X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
Click here for the full text of this decision FACTS:The roof of Becky Ann Johnson’s home was damaged by hail in April 2003. State Farm Lloyds inspected the property and concluded that only the ridgeline of Johnson’s roof was damaged by hail. State Farm estimated repairs at $499.50, which was less than Johnson’s deductible, and declined any payment on the claim. At Johnson’s request, State Farm conducted a second inspection. The result was the same. Johnson argued the entire roof needed to be replaced and submitted an estimate for the repairs of over $6,400. She also hired an attorney who wrote State Farm demanding it submit to the appraisal process pursuant to the policy’s appraisal clause. State Farm declined, stating that the parties’ disagreement about the extent of the hail damage was a coverage issue that could not be decided by appraisal. Johnson filed a declaratory judgment action seeking to compel State Farm to submit to an appraisal pursuant to the policy State Farm issued to her. Both parties moved for summary judgment. The trial court agreed with State Farm, granted its motion for summary judgment, and denied Johnson’s motion. HOLDING:The court reverses the judgment of the trial court granting summary judgment in favor of State Farm and renders judgment granting Johnson’s motion to compel State Farm to submit to the appraisal process. The court remands the issue of Johnson’s attorney’s fees to the trial court for consideration. State Farm argues that any decisions by appraisers on the extent of damage would be beyond the scope of their authority, because their decisions necessarily will involve decisions about causation, coverage and liability. It cites Wells v. American States Preferred Insurance Co., 919 S.W.2d 679 (Tex. App. – Dallas 1996, writ denied) to support its argument that determination of the extent of the damage is a coverage issue. The court held that the plain language of the appraisal clause did not authorize or empower the appraisers to determine what caused or did not cause the claimed loss. The principle in Wells was that the appraisers have certain powers and that, acting within those powers, their determination can 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. Actions beyond those powers are not given estoppel effect. In Wells the parties apparently agreed on the extent of the loss and the cost of repairs; they disagreed on whether there was a covered loss at all. Unlike Wells, these parties agree there was a covered loss but disagree on the extent of the loss and the cost of repairs. The court concludes that Wells is distinguishable. Simply because they are differentiating between hail damage and normal wear and tear does not mean that appraisers are making coverage decisions, the court states. If they do make coverage decisions, the parties can challenge the estoppel effect of the appraisal. The court concludes that if the parties agree there is coverage but disagree on the extent of damage, the dispute concerns the “amount of loss” and that issue is determined in accordance with the appraisal clause. Because the parties here agree that covered property sustained damage from a covered peril but fail to agree on the amount of loss, the appraisal clause applies. Under these circumstances, Johnson was entitled to appraisal, the court concludes. OPINION:Lang-Miers, J.; Whittington, Bridges and Lang-Miers, J.J.

Want to continue reading?
Become a Free ALM Digital Reader.

Benefits of a Digital Membership:

  • Free access to 1 article* every 30 days
  • Access to the entire ALM network of websites
  • Unlimited access to the ALM suite of newsletters
  • Build custom alerts on any search topic of your choosing
  • Search by a wide range of topics

*May exclude premium content
Already have an account?

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.