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In re Allstate Vehicle and Property Insurance Co.

Court of Appeals of Texas, Second District, Fort Worth

May 3, 2018

IN RE ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY RELATOR

          ORIGINAL PROCEEDING TRIAL COURT NO. 2017-000323-3

          PANEL: WALKER, MEIER, and GABRIEL, JJ.

          OPINION

          SUE WALKER, JUSTICE.

         I. Introduction

         Because the trial court did not abuse its discretion by finding that Relator Allstate Vehicle and Property Insurance Company waived its right to invoke its policy's appraisal provision, and because the policy does not contain a nonwaiver clause, we will deny Allstate's petition for writ of mandamus.

         II. Factual and Procedural Background

         Real Party in Interest Deniedra Jackson made two claims under her homeowner's policy with her insurance company, Allstate, for roof damage sustained on April 1, 2015, and on March 17, 2016. Allstate refused to pay monies on either claim, stating in writing that "[n]o payment was made . . . because the covered damage observed by Allstate . . . did not exceed the policy's $4, 077.68 deductible." Jackson filed suit pursuant to the expedited action provisions of Texas Rule of Civil Procedure 169.[1] See Tex. R. Civ. P. 169. In accordance with that rule, Jackson affirmatively pleaded that she was seeking recovery of only monetary relief aggregating $100, 000 or less. See Tex. R. Civ. P. 169(a)(1).

         Prior to invoking the appraisal provision set forth in Jackson's policy, Allstate had conducted at least six inspections of Jackson's roof;[2] had removed the case to federal court--the federal court remanded it to state court three months later;[3] had taken Jackson's deposition; had conducted discovery; had agreed to a February 2018 trial setting;[4] had sought and had obtained an order from the trial court compelling a seventh inspection of Jackson's roof by a new Allstate expert-specifically representing to the trial court that a seventh inspection was needed for Allstate to prepare for the upcoming jury trial;[5] and had obtained an extension of time to the expert designation deadline in order to designate the new expert conducting the seventh inspection-Jackson's counsel stated that she had no objection to an extension of Allstate's designation deadline for the new expert "[a]s long as it doesn't postpone the trial setting."

         Jackson objected to Allstate's motion to compel a seventh inspection, pointing out that Allstate had already performed six inspections-four by adjusters and two by experts-that it had "over a thousand photographs, " that it had "hundreds of measurements, " and that "it will be the seventh inspection." She explained that as far as the interior, "[w]e're talking about two spots [on the ceilings], one in the master bedroom and one in the living room."[6] Jackson's counsel argued at various points in the hearing that Allstate's request for a seventh inspection had "reached a point of harassment."[7]

         The trial court nonetheless signed a July 26, 2017 order granting Allstate's motion to compel another inspection of Jackson's roof by another Allstate expert and granting Allstate's counsel's request for an extension of Allstate's deadlines to designate this new expert. On August 10, 2017, Allstate's new expert Gary Boyd conducted a seventh inspection for Allstate of Jackson's roof and home.

         Four days later, on August 14, 2017, Allstate made a settlement offer. Allstate offered $24, 000 to Jackson to settle all her claims against Allstate. Allstate's settlement offer provided,

Allstate offers to pay $24, 000 (TWENTY-FOUR THOUSAND AND NO/DOLLARS) in new money in exchange for a complete release of all claims against Defendant Allstate and a dismissal with prejudice of the above referenced suit.
The offer contained in this letter is made for the sole purpose of amicable resolution and avoiding further expense associated with Plaintiff's lawsuit. The offer is not intended to be and should not be considered by you or your client to be an admission of liability.

         Jackson rejected Allstate's $24, 000 settlement offer on August 16, 2017.

         The next day, on August 17, 2017, Allstate made a written demand for appraisal under the terms of its policy with Jackson. When Jackson refused to participate in the appraisal process, Allstate filed with the trial court motions to compel an appraisal and to abate the case. Jackson filed a response in opposition to Allstate's motion to compel appraisal and abate.

