HOUSTON COURT OF APPEALS REJECTS EFFORTS TO “GAME” THE APPRAISAL PROCESS, UPHOLDS ATTORNEY SANCTIONS

Last week, a Houston court of appeals upheld sanctions against a policyholder attorney after an appraisal process went off the rails. In Etienne v. State Farm Lloyds, No. 14-18-00665-CV, 2019 WL 4266104 (Tex. App.—Houston [14th Dist.] Sept. 10, 2019, no pet. h.) (slip op.), the policyholder invoked appraisal of a claim under her homeowners policy.  After State Farm agreed to the appraisal and both sides appointed their appraisers, Etienne filed suit against State Farm, accusing State Farm of refusing to participate in the appraisal.  State Farm answered the lawsuit, filed a motion to appoint an umpire, and set a hearing on the motion.

Twelve hours before the hearing, Etienne non-suited her case, and her counsel did not appear for the hearing.  (Meanwhile, outside the context of the original lawsuit and unbeknownst to State Farm, Etienne filed a separate application for appointment of an umpire.)  At the hearing, which was already on the court’s docket, the court appointed an umpire.  The next day, the court signed the nonsuit and dismissed the lawsuit.

Etienne sought to vacate the court’s order appointing the umpire, arguing the court lost jurisdiction the moment she filed her nonsuit and could not appoint an umpire.  In response, State Farm sought and won sanctions against Etienne’s counsel for signing and filing a pleading which falsely alleged State Farm had refused to participate in appraisal, in violation of Texas Rule of Civil Procedure 13. Etienne appealed both the umpire appointment and the sanctions order.

On appeal, the court pointed out that as a procedural matter, a nonsuit does not immediately deprive the court of jurisdiction if another party has sought affirmative relief. Additionally, the court retained plenary power for 30 days after its own dismissal order, and had the power to hear and rule on State Farm’s motion to appoint an umpire the morning after Etienne filed her nonsuit.  The court summarily rejected Etienne’s appeal of the sanctions order because she had not been personally sanctioned – only her attorney, Eric Dick, had.