Umpire’s Decision In Insurance Disputes

Insurance cases involving umpire’s are a little different.  The Amarillo Court of Appeals issued an opinion on May 14, 2018, styled, Mahmoud Abdalla v. Farmers Insurance Exchange.  The case deals with, among other issues, when an umpire’s appraisal award can be challenged.

This case is an appeal by Abdalla from a summary judgment in favor of Farmers.  Abdalla sued Farmers over an insurance dispute resulting from water damage.  The extent of the damage and insurance proceeds payable was ultimately submitted to appraisers in accordance with policy terms.  An umpire appointed by the trial court eventually (1) found the appraisal developed by Farmer’s appraiser (Albright) to be the “more sound and well supported appraisal” ad (2) designated the actual cash value of the loss at $345,664.21.  Farmer’s timely paid the umpire’s decision.

Abdalla filed motions to set aside the decision based on the umpire’s decision being a mistake and to appoint a new umpire.

Mistake is one of the few grounds upon which an insurance appraisal award may be vacated.   Texas courts have recognized three grounds on which the results of an otherwise binding appraisal may be set aside and they are when the award fails to comply with the policy, was made without authority, or resulted from fraud, accident, or mistake.  Courts have stated that an award entered by appraisers and an umpire can be disregarded only if it was made without authority or made as the result of fraud, accident, or mistake.  Mistake applies when the award fails to speak what the appraisers intended.  That is, it applies when the complainant establishes that the appraisers were operating under a mistake of fact which resulted in an unintended award.

Excluded from the scope of mistake are those situations where on appraiser simply disagrees with an umpire’s decision to adopt the estimates of the other appraiser.  Umpire’s must choose between two competing values.  That is what they do.  In view of this role played by the umpire, his decision to select between competing viewpoints or appraisals does not mean that the appraisal resulted from accident or mistake.

In this case, this court stated the appraisers disagreed on the extent of the loss suffered by Abdalla, and the umpire chose one appraisal over the other.  Such evidenced split of opinions is what an umpire is suppose to settle.  Abdalla’s appeal on this point was denied.