A recent case filed in Tarrant County was removed to Federal Court, Northern District, Fort Worth Division. One issue dealt with the appraisal provision in the insurance contract. The style of the case is, Reese Hallak v. Allstate Vehicle and Property Insurance Company.
Hallak sued Allstate for breach of contract and violations of the Texas Insurance Code. Hallak’s petition alleges Allstate mishandled and underpaid him for two separate property damage claims. After removal to Federal Court, Allstate filed a Motion To Abate Pending Appraisal, arguing that, pursuant to the terms of the insurance contract between the parties, this case should be abated until conclusion of the appraisal process.
There is no specific federal statute or rule which expressly authorizes a motion to abate. The court’s decision to do so is largely a matter of judicial discretion.
The Court applies the law of the forum state, which here is Texas and is bound the substantive law as interpreted by the state’s highest court.
This court, then cites the appraisal provision in the Allstate policy, the last paragraph of which states “Action Against Us. No one may bring an action against us unless there has been full compliance with all policy terms.”
Appraisals are intended to take place before suit is filed and Texas has held it is a condition precedent to suit. Under Texas law, an insured’s failure to comply with a condition precedent constitutes grounds for abating the suit.
The Court must presume that parties to a contract intend every contractual provision to have some meaning.
Courts have enforced “Appraisal” clauses as “clear and unambiguous” in entitling the insurer to have the appraisal procedure followed and the underlying suit abated until the completion of that procedure. A policy generally includes appraisal provisions to provide for a potential resolution of the dispute, such that the value of proceeding further in the litigation process will only be evident after the completion of the appraisal process.
Halleck’s argument was that he was also pursuing extra-contractual claims and that those claims do not require abatement. Halleck pointed out that a recent Texas Supreme Court opinion that extra-contractual claims may be pursued in spite of there bring no breach of the insurance contract. However, the Texas court recognized that “a successful independent-injury claim would be rare, and the Court in fact has yet to encounter one.”
This Court granted the Motion to Abate.