When Is “Too Late” for an Insurance Company to Invoke Appraisal?

J. Ryan Fowler | Property Insurance Coverage Law Blog | July 10, 2018

I often take calls from potential clients and public adjusters frustrated with an insurance company that has denied, delayed and then underpaid a claim and then ultimately invoked appraisal. Often the insured or public adjuster states that multiple inspections have taken place with substantial correspondence between the parties and the question is, “can the insurance company do that? It has been too long and time and resources have been wasted. Can we argue the insurance company waived the right to invoke appraisal?”

The San Antonio Court of Appeals recently looked at this issue in a case in litigation.1 In the case at issue the insurance company invoked appraisal three months after being ordered to be ready for trial; after multiple depositions had been taken; experts had been designated and multiple motions filed. The insured refused to participate in appraisal and argued the insurer had waived the right to invoke appraisal. The trial court denied insurer’s motion to compel appraisal and the insurer filed a writ of mandamus to the appellate court.

The appellate court first looked at the nonwavier clause in the policy. The insurance company argued that it was determinative of all issues since the alleged wavier of the appraisal provision was not done in writing. The nonwaiver clause read:

This policy contains all the agreements between you and us concerning the insurance afforded….This policy’s terms can be amended or waived only by endorsement issued by us and made a part of this policy.

The court held that the inclusion in an insurance contract of a broadly-worded nonwaiver clause such as the one in this case is not dispositive, as a matter of law, on whether the insurer waived any of its rights under the contract.

The appellate court next addressed prejudice to the insured. The insured argued that the financial impact of the insurance companies conduct exceeded $145,000 to the insured. The insured pointed out that several depositions, motions, expert retentions, mediation and even a declaratory act have been required because of insurers litigation conduct and the case had actively been litigated for months between the parties.

The court looked at the fact that the appraisal provision allowed either party to invoke appraisal and that if a party knows of its right to request an appraisal and does not make that request, it is difficult to attribute the costs incurred to the opponent.

The court ultimately held that the trial court erred by denying the insurance companies motion to compel appraisal because the insured did not show prejudice.

So, the answer ultimately is fact intensive for a case but often: Yes, the insurance company can invoke appraisal and they didn’t waive the right to appraisal.
1 In re American National Prop. and Cas. Co., No. 04-18-00138-CV (Tex. App. – San Antonio, July 5, 2018).

Texas Case Shows Clarity is Key in the Appraisal Process

Jennifer L. Gibbs and Michael C. Upshaw | Zelle | July 5, 2018

A recent Texas state appellate court decision confirms the importance of clarity in the appraisal process as to the issues being considered by an appraisal panel. In Texas Windstorm Insurance Association v. Dickinson Independent School District,[1] the 14th Court of Appeals in Houston reversed and remanded a post-appraisal award summary judgment ruling in favor of TWIA policyholder, Dickinson ISD, holding: “Standing alone, the Appraisal Award simply does not provide sufficient evidence from which a court may determine as a matter of law which Appraisal Award damages, if any, were caused by a covered peril.”[2]


The Dickinson ISD case stemmed from alleged windstorm damage sustained during Hurricane Ike in September 2008. The Texas Windstorm Insurance Association made multiple payments under its policy for damage to Dickinson ISD buildings during the following three years. After Dickinson ISD demanded recovery for overhead and profit, statutory interest, and attorney and expert fees, TWIA invoked the appraisal provision of the policy. By the time the appraisal panel inspected the buildings, five years had passed since the date of the storm. TWIA contended that there was no indication of wind damage to support Dickinson ISD’s claim, and no wind-created openings that caused interior damage to the buildings. TWIA also asserted that the policyholder had already recovered for certain damages, which were covered under manufacturer warranties.

