ct.App.), cert. denied, 96 N.M. 543, 632 P.2d 1181 (1981), as supported by the evidence. The court of appeals did not, however, set out express guidelines for making such an award. Under some statutes, the insured, upon recovering on the policy, is automatically entitled to a reasonable attorney’s fee, such statutes being compensatory in nature. Halliday v. Farmers Insurance Exchange, 89 Idaho 293, 404 P.2d 634 (1965). Cf. NMSA 1978, § 38-1-10. In contrast, other statutes hold it necessary to establish fault on the part of the insurer in order to recover attorney’s fees, these statutes being punitive in nature. Meshell v. Insurance Co. of North America, 416 So.2d 1383 (La.App.1982). Because New Mexico’s statute does not automatically award attorney’s fees upon recovery by the insured, but requires a showing of unreasonableness in failing to pay the claim, it falls within the punitive class statutes. As such, it must be strictly construed and applied with caution so as not to intimidate the insurer from raising a defense- in good faith. McGowen v. St. Paul Guardian Insurance Co., 422 So.2d 637 (La.App.1982). In order for the insured to recover attorney’s fees, he must prove that the insurer acted unreasonably in failing to pay the claim. Wood v. Detroit Auto-Inter-Insurance Exchange, 413 Mich. 573, 321 N.W.2d 653 (1982). The trial court in the present case found Allendale’s refusal to pay “without reasonable cause.” The question then is whether the evidence will support that finding. Even if it can be said that Allendale’s reliance on the “subsidence or any other earth movement” exclusion was unreasonable in light of court decisions construing similar claims as relating to natural phenomenon, nevertheless, the insurer could reasonably have asserted, as a defense, the fact question as to whether the Churchrock failure constituted a collapse. See Strickland v. Prudential Insurance Co. of America, 278 S.C. 82, 292 S.E.2d 301 (1982). An insurer is not liable for the statutory penalty when there is some reasonable ground, whether based on law or fact, for refusing to make payment. McGowen v. St. Paul Guardian Insurance Co. The same applies to attorney’s fees. Allendale had a right to seek a determination as to whether the coverage provision applied. It was not unreasonable for it to do so. Because an award of attorney’s fees cannot be upheld in this case, it is unnecessary to discuss the reasonableness of the award or the “Lodestar” approach. V. Prejudgment Interest. While I agree that the award of prejudment interest should be upheld, I disagree with the approach taken and believe it, along with Grynberg v. Roberts, 698 P.2d 430 (1985), will lead to confusion in later cases. We are not concerned with NMSA 1978, Section 56-8-4 (Cum.Supp.1984) which was enacted after the filing of this action. In O’Meara v. Commercial Insurance Co., 71 N.M. 145, 152, 376 P.2d 486, 490-91 (1962), this court said: [T]he allowance of interest as an element of the total damage, under the circumstances here present, is a matter of discretion in the trier of the facts, and not a matter of right under the statute. See, 1 Restatement of the Law, Contracts, § 337, wherein the rule is stated as follows: “If the parties have not by contract determined otherwise, simple interest at the statutory legal rate is recoverable as damages for breach of contract as follows: “(a) Where the defendant commits a breach of a contract to pay a definite sum of money, or to render a performance the value of which in money is stated in the contract or is ascertainable by mathematical calculation from a standard fixed in the contract or from established market prices of the subject matter, interest is allowed on the amount of the debt or money value from the time performance was due, after making all the deductions to which the defendant may be entitled. “(b) Where the contract that is broken is of a kind not specified in Clause (a), interest may be allowed in the discretion of the court, if justice requires it, on the amount that would have been just compensation if it had been paid when performance was due.” In my view, subsection (a) of the Restatement does not apply because the contract of insurance did not provide for payment of a “definite sum of money,” or for performance, the value of which “is ascertainable by mathematical calculation from a standard fixed in the contract or from established market prices.” From a discussion of the issue of compensatory damages, it is clear that the determination of damages was not calculable in the manner required for application of subsection (a). Cf. Sundt v. Tobin Quarries, Inc., 50 N.M. 254, 175 P.2d 684, 169 A.L.R. 586 (1946) (holding under the facts of the case that quantity calculable and prices were ascertainable). The present case, as with O’Meara, falls within subsection (b) of the Restatement, § 337. See also Kennedy v. Moutray, 91 N.M. 205, 572 P.2d 933 (1977). The award was discretionary, if justice requires it, and resort to calculations is not needed. See also Moorhead v. Stearns-Roger Manufacturing Co., 320 F.2d 26 (10th Cir.1963). Both O’Meara and Moorhead involved, as does the case before us, property damage claims under insurance policies. In O’Meara and Moorhead, prejudgment interest was not awarded. In both cases, the refusal to award was upheld. In the case before us, the same principle should apply in upholding, as a discretionary act, the award of prejudgment interest. No claim has been made of abuse of discretion. Allendale assumes that the trial court awarded prejudgment interest based on Restatement § 337(a). Conclusion of law number 12 simply says UNC is entitled to prejudgment interest from the date of the denial of the claim, March 21, 1980. No reference is made to mathematical calculations. Thus, the award of interest may be sustained under subsection (b). Because the trial court’s exercise of discretion has not been challenged, we need not search the record to justify it.