Plaintiff Cannot Checkmate Carrier With Pre-Suit Appraisal Reference

Originally published by Todd Key.

In the recent case of In re Allstate Vehicle & Prop. Ins. Co., 09-18-00024-CV, 2018 WL 1003794, (Tex. App.—Beaumont Feb. 22, 2018, no pet. h.), the Beaumont Court of Appeals confirmed per curiam that insurance carriers do not waive their right to appraisal in response to pre-suit demands by claimants.

With the exception of an unusual reference to appraisal by the claimant, the facts of the case were relatively typical. After an initial inspection and payment on a claim for storm damages, the Plaintiff hired an attorney and sent a demand letter for an amount in excess of the original claim adjustment. In the demand letter, the claimant’s attorney referenced the appraisal provision in the policy and stated:

If you wish to appraise this loss under the policy’s appraisal condition, please notify us of the identity of your appraiser within twenty (20) days of your receipt of this letter. Otherwise, we intend to move forward, in reliance on your decision, with [litigation]  . . . .

After more than a month had passed, the insurance carrier responded to the letter rejecting the demand. The carrier’s letter did not specifically reference the appraisal provision of the policy, but noted that the claimant could not file an action until she had complied with all policy provisions. The claimant then filed suit, and the carrier responded by invoking appraisal. After the claimant did not respond to the carrier’s appraisal demand, the carrier filed a motion to compel appraisal. The trial court denied the carrier’s motion, and the carrier filed its petition for mandamus in the Beaumont Court of Appeals.

The crux of the mandamus argument before the Court of Appeals was whether the insurance carrier, by failing to name an appraiser in response to the claimant’s pre-suit demand letter, had waived its right to invoke appraisal after the litigation had begun. The answer from the Court of Appeals was that the carrier had not so waived its right. Under Texas law, waiver is an intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right. The Court of Appeals noted that in the absence of any time limitations or other restrictions in the policy, the carrier was not required to invoke appraisal before litigation. There had been no unreasonable delay and no waiver, and the Court of Appeals acknowledged the difference between appraisal as a loss-setting procedure as opposed to an alternate forum for the dispute.

Although ordinary in many respects, this opinion unambiguously restricts the ability of creative plaintiffs’ attorneys to circumvent appraisal through cleverly worded pre-suit demand letters. The demand letter in this case stopped just short of an outright invocation of appraisal, and the clear intent was to force the carrier’s hand before suit was filed. This opinion forecloses that strategy, even when the trial date was no more than three months away from the date the carrier’s motion to compel appraisal was filed.

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