A Twist On Appraisals

Here is a 2020, case from the Eastern District of Texas, Sherman Division, that has an interesting twist.  The case is styled, Jennifer Hamorsky v. Allstate Vehicle and Property Insurance Company and Charmell King.

In this case, Jennifer sustained hail and wind damage to her home as the result of a storm in April of 2018, and timely filed a claim.  She made a claim with her home insurer, Allstate.  Allstate investigated the claim and paid Jennifer $31,614.47 to cover the damage.  Jennifer believes she should receive $51,043.27.

On January 9, 2019, Jennifer filed suit against Allstate.  A Scheduling Order was entered and after the substantial completion of the litigation process, the case was mediated on the Court was notified on September 10, 2019, that the mediation resulted in an impasse.  After said impasse, Allstate filed a motion for summary judgment on October 8, 2019, and on October 11, 2019, Jennifer invoked the appraisal clause in the insurance contract.  Allstate opposed the appraisal resulting in Jennifer filing a Motion to Compel Appraisal and Abate Pending Completion of Appraisal.

Appraisal clauses, a common component of insurance contracts, spell out how parties will resolve disputes concerning a property’s value or the amount of a covered loss.  These clauses are generally enforceable, absent illegality or waiver.   Once invoked, courts are discouraged from interfering with the appraisal process.  But, a valid appraisal does not divest the courts of jurisdiction, but only binds the parties to have the extent or amount of the loss determined in a particular way.

Here is the twist in the case:  It is Allstate, rather than the insured opposing the appraisal process.  95% of the time, it is the other way around.

The Court reviewed the policy language and agreed that appraisal was appropriate.  Allstate argued that Jennifer waived the appraisal because she “waited until the end of litigation and the eve of trial to invoke appraisal.”  Allstate did not explain how it will be prejudiced should the Court compel appraisal.  Allstate only argues that waiting until ten months into litigation was too long to wait to invoke appraisal.

The law is that the point of impasse is measured from the moment that there is “the apparent breakdown of good-faith negotiations.”  Consequently, a court is not to measure the point of impasse by considering the first sign of disagreement between the parties because both parties must be aware that future negotiations would be futile.  For this reason, the mere filing of a lawsuit does necessarily signify an impasse because the filing of a suit merely demonstrates that one party, the plaintiff, has unilaterally concluded that the parties were at an impasse.  Thus, a court must find the moment where it becomes unrealistic that the parties can conduct any fruitful negotiations.

The parties do not brief the Court on when the point of impasse occurredin this case. Allstate implicitly argues that the Court should find that the point of impasse occurred on January 8, 2019 — the date this lawsuit was filed.  The law, however, does not support such argument.  Rather, from a review of the record before the Court, it seems that the parties reached an impasse on September 10, 2019—the date that mediation failed.  While Jennifer filed this action on January 8, 2019, such filing only indicates, at most, a “unilateral conclusion” that the parties were at an impasse.  There is nothing in the record to evidence that Allstate believed that the parties were at an impasse prior to mediation or that Jennifer acted in a manner that would constitute waiver prior to mediation.  On the contrary, any argument that Allstate believed that the parties were at an impasse as early as January 8, 2019 is belied by the fact that the parties entered mediation following the filing of this suit.  Thus, the Court finds that the point of impasse occurred on September 10, 2019—the date that mediation failed.

Since the Policy does not include a time frame in which a party must request an appraisal, Jennifer needed to make the request for an appraisal within a reasonable time from the moment of impasse.  Jennifer first requested an appraisal on October 11, 2019, approximately one month after the parties reached an impasse.  Allstate has not presented any argument that a one-month delay is unreasonable; rather, Allstate has briefed the Court that the delay was ten months. Certainly, a one-month delay is not unreasonable.  While the Court recognizes that Jennifer’s appraisal demand came approximately one week after Allstate filed their Motion for Summary Judgement, that delay is within nearly one month of the point of impasse.  Thus, Allstate has not carried its burden in demonstrating that Jennifer waived her right to appraisal by exhibiting behavior that was inconsistent with her contractual rights.

The abatement and Order for appraisal was granted.

Contact Information