Court Opinion

ID: 3125795
Source: CourtListenerOpinion
Date Created: 2015-10-16 15:16:02.514938+00
Date Added: 2024-06-11T10:22:47.035343
License: Public Domain

Opinion issued December 15, 2011

In The
Court of
Appeals
For The
First District
of Texas
————————————
NO. 01-11-00714-CV
———————————
IN re CYPRESS TEXAS LLOYDS, Relator

 

 
Original Proceeding on Petition for Writ of Mandamus

 

 
O P I N I O N
Relator, Cypress Texas Lloyds
(“CTL”), has filed a petition for writ of mandamus, challenging the trial
court’s order denying its motion to abate the underlying
case[1] pursuant
to an appraisal clause in a homeowner’s insurance policy that it issued to real
parties in interest, Mahendra and Daksha
Parikh.  In its sole issue, CTL contends
that the trial court abused its discretion in “failing to abate the case after
compelling appraisal pursuant to a mandatory, contractual appraisal clause.”
We deny the petition for writ
of mandamus.[2]
Background
          The Parikhs alleged that they sustained damage to their home as
a result of Hurricane Ike, and they filed a homeowners’ insurance claim with
CTL.  Contending that CTL had wrongfully
denied, underpaid, and delayed in paying their claims, the Parikhs
filed suit against CTL for breach of contract, violations of the Texas
Insurance Code, and breach of the duty of good faith and fair dealing.   CTL answered, generally denying the Parikhs’ allegations and asserting that the Parikhs had failed to comply with the insurance policy’s
condition precedent of submitting to an appraisal.   In its
answer, CTL requested an abatement of the lawsuit until this policy condition
was satisfied.   CTL subsequently filed a
Motion to Compel Appraisal and Abate Litigation.   The trial court granted CTL’s motion to
compel appraisal, but denied CTL’s motion to abate the lawsuit. 
 
 
Standard of Review
Mandamus is an extraordinary
remedy, which is available only when (1) a trial court clearly abuses its
discretion and (2) there is no adequate remedy by appeal.  In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135–36 (Tex. 2004).
 A trial court clearly abuses its
discretion if it reaches a decision so arbitrary and
unreasonable as to amount to a clear and prejudicial error of law.  Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992).  With respect to a trial court’s determination
of legal principles, “a trial court has no ‘discretion’ in determining what the
law is or applying the law to the facts.”  In re Prudential, 148 S.W.3d at 135 (quoting Walker, 827 S.W.2d at 840).
Abatement
          In
its sole issue, CTL argues that the trial court abused its discretion in “failing
to abate the case after compelling appraisal pursuant to a mandatory,
contractual appraisal clause” because the appraisal provision in the policy is
a condition precedent to filing suit and denying abatement of the lawsuit deprives
it of “its contractual right to engage in an alternative dispute resolution
process prior to the initiation of litigation.” 
CTL also asserts that it has no adequate remedy by appeal.
          The
Texas Supreme Court recently considered a petition for writ of mandamus brought
by an insurer that contended that a trial court had abused its discretion in denying
its motion to compel an appraisal and abate a pending lawsuit.  In re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404,
405–07 (Tex. 2011).  The supreme court noted that appraisal clauses, which are “commonly
found in homeowners, automobile, and property policies” and “provide a means to
resolve disputes about the amount” of a covered loss, are “generally enforceable,
absent illegality or waiver.”  Id. at 406–07 (citing State Farm Lloyds v. Johnson, 290 S.W.3d
886, 888 (Tex. 2009)).  In rejecting the
insured’s arguments that the insurer had waived its appraisal rights under the
policy, the court stated that an “appraisal must be invoked within a reasonable
time” after the “parties have reached an impasse” and that a party seeking to establish
a waiver of appraisal rights must show that the “failure to demand appraisal
within a reasonable time” caused it prejudice. 
 Id. at 410, 412.   In regard to the abatement issue, the court
stated that the “trial court’s failure to grant the motion to abate” the case
during the appraisal “is not subject to mandamus, and the proceedings need not
be abated while the appraisal goes forward.”  Id. at 413, n.5 (citing In re
Allstate Cnty. Mut. Ins. Co.,
85 S.W.3d 193, 196 (Tex. 2002).
In In re Allstate County Mutual Insurance Company, the Texas Supreme
Court considered a petition for writ of mandamus brought by an insurer that challenged
a trial court’s ruling that an insurance policy’s appraisal clause was  unenforceable on
grounds of public policy.  85 S.W.3d at 194.  In
concluding that the trial court had abused its discretion because such clauses are
enforceable, the court noted that appraisal “merely binds the parties to have
the extent or amount of the loss determined in a particular way.”  Id. at 195 (citation omitted).  In regard to the abatement issue, the court
stated, “While the trial court’s denial of the motion to invoke appraisal was
error, the failure to grant the motion to abate is not subject to mandamus.”  Id. at 196.  The court
stated that the trial “proceedings need not be abated while the appraisal goes forward,” and it explained that, “[w]hile
the trial court has no discretion to deny the appraisal, the court does have
some discretion as to the timing of the appraisal.”  Id.   
CTL argues that the supreme court’s
statements regarding abatement in In re
Universal Underwriters of Texas Insurance Company and In re Allstate County Mutual Insurance Company are not controlling
because neither case involved the
“specific policy language” in the instant case that “requir[es]
abatement.”  CTL asserts that the
statements in In re Universal
Underwriters of Texas Insurance Company pertaining to abatement are dicta
because the abatement issue was not before the court.  
          The
appraisal clause in CTL’s policy provides,
Appraisal.  If you and we fail to agree on the actual
cash value, amount of loss or the cost of repair, either can make a written demand
for appraisal.  Each will then select a
competent, independent appraiser and notify the other of the appraiser’s
identity within 20 days of receipt of the written demand.  The two appraisers will choose an umpire.  If they cannot agree upon an umpire within 15
days, you or we may request that the choice be made by a judge of a district
court of a judicial district where the loss occurred.  The two appraisers will then set the amount of
loss, stating separately the actual cash value and loss to each item.
 
