in Re Liberty Insurance Corporation
2016 Tex. App. LEXIS 6161
Tex. App.2016Background
- Liberty Insurance issued a homeowner’s policy to James Hallbeck covering his Cypress residence; the policy contained an appraisal clause and an anti-waiver provision requiring written waivers by the insurer.
- Hallbeck claimed wind/hail damage from a June 2013 storm and demanded damages in late 2014; a Liberty adjuster inspected the property and concluded no storm-related damage occurred.
- Liberty denied the claim by letter stating no storm-related damage was found and expressly disclaiming that the denial should be construed as a waiver of policy defenses; Liberty also reserved appraisal rights in its answer and in other communications.
- After mediation failed, Liberty invoked the policy’s appraisal clause in April 2015 and requested Hallbeck appoint an appraiser; Hallbeck did not participate.
- Liberty moved the trial court to abate and compel appraisal; the trial court denied the motion without stated reasons. Liberty sought mandamus relief from the court of appeals.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurer waived the contractual right to appraisal by denying coverage | Hallbeck: Denial of coverage is a denial of liability and thus waived appraisal | Liberty: Denial of coverage alone does not waive appraisal, and insurer expressly reserved appraisal rights in writing | Court: Denial alone does not constitute waiver when insurer reserves appraisal rights and policy requires written waiver; trial court abused discretion in denying appraisal |
| Whether the dispute falls within scope of appraisal clause (amount of loss vs causation) | Hallbeck: There is no "loss" to value; dispute is coverage/causation, not amount | Liberty: Appraisal can and should resolve amount of loss even when causation/coverage is disputed | Court: Appraisal may include causation elements and can determine amount (including $0); appraisal should generally proceed |
| Whether insurer waived appraisal by participation in litigation/mediation before invoking appraisal | Hallbeck: Participation indicates waiver | Liberty: Participation plus express reservations preserved appraisal rights | Court: Participation without clear, written relinquishment does not show intent to waive; insurer preserved rights by written reservations and policy anti-waiver clause |
| Whether mandamus is appropriate to compel appraisal | Hallbeck: Denial of motion proper; appeal adequate | Liberty: Denial prevents obtaining independent valuations central to defense; appellate remedy inadequate | Court: Mandamus appropriate because denial of appraisal prevents development of core proof and appeal is inadequate |
Key Cases Cited
- In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004) (mandamus standard and need to show abuse of discretion)
- Walker v. Packer, 827 S.W.2d 833 (Tex. 1992) (trial court has no discretion in defining or applying law)
- In re Allstate Cnty. Mut. Ins. Co., 85 S.W.3d 193 (Tex. 2002) (refusal to enforce appraisal can deny defendants essential valuations and justify mandamus)
- State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009) (appraisal can address amount of loss even when causation/coverage is disputed)
- In re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404 (Tex. 2011) (appraisal clauses generally enforceable; waiver requires intentional relinquishment)
- Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (Tex. App.—Houston [14th Dist.] 2004) (appraisal estops parties from contesting damages, leaving liability to court)
- In re Slavonic Mut. Fire Ins. Ass’n, 308 S.W.3d 556 (Tex. App.—Houston [14th Dist.] 2010) (insurer’s reservation of rights can show no waiver of appraisal)
- Scottish Union & Nat’l Ins. Co. v. Clancy, 8 S.W. 630 (Tex. 1888) (waiver requires acts reasonably calculated to induce insured to believe compliance is not desired or a denial of liability)
- In re Gen. Elec. Capital Corp., 203 S.W.3d 314 (Tex. 2006) (waiver requires intentional relinquishment or conduct inconsistent with claiming the right)
- In re Acadia Ins. Co., 279 S.W.3d 777 (Tex. App.—Amarillo 2007) (insurer’s unequivocal statement that appraisal need not be required when there is no coverage can constitute waiver)