Rosa Ena Cantu v. Southern Insurance Company

• Court: Court of Appeals of Texas
• Decided: January 22, 2015
• Docket: 03-14-00533-CV
• Status: Published

Opinion

ACCEPTED 03-14-00533-CV 3865258 THIRD COURT OF APPEALS AUSTIN, TEXAS 1/22/2015 3:02:40 PM JEFFREY D. KYLE CLERK CASE NO. 03-14-00533-CV

IN THE THIRD COURT OF APPEALS FILED IN AUSTIN, TEXAS 3rd COURT OF APPEALS AUSTIN, TEXAS 1/22/2015 3:02:40 PM JEFFREY D. KYLE ROSA ENA CANTU, Appellant Clerk

V.

SOUTHERN INSURANCE COMPANY, Appellee

On appeal from the 335th Judicial District Court of Bastrop County, Texas Trial Court Cause Number 29,079

APPELLEE’S BRIEF __________________________________________________________________

Catherine L. Hanna State Bar No. 08918280 Email: channa@hannaplaut.com Eric S. Peabody State Bar No. 00789539 Email: epeabody@hannaplaut.com Laura D. Tubbs State Bar No. 24052792 Email: ltubbs@hannaplaut.com HANNA & PLAUT, L.L.P. 211 E. Seventh Street, Suite 600 Austin, Texas 78701 Telephone: (512) 472-7700 Facsimile: (512) 472-0205 Counsel for Appellee

Oral Argument Requested TABLE OF CONTENTS

TABLE OF CONTENTS .......................................................................................... ii

TABLE OF AUTHORITIES ................................................................................... iv

STATEMENT OF THE CASE..................................................................................1

STATEMENT REGARDING ORAL ARGUMENT ...............................................2

ISSUES PRESENTED...............................................................................................2

After Cantu sued Southern following the 2011 Bastrop wildfires for allegedly inadequate payment on her claim, the court ordered the parties to appraisal. Despite participating in the appraisal process, Cantu was dissatisfied with the award and nonsuited after Southern paid the award and moved for summary judgment. In Southern’s subsequent declaratory action, Cantu challenged the appraisal award based on the original court’s replacement of the first appraisal umpire.

1. Cantu did not seek appellate review of the original trial court’s replacement of the appraisal umpire and cannot collaterally attack that court’s orders in a court of concurrent jurisdiction.

2. The appraisal award signed by the umpire and Southern’s appraiser was valid, binding, and in substantial compliance with the policy.

3. Cantu did not assert any extra-contractual claims regarding Southern’s pre- or post-appraisal conduct and is not entitled to an advisory opinion on the effect of the appraisal award on hypothetical claims that are now barred.

STATEMENT OF FACTS ........................................................................................3

SUMMARY OF THE ARGUMENT ........................................................................6

ii ARGUMENT AND AUTHORITIES ........................................................................6

A. Cantu cannot collaterally attack a different trial court’s appraisal orders in this suit.......................................................................... 6

B. The appraisal award was valid and binding. ........................................... 9

C. Cantu cannot complain about the effect of the trial court’s declarations on extra-contractual causes of action she did not assert. .............................................................................................................. 11

CONCLUSION AND PRAYER .............................................................................12

CERTIFICATE OF SERVICE ................................................................................14

CERTIFICATE OF COMPLIANCE .......................................................................15

APPENDIX ..............................................................................................................16

iii TABLE OF AUTHORITIES Cases Page Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264 (Tex. App.–Fort Worth 1992, writ dism'd by agr.) ...................11

Blum’s Furniture Co., Inc. v. Certain Underwriters at Lloyds London, 459 Fed. Appx. 366 (5th Cir. 2012) ......................................................................12

Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (Tex. App.–Houston [14th Dist] 2004, no pet.) .........................11

Harris County Appraisal Dist. v. Bradford Realty, Ltd., 919 S.W.2d 131 (Tex. App.–Houston [14th Dist.] 1994, no writ) ..........................9

In re Barrentine, 2013 WL 6466574 (Tex. App.–Austin Nov. 27, 2013, orig. proceeding) .............8

Michels v. Safeco Ins. Co., 544 Fed. Appx. 535 (5th Cir. 2013) ......................................................................10

Providence Lloyds Ins. Co. v. Crystal City Independent Sch. Dist., 877 S.W.2d 872 (Tex. App.–San Antonio 1994, no writ)....................................10

Richardson v. Allstate Texas Lloyds, 2007 WL 1990387 (Tex. App.–Dallas July 11, 2007, no pet.) ....................... 10, 11

Safeco Lloyds Ins. Co. v. Barrentine, 2014 WL 7399307 (Tex. App.– Dallas Dec. 17, 2014, n.p.h.) ..............................7

TMM Investments, Ltd. v. Ohio Cas. Ins. Co., 730 F.3d 466 (5th Cir. 2013) .................................................................................10

Wells v. American States Preferred Ins. Co., 919 S.W.2d 679 (Tex. App.–Dallas 1996, writ denied) .........................................9

Wentworth v. Medellin, 529 S.W.2d 125 (Tex. Civ. App.–San Antonio 1975, no writ) ..............................9

iv Statutes TEX. INS. CODE § 541.061 .........................................................................................5

TEX. INS. CODE § 542.060..........................................................................................5

Rules TEX. R. APP. P. 38.2 ...................................................................................................1

v To the Honorable Court of Appeals:

Appellee Southern Insurance Company submits this brief in response to the

brief of Appellant Rosa Ena Cantu1 pursuant to Rule 38.2 of the Texas Rules of

Appellate Procedure. Southern agrees with Cantu’s list of parties and counsel, but

presents its own statement of the case, statement of the issues presented, and

statement of facts.

Statement of the Case

The lawsuit giving rise to this appeal involves Cantu’s claims under her

Southern homeowners’ insurance policy for damage resulting from the 2011

Bastrop County wildfires.2 Cantu filed suit in Bastrop district court,3 and the court

ordered the parties to appraisal. After paying the appraisal award, Southern moved

for summary judgment.4 Cantu nonsuited this Original Bastrop Suit.5 Southern

filed the declaratory action underlying this appeal, Cause Number 29,079, in the

335th Judicial District Court of Bastrop County (“Bastrop Dec Action”), the

Honorable Reva Towslee Corbett, presiding, to determine its contractual and

1 Cantu’s first name is identified in the record as both “Rose” and “Rosa.” Southern uses “Rosa” as directed in the Court’s letter of August 27, 2014. 2 R. 5-7. The record for this appeal consists solely of an original clerk’s record [R.]. 3 Cause No. 28,370; Rose Ena Cantu v. Southern Insurance Co., et al., in the 21st Judicial District Court, Bastrop County, Texas (“Original Bastrop Suit”); R. 255-64. 4 R. 275-87. 5 R. 288.

Appellee’s Brief Page 1 statutory duties in light of its payment of the appraisal award.6 On July 23, 2014,

Judge Corbett granted Southern’s motion for summary judgment, declaring that:

(1) the award signed by Southern’s appraiser and the umpire was valid and

binding; (2) Southern’s payment of the appraisal award fulfilled Southern’s duties

under Cantu’s insurance policy; and (3) Southern’s liability was not reasonably

clear until the appraisal award was issued.7 Cantu filed her notice of appeal on

August 22, 2014.8

Statement Regarding Oral Argument

Although Southern believes that oral argument is unnecessary to resolve the

issues in this appeal, Southern reserves its right to appear.

Issues Presented

After Cantu sued Southern following the 2011 Bastrop wildfires for allegedly inadequate payment on her claim, the court ordered the parties to appraisal. Despite participating in the appraisal process, Cantu was dissatisfied with the award and nonsuited after Southern paid the award and moved for summary judgment. In Southern’s subsequent declaratory action, Cantu challenged the appraisal award based on the original court’s replacement of the first appraisal umpire.

1. Cantu did not seek appellate review of the original trial court’s replacement of the appraisal umpire and cannot collaterally attack that court’s orders in a court of concurrent jurisdiction.

6 R. 6-10. 7 R. 532-33. 8 R. 534-35.

Appellee’s Brief Page 2 2. The appraisal award signed by the umpire and Southern’s appraiser was valid, binding, and in substantial compliance with the policy.

3. Cantu did not assert any extra-contractual claims regarding Southern’s pre- or post-appraisal conduct and is not entitled to an advisory opinion on the effect of the appraisal award on hypothetical claims that are now barred.

Statement of Facts

Cantu owns a property in Paige, Texas, which Southern insured for the

period August 14, 2011 to August 14, 2012.9 Cantu reported her fire claim on or

about September 4, 2011.10 Southern hired an independent adjuster, Steven

Dollery, to inspect the loss and issued payment to Cantu for damage to the

contents, dwelling, and other structures.11

Cantu was dissatisfied with Southern’s adjustment of her claim and hired

counsel and a public adjuster, Stephen Hadhazi.12 Southern contacted Dollery and

instructed him to attempt to reach an agreement with Hadhazi on the amount of

loss.13 Dollery and Hadhazi briefly discussed the differences in their estimates by

telephone, but Hadhazi failed to reply to Dollery’s further communications.14

9 R. 7. 10 R. 158-59. 11 Id. 12 R. 159, 201-22. 13 R. 159. 14 R. 159, 223.

Appellee’s Brief Page 3 Cantu filed the Original Bastrop Suit in January 2012, and Southern

answered, reserving its right to invoke appraisal.15 In September 2012, the 21st

District Court ordered the parties to appraisal and appointed Claude Ducloux as

umpire.16 On January 16, 2013, the court, after learning of inappropriate

communications between Cantu’s counsel and the umpire, dismissed Ducloux and

appointed the Hon. Don Wittig as umpire.17 Cantu continued to participate in the

appraisal and did not ask the 21st District Court to reconsider its appointment of

Judge Wittig or seek mandamus review of this order. In April 2013, Judge Wittig

and Southern’s appraiser signed an appraisal award.18 After Cantu’s counsel failed

to respond to multiple requests for drafting instructions, Southern tendered a check

for the full replacement cost value of the appraisal award less the deductible and

prior payments.19

Following its payment of the appraisal award, Southern filed a motion for

summary judgment, arguing that the payment of the award satisfied Southern’s

obligations under the policy and negated the only bases for Cantu’s extra-

contractual causes of action.20 Shortly before her response was due, Cantu

15 R. 255-68. 16 R. 459. 17 R. 273. 18 R. 227. 19 R. 228-36. 20 R. 275-87.

Appellee’s Brief Page 4 nonsuited the Original Bastrop Suit.21 Cantu did not cash the award check because

she disputed the validity and binding effect of the appraisal award.22

Two days after Cantu’s nonsuit, Southern filed the Bastrop Dec Action,

requesting that the Court declare that:

(1) The appraisal award signed by Southern’s appraiser and the umpire is valid and binding on the parties with regard to the amount of Cantu’s loss;

(2) Southern’s payment of the appraisal award fulfills its obligations under the insurance policy with regard to Cantu’s claim; and

(3) Southern’s liability to pay Cantu’s claim was not reasonably clear until the appraisal award was issued and Southern’s payment was therefore prompt for purposes of Texas Insurance Code sections 541.061 and 542.060 and tie-in provisions of the DTPA.23

After Southern filed the Bastrop Dec Action, Cantu filed suit in Dallas County,

alleging the same claims and causes of action she had raised in the Original

Bastrop Suit and disputing the validity of the appraisal award.24 The Dallas court

abated Cantu’s suit against Southern in favor of the Bastrop court’s dominant

jurisdiction over the parties and subject matter.25 Despite the dominant jurisdiction

of the Bastrop court, Cantu did not assert any counterclaims in the Bastrop Dec

21 R. 288. 22 R. 295. 23 R. 6-10. 24 R. 290-315. 25 R. 316-17.

Appellee’s Brief Page 5 Action.26 The Bastrop court rendered summary judgment in favor of Southern, and

this appeal ensued.27

Summary of the Argument

Appraisal awards are presumptively valid and binding. Cantu did not plead

or adduce evidence of any basis to set aside the appraisal award. She could not

collaterally attack in this suit the former trial court’s decision to appoint a new

umpire after the appraisal was complete and she had nonsuited her claims.

