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Fajardo et al v. Liberty House et al}{\fs20\insrsid14562841 , 2000 Guam 4, Opinion\tab Page }{\field{\*\fldinst {\fs20\insrsid14562841 PAGE }}{\fldrslt {\fs20\lang1024\langfe1024\noproof\insrsid12610611 7}}}{\fs20\insrsid14562841  of 10}{\insrsid14562841 

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\par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid12610611 {\b\insrsid14562841\charrsid12610611 NADINE FAJARDO and IMEE FAJARDO,
\par by and through their }{\b\i\insrsid14562841\charrsid12610611 Guardian Ad Litem}{\b\insrsid14562841\charrsid12610611  JAIME FAJARDO
\par }{\insrsid14562841\charrsid12610611 Plaintiffs-Appellees/Cross-Appellants
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\par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid12610611 {\b\insrsid14562841\charrsid12610611 LIBERTY HOUSE GUAM, ROLANDO VILLALON,
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\par NORTH AMERICA, A CIGNA COMPANY}{\insrsid14562841\charrsid12610611 
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\par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\b\insrsid14562841\charrsid12610611 Filed: January 19, 2000}{\insrsid14562841\charrsid12610611 
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\par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\b\insrsid14562841\charrsid12610611 Cite as:}{\b\insrsid12610611  }{\b\insrsid14562841\charrsid12610611 2000 Guam 4}{\insrsid12610611 
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\par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 Supreme Court Case No. CVA99-001
\par Superior Court Case No. CV0479-98}{\insrsid12610611 
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\par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 Appeal from the Superior Court of Guam
\par Argued and submitted on August 9, 1999
\par Hag\'e5t\'f1a, Guam}{\insrsid12610611 
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\par }{\ul\insrsid14562841\charrsid12610611 Appearing for the Defendants-Appellants/
\par }{\insrsid12610611  }{\ul\insrsid14562841\charrsid12610611 Cross Appellee:}{\insrsid14562841\charrsid12610611 
\par Kevin J. Fowler, Esq.
\par Dooley Lannen Keeler & Roberts LLP
\par Suite 200, Calvo}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s Insurance Bldg.
\par 115 Chalan Santo Papa
\par Hag\'e5t\'f1a, Guam 96910\cell 
\par }{\ul\insrsid14562841\charrsid12610611 Appearing for the Plaintiffs-Appellees/
\par }{\insrsid12610611  }{\ul\insrsid14562841\charrsid12610611 Cross Appellants:}{\insrsid14562841\charrsid12610611 
\par Seth Foreman, Esq.
\par Law Offices of Keogh and Foreman
\par Suite 105, C & A Prof. Bldg.}{\b\insrsid14562841\charrsid12610611 
\par }{\insrsid14562841\charrsid12610611 P. O. Box GZ
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\par }{\insrsid14562841\charrsid12610611 BEFORE: BENJAMIN J. F. CRUZ, Chief Justice, PETER C. SIGUENZA, Associate Justice,}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 and PETER F. PEREZ, Justice Pro Tempore.
\par 
\par }{\b\insrsid14562841\charrsid12610611 SIGUENZA, J.:
\par }{\insrsid14562841\charrsid12610611 
\par }{\b\insrsid14562841\charrsid12610611 [1]}{\insrsid14562841\charrsid12610611 \tab This is an appeal of the lower court}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
s ruling for Partial Summary Judgment. The Plaintiffs, Nadine and Imee Fajardo (hereinafter }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 Fajardo
}{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 ) filed a complaint on February 25, 1998, against the Defendants.}{
\cs15\super\insrsid14562841\charrsid12610611 \chftn {\footnote \pard\plain \qj \fi720\li0\ri0\sa240\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs15\fs20\super\insrsid14562841 \chftn }{
\fs20\insrsid14562841  Nadine and Imee Fajardo are minors and the instant suit is prosecuted on their behalf by their }{\i\fs20\insrsid14562841 Guardian ad Litem}{\fs20\insrsid14562841 , Jaime Fajardo.}}}{\insrsid14562841\charrsid12610611 
 The Complaint alleged that on July 11, 1997, Defendant Rolando Villalon (hereinafter }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 Villalon}{
\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 
), while employed as a security guard for Defendant Liberty House, unlawfully detained the Fajardos under suspicion of shoplifting.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 In addition, the Fajardos al
leged that they were subjected to false imprisonment, intentional and/or negligent infliction of emotional distress and defamation. The Plaintiffs named Defendant Insurance Company of North America (hereinafter }{\insrsid14562841\charrsid12610611 
{\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 CIGNA}{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{
\insrsid14562841\charrsid12610611 ) as a party to the lawsuit, pursuant to Title 22 of the Guam Code Annotated Section 18305 (formerly Government Code }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols"
