Last Wednesday, the Fifth Circuit upheld an appraisal award of a home damaged by smoke in the Bastrop County wildfire of September 2011.  In Michels v. Safeco Ins. Co. of Indiana, ---Fed. Appx. ---, No. 13–50321, 2013 WL 5935067 (5th Cir. Nov. 6, 2013) (unpublished opinion), Safeco initially paid approximately $12,000 to clean the house and replace smoke-damaged insulation.  After the homeowners sued Safeco for damages exceeding $72,000, Safeco demanded appraisal and obtained appointment of an umpire. The umpire issued an award of $17,600. Safeco promptly paid the difference between its initial payment and the award, and soon afterward moved for summary judgment.

The policy’s appraisal clause required an itemized award, and the homeowners sought to set the award aside on the ground that it was not properly itemized.   Both the District Court and the Fifth Circuit rejected this position, noting the homeowners’ own appraiser had requested the lump-sum award form. The Fifth Circuit also observed that both appraisers had submitted itemized estimates, and noted that the district court was entitled to disregard “small variances” in form as long as the award substantially complied with policy requirements.

The Fifth Circuit also summarily upheld the District Court’s grant of summary judgment in favor of Safeco on all of the homeowners’ remaining claims, further strengthening the body of law in Texas holding that prompt payment of an appraisal award constitutes compliance with the contract, and thus trumps extra-contractual claims.

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