Because Southern promptly paid the appraisal award in full, the trial court

correctly ruled that Southern satisfied its contractual and statutory obligations with

respect to her loss. Cantu is not entitled to an advisory opinion on the effect of an

appraisal award on causes of action she never raised.

Argument and Authorities

A. Cantu cannot collaterally attack a different trial court’s appraisal orders in this suit.

Cantu’s primary argument is that the court in which she originally filed suit

– the Bastrop 21st District Court – had no authority to replace an appraisal umpire

after finding Cantu’s counsel had inappropriate communications with that

umpire.28 In this case, Cantu complains that the 335th District Court should have

26 R. 17-22. 27 R. 532-33. 28 Cantu’s assertion that she was denied “due process” in the appointment of a new umpire is groundless. See Appt. Br. at 13. Judge Campbell appointed Judge Wittig as the replacement

Appellee’s Brief Page 6 invalidated the appraisal award based on the 21 st District Court’s alleged lack of

jurisdiction to replace the umpire. A district court does not have the authority to

review or invalidate the orders of a court of concurrent jurisdiction.

The Dallas Court of Appeals recently rejected the same argument by Cantu’s

counsel.29 In Barrentine, the 423rd District Court of Bastrop County disqualified

umpire Ducloux for the same inappropriate contact by plaintiff’s counsel and

appointed Judge Wittig as a replacement.30 The homeowners in Barrentine

nonsuited, refiled in Dallas County, and sought a temporary injunction to prevent

the appraisal ordered by the Bastrop court from proceeding.31 On appeal, the

Dallas Court of Appeals dissolved the temporary injunction, holding that the

injunction ignored and unwound the orders of the Bastrop court, which “‘allow[ed]

the Barrentines to collaterally attack those orders in a court of concurrent

jurisdiction.’”32 The Barrentines also sought a writ of mandamus in this Court,

umpire at a hearing on Southern’s motion to compel completion of the appraisal process, which counsel for Cantu attended. A copy of the trial court’s order setting the hearing in which Judge Campbell removed umpire Ducloux and appointed umpire Wittig is attached at Appendix A. Contrary to Cantu’s assertion, the record in Cause No. 28,370 shows that Judge Campbell explicitly removed umpire Ducloux when he appointed Judge Wittig as umpire and then set the appraisal deadlines. See Order of January 28, 2013, attached at Appendix B. Southern agrees with Cantu that the Court should take judicial notice of these and other documents from Cause No. 28,370. See Appt. Br. at 14. 29 Safeco Lloyds Ins. Co. v. Barrentine, No. 05-13-01011-CV, 2014 WL 7399307 (Tex. App.– Dallas Dec. 17, 2014, n.p.h.). 30 Id. at *1; R. 493-500. 31 Barrentine, 2014 WL 7399307 at *1. 32 Id.

Appellee’s Brief Page 7 arguing that the Bastrop trial court abused its discretion by appointing Judge Wittig

as replacement umpire. This Court summarily denied the petition and the

Barrentines’ motion for rehearing.33

After Judge Campbell replaced the umpire in the Original Bastrop Suit,

Cantu did not ask for reconsideration of this decision or file a petition for writ of

mandamus.34 Instead, Cantu participated in the appraisal process and nonsuited

when she was dissatisfied with the appraisal award. She then asked the trial court

in this case to rule on its sister court’s authority to replace the umpire. Judge

Corbett had neither the obligation nor the authority to sit in appellate review of

Judge Campbell’s appraisal orders.35

Even if the 335th District Court could have reviewed the 21st District Court’s

order to replace the umpire, the 335th District Court did not err in confirming

validity of the appraisal. Nothing in the insurance policy or Texas law limited the

21st District Court’s authority to appoint, remove, or replace the appraisal umpire.

Although appraisal is intended to take place before suit is filed, Cantu filed suit in

the 21st District Court, which gave the court jurisdiction over all matters

appurtenant to that suit, including the appraisal. Cantu has cited no authority

33 See R. 501-31; In re Barrentine, No. 03-13-00752-CV, 2013 WL 6466574 (Tex. App.–Austin Nov. 27, 2013, orig. proceeding). 34 See Docket Sheet for Cause No. 28,370, attached hereto as Appendix C. 35 Because Cantu is actually attacking the actions of the 21st District Court in replacing the umpire, she confuses the suit on appeal. See Appt. Br. at 14 (“Entry of the order appointing a second Umpire was reversible error and an abuse of discretion by the District Court.”).

Appellee’s Brief Page 8 limiting that jurisdiction or discretion, and this Court already rejected the same

argument by Cantu’s counsel when it denied the petition for writ of mandamus in

Barrentine.

B. The appraisal award was valid and binding.

Cantu further argues that appraisal award was not in compliance with the

policy because it was not “itemized.”36 An appraisal award is binding and

enforceable if it is in “substantial compliance” with the policy.37 “Substantial

compliance” means fulfillment of the essential requirements of a contract or a

statute.38 The Southern policy does not require a particular form for the appraisal

award; appraisers and umpires use different templates for their awards. The award

in this case itemizes the amount of loss for all coverages provided under the

policy.39 The award is in writing and includes the actual cash value, depreciation,

and replacement cost of the damage to Cantu’s property caused by the fires. The

36 Appt. Br. at 14-16. 37 See Wells v. American States Preferred Ins. Co., 919 S.W.2d 679, 683 (Tex. App.–Dallas 1996, writ denied) (“Texas courts recognize three situations in which an appraisal award may be disregarded: (1) when the award was made without authority; (2) when the award was the result of fraud, accident, or mistake; or (3) when the award was not made in substantial compliance with the terms of the contract.”). As discussed supra, Cantu’s argument that umpire Wittig was without authority to act is really an attack on Judge Campbell’s authority to appoint him. Cantu does not argue that the award was the result of fraud, accident, or mistake. 38 Wentworth v. Medellin, 529 S.W.2d 125, 128 (Tex. Civ. App.–San Antonio 1975, no writ); see also Harris County Appraisal Dist. v. Bradford Realty, Ltd., 919 S.W.2d 131, 135 (Tex. App.– Houston [14th Dist.] 1994, no writ). 39 R. 227.

Appellee’s Brief Page 9 award was signed by Southern’s appraiser and the duly-appointed umpire, Judge

Wittig.40

Cantu’s counsel has raised and had the same arguments rejected in another

Bastrop wildfire case.41 In response to the carrier’s motion for summary judgment

in Michels, plaintiffs argued that the form of the award was not in substantial

compliance with the policy because it was not itemized and provided only the

replacement cost and actual cash value of the loss.42 The district court disagreed

and denied the Michelses’ motion to set aside the award.43 The appellate court

affirmed, holding that the lump sum award substantially complied with the policy’s

requirements.44

Cantu’s reliance on Richardson v. Allstate Texas Lloyds,45 is misplaced. In

Richardson, the court held that the entire appraisal process was not in substantial

compliance with the policy because: (1) the appraisers did not prepare an itemized

list of damages; (2) the appraisers did not meet to discuss their estimates; (3) the

appraisers did not submit to the umpire the items upon which they did not agree;

40 Id. 41 See Michels v. Safeco Ins. Co., 544 Fed. Appx. 535 (5th Cir. 2013). 42 Id. at 542. 43 Id. at 537. 44 Id. at 542; see also TMM Investments, Ltd. v. Ohio Cas. Ins. Co., 730 F.3d 466, 472 (5th Cir. 2013) (“minor mistakes that do not taint the entire award should not frustrate the parties’ intent to be bound by the appraisal provision of their contract”); Providence Lloyds Ins. Co. v. Crystal City Independent Sch. Dist., 877 S.W.2d 872, 875-78 (Tex. App.–San Antonio 1994, no writ). 45 No. 05-06-00100-CV, 2007 WL 1990387 (Tex. App.–Dallas July 11, 2007, no pet.).

Appellee’s Brief Page 10 (4) the umpire did not discuss the award with both appraisers before it was entered;

and (5) the award was a lump-sum amount written next to the phrase “to be

determined by hygienist.”46 The lack of an itemized decision was just one part of

the wholly flawed process that was not in substantial compliance with the policy. 47

Appraisal awards “are binding and enforceable, and every reasonable

presumption will be indulged to sustain an appraisal award.”48 Because every

reasonable presumption is indulged in favor of the award, the burden of proof is on

the party seeking to avoid the award.49 Cantu did not request clarification of the

award and did not adduce any evidence that the appraisal process or award in this

case was not in substantial compliance with the policy.

C. Cantu cannot complain about the effect of the trial court’s declarations on extra-contractual causes of action she did not assert.

Cantu’s final argument is that the trial court erred in holding that Southern’s

payment of the appraisal award foreclosed her bad-faith claims.50 This misstates

the trial court’s judgment. The trial court declared that Southern’s liability under

the policy was not reasonably clear until the appraisal award was issued and that

Southern’s timely payment of the award therefore satisfied the prompt-payment 46 Id. at *2-3. 47 See id. at *4. 48 Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777, 786 (Tex. App.–Houston [14th Dist] 2004, no pet.). 49 Id. (citing Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264, 267 (Tex. App.–Fort Worth 1992, writ dism'd by agr.)). 50 Appt. Br. at 16-19.

Appellee’s Brief Page 11 requirements of the Texas Insurance Code and tie-in provisions of the DTPA –

established holdings under Texas law.51 The court did not opine on Southern’s

“pre-appraisal conduct” or alleged “extreme acts” in processing Cantu’s claims

because Cantu did not assert any counterclaims for this extra-contractual liability.