 \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611  43354), alleging that Liberty House was insured under a policy issued by CIGNA covering liability for some or all of the claims mentioned in the complaint.}{
\cs15\super\insrsid14562841\charrsid12610611 \chftn {\footnote \pard\plain \qj \fi720\li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 \fs24\lang1033\langfe1033\cgrid\langnp1033\langfenp1033 {\cs15\fs20\super\insrsid14562841 \chftn }{\fs20\insrsid14562841 
 That section provides:
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 {\fs20\insrsid14562841 
\par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0 {\fs20\insrsid14562841 On any policy of liability insurance the injured person or his heirs or representatives shall have a right of direct 
action against the insurer within the terms and limits of the policy, whether or not the policy of insurance sued upon was written or delivered in Guam, and whether or not such policy contains a provision forbidding such direct action, provided that the c
ause of action arose in Guam. Such action may be brought against the insurer alone, or against both the insured and insurer.
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0 {\fs20\insrsid14562841 
\par 22 GCA }{\fs20\insrsid14562841 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 10}{\fldrslt\f36\fs20}}}{\fs20\insrsid14562841  18305 (1994).
\par  
\par 
\par }\pard \qj \li0\ri0\sa240\nowidctlpar\faauto\rin0\lin0\itap0 {\fs20\insrsid14562841  }}}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 Liberty House and Villalon are represented by the same co
unsel and generally denied the allegations of liability and posited the defense that Villalon}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
s actions were in good faith and based upon a reasonable belief that the Plaintiffs may have taken property of Liberty House.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 
CIGNA answered by admitting and denying specific aspects of the Complaint; however, it asserted that its policy of insurance did not provide coverage for the claims of intentional misconduct or for punitive damages.}{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [2]}{\insrsid14562841\charrsid12610611 \tab On September 3, 1998, CIGNA filed its Motion for Partial Summary Judgment with respect to plaintiffs}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
 claims seeking the recovery of punitive damages against CIGNA.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 CIGNA sought judgment that it may not be held liable to indemnify Liberty House for any award of punitive damages.}{\insrsid12610611  

\par 
\par }{\b\insrsid14562841\charrsid12610611 [3]}{\insrsid14562841\charrsid12610611 \tab On January 5, 1999, the trial court issued its Decision and Order granting partial summary judgment in favor of CIGNA and held that CI
GNA is statutorily prohibited from indemnifying Liberty House for any award of punitive damages based upon Liberty House}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s own conduct. }{\i\insrsid14562841\charrsid12610611 See}{
\insrsid14562841\charrsid12610611  }{\i\insrsid14562841\charrsid12610611 Fajardo et al v. Liberty House et al}{\insrsid14562841\charrsid12610611 , CV 0479-98, Decision and Order at 5 ( Super. Ct. Guam, Jan. 5, 1999). The tria
l court, however, held that CIGNA would be liable to indemnify Liberty House for an award of punitive damages imposed against the latter on a respondeat superior theory for the fraudulent, willful or oppressive conduct of Villalon. }{
\i\insrsid14562841\charrsid12610611 Id.}{\insrsid14562841\charrsid12610611  at 6. CIGNA appeals the trial court}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s finding that it may be held vicariously liable for punitive damages.}
{\insrsid12610611  }{\insrsid14562841\charrsid12610611 The Fajardos}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
 cross-appeal asks this court to recognize an exception to the exclusion of punitive damages in cases involving false arrest, false imprisonment and malicious prosecution claims arising from security and law enforcement activities.}{\insrsid12610611 

\par 
\par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid12610611 {\b\insrsid14562841\charrsid12610611 DISCUSSION}{\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\b\insrsid14562841\charrsid12610611 [4]}{\insrsid14562841\charrsid12610611 \tab 
Jurisdiction in this matter is not in dispute and is obtained pursuant to Title 7 of the Guam Code Annotated Sections 3107 and 3108(b) (1994). }{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [5]}{\insrsid14562841\charrsid12610611 \tab A grant of summary judgment is reviewed }{\i\insrsid14562841\charrsid12610611 de novo}{\insrsid14562841\charrsid12610611 . }{\i\insrsid14562841\charrsid12610611 
Guam v. Marfega Trading}{\insrsid14562841\charrsid12610611 , 1998 Guam 4, }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611  9}{
\i\insrsid14562841\charrsid12610611 ; Kim v. Hong}{\insrsid14562841\charrsid12610611 , 1997 Guam 11, }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{
