Court Opinion

ID: 2880625
Source: CourtListenerOpinion
Date Created: 2015-09-07 07:11:52.768339+00
Date Added: 2024-06-11T15:14:49.534596
License: Public Domain

COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                              NO. 02-15-00238-CV

IN RE OOIDA RISK RETENTION                                           RELATORS
GROUP, INC., CERTAIN
UNDERWRITERS AT LLOYDS,
AND GEORGE ODOM

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                          ORIGINAL PROCEEDING
                         TRIAL COURT NO. C2013333

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                                   OPINION

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      Relators OOIDA Risk Retention Group, Inc., Certain Underwriters at

Lloyds, and George Odom seek a writ of mandamus to compel the trial court to

vacate its order denying their motion to appoint an impartial umpire and to vacate

its order denying their motion for summary judgment. For the reasons set out

below, we conditionally grant relief on the order denying Relators’ motion to

appoint an impartial umpire but deny Relators’ petition on the order denying their

motion for summary judgment.
                                    Background

      Ricky Lee Wells, the real party in interest, had commercial automobile

insurance for his Peterbilt truck with Relators.1 Condition 12 of the policy, entitled

“Appraisal,” provided:

      In case the Insured and Underwriters shall fail to agree as to the
      amount of loss or damage each shall on the written demand of
      either, select a competent and disinterested appraiser within fifteen
      (15) days of receipt of such written demand.            The selected
      appraisers shall first attempt to agree between themselves on an
      agreed actual cash value, loss or damage taking into account the
      terms and conditions of the Policy. If the two appraisers fail to agree
      then they shall select a competent and impartial umpire, and failing
      for fifteen (15) days to agree upon such umpire, then on the request
      of the Insured or the Underwriters such umpire shall be selected by
      a judge of a court of record in the County and State in which the
      appraisal is pending. The appraisers shall then submit their
      differences only to the umpire. The award in writing of any two of
      the three parties involved (i.e. the two appraisers and the umpire)
      when filed with Underwriters, shall determine the sound actual cash
      value and the amount of loss or damage. Each appraiser shall be
      paid by the party selecting him and the expenses of the umpire shall
      be paid by the parties equally.

      Wells’s truck caught fire on March 4, 2013, and was damaged.              Wells

reported his claim on the same date. On March 28, 2013, a representative of

Relators left Wells a telephone message that he was sending Wells a copy of

Condition 12. Relators sent Wells a settlement offer on March 29, 2013, and, on

April 5, 2013, sent him settlement paperwork that specifically mentioned

      1
       The insurance policy was with Certain Underwriters at Lloyds, one of the
Relators. For the sake of simplicity, when referring to any one of the Relators,
we use the term “Relators.”
                                          2
compliance with Condition 12 and provided him with the full text of the appraisal

clause.

      On April 24, 2013, Wells’s fiancée emailed Relators and asked them to

send the paperwork for the settlement valuation of $21,000.             The email

exchanges between Relators and Wells’s fiancée show that Relators were going

to pay Wells $21,000 but were also going to subtract from that amount the truck’s

salvage value of $7,186. Wells’s fiancée responded that they did not want to

retain the truck for salvage but wanted, instead, the $21,000. Relators agreed,

provided nothing had been removed or swapped from the truck. Wells’s fiancée

assured Relators nothing had been removed. In an April 24, 2013 telephone

conversation between Relators and Wells’s fiancée, she confirmed receiving the

Condition 12 paperwork but expressed uncertainty about how it worked.

Relators responded that it worked “exactly how it’s spelled out in the policy” and

summarized it for her.2

      2
       [Relators]: Well, the first thing that has to happen is you notify the
      insurance company in writing of your selected disinterested
      appraiser, you know.         Not a truck salesman at Peterbilt or
      something, but it has to be a licensed appraiser, and you get that
      information from him and send it in to the insurance company. The
      insurance company will then provide that information to the selected
      appraiser of the insurance company.

      [Wells’s fiancée]: Okay. And so will you get a new appraisal or are
      you going with the appraisal that you already received?