         The trial court conducted a September 8, 2017 hearing on Allstate's motion to compel an appraisal and motion to abate. Allstate argued that a point of impasse had been reached on August 16, 2017, when Jackson rejected Allstate's $24, 000 settlement offer and that, consequently, Allstate's demand the next day, on August 17, 2017, for an appraisal was timely. Jackson argued that Allstate had waived its right of appraisal by conduct inconsistent with that right- including that Allstate had compelled a seventh inspection, that the point of impasse concerning the amount of loss had occurred over two years earlier, and that she would suffer prejudice from Allstate's attempt to invoke the appraisal clause.[8]

         At the hearing on Allstate's motion to compel an appraisal, the trial court asked Allstate,

So why did we have the whole fight on y'all wanting to go out and inspect it again rather than saying we've reached an impasse and we want to invoke the appraisal?
[ALLSTATE'S COUNSEL]: We hadn't reached the impasse yet. We were continuing to negotiate the settlement negotiations.
THE COURT: No. You were preparing for trial and complaining that there was no way you could go to trial with the expert that you had and you had to have another expert come out because one fellow was only causation. So you weren't talking settlement. You were doing tactical maneuvering in the lawsuit.

         At the conclusion of the hearing on Allstate's motion to compel an appraisal and to abate the lawsuit pending an appraisal, the learned trial court judge stated his ruling on the record:

All right. Well, you can't look at it in a vacuum. And I don't think the time in and of itself -- and, in fact, I really think it's almost silly the way they claim when an impasse is met because as somebody who's practiced law 30 years, I know that Friday before Monday trials cases that have been at an impasse for years suddenly get resolved because people know that there's a jury waiting on Monday. In fact, we have them settle Monday morning. So I don't know that there's ever an actual impasse.
But I do think that with all the hoops that we have jumped through and because this was filed as an expedited action case, that there was a waiver. I think we should have -- we didn't need to go out and inspect the property again if we knew that, that we wanted to have a third-party appraisal done, we should have done it then rather than saying we need this to prepare for trial.
So that's -- I'm going to find that they waived the right to invoke the appraisal provision and deny the request for the appraisal.

         After the trial court signed an order memorializing its rulings, Allstate filed this original proceeding. Jackson filed a response.[9]

         III. Standard of Review

         To obtain mandamus relief, a relator generally must show both that the trial court clearly abused its discretion and that the relator has no adequate remedy by appeal. In re Prudential Ins., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding). A trial court clearly abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law or if it clearly fails to analyze the law correctly or properly apply the law to the facts. Walker v. Packer, 827 S.W.2d 833, 840 (Tex. 1992) (orig. proceeding); see also In re Gen. Elec. Co., 271 S.W.3d 681, 685 (Tex. 2008) (orig. proceeding) ("A court abuses its discretion if its decision is arbitrary, unreasonable, or without reference to guiding principles."). No adequate remedy by appeal exists concerning a trial court's erroneous determination that an appraisal clause has been waived. See In re Allstate Cty. Mut. Ins., 85 S.W.3d 193, 195-96 (Tex. 2002) (orig. proceeding) (holding relator has no adequate remedy on appeal of trial court's abuse of discretion in failing to enforce an appraisal clause). Accordingly, in considering whether mandamus relief is warranted, we need only review a trial court's ruling on a motion to compel an appraisal for an abuse of discretion. See In re Slavonic Mut. Fire Ins., 308 S.W.3d 556, 559 (Tex. App.- Houston [14th Dist.] 2010, orig. proceeding), overruled on other grounds by In re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404, 408, 410-11 (Tex. 2011) (orig. proceeding) (overruling Slavonic to the extent it granted abatement via mandamus).

         IV. The Law Concerning Appraisals

         Appraisal of the amount of loss is intended to take place before suit is filed; the Texas Supreme Court and other courts have held that it is a condition precedent to suit. State Farm Lloyds v. Johnson, 290 S.W.3d 886, 894 n.42 (Tex. 2009) (collecting cases). However, a party may waive a condition precedent required prior to filing suit, including a right of appraisal of the amount of loss. See Sun Expl. & Prod. Co. v. Benton, 728 S.W.2d 35, 37 (Tex. 1987) (stating that "[a] condition precedent may be waived, . . . and the waiver of a condition precedent may be inferred from a party's conduct"); see also G.T. Leach Builders, LLC v. Sapphire V.P., LP, 458 S.W.3d 502, 511 (Tex. 2015) ("Waiver-the 'intentional relinquishment of a known right'-can occur either expressly, through a clear repudiation of the right, or impliedly, through conduct."). Implied waiver "is largely a matter of intent, and for . . . [it] to be found through a party's actions, intent must be clearly demonstrated by the surrounding facts and circumstances." Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003) (citing Motor Vehicle Bd. v. El Paso Indep. Auto. Dealers Ass'n, 1 S.W.3d 108, 111 (Tex. 1999)). We may not infer a waiver of a right of appraisal, however, where neither explicit language nor conduct indicates that such was the party's intent. See Universal Underwriters, 345 S.W.3d at 408, 410-11. That is,