\insrsid14562841\charrsid12610611  5;}{\i\insrsid14562841\charrsid12610611  Iizuka Corporation v. Kawasho Int}{\i\insrsid15433690\charrsid12610611 '}{\i\insrsid14562841\charrsid12610611 l}{\insrsid14562841\charrsid12610611 , 1997 Guam 10, }{
\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611  7. Summary judgment is proper }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 65 \\f 
"WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show t
hat there is no genuine issue as to any material fact.}{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 
 Guam R. Civ. P. 56(c) (1995). There is a genuine issue if there is }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 sufficient evidence }{
\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 which establishes a factual dispute requiring resolution by a fact-finder.}{
\i\insrsid14562841\charrsid12610611  Iizuka}{\insrsid14562841\charrsid12610611 , 1997 Guam 10 at }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 
 7. However, the dispute must be as to a }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 material fact.}{\insrsid14562841\charrsid12610611 
{\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611  }{\i\insrsid14562841\charrsid12610611 Id}{\insrsid14562841\charrsid12610611 . }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst 
SYMBOL 65 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 A }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 62 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{
\insrsid14562841\charrsid12610611 material}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
 fact is one that is relevant to an element of a claim or defense and whose existence might affect the outcome of the suit. . . Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment.}{
\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 64 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611  }{\i\insrsid14562841\charrsid12610611 Id.}{\insrsid14562841\charrsid12610611  (citation omitted). }{
\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [6]}{\insrsid14562841\charrsid12610611 \tab 
If the movant can demonstrate that there are no genuine issues of material fact, the non-movant cannot merely rely on allegations contained in the complaint, but must produce at least some significant probative evidence tending to support the complaint. }
{\i\insrsid14562841\charrsid12610611 Id}{\insrsid14562841\charrsid12610611 . at }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 8. (citing }{
\i\insrsid14562841\charrsid12610611 Anderson v. Liberty Lobby, Inc.}{\insrsid14562841\charrsid12610611 , 477 U.S. 242, 249, 106 S.Ct. 2505, 2510 (1986)). In addition, the court must view the evidence and draw inferences in the l
ight most favorable to the non-movant.}{\i\insrsid14562841\charrsid12610611  Id. }{\insrsid14562841\charrsid12610611 (citation omitted).}{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [7]}{\insrsid14562841\charrsid12610611 \tab Under Guam}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
s statutory authority, a principal may be held liable to third parties for the acts of its agent that causes injury to the third party.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 Specifically, 18 GCA }{\insrsid14562841\charrsid12610611 
{\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611  20309 provides:}{\insrsid12610611 
\par 
\par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\b\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\b\insrsid14562841\charrsid12610611 20309. Principal
}{\b\insrsid15433690\charrsid12610611 '}{\b\insrsid14562841\charrsid12610611 s responsibility for negligence or omission.}{\insrsid14562841\charrsid12610611 
 Unless required by or under the authority of law to employ that particular agent, a principal is r
esponsible to third persons for the negligence of his agent in the transaction of the business of the agency, including wrongful acts committed by such agent in and as part of the transaction of such business, and for his willful omission to fulfill the o
bligations of the principal.}{\insrsid12610611 
\par }\pard \qj \li0\ri720\nowidctlpar\faauto\rin720\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 18 GCA }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{
\insrsid14562841\charrsid12610611  20309 (1992) (formerly Section 2338 of the Civil Code of Guam (1970)). This provision has been held to be in accord with the letter and spirit of the common law
 doctrine of respondeat superior and to govern cases involving master and servant as well as principal and agent. }{\i\insrsid14562841\charrsid12610611 See Concepcion v. United States}{\insrsid14562841\charrsid12610611 
, 374 F. Supp. 1391, 1395 (D. Guam 1974) (citing Guam Civ. Code }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611  2338 (1970)).}{\insrsid12610611 

\par 
\par }{\b\insrsid14562841\charrsid12610611 [8]}{\insrsid14562841\charrsid12610611 \tab However, Guam law incorporates a caveat to the general proposition that the principal is liable to third parties for the negligence of its agents.}{\insrsid12610611  }{
\insrsid14562841\charrsid12610611 The following provision states:}{\insrsid12610611 