      [Relators]: No. They’ll do a new appraisal too.

      [Wells’s fiancée]: Okay.
                                        3
      However, on April 26, 2013, Relators emailed Wells’s fiancée to inform her

that they had determined that certain items had been removed or swapped from

the truck, and on April 30, 2013, Relators informed Wells’s fiancée that because

the drive wheels and tires had been swapped, they were reducing the salvage

bid by $2,000. Relators sent Wells revised settlement paperwork on the same

date. Wells’s fiancée emailed Relators and refused the settlement because of

the dispute over the tires. She maintained the setoff for the tires should be only

$276, not $2,000. Relators informed Wells’s fiancée that if she was not happy

with the offer, she could use the appraisal clause. In an April 30, 2013 email, she

wrote that $20,724 was their final offer.         A representative of Relators

acknowledged telling Wells’s fiancée at some point that Relators had made their

final offer and that Wells needed to get an attorney or use Condition 12, but the

representative himself expressed confusion over how Condition 12 worked

exactly.

      [Relators]: It will be re-evaluated –

      [Wells’s fiancée]: And then what happens?

      [Relators]: It will be re-evaluated by both, your appraiser, the
      insurance company’s appraiser. If the two of them don’t agree on a
      price, then it’ll go to an umpire. And then you and the insurance
      company will split the cost of the umpire. You’ll be responsible for
      your appraiser fees. The insurance company will be responsible for
      theirs. And then if it goes to an umpire, then the umpire will be split
      between you and the insurance company.

                                         4
      In early June 2013, Relators received a notice of attorney representation

from Wells’s attorney. Wells’s attorney’s paralegal followed up with an email to

Relators on June 19, 2013, and spoke with Relators. Relators sent the revised

settlement paperwork to Wells’s attorney on July 2, 2013. On July 23, 2013,

Wells’s attorney’s paralegal communicated Wells’s counsel’s demand for

$40,000 to Relators. On the same date, Relators spoke with Wells’s attorney

and requested documentation supporting the $40,000 demand. On August 13,

2013, Relators emailed Wells’s attorney’s paralegal to inquire about the status of

the documentation they previously requested. Relators followed up again on

August 22, 2013. Wells filed suit against Relators on September 17, 2013.

      Thereafter, nearly five months later, on February 6, 2014, Relators emailed

Wells’s attorney regarding the settlement negotiations. On February 14, 2014,

Wells’s attorney responded by making a demand for $125,000. Relators rejected

the demand on February 19, 2014, and requested compliance with the appraisal

requirement in Condition 12 of the policy.

      In response, for the purpose of appointing an appraiser, Wells’s attorney

asked Relators for the location of the truck. Relators informed Wells’s attorney

that because Wells had indicated he did not intend to keep the truck, a salvage

company had taken it and dismantled it; however, Relators further informed

Wells’s attorney that there were photographs of the truck as well as

                                        5
specifications clearly showing the equipment on the truck and the condition of the

vehicle.

      On March 7, 2014, despite expressing some reservations, Wells’s attorney

selected an appraiser. Wells’s attorney wrote: “It is my understanding from

speaking with our appraiser that a traditional appraisal will not be possible

without the physical tractor present to be appraised; however, our appraiser will

attempt to provide a valuation of the vehicle based on the information that you

provided.”

      On April 28, 2014, Wells’s appraiser completed a “Total Loss Evaluation

Worksheet.”     Wells’s appraiser made no complaint about his inability to

personally inspect the vehicle and listed his estimate at $26,807.94. On May 6,

2014, Wells’s appraiser completed his “Truck Appraiser’s Report” and, again,

made no complaint about his inability to personally inspect the truck. Within the

report, Wells’s appraiser indicated that he had spoken with Relators’ appraiser

and that they had agreed to settle the claim. Wells’s appraiser took his estimate

of $26,807.94, subtracted $2,000 for the wheels and tires, and then reported that

Relators were willing to settle for $24,807.94.

