Mahmoud Abdalla v. Farmers Insurance Exchange
07-17-00020-CV
| Tex. | Jul 5, 2017Background
- Insured Mahmoud Abdalla filed suit after a Feb 21, 2012 water loss and invoked his policy’s appraisal clause when parties disagreed on the amount of loss.
- Appraisers submitted competing estimates; the court-appointed umpire (Charles Bleil) adopted Farmers’ appraiser Albright and issued an Award for $345,664.21 (Oct. 2014).
- Farmers tendered payment within the policy timeframe (payment sent Oct. 15, 2014) reflecting ACV less depreciation, deductible, and prior payments.
- Abdalla moved to vacate the appraisal award, alleging mistake/accident; the trial court denied the motion (Apr. 6, 2016).
- Farmers moved for summary judgment arguing timely payment of the appraisal award (and absence of independent injury) precluded contract, statutory (Tex. Ins. Code chs. 541/542), and extra‑contractual claims; the trial court granted summary judgment on all claims and awarded costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the appraisal award should be vacated for mistake/accident | Abdalla: umpire’s award resulted from mistake/accident and relied on improper methodology/reports | Farmers: differences between appraisers are inherent; award reflects umpire’s intent and is not a mistake | Award not vacated — no evidence the award failed to reflect appraisers’/umpire’s intent |
| Whether timely payment of the appraisal award defeats breach of contract claim | Abdalla: disputes the award and had not negotiated payment; seeks additional contract recovery | Farmers: participation in appraisal + timely tender of award estops insured from breach claim | Payment precludes breach of contract — summary judgment for Farmers |
| Whether tender (even if not accepted) estops breach claim | Abdalla: did not accept/endorse payment and continued to contest award | Farmers: tender in compliance with appraisal clause is sufficient to defeat breach claim | Tender defeats breach claim regardless of acceptance |
| Whether timely payment of appraisal award gives rise to Tex. Ins. Code ch. 542 liability (prompt-payment penalties) | Abdalla: insurer delayed acceptance/rejection earlier in claim timeline, arguing statutory deadlines were missed | Farmers: statutory deadlines for §542 do not run until insurer has items needed to secure final proof of loss; appraisal award reset the relevant timing and payment was timely | No Chapter 542 liability — payment was timely as a matter of law |
| Whether extra‑contractual claims (bad faith, DTPA, Tex. Ins. Code §541) survive when appraisal award paid | Abdalla: Menchaca (Supreme Court) allows statutory/extra‑contractual recovery in some contexts; seeks statutory/extra-contractual relief | Farmers: without an underlying breach or an independent injury beyond policy benefits, extra‑contractual claims fail; Abdalla admitted his damages were only unpaid policy benefits | No extra‑contractual recovery — no breach and no independent injury; summary judgment affirmed |
Key Cases Cited
- Providence Lloyds Ins. Co. v. Crystal City Indep. Sch. Dist., 877 S.W.2d 872 (Tex. App.—San Antonio 1994) (appraisal awards sustained unless issued without authority, by fraud/accident/mistake, or not in substantial policy compliance)
- Garcia v. Lloyds, 514 S.W.3d 257 (Tex. App.—San Antonio 2016) (appraisal award set‑aside standard; disagreements in methodology do not show mistake of intent)
- Breshears v. State Farm Lloyds, 155 S.W.3d 340 (Tex. App.—Corpus Christi 2004) (timely payment of appraisal award bars prompt‑payment penalty liability)
- Franco v. Slavonic Mut. Fire Ins., 154 S.W.3d 777 (Tex. App.—Houston [14th Dist.] 2004) (payment of appraisal award estops insured from breach claim)
- Republic Ins. Co. v. Stoker, 903 S.W.2d 338 (Tex. 1995) (no bad‑faith recovery without an underlying breach of the insurance contract)
- Transp. Ins. Co. v. Moriel, 879 S.W.2d 10 (Tex. 1994) (extra‑contractual recovery requires conduct rising to independent tort beyond breach)