James F. Willeford v. Privilege Underwriters Reciprocal Exchange

• Court: Louisiana Court of Appeal
• Decided: September 27, 2024
• Docket: 2024-C-0489
• Status: Published

Opinion

JAMES F. WILLEFORD * NO. 2024-C-0489

VERSUS * COURT OF APPEAL PRIVILEGE UNDERWRITERS * RECIPROCAL EXCHANGE FOURTH CIRCUIT * STATE OF LOUISIANA *******

APPLICATION FOR WRITS DIRECTED TO CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2023-03505, DIVISION “B” Honorable Marissa Hutabarat, ****** Judge Sandra Cabrina Jenkins ****** (Court composed of Judge Sandra Cabrina Jenkins, Judge Tiffany Gautier Chase, Judge Rachael D. Johnson)

John W. Waters, Jr. David E. Walle BIENVENU, FOSTER, RYAN & O’BANNON, LLC 1100 Poydras Street, Suite 2870 New Orleans, LA 70163

COUNSEL FOR PLAINTIFF/RELATOR

Mark C. Dodart Virginia P. Stewart PHELPS DUNBAR, LLP Canal Place | 365 Canal Street, Suite 2000 New Orleans, Louisiana 70130

COUNSEL FOR DEFENDANT/RESPONDENT

WRIT GRANTED. JUDGMENT VACATED. SEPTEMBER 27, 2024 SCJ TGC RDJ

The plaintiff/relator, James F. Willeford, seeks review of the trial court’s

July 29, 2024 judgment granting in part, and denying in part, his Motion for

Appointment of an Umpire. The trial court denied the plaintiff’s request for

appointment of an umpire and ordered the defendant, Privilege Underwriters

Reciprocal Exchange, to select an appraiser pursuant to the appraisal provision in

the homeowners’ policy issued to the plaintiff. For the following reasons, we grant

the writ application and vacate the trial court’s judgment.

PROCEDURAL HISTORY

Plaintiff, James F. Willeford, filed suit against his homeowners’ insurer,

Privilege Underwriters Reciprocal Exchange (PURE), alleging that PURE failed to

adequately reimburse him for damages sustained to his house as a result of

Hurricane Ida. He asserted that he and PURE could not agree on the amount of the

loss. Prior to filing suit, the plaintiff invoked the appraisal provision of the

homeowners’ insurance policy and requested his claim be submitted to the

1 appraisal process. PURE refused to participate, averring that invocation of the

appraisal provision was premature.

After suit was filed, the plaintiff filed a Motion for Appointment of an

Umpire. He alleged that he had demanded appraisal pursuant to the insurance

policy because PURE would not pay the damages he alleged he sustained as a

result of the hurricane. The plaintiff further asserted that PURE had waived its

right to name an appraiser, and thus, the plaintiff was entitled under the appraisal

provisions of the insurance policy to have an umpire appointed to determine the

amount of damages to which plaintiff was entitled. The policy provided if the

insured and insurer failed to agree on the amount of the loss, either may:

Demand an appraisal of the loss. In this event, each party will choose a competent impartial appraiser with no financial interest in the outcome of the decision within twenty (20) days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within fifteen (15) days, you or we may request that the choice be made by a judge of a court of record in the state where the residence premises is located. The appraisers will separately set the amount of the loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of the loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of the loss. A decision agreed to by the appraisers is not binding.

The plaintiff included numerous documents with his motion, including a

portion of the homeowners policy that provided that PURE would “pay the

reconstruction cost for your dwelling, even if this amount is greater than the

coverage limit shown for that location on your declaration.” The plaintiff also

affixed an email thread between himself and PURE’s adjuster concerning his

request to invoke the appraisal provision. The email string reveals that the plaintiff

made his request on December 14, 2022. The adjuster responded that she would

review the policy and advise the plaintiff of PURE’s response to the request for an

2 appraisal. On January 3, 2023, PURE issued a letter advising the plaintiff that

appraisal was premature as it had requested an opportunity to re-inspect the

residence and that the request had not been honored.

