Texas Farm Bureau Casualty Insurance Company v. Brittni Sampley

In The
Court of Appeals
Seventh District of Texas at Amarillo
No. 07-13-00151-CV
TEXAS FARM BUREAU CASUALTY
INSURANCE COMPANY, APPELLANT
V.
BRITTNI SAMPLEY, APPELLEE
On Appeal from the 181st District Court
Randall County, Texas
Trial Court No. 65,222-B, Honorable John B. Board, Presiding
May 26, 2015
MEMORANDUM OPINION
Before CAMPBELL and HANCOCK and PIRTLE, JJ.
Appellant Texas Farm Bureau Casualty Insurance Company challenges the trial
court’s order denying its request for removal of the appraiser selected by appellee Brittni
Sampley. Sampley cross-appeals, seeking a determination she is entitled to recover
her attorney’s fees. We will affirm the orders of the trial court.
Background
Texas Farm Bureau insured Sampley’s vehicle under a Texas personal
automobile policy. The vehicle suffered hail damage and, when the parties disagreed
over the cost of repairs, Sampley invoked the appraisal provision in the policy. It
requires each party to select a “competent appraiser.” Each party selected an
appraiser. After being notified of Sampley’s choice of Robert Batt as her appraiser,
Texas Farm Bureau sent her a letter advising her choice was “unacceptable as Mr. Batt
is an employee of Bernard’s Advanced Collision, the body shop who repaired your
vehicle. Texas law not only requires appraisers to be competent, but also disinterested
in the outcome of the appraisal process.” The letter asked Sampley to “inform us once
you have selected a disinterested appraiser.” When Sampley declined to change
appraisers, Texas Farm Bureau filed suit asking the trial court to remove Batt as
appraiser. The parties stipulated Batt “is not disinterested as to the appraisal of the loss
at issue because he is employed by Bernard’s Advanced Collision and that company
will be paid from the results of the appraisal.” Sampley filed a counterclaim asserting
Texas Farm Bureau had breached the insurance contract and seeking attorney’s fees.
Both sides filed motions for summary judgment. Resolving the motions, the trial
court denied Texas Farm Bureau’s request to remove Batt as Sampley’s appraiser. The
court issued a further order stating in part that it “sees no requirement that an appraiser
in this appraisal process must be both competent and disinterested and will not impose
such a requirement.” The court also denied Sampley’s request for attorney’s fees.
After related claims were dismissed, both parties appealed.
2
Analysis
Texas Farm Bureau’s Appeal
Texas Farm Bureau’s brief presents an issue asking whether an appraiser in an
insurance appraisal must be financially disinterested in the results of the appraisal.
Sampley’s policy with Texas Farm Bureau contains the following appraisal
clause:
APPRAISAL
If we and you do not agree on the amount of loss, either may demand an
appraisal of the loss. In this event, each party will select a competent appraiser.
The two appraisers will select an umpire. The appraisers will state separately the
actual cash value and the amount of loss. If they fail to agree, they will submit
their differences to the umpire. A decision agreed to by any two will be binding.
Each party will: 1. Pay its chosen appraiser; and 2. Bear the expenses of the
appraisal and umpire equally. We do not waive any of our rights under this policy
by agreeing to an appraisal.
(Emphasis ours).
The facts as to this issue are undisputed. Texas Farm Bureau’s issue presents a
question of law we review de novo. El Paso Natural Gas Co. v. Minco Oil & Gas, Inc., 8
S.W.3d 309, 312 (Tex. 1999).
In support of its position Texas law requires appraisers to be both competent and
disinterested, even in the absence of policy language requiring appraisers to have both
attributes, Texas Farm Bureau brings two contentions: it argues the Supreme Court of
Texas recognized appraisal as a quasi-judicial proceeding in its 1919 opinion in
3
Delaware Underwriters v. Brock1 and held that appraisers must be disinterested even if
the policy does not contain the requirement; and it argues the express requirement of
competency, in the case of appraisers, includes a requirement of disinterestedness.
Delaware Underwriters involved a dispute between an insurance company and
its insured, Brock. The company defended Brock’s suit on the policy in part by asserting
Brock had wrongfully refused to permit an appraisement and thus could not maintain his
suit. 211 S.W. at 779. The trial court submitted to the jury the special issues whether
the appraisers appointed by Brock and the company were, as the policy required,
“competent and disinterested” appraisers. The jury found neither was competent and
disinterested. Id. at 780. The Supreme Court of Texas found the evidence supported
the jury’s finding that the company’s designated appraiser was not disinterested, and
found that by its insistence on a disqualified person as appraiser the company waived
its contractual right to require their dispute to be resolved by appraisal. Id. at 781.2 In
the course of its discussion, the court quoted at length from an opinion of the Alabama
Supreme Court,3 on the meaning and importance of disinterestedness on the part of
appraisers. 211 S.W. at 780-81. Texas Farm Bureau points to that discussion as
demonstrating that Texas law imposes the requirement of disinterestedness.