\par 
\par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\b\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\b\insrsid14562841\charrsid12610611 20310. Principal
}{\b\insrsid15433690\charrsid12610611 '}{\b\insrsid14562841\charrsid12610611 s responsibility for wrongs willfully committed by the agent}{\insrsid14562841\charrsid12610611 
. A principal is responsible for no other wrongs committed by his agent than those mentioned in }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 
 20309, unless he has authorized or ratified them, even though they are committed while the agent is engaged in his services.}{\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }{\insrsid14562841\charrsid12610611 18 GCA }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611  20310 (1992). Guam}{\insrsid15433690\charrsid12610611 '
}{\insrsid14562841\charrsid12610611 s codification is consistent with other authority stating when an employer can be held vicariously liable for punitive damages based on an employee}{\insrsid15433690\charrsid12610611 '}{
\insrsid14562841\charrsid12610611 s conduct.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 The Restatement (Second) of Torts provides:}{\insrsid12610611 
\par 
\par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 Punitive damages can properly be awarded against a master or other principal because of an act by an agent if, but only if, }{
\insrsid12610611 
\par }\pard \qj \li0\ri720\nowidctlpar\faauto\rin720\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qj \fi720\li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 (a) the principal or a managerial agent authorized the doing and the manner of the act, or}{\insrsid12610611 
\par }\pard \qj \li0\ri720\nowidctlpar\faauto\rin720\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qj \fi720\li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 (b) the agent was unfit and the principal or managerial agent was reckless in employing or retaining him, or}{\insrsid12610611 
\par }\pard \qj \li0\ri720\nowidctlpar\faauto\rin720\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qj \fi720\li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 (c) the agent was employed in a managerial capacity and was acting in the scope of employment, or}{\insrsid12610611 
\par }\pard \qj \li0\ri720\nowidctlpar\faauto\rin720\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qj \fi720\li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 (d) }{\i\insrsid14562841\charrsid12610611 the principal or managerial agent of the principal ratified or approved the act.}{
\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }{\insrsid14562841\charrsid12610611 RESTATEMENT SECOND OF TORTS }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611  909 (1979) (emphasis added).}{
\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [9]}{\insrsid14562841\charrsid12610611 \tab In addition, Guam}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s statutory provision for the remedy of punitive damages states:}{\insrsid12610611 

\par 
\par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 
In an action for the breach of an obligation not arising from contract, where the defendant has been guilty of oppression, fraud, or malice, express or implied, the Plaintiff, in addition to the actual damages, may 
recover damages for the sake of example and by way of punishing the defendant.}{\insrsid12610611 
\par }\pard \qj \li0\ri720\nowidctlpar\faauto\rin720\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 20 GCA }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{
\insrsid14562841\charrsid12610611  2120 (1992).}{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [10]}{\insrsid14562841\charrsid12610611 \tab Our plain reading of the aforementioned statutes}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 leads to the conclusion that}{\insrsid12610611  }{
\insrsid14562841\charrsid12610611 if the agent is liable to the third party because of some negligent conduct committed in the scope of the agent}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
s employment then, by operation of the doctrine of respondeat su
perior, the principal becomes vicariously liable to the third party. However, if the agent commits an intentional tort, then the doctrine of respondeat superior will not hold the principal vicariously liable to the third party unless the principal had aut
horized or ratified the conduct.}{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [11]}{\insrsid14562841\charrsid12610611 \tab 
We note, however, that other jurisdictions have specifically rejected the Restatement view in favor of a rule allowing punitive damages against an employer for acts of its employees so long as committed in the furtherance of the employer}{
\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s business and acting within the scope of employment. }{\i\insrsid14562841\charrsid12610611 See Wiper v. Downtown Development Corp}{\insrsid14562841\charrsid12610611 