An appraisal award was eventually executed awarding Dickinson ISD nearly $11 million. The award listed a date of loss consistent with the date of Hurricane Ike and described the type of loss/claim as “Appraisal for Hurricane wind damage.” The award also stated that the appraisers, “carefully examined the damages pursuant to the loss described herein above …” While the award was accompanied by 25 pages listing the replacement cost value, depreciation and actual cash value of 134 buildings and other items, it did not indicate that the damages listed were caused solely by wind or other covered perils during Hurricane Ike. The court was then asked whether the award alone was sufficient to establish conclusively that Dickinson ISD suffered covered losses in the amount awarded.

Reliance on State Farm Lloyds v. Johnson

The Dickinson ISD case provided the appellate court with an opportunity to analyze the Texas Supreme Court’s oft-cited decision in State Farm Lloyds v. Johnson.[3] The most thorough analysis of the appraisal process by the highest court in Texas, Johnson makes clear that although the “line between liability and damage questions may not always be clear, … the scope of appraisal is damages, not liability.”[4] But the Johnson court also recognized “when different types of damage occur to different items of property, appraisers may have to decide the damage caused by each before the courts can decide liability.”[5] It is this distinction between causation as a liability issue and causation as a damages issue that the court was tasked with addressing in TWIA v. Dickinson ISD.

It is important to note that Dickinson ISD only submitted four pieces of summary judgment evidence to the trial court: (a) a copy of the TWIA policy, (b) the Appraisal Award, (c) TWIA’s answer, and (d) TWIA’s letter invoking the appraisal process. Forty other exhibits, including deposition excerpts from the court-appointed umpire, were filed late and not considered. Hence, on the issues of causation and damages, for which Dickinson ISD sought summary judgment, the only evidence before the court from the actual appraisal process was the appraisal award itself.

The appellate court reversed summary judgment in favor of Dickinson ISD and held that the appraisal award alone was insufficient for Dickinson ISD to carry its burden of proving causation and damages as a matter of law. In a footnote addressing a portion of the appraisal award, the court explained that numerous interior rooms were listed as having sustained damage. However, the court observed that there was nothing in the appraisal award to indicate what type of damage each line item represented. “For example, nothing indicate[d] whether the dollar amounts reflect[ed] damage from wind as opposed to flood, rain, or mold, all of which [were] excluded under the policy.”[6]

The court also stated that a factfinder could reasonably infer that some of the damages were caused in the five years after Hurricane Ike, based on the evidence submitted by TWIA.


The court made clear, quoting Johnson, that the analysis of an appraisal award will be made on a case-by-case basis: “Whether the appraisers have gone beyond the damage questions entrusted to them will depend on the nature of the damage, the possible causes, the parties’ dispute, and the structure of the appraisal award.”[7]

The lessons of TWIA v. Dickinson ISD are simple and clear. Both insurers and insureds must ensure that their designated appraisers obtain clarity going into the appraisal process as to the scope of the issues being considered. The court’s ruling indicates that boilerplate awards are insufficient under Texas law to prove whether damages were caused by a covered peril. This is true even where the award lists a specific date of loss and a specific type of loss, such as “Hurricane wind damage.”

The lessons of TWIA v. Dickinson ISD are also easily addressed. Both parties to the appraisal process can provide their appraisers with the specific questions or issues to be addressed by the panel consistent with the policy and applicable Texas law. For example, when there are questions as to date of loss and covered versus excluded damage, the appraisal panel could be asked:

  • Was there a [hail] event on the reported date of loss?
  • Did the [hail] event cause physical loss or damage covered by the policy?
  • State the replacement cost and actual cash value of the physical loss or damage caused solely by the [hail] event on the reported date of loss?

The parties could agree to use an agreed appraisal protocol that provides the appraisal panel with guidance as to the issues to be addressed, along with any other terms that could prove useful in ensuring that the panel issues a clear award that brings the dispute to conclusion. That objective serves the interests of all involved parties.