Cantu did not assert any counterclaims at all. Her pleadings consisted solely of an

answer with affirmative defenses to the validity of the appraisal award, a plea to

the jurisdiction, and a motion to transfer venue to Dallas based on convenience.52

Even if Cantu had bad-faith claims that were not extinguished by Southern’s

payment of the appraisal award, she did not raise them, providing no impediment

to the trial court’s final summary judgment and preserving nothing for this Court to

review. Cantu is not entitled to an advisory opinion on the effect of an appraisal

award on theoretical bad-faith claims.

Conclusion and Prayer

Rather than challenge the appraisal process and award in the Original

Bastrop Suit through proper appellate channels, Cantu abandoned her claims and

sought a different district court to review the first court’s appraisal orders. The

trial court properly rejected this collateral attack. Cantu also failed to assert the

51 R. 532; see Blum’s Furniture Co., Inc. v. Certain Underwriters at Lloyds London, 459 Fed. Appx. 366, 367 (5th Cir. 2012) (collecting and discussing cases). 52 R. 17-22.

Appellee’s Brief Page 12 extra-contractual claims she contends are affected by the trial court’s declarations,

which leaves nothing for this Court to review.

WHEREFORE, PREMISES CONSIDERED, Appellee Southern Insurance

Company respectfully requests that the Court affirm the trial court’s judgment and

grant Appellee such other relief to which it may be justly entitled.

Respectfully submitted,

HANNA & PLAUT, L.L.P. 211 E. Seventh Street, Suite 600 Austin, Texas 78701 Telephone: (512) 472-7700 Facsimile: (512) 472-0205

By: /s/ Eric S. Peabody Catherine L. Hanna State Bar No. 08918280 Email: channa@hannaplaut.com Eric S. Peabody State Bar No. 00789539 Email: epeabody@hannaplaut.com Laura D. Tubbs State Bar No. 24052792 Email: ltubbs@hannaplaut.com

ATTORNEYS FOR APPELLEE SOUTHERN INSURANCE COMPANY

Appellee’s Brief Page 13 CERTIFICATE OF SERVICE

I hereby certify that a true and correct copy of the foregoing Appellant’s Brief has been forwarded by e-service and/or facsimile on the 22nd day of January, 2015 to:

Via Facsimile: (713) 583-8989 Email: rraytex@aol.com Robert E. Ray 1177 West Loop South, Suite 1180 Houston, Texas 77027

Via Facsimile: (713) 467-8883 Email: houstonlaw2@aol.com Robert L. Collins M. Chad Gerke Audrey E. Guthrie P.O. Box 7726 Houston, Texas 77270-7726

Via Facsimile: (713) 467-8883 Email: lewis@texlaw.info Christopher D. Lewis 1721 West T.C. Jester Blvd. Houston, Texas 77008

Attorneys for Appellant

/s/ Eric S. Peabody Eric S. Peabody

Appellee’s Brief Page 14 CERTIFICATE OF COMPLIANCE

I certify that this document was produced on a computer using Microsoft Word 2010 and contains 3,757 words, as determined by the computer software’s word-count function, excluding the sections of the document listed in Texas Rule of Appellate Procedure 9.4(i)(1).

/s/ Eric S. Peabody Eric S. Peabody Catherine L. Hanna Laura D. Tubbs Attorneys for Appellee Southern Insurance Company

Dated: January 22, 2015

Appellee’s Brief Page 15 APPENDIX

Tab A Cause No. 28,370: Order setting hearing on Motion to Compel Completion of Appraisal

Tab B Cause No. 28,370: Order Granting Motion to Compel Completion of Appraisal

Tab C Cause No. 28,370: Docket Sheet

Appellee’s Brief Page 16 Tab A Dec. 13. 2012 8:31AM No. 2167 P. 1/3

211` and 335th JUDICIAL DISTRICT COtrRTS BASTROP, BURLESON, LEE AND WASHINGTON COUNTIES

TERRY FLENNIKEN, JUDGE DEBORAH SHIROCKY REVAL. TOWSLEE connErr, JUDGE 21' Judicial District Court Court Coordinator 3354' Judicial District Court 100 East Main Street, Suite 305 804 Pecan Street 100 W. Buck Street, Suitt 307 Brenhern, Texas 77833 Bastrop, Texas 78602 Caldwell, Texas 77836 (979) 277-6200 phew, (512) 581.4037 (979) 567-2335 Fax (512) 5814038 E-mail deborah.shirocky©co.bastronticms CAROLER MURRAY JAN LYNN Of ficial Reporter Official Reporter (979) 542-2947 (512) 581-4236

NOTICE OF HEARING

DATE: December 11, 2012

TO: Mr. Robert L. Collins, Attorney at Law, 713-467-8883 Mr. Daniel Kistler, Attorney at Law, 866-352-5124 Mr. Eric S. Peabody, Attorney at Law, 512-472-0205 Ms. Laura D. Tubbs, Attorney at Law, 512-472-0205 Ms. Sarah Loucks, District Clerk, Hand Delivered

FROM: Deborah Shirocky, Civil Court Coordinator

RE: Cause No. 28,370; ROSE ENA CANTU vs. SOUTHERN XNSURANCE COMPANY and STEVE A. DOLLERY; In the 21st Judicial District Court of Bastrop County, Texas

Greetings:

PLEAE BE ADVISED that the court received the Plaintiff's Motion for Continuance of the Oral Hearing that was set on the docket for December 12, 2012. The court GRANTED that Motion and an Order is attached.

The court has rescheduled the above entitled and numbered case for Wednesday, January 16, 2013 at 9:00 a,m. At that time the court will address Southern Insurance Company's Motion To Compel Plaintiff To Complete Appraisal and To Continue Trial Setting. FILED8%5°AM DATE 12-3- 1 2. Sarah Loucks Oistiot Merk, Bastrop County Dec. 13. 2012 8:31AM No. 2167 P. 2/3

Page 2 December 11, 2012 Cause No. 28,370

This hearing will take place on the First Floor of the Bastrop County Courthouse Annex, located at 804 Pecan in Bastrop, Texas. Please call the Court Coordinator, Deborah Shirocky, the day before this scheduled hearing to confirm the location!

The Honorable Carson Campbell will be the new judge presiding over the entitled case. Please notify the court by phone and in writing at the above referenced numbers if this case reaches a settlement prior to the setting so that other matters may be scheduled.

Should you have any questions regarding the rescheduling of this hearing, please do not hesitate to contact this office at the above referenced number.

Respectfully, onAL Deborah Shirocky Civil Court Coordinator Dec. 13. 2012 8 31AM No. 2167 P. 3/3 To lodosgai a of 7 .T.i1 0/M0i= 3:47..44 P.M =-W-r- I Etela455q DTA PrOrn: nob." rt Colt! no

CAUSE NO. 2S,370

ROSE ENA CANTU IN THE DISTRICT COURT OF Faintiff,

VS. 218T JUDICIAL DISTRICT

SOUTHERN INSURANCE COMPANY and STEVE A. DOLLERY Defendants. BASTROP COUNTY, TEXAS

ORDER GRANTING MOTION FOR CONTINUANCE OF ORAL IEEARING

On this day the Court considered the Motion for Continuance of Oral Hearing requesting

a continuance of the December 12, 2012oial hearing. After reviewing the Motion for

Continuance of Oral Hearing, the Court finds and concludes that the Motion should be

GRANTED.

IT IS THEREFORE ORDERED that this matter be reset, for hearing on the

day of , 2013 at * 0 0 lar,?"‘

SIGNED this id day of , 2012.

PILE occrF. -.L.at,f1E( . : .

tleCt 6eaq Tab B 01/28/2013 15:56 9792776235 LYNN MITCHELL PAGE 02/02 Jan, 23. 2013 3:10PM Hanna & Haut, 1., F. No, 989/ P. 3

CAUSE NO. 28,370

ROSE ENA CANTU IN THE DISTRICT COURT Plaintiff, vs BASTROP, TEXAS SOUTHERN INSURANCE COIVCPANY § And STEVE A DOLLERY PARKER CLAIMS SERVICE 21ST JUDICIAL DISTRICT

ORDER GRANTING MOTION TO CCOMPEL COMPLETION OF APPRAISAL

CAME ON FOR CONSIDMATION the Motion to Compel. Completion of the Appraisal

in, the above-referenced action, The Court, having considered the motion, the Plaintiff's

response, and arguments of counsel, removed the previously appointed umpire, Mr, Claude

Nam, and appointed lien, ton Wittig as umpire of the appraisal on January 1.6, 2013

IT IS ORDERED that the following deadlines will govern the appraisal:

Jamlary 28, 2013 Appraisers shall confer regarding their estimates

January 29, 2013 Appraisers shall submit their differences to the umpire

February 8, 2013 Appraisal panel shall inspect the residence

February' 15, 2013 Appraisal panel shall meet to dimass estimates and award

February 22,2011 Appraisal shall be completed

SIGNED this, 2S%of J P•bk r 013. or 01/28/2013 15:56 9792776235 LYNN MITCHELL PAGE 01/02

21' and 335th JUDICIAL DISTRICT COURTS BASTROP, BURLESON, ACE, AND WASHINGTON COUNTIES

CARSON CAMPBELL, JUDGE REVA L. TOWSLEE CORBETT, JUIY 21" Judicial District Court LYNN MITCHELL 335th Judicial Diatriet Co , rt 100 East Main Street, Suite 305 Court Coordinator 100 W. Buck Street, Suite 4.1 Brenham, Texas 77833 100 E. Main Street, Suite 305 Caldwell, Texas 771.15 (979) 277-6200 Brenham, Texas 77833 (979) 567.2,13 (979) 277.6200, cxi, 156 JAN LYNN (979) 2776235 fax HOLLY SOIL V, Official Reporter itma i l. ImitchollZwnwnty,com Official Repor I ;Tr (979);542-2947

FACSIMI

DATE: January 28, 2013

TO: Eric Peabody, Attorney at Law FAX #: (512) 472-0205 Robert Collins, Attorney at Law (713) 467-8883 Daniel Kistler, Attorney at Law (866) 352-5124

FROM: Lynn Mitchell

RE: No. 28,370; Rose ,Ella Cantu v. Southern Insurance Company, et al.; In the 21' Judicial District Court at Law of Bastrop County, Texas

PAGES: 2

MESSAGE:

Attached, please find the Order Granting Motion to Compel Completion of Appraisal on the abov referenced case signed by Judge Campbell today.

cc: Ms. Deborah Shirocky, Court Coordinator Tab C 1/20/2015 co.bastrop.tx.us:8080/CaseDetail.aspx?CaselD=526080

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REGISTER OF ACTIONS CASE No. 28,370

ROSE ENA CANTU vs.SOUTHERN INSURANCE COMPANY and STEVE § Case Type: Contract - Other A. DOLLERY Date Filed: 01/11/2012 Location: 21st District Court

PARTY INFORMATION

Attorneys Defendant DOLLERY, STEVE A.