      After a couple months of inactivity, on May 28, 2014, Wells’s attorney sent

a revised settlement demand of $100,000. Relators did not respond.

      However, on June 27, 2014, Relators emailed Wells’s attorney and stated

that their understanding was that the two appraisers had reached an agreement

                                         6
that the loss of the value of the truck was $23,888.34. Relators offered Wells

$5,000 to resolve the remainder of his claims.      On June 30, 2014, Wells’s

attorney responded by asking Relators to make the check payable to Wells but

asserted they were not releasing all of their claims. On July 8, 2014, Relators

forwarded to Wells’s attorney settlement paperwork and a settlement check in

the amount of $23,888.34 made payable to Wells.

      Thereafter, on August 27, 2014, Relators filed their “First Amended Answer

and Counterclaims.” Relators argued that Wells had not, before bringing suit,

performed a condition precedent to the contract. Specifically, Relators alleged

Wells did not comply with Condition 12 of the insurance policy before bringing his

suit.3 On the same date, Relators filed a “No-Evidence Motion for Summary

Judgment” as to all of Wells’s claims.

      On September 18, 2014, Wells informed Relators that the check for

$23,888.34 was in the wrong amount and appeared to suggest that the check

should have been for $24,807.94. On February 19, 2015, the parties discussed

filing a motion to appoint an umpire. On March 13, 2015, Relators filed their

“Motion to Appoint Impartial Umpire to Appraise Vehicle.”

      On March 16, 2015, Wells filed his “Third Amended Original Petition” and,

for the first time, argued that Relators had waived their right to invoke the

appraisal clause in Condition 12.        Wells maintained that an impasse had

      3
        As shown here, the first time noncompliance with Condition 12 arose in
the trial court was when Relators alleged noncompliance by Wells.
                                         7
occurred when he filed suit on September 17, 2013, and that, by waiting until

February 19, 2014, Relators had waived their right to request an appraiser under

the appraisal clause. Wells also complained about the destruction of the truck.

In his April 21, 2015 “Objection and Response to Defendants’ Motion to Appoint

Impartial Umpire to Appraise Vehicle,” Wells made the same argument.

      The trial court conducted a hearing on Relators’ motion to appoint an

umpire and motion for summary judgment on April 23, 2015. On May 18, 2015,

the trial court signed an order denying Relators’ motion to appoint an umpire. On

June 3, 2015, the trial court signed an order denying Relators’ motion for

summary judgment on Wells’s claim for breach of contract.

                               Standard of Review

      Mandamus is an extraordinary remedy that will issue only if (1) the trial

court clearly abused its discretion and (2) the party requesting mandamus relief

has no adequate remedy by appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d
124, 135–36 (Tex. 2004) (orig. proceeding).        A trial court clearly abuses its

discretion when it reaches a decision so arbitrary and unreasonable as to amount

to a clear and prejudicial error of law or if it clearly fails to correctly analyze or

apply the law. In re Olshan Found. Repair Co., 328 S.W.3d 883, 888 (Tex. 2010)

(orig. proceeding); Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig.

proceeding). We may not substitute our judgment for that of the trial court unless

the relator establishes that the trial court could reasonably have reached only

                                          8
one decision and that the trial court’s decision is arbitrary and unreasonable.

In re Sanders, 153 S.W.3d 54, 56 (Tex. 2004) (orig. proceeding); Walker, 827
S.W.2d at 839–40. We give deference to a trial court’s factual determinations

that are supported by evidence, but we review the trial court’s legal

determinations de novo. In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643

(Tex. 2009) (orig. proceeding).    We determine the adequacy of an appellate

remedy by balancing the benefits of mandamus review against its detriments.

Prudential Ins. Co. of Am., 148 S.W.3d at 136.        In evaluating benefits and

detriments, we consider whether mandamus will preserve important substantive

and procedural rights from impairment or loss. Id.