The plaintiff responded to PURE’s email on January 19, 2023, stating that

although the house had been sold, the new owner would allow an inspection. The

plaintiff stated that PURE’s inspector should have known the fall of the chimney

would likely cause interior damage to the chimney.

On April 12, 2023, PURE sent correspondence to the plaintiff detailing the

initial investigation of the claim revealed $49,709.86 in estimated damages as a

result of Hurricane Ida. PURE indicated after application of the deductible, PURE

issued payment in the amount of $8,229.86 to the relator. PURE noted the plaintiff

sold the home on April 29, 2022. Five months later, PURE received an estimate

totaling $330,674.58. PURE indicated the new estimate prompted a request to re-

inspect the property. PURE averred the re-inspection resulted in a finding that

Hurricane Ida’s winds did not cause racking. PURE noted the new owner

performed extensive renovations to the interior of the building. As a result of the

renovations, PURE determined it lacked the ability to inspect the alleged damage.

PURE concluded no further amounts were owed to the plaintiff under the policy

and declined to participate in appraisal.

The plaintiff responded to PURE’s letter on April 13, 2023, stating that

PURE’s latest inspection report failed to discuss the chimney and the need for the

interior of the chimney to be redone in order to safely put the chimney back into

use. The plaintiff reasserted his request for an appraisal in that correspondence.

In response to the plaintiff’s motion for appointment of an appraiser,

PURE argued that appraisal was not appropriate as the home had been

3 remodeled extensively by the new owner, the damage could not be

inspected, and any damage to the chimney below the roof line would not be

covered by the policy. In the alternative, PURE asserted that it had not

waived the right to participate in appraisal. In support, PURE attached the

initial inspection report dated November 24, 2021, in which the inspector

indicated the plaintiff reported a shifted foundation pier on the north side of

the residence. The inspector concluded that the shifted foundation pier was

a result of long-term settlement of the piers and not a result of Hurricane Ida.

The inspector noted the cracked pier was near the chimney.

PURE also included a letter to the plaintiff, dated January 14, 2022, in which

PURE denied a portion of the alleged Hurricane Ida damages. PURE noted it

found the cause of foundation damage to be the result of long-term settlement of

the foundation and noted such damage is excluded under the policy. PURE affixed

a supplemental report from its inspector dated April 5, 2023, in which the inspector

concluded there was no evidence Hurricane Ida’s winds caused the damage to the

house for which the plaintiff sought reimbursement.

After a hearing on July 11, 2024, the trial court rendered a written

judgment on July 29, 2024, denying in part and granting in part, the

plaintiff’s Motion to Appoint an Umpire. The trial court denied the

plaintiff’s request for appointment of an umpire and ordered PURE to

appoint its appraiser in fifteen days. The trial court further ordered that in

the event the appraisers could not agree on an umpire, then either party

could file a motion and the trial court would appoint an umpire.

The plaintiff filed a notice of intent to seek supervisory review on July

24, 2024, and the trial court set a return date of August 29, 2024. The

4 plaintiff filed his application for supervisory writs with this Court on August

7, 2024. PURE filed an opposition to the writ application on August 14,

2024.

STANDARD OF REVIEW

An insurance policy is a contract between the parties. Lirette v. Adams,

2023-0377, 2023-0382, 2023-0528, p.12 (La. App. 4 Cir. 7/10/24), __ So.3d __, __

, 2024 WL 3355087 *5. “The interpretation of the language of a contract is a

question of law subject to the de novo standard of review on appeal.” 1955 Nola

Holdings, L.L.C., v. Windy Hill Pictures L.L.C., 2023-0050, p.12 (La. App. 4 Cir.

10/2/23), 376 So.3d 200, 209.