As Sampley points out, the difficulty with Texas Farm Bureau’s position,
however, is that the appraisal clause in the policy in Delaware Underwriters expressly
1
109 Tex. 425, 211 S.W. 779 (1919).
2
See In re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404, 407 (Tex. 2011, orig.
proceeding); State Farm Lloyds v. Johnson, 290 S.W.3d 886, 889 n.13 (Tex. 2009) (both so describing
holding of Delaware Underwriters).
3
Hall Bros. v. Western Assurance Co., 133 Ala. 637, 32 So. 257, 258 (1901).
4
required appraisers to be both competent and disinterested, as did the policy in the
Alabama case it quoted.4
In its 2009 opinion in State Farm Lloyds v. Johnson, an appraisal case, the
Supreme Court of Texas included a brief history of appraisal clauses in Texas. 5 Its
quote from its earliest opinion concerning such clauses, the 1888 opinion in Scottish
Union & National Insurance Co. v. Clancy,6 emphasizes the contractual nature of the
appraisal right.7
Texas Farm Bureau also relies on Central Life Ins. Co. v. Aetna Cas. & Surety
Co., in which the Iowa Supreme Court found an appraisal agreement did not override
the requirement stated in the insurance policy that appraisers be disinterested. 466
N.W.2d 257, 261-62 (Iowa 1991). The Iowa court cited its previous holding that “[a]n
inherent qualification for a quasi-judicial decision-maker is disinterest in the result.” Id.
at 261 (citation omitted). Assuming that the Iowa court would have reached the same
decision even if the insurance policy had not required disinterested appraisers, to us, its
decision merely demonstrates that the states have taken different approaches to the
4
Hall Bros., 32 So. at 257.
5
The court’s opinion in Universal Underwriters, 345 S.W.3d at 406-07, similarly notes that
appraisal clauses are “commonly found in homeowners, automobile, and properties policies in
Texas . . . .”
6
71 Tex. 5, 8 S.W. 630 (1888).
7
The court quoted these words from its opinion in Scottish Union, 8 S.W. at 631:
However injudicious it may be for parties to bind themselves by such agreement, it seems to be
well settled that, having done so, they cannot disregard it . . . . In the absence of fraud, accident,
or mistake, the parties having agreed that the amount of loss shall be determined in a particular
way, we are constrained to hold that such stipulation is valid . . . .
State Farm Lloyds, 290 S.W.3d at 888.
5
issue of the required qualifications of appraisers. See, e.g., Hozlock v. Donegal Cos.,
745 A.2d 1261, 1264 (Pa. Super. Ct. 2000) (stating the court in Central Life Ins. “hinted”
its holding would have been the same regardless of the inclusion of the word
“disinterested,” and discussing other cases).
In sum, we do not agree that Delaware Underwriters or the other authorities8
cited by Texas Farm Bureau require that every appraiser appointed under a Texas
insurance policy have the attribute of disinterestedness, regardless of the policy’s
language.9
“It is settled law in this state that contracts of insurance in their construction are
governed by the same rules as other contracts, and that terms used in them are to be
given their plain, ordinary and generally accepted meaning unless the instrument itself
shows them to have been used in a technical or different sense.” Western Reserve Life
Ins. Co. v. Meadows, 261 S.W.2d 554, 557 (Tex. 1953); see Gilbert Tex. Constr., L.P. v.
Underwriters at Lloyd's London, 327 S.W.3d 118, 126 (Tex. 2010) (noting “principles
courts used when interpreting an insurance policy are well established”). Courts
examine the language of the policy because we presume that the language of the
8
We also have reviewed the insurance law treatise language Texas Farm Bureau cites, 6 J.A.
Appleman & J. Appleman, Insurance Law and Practice § 3927 (1972).
9
Delaware Underwriters was quoted and applied in Pennsylvania Fire Ins. Co. v. W. T.
Waggoner Est., 39 S.W.2d 593, 594 (Tex. 1931) and applied in Milwaukee Mechanics’ Ins. Co. v. West
Develop’t Co. 275 S.W. 203, 204 (Tex. Civ. App.—Waco 1924, modified on other grounds by 282 S.W.
562 (Tex. 1926)). The policies at issue in both those cases also required that the insured and insurer
select competent and disinterested appraisers. That the policies quoted in the 2009 opinion in State
Farm Lloyds, 290 S.W.3d at 887-88, and the 2011 opinion in Universal Underwriters, 345 S.W.3d at 406,
likewise stated the requirement for competent and disinterested appraisers further cuts against Texas
Farm Bureau’s implication that insurers have understood Texas law to require disinterested appraisers
since the 1919 Delaware Underwriters decision. See also General Star Indem. Co. v. Creek Vill.
th
Apartments Phase V, Inc., 152 S.W.3d 733, 737 (Tex. App.—Houston [14 Dist.] 2004, no pet.) (policy
required selection of a “competent and impartial appraiser”).
