On August 27, 2015, the Fifth Court of Appeals, Dallas, Texas
denied GuideOne National Insurance Company’s petition for writ of mandamus
in a case alleging bad faith and breach of contract. The petition stems
from an action in the trial court where the insurance company asked the
judge to compel an appraisal, as they frequently do. The problem here
was with the insurer’s
timing in seeking to compel appraisal.
By way of background, the plaintiff’s property sustained both fire
hail damage. GuideOne paid part of the fire damage claim but refused to pay
the wind and hail claims. In an attempt to resolve their dispute over
the wind and hail damage claims, the parties mediated; however, mediation
Subsequent to the failed mediation, the insurer sought to invoke a portion
of its commercial insurance policy provision that provides, “If
the Named Insured and the Company fail to agree on the amount of the loss,
the Company can demand that the amount of loss be set by appraisal.”
The insurer wanted an independent appraisal undertaken to determine the
amount of property damage. However, the court found that
appraisals of this kind are intended as
a pre-suit remedy and must be timely invoked, and that by waiting until
after litigation had proceeded through a mediation, GuideOne invoked appraisal too late.
Hoping the Court of Appeals would let it get away with this behavior, GuideOne
sought interlocutory relief in the form of a petition for mandamus. But
the request rightfully fell on unsympathetic ears. The
Dallas Court of Appeals found that the insurance company had waived its right to seek appraisal
when it waited until after the mediation to invoke this policy provision.
This is a meaningful win for insureds because it means there is more precedent
regarding the timeframe within which an insurer will be reasonably allowed
to request an appraisal. This ruling further protects a consumer’s
right against insurance company bad faith practices, and makes it less
likely other insurance companies will wait until after mediation before
deciding to invoke appraisal.
Read the Court’s opinion