• Texas Appellate Court Threatens Mandamus If Trial Court Does Not Vacate Denial of Insurer’s Motion to Compel Appraisal
  • March 22, 2013 | Author: George B. Hall
  • Law Firm: Phelps Dunbar LLP - New Orleans Office
  • An appellate court in Texas recently granted a conditional writ of mandamus ordering the trial court to vacate an order denying an insurer’s motion to compel appraisal prior to the scheduled trial date, holding that denying appraisal would deprive an insurer of a contractual right under the policy.  In Re GuideOne Mutual Insurance Company, 2013 WL 257371 (Tex. App.—Beaumont Jan. 24, 2013).

    The insured had a property policy that included appraisal.  The insurer invoked appraisal two months before trial on the insured’s claim and filed a motion to compel appraisal.  The insured contended that the insurer had waived appraisal and that it had been prejudiced because it incurred litigation expenses due to the insurer’s delay in invoking appraisal.  Texas courts hold that a party seeking to establish waiver must show that the party compelling appraisal failed to invoke the appraisal provision within a reasonable time after an impasse was reached and that the delay caused prejudice.  The trial court found an impasse occurred when the insurer answered the insured’s lawsuit and that the insurer failed to demand appraisal within a reasonable time thereafter and that its failure prejudiced the insured.  It denied the insurer’s motion to compel appraisal.  The insurer sought mandamus relief.

    The appellate court stated that it would issue mandamus if the trial court did not vacate its denial of the insurer’s motion to compel.  The appellate court distinguished the existence of a dispute and the development of an impasse, which occurs when the parties reach a mutual understanding that neither will negotiate further.  Here, the parties engaged in mediation, discovery and negotiations for years after the suit was filed.  Hence, it concluded an impasse could not have occurred at the time the insurer filed its answer.  Further, the court found that the policy placed no time limit on making a demand for appraisal and held the insured was not prejudiced because it would have incurred similar costs in fact gathering regardless of when the appraisal occurred.  The appellate court also concluded that the insured’s right to sue was unaffected by its insurer’s demand for appraisal and, therefore, the contractual rights the parties had under the policy were not waived.