in Re GuideOne National Insurance Company ( 2015 )

In The
Court of Appeals
Seventh District of Texas at Amarillo
No. 07-15-00281-CV
IN RE GUIDEONE NATIONAL INSURANCE COMPANY
ORIGINAL PROCEEDING
September 29, 2015
MEMORANDUM OPINION
Before QUINN, C.J., and HANCOCK and PIRTLE, JJ.
Relator, GuideOne National Insurance Company, filed this petition for writ of
mandamus, arguing that Respondent, the Honorable William C. Sowder, presiding
judge of the 99th District Court in Lubbock, Texas, abused his discretion in denying its
motion to compel appraisal. This case involves a claim for insurance benefits arising
out of alleged wind and hail damage to property belonging to the insured, Steven
Biasatti and Paul Gross d/b/a TopDog Properties, the Real Party in Interest. The policy
at issue was a commercial property insurance policy. After the loss was reported to
GuideOne, GuideOne assigned the claim to be investigated. As a result of its
investigation, GuideOne advised that the adjusted loss was below the deductible and so
notified TopDog. TopDog responded by requesting additional investigation stating that
GuideOne had underpaid the claim by failing to pay for what TopDog termed as “visual
hail damage to the roof.”
On March 5, 2014, GuideOne’s adjuster responded to this claim by stating that,
based upon his investigation, there was no hail damage to the roof. The adjuster
reiterated this statement on March 13, 2014. Subsequently, TopDog complained to its
insurance agent its belief that the claim had been underpaid. The agent then contacted
GuideOne and advised that TopDog wished to proceed with an appraisal of the claim
through the appraisal provision of the policy. GuideOne then advised TopDog that the
appraisal clause of the contract could be invoked only by GuideOne and that they did
not choose to proceed with an appraisal.
The appraisal clause at issue states:
If the Named Insured and the Company fail to agree on the amount of the
loss, the Company can demand that the amount of loss be set by
appraisal. If the Company makes a written demand for appraisal, each
party shall select a competent independent appraiser. Each party shall
notify the other of the selected appraiser’s identity within 20 days of the
receipt of the written demand.
The policy then outlines how the selected appraisers will conduct the appraisal and
provides for procedures should the appraisers not agree on the amount of the loss.
Following GuideOne’s declining to enter into the appraisal, pursuant to the
insurance contract, TopDog filed suit on August 22, 2014. On April 16, 2015, GuideOne
advised counsel for TopDog that the company wanted to initiate the appraisal process.
TopDog’s counsel replied that his clients would not agree to the appraisal procedure.
On April 24, 2015, GuideOne filed a motion to compel appraisal. The trial court initially
granted the motion. However, TopDog filed a motion for reconsideration and oral
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arguments. The trial court granted the motion for reconsideration and heard oral
arguments regarding the issue of appraisal on June 19, 2015. On July 6, 2015, the trial
court denied GuideOne’s motion to compel appraisal. The order was filed on July 7,
2015. GuideOne subsequently filed its petition for writ of mandamus in which it asks
this Court to compel Respondent to vacate its July 6th order and enter an order granting
GuideOne’s motion to compel appraisal.
GuideOne claims that the trial court clearly abused its discretion by failing to
enforce the appraisal clause of the insurance contract which included a non-waiver
provision. TopDog responded to the petition for mandamus contending that (1)
GuideOne expressly waived appraisal, (2) unreasonably delayed invoking the appraisal
provision to the prejudice of TopDog, and (3) the non-waiver provision cannot change
the fact that GuideOne waived the appraisal process in writing. Further, TopDog
contends that the unilateral appraisal clause is unenforceable as against public policy.
Because we find that the trial court committed a clear abuse of discretion, we will
conditionally grant the writ of mandamus.
Standard of Review
Mandamus is an extraordinary remedy which lies only when the trial court clearly
abuses its discretion and the relator has no adequate remedy by appeal. In re Sw. Bell
Tel. Co., L.P., 235 S.W.3d 619, 623 (Tex. 2007) (orig. proceeding). A trial court clearly
abuses its discretion if it reaches a decision so arbitrary and unreasonable as to
constitute a clear and prejudicial error of law, or if it clearly fails to correctly analyze and
apply the law. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005)
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(orig. proceeding) (per curiam) (quoting Walker v. Packer, 827 S.W.2d 833, 839–40
(Tex. 1992) (orig. proceeding)). A showing that the trial court could have reasonably
reached only one decision is necessary to establish a clear abuse of discretion. Liberty
Nat’l Fire Ins. Co. v. Atkin, 927 S.W.2d 627, 630 (Tex. 1996) (orig. proceeding).
Analysis
We begin our analysis with consideration of GuideOne’s contention that there
could be no waiver in this case because of the non-waiver provision of the insurance
policy. Part 3 of the policy, “COVERED PERILS, EXCLUSIONS, DEDUCTIBLE
CLAUSE, OTHER PROVISIONS,” contains, in section IV, “Other Provisions,” part 12,
“Waiver or Change of Provisions,” the following language:
This policy contains all the agreements between you and us concerning
the insurance afforded. The first Named Insured shown in the
Declarations is authorized to make changes in the terms of this policy with
our consent.