           Absence of Reporter’s Record of April 23, 2015 Hearing

      Wells contends that the court should deny Relator’s petition because the

record is incomplete for want of the reporter’s record of the April 23, 2015

hearing. We disagree. Where the trial court heard no evidence, the absence of

a reporter’s record of the hearing is not fatal. See Otis Elevator Co. v. Parmelee,

850 S.W.2d 179, 181 (Tex. 1993).            Parties are not required to obtain

transcriptions of non-evidentiary hearings to preserve error. See id. The order

denying the motion to appoint an umpire recites that the trial court considered

“the motion, response, reply, arguments of counsel, and other matters of record.’’

The order does not recite that the trial court heard any evidence. The order

denying the motion for summary judgment, the hearing on which was heard at

                                        9
the same time as the motion to appoint an umpire, recites as well that the trial

court considered “the motion, response, reply, arguments of counsel, and other

matters of record.” We would not expect oral testimony at a hearing on a motion

for summary judgment. See Tex. R. Civ. P. 166a(c). Finally, on August 12,

2015, Relators filed a statement in compliance with rule 52.7(a)(2) of the Texas

Rules of Appellate Procedure in which they asserted that no testimony was

adduced in connection with the matter complained of. Tex. R. App. P. 52.7(a)(2).

We hold the absence of a reporter’s record of the April 23, 2015 hearing is not

dispositive of this proceeding. See Otis Elevator Co., 850 S.W.2d at 181.

      Whether Relators Waived Condition 12 (The Appraisal Provision)

      Appraisal provisions can be enforced by mandamus.            In re Universal

Underwriters of Tex. Ins. Co., 345 S.W.3d 404, 405, 412 (Tex. 2011) (orig.

proceeding).   In their first issue, Relators argue the trial court abused its

discretion by failing to enforce the appraisal clause in the insurance policy by

denying their motion to appoint an impartial umpire. Relators argue that the only

way Wells could avoid the appraisal clause is to establish waiver and that Wells

failed to establish waiver. For the reasons given below, we agree.

      Wells maintains Relators waived the appraisal clause by destroying the

truck, which he asserts was an act inconsistent with the clause. See Am. Cent.

Ins. Co. v. Terry, 26 S.W.2d 162, 166 (Tex. 1930) (stating that waiver can be

established by conduct of the insurer, including, “(a) Parol waiver; (b) refusal to

                                        10
arbitrate; (c) denial of liability; (d) failure to demand arbitration or appraisal; (e)

acts inconsistent with intention to arbitrate; (f) appointment of prejudiced

appraiser; and (g) improper conduct during appraisement”). Relators respond

that the destruction of the truck had no bearing on the parties’ willingness to

negotiate or on the appraisers’ ability to make their appraisals. We agree with

Relators.    Wells’s attorney, when informed of the destruction of the truck,

nevertheless proceeded with the appraisal process, and Wells’s own appraiser

never complained that the truck’s destruction impeded his ability to make an

appraisal. At most, the destruction of the truck merely complicated the appraisal

process.

       Wells next argues the parties reached the point of impasse when he filed

suit on September 17, 2013, and that, by waiting until February 19, 2014, before

invoking the appraisal clause, Relators waived it. Relators disagree and argue

that the point of impasse, if any, occurred in February 2014 when Wells more

than tripled his demand. Relators also emphasize that Wells thereafter actually

engaged in the appraisal process for more than a year before raising the waiver

argument for the first time in his March 16, 2015 “Third Amended Original

Petition.”

       The Texas Supreme Court has held that to establish waiver of an appraisal

clause, a party must show that (1) an impasse was reached as to settlement

negotiations; (2) an unreasonable amount of time passed after the parties

                                          11
reached an impasse, and (3) the party suffered prejudice due to the delay.

Universal Underwriters of Tex. Ins. Co., 345 S.W.3d at 408, 411–12.             “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.” Id. at 408. An impasse occurs when the parties mutually

understand that neither will negotiate further. Id. at 409.

