COURT OF APPEALS HOLDS TRIAL COURT ABUSED ITS DISCRETION BY DENYING INSURER’S MOTION TO COMPEL AN APPRAISAL

January 28, 2013

Last Thursday, a three-judge panel in the Beaumont Texas Court of Appeals held that a trial court abused its discretion when it denied an insurer’s motion to compel appraisal.  In re GuideOne Mut. Ins. Co., 2013 WL257371, Cause No. 09–12–00581–CV (Tex.App.—Beaumont, Jan. 24, 2013).   GuideOne Mutual invoked the appraisal clause of a commercial insurance policy in May 2012, several years after its insured, First Baptist Church of Silsbee (“First Baptist”), commenced litigation relating to property damages it allegedly sustained  during  Hurricane  Rita.    After  GuideOne  moved  to  compel  appraisal,  the  trial  court  found GuideOne waived its appraisal rights by failing to demand appraisal within a reasonable time after the parties reached an impasse and that its failure prejudiced the insured.  In reaching its decision, the trial court determined that impasse occurred no later than December 13, 2007 when GuideOne filed its answer to First Baptist’s suit.

 After reviewing the mandamus record, the Appellate Court held that GuideOne did not waive its right to an appraisal merely by waiting until May 2012 to invoke that provision in the policy.  The Court noted that the parties had engaged in mediation in October 2011, indicating that they were still negotiating years after the suit commenced.  The Appellate Court further held that First Baptist failed to identify specific expenses that would not have been incurred had the appraisal process occurred earlier and, therefore, the trial court erred in holding that the insured was prejudiced.   In the per curiam opinion, the Court noted that a flawed appraisal award may be disregarded, but denying an appraisal altogether would deprive GuideOne of a contractual right that could not be remedied by appeal.  As such, the Appellate Court conditionally granted a petition for a writ of mandamus, ordering the trial court to vacate its order denying an insurer’s motion to compel and enforce the appraisal provision of the policy.