Absent such clarity, TWIA v. Dickinson ISD provides a basis to question awards that are not clear as to the issues addressed by the appraisal panel. However, the opinion does not give insurers a free pass to ignore an appraisal award anytime there is evidence of noncovered damages. Had Dickinson ISD timely submitted additional summary judgment evidence showing that the damages listed in the award were only for covered damages, the result may have been different. And nothing in the court’s decision precludes an insured from submitting such evidence at trial.

Insurers and insureds have remedies at their disposal to seek clarification of an appraisal award. Where the facts underlying an appraisal indicate that noncovered damages are included in an appraisal award, an insurer could first exercise its right to seek prelitigation depositions. Texas Rule of Civil Procedure 202 allows for depositions to investigate a claim or suit. The purpose of such a deposition in this situation would be to determine whether to file a lawsuit seeking to set aside an appraisal award.

But this approach is not without risk. It is currently well established under Texas law that full and timely payment of an appraisal award precludes recovery of penalties and interest under the prompt payment provisions of the Texas Insurance Code.[8] Whether seeking clarification prior to paying an award would expose a carrier to extracontractual damages appears to be an unresolved issue under Texas law. However, the reasoning set forth in TWIA v. Dickinson ISD, provides at least some support for the argument that seeking clarification prior to tendering payment of an appraisal award should not expose carriers to liability for extracontractual damages.

But the way to avoid all of these issues is very simple. The parties to the appraisal process should cooperate in educating the appraisal panel as to the issues they are being asked to address and the importance of issuing a detailed appraisal award identifying the cause of loss for each damage item, perhaps with the use of an appraisal protocol. As illustrated by TWIA v. Dickinson ISD, boilerplate awards can frustrate the very purpose of appraisal, which is to provide the parties with an efficient and effective means of resolving a dispute over the amount of a covered loss.


[1] Texas Windstorm Ins. Ass’n v. Dickinson Indep. Sch. Dist., 14-16-00474-CV, 2018 WL 2436924, at *1 (Tex. App.—Houston [14th Dist.] May 31, 2018, no pet. h.).[3] 290 S.W.3d 886 (Tex. 2009).

[2] Id. at *11.

[3] 290 S.W.3d 886 (Tex. 2009).

[4] Johnson, 290 S.W.3d at 890.

[5] Id. at 886.

[6] Dickinson Indep. Sch. Dist., 2018 WL 2436924, at n.13.

[7] Id. at *10.

[8] Nat’l Sec. Fire & Cas. Co. v. Hurst, 523 S.W.3d 840, 847 (Tex. App.—Houston [14th Dist.] 2017, pet. filed), reh’g denied (July 25, 2017).

Post-Menchaca: Is the Independent Injury Rule Dead or Alive?

Kay Morgan | Property Insurance Coverage Law Blog | June 17, 2018

Having undertaken to write about “all things Menchaca,” this month is a review of five cases post-Menchaca which contradict one another in deciding whether the independent injury rule is dead or alive. Looking at the first set of cases post-Menchaca, it appears that the answer to that question is a long way off.

In my last blog post, The Independent Injury Rule is Dead, the Fifth Circuit Court of Appeals in Aldous v. Darwin National Assurance Company, cited the April 13, 2018, USAA Tex. Lloyds Company v. Menchaca opinion and declared,

Menchaca repudiated the independent injury rule, clarifying instead that “‘an insured who establishes a right to receive benefits under an insurance policy can recover those benefits as ‘actual damages’ under the statute if the insurer’s statutory violations causes the loss of benefits.’”1