      We disagree that Wells’s filing suit in September 2013 signaled an

impasse. See Terra Indus., Inc. v. Commonwealth Ins. Co. of Am., 981 F. Supp.
581, 603 (N.D. Iowa 1997) (“Before Terra filed suit, the IRI defendants had no

notice that an impasse had been reached, because only the filing of Terra’s suit

demonstrated Terra’s unilateral conclusion that the parties were at an impasse

when the IRI defendants still anticipated further discussions.”); see also Universal

Underwriters of Tex. Ins. Co., 345 S.W.3d at 409 (citing Terra Indus., Inc., 981 F.

Supp. at 603). Merely fling suit does not inherently signal that the parties have

mutually concluded that all future settlement negotiations would be futile.

      Additionally, Wells subsequently engaged in settlement negotiations in

February 2014. Wells’s own conduct belies his assertion that the parties had

reached an impasse earlier.       See Terra Indus., Inc., 981 F. Supp. at 603.

(observing that the parties “continuing indications of a willingness to seek

agreement on amount-of-loss issues made any delay by the IRI defendants in

                                         12
demanding an appraisal, instead of demanding appraisal immediately after suit

was filed, reasonable under the circumstances”).

      When Relators responded by invoking the appraisal clause on February

19, 2014, Wells never balked on the basis of waiver; just the opposite, Wells

complied with the appraisal clause by appointing his own appraiser. Wells even

made a settlement demand of $100,000 on May 28, 2014, independent of the

appraisal-clause process.    See id. at 604 (“On the undisputed facts that the

parties attempted to continue negotiations immediately before and even after suit

was filed, and the absence of any evidence of prejudice to Terra from the delay,

the court concludes that there was no waiver of appraisal in this case.”). Wells’s

own conduct contradicted his assertion that the parties mutually concluded that

they had reached an impasse in September 2013 when he filed suit.

      Further, waiver cannot be invoked unless Wells can establish prejudice

from any resulting delay. Universal Underwriters of Tex. Ins. Co., 345 S.W.3d at

411. The only evidence of “prejudice” Wells has produced is that “by the time

that [Relators] attempted to invoke the appraisal clause [Wells] only had pictures

to conduct their appraisal.”    The prejudice required, however, is prejudice

following impasse and prior to invocation of the appraisal process, i.e., prejudice

caused by the insurer’s unreasonable delay in invoking the process. See id. at

408, 411–12. Wells has produced no evidence that the destruction of the truck

was the result of any such delay. To the contrary, the only evidence on this point

                                        13
is that Wells did not want the salvage and elected not to retain the truck on April

24, 2013, and that the truck was thereafter released to a salvage company, all of

which occurred long prior to any “impasse” reached between the parties. Wells’s

appraiser, moreover, was in fact able to place a value on the vehicle with

reference to the pictures and specifications provided to him.          As to other

allegations in Wells’s response about loss of use and income during the time he

contends that Relators unreasonably delayed, Wells has provided no evidence

and, as noted by the Supreme Court in Universal Underwriters, Wells could have

avoided any prejudice by invoking the appraisal process himself at any time. Id.

at 411.

      For all the above reasons, we hold there was no unreasonable delay and

no prejudice and, thus, no waiver of the appraisal process by Relators. We

sustain Relators’ first issue and hold that the trial court abused its discretion by

denying their motion to appoint an umpire in compliance with the appraisal

provision.4

      4
       Condition 12 has no trigger defining when a party must invoke it or risk
waiving it. As a practical matter, it appears either party could invoke the
appraisal clause at the moment that serves its purposes best. Wells never
invoked the appraisal clause, sought to proceed on his suit without invoking it,
and, further, wanted to prevent Relators from invoking it. Relators, for their part,
invoked the appraisal clause only when confronted with a demand for $125,000.
While Universal Underwriters shows that despite the absence of a trigger, under
certain circumstances, a party can waive an appraisal clause, see id. at 408,
411–412, we conclude that on the circumstances here, there was no wavier.
                                        14
               The Denial of the Motion for Summary Judgment

      In their second issue, Relators contend the trial court abused its discretion

by allowing Wells’s breach of contract claim to proceed without requiring Wells to

comply with the policy’s appraisal clause as a condition precedent to his suit.

Relators are complaining about the trial court’s denial of their motion for

summary judgment on Wells’s breach of contract claim.

