Lead Opinion
delivered the opinion of the Court, in which Chief Justice
The trial court in this case determined that an appraisal provision in a personal automobile insurance policy promulgated by the Texas Department of Insurance is an agreement to arbitrate, and as such, the agreement is unenforceable because it is against public policy. Thus, the trial court refused to enforce the clause. But this provision concerns an appraisal, not arbitration, and is not unenforceable for the reason the trial court gave. Because the trial court abused its discretion and rela-tors have no adequate remedy on appeal, we conditionally grant the writ of mandamus.
I
Plaintiff Terri Shields’s car was stolen, and plaintiffs Renita Washington’s and Lu-cilia Hernandez’s vehicles were involved in accidents. Their insurance companies, Allstate, Farmers, and Progressive, respectively, determined that the vehicles were total losses and engaged CCC Information Services, Inc., to determine the values of the totaled cars. Plaintiffs allege that the insurance companies directed CCC to fraudulently generate low values for the totaled vehicles, that CCC intentionally un
The plaintiffs allege that the insurance companies misrepresented their coverage by representing that actual cash value would be paid under the policies, when in fact CCC’s and the insurance companies’ conduct resulted in inaccurate, unreliable, and biased valuations, and payment of less than full value. Under the plaintiffs’ theory, the insurance companies systematically undervalue vehicles, knowing that because of the costly appraisal process the insureds are unlikely to challenge the valuations. Based on these allegations, they pleaded fraud and fraudulent concealment, Texas Deceptive Trade Practices Act and Texas Insurance Code violations, breach of the duty of good faith and fair dealing, breach of contract, and civil conspiracy.
The plaintiffs’ insurance policies contain an appraisal clause, which may be invoked by either party, for determining a vehicle’s value if the insurer and the insured disagree. Each party hires its own appraiser. If the two appraisers cannot agree on the value, they select an additional appraiser as an umpire, or a district judge will appoint one if the appraisers cannot agree on an umpire. A decision signed by two of the appraisers is binding as to the vehicle’s value.
After plaintiffs filed suit, the insurance companies answered and then filed a plea in abatement and motion to invoke appraisal. The trial court denied the motion, finding that the appraisal provision, when considered as an arbitration agreement, was unenforceable. The defendants unsuccessfully sought mandamus relief from the court of appeals. They then petitioned this Court for mandamus relief.
II
The trial court’s conclusion that the appraisal provision was an arbitration agreement and unenforceable was error. This Court distinguished between appraisal and arbitration clauses over a hundred years ago. In Scottish Union & National Insurance Co. v. Clancy, we concluded that while arbitration determines the rights and liabilities of the parties, appraisal merely “binds the parties to have the extent or amount of the loss determined in a particular way.”
III
“[A] clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion” sub
In an analogous situation, we have held that denial of discovery “going to the heart of a party’s case may render the appellate remedy inadequate.”
In Walker v. Packer, this Court reaffirmed the principle that “an appeal will not be an adequate remedy where the party’s ability to present a viable claim or defense at trial is vitiated or severely compromised by the trial court’s discovery error.”
IV
The parties in this case contracted for an appraisal if they disagreed about the damaged property’s value. Texas courts have distinguished between appraisal and arbitration for over a hundred years. And they have enforced appraisal provisions over that same length of time. Under Texas law, the trial court’s conclusion that the appraisal clause was one for arbitration and unenforceable was an error of law, constituting an abuse of discretion. That abuse of discretion denies the development of proof going to the heart of a party’s case and cannot be remedied by appeal. Accordingly, we conditionally grant mandamus relief.
While the trial court’s denial of the motion to invoke appraisal was error, the failure to grant the motion to abate is not subject to mandamus.
Notes
.
. See id. at 631-32.
. See, e.g., Standard Fire Ins. Co. v. Fraiman,
. Hartford Lloyd’s Ins. Co. v. Teachworth, 898 F.2d 1058, 1061-62 (5th Cir.1990).
.See, e.g., Glens Falls Ins. Co. v. Peters,
. Walker v. Packer,
. Id. at 843.
. Id.
. See, e.g., id.; Able Supply Co. v. Moye,
. See Abor v. Black,
. See, e.g., In re Terra Nova,
Dissenting Opinion
filed a dissenting opinion, in which Justice HANKINSON joined.
Once again, the Court ignores established mandamus precedent and rolls back the clock to a time before our decision in Walker v. Packer,
I. ADEQUATE REMEDY AT LAW — APPEAL
■ A writ of mandamus will issue “only to correct a clear abuse of discretion or the violation of a duty imposed by law when there is no other adequate remedy by law.” Johnson v. Fourth Court of Appeals,
II. ANALYSIS
Missing from the Court’s opinion is an accurate description of the plaintiffs’ claims in this case. The plaintiffs have sued Allstate for fraud, fraudulent concealment, violations of the Texas Deceptive Trade Practices Act and the Texas Insurance Code, breach of the duty of good faith and fair dealing, civil conspiracy, and breach of contract. The plaintiffs’ allegations underlying all these claims — including the breach of contract claim that the Court solely relies upon for granting mandamus — relate to how Allstate and the appraisal company it employs, CCC Information Services, value cars before Allstate initially offers a cash settlement for a covered loss. The plaintiffs’ pleadings contend that Allstate, in concert with CCC Information Services, systematically undervalues cars at the initial valuation stage and offers this low amount knowing that the initial valuations “are inaccurate, unreliable, and biased toward generating valuation reports well below the actual cash value or replacement cost” and anticipating that claimants will not bother disputing the offer. The plaintiffs argue that Allstate’s conduct is fraudulent and constitutes a breach of its agreement to pay cash value for covered losses at the initial valuation stage.
