In re Acceptance Indem. Ins. Co.
562 S.W.3d 645
| Tex. App. | 2018Background
- Acceptance Indemnity issued commercial property policies covering apartment complexes owned by Agrestic I, LP and Tiberious, LLC (RPIs).
- After a May 2015 wind/hail event, RPIs' contractor estimated repairs at ~$1.2M; Acceptance’s appraisals produced a much lower amount.
- RPIs accepted partial payment (undisputed amount less deductibles) but sought additional payment for contractor overhead, profit, and sales tax.
- RPIs sent a demand letter in April 2017 and sued in August 2017 alleging underpayment and extra‑contractual claims; Acceptance moved to compel appraisal and abate under the policy’s appraisal clause.
- The trial court denied the motion to compel and to abate; Acceptance sought mandamus relief from the appellate court.
Issues
| Issue | RPIs' Argument | Acceptance Indemnity's Argument | Held |
|---|---|---|---|
| Whether the contractual appraisal clause must be enforced | Appraisal is improper because dispute is coverage/entitlement to overhead, profit, and taxes (a legal question), not amount; insurer waived or forfeited appraisal | Appraisal governs disputes about amount of loss; insurer invoked appraisal timely and dispute concerns valuation of overhead/profit/taxes | Appellate court: appraisal enforceable; RPIs failed to prove waiver; compel appraisal and abate litigation |
| Whether Acceptance waived appraisal by delay/negotiating | Parties reached an impasse (Aug–Dec 2015) and insurer delayed, causing prejudice | No impasse shown; ongoing negotiations and demand letters encourage settlement; insurer invoked appraisal before notice of impasse | No waiver: impasse not established; no unreasonable delay or prejudice shown |
| Whether insurer’s refusal to pay constitutes breach excusing appraisal compliance | Insurer’s alleged breach (not paying overhead/profit/taxes) discharged RPIs from contractual appraisal obligation | Breach claim would require deciding coverage/amount; appraisal is the contractually specified means to resolve amount disputes absent illegality or waiver | Court: breach argument insufficient to avoid appraisal; clause enforceable absent illegality or proven waiver |
| Whether appraisal clause is illusory or violates right to jury | Clause lacks mutuality because insurer can still deny claim after appraisal; appraisal used to deprive jury and litigate away statutory claims | Policy binds both parties to appraised valuation while preserving rights to sue or deny coverage on other grounds; parties can contractually waive jury for valuation | Clause valid and mutual; parties bound by appraisal valuation; contention rejected |
Key Cases Cited
- In re M-I, L.L.C., 505 S.W.3d 569 (Tex. 2016) (mandamus available to correct clear abuse of discretion)
- In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) (mandamus as remedy; parties may contractually waive jury trial)
- In re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404 (Tex. 2011) (appraisal clauses generally enforceable absent illegality or waiver; impasse requires both sides believe negotiation is futile)
- State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009) (trial court has no discretion to ignore a valid appraisal clause)
- In re Allstate Cnty. Mut. Ins. Co., 84 S.W.3d 193 (Tex. 2002) (appraisal clause binds parties to a method for determining amount of loss)
- Pounds v. Liberty Lloyds of Tex. Ins. Co., 528 S.W.3d 222 (Tex. App.—Houston [14th Dist.] 2017) (insurer’s denial of claim does not necessarily preclude appraisal)