Defendant SOUTHERN INSURANCE COMPANY ERIC S PEABODY Retained 512-472-7700(W)

LAURA D TUBBS Retained 512-472-7700(W)

Plaintiff CANTU, ROSE ENA ROBERT L. COLLINS Retained 713-467-8884(W)

DANIEL KISTLER Retained 713-855-0827(W)

EVENTS & ORDERS OF THE COURT

DISPOSITIONS 07/08/2013 Non Suit (Judicial Officer: Flenniken, Terry)

0 IDER EVENTS AND HEARINGS 01/11/2012 Original Petition (OCA) 01/11/2012 Case Information Sheet 01/11/2012 COVER LETTER 01/18/2012 Citation by Certified Mail 01/18/2012 Citation DOLLERY, STEVE A. Returned Unserved 01/24/2012 Returned 01/24/2012 01/18/2012 Citation by Certified Mail 01/18/2012 Citation SOUTHERN INSURANCE COMPANY Served 01/25/2012 01/25/2012 Green Card Received 02/10/2012 Answer 02/10/2012 COVER LETTER 04/09/2012 Notice 04/09/2012 Notice 04/19/2012 COVER LETTER 04/19/2012 Motion 05/07/2012 COVER LETTER 05/07/2012 Motion 05/09/2012 Notice 05/30/2012 Motion 06/05/2012 Notice of Hearing 06/05/2012 COVER LETTER 06/07/2012 COVER LETTER 06/07/2012 Motion 06/07/2012 Notice 06/13/2012 Hearing (9:00 AM) (Judicial Officer Flenniken, Terry) 06/18/2012 Order of Mediation 08/02/2012 Order 08/06/2012 Report of Mediation (ACTIVE) 08/07/2012 Notice of Hearing 08/07/2012 Notice of Hearing 09/04/2012 COVER LETTER 09/04/2012 Response 09/05/2012 STATUS HEARING (9:00 AM) (Judicial Officer Flenniken, Terry) 09/05/2012 Order

http://co.bastrop.bus:8080/CaseDetall.aspx?CaselD=526080 1/2 1/20/2015 co.bastrop.1x.us:8080/CaseDetail.aspx?CaselD=526080 09/06/2012 Notice of Hearing 11/30/2012 Motion 11/30/2012 COVER LETTER 12/05/2012 COVER LETTER 12/05/2012 Notice of Hearing 12/11/2012 COVER LETTER 12/11/2012 Motion 12/11/2012 Other/Misc 12/11/2012 Order 12/11/2012 Notice of Hearing 12/12/2012 CANCELED Hearing (9:00 AM) (Judicial Officer Flenniken, Terry) Other 12/13/2012 COVER LETTER 12/13/2012 Motion 01/15/2013 COVER LETTER 01/15/2013 Response 01/16/2013 Hearing (9:00 AM) (Judicial Officer Campbell, Carson) 01/16/2013 Order 01/23/2013 COVER LETTER 01/23/2013 Notice 01/29/2013 Order 01/30/2013 COVER LETTER 02/25/2013 Report 02/25/2013 COVER LETTER 02/26/2013 COVER LETTER 02/27/2013 Pre-Trial Hearing (9:00 AM) (Judicial Officer Campbell, Carson) 02/27/2013 Agreed Order 03/07/2013 Notice 03/18/2013 CANCELED Jury Trial (9:00 AM) (Judicial Officer Campbell, Carson) Per Judge 04/10/2013 STATUS HEARING (9:00 AM) (Judicial Officer Campbell, Carson) 05/01/2013 Hearing (9:00 AM) (Judicial Officer Campbell, Carson) 06/10/2013 COVER LETTER 06/10/2013 Motion 06/18/2013 Notice of Hearing 06/18/2013 COVER LETTER 07/08/2013 Notice of Nonsuit 07/17/2013 CANCELED Summary Judgment Hearing (9:00 AM) (Judicial Officer Campbell, Carson) Case Disposed 09/18/2013 CANCELED Pre-Trial Hearing (9:00 AM) (Judicial Officer Campbell, Carson) Case Disposed 09/23/2013 CANCELED Jury Trial (9:00 AM) (Judicial Officer Campbell, Carson) Case Disposed 10/31/2013 Motion 11/12/2013 COVER LETTER 11/12/2013 Response 11/12/2013 Notice of Hearing 12/04/2013 Motions Hearing (9:00 AM) (Judicial Officer Campbell, Carson)

FINANCIAL INFORMATION

Plaintiff CANTU, ROSE ENA Total Financial Assessment 418.00 Total Payments and Credits 418.00 Balance Due as of 01/20/2015 0.00

01/17/2012 Transaction Assessment 252.00 01/18/2012 Transaction Assessment 166.00 01/18/2012 Payment Receipt # 2012-07272 COLLINS, ROBERT L. (418.00)

http://co.bastrop.bus:8080/CaseDetail.aspx7CaselD=526080 2./2 Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264 (1992)

844 S.W.2d 264 Court of Appeals of Texas, OPINION Fort Worth. DAY, Justice. W. Ray BARNES, Barnes Maintenance Co., Inc., W.R.B. Properties, and Softline Services, W. Ray Barnes, Barnes Maintenance Company, and Intervenor, Appellants, W.R.B. Properties (Barnes) brought this action against v. Western Alliance Insurance Company (Western) to WESTERN ALLIANCE INSURANCE COMPANY, enforce an insurance appraisal award. Softline Services Appellee. (Softline) intervened in the suit, asserting its right to 20% of the gross damages Barnes recovered from Western, No. 2–92–034–CV. | Dec. 16, 1992. | Rehearing pursuant to a contract between Barnes and Softline that Denied Jan. 26, 1993. antedated this proceeding. Barnes claimed that the roofs of two of his buildings were hail-damaged on March 1, Insured brought action against insurer to enforce appraisal 1988. Barnes filed a claim for this alleged loss with award and entity, which had contracted with insured to Western. Barnes and Western could not agree on the investigate and document insured’s claims and to receive amount of the loss, so Barnes, through Softline, 1 20% of gross damages recovered from insurer, demanded that an appraisal be made and an award given intervened. The 89th District Court, Wichita County, based on that appraisal, pursuant to *267 a provision in Temple Driver, J., set aside appraisal award, rendered the insurance contract between Barnes and Western. The judgment for insured for actual and treble damages, insurance contract provided as follows: attorney fees, and prejudgment and postjudgment interest, and awarded entity 20% of insured’s actual damages and prejudgment interest. Insured and entity appealed. The Appraisal. In case the insured and this Company shall Court of Appeals, Day, J., held that: (1) evidence was fail to agree as to the actual cash value or the amount of sufficient to support finding that appraisal award was loss, then, on the written demand of either, each shall result of fraud, accident, or mistake; (2) jury question select a competent and disinterested appraiser and asking whether appraisal award should be set aside notify the other of the appraiser selected within twenty because of fraud, accident, or mistake was not days of such demand. The appraisers shall first select a impermissibly multifarious; and (3) entity was entitled to competent and disinterested umpire; and failing for 20% of overall, total amount insured was awarded in fifteen days to agree upon such umpire, then, on action. request of the insured or this Company, such umpire shall be selected by a judge of a district court of a Affirmed in part and reversed and rendered in part. judicial district where the loss occurred. The appraisers shall then appraise the loss, stating separately actual cash value and loss to each item; and, failing to agree, Attorneys and Law Firms shall submit their differences only to the umpire. An *266 Schell, Nicholas, Thompson, Beene & Vaughan, award in writing, so itemized, of any two when filed L.L.P., and Russell W. Schell, Gregory Alan Scott, with this Company, shall determine the amount of actual cash value and loss. Each appraiser shall be paid Baltasar D. Cruz, Dallas, for appellants. by the party selecting him and the expenses of appraisal Pohl, Bennett & Mathews, and Michael A. Pohl, Daniel and umpire shall be paid by the parties equally. L. Ellwood, James A. Dunn, Houston, for appellant Softline Services. When Loss Payable. The amount of loss for which this Company may be liable shall be payable sixty Oldham & Barnard, and Charles M. Barnard, Charles W. days after proof of loss, as herein provided, is Oldham, Wichita Falls, for appellee. received by this Company and ascertainment of the loss is made either by agreement between the insured Before MEYERS, DAY and CLYDE R. ASHWORTH and this Company expressed in writing or by the (Retired, Sitting by Assignment), JJ. filing with this Company of an [appraisal] award as herein provided.

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264 (1992)

Barnes appointed Gene E. Thayer, Sr. (Thayer) as his *268 Do you find from a preponderance of the appraiser, and Western selected Dennis Olsovsky evidence that the [appraisal] award should be set aside (Olsovsky). Thayer and Olsovsky were unable to agree on because of fraud, accident, or mistake? an umpire, so Judge Brotherton, of the 30th District Court of Wichita County, appointed Joseph E. Ashmore, Jr. Answer “Yes” or “No.” (Ashmore) as umpire. Thayer and Olsovsky submitted their differences as to the actual cash value of the loss in ANSWER: Yes writing to Ashmore. Ashmore and Thayer signed an appraisal award for $402,978.08 on June 6, 1990. Jury Instruction No. 14–A: Olsovsky did not sign the award. Western failed to You are instructed that “fraud” means: challenge or pay the award sixty days after it was rendered, whereupon Barnes instituted this suit. Softline (1) that a material representation was made; (2) that it intervened in the suit on July 29, 1991. was false; (3) that when the speaker made it, he knew it was false or made it recklessly without any knowledge Following a trial on the merits, the jury found that Barnes of its truth and as a positive assertion; (4) that he made had suffered hail damage in the amount of $67,834.89 and it with the intention that it should be acted upon by the that the appraisal award should be set aside because of party; (5) that the party acted in reliance upon it; and fraud, accident, or mistake. The jury also found that (6) that he thereby suffered injury. Western had knowingly violated the Texas Insurance Code and the Deceptive Trade Practices–Consumer Jury Instruction No. 14–B: Protection Act. You are instructed that “accident” means an The trial court denied Barnes’ and Softline’s motions for unexpected, unforseen [sic] or undesigned happening judgment non obstante veredicto to disregard the jury’s or consequence from either a known or unknown cause. finding on the damages issue and rendered judgment for Barnes for actual and treble damages, attorneys’ fees, and Jury Instruction No. 14–C: pre- and postjudgment interest. The judgment also provided for Softline to recover 20% of Barnes’ actual You are hereby instructed that “mistake” means a damages and prejudgment interest. situation where the appraisers and umpire were laboring under a mistake of fact by which their We affirm in part and reverse and render in part. appraisal award was made to operate in a way they did not intend, such that the award does not speak the [1] [2] [3] intention of the appraisers and umpire, or where the Texas courts have long held that appraisal awards made pursuant to the provisions of an insurance contract error resulting in the award is so great as to be are binding and enforceable. Standard Fire Ins. Co. v. indicative of gross partiality, undue influence, or Fraiman, 514 S.W.2d 343, 344–45 (Tex.Civ.App.— corruption. Houston [14th Dist.] 1974, no writ). Every reasonable presumption will be indulged to sustain an appraisal Jury Question No. 10 asked: award, and the burden of proof lies on the party seeking to avoid the award. Continental Ins. Co. v. Guerson, 93 [F]rom a preponderance of the evidence[, w]hat sum of S.W.2d 591, 594 (Tex.Civ.App.—San Antonio 1936, writ money, if paid now in cash, would fairly and dism’d). An award entered by appraisers and an umpire reasonably compensate W. Ray Barnes for his can be disregarded in only two instances: (1) if the award damages, if any, for the storm, hail, and resulting damage to the insured buildings from the occurrence in was made without authority; or (2) if the award was made question? as the result of fraud, accident, or mistake. See Fisch v. Transcontinental Ins. Co., 356 S.W.2d 186, 190 .... (Tex.Civ.App.—Houston 1962, writ ref’d n.r.e.); Guerson, 93 S.W.2d at 594. Answer in dollars and cents for damages, if any. Western contended at trial that the appraisal award was ANSWER: $67,834.89 the result of fraud, accident, or mistake. The trial court allowed Western to submit that issue to the jury in the Because the jury answered Question 14 in the affirmative, form of Jury Question 14. the trial court based Barnes’ damages on the jury’s answer to Question 10 rather than on the appraisal award. Jury Question No. 14 asked: WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264 (1992)