Aldous involved a legal malpractice suit with a multitude of issues, counterclaims and cross-appeals.2 The underlying suit concerned litigation over two trusts and following the finality of that litigation, Aldous’ client brought a malpractice suit against Aldous which triggered her professional liability insurer, Darwin’s involvement. Aldous was successful in the malpractice suit but then sued Darwin alleging that Darwin did not pay enough to fully cover the costs of her malpractice defense. Aldous alleged against Darwin breach of contract, breach of the duty of good faith and fair dealing and violations of the Texas Insurance Code, among others. The court found that Aldous’ Chapter 541 Texas Insurance Code claims were barred as a matter of law under Parkans International LLC v. Zurich Insurance Company3 because Aldous had not established an injury independent of the injury that would have resulted from a wrongful denial of policy benefits. Aldous appealed the results of her suit against Darwin and in particular, asked the Fifth Circuit to reverse Parkans. After finding that “Menchaca repudiated the independent injury rule” as quoted above, the Fifth Circuit wrote: “[p]ut simply, Parkans’s categorical bar does not hold up in the face of Menchaca.4

Subsequent to Aldous, the Amarillo Court of Appeals in Turner v. Peerless Indemnity Insurance Company,5 declared the opposite of the holding in Aldous by the Fifth Circuit. The Turner court held: “[t]he independent injury rule is alive and well, as reiterated by the Texas Supreme Court in its recent Menchaca opinion and recognized by us in Abdalla, 2018 Tex. App. LEXIS 3358, at *9-10.” Turner is the first appraisal case that has applied the April 13, 2018, Menchaca opinion. Following appraisal, as is the routine with all insurance companies, Peerless moved for summary judgment on all of Turner’s claims and the court granted it. The Amarillo Court of Appeals affirmed the trial court’s dismissal by summary judgment of Turner’s breach of contract and extra-contractual claims. In affirming the dismissal of the extra-contractual claims, the court determined that Turner had failed to provide any evidence of an independent injury upon which to base his extra-contractual claims aside from the damages represented by supposedly lost policy benefits. In affirming the trial court’s granting of summary judgment on Turner’s extra-contractual claims, the Turner court made an extensive review of Menchaca’s discussion of the independent injury rule.6 The court rejected Turner’s contention that the damages in the policy benefits he lost due to Peerless’ statutory violations can be recovered under the bad faith statute, and instead found:

As can be seen, his [Turner’s] argument remains focused on the benefits recoverable under the policy, which benefits have already been paid. But, under what we perceived to be Menchaca’s explanation of the independent injury rule, his injury cannot be so predicated. It must be independent of what he claims he lost ‘out on’ under the policy. Thus, the decision to grant summary judgment upon the extra-contractual claims urged by [Peerless] has the support of at least one ground, and we overrule the second issue.7

Thus, the Amarillo Court of Appeals in Turner finds that the independent injury rule is alive and well. The same panel of Amarillo judges in Turner wrote the opinion in Abdalla, another appraisal case, and in relevant part, stated:

The need of an independent injury to support extra-contractual causes of action was reaffirmed in Menchaca. After discussing its own precedent, the Supreme Court first reiterated that ‘an insured can recover actual damages caused by the insurer’s bad faith conduct if the damages are separate from and…differ from benefits under the contract.’” [Cites omitted.] Then, it observed that damages were recoverable ‘only if [they] are truly independent of the insured’s right to receive policy benefits.’8

Two more opinions citing Menchaca were handed down on June 6, 2018: another Fifth Circuit opinion, Certain Underwriters at Lloyd’s of London v. Lowen Valley View,9 and another Texas Supreme Court case, State Farm Lloyds v. Fuentes.10

In Lowen Valley, the insurer brought a declaratory judgment action that it owed no benefits under a commercial property insurance policy and the insured, Lowen Valley, counterclaimed for declaratory judgment, breach of the insurance contract, and violations of the Texas Insurance Code. The district court granted summary judgment in favor of the insurer on all claims and the Fifth Circuit affirmed. In reaching that decision, the Fifth Circuit found that Lowen Valley’s Texas Insurance Code claims were based on unpaid coverage benefits rather than some independent injury and when Lowen Valley’s breach of contract claim fell, so did its extra-contractual claims. The appellate court wrote:

See USAA Tex. Lloyds Co. v. Menchaca, 14-0721, 2018 WOL 1866041, at *5 (Tex. 13, 2018) (“[A]n insured cannot recover any damages based on an insurer’s statutory violation if the insured had no right to receive benefits under the policy and sustained no injury independent of a right to benefits.”).11