      As with the first issue, whether Wells had to comply with the appraisal

clause would depend on whether Relators had waived it. Once again, Wells

argues Relators waived it. Relators essentially take the position that if they win

on their first issue, that is, that there was no waiver, it would necessarily follow

that they should win on their second issue as well. However, we do not reach

the merits of their motion for summary judgment because we conclude that the

trial court’s order denying Relator’s motion for summary judgment is not

reviewable at this juncture of the case.

      Mandamus is generally unavailable when a trial court denies summary

judgment, no matter how meritorious the motion. In re United Servs. Auto. Ass’n,

307 S.W.3d 299, 314 (Tex. 2010) (orig. proceeding) (quoting In re McAllen Med.

Ctr., Inc., 275 S.W.3d 458, 465 (Tex. 2008) (orig. proceeding)).               Only

extraordinary circumstances will justify granting mandamus relief when a trial

court erroneously denies a motion for summary judgment. Id. The extraordinary

circumstances in United Services Automobile Ass’n were: (1) a previous trial by

                                           15
a trial court without jurisdiction, (2) an appeal to an appellate court and then to

the supreme court to get that error corrected, and (3) a proposed second trial on

a claim barred by limitations.       Id.   In granting mandamus relief based on

extraordinary circumstances in that case, the supreme court noted: “Two wasted

trials are not ‘[t]he most efficient use of the state’s judicial resources.’”    Id.

(quoting CSR Ltd. V. Link, 925 S.W.2d 591, 596 (Tex. 1996) (orig. proceeding)5).

Relators have made no comparable showing of extraordinary circumstances.

Expressing no opinion on the merits of the trial court’s order denying Relators’

motion for summary judgment, we hold that mandamus does not lie to review

such an order.

      Appraisal will set the amount of loss conclusively, and may dispose of

Plaintiff’s breach of contract claims entirely. See James v. Prop. Cas. & Ins. Co.

of Hartford, No. H-10-1998, 2011 WL 4067880, at *2 n.7 (S.D. Tex. Sept. 12,

2011) (citing In re Allstate Cty. Mut. Ins. Co., 85 S.W.3d 193, 196 (Tex. 2002)

(orig. proceeding) (noting that “if the appraisal determines that the vehicle’s full

value is what the insurance company offered, there would be no breach of

contract,” and concluding that “[a] refusal to enforce the appraisal process here

will prevent the defendants from obtaining the independent valuations that could

counter at least the plaintiffs’ breach of contract claim”)).

      5
       See Raymond Overseas Holding, Ltd. v. Curry, 955 S.W.2d 470, 471
(Tex. App.—Fort Worth 1997, orig. proceeding) (op. on reh’g) (recognizing CSR
Ltd. was superseded by statute allowing interlocutory appeals of orders granting
or denying special appearances).
                                           16
      Appraisal may obviate the need for further litigation, with all of the burdens

and costs of pretrial discovery and the like; “and if not, then in due season what

remains to be litigated can proceed with efficient focus by the parties upon the

specific issues remaining.” James, 2011 WL 4067880, at *2 n.7 (citing Liberty

Nat’l Fire Ins. Co. v. Akin, 927 S.W.2d 627, 629 (Tex. 1996) (orig. proceeding)).

We overrule Relators’ second issue.

                                    Conclusion

      Accordingly, we sustain Relators’ first issue; conditionally grant the

mandamus relief requested by Relators in their first issue; direct the trial court to

vacate its order denying Relators’ motion to appoint an umpire; and direct the

trial court to grant Relators’ motion and appoint an umpire in accordance with

Condition 12 of the insurance policy. We are confident the trial court will comply,

and the writ will issue only if it fails to do so. We have overruled Relators’ second

issue; therefore, their petition is otherwise denied.

                                                        /s/ Anne Gardner
                                                        ANNE GARDNER
                                                        JUSTICE

PANEL: LIVINGSTON, C.J.; GARDNER and MEIER, JJ.

DELIVERED: September 4, 2015

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