Appealing Appraisal Awards

Palo Pinto County insurance lawyers know that it is very difficult to appeal appraisal findings. A hail damage case from the Sherman Division, Eastern District illustrates this. The opinion is styled, Ronald Studer v. State Farm Lloyds.
The issue before the Court was whether the appraisal award should be set aside due to mistake. Plaintiff’s home was damaged due to hail stones during a storm. Plaintiff filed a claim for damage to his roof, gutters, siding, windows, skylight, and glass solarium with State Farm. State Farm hired Rimkus Engineering to inspect the solarium and give a cause of loss. This report is contained in the courts’ opinion.
A lawsuit filed by Studer resulted and State Farm invoked the appraisal provision in the insurance contract. An appraisal was conducted that was adverse to Studer and he filed a motion to set aside the appraisal and State Farm filed a motion for summary judgment based on the appraisal.
The Texas Supreme Court has long recognized the validity of appraisal provisions in insurance contracts. Under Texas law, appraisal awards made pursuant to the provisions of an insurance contract are binding and enforceable, and every reasonable presumption will be indulged to sustain an appraisal award. The effect of an appraisal provision is to estop one party from contesting the issue of damages in a suit on the insurance contract, leaving only the question of liability for the court. Because every reasonable presumption will be indulged to sustain an appraisal award, the burden of proof is on the party seeking to avoid the award. Texas courts recognize three situations in which the results of an otherwise binding appraisal may be disregarded: (1) when the award was made without authority; (2) when the award was made as a result of fraud, accident, or mistake, or (3) when the award was not in compliance with the requirements of the policy.
Studer argued number (2) applied. The court then reviewed the paperwork and reports submitted and used in the appraisal and stated the following.
It is well-settled that a court will not substitute its judgment for that of the appraisers in the absence of a showing that the award was induces by fraud, accident, mistake, or some circumstance that would render it unjust and unfair to one or both of the interested parties. The Court found that Studer did not present evidence that a mistake occurred in the determination of the appraisal award and therefore, the Court found no reason to set aside the appraisal award.
The Court then reviewed and discussed the motion for summary judgment filed by State Farm and granted judgment in favor of State Farm.