The final case this blog, State Farm Lloyds v. Fuentes, was a Hurricane Ike suit and following a trial, the trial court disregarded two jury’s findings that the Fuenteses had breached the insurance contract as well as State Farm and that the Fuenteses had breached it first. The trial court rendered judgment for the Fuenteses, awarding them $18,818.39 for amounts owed under the policy, $27,000 for mental-anguish damages, $7,527 in statutory penalties, and more than $300,000 in attorney’s fees. State Farm appealed. Houston’s Fourteenth Court of Appeals affirmed the trial court judgment. State Farm appealed again. The Texas Supreme Court held:

[We] conclude simply that the considerations that led us to remand for a new trial in Menchaca similarly dictate that State Farm’s first issue—whether the trial court properly disregarded some of the jury’s findings—should be remanded to the court of appeals for reconsideration in light of MenchacaSee TEX. R. APP. R. 60.2(f).12

Interestingly, both Fuentes and Menchaca involved a trial court’s disregarding specific jury findings in reaching their judgments and both have been remanded for new trial. In Fuentes, the trial court disregarded two jury findings that Fuentes breached the contract and breached it first before State Farm, who was also found to have breached the contract. The Fuentes court remanded the suit to the court of appeals in light of Menchaca. In Menchaca, the trial court disregarded jury question No. 1 in which the jury found that USAA had not failed to comply with its obligations under the policy. The supreme court found that that the trial court erred in disregarding the jury’s answer to question No. 1. The court also held that a plaintiff does not have to prevail on a separate breach of contract claim to recover policy benefits for a statutory violation. Menchaca was remanded to the trial court for a new trial.

In addition to these two appeals, more new cases relying on Menchaca will continue to trickle down and, no doubt, that trickle will bring more new interpretations. It is still too early to definitively declare whether the independent injury rule is dead or alive.
1 Aldous v. Darwin National Assurance Co., No. 16-10537 (5th Cir. May 11, 2018)(emphasis added).
2 See Aldous v. Darwin National Assurance Co., 851 F.3d 473 (5th Cir. 2017).
3 Parkans International LLC v. Zurich Ins. Co., 299 F.3d 514 (5th Cir. 2002).
4 Id. (emphasis added).
5 Turner v. Peerless Indemnity Ins. Co., 2018 WL 2709489 (Tex. App.—Amarillo June 5, 2018).
6 Id. at 2018 WL 2709489, at ** 3-5.
7 Id. at 2018 WL 2709489, at *5.
8 Abdalla v. Farmers Ins. Exch., 2018 WL 2220269, at * 5 (Tex. Civ.—Amarillo, May 14, 2018).
9 Certain Underwriters at Lloyd’s of London v. Lowen Valley View, LLC, No. 17-10914 (5th Cir. June 6, 2018).
10 State Farm Lloyds v. Fuentes, No. 16-369, 2018 WL 274919 (Tex. June 6, 2018).
11 Lowen Valley at 8. (emphasis in the original).
12 Fuentes, 2018 WL 2749719, at *2.

Texas Insurance Appraisal: Who is Grading Insurance Company Papers and the Policies They Sell?

Emily Marlowe | Property Insurance Coverage Law Blog | June 19, 2018

It is no secret that there are problems with the appraisal process. The ever-growing issues with appraisal include, but certainly are not limited to, exorbitant expenses pushed onto policyholders and insurance companies, gamesmanship, and the never-ending questions of:

  • When is appraisal appropriate
  • What can be addressed and assessed within appraisal, and
  • Whether a policyholder’s claims for bad faith, fraud, and violations of the Texas Insurance Code stand once appraisal is completed.

There are other burdens, problems, and uncertainties with appraisal, as discussed more in-depth in my previous article, The Status of Appraisal in Texas Insurance Policies & Claims.