.... [4] [5] [6] [7] In their first two points of error, Barnes and Softline each complain that the jury’s affirmative finding Q: And you know that you ordered a new roof on the in response to Question 14 was supported by no evidence Winn’s portion before the hail? or insufficient evidence.2 In point of error three, Barnes contends that he was entitled to specific performance of A: Yes, sir. the appraisal award as a matter of law, and Softline asserts that the trial court should have based damages on Q: And although you told us in your prior testimony the appraisal award as a matter of law, rather than on the that the entire roof was fine before the hail, you now jury’s answer to Question 10. know that it was so bad that one section of it you had completely ordered a re-roofing job? [8] [9] In determining a “no evidence” point, we are to A: Yes, sir. consider only the evidence and inferences that tend to support the finding of the jury and disregard all evidence .... and inferences to the contrary. See Sherman v. First Nat’l Bank, 760 S.W.2d 240, 242 (Tex.1988) (per curiam); Q: So whatever work you were having done, not Larson v. Cook Consultants, Inc., 690 S.W.2d 567, 568 only to that roof but to the inside of the Winn’s (Tex.1985) (per curiam); In re King’s Estate, 150 Tex. building, obviously was not work caused by that 662, 244 S.W.2d 660, 661–62 (1951) (per curiam). If particular hail? there is any evidence of probative force to support the finding of the jury, the point must be overruled and the A: That’s true. finding upheld. In re King’s Estate, 244 S.W.2d at 661– 62. ....

The record reveals numerous instances in which Barnes Q: Back in October of 1990. And you told the court admitted in open court that he had previously lied about reporter that at that time you believe[d] the Winn’s the hail damage *269 to the roof and about the repair roof damage was from the hail, and that’s a lie? costs. Barnes testified at trial as follows: A: That’s right. Q: Now, in your deposition you told us that the work that was done on Winn’s3 was done after the hail and .... because of the hail and you had to get that roof because of the hail; didn’t you? Q: And before the deposition she had you raise your right hand and swear that everything you stated before her was true and correct? A: Yes, sir, I did. A: That’s true. Q: That’s not true; is it? Q: Do you have anything in writing that you can A: That is not true. show this jury that from March 1, 1988 up to December 28th, 1990 that you ever told the .... insurance company that you were not claiming damage to the Winn’s portion of the roof? Q: Have you ever at any point prior to the last five minutes ever told the defendants in this case ... that A: No, sir. you were no longer claiming that that was part of the Judge Ashmore, the umpire, testified as follows: hail damage? Q: ... If this roof [over Winn’s] was under repair at the A: No, sir, I have not done that. time of the hail, that repair was finished after the hail without any additional charges other than what was .... already going to be charged, and it was a permanent roof, and they gave a roofing guarantee, then you Q: ... You never told the umpire or Thayer that that wouldn’t expect there to be any award if you had new roof was not from the hail? known those facts, for that section of the roof that that roofer had done the work on? A: No, sir. WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264 (1992)

.... guaranteed its work and that Barnes had never asked Armored to make good on its guarantee. A: If I had had that information, I would have factored it in. Unfortunately, I didn’t have that information. (3) Ashmore testified that he was shocked by Olsovsky’s letter sent after the award was made This testimony is some evidence from which the jury because of the difference between Ashmore’s and could reasonably have concluded, based on the definition Olsovsky’s findings and because Olsovsky was so given in Jury Instruction 14–A, that Barnes had upset about the award. Ashmore asked Judge committed fraud, thus causing the appraisal award to be Brotherton what he should do about the situation. based on fraud. This testimony also provides some Ashmore testified that Olsovsky’s letter did not contain evidence from which the jury could have concluded that anything that would have made a difference in the the appraisal award was the result of accident or mistake, award, but he also admitted that he got his figures as those terms were defined in Jury Instructions 14–B and solely from Thayer. 14–C. (4) Ashmore testified that he could not tell which part Because we find some evidence that supports the jury’s of the Thaten property roof was over Winn’s store and affirmative finding to Question 14, we overrule Barnes’ that he did not know whether the roof he had inspected and Softline’s first points of error. was permanent or temporary or whether his appraisal figures were for the whole roof, including the part that [10] We will now consider Barnes’ and Softline’s was roofed after the hail by Armored. challenge to the factual sufficiency of the evidence. (5) Ashmore admitted that he had received two *270 [11] [12] [13] [14] An assertion that the evidence is different letters from Armored that predated the “insufficient” to support a finding of fact can mean that appraisal award, showing that Armored had performed the evidence supporting the finding is so weak or the two repair jobs on Winn’s store: one in process before evidence to the contrary is so overwhelming that the and completed after the hail and one several months finding should be set aside and a new trial ordered. Garza later. Ashmore further testified that he knew this v. Alviar, 395 S.W.2d 821, 823 (Tex.1965). We are information when he made his appraisal award. required to consider all of the evidence in the case in making this determination. See id. Findings of fact are the (6) Ashmore testified that Olsovsky complained of the exclusive province of the jury and/or the trial court. Winn’s roof being repaired before the appraisers and Bellefonte Underwriters Ins. Co. v. Brown, 704 S.W.2d umpire could inspect it so that it was difficult to tell 742, 744–45 (Tex.1986). A court of appeals cannot make whether there had been hail damage to the roof in 1988. findings of fact; it can only “unfind” facts. Id. (7) Olsovsky’s estimate for roof repairs was $135.00 per square. Olsovsky provided Ashmore this Based on our review of the entire record on this issue, we information, substantiated by estimates from Lydick find that there is sufficient evidence to support the jury’s Roofing and Weatherford Roofing, at $142.00 per affirmative answer to Question 14. In addition to Barnes’ square and $135.00 per square, respectively. Thayer’s admissions that he had lied about the March 1988 hail per-square estimate was $325.00, and Ashmore could damage and correspondent repair costs, evidence was provide no information from Thayer that backed this presented of the following: estimate. Ashmore testified that he had access to this (1) When questioned about whether Winn’s store information and considered it in making his award, but needed considerable work before the hail (inside and that he could not tell if it was for the same type of roof out) and whether the price changed after the hail, as the roof for which he made the award. Ashmore Barnes would not give a direct answer but could relied on Thayer’s figures when making the award produce no evidence that his roofing contractor, because he thought they were correct. Armored Roofing (Armored), changed its contract price after the hail. Barnes’ testimony shows that he did not tell the truth about the 1988 hail damage to the Thaten property. (2) Armored completed its roofing job a few days after Barnes’ and Ashmore’s testimony reveals that there was a the March 1988 hailstorm, and Barnes knew of no great deal of confusion about which part of the roof on the damage to the roof after that time. Barnes refused to Thaten property was actually damaged during the 1988 assume that any leakage damage to the Winn’s store hailstorm, so *271 much so that the appraisers and umpire was not from the hail but admitted that Armored had

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 4 Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264 (1992)

could not tell which part needed to be replaced because of finding and as such would be improper.” Id., 596 S.W.2d the storm. at 290. [16] This evidence is sufficient for the jury to have reasonably Both of these cases were decided before the 1988 concluded that the appraisal award was based on fraud. amendment to TEX.R.CIV.P. 277. Rule 277 provides, in The jury could have found that: (1) Barnes made a pertinent part: material representation as to which part of the roof was actually damaged by the March 1988 hailstorm; (2) this In all jury cases the court shall, representation was false; (3) Barnes knew it was false whenever feasible, submit the cause when he made it; (4) Barnes intended that Western, upon broad-form questions. The Thayer, Olsovsky, and Ashmore should act upon it; (5) court shall submit such instructions Ashmore4 did act in reliance upon it pursuant to the and definitions as shall be proper to insurance contract between Western and Barnes; and (6) enable the jury to render a verdict. Western thereby suffered injury. Additionally, the evidence of Barnes’ dishonesty and the resultant Id. (emphasis supplied). In Texas Dep’t of Human confusion as to which portion of the roof actually required Resources v. E.B., 802 S.W.2d 647, 649 (Tex.1990), the replacing was sufficient for the jury to have reasonably supreme court stated that “whenever feasible” means “in concluded that the appraisal award was the result of any or every instance in which it is capable of being accident or mistake, based on Jury Instructions 14–B and accomplished.” Thus, unless “extraordinary 14–C. circumstances” exist, a trial court must submit broad-form questions. Id. Because we find sufficient evidence from which the jury could have concluded that the appraisal award was the The “controlling question” in E.B. was whether the result of fraud, accident, or mistake, we overrule Barnes’ parent-child relationship between the mother and her and Softline’s second points of error. In view of our children should be terminated, and not what specific finding with respect to Barnes’ and Softline’s first and ground or grounds the jury relied on to affirmatively second points of error, we deem it unnecessary to address answer the question posed. Id. The E.B. court also their third points of error. rejected arguments that the jury was required to agree on the specific grounds for termination. Rather, it was [15] By his fourth point of error, Barnes complains that enough that the jurors agreed that the mother had Jury Question No. 14 was impermissibly multifarious endangered her children by doing one or more of the because fraud, accident, and mistake are distinct things listed in the jury instruction. Id. affirmative defenses that should have been submitted separately to the jury. Barnes contends that the question *272 In the case before us, the controlling question was was improper because there is no way of knowing which whether the appraisal award was the result of fraud, of these defenses the jury intended from its affirmative accident, or mistake and not which of these specific finding. grounds the jury relied upon to answer Question 14. Under E.B., the jury was not required to agree on the We have found that evidence sufficient to prove each of specific ground that resulted in the improper appraisal these theories was presented to the jury at trial. award. See also TEX.R.CIV.P. 277 (court may submit a Nonetheless, we must consider whether it is necessary question disjunctively when it is apparent from the that we be able to determine which of the defenses the evidence that one or the other of the conditions or facts jury intended from its affirmative finding. inquired about necessarily exists). Moreover, the trial judge complied with Rule 277 by submitting the Barnes primarily relies on European Import Co. v. Lone instructions necessary to enable the jury to render a Star Co., 596 S.W.2d 287, 290 (Tex.Civ.App.—Houston verdict on the appraisal award issue. [1st Dist.] 1980, writ ref’d n.r.e.) and Parker v. Keyser, 540 S.W.2d 827, 830–31 (Tex.Civ.App.—Corpus Christi Because we find that Jury Question 14 was proper in light 1976, no writ). The European court ruled that a special of the current version of Rule 277 and the supreme court’s issue inquiring whether the execution of a guaranty interpretation of that rule, we overrule Barnes’ fourth agreement was obtained by fraud or duress was point of error. “multifarious and would cause the court to speculate [17] concerning what the jury intended from an affirmative In its fourth point of error, Softline complains the trial court improperly limited Softline’s recovery to 20% of Barnes’ actual damages and prejudgment interest because WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 5 Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264 (1992)