DISCUSSION

The plaintiff argues that the trial court erred when it failed to grant his

request to appoint an umpire pursuant to the appraisal provision in the

homeowners’ insurance policy issued to him by PURE. The appraisal provision

provides:

Demand an appraisal of the loss. In this event, each party will choose a competent impartial appraiser with no financial interest in the outcome of the decision within twenty (20) days after receiving a written request from the other. The two appraisers will choose an umpire. If they cannot agree upon an umpire within fifteen (15) days, you or we may request that the choice be made by a judge of a court of record in the state where the residence premises is located. The appraisers will separately set the amount of the loss. If the appraisers submit a written report of an agreement to us, the amount agreed upon will be the amount of the loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will set the amount of the loss. A decision agreed to by the appraisers is not binding. (emphasis added).

The insurance policy between the plaintiff and PURE constitutes a

contract between them, which is interpreted according to contract law.

5 Because PURE wrote the policy, any ambiguity is to be interpreted against

it. The provision provides upon receipt of a written request by one party,

each party “will choose a competent impartial appraiser with no financial

interest in the outcome of the decision within twenty (20) days after

receiving a written request from the other.” The plaintiff made written

demand under the appraisal provision on December 14, 2022 and April 13,

2023. On both occasions, PURE declined to participate in the appraisal

process. It is clear from the language of the provision, that once the plaintiff

made his written request, PURE did not have the option to decline to

participate. It was required, under the provision it wrote, to choose an

appraiser within twenty days after receiving a written request from the

plaintiff.

Plaintiff argues that PURE’s failure to comply with the provision’s

requirements resulted in PURE’s waiver of its right to appoint an appraiser.

In support of his argument that PURE waived its right to appoint an

appraiser, the plaintiff relies upon the Supreme Court’s decision in Steptore

v. Masco Const. Co., Inc., 93-2064 (La. 8/18/94), 643 So.2d 1213. Therein,

the Supreme Court discussed the concept of waiver and noted:

[w]aiver is generally understood to be the intentional relinquishment of a known right, power, or privilege. Tate v. Charles Aguillard Ins. & Real Estate, Inc., 508 So.2d 1371 (La. 1987); Ledoux v. Old Republic Life Ins. Co., 233 So.2d 731 (La. App. 3d Cir.), cert denied 256 La. 372, 236 So.2d 501 (1970); Peavey Co. v. M/V ANPA, 971 F.2d 1168 (5th Cir.1992); Comment, Waiver and Estoppel in Louisiana Insurance Law, 22 La.L.Rev. 202 (1961); 16B Appleman, Insurance Law and Practice, § 9081 (1981); Couch on Insurance 2d, § 35:249 (Rev. ed. 1985). Waiver occurs when there is an existing right, a knowledge of its existence and an actual intention to relinquish it or conduct so inconsistent with the intent to enforce the right as to induce a reasonable belief that it has been relinquished. Tate, supra; Peavey, supra; Ledoux, supra; 16B Appleman, supra, § 9085. A waiver may

6 apply to any provision of an insurance contract, even though this may have the effect of bringing within coverage risks originally excluded or not covered. Tate, supra.

Steptore, 93-2064, p.4, 643 So.2d at 1216.

In Steptore, the plaintiff filed suit against the defendant and the defendant’s

insurer. Id., p.2, 643 So.2d at 1214-1215. The insurer retained the same firm to

represent both itself and the defendant. Approximately six months later, the

insurer denied coverage by claiming the defendant breached a provision in the

policy. Id., p.2, 643 So.2d at 1215. The defendant filed a third-party demand

against the insurer. The Supreme Court determined the insurer waived its coverage

defense. Id., p.4, 643 So.2d at 1215-1216. The Supreme Court indicated, “when

an insurer, with knowledge of facts indicating noncoverage under the insurance

policy, assumes or continues the insured's defense without obtaining a nonwaiver

agreement to reserve its coverage defense, the insurer waives such policy defense.