Refusing to acknowledge the nature of the plaintiffs’ claims, in a remarkably terse discussion, the Court holds that Allstate does not have an adequate appellate remedy from the trial court’s erroneous deci
In determining that the trial court’s order denying the appraisals would vitiate or severely compromise Allstate’s defenses, the Court relies on Walker.
Here, the Court’s position is that no adequate appellate remedy exists, because Allstate’s defenses to the plaintiffs’ breach of contract allegations turn on whether Allstate did in fact undervalue the plaintiffs’ cars at the initial valuation stage. According to the Court, “if the appraisal determines that the vehicle’s full value is what the insurance company [initially] offered, there would be no breach of contract.”
Moreover, the Court’s unfounded belief that the appraisal valuations will finally resolve whether Allstate breached its contractual obligation to pay cash value for losses or damage at the initial valuation stage demonstrates a fundamental misunderstanding not only about our case law involving insurance contract appraisal provisions, but also about when the Court has authority to issue mandamus relief. First, long ago, this Court rejected the position that an appraisal’s outcome establishes liability when we held that, unlike an arbitration provision, an appraisal provision “only binds the parties to have the extent or amount of the loss determined in a particular way, leaving the question of liability for such loss to be determined, if necessary, by the courts.” Scottish Union & Nat’l Ins. Co. v. Clancy,
Second, the Court’s cursory conclusion that the appraisal valuations are disposi-tive of the plaintiffs’ breach of contract claim disregards that Allstate can otherwise develop defenses to the plaintiffs’ breach of contract allegations. The Court simply assumes, without analysis or explanation, that the trial court’s order refusing to enforce the appraisal provision vitiates or severely compromises Allstate’s ability to defend itself against the plaintiffs’ breach of contract claim. However, other than the Court’s wholly advisory writing, there is absolutely no indication that the appraisal process’ outcome is the only means by which Allstate can develop its contractual defenses. Allstate has not demonstrated that it lacks other reasonable opportunities to develop evidence about the cars’ values to counter the plaintiffs’ allegations about Allstate’s breach of its obligation to pay cash value at the initial valuation process. See Walker,
For example, Allstate can obtain expert testimony about the valuation process and about the actual losses to counter the plaintiffs’ allegations. Thus, the trial court’s order is nothing more than an incidental ruling that does not deny Allstate a reasonable opportunity to develop its defenses against the plaintiffs’ claims. Moreover, because the cars’ values can be established through other means, the appraisal process is certainly not dispositive on whether Allstate breached its agreement to pay actual value for covered losses or whether Allstate systematically acted fraudulently during the initial valuation process.
Furthermore, in granting mandamus relief because the appraisal valuations will counter at least one of the plaintiffs’ claims, the Court parses the breach of contract claim from the plaintiffs’ other claims. In doing so, the Court recognizes that the erroneous order does not compromise Allstate’s defenses to the fraud-based claims. However, even assuming the Court has authority to grant mandamus relief based on an order’s purported effect on one of the several underlying claims, the Court’s decision to do so here is based on its faulty assumption that the breach of contract claim necessitates the appraisal process. Instead, the plaintiffs’ pleadings demonstrate that the plaintiffs’ breach of contract claim is that Allstate breached its agreement to pay cash value for covered losses during the initial valuation stage; no allegations underlying the breach of .contract claim refer to Allstate’s duty under the appraisal provision. The Court cites no authority — and I find none that exists — for its conclusion that the appraisal process’ outcome is entirely dispositive of the breach of contract claim here. Further, there is no authority for the Court’s assumption that Allstate cannot defend itself against the breach of contract claim through other means. Because Allstate has not established that the trial court’s order vitiates its defenses so that trial would be a waste of judicial resources, an adequate appellate remedy exists. See Walker,
Ultimately, the trial court’s order refusing to enforce the appraisal provisions is, in light of the plaintiffs’ claims against Allstate, an incidental ruling. As the Court acknowledges, it is well settled in
III. THE ROAD OF NO RETURN ... ONCE AGAIN
‘Yesterday ... I believe in yesterday.”
Lennon/McCartney
The Court obviously believes in yesterday, because its opinion revives a concept we expressly disapproved in Walker v. Packer. The law clearly establishes that appraisal clauses are not analogous to unenforceable arbitration provisions. Thus, this case involves a trial court’s erroneous decision about a settled legal question for which an appeal is readily available. In order to justify mandamus here, the Court, while skillfully avoiding saying so, revives the more lenient mandamus standard first articulated in Cleveland v. Ward,
Today, the Court’s opinion returns us to this disfavored doctrine and will cause appellate courts to “embroil themselves unnecessarily in incidental pre-trial rulings of the trial courts.” Walker,
. See, e.g., Glens Falls Ins. Co. v. Peters,