If we look back over the past fifteen years of insurance claims and litigation in Texas, it becomes clear that appraisal was not a problem, solution, or commonly used tactic until around 2014. Since then, insurance companies have increasingly used the appraisal provision as a sword and shield – a sword to kill the claim, and shield to prevent liability for the bad acts of their own personnel.

This behavior is not okay!

Insurance companies need to be accountable for their actions. The truth is, the only party that suffers in appraisal is the policyholder – the people who were promised supplemental payment in December that they didn’t receive until June; those people whose claims have been unnecessarily delayed, who are still sitting in a home with a leaky roof at the beginning of another hurricane season; the people without the financial resources or the knowledge of who to use as their appraiser. People who have tried their darndest to get their claim resolved themselves, but are finally forced to retain an attorney because the insurance company continues to delay the claim.

The question becomes why. Why have problems with appraisal and the appraisal provisions continued to increase? What can we do about it? How can we change it? How did we get here?

For this problem we must look to the root of the cause: The appraisal provisions in insurance policies. Over the past several years, insurance companies have been amending their policies and changing the provisions to add language that limits policyholders rights, decreases their remedies, and forces them to pay for a service that should be included as part of the insurance contract they enter into.

The problem has been that policyholders – your run of the mill homeowner and business owner – do not realize that their policies have been changing little by little. The reason this has largely gone unrecognized is because these policy changes are not in exchange for a reduction in premium or deductible. Therefore, insurance agents may have not be aware that any substantive change to the policy and its provisions has occurred. With hundreds of policy forms used in Texas, it’s impossible for an agent to review every line of every policy they put in place. If there was a significant change in the deductible or premium amounts, it may tip the agent off that the policy is different, but if not, they may never know.

The insurance companies certainly aren’t telling policyholders that their policy is changing to reduce coverage and limit their rights and remedies. Yet, year after year insurance companies are filing policy endorsements and amendments with the Texas Department of Insurance to do just that – reduce policy coverage, limit policyholder rights, and impose greater burdens on policyholders if a loss occurs.

These policy changes generally aren’t obvious to an untrained eye – the changes are hidden in the fine print of the Amendments, Endorsements, and Exclusions.

The problem is that Texans aren’t aware of these issues and changes. How are insurance companies changing their policies without clearly alerting their insureds to the changes and their effect on future claims? For insurance companies the process is simple, they just submit their proposed policy changes to the Texas Department of Insurance for review and approval.

It’s a fairly simple process that has happened repeatedly the past many years. A simple search generates thousands of examples, where policy language was significantly altered to reduce coverage, reduce rights and remedies, and impose burdens on policyholders. Examples of this can be found below:

  • Exhibit 1 – In 2015, State Farm proposed to amend its policy language to significantly alter the appraisal provision. Here, you will see State Farm’s former appraisal provision, which was 1 simple paragraph in the left column compared with State Farm’s proposed amendment, which increased their appraisal provision from 1 paragraph to over 2 pages of text and added numerous conditions, stipulations, and burdens for the policyholder. This language was approved, and policyholders had no clue.
  • Exhibit 2 – In 2014, Foremost Insurance proposed to amend its policy language regarding loss settlement and appraisal. Page 2 says “old” at the top, which shows the previous policy, a single page of text regarding loss settlement. However, pages 3-4 that say “new” at the top and clarify that the underlined language is new added requirements. At the bottom left of page 3 the newly proposed appraisal provision begins, and continues on for the next 2 pages and includes extensive and burdensome appraisal impositions, requirements, and confusing rules. This language was approved, and policyholders had no clue.
  • Exhibit 3 – In 2015, Allstate proposed to amend its endorsements regarding duties after loss and appraisal. Page 3 of this Exhibit shows how Allstate added in nearly 10 requirements that a policyholder must comply with in the event of a loss, including sending a signed sworn to proof of loss, submit to an examination under oath, and to provide Allstate with access to the property “as often as we reasonably require” – this means Allstate could request to inspect the property 10 times, 20 times, 30 times never offering to pay, but policyholders are required to allow them to do so. The proposed amended language on appraisal starts on page 5 – its quite burdensome and continues on through the end of page 6. This language was not in their previous policy form, that’s why its all in red.

