May I Take My Toys and Go Home? Once you start, you may not stop. A Guide to Appraisal

emoce-dite-nastvany-zlobi-678x381If a plaintiff were allowed to invoke appraisal, await the estimates, and then determine whether to risk an unfavorable award or commence litigation, the entire purpose of an appraisal—to resolve the parties’ dispute over the amount of loss for a covered claim without incurring the time and expense of litigation—would be vitiated.” Scalise v. Allstate Texas Lloyds, 2013 WL 6835248, No. 7:13-CV-178 (S.D. Tex. Dec. 20, 2013)

Claiming the insurer’s chosen appraiser was neither competent nor independent because he ignored obviously covered damages, Plaintiff attempted to withdraw from the appraisal process and filed suit. The insurer’s appraiser and the umpire then agreed upon the award and carrier tendered payment. Carrier moved for summary judgment and court granted same. The court of appeals began its analysis by noting that the Texas Supreme Court recognizes a ‘strong policy’ in favor of enforcing appraisal clauses in insurance contracts regardless of concerns that may exist about the scope of the appraisal. The court then went on to address Plaintiff’s concern that the carrier’s appraiser was not ‘independent’ because his estimate mimicked the adjuster’s in both scope and price and that he was not ‘competent’ because his estimate failed to include obviously covered damages.

The court, in granting summary judgment, noted that even if the carrier’s appraisal undervalued or failed to estimate covered damages, his ‘low-ball’ estimate did not determine the award under the policy. The appraiser and umpire agreed to set the amount of loss at a different (and higher) figure.

Appraiser’s Estimate is Too High or Low–You Still Must Complete Appraisal Process

“Plaintiff has cited to no authority indicating that a party who contests one appraiser’s estimate may then opt to file suit to determine damages rather than complete the appraisal process. If a plaintiff were allowed to invoke appraisal, await the estimates, and then determine whether to risk an unfavorable award or commence litigation, the entire purpose of an appraisal—to resolve the parties’ dispute over the amount of loss for a covered claim without incurring the time and expense of litigation—would be vitiated. Id., citing In re Universal Underwriters of Tex. Ins. Co., at 407.

“This Court can not ignore the Texas Supreme Court’s repeated directive that ‘[a]n clause binds the parties to have the extent or amount of the loss determined in a particular way.’ Johnson, 290 S.W.3d at 895 (quoting In re Allstate Cnty. Mut. Ins. Co., 85 S.W.3d 193, 195 (Tex. 2002)).  The determination was made, and Plaintiff is bound by it absent a meritorious request to set it aside. See TMM Invs. Ltd. v. Ohio Cas. Ins. Co., 730 F.3d 466, 472 (5th Cir. 2013) (citing Texas law) (appraisal award will be upheld unless it was made without authority, was the result of fraud, accident, or mistake, or was not made in substantial compliance with terms of the contract).” Scalise, supra.

If a Disgruntled Party Must Complete the Appraisal Process, Why Are They Running To the Judge During the Appraisal?

How many times do you hear about a disgruntled party’s lawyer running to the Judge during appraisal and complaining about something the appraiser for the other side did or didn’t do?  Sound familiar?  See my post on ‘Running to the Judge During Appraisal.’

Disclaimer

This article is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this article or any of the e-mail links contained within the site do not create an attorney-client relationship between Thomas W. Hamrick and the user or browser. The opinions expressed in this article are the opinions of the individual author and may not reflect the opinions of other lawyers.

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