6
contract reflects the intentions of the parties, and we review the entire agreement and
seek to harmonize and give effect to all provisions so that none will be meaningless.
Gilbert Tex. Constr., L.P., 327 S.W.3d at 126. Courts strive to honor the parties'
agreement and not remake their contract by reading additional provisions into it. Id.
(citing Nat'l Union Fire Ins. Co. of Pittsburgh, PA v. Crocker, 246 S.W.3d 603, 606 (Tex.
2008)).
We turn to Texas Farm Bureau’s second contention, by which it argues that the
policy’s requirement for a competent appraiser also includes the requirement of
disinterestedness, that is, the competent appraiser required by the policy language also
must be disinterested. Neither party argues the issue is one of ambiguity, and we agree
the policy language is not ambiguous. An ambiguity does not arise merely because the
parties offer conflicting interpretations of the policy language. Am. Mfrs. Mut. Ins. Co. v.
Schaefer, 124 S.W.3d 154, 157 (Tex. 2003).
Texas Farm Bureau does not contend that the ordinary and generally accepted
meaning of the word competent includes the concept of disinterestedness. It argues
that the word carries that meaning in the appraisal clause in the policy of insurance, in
other words, that when used in the appraisal clause the word competent is used in the
technical or different sense of including a requirement of disinterestedness. Gilbert Tex.
Constr., L.P., 327 S.W.3d at 126. For Texas Farm Bureau, a competent appraiser also
must be a disinterested appraiser.
For support, Texas Farm Bureau points out that the appraisal clause “does not
expressly require any of the three members of the appraisal tribunal to be disinterested.
7
It provides no express requirements for the umpire at all. However, just because the
policy does not expressly require impartial, unbiased, financially disinterested members
does not mean that partiality and financial interest are acceptable. Partiality and
financial interest defeat the very purpose of the appraisal process.” Texas Farm
Bureau’s argument here is merely a restatement of its first contention, that the law
requires disinterested appraisers regardless of the policy language chosen by the
parties. In this section of its brief, it cites Delaware Underwriters, 211 S.W. at 780, and
an Indiana opinion, Farmers’ Conservative Mut. Ins. Co. v. Neddo.10
Other case law draws a distinction between competence and disinterestedness
in appraisers.11 See, e.g., Hozlock, 745 A.2d at 1264 (“[a] holding that the two words
mean the same would ignore the reality of the tri-party appraisal process that, in a great
majority of cases, some amount of partiality exists between an insured and his
appraiser” and noting that if insurer had desired, “it could have explicitly contracted for
completely neutral appraisers”).12 Just as we have concluded Texas case law does not
require disinterested appraisers when the parties have not included that requirement in
their contract, we conclude also that the policy here does not require appraisers be
10
111 Ind. App. 1, 40 N.E.2d 401 (Ind. Ct. App. 1942) (stating “It is certainly essential in order to
render a person competent as an arbitrator in a disputed matter, that he be disinterested and also
impartial”) (citation omitted).
11
A law review article cited in State Farm Lloyds, 290 S.W.3d at 888 n.8, also draws the
distinction between the terms competent and disinterested as applied to appraisers. UNDERSTANDING
THE INSURANCE POLICY APPRAISAL CLAUSE: A FOUR-STEP PROGRAM, 37 U. Tol. L. Rev. 931,
940 (Summer 2006) (“The requirement that a party appraiser be both competent and disinterested
provides for distinct and not interchangeable credentials”) (citations omitted).
12
The mandatory terms of policies of insurance may, of course, be affected by statute or
administrative regulation. The court in Hozlock, 745 A.2d at 1264, noted a Pennsylvania statute requiring
a standard appraisal paragraph. Neither party in this case contends that any Texas statute or regulation
bears on the issue Texas Farm Bureau has raised.
8
disinterested merely by requiring that they be competent. To do so would be to read
into the policy a provision the parties did not include.
We overrule Texas Farm Bureau’s issue on appeal.
Sampley’s Cross-Appeal
Sampley poses the question on cross-appeal: “Whether the Trial Court erred in
refusing to award Brittni Sampley, Insured, her attorney’s fees after she prevailed upon
her right to proceed without delay to appraisal without having to designate a new
appraiser.”
