The reply to the second query is, “Sure, appraisal might be waived.” The reply to the primary query is rather more tough to reply. In 2010, I wrote Waiver of Proper to an Appraisal in Texas: Extra Arguments, and raised the next questions
I’ve beforehand written about how an insurance coverage firm can waive its proper to appraisal by taking too lengthy to invoke it, however are there different methods an insurance coverage firm can waive its proper to an appraisal? For instance, does an insurance coverage firm waive its proper to appraisal when it acknowledges some however not the entire damages claimed by the insured? What if the insurer anticipatorily breaches the insurance coverage contract?
A pending case in Texas is elevating the identical points. In its response in opposition to the insurer’s movement to compel appraisal, the policyholder, Waco Hippodrome, Inc., contends that the Central Mutual Insurance coverage Firm waived its proper to compel appraisal as a result of substantial delays and inconsistent actions taken all through the litigation course of. Central’s actions, equivalent to agreeing to a number of scheduling orders, participating in in depth litigation discovery, and failing to request an appraisal in a well timed method, have prejudiced the policyholder and rendered appraisal inappropriate at this stage. Additional, unresolved factual points and allegations of unhealthy religion dealing with of the insurance coverage declare necessitate decision by a jury moderately than via an appraisal course of.
To me, apparently the insurer has found out it could lose the case in litigation and is now looking for a “get out of free card” to flee full contract and extracontractual legal responsibility. I highlighted this insurer tactic in Texas Offers Insurers A “Get Out of Jail” Free Card When Appraisal Is Demanded.
A abstract of the policyholder’s factual arguments for waiver embrace the next:
Policyholder Recordsdata Lawsuits Towards Central
- October 5, 2021: Plaintiff filed a lawsuit in Texas state courtroom, later eliminated to federal courtroom.
- November 19, 2021: Events entered a Joint Stipulation of Dismissal with out Prejudice for additional inspections.
- April 1, 2022: Plaintiff filed a second lawsuit in federal courtroom.
- July 20, 2022: Central filed its Authentic Reply with twenty affirmative defenses and a normal problem to protection, with out demanding an appraisal.
Discovery and Preparation for Trial
From August 2022 to July 2024, in depth discovery and trial preparations occurred. A number of depositions, professional designations, and doc productions have been performed. Central by no means demanded an appraisal throughout this era.
Central’s Late Appraisal Request
- April 11, 2024: Central requested an appraisal and abatement for the primary time, topic to reservation of rights.
- June 26, 2024: Central filed a Movement to Compel Appraisal and Movement to Abate Litigation.
- June 28, 2024: Central sought to amend its Reply to allege the coverage was void.
- July 5, 2024: Central observed further depositions.
The policyholder then argued that substantial litigation exercise may end up in a waiver of the correct to appraisal. Additional, Central’s delay of over three years from the preliminary declare and in depth litigation efforts (e.g., quite a few depositions, professional studies) point out waiver.
I beforehand famous that the Texas Supreme Court docket Now Requires Displaying of Prejudice for Waiver of Appraisal Provisions. In its argument, the policyholder famous that it incurred vital prices for professional studies and depositions, which might not have been vital had Central well timed requested an appraisal. It additional argued that Central’s delay and inconsistent positions have prejudiced the plaintiff’s capability to resolve the dispute effectively.
On this case, the policyholder notes that the protection disputes go far past simply causation. Central’s pleadings and depositions reveal quite a few factual disputes relating to protection. The policyholder argues that these should be resolved by a jury earlier than any appraisal. Examples embrace disputes over the interval of restoration and protection of particular damages (e.g., roof tiles, Sony projectors, theater furnishings).
I’m curious whether or not the insurer will agree that the interval of restoration is a protection challenge. I mentioned this challenge beforehand in Blockbuster New York Appraisal Resolution Impacts Causation and Interval of Restoration Determinations, and in Shaun Marker’s put up, Sure Protection Disputes Beneath New York Regulation Might Not Stop An Appraisal Demand.
The policyholder lastly argued that appraisal and abatement of the litigation have been inappropriate due to judicial economic system. They reasoned that conducting an appraisal with out resolving key factual disputes can be ineffective and a waste of money and time. They argued that courts typically don’t abate litigation for appraisal when protection questions, which end in no protection in any respect, stay unresolved. Additional, the policyholder asserted extra-contractual (unhealthy religion) claims that can not be addressed via appraisal. Resolving these claims requires a trial to find out the underlying factual points.
The underside line for events wishing to hunt appraisal and keep away from waiver of that proper is to boost the potential for appraisal being the most effective avenue for declare decision as early as attainable. Ready years after loss or the initiation of litigation invitations this dispute. I’ll report again on this energetic case end result later.
In case you are concerned with appraisal points equivalent to this, please don’t miss the upcoming IAUA occasion in Park Metropolis on July 24-25, as famous in yesterday’s put up, The IAUA Is Coming to Badgerland—A Can’t-Miss Alternative for Appraisers and Umpires.
Thought For The Day
Higher three hours too quickly than a minute too late.
—William Shakespeare