., 732 P.2d 200, 201 (Ariz. 1987).}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 Other jurisdictions require that before an employer may be held vicariously liable for punitive damages there must be some fault on his part.}{\insrsid12610611  }{
\i\insrsid14562841\charrsid12610611 See Mercury Motors Express, Inc. v. Smith}{\insrsid14562841\charrsid12610611 , 393 So.2d 545, 549 (Fla. 1981). Further,}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 
although the misconduct of the employee, upon which the vicarious liability of the employer is based, must be willful and wanton, it is not necessary that the fault of the employer, independent of his employee}{\insrsid15433690\charrsid12610611 '}{
\insrsid14562841\charrsid12610611 s conduct, also be willful and wanton. }{\i\insrsid14562841\charrsid12610611 Id.}{\insrsid14562841\charrsid12610611 
 It is sufficient that a plaintiff allege and prove some fault on the part of the employer which foreseeably contributed to the plaintiff}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s i
njury to make him vicariously liable for punitive damages. }{\i\insrsid14562841\charrsid12610611 Id.}{\insrsid14562841\charrsid12610611  However, we decline to follow this view given the plain and unambiguous prescription of our statutes.}{
\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [12]}{\insrsid14562841\charrsid12610611 \tab Therefore, although a split of authority exists on the propriety of the imposition of punitive damages upon an employer for the acts of its employee, Guam}{
\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s statutory provisions are unambiguous and we hold that some authorization or ratification by the employer is necessary before he is vicariously liable for a punitive damages award.}{
\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [13]}{\insrsid14562841\charrsid12610611 \tab Turning to the instant issue before the court, i.e., whether an employer}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
s insurer should indemnify the employer for punitive damages properly assessed upon him under the theory of vicarious liability we begin by observing that Guam}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
s statutory scheme for the regulation of the insurance business is found in Division 2 of Title 22 of the Guam Code Annotated (Chapters 12 through 29).}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 In the context of the instant case, liab
ility insurance includes all insurance against loss or damage resulting from accident to, or injury, fatal or non-fatal, suffered by any person, and for which the insurer is liable. }{\i\insrsid14562841\charrsid12610611 See}{
\insrsid14562841\charrsid12610611  22 GCA }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611  18105 (1994).}{\insrsid12610611  }{
\insrsid14562841\charrsid12610611 However, in a specific provision, Guam law exonerates an insurer from liability for a loss occasioned by the willful act of an insured.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 The statute provides:}{
\insrsid12610611 
\par 
\par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\b\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\b\insrsid14562841\charrsid12610611 
18602. Wilful Act of Insured: Negligence.}{\insrsid14562841\charrsid12610611  An insurer is not liable for a loss caused by the wilful act of the insured; but he is not exonerated by the negligence of the insured or of the insured}{
\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s agents or others.}{\insrsid12610611 
\par }\pard \qj \li0\ri720\nowidctlpar\faauto\rin720\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 22 GCA }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{
\insrsid14562841\charrsid12610611  18602 (1994).}{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [14]}{\insrsid14562841\charrsid12610611 \tab The statute is unambiguous in its proscription against indemnification. Thus, the lower court}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
s ruling that CIGNA would not be liable to Liberty House based upon the latter}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s intentional acts must be affirmed.}{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [15]}{\insrsid14562841\charrsid12610611 \tab Now to the issue of punitive damages assessed against an insured by operation of the doctrine of respondeat superior. As pointed out by the parties, Guam}{
\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s insurance statutes were adopted from California.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 In that jurisdiction, indemnification of punitive damages is prohibited.}{
\i\insrsid12610611  }{\i\insrsid14562841\charrsid12610611 See Peterson v. Superior Court}{\insrsid14562841\charrsid12610611 
, 31 Cal.3d 147, 642 P.2d 1305, 181 Cal.Rptr. 784 (Cal. 1982). The California Supreme Court has recognized that indemnification of punitive damages is prohibited for two distinct reasons:}{\insrsid12610611 
\par 
\par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 First is the public policy rationale against diluting the deterr
