542 S.W.3d 815
Tex. App.2018Background
- Pamela Bailey's home was insured by Allstate in April 2015 and suffered storm damage; Bailey's estimate was ~$13,776 while Allstate paid ~$766 after deductible.
- Bailey's attorney sent a demand letter in July 2017 demanding payment and penalties and offering appraisal if Allstate named its appraiser within 20 days; Allstate declined the demand about 40 days later but did not mention appraisal.
- Bailey sued Allstate in August 2017 for breach of contract, statutory penalties, and bad faith; Allstate answered in September 2017.
- In November 2017 Allstate invoked the policy's appraisal clause and identified its appraiser; Bailey did not respond, and Allstate moved to compel appraisal.
- Bailey opposed the motion, arguing Allstate waived the appraisal right by waiting until after suit and that compelling appraisal would be impermissible specific performance; the trial court denied Allstate’s motion.
- Allstate sought mandamus relief from the appellate court to vacate the denial and compel appraisal; the appellate court conditionally granted the petition.
Issues
| Issue | Plaintiff's Argument (Bailey) | Defendant's Argument (Allstate) | Held |
|---|---|---|---|
| Whether Allstate waived its contractual right to demand appraisal by delaying until after suit | Allstate unreasonably delayed and therefore waived appraisal; Bailey incurred litigation expenses and prejudice | Delay alone does not show waiver; no policy time limit; appraisal may be invoked after suit and Bailey suffered no unavoidable prejudice | Appraisal right not waived; delay did not establish prejudice or impasse; court abused discretion in denying motion to compel appraisal |
| Whether Bailey's attorney's demand letter altered the insurer's contractual appraisal rights | The letter’s 20‑day request should be read to require Allstate to invoke appraisal before litigation | The policy controls; attorney’s demand cannot unilaterally change policy terms absent endorsement | Attorney's letter did not change policy; unambiguous policy terms govern and may be altered only by endorsement |
| Whether the trial court required particular pleadings (counterclaim or summary judgment) to compel appraisal | Allstate should have pled appraisal right as a counterclaim or sought summary judgment before motion to compel | Motion to compel appraisal is an established procedure to enforce appraisal rights | No special pleading required; motion to compel is proper vehicle to invoke appraisal |
| Whether mandamus is an appropriate remedy (adequate appellate remedy) | Bailey argued trial scheduling and mediation made appraisal unnecessary and appeal would be adequate | Denial of appraisal vitiates insurer’s contractual right and ability to defend breach claim; appeal is inadequate | Mandamus appropriate; insurer lacks adequate remedy by appeal; appellate court conditionally granted mandamus |
Key Cases Cited
- Scottish Union & Nat'l Ins. Co. v. Clancy, 8 S.W. 630 (Tex. 1888) (appraisal clauses bind parties to specified method for determining amount of loss)
- In re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404 (Tex. 2011) (appraisal clauses generally enforceable; waiver requires intent and prejudice)
- In re Gen. Elec. Capital Corp., 203 S.W.3d 314 (Tex. 2006) (waiver requires intentional relinquishment or conduct inconsistent with claiming the right)
- Tex. Farm Bureau Mut. Ins. Co. v. Sturrock, 146 S.W.3d 123 (Tex. 2004) (construction of unambiguous contract is a question of law)
- Royal Indem. Co. v. Marshall, 388 S.W.2d 176 (Tex. 1965) (courts must enforce plain and unambiguous policy terms)
- State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009) (appraisal clauses should be enforced)
- In re Allstate Cty. Mut. Ins. Co., 85 S.W.3d 193 (Tex. 2002) (motion to compel appraisal is proper procedure)
- In re Team Rocket, L.P., 256 S.W.3d 257 (Tex. 2008) (mandamus balancing of benefits and detriments)
- Security Nat'l Ins. Co. v. Waloon Investment, Inc., 384 S.W.3d 901 (Tex. App.--Houston [14th Dist.] 2012) (distinguished — addressed enforcement of appraisal award, not compelment of appraisal)
- In re Cypress Tex. Lloyds, 419 S.W.3d 443 (Tex. App.--Beaumont 2012) (insurer’s failure to request appraisal makes it difficult to attribute costs to insurer)