Sampley argues Texas Farm Bureau had a contractual and statutory duty to
engage in the appraisal process in order to pay her covered claim timely. Instead of
complying with its duty to handle and pay the claim in a timely fashion, Sampley argues,
Texas Farm Bureau objected to her choice of Batt as her appraiser. Because the trial
court denied the company’s request to remove Batt, Sampley contends she is entitled to
her attorney’s fees. On appeal, she relies on section 38.001 of the Texas Civil Practice
and Remedies Code and section 542.060 of the Texas Insurance Code. TEX. CIV. PRAC.
& REM. CODE ANN. § 38.001 (West 2013); TEX. INS. CODE ANN. § 542.060 (West 2013).
Attorney's fees may not be recovered unless provided for by statute or by
contract between the parties. Dallas Cent. Appraisal Dist. v. Seven Inv. Co., 835
S.W.2d 75, 77 (Tex. 1992). Section 38.001 of the Civil Practice and Remedies Code
provides that a party may recover reasonable attorney's fees on a claim based on a
9
written or oral contract.13 TEX. CIV. PRAC. & REM. CODE ANN. § 38.001(8) (West 2013).
Valid claims under section 38.001(8) may include claims involving the recovery of
monetary damages and those for which a party recovers "at least something of value."
Haubold v. Med. Carbon Research Inst., LLC, No. 03-11-00115-CV, 2014 Tex. App.
LEXIS 2863, at *20-21 (Tex. App.—Austin Mar. 14, 2014, no pet.); Woody v. J. Black's,
L.P., No. 07-12-00192-CV, 2013 Tex. App. LEXIS 13062, *17-18, (Tex. App.—Amarillo
Oct. 18, 2013) (mem. op.) (citing Albataineh v. Eshtehardi, No. 01-12-00671-CV, 2013
Tex. App. LEXIS 5406, at *3-4 (Tex. App.—Houston [1st Dist.] May 2, 2013, no pet.)
(mem. op.)).
When asserting entitlement to attorney’s fees, Sampley did not plead for
damages or anything of value, or present to the trial court any evidence supporting her
recovery of such. Rather she simply argued against Batt’s removal and asked for
attorney’s fees. This is not a claim on which attorney’s fees may be awarded under
section 38.001. See MBM Financial Corp. v. Woodlands Oper. Co., 292 S.W.3d 660,
663 (Tex. 2009) (discussing requirements for recovery of attorney’s fees and noting
“suits cannot be maintained solely for the attorney’s fees; a client must gain something
before attorney’s fees can be awarded.”); Butler v. Arrow Mirror & Glass, Inc., 51
S.W.3d 787, 797 (Tex. App.—Houston [1st Dist.] 2001, no pet.) (“there must be a
recovery of money, or at least something of value; otherwise, the attorney's fee award
cannot be described as an 'addition' to the claimant's relief.”). See also Polansky v.
13
Sampley does not address the application of Section 38.006, concerning awards of attorney's
fees in a case involving an insurance contract subject to certain provisions of the Insurance Code,
including Chapter 542. TEX. CIV. PRAC. & REM. CODE ANN. § 38.006 (West 2013). Because of our
disposition of Sampley’s issue on appeal, we have no occasion to address that section.
10
Berenji, 393 S.W.3d 362, 368 (Tex. App.—Austin 2012, no pet.) (chapter 38 does not
provide for the recovery of attorney's fees by a party who only defends against a claim);
Wilson & Wilson Tax Servs. v. Mohammed, 131 S.W.3d 231, 240 (Tex. App.—Houston
[14th Dist.] 2004, no pet.) (section 38.001 does not provide for attorney's fees for a
party's successful defense against a claim).
With regard to section 542.060 of the Insurance Code,14 we agree with Texas
Farm Bureau that Sampley never asserted in the trial court she was entitled to
attorney’s fees under this provision and certainly did not recover any relief under the
Insurance Code. More specifically, her motion for summary judgment did not assert she
was entitled to attorney’s fees, or any other relief, under section 542.060. We may not
reverse the trial court’s ruling on summary judgment on an issue not expressly
presented to that court. TEX. R. CIV. P. 166a(c); Houston v. Clear Creek Basin Auth.,
589 S.W.2d 671, 675 (Tex. 1979).
We overrule Sampley’s sole issue on cross-appeal.
14
This section, contained in Subchapter B “Prompt Payment of Claims” of Chapter 542, provides:
(a) If an insurer that is liable for a claim under an insurance policy is not in compliance with this
subchapter, the insurer is liable to pay the holder of the policy or the beneficiary making the
claim under the policy, in addition to the amount of the claim, interest on the amount of the
claim at the rate of 18 percent a year as damages, together with reasonable attorney's fees.
(b) If a suit is filed, the attorney's fees shall be taxed as part of the costs in the case.
TEX. INS. CODE ANN. § 542.060 (West 2013).
11
Conclusion
Having overruled Texas Farm Bureau’s issue on appeal and Sampley’s issue on
cross-appeal, we affirm the orders of the trial court.
James T. Campbell
Justice
12