ent effect of punitive damages by allowing the impact of the penalty to be shifted to the insurer.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 This justification applies whatever the basis for the punitive damages award.}{\insrsid12610611  }{
\insrsid14562841\charrsid12610611 The second reason is applicable only when the basis for punitive damages is the wilful act of the defendant.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 When the}{\insrsid12610611  }{
\insrsid14562841\charrsid12610611 defendant commits an intentional tort, the prohibition of }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611 533}{
\insrsid12610611  }{\insrsid14562841\charrsid12610611 presents an additional reason for disallowing indemnification of the punitive damages, as well as indemnification of the remainder of the plaintiffs}{\insrsid15433690\charrsid12610611 '}{
\insrsid14562841\charrsid12610611  recovery.}{\insrsid12610611 
\par }\pard \qj \li0\ri720\nowidctlpar\faauto\rin720\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\i\insrsid14562841\charrsid12610611 Peterson}{\insrsid14562841\charrsid12610611 , 31 Cal.3d at 158, 642 P.2d at 1311, 181 Cal.Rptr. at 790.}{\insrsid12610611  }{
\insrsid14562841\charrsid12610611 California}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s Section 533 is the same as 22 GCA }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 39 \\f "WP TypographicSymbols"
 \\s 12}{\fldrslt\f36\fs24}}}{\insrsid14562841\charrsid12610611  18602. }{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [16]}{\insrsid14562841\charrsid12610611 \tab Again, there is a split of authorities as to whether insurance may cover liability for punitive damages. In California, indemnification is prohibited. By way of contrast,}{
\insrsid12610611  }{\insrsid14562841\charrsid12610611 in Oklahoma, indemnification may be possible.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 In the case of}{\insrsid12610611  }{\i\insrsid14562841\charrsid12610611 
Dayton Hudson Corp. v. American Mutual Liability Ins. Co.}{\insrsid14562841\charrsid12610611 , 621 P.2d}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 1155 (Okla. 1980), the Oklahoma Supreme Court embraced the rule of}{\insrsid12610611  }{
\insrsid14562841\charrsid12610611 allowing insurance coverage of punitive damages articulated in }{\i\insrsid14562841\charrsid12610611 Northwest Nat}{\i\insrsid15433690\charrsid12610611 '}{\i\insrsid14562841\charrsid12610611 l. Cas. Co. v. McNulty}{
\insrsid14562841\charrsid12610611 , 307 F.2d 432, 440 (5}{\super\insrsid14562841\charrsid12610611 th}{\insrsid14562841\charrsid12610611  Cir. 1962). }{\i\insrsid14562841\charrsid12610611 Dayton Hudson}{\insrsid14562841\charrsid12610611 
, 621 P.2d at 1160. The court reasoned that since the purpose of punitive damages is to punish and deter wrongdoers rather than to compensate injured parties, allowing the responsibility of the wrongdoer to shift that liability would defeat this purpose. 
}{\i\insrsid14562841\charrsid12610611 Id.}{\insrsid14562841\charrsid12610611 
 However, since cases of vicarious liability (such as respondeat superior) involve conduct by someone else other than the policyholder, it does not contravene public policy to allow coverage of such liability. }{\i\insrsid14562841\charrsid12610611 Id.}{
\insrsid14562841\charrsid12610611  }{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [17]}{\insrsid14562841\charrsid12610611 \tab The Fajardos and the lower court argue that blind adherence to California}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
s precedents is no longer necessary. However, this court has held that: }{\insrsid12610611 
\par 
\par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 And while we will not disturb precedent that is "well supported in law and well reasoned", we clearly are within our authority t
o modify those interpretations previously addressed by federal courts.}{\i\insrsid14562841\charrsid12610611  . .}{\insrsid14562841\charrsid12610611 
When choosing to make such changes, we will use our own independent and reasoned analysis of the issues before us. Moreover, based on our familiarity with these matters, we will give
 consideration to local law and customs, if applicable, and provide for their proper effect.}{\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }{\i\insrsid14562841\charrsid12610611 Sumitomo Const. Co., Ltd. v. Zhong Ye, Inc.,}{\insrsid14562841\charrsid12610611  1997 Guam 8, }{\insrsid14562841\charrsid12610611 {\field{\*\fldinst SYMBOL 38 \\f "WP TypographicSymbols" \\s 12}{\fldrslt\f36\fs24}}}{
\insrsid14562841\charrsid12610611  6 (citations omitted).}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 In this case, Guam}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s insurance sta
tutes are adopted from California and there is no compelling reason to deviate from that jurisdiction}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s interpretation of these statutes.}{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [18]}{\insrsid14562841\charrsid12610611 \tab We hold that it would be against public policy to allow the indemnification of punitive damages by an insurer of 