[to] constitute waiver[, ] the acts relied on must be such as are reasonably calculated to induce the [insured] to believe that a compliance by him with the terms and requirements of the policy is not desired[] or would be of no effect if performed. The acts relied on must amount to a denial of liability[] or a refusal to pay the loss.

Id. at 407 (quoting Scottish Union & Nat'l Ins. v. Clancy, 8 S.W. 630, 632 (Tex. 1888)). A waiver of rights under an appraisal provision by conduct occurs only when the party engages in intentional conduct inconsistent with claiming that right. Id.

         A party's unreasonable delay in invoking an appraisal clause is one aspect, or factor, of a waiver-by-conduct analysis. See id. at 408 (stating that "unreasonable delay is a factor in finding waiver"). Whether the party's delay in invoking an appraisal clause is reasonable or unreasonable depends on the time between the "point of impasse" in the parties' negotiations concerning the amount of loss and the time the appraisal clause is invoked. Id. (stating that "reasonableness must be measured from the point of impasse"). "Point of impasse" is a mutual understanding that neither party will negotiate further on the amount of loss. See id. at 408-10. An impasse is reached when it becomes apparent to both sides that they disagree as to the damages and that further negotiations are futile. Id. at 409-10; see Jai Bhole, Inc. v. Emp'rs Fire Ins., No. CIV.A. G-10-522, 2014 WL 50165, at *2 (S.D. Tex. Jan. 7, 2014) (holding point of impasse occurred when insurer chose to stand on its defenses).

         Other factors or circumstances-in addition to the delay-in-requesting-an-appraisal-after-the-point-of-impasse factor-are pertinent in determining whether a party has waived by conduct its right to an appraisal. See, e.g., Universal Underwriters, 345 S.W.3d at 407-08 (recognizing appellate court decisions holding that party waived appraisal clause "were not based solely on the length of delay, but rather on the parties' conduct, as indication of waiver"); Pounds v. Liberty Lloyds of Tex. Ins., 528 S.W.3d 222, 225-28 (Tex. App.-Houston [14th Dist.] 2017, no pet.) (recognizing denial of the claim as a "circumstance[] to consider in determining whether the insurer impliedly waived its appraisal right through inconsistent conduct"); In re Ooida Risk Retention Grp., Inc., 475 S.W.3d 905, 911 (Tex. App.-Fort Worth 2015, orig. proceeding) (recognizing insurer's destruction of insured's fire-damaged truck was not conduct inconsistent with insurer's invocation of appraisal clause when insurer "nevertheless proceeded with the appraisal process"); see also Sun Expl. & Prod. Co., 728 S.W.2d at 37 (examining conduct of accepting and recording oil, gas, and mineral lease and holding such conduct not inconsistent with claiming the right to approve title to the interest conveyed); Trelltex, Inc. v. Intecx, L.L.C., 494 S.W.3d 781, 791 (Tex. App.-Houston [14th Dist.] 2016, no pet.) (holding evidence of surrounding circumstances sufficient to support trial court's conclusion that party's conduct waived its right to collect certain unpaid commissions).

         The party challenging the validity or enforceability of an appraisal clause based on waiver bears the burden of establishing (1) waiver by conduct of the party seeking appraisal and (2) prejudice to itself (the party claiming waiver of the appraisal clause). Universal Underwriters, 345 S.W.3d at 411; see also In re State Farm Lloyds, Inc., 170 S.W.3d 629, 634 (Tex. App.-El Paso 2005, orig. proceeding).

         V. Analysis

         Applying the above law to the present facts, we hold that the trial court did not abuse its discretion by determining that Allstate's conduct was inconsistent with the assertion of its appraisal right and constituted waiver of its appraisal right or by determining that Jackson was or would be prejudiced by Allstate's invocation of the appraisal clause.

         A. Allstate's Intentional Conduct Was Inconsistent with Its Right of Appraisal and Unreasonable Delay from ...


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