the contract between Softline and Barnes and the jury’s Barnes does not assert that Softline was engaged in the answer to Question 13 entitled Softline to 20% of Barnes’ unauthorized practice of law. He does not dispute the gross recovery from Western. existence of the contract with Softline or any of its terms, nor does he contend that the contract was unconscionable Jury Question No. 13 asked: or the result of unequal bargaining power. Based on the evidence presented at trial, the jury concluded that Do you find from a preponderance of the evidence that Softline was entitled to recover 20% of the gross amount Softline Services and Plaintiffs agreed that Softline was Barnes recovered from Western, pursuant to that contract. to be paid by the Plaintiffs an amount equal to 20% of Aside from his mistaken reliance upon Jansen, Barnes has the gross amount recovered prior to any alterations presented no evidence or authority on appeal, and we are and/or depreciation with no limitations or restrictions aware of none, why he should not be required to abide by on the method of recovery, or for time and expenses, the terms of his contract with *273 Softline. Thus, whichever is greater, and directed all interested parties Barnes’ argument must fail. to honor Softline Services’ interest and lien in the agreement? [Emphasis supplied.] [18] Words used in a contract are to be given their plain, ordinary, and generally accepted meanings unless the Answer “Yes” or “No.” instrument itself shows them to have been used in a technical or different sense. Western Reserve Life Ins. Co. ANSWER: Yes v. Meadows, 152 Tex. 559, 261 S.W.2d 554, 557 (1953), cert. denied, 347 U.S. 928, 74 S.Ct. 531, 98 L.Ed. 1081 Similarly, the contract between Barnes and Softline (1954). The term “gross” means “an overall total provided that Barnes was to pay Softline “an amount exclusive of deductions.” WEBSTER’S THIRD NEW equal to 20% of the gross amount recovered prior to any INTERNATIONAL DICTIONARY 1002 (1981). Thus, deductions for deductibles and/or depreciation with no the “gross amount” is the overall, total amount Barnes limitations or restrictions on the method of recovery” for was awarded. That amount includes: (1) actual damages Softline’s services in collecting insurance proceeds for the of $67,834.89, trebled to $203,504.67, (2) attorneys’ fees hail-damaged roof from Western. of $13,500.00, (3) prejudgment interest of $16,325.99, and (4) postjudgment interest at 10% per annum from and Relying on Unauthorized Practice of Law Committee v. after the date of the judgment until fully paid. Jansen, 816 S.W.2d 813, 814 (Tex.App.—Houston [14th Accordingly, Softline is entitled to 20% of each of these Dist.] 1991, writ denied), Barnes asserts that Softline is amounts. precluded from any recovery. In the judgment that formed the basis of the Jansen appeal, the trial court permanently We sustain Softline’s fourth point of error. enjoined a public insurance adjusting firm (Jansen) from asserting a contingent fee claim against a client who has [19] In two cross-points Western complains that the trial contracted with an attorney on a contingent fee basis in court erred in awarding Barnes treble damages and the same matter. Id. at 814. The trial court’s ruling on that attorneys’ fees. Western directs us to TEX.BUS. & issue was undisputed on appeal. Id. Without the benefit of COM.CODE ANN. § 17.50(b) (Vernon Supp.1993), knowledge of the facts in that case, we cannot determine which provides that only consumers who prevail in a trial whether Jansen was in the practice of contracting with his on the merits are entitled to recover treble damages. clients on a contingency fee basis before or after those Western contends that Barnes did not prevail at trial clients entered into contingency fee contracts with because of the jury’s affirmative finding in response to attorneys on the same matters. Question 14. This argument is without merit. In the case before us, however, Barnes contracted with In his original petition Barnes sought to recover damages Softline on February 8, 1989, over a year-and-a-half from Western for breach of contract, insurance code before Barnes filed suit against Western. We find it violations, breach of duty of good faith and fair dealing, inconceivable that the Jansen trial court intended to DTPA violations, and negligence and gross negligence. enable insureds to avoid contingency fee contracts already The jury found that Western breached its duty of good in existence with insurance adjustors by subsequently faith, engaged in unfair or deceptive practices, in violation contracting on a contingency fee basis with an attorney of the Texas Insurance Code and the Texas Deceptive about the same matter. Moreover, we are not bound by the Trade Practices–Consumer Protection Act, and was decisions of our sister appellate courts, much less those of grossly negligent in its handling of Barnes’ claim. Thus, the trial courts.

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 6 Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264 (1992)

Barnes prevailed on all of his causes of action. Moreover, 827 (Tex.App.—Austin 1990, writ denied); Western does not dispute any of these findings. TEX.R.APP.P. 74(f).

The jury also found that Barnes had suffered damages in We overrule both of Western’s cross-points. the amount of $67,834.89 as a result of the March 1988 hailstorm and that he was entitled to attorneys’ fees in the We affirm the trial court’s judgment, except as it relates amount of $13,566.98. Barnes did not recover the amount to Softline’s fourth point of error. With respect to that of damages requested in his petition, but many litigants do point, we reverse the trial court’s judgment and render not recover the entire amount they seek at trial. judgment for Softline of 20% of Barnes’ gross damages recovered, including actual and trebled damages, pre- and Western’s complaint that the trial court improperly postjudgment interest, and attorneys’ fees. awarded Barnes attorneys’ fees is without support in the record or the case law. Accordingly, this point is waived The parties shall share equally the costs of this appeal. on appeal. Lakeway Land Co. v. Kizer, 796 S.W.2d 820,

Footnotes 1 On February 8, 1989, Barnes and Softline entered into an agreement under which Softline agreed to investigate and document Barnes’ claims for presentation to Western. A Softline representative initiated the appraisal process provided for in the insurance contract between Barnes and Western. 2 Barnes contends that the jury’s factual finding was against the great weight and preponderance of the evidence. When a party without the burden of proof on a special issue complains of the jury’s adverse fact finding, that party should phrase his point of error as “insufficient evidence” to support the jury’s findings. Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex.1983). Since fraud, accident, and mistake are affirmative defenses, Western, and not Barnes, had the burden of proof on Jury Question 14. The supreme court has adopted a liberal rule of reference to the construction of points of error contained in appellate briefs, however, (see Pool v. Ford Motor Co., 715 S.W.2d 629, 630 (Tex.1986) (opinion on reh’g), O’Neil v. Mack Trucks, Inc., 542 S.W.2d 112, 114 (Tex.1976), and TEX.R.APP.P. 74(p)), and so we will construe an inappropriately phrased point of error as raising a challenge to the factual sufficiency of the evidence. See Muhlbauer v. Muhlbauer, 686 S.W.2d 366, 368 (Tex.App.—Fort Worth 1985, no writ). 3 Barnes claimed that the March 1988 hailstorm damaged two of his properties: the Lamar property, where Barnes maintained offices, and the Thaten property, which was a strip shopping center. Winn’s Variety Stores was one of two tenants located at the Thaten property. 4 We cannot determine the basis of Thayer’s and Olsovsky’s award because their testimony is not before us.

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WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 7 Blum’s Furniture Co., Inc. v. Certain Underwriters at Lloyds..., 459 Fed.Appx. 366...

Thomas Clark Wright, Wright & Close, L.L.P., Frank 459 Fed.Appx. 366 Anthony Piccolo, I, Esq., Preis & Roy, A.P.L.C., Henry This case was not selected for publication in the Sim Platts, Jr., Esq., Wright & Close, L.L.P., Houston, Federal Reporter. TX, for Defendant–Appellee. Not for Publication in West’s Federal Reporter See Fed. Rule of Appellate Procedure 32.1 generally Appeal from the United States District Court for the governing citation of judicial decisions issued on or Southern District of Texas, 4:09–CV–3479. after Jan. 1, 2007. See also Fifth Circuit Rules 28.7, 47.5.3, 47.5.4. (Find CTA5 Rule 28 and Find CTA5 Before KING, JOLLY, and GRAVES, Circuit Judges. Rule 47) United States Court of Appeals, Fifth Circuit. *367 PER CURIAM:* BLUM’S FURNITURE COMPANY, INC., Plaintiff–Appellant, v. CERTAIN UNDERWRITERS AT LLOYDS FACTS AND PROCEDURAL BACKGROUND LONDON, Defendant–Appellee. Certain Underwriters at Lloyds London (“Lloyds”) issued No. 11–20221 | Summary Calendar. | Jan. 24, 2012. to Blum’s Furniture Company (“Blum’s”) an insurance policy, number PUC 102524 (“policy”), covering its business property. During Hurricane Ike in 2008, the Synopsis insured’s building and contents (collectively “the Background: Insured company brought Texas state-court property”) sustained extensive damage. On September 17, action against insurer, alleging breach of contract, fraud, 2008, Blum’s submitted its claim under the policy to conspiracy, and common-law and statutory bad faith Lloyds. claims in relation to insurance claim, under business property policy, stemming from hurricane damage. On September 26, 2008, T.M. Mayfield & Company, an Insurer removed action and asserted defense of estoppel independent insurance claims adjuster hired by Lloyds, based on ongoing appraisal procedure provided for by inspected the property. After conducting its inspection, policy. The United States District Court for the Southern T.M. Mayfield & Co. forwarded to Lloyds a detailed District of Texas, Nancy F. Atlas, J., 2011 WL 819491, report containing an estimate for payment of Blum’s granted insurer’s summary judgment motion. Company claim. On October 28, 2008, Lloyds requested a proof of appealed. loss in exchange for payment of $50,000.00. Less than a year after Hurricane Ike, Lloyds obtained a second estimate from Belfor USA. Upon receiving Belfor USA’s report, Lloyds adjusted the claim and paid Plaintiff Holdings: The Court of Appeals held that: approximately $300,000.00. Plaintiff accepted this [1] payment, but invoked the appraisal provision under the insurer did not breach its contract with company, and policy on August 10, 2009. [2] insurer did not act in bad faith in processing company’s According to the appraisal provision, if the parties to the claim. policy disagreed on the value of the property loss, either party may make written demand for an appraisal of the Affirmed. loss. In the event that a party demands appraisal, each party will select its own impartial appraiser. If the selected appraisers cannot agree on the value of the loss, Attorneys and Law Firms the two appraisers will select an umpire to whom the differences will be submitted. Once an umpire has been *366 Peter M. Kelly, Attorney, Law Office of Peter M. selected, an agreement on the amount of loss by the Kelly, P.C., Robert Chamless Lane, Middagh & Lane, umpire and either appraiser will be binding. However, P.L.L.C., Houston, TX, for Plaintiff–Appellant. Lloyds still retained its right to deny the claim.