an employer who may be liable to another by operation of the doctrine of respondeat superior. The rationale has been stated and herewith adopted as follows:}{\insrsid12610611 
\par 
\par }\pard \qj \li720\ri720\nowidctlpar\faauto\rin720\lin720\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 [P]unitive damages are awarded for punishment and deterrence. . . and should rest ultimately on the
 party actually responsible for the wrong.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 If that person were to shift the burden to an insurance company, punitive damages would serve no useful purpose.}{\insrsid12610611  }{
\insrsid14562841\charrsid12610611 Such damages do not compensate the plaintiff for his injury, since compensatory damages already have made the plaintiff whole. And there is no point in punishing the insurance company; it has done no wrong.}{
\insrsid12610611  }{\insrsid14562841\charrsid12610611 In actual fact, of course, and considering the extent to which the public is insured, the burden would ultimately come to rest not on the insuranc
e companies but on the public, since the added liability to the insurance companies would be passed along to the premium payers.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 
Society would then be punishing itself for the wrong committed by the insured.}{\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }{\i\insrsid14562841\charrsid12610611 Northwestern}{\insrsid14562841\charrsid12610611 , 307 F.2d at 440-41.}{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [19]}{\insrsid14562841\charrsid12610611 \tab Therefore, we reverse the lower court}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
s ruling that CIGNA would have to indemnify for punitive damages assessed against Liberty House if liability therefor arose by operation of vicarious liability.}{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [20]}{\insrsid14562841\charrsid12610611 \tab Lastly, with respect to the Fajardo}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s issue 
on cross-appeal, we are unconvinced by their policy arguments and decline to carve out an exception for indemnification of punitive damages when the claims against the insured arise from security and law enforcement activities.}{\insrsid12610611  }{
\insrsid14562841\charrsid12610611 Again, our holding is consistent with the overall policy of requiring the wrongdoer to feel the full implication of an award of punitive damages and not to escape its consequences by shifting that liability to an insurer.
}{\insrsid12610611 
\par 
\par }\pard \qc \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid12610611 {\b\insrsid14562841\charrsid12610611 CONCLUSION}{\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\tqc\tx4680\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\b\insrsid14562841\charrsid12610611 [21]}{\insrsid14562841\charrsid12610611 \tab Because we find that Guam}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 
s law is unambiguous in precluding indemnification of an insured for the wilful acts of the insured, we AFFIRM that portion of the lower court}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s decision.}{\insrsid12610611  }{
\insrsid14562841\charrsid12610611 However, because we find that allowing indemnification, by an insurer, of punitive damages assessed 
against an insured, even if that liability is vicariously imposed, is against public policy and defeats the very purposes for which punitive damages are imposed, we REVERSE that portion of the lower court}{\insrsid15433690\charrsid12610611 '}{
\insrsid14562841\charrsid12610611 s decision.}{\insrsid12610611 
\par 
\par }{\b\insrsid14562841\charrsid12610611 [22]}{\insrsid14562841\charrsid12610611 \tab Accordingly, the trial court}{\insrsid15433690\charrsid12610611 '}{\insrsid14562841\charrsid12610611 s ruling is }{\b\insrsid14562841\charrsid12610611 AFFIRMED}{
\insrsid14562841\charrsid12610611  in part, }{\b\insrsid14562841\charrsid12610611 REVERSED}{\insrsid14562841\charrsid12610611  in part, and }{\b\insrsid14562841\charrsid12610611 REMANDED}{\insrsid14562841\charrsid12610611 
 for further proceedings consistent with this opinion.}{\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\tx-1440\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qc \li0\ri0\nowidctlpar\tx-1440\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 PETER F.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 PEREZ\tab \tab \tab \tab }{\insrsid12610611  }{
\insrsid14562841\charrsid12610611 PETER C.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 SIGUENZA
\par Justice Pro Tempore\tab \tab \tab \tab }{\insrsid12610611  }{\insrsid14562841\charrsid12610611 Associate Justice}{\insrsid12610611 
\par }\pard \qj \li0\ri0\nowidctlpar\tx-1440\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid12610611 
\par }\pard \qc \li0\ri0\nowidctlpar\faauto\rin0\lin0\itap0\pararsid12610611 {\insrsid14562841\charrsid12610611 BENJAMIN J.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 F.}{\insrsid12610611  }{\insrsid14562841\charrsid12610611 CRUZ
\par Chief Justice
\par }}