Opinion ID: 895317
Heading Depth: 2
Heading Rank: 1

Heading: Delay must be measured from the point of impasse.

Text: Thus, while an unreasonable delay is a factor in finding waiver, reasonableness must be measured from the point of impasse, as several cases have recognized. See In re Slavonic Mut. Fire Ins. Ass'n, 308 S.W.3d 556, 562 (Tex.App.-Houston [14th Dist.] 2010, no pet.) (holding that the date of disagreement, or impasse, is the point of reference to determine whether a demand for an appraisal is made within a reasonable time); see also Sanchez v. Prop. & Cas., Ins. Co. of Hartford, No. H-09-1736, 2010 WL 413687, at , 2010 U.S. Dist. LEXIS 6295, at -14 (S.D.Tex. Jan. 27, 2010) (The proper point of reference for determining whether an insurer waived the right to invoke appraisal by delay is the point at which the insurer knew the appraisal clause could be invoked because of a disagreement over the amount of damages, that is, the point of impasse with the insured.). That requires an examination of the circumstances and the parties' conduct, not merely a measure of the amount of time involved in seeking appraisal. An impasse is not the same as a disagreement about the amount of loss. Ongoing negotiations, even when the parties disagree, do not trigger a party's obligation to demand appraisal. Nor does an insurer's offer of money to cover damages necessarily indicate a refusal to negotiate further, or to recognize additional damages upon reinspection. See Scottish Union, 8 S.W. at 632. Texas state and federal courts have cited a federal district court case from Iowa, Terra Industries, Inc. v. Commonwealth Insurance Co. of America, 981 F.Supp. 581 (N.D.Iowa 1997), for its analysis of the point of impasse in insurance negotiations. See Tran v. Am. Econ. Ins. Co., No. H-10-0016, 2010 WL 2680616, at -3, 2010 U.S. Dist. LEXIS 66283, at -7 (S.D.Tex. July 2, 2010); Sanchez, 2010 WL 413687, at , 2010 U.S. Dist. LEXIS 6295, at ; Laas v. State Farm Mut. Auto. Ins. Co., No. 14-98-00488-CV, 2000 WL 1125287, at -7, 2000 Tex.App. LEXIS 5332, at -18 (Tex.App.-Houston [14th Dist.] Aug. 10, 2000, no pet.) (not designated for publication). The Terra court looked to other jurisdictions for insight in determining at what point an insurer has waived its appraisal right and formulated the following factors: In deciding whether a demand for appraisal was made within a reasonable time, and consequently has not been waived even if suit was filed before the demand was made, courts have considered the timeliness of the demand in light of the circumstances as they existed at the time the demand was made. Pertinent circumstances include (1) the time between the breakdown of good faith negotiations concerning the amount of the loss suffered by the insured and the appraisal demand; and (2) whether there would be any prejudice to the other party resulting from the delay in demanding an appraisal. Id. at 602 (citation omitted). In Terra, despite two and a half years of negotiations, and evident dispute, id. at 601, the court found that the insurer had no notice that an impasse had been reached, because only the filing of [the insured]'s suit demonstrated [the insured]'s unilateral conclusion that the parties were at an impasse. Id. at 603. Other courts have relied on Terra to measure the point of impasse at which parties are to invoke appraisal clauses. See, e.g., Lyon v. Am. Family Mut. Ins. Co., 617 F.Supp.2d 754, 760 (N.D.Ill.2009); Rebel Tractor Parts, Inc. v. Auto-Owners Ins. Co., No. CV206-102, 2006 U.S. Dist. LEXIS 86502, at  (S.D.Ga. Nov. 28, 2006); SR Int'l Bus. Ins. Co. Ltd. v. World Trade Ctr. Props. LLC, No. 01 Civ.9291, 2003 WL 1344882, at , 2003 U.S. Dist. LEXIS 3881, at  (S.D.N.Y. Mar. 18, 2003). Using the point of impasse, rather than the first sign of disagreement, corresponds with our definition of waiver as an intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right. In re GE Capital, 203 S.W.3d at 316 (quotation omitted). In other words, both parties must be aware that further negotiations would be futile, or would be of no effect if performed. Scottish Union, 8 S.W. at 632. If one party genuinely believes negotiations to be ongoing, it cannot have intended to relinquish its right to appraisal (unless it expressly waives it). See Keesling v. W. Fire Ins. Co., 10 Wash.App. 841, 520 P.2d 622, 627 (1974) (finding no waiver where, insofar as the record shows, until the insured filed suit, the frame of mind of both parties welcomed additional communications and negotiations rather than confrontation). The definition of impasse as the apparent breakdown of good-faith negotiations is supported in another context as well, which we find persuasive in our analysis. Under the National Labor Relations Act, 29 U.S.C. § 151, an employer may implement unilateral changes in employment terms only after good-faith negotiations have been exhausted, and the parties have reached an impasse. Beverly Farm Found, v. NLRB, 144 F.3d 1048, 1052 (7th Cir.1998); Taft Broadcasting Co., 163 N.L.R.B. 475, 478 (1967). The United States Supreme Court has defined impasse under these circumstances as that point at which the parties have exhausted the prospects of concluding an agreement and further discussions would be fruitless. Laborers Health & Welfare Trust Fund v. Advanced Lightweight Concrete Co., 484 U.S. 539, 544, 108 S.Ct. 830, 98 L.Ed.2d 936 (1988); see also Beverly Farm Found., 144 F.3d at 1052 (The touch-stone for determining whether a genuine `impasse' or `deadlock' existed ... is the absence of any realistic possibility that continuation of the negotiations would have been fruitful.). Universal invoked appraisal within a reasonable time after the parties reached an impasse. The policy contained no time limit for the appraisal request, and Universal never denied liability for the loss. At no point did Grubbs notify Universal that it refused to discuss the matter further, despite Universal's statement that it would leave its file open for further discussions should Grubbs care to do so. Whether Universal was aware of Grubbs' disagreement as to the estimate of damages is also irrelevant, since mere disagreement does not in itself signal an unwillingness to negotiate further. See NLRB v. Cent. Plumbing Co., 492 F.2d 1252, 1254 (6th Cir.1974) ([M]ere rejection of a bargaining proposal does not create an impasse.); Lyon, 617 F.Supp.2d at 759 n. 8 ([T]he relevant event is not the existence of a difference of views as to the loss amount, but rather the parties' inability to resolve that difference despite their attempts to do so.). Once the parties have reached an impassethat is, a mutual understanding that neither will negotiate furtherappraisal must be invoked within a reasonable time. Here Universal sought appraisal approximately one month after Grubbs sued. We conclude that Universal demanded appraisal within a reasonable time after the parties reached an impasse. Grubbs contends that, because Universal's correspondence included a provision alerting the insured of the statute of limitations on bringing suit, Universal effectively acknowledged that the parties were at an impasse (... being mindful of the policy requirement that legal action contesting Universal Underwriter's decision on this claim must be brought within 24 months and 1 day from the date you discover the loss ...). Universal counters that its letters included no statements regarding waiver of appraisal, or any suggestion that it was not open to further negotiation. To the contrary, it specifically reserve[d] its rights under both the laws of the State of Texas and the terms of the subject policy of insurance. Moreover, Universal stated that it would leave the file open should Grubbs want to pursue further discussions. We will not infer waiver where neither explicit language nor conduct indicates that such was the party's intent. Scottish Union is again instructive. In that case, the insurer conducted an inspection in response to the insured's claim and offered its calculation of damages. 8 S.W. at 630. When the parties disagreed on their estimates, the insurer offered an amount in settlement. Id. The insured declined the offer, then brought suit. Id. When the insurer demanded appraisal, the insured argued that the insurer had waived its right to do so. Id. at 631. We held that the insurer's attempt at reaching a settlement did not constitute a refusal to pay the loss: It does not appear that [the insurer] at any time denied its liability or refused to pay whatever amount of loss and damage might be determined in the manner required by the policy to be due. Id. at 632. As such, it had not waived its appraisal right. The same reasoning applies here.