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Less than one month later, Blum’s filed this lawsuit in Fed.R.Civ.P. 56(c). The moving party bears the burden of Texas state court asserting causes of action for breach of identifying an absence of evidence to support the contract, fraud, conspiracy, and common law and nonmoving party’s case. Celotex Corp. v. Catrett, 477 statutory bad faith claims. Lloyds then removed the U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In lawsuit to federal court and asserted the defense of determining whether summary judgment is appropriate, estoppel based on the appraisal procedure. the evidence and factual inferences drawn therefrom are to be viewed in a light most favorable to the non-movant, Meanwhile, the appraisal process continued. Each party and all reasonable doubts about the facts should be selected an appraiser who inspected the property and resolved in favor of the non-movant. Boston Old Colony issued estimates of damage. When the appraisers could Ins. v. Tiner Associates Inc., 288 F.3d 222, 227 (5th not agree on the proper value of the damage, they selected Cir.2002). an umpire as required under the policy. After more than one year spent in the appraisal process, the umpire Where, as here, jurisdiction is based upon diversity, this ultimately issued an award for damage to the property court applies the law of the forum state. Holt v. State exceeding $1,000,000. Farm Fire & Cas. Co., 627 F.3d 188, 191 (5th Cir.2010). Accordingly, Texas substantive law controls. In the Thereafter, Lloyds issued two checks to Blum’s for the absence of a final decision by the Texas Supreme Court appraisal amount, less amounts already paid and other addressing the issue at hand, this court must determine, in deductions provided for by the policy. Blum’s accepted its best judgment, how the state’s highest court would Lloyds’s payment of the appraisal amount, but continued resolve the issue if presented with it. Id. Because the to pursue the breach of contract and extra-contractual Texas Supreme Court has not addressed the issue at hand, claims. we must make an “Erie guess.” Id. at 191–192.

Following the close of discovery, Lloyds filed its motion for summary judgment. The district court granted Lloyds’ motion for summary judgment, finding that “when an insurer makes timely payment of a binding and DISCUSSION enforceable appraisal award, and the insured accepts that payment, the insured is ‘estopped by the appraisal award In this case, Blum’s raises two issues challenging the from pursuing a breach of contract claim the insure[r] district court’s grant of summary judgment in favor of [sic].’ ” Blum’s Furniture Co. v. Certain Underwriters at Lloyds. These issues, however, hinge upon the same Lloyds *368 London, 2011 WL 819491, *1, *3 argument—that Lloyds breached its duty of good faith (S.D.Tex.2011) (citing Franco v. Slavonic Mut. Fire Ins. and fair dealings with Blum’s by failing to promptly pay Ass’n., 154 S.W.3d 777, 787 (Tex.App.2004)). Based on the full policy claim. this holding, the district court found that an insured cannot maintain a common law and/or statutory bad faith In Liberty Nat’l Fire Ins. Co. v. Akin, the Texas Supreme claim where the breach of contract claim fails, unless the Court recognized that “in most circumstances, an insured insurer’s actions fall within one of the recognized may not prevail on a bad faith claim without first showing exceptions, to which Blum’s has failed to present any that the insurer breached the contract.” 927 S.W.2d 627, evidence. Id. at *3–*5. 629 (Tex.1996). The only recognized exceptions to this rule are if the insurer “commit[s] some act, so extreme, Aggrieved by the district court’s grant of summary that would cause injury independent of the policy claim,” judgment, Blum’s appealed. or fails “to timely investigate the insured’s claim.” Republic Ins. Co. v. Stoker, 903 S.W.2d 338, 341 (Tex.1995).

Under Texas law, when an insurer makes timely payment STANDARD OF REVIEW of a binding and enforceable appraisal award, and the insured accepts the payment, the insured is “estopped by This court reviews a district court’s grant or denial of the appraisal award from maintaining a breach of contract summary judgment de novo. Dunn–McCampbell Royalty claim against [the insurer].” Franco v. Slavonic Mut. Fire Interest, Inc. v. Nat’l Park Serv., 630 F.3d 431, 435 (5th Ins. Ass’n, 154 S.W.3d 777, 787 (Tex.App.2004). Cir.2011). Summary judgment may be granted if there is no genuine issue as to any material fact and the moving According to Blum’s, because the appraisal award was party is entitled to judgment as a matter of law. See greater than the initial payment made by Lloyds

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(approximately $300,000), Lloyds’ final payment of the based on the general rule, Blum’s cannot maintain an claim was untimely and constituted a breach of contract. action for bad faith where the breach of contract claim Lloyds argues that Blum’s cannot use the difference in the fails, Akin, 927 S.W.2d at 629, and neither exception appraisal award and initial payment as evidence of a applies. Stoker, 903 S.W.2d at 341. breach of contract. See *369 Breshears v. State Farm Lloyds, 155 S.W.3d 340, 343 (Tex.App.2004) (“The Blum’s, however, would have this court believe that it Breshears may not use the fact that the appraisal award suffered additional damages because Lloyds initially paid was different than the amount originally paid as evidence only a portion of the entire claim thereby forcing Blum’s of breach of contract, especially when the contract they to invoke the appraisal process. To the contrary, Lloyds claim is being breached provides for resolution of began investigating Blum’s claim nine days after Blum’s disputes through appraisal.”). submitted its claim. Lloyds inspected the property damage and obtained estimates from two adjusters. Based on these [1] Here, it seems clear that Lloyds did not breach its estimates, Lloyds adjusted the claim and paid Blum’s contract with Blum’s. Blum’s made a claim, Lloyds approximately $300,000.00. Because Blum’s disagreed inspected the property, obtained estimates on the amount with the amount of payment, it invoked the appraisal of damage, and made an initial payment to Blum’s. When provision. Blum’s disputed the amount paid, it invoked the appraisal process to have independent appraisers determine the It is undisputed that the appraisal process can only amount of covered loss. Upon the conclusion of the determine the value of damages, while liability is left for appraisal process, Lloyds paid the difference between the the courts to decide. See, e.g., In re Universal appraisal award and the initial payment. Furthermore, the Underwriters of Tex. Ins. Co., 345 S.W.3d 404, 407 (Tex. district court found that “it is undisputed that Lloyds paid May 6, 2011). However, at no time during the claims the appraisal amount in a timely manner after the award process did Lloyds dispute the issue of coverage. Once was issued,” and that “Blum’s accepted that payment.” the appraisal process concluded with an award to Blum’s, Blum’s Furniture Co., 2011 WL 819491, at *3. Therefore, Lloyds made payment of that amount and Blum’s we find that Blum’s has failed to present any evidence accepted. Based on the evidence presented, Blum’s has which would establish a genuine issue of material fact failed to establish a genuine issue of material fact regarding its breach of contract claim against Lloyds. regarding its bad faith claims against Lloyds.

As stated above, “in most circumstances, an insured may not prevail on a bad faith claim without first showing that the insurer breached the contract.” Akin, 927 S.W.2d at 629. The only recognized exceptions to this rule are if the CONCLUSION insurer “commit[s] some act, so extreme, that would cause injury independent of the policy claim,” or fails “to Based on the foregoing analysis, the judgment of the timely investigate the insured’s claim.” Republic Ins. Co. district court is AFFIRMED. v. Stoker, 903 S.W.2d 338, 341 (Tex.1995). [2] Here, Blum’s argues that because the initial payment Parallel Citations made by Lloyds was less than the appraisal award, Lloyds’ failure to pay the full amount of the claim 2012 WL 181413 (C.A.5 (Tex.)) constituted an act, so extreme, that caused injury independent of the policy claim. Lloyds contends that,

Footnotes * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

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WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 Blum’s Furniture Co., Inc. v. Certain Underwriters at Lloyds..., 459 Fed.Appx. 366...

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 4 Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (2004)

H. Dwayne Newton, Houston, Jeffrey Lee Hoffman, 154 S.W.3d 777 Richmond, for appellees. Court of Appeals of Texas, Houston (14th Dist.). Panel consists of Justices ANDERSON, HUDSON, and FROST. Patsy FRANCO, Individually and as Next Friend of Jesse Ryan Villanueva, Alyssa Villanueva, Victoria Villanueva, and Pete Villanueva, Minors, and Jesse Villanueva, Appellants, v. SLAVONIC MUTUAL FIRE INSURANCE OPINION ASSOCIATION, Jed Walzel, Southland Services, Inc., Carl King, and Ernie Afflitto, Appellees. JOHN S. ANDERSON, Justice.

No. 14–03–01433–CV. | Dec. 16, 2004. Appellants, Patsy Franco, individually and as next friend of her four children Jesse Ryan, Alyssa, Victoria, and Pete Villanueva, and Jesse Villanueva, her husband, appeal Synopsis summary judgments granted *780 in favor of appellees. Background: Insureds brought action against This suit arises from a claim filed by Patsy Franco, the homeowners’ insurer, its employee, and adjusters to insured, with her insurer seeking coverage under a fire recover for breach of contract and based on extra- and extended coverage insurance policy for damage contractual causes of action stemming from alleged caused by a plumbing leak in her home. Appellants, Patsy misrepresentations concerning the policy and the handling Franco and her family, filed suit against appellees, the of the claim for damage from plumbing leak. The 149th insurer, adjuster, and individuals who handled the District Court, Brazoria County, Robert E. May, J., insurance claim, alleging breach of contract and extra- entered summary judgments in favor of defendants. contractual causes of action stemming from alleged Insureds appealed. misrepresentations made concerning the policy and the handling of the claim. We affirm.

