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CCPA Enterprises, Inc. v. Bedford Hospitality Investments, LLC

Court of Appeals of Texas, Second District, Fort Worth

October 31, 2019

CCPA Enterprises, Inc. and Rickey Conradt, Appellants
Bedford Hospitality Investments, LLC d/b/a Holiday Inn - Bedford, Appellee

          On Appeal from the 348th District Court Tarrant County, Texas Trial Court No. 348-237051-09

          Before Sudderth, C.J.; Kerr and Birdwell, JJ.



         In this appeal from a bench-trial judgment, CCPA Enterprises, Inc.-a public insurance adjuster[1] owned by Rickey Conradt--asserts its entitlement to interpleaded funds as a matter of law based on its client's eventual settlement with its insurer. CCPA challenges how the trial court construed the adjusting contract's payment provision, contending that the provision entitled CCPA to ten percent of any settlement that its client, Bedford Hospitality Investments, LLC, ultimately made with the insurer regardless of the types of damages included in the settlement amount. But consistent with the trial court's determination, Bedford Hospitality argues that the contract entitled CCPA to be paid only if Bedford Hospitality recovered certain types of policy damages and that CCPA did not conclusively prove that Bedford Hospitality's recovery included those types. Because we agree with the trial court's construction of the contract, we affirm.

         I. Factual and Procedural Background

         The trial court signed extensive findings of fact the majority of which CCPA does not challenge, so we rely extensively on those findings for our background.

         A. The hailstorm and claims adjusting immediately following

         Bedford Hospitality, the former owner of a hotel and real property in Bedford, Texas, purchased an insurance policy from Colony Insurance Company covering defined types of loss occurring from November 1, 2006, through November 13, 2007. The policy provided that if Bedford Hospitality incurred a covered loss to the structure or its business personal property, it could recover actual cash value for the damaged items, defined generally as the replacement cost minus depreciation. The policy also included business-interruption coverage (defined in the policy as "business income") and coverage for "extra expense."[2] Mold-damage coverage was excluded.

         In April 2007, "severe weather and a catastrophic hail storm" damaged the hotel's roof and EIFS[3]; additionally, some rooms flooded. Bedford Hospitality filed a claim with Colony in July 2007. Colony retained an independent adjuster, who inspected the hotel in August 2007 and estimated the actual cash value of necessary repairs to be $127, 990.10. Colony then issued Bedford Hospitality a check for that amount. Bedford Hospitality responded by filing a sworn proof of loss seeking an additional $2, 662, 890.67 for the storm damage, but Colony rejected it subject to "further investigations concerning the issue of water penetration through the EIFS."

         In September 2007, Bedford Hospitality[4] contracted with CCPA to adjust the "loss and damages by hail/wind" on its behalf. In the one-page contract form, which we reproduce at the end of this opinion, Bedford Hospitality "agree[d] to pay CCPA . . . ten percent (10%)* plus sales tax if applicable as agreed of the amount as adjusted of the replacement cost recovered on account of loss on structure, contents, business interruption, loss of use, [and] extra expense." [Emphasis added.] Above the underlined "ten percent" was handwritten, "To be paid 10% over 130, 000.00 al[]ready paid." Following the description of the payment, the contract identified Bedford Hospitality's policy number and Colony as the insurer. Finally, next to an asterisk, the paragraph concluded, "The total commission payable to CCPA . . . may not exceed 10% of the amount of the insurance settlement. The sales tax is owed to the State of Texas, not to CCPA . . . ." Handwritten again was "over 130, 000.00 al[]ready paid."

         In late October 2007, the City of Bedford closed the hotel because unsafe amounts of mold were present indoors.[5]

         B. Colony's suit for injunctive relief

         Dissatisfied with Colony's $127, 990.10 payment, Bedford Hospitality sought to invoke the Colony policy's appraisal procedure. Colony refused, claiming that it was still investigating the cause of the water intrusion, and sought to inspect the property a second time. CCPA would not agree. Colony then sued Bedford Hospitality, and the two agreed to a "preliminary injunction" prohibiting Bedford Hospitality and its representatives from (1) continuing to pursue appraisal until further court order and (2) preventing Colony's access to the hotel property for inspections and testing.

         Conradt later wrote to Colony's adjuster that he understood that the adjuster and an engineer had inspected the hotel. He also said that he had declined to attend that inspection because he thought his presence would be "counterproductive" to the appraisal process. Although Conradt noted that at that time he was still involved in adjusting the claim under the CCPA-Bedford Hospitality contract, CCPA did not perform any additional adjusting services for Bedford Hospitality after November 2007.[6] Colony nonsuited its claims after performing the additional inspections, and the trial court dismissed Colony's suit.

         C. Bedford Hospitality's suit against Colony

         After CCPA had stopped performing any adjusting services, Bedford Hospitality filed additional claims with Colony for business-personal-property loss and business-interruption loss, also related to the water damage. Bedford Hospitality sued Colony in April 2009 (1) for breach of the insurance policy by failing to pay for damage to the hotel's contents and by failing to pay for remediation or rebuilding, (2) for violations of the Texas Deceptive Trade Practices Act, (3) for violations of the unfair-settlement-practices prohibitions in the Texas Insurance Code, and (4) for breach of the duty of good faith and fair dealing. Bedford Hospitality sought damages recoverable under the policy as well as other types of damages.

         Four years into this second litigation, Bedford Hospitality moved to compel appraisal, which the trial court granted. Each party appointed an appraiser, and on the parties' joint motion the trial court appointed an umpire. Colony's appraiser and the umpire agreed to a final appraisal amount on "damages only," disclaiming any determination of causation, coverage, depreciation, or "any other legal matter" to be considered by the trial court in Bedford Hospitality's suit. The appraisal determination lists the following damages amounts:

Building Damages:
$ 1, 387, 383.18
Mold Remediation:
$ 705, 362.52
Business Interruption[:]
$ 706, 686.48 (24 months at $29, 445.27 per month)
Business Personal Property[:]
$ 1, 676, 339.76
$ 4, 475, 771.94

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