Is Issuing An Insurance Claim Check And Receiving The Check The Same Thing?

Insurance lawyers need to know the various ways other insurance lawyers have attempted to pursue an insurance company and the ways that work and the ways that do not or have not worked.  Here is a different approach that failed to work.

This is an opinion from the Northern District of Texas, Dallas Division.  It is styled, Corinne Pearson v. Allstate Fire and Casualty Insurance Co.

Corinne filed suit in State Court alleging Allstate improperly denied or underpaid a claim after a storm damaged her home.  Allstate removed the case to this Federal Court and obtained an abatement pending an appraisal of the damage to her home.  In June 2019, the Court was notified that appraisal had been completed and the case was reopened.  Allstate immediately filed this motion for summary judgment.

Allstate alleges the appraisers award of $24,188.63 was paid by issuance of a check to Corinne withing five business days of the appraisal award on June 4, 2019.  On August 21, 2019, Allstate issued a second check for $1,945.71 to cover additional interest allegedly owed on the appraisal award.  Courier tracking data show Corrine and her attorneys received the check on August 22, 2019.

Allstate contends that the bad faith claims of the lawsuit are barred because Allstate paid all benefits due under the policy, and thus Corrine has not suffered any injury independent of the policy claims handling process.

Corrine argues there is actual evidence the check was tendered to her but no evidence demonstrating the check was actually received and accepted.

In response, Allstate contends that the issuance of the check is sufficient and that it need not prove that Corrine “accepted” the check.

The Court in its ruling said, appraisals function as contractual mechanisms to determine the amount of damages owed under an insurance policy when the parties have reached an impasse.  Such awards 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.  Even an insured’s rejection of the payment does not prevent estoppel.

Corrine’s attempt to avoid estoppel by pointing to the lack of proof that the appraisal award was tendered to and accepted by her is unsupported by Texas law.  In an an alogous case, an insured contended that the insurer could not prove that it had timely paid the appraisal award or that the insured had accepted it.  The Court rejected this argument, explaining that (1) proof that the insurer issued payment of the appraisal award was sufficient evidence that the insurer had paid the award; (2) because the check was issued on the fifth business day after the appraisal award, the payment was timely; and (3) because there was a binding and enforceable appraisal award which the insurer timely paid, estoppel applied regardless of whether the insured actually accepted the payment.  Allstate cites other cases with similar holdings that the Court finds equally persuasive for the reasons stated therein.

The undisputed evidence in this case demonstrates that on May 29, 2019, Allstate received notice of the Award in the amount of $24,188.63.  On June 3, 2019, Allstate emailed Corrine’s counsel to advise that Allstate had issued a check pursuant to the Award, less depreciation and the amount of Corrine’s deductible, and that the check was being forwarded to Corrine’s counsel.  Allstate counsel issued the check payable to Corrine and her counsel on June 4, 2019—four business days after Defendant received notice of the Award.  This action was in full compliance with the terms of the policy.  As such, Corrine is estopped from claiming that Allstate breached the policy terms.