AMARILLO COURT OF APPEALS FINDS NO “MISTAKE OF FACT” UNDERLYING UMPIRE’S APPRAISAL-DECISION, AND DENIES INSURED’S MOTION TO VACATE UMPIRE’S AWARD AND APPOINT A NEW UMPIRE

May 22, 2018

Last week, the Amarillo Court of Appeals denied the insured’s motion to vacate the umpire’s appraisal-decision and appoint a new umpire, holding that a disagreement between the appraisers did not constitute a “mistake of fact” resulting in an unintended award.  In  Abdalla v Farmers Insurance Exchange, No. 07-17-00020-CV, 2018 WL 2220269 (Tex. App.—Amarillo, May 14, 2018, mem. op.), the insured’s residence sustained water damage, which was covered under his insurance policy with Farmers Insurance Exchange (“Farmers”). However, the extent of the damage and insurance proceeds payable was disputed and submitted to appraisers in accordance with the policy’s terms, and then to an umpire appointed by the trial court. Subsequently, the umpire found that the appraisal made by Farmers' appraiser was the “more sound and well supported appraisal” and designated a certain amount as the actual cash value of the insured’s loss, which Farmers tendered. Nevertheless, the insured believed that the umpire’s award was a product of “mistake” and he moved the trial court to vacate the award and appoint a new umpire.  The insured’s allegation of “mistake,” though, was simply that there was a disagreement between the appraisers about the extent of water damage and the ultimate award of damages omitted damages that the insured’s appraiser thought should have been included. 

The court observed that Texas courts have recognized three grounds on which the results of an otherwise binding appraisal may be set aside:  when the award (1) fails to comply with the policy, (2) was made without authority, or (3) resulted from fraud, accident, or mistake.  “Mistake” applies when the complainant establishes that the appraisers were operating under a mistake of fact which resulted in an unintended award.   In the case at hand, the court, noting that a split of opinions between the appraisers was precisely what the umpire was called upon to settle, concluded that the disagreement between the appraisers “fell short of illustrating the umpire operated under a mistake of fact resulting in an unintended award.”  Accordingly, the court denied the insured’s motion to vacate.