“Id., p.5, 643 So.2d at 1216 (citing Peavey Co. v. M/V ANPA, 971 F.2d 1168 (5th

Cir. 1992)).

In response, PURE argued that appraisal was not appropriate under the

circumstances. It also contended that its actions did not constitute waiver of the

appraisal provision. PURE notes that the plaintiff sold the house and five months

after the sale, the plaintiff provided PURE with a new estimate of damages. PURE

stated that it initially determined appraisal was premature, as it required a re-

inspection before determining it failed to agree on the amount of the loss. PURE

argued that foundation settlement more likely caused any internal damage to the

chimney and would not be covered by the policy. PURE averred that there was no

knowing and voluntary relinquishment of the right to participate in the appraisal

process.

7 However, PURE subsequently provided the plaintiff with a supplemental

report from its inspector dated April 5, 2023, in which the inspector concluded

there was no evidence Hurricane Ida’s winds caused the damage to the house for

which the plaintiff sought reimbursement. On April 12, 2023, PURE sent

correspondence to the plaintiff detailing the initial investigation of the claim

revealed $49,709.86 in estimated damages as a result of Hurricane Ida. PURE

indicated after application of the deductible, PURE issued payment in the amount

of $8,229.86 to the relator. PURE acknowledged that a re-inspection was

performed after it received an estimate totaling $330,674.58, from the plaintiff.

PURE averred the re-inspection resulted in a finding that Hurricane Ida’s winds

did not cause racking.

Waiver, as defined in Steptore, “occurs when there is an existing right, a

knowledge of its existence and an actual intention to relinquish it or conduct so

inconsistent with the intent to enforce the right as to induce a reasonable belief that

it has been relinquished.” 93-2064, p. 4, 643 So.2d at 1216. In the present case, the

plaintiff and PURE both had a right under the appraisal provision to appoint an

appraiser within twenty days of the written request to demand the appraisal

process. PURE was well aware of its right to appoint an appraiser and failed to do

so, stating that it declined to participate in the appraisal process. PURE’s action in

declining to participate in the appraisal process indicated a waiver of its right to

appoint an appraiser. Once the plaintiff sent a written request for appraisal, PURE

had the obligation to appoint an appraiser. The appraisal provision did not give

PURE the option to decline to participate on the basis that appraisal was

premature. PURE’s failure to appoint an appraiser constitutes a waiver of its rights

under the appraisal provision.

8 However, the remedy sought by the plaintiff, i.e. the appointment of an

umpire by the trial court, is inconsistent with the language of the appraisal

provision. The provision provides for a court to appoint an umpire when the two

appraisers cannot agree upon an umpire. In this case, only one appraiser has been

appointed. The plaintiff seeks to have the trial court appoint an umpire because the

appraisal provision states that if the appraisers fail to agree on the amount of the

loss, the amount of the loss will be submitted to the umpire. “A decision agreed to

by any two will set the amount of the loss.”

It appears that the trial court was trying to fashion an appropriate remedy

given the language of the appraisal provision and the issue of waiver by PURE.

Although PURE waived its right under the appraisal provision, the trial court

erroneously reinstated the right to appoint an appraiser so that the other

requirements of the provision could proceed.

Notably, the appraisal provision provides that a decision agreed to by the

appraisers (or one appraiser and umpire) will set the amount of the loss. However,

a decision agreed to by the appraisers is not binding on the parties. The filing of the

present lawsuit by the plaintiff/homeowner against his insurer, PURE, for

reimbursement of damages allegedly sustained as a result of Hurricane Ida,

acknowledges a disagreement concerning the coverage for and amount of damages.

The request for an umpire at this stage in the ligation is beyond the scope of the

appraisal provision.

Accordingly, the plaintiff’s writ application is granted. The trial court’s

judgment is vacated.

WRIT GRANTED JUDGMENT VACATED