The foregoing are just a few examples that are publicly accessible through the Texas Department of Insurance. These proposed amendments were all approved and are now in effect. Maybe your policy provides less rights today than a few years ago – do you know?

Insurance policies can vary, but to consistently reduce rights, limit recoveries, and leave insureds empty handed with nowhere to turn is wrong. Someone needs to be accountable, someone needs to step up. It’s time to change this system, and facilitate a more transparent insurance process.

Where is the oversight?

Who is grading the insurance companies’ papers?

Who is protecting the rights of the policyholders?

How many rights does an insured have to lose before they realize it?

When will the mortgage companies wake up, and act to ensure that their interests in properties are protected?

Who is going to finally step up to do the right thing?

When Is a Demand for Appraisal Too Late?

J. Ryan Fowler | Property Insurance Coverage Law Blog | May 8, 2018

I often hear from insureds that have been negotiating with their insurance company for a period of time when the insurer suddenly demands appraisal. The insureds do not want to go to appraisal and the first question is always, “Can the insurance company do that?” followed by “This claim has been going on for months, isn’t it too late?” My usual answer is that in Texas the insurance company can force appraisal before litigation if it is part of the insurance policy. However, when an insurance company demands appraisal while in litigation the answer often depends on the facts of the case.

Last week the Court of Appeals of Texas, Fort Worth, denied mandamus and found that a trial court that denied Allstate’s motion to compel appraisal did not abuse its discretion.1 The appellate court looking at the facts of the case had to decide if Allstate had waived the right to appraisal. The insured had to establish that Allstate had engaged in intentional conduct inconsistent with claiming the right to appraisal.

The court noted that simply a delay in invoking appraisal can be one aspect, or factor, of a wavier-by-conduct analysis. The court looked at the fact that Allstate had wrongfully removed the action to Federal Court; conducted six inspections of the property at issue—four by Allstate adjusters and two by Allstate’s experts; Allstate had agreed to a trial date; Allstate then moved to compel a seventh inspection by another expert for the express purpose of the new expert testifying at trial; Allstate’s attorneys then sought an extension for expert designations for the new expert witness.2

The appellate court then addressed Allstate’s conduct regarding the timing of an impasse regarding the party positions on the amount of loss in the claim. The insured argued the impasse was reached, at the latest, on May 9, 2017, when Allstate made a Texas Rule of Civil Procedure 167 offer of $4,000, and the insured rejected the offer and for the third time stated the loss to be over $19,0000. Allstate argued that no impasse was reached until August 14, 2017, because Allstate sent a settlement offer of $24,000 to the insured to settle all claims and give a full release. The court pointed out that Allstate was essentially arguing that despite its litigation conduct it may at any point trigger a new point of litigation by simply making a settlement offer that is requested. The court rejected this argument and agreed with the trial court that, rather than talking settlement, Allstate was “doing tactical maneuvering in the lawsuit.” The court pointed out the distinction between settlement negotiations as a lawsuit strategy and negotiations about the amount of loss.3

Ultimately the court held that Allstate cannot make a settlement offer to pay money in exchange for the dismissal with prejudice of the insured’s claims and then argue that its settlement offer constituted “good faith negotiations concerning the amount of loss suffered by the insured.”4

Waving the right to appraisal will continue to be a fact intensive analysis once litigation has commenced, but in this case Allstate’s eleventh-hour demand was deemed too late.
1 In Re Allstate Vehicle and Property Ins. Co., No. 02-17-00319, 2018 WL 2069185 (Tex. App.—Fort Worth, May 3, 2018).
2 Id.
3 Id.
4 Id. citing Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404 (Tex. 2011).