This policy’s terms can be amended or waived only by endorsement
issued by us and made a part of this policy.
The record before the Court shows no endorsements concerning any waiver of any term
pursuant to the terms of part 12 above.1
GuideOne’s contention is that the non-waiver provision is a part of the policy and
the trial court was not free to simply ignore the provision. As this theory goes, the trial
court’s finding that GuideOne had “waived its right to compel appraisal” would amount
to a simple refusal by the trial court to enforce the terms of the insurance contract. This,
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TopDog’s contention that GuideOne waived the appraisal process in writing is centered on
emails sent to and from GuideOne’s representative. No one contends that there was an endorsement
issued by GuideOne.
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according to GuideOne, is a clear abuse of discretion subject to remedy by issuance of
a writ of mandamus.
That an insurance contract is simply a specialized form of contract and subject to
construction as any other contract is beyond any argument. See Gilbert Tex. Constr.,
L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126 (Tex. 2010). Construing
an unambiguous contract is a question of law. See Cross Timbers Oil Co. v. Exxon
Corp., 22 S.W.3d 24, 26 (Tex. App.—Amarillo 2000, no pet.). We construe the
insurance contract to ascertain the parties’ intent. Gilbert Tex. Constr., L.P., 327
S.W.3d at 126. Further, we examine the language of the policy because we presume
that the language in the policy reflects the intentions of the parties. See id. When
reviewing a contract, we must strive to honor the parties’ agreement and not remake
their contract. Id.
With the above strictures in mind, there are two provisions of the insurance
contract before the Court. The first is the appraisal clause. Pursuant to this clause, the
insurer, GuideOne, can, once they and the insured fail to agree on the amount of the
loss at issue, proceed with an appraisal. The policy’s reliance on an appraisal clause to
resolve disputes about the amount of loss is standard for the insurance industry. See In
re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404, 40-07 (Tex. 2011) (orig.
proceeding).
However, TopDog takes issue with the appraisal clause in this case because it
vests the right to require an appraisal to resolve issues regarding the amount of the loss
in the company alone. TopDog asks us to refuse to enforce this clause, contending that
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the clause is against public policy. In reviewing this issue, we note that there is not a
case cited by TopDog where the Texas Supreme Court or any intermediate appellate
court has held an appraisal clause that can only be instituted by the insurance company
to be against public policy. We, therefore, decline the invitation to so find.
Turning to the non-waiver clause, we note that non-waiver clauses have long
been held to be valid. See Am. Cent. Ins. Co. v. Bass, 38 S.W. 119, 119-20 (Tex. 1897)
(holding that insurer did not waive right to contest liability by proceeding with appraisal
where policy contained a non-waiver clause). Non-waiver clauses are generally
considered valid and enforceable. See Breof BNK Tex., L.P. v. D.H. Hill Advisors, Inc.,
370 S.W.3d 58, 66 (Tex. App.—Houston [14th Dist.] 2012, no pet.); accord A.G.E., Inc.
v. Buford, 105 S.W.3d 667, 676 (Tex. App.—Austin 2003, pet. denied).
In reviewing TopDog’s response to the non-waiver argument, there is no
argument that the non-waiver clause is not part of the contract. Neither does TopDog
argue that the clause is not valid. Rather, TopDog simply argues that GuideOne has
waived its right to request an appraisal by its actions. Exactly how we should deal with
the non-waiver argument is left unsaid. We are unable to simply ignore the contract’s
specific language. See Gilbert Tex. Constr., L.P., 327 S.W.3d at 126.
On a more basic level, we cannot ignore language in the contract simply because
we or one of the parties comes to dislike the provision or thinks that some other action
is intended. See Cross Timbers Oil Co., 22 S.W.2d at 26 (citing HECI Exploration Co.
v. Neel, 982 S.W.2d 881, 888–89 (Tex. 1998)). As is the case in most contract cases,
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the parties chose the language when the decision to enter into the insurance contract
was made, and we cannot change that language at this late date. See id.
Having found that the non-waiver clause in the contract is valid and was before
the trial court when the complained-of ruling was made, we find that the trial court has
clearly abused its discretion by refusing to enforce the contract according to its terms.
See In re Allstate Cnty. Mut. Ins. Co., 85 S.W.3d 193, 195–96 (Tex. 2002) (orig.
proceeding) (holding that trial court clearly abused its discretion by determining that
appraisal clause in contract was an arbitration clause and unenforceable).
Conclusion
Having found that the trial court clearly abused its discretion, we will conditionally
grant the writ of mandamus and direct the trial court to grant GuideOne’s motion to
compel appraisal. Confident that the Respondent will promptly enter its order consistent
with this opinion, we will direct the Clerk of this Court to issue the writ of mandamus only
in the event that Respondent fails to comply with this Court’s directive within 10 days of
this opinion.
Mackey K. Hancock
Justice
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