Holdings: The Court of Appeals, John S. Anderson, J., held that: [1] FACTUAL AND PROCEDURAL BACKGROUND insurer’s appraiser was not shown to be biased against insureds; On June 18, 2000, Patsy Franco noticed water on her [2] porch. It was discovered that the water was the result of a insureds failed to present evidence creating factual plumbing leak in her home. She notified her insurer, issue precluding summary judgment on extra-contractual Slavonic Mutual Fire Insurance Association, of the claims; and plumbing leak and sought coverage for the cost of [3] repairing the damage caused by the plumbing leak under a statutes of limitations applicable to extra-contractual fire and extended coverage insurance policy issued by claims began to run at time of insurer’s alleged Slavonic insuring her home from certain losses.1 misrepresentations in connection with sale of policy more than five years before suit was commenced. Jed Walzel, secretary of Slavonic, acknowledged Franco’s claim and hired Southland Services, Inc. to inspect the premises at Franco’s residence and adjust the claim. Affirmed. Southland assigned the claim to individual adjustors Ernie Afflitto and Carl King. King contacted Franco about her claim and instructed her to contact a plumber. The section Attorneys and Law Firms of the pipe that was leaking was located within the wall *779 John Steven Mostyn, Eric Vincent Blanchard, cavity, and King authorized the kitchen wall to be opened Houston, for appellants. for plumbing repairs. It was discovered that the leak was caused by a hole in a drain pipe connected to the kitchen

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (2004)

sink that leaked only when the sink was used. Franco did Garibay agreed on the appointment of Lynn Taylor as the not know how long the pipe had been leaking. umpire, and the appraisal process moved forward.

After the plumbing repairs were made, King returned to Franco and Kubala claimed mold in Franco’s home was Franco’s home, inspected the damage, and prepared an caused by water from the plumbing leak and needed to be estimate of the repairs. On July 7, 2000, King sent his tested. Kubala estimated the cost of repair as $12,397.72. estimate of the cash value of the repairs to Slavonic. King Garibay disagreed with Kubala’s estimate and, instead, estimated the amount of the actual cash value of the agreed with an estimate prepared by Southland estimating repairs as $3,930.55, less a $250 deductible, for a total the cost of repair as $4,002.2 cash value of $3,680.55. On July 18, 2000, Slavonic tendered a check in that amount to Franco. Slavonic also On December 28, 2000, Taylor sent a proposed appraisal paid an invoice in the amount of $285 for emergency award to Kubala and Garibay proposing $8,273.53 as the services at the Franco residence related to the plumbing cost of repair and $6,863.03 as the amount of the loss leak. Franco did not cash the check for $3,680.55. with depreciation deducted. Taylor’s proposed award included an allowance for “mold treatment” but not for On July 21, 2000, Southland was notified by John Kubala, any special remediation effort because Taylor had “not Franco’s designated appraiser, that Franco was invoking been presented with any information that the mold the appraisal provision of the Slavonic policy. On July 31, condition that presently exists is one that warrants special Walzel received a fax from Southland transmitting environmental remediation.” Franco’s demand for appraisal. The appraisal provision in the policy provides the following: On January 13, 2001, Taylor submitted a revised, proposed award to Kubala and Garibay. Taylor and Appraisal. In case the insured and this Company shall Kubala both agreed to the revised proposed award of fail to agree as to the actual cash value or the amount of $8,350.51 for the cost of repair and $6,902.03 for the loss, then, on the written demand of either, each shall actual amount of loss, and Slavonic paid Franco select a competent and disinterested appraiser and $6,652.03 on January 22, which represented the actual notify the other of the appraiser selected within twenty value of the loss as determined by the revised, proposed days of such demand. The appraisers shall first select a award agreed to by Kubala and Taylor, less the $250 competent and disinterested umpire; and failing for deductible specified in the policy. Franco accepted fifteen days to agree upon such umpire, then, on payment and deposited the check. request of the insured or this Company, such umpire shall be selected by a judge of a district court of a In June 2001, appellants filed suit against Slavonic, judicial district where the loss occurred. The appraisers Walzel, Southland, Afflitto, and King, alleging violations shall then appraise the loss, stating separately actual of Texas Insurance Code articles 21.21 and 21.55 and the cash value and loss to each item; and, failing to agree, Texas Deceptive Trade Practices Act (“DTPA”) and shall submit their differences only to the umpire. An claims of negligent misrepresentation, fraud, breach of award in writing, so itemized, *781 of any two when contract, breach of the duty of good faith and fair dealing, filed with this Company, shall determine the amount of breaches of warranty, unconscionable conduct, gross actual cash value and loss. Each appraiser shall be paid negligence, and malice. All of appellants’ claims stem by the party selecting him and the expenses of appraisal from alleged misrepresentations made by appellees and umpire shall be paid by the parties equally. concerning the policy and its coverage and the appellees’ alleged mishandling of Franco’s claim.3 Appellants sought On August 14, 2000, Afflitto notified Kubala that economic and mental anguish damages, treble damages Slavonic designated Sergio Garibay as its appointed under the DTPA, exemplary damages, and attorney’s fees. appraiser. In April 2003, Slavonic and Walzel filed a joint motion In mid-July 2000, prior to Garibay’s appointment as for summary judgment (“Slavonic’s motion”) asserting Slavonic’s appraiser, Southland had contacted Garibay to traditional and no-evidence grounds as follows: examine the premises of the Franco home and determine the cause of the damage, and Garibay issued a report 1. The Plaintiffs submitted their contractual claim to regarding his examination of the Franco residence and his binding appraisal under the policy [and the appraisal findings. Franco protested Garibay’s appointment as award] was paid by Defendant Slavonic; Slavonic’s appraiser because of his previous investigation of the leak. However, on October 4, 2000, Kubala and *782 2. The Plaintiffs are estopped to claim additional damages under the policy of insurance WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (2004)

since they have retained the benefit of the appraisal and (4) appellants have no evidence to support certain award paid by Slavonic; elements of their article 21.21, DTPA, and 3. The Plaintiffs’ contractual claims are not covered negligence/gross negligence claims. In August 2003, the under the policy because the plumbing leak was not trial court signed a “Final Judgment of Dismissal” sudden but was a repeated leak over at least a period granting Southland’s summary judgment motion. of weeks;4

4. The summary judgment evidence establishes that no misrepresentation/fraud took place, the claims are DISCUSSION barred by the applicable statute of limitations, or, in the alternative there is no evidence to support Appellants challenge the summary judgments rendered in Plaintiffs’ misrepresentation/fraud claims; favor of appellees Slavonic, *783 Walzel, Southland, King, and Afflitto in five issues, arguing: (1) the trial 5. The summary judgment evidence establishes court abused its discretion in overruling their special compliance with the provisions of Art. 21.55 of exception to Slavonic’s motion; (2) Slavonic’s payment the Texas Insurance Code as a matter of law; of the appraisal award does not dispose of appellants’ breach of contract claim; (3) Slavonic’s motion fails to 6. There is no evidence to support Plaintiffs’ show there are no fact issues as to any elements of claims of violations of Art. 21.21 of the Texas appellants’ extra-contractual causes of action; (4) Insurance Code or the Texas DTPA or that Southland’s motion does not establish that there are no Plaintiffs were damaged thereby; fact issues as to any elements of appellants’ extra- contractual causes of action; and (5) fact issues preclude 7. There is no evidence to support Plaintiffs’ no-evidence summary judgment in favor of Southland, Art. 21.21, DTPA and misrepresentation/fraud Afflitto, and King. claims against Jed Walzel; and

8. There is no evidence that Slavonic or Walzel prevented Plaintiffs from remediating their premises or intentionally, knowingly, recklessly STANDARD OF REVIEW or negligently caused the minor Plaintiffs any bodily injury. The movant for summary judgment has the burden to show that there is no genuine issue of material fact and Appellants filed a response and specially excepted to that it is entitled to judgment as a matter of law. TEX.R. Slavonic’s motion, contending it is unclear what type CIV. P. 166a(c); Nixon v. Mr. Prop. Mgmt. Co., 690 of summary judgment motion, traditional or no- S.W.2d 546, 548 (Tex.1985). We review the summary evidence, Slavonic filed. The trial court specifically judgment evidence using familiar standards of review. See denied Slavonic’s motion for summary judgment Dolcefino v. Randolph, 19 S.W.3d 906, 916–17 with respect to the lack of coverage ground, but (Tex.App.-Houston [14th Dist.] 2000, pet. denied). granted the motion in all other respects, ordering that appellants take nothing as to Slavonic and Walzel. A defendant moving for traditional summary judgment In June 2003, Southland, Afflitto, and King jointly moved assumes the burden of showing as a matter of law the for summary judgment (“Southland’s motion”) on both plaintiff has no cause of action against him. Levesque v. traditional and no-evidence grounds. Southland’s motion Wilkens, 57 S.W.3d 499, 503 (Tex.App.-Houston [14th alleged summary judgment was proper based on the Dist.] 2001, no pet.). Traditional summary judgment for a following: (1) because appellants’ claims against Slavonic defendant is proper only when the defendant negates at failed, their claims against Slavonic’s agents, Southland, least one element of each of the plaintiff’s theories of King, and Afflitto, also must fail; (2) appellants’ recovery, or pleads and conclusively establishes each acceptance of the appraisal award waives appellants’ element of an affirmative defense. Science Spectrum, Inc. claim for insurance benefits; (3) the summary judgment v. Martinez, 941 S.W.2d 910, 911 (Tex.1997). A evidence shows Slavonic paid Franco’s plumbing-leak defendant may file a “no evidence” motion for summary claim in its entirety as determined by appraisal, thus judgment, after sufficient time for discovery has passed, if Southland, King, and Afflitto are entitled to summary there is no evidence of one or more essential elements of judgment on appellants’ DTPA and insurance code claims a claim or defense on which an adverse party would have premised upon the contention that the claim was denied; the burden of proof at trial. See TEX.R. CIV. P. 166a(i).

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (2004)

As with the traditional summary judgment, in reviewing a 858 S.W.2d 337, 343 n. 7; Dolcefino, 19 S.W.3d at 925– “no evidence” summary judgment, we review the 26; see also Rosas v. Hatz, 147 S.W.3d 560, 562 evidence in the light most favorable to the non-movant (Tex.App.-Waco, 2004, no pet. h.) (refusing to infer a and disregard all evidence and inferences to the contrary. ruling on a special exception based only upon the trial Coastal Conduit & Ditching, Inc. v. Noram Energy Corp., court’s disposition of the summary judgment