in Re Texas Windstorm Insurance Association ( 2013 )

Petition for Writ of Mandamus Conditionally Granted and Memorandum
Opinion filed September 10, 2013.
In The
Fourteenth Court of Appeals
NO. 14-13-00632-CV
IN RE TEXAS WINDSTORM INSURANCE ASSOCIATION, Relator
ORIGINAL PROCEEDING
WRIT OF MANDAMUS
412th District Court
Brazoria County, Texas
Trial Court Cause No. 71097
MEMORANDUM OPINION
On July 24, 2013, relator Texas Windstorm Insurance Association
(“TWIA”) filed a petition for writ of mandamus in this Court. See Tex. Gov’t Code
Ann. §22.221 (Vernon 2004); see also Tex. R. App. P. 52. In the petition, relator
asks this Court to compel the Honorable W. Edwin Denman, presiding judge of the
412th District Court of Brazoria County, to vacate his order dated March 8, 2013,
denying TWIA’s motion to compel appraisal and direct him to compel appraisal.
TWIA also filed a motion to stay all trial court proceedings pending resolution of
this proceeding. The real party in interest was requested to file a response by
August 14, 2013. As of the date this memorandum opinion is being issued, the real
party in interest has not filed a response to the petition for writ of mandamus.
This proceeding arises from a dispute in which the real party in interest and
plaintiff below, Joseph Hayden, seeks recovery for property damage under an
insurance policy issued by TWIA. He alleges that the damage was caused by hail
and wind from a storm that occurred on April 4, 2012.
TWIA began investigating Hayden’s insurance claim on April 10, 2012.
Following an inspection by an independent adjustor, TWIA advised Hayden there
was no damage to his property caused by hail, but there was wind damage. TWIA
further advised Hayden the cost to repair did not exceed the deductible so no
payment would be made.
On June 29, 2012, Hayden’s insurance agent advised TWIA that a contractor
had inspected the roof and found additional damage and estimated replacing the
roof would cost $14,988.76. On August 17, 2012, an inspection was conducted by
an engineering firm retained by TWIA. Subsequently, TWIA advised Hayden the
property had sustained no additional damage related to wind or hail, so no further
payments would be made.
On October 31, 2012, Hayden advised TWIA of his intention to file suit. On
November 7, 2012, TWIA demanded appraisal. The appraisal provision in the
insurance policy provides:
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10. Appraisal. If you and we fail to agree on the actual cash value,
amount of loss, or cost of repair or replacement, either can make a
written demand for appraisal.
Hayden refused to participate and filed suit on January 3, 2013. TWIA moved to
compel appraisal but the motion was denied.
In his response to TWIA’s motion to compel, Hayden argued that appraisal
was not appropriate because this dispute focuses on coverage rather than the
amount of loss. Further, Hayden claimed TWIA waived its right to appraisal
because it demanded appraisal only after being notified of his intention to file suit.
Where an insurance contract mandates appraisal to resolve the parties’
dispute regarding the value of a loss, and the appraisal provision has not been
waived, a trial court abuses its discretion and misapplies the law by refusing to
enforce the appraisal provision. Scottish Union & Nat’l Ins. Co. v. Clancy, 83 Tex.
113, 18 S.W. 439, 440 (1892). Mandamus relief is appropriate to enforce an
appraisal clause because denying the appraisal would vitiate the insurer’s right to
defend its breach of contract claim. In re Allstate Cnty. Mut. Ins. Co., 85 S.W.3d
193, 196 (Tex.2002).
We first address the waiver argument Hayden made in the trial court.
Waiver is either the intentional relinquishment of a known right or intentional
conduct inconsistent with claiming that right. In re Slavonic Mut. Fire Ins. Assoc.,
308 S.W.3d 556, 561 (Tex. App.—Houston [14th Dist.] 2010, orig. proceeding).
Waiver based upon the length of delay before demanding an appraisal is
determined from the point of impasse. See In re Slavonic Mut. Fire Ins. Ass'n, 308
S.W.3d 556, 562 (Tex. App.—Houston [14th Dist.] 2010, orig. proceeding). For
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impasse, both parties must be aware not merely that there is a disagreement, but
also that further negotiations would be futile. In re Universal Underwriters of Tex.
Ins. Co., 345 S.W.3d 404, 409 (Tex. 2011) (orig. proceeding). If one party
genuinely believes negotiations to be ongoing, it cannot have intended to
relinquish its right to appraisal unless it expressly waives that right. See Keesling
v. W. Fire Ins. Co., 520 P.2d 622, 627 (Wash. App. 1974) (finding no waiver
where, “insofar as the record shows, until the insured filed suit, the frame of mind
of both parties welcomed additional communications and negotiations rather than
confrontation”).
In this case, the record does not show that TWIA was aware further
negotiations would be futile until it received Hayden’s notice that he intended to
sue. TWIA demanded appraisal only seven days after receiving the notice, which
is not a sufficiently lengthy delay to support a finding of waiver on this record. Cf.
In re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d at 410 (holding no
unreasonable delay where insurer demanded appraisal one month after date of
impasse). Accordingly, we hold that the trial court clearly abused its discretion to
the extent it found that TWIA waived its right to appraisal.
Hayden also argued below that appraisal was not appropriate because the
dispute is not over the amount of loss or the cost of repair or replacement, but
whether the roof damage was caused by the storm. But the record shows that
TWIA also disputed the amount of loss, which it determined did not exceed the
deductible.
Moreover, though appraisal addresses damages rather than coverage, the fact
that a dispute implicates coverage in addition to the amount of loss does not
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automatically preclude appraisal. See State Farm Lloyds v. Johnson, 290 S.W.3d
886, 890, 894 (Tex. 2009). Appraisers must allocate damages between covered
and excluded perils; causation always is a consideration because an appraisal is for
damages caused by a particular occurrence. Id. at 892. “Any appraisal necessarily
includes some causation element because setting the ‘amount of loss’ requires
appraisers to decide between damages for which coverage is claimed from
damages caused by everything else.” Id.
The appraisal provision in this policy may not be disregarded simply
because coverage or causation issues about whether the storm caused the roof
damage may overlap with issues about the amount of the loss and repair costs.
Accordingly, we hold the trial court clearly abused its discretion in denying
TWIA’s motion to compel appraisal.
We therefore conditionally grant the petition for a writ of mandamus and
direct the trial court to grant TWIA’s motion to compel appraisal. The writ will
issue only if the trial court fails to act in accordance with this opinion.
The motion for stay pending resolution of this proceeding is denied as moot.
PER CURIAM
Panel Consists of Justices Boyce, Jamison, and Busby.
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