If the appraisers fail to
agree, they will submit their differences to the umpire.   An
itemized decision agreed to by any two of these three and filed with us will
set the amount of the loss.  Such award
shall be binding on you and us.
 
The CTL policy further provides that “[n]o suit or
action can be brought unless the policy provisions have been complied with,” “[a]ppraisal is required as a prerequisite before an insured
can file suit related to Section I—Property Coverage,” and “[a]ppraisal, no suit involving Section I—Property Coverage can
be brought unless appraisal has been completed.”  
          We
recognize that, in its opinions in In re
Universal Underwriters of Tex. Insurance Company and In re Allstate County Mutual Insurance Company, the supreme court did not indicate that either of the policies
contained language similar to the policy here. 
See In re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d at 406
(noting that policy language allowed for either party to demand “binding” appraisal,
but making no mention of any policy term requiring appraisal before filing suit);
In re Allstate Cnty.
Mut.
Ins. Co., 85 S.W.3d at 195 (same).  But, in regard to the abatement issue, both
opinions state, without substantial explanation or analysis, that the “failure
to grant the motion to abate is not subject to mandamus.”  See
In re Universal Underwriters of Texas
Ins. Co., 345 S.W.3d at 413, n.5.  Neither
opinion addresses in any significant detail whether the language of the
policies at issue contained language identical to the policies here.  Moreover, at the time it issued its opinion
in In re Universal Underwriters of Texas
Ins. Co., the supreme court had already
characterized the right to appraisal, at least in the general sense, as a
condition precedent to suit.  See Johnson,
290 S.W.3d at 894 (stating that “appraisal is intended to take place before
suit is filed” and that “it is a condition precedent to suit”) (citing Scottish Union & Nat’l Ins. Co. v.
Clancy, 71 Tex. 5, 8 S.W. 630, 631–32 (1888)).  Importantly, however, the supreme
court made no effort to limit its broad statements that mandamus relief is
not available to compel abatement during the pendency of an appraisal exercised
pursuant to an insurance policy.
CTL urges us to consider the
analysis set forth in two opinions from our sister court in which the court
provided mandamus relief to compel abatement of the lawsuits pending the
appraisals.  See In re Slavonic Mut. Fire Ins. Ass’n, 308
S.W.3d 556, 562, 564–65 (Tex. App.—Houston [14th Dist.] 2010, orig. proceeding);
In re Cont’l Cas. Co.,
No. 14–10–00709–CV, 2010 WL 3703664, at *5 (Tex. App.—Houston [14th Dist.] Sept. 23,
2010, orig. proceeding) (mem.op.).  In Slavonic,
the Fourteenth Court of Appeals acknowledged the general rule that the “failure
to grant a motion to abate is not ordinarily subject to mandamus.”  308 S.W.3d at 564.  But, because the policy before the court in Slavonic required the insured to satisfy
the policy terms before filing suit, the court held that the appraisal
provision in the policy constituted a “condition precedent” and that abatement
of the lawsuit was “appropriate.”  Id. at 565; see also In re Cont’l Cas.
Co., 2010 WL 3703664, at *5 (holding that terms of insurance policy
rendered appraisal “condition precedent to suit” and that because “insurer’s
remedy to enforce a condition precedent in its policy is abatement of the
case,” mandamus relief compelling abatement of case was appropriate).
As CTL acknowledges, in light of
the supreme court’s more recent opinion in In
re Universal Underwriters of Texas Insurance Company addressing the issue
of abatement in the context of an appraisal,
the Fourteenth Court of Appeals has since overruled the portions of its prior
opinions in In re Slavonic and In re Continental Casualty Company granting
mandamus relief “as to the trial court’s failure to abate during the appraisal
process.”  See, e.g., In re Cypress Texas Lloyds, No. 14–11–00713–CV, 2011 WL
4366984, at *1 (Tex. App.—Houston [14th Dist.] Sept. 20, 2011, orig.
proceeding) (mem. op.) (“Therefore, the parts of our
two prior opinions in which this court granted mandamus relief as to the trial
court’s failure to abate during the appraisal process are no longer good law.”);
In re Liberty Mut.
Group, Inc., No.
14–11–00310–CV, 2011 WL 2149482, at *1 (Tex. App.—Houston [14th Dist.]
May 26, 2011, orig. proceeding) (mem. op.) (“Recently,
the Texas Supreme Court confirmed that mandamus will not lie regarding the
grant or denial of a motion to abate.”). 
 
We agree with the Fourteenth Court
of Appeals’ more recent opinion recognizing that, pursuant to controlling authority
from our supreme court, the trial court’s denial of CTL’s motion to abate pending
the appraisal is not subject to mandamus. 
See In re Cypress Texas Lloyds,
2011 WL 4366984, at *1. Accordingly, we hold that CTL is not entitled to the
relief requested in its petition.  
We overrule CTL’s sole issue.
Conclusion
We deny CTL’s petition for writ of
mandamus. 
 
 
                                                          Terry
Jennings
                                                          Justice
 
  Panel consists of Justices Jennings, Brown,
and Sharp.
 
 

[1]
          The underlying case is Parikh v. Cypress Texas Lloyds, No.
2009-35826, in the 11th District Court of Harris County, Texas, the Honorable Mike
Miller presiding.
 

[2]
          See Tex. R. App. P. 52.8(d)
(providing that, when denying relief requested in petition for writ of mandamus,
“court may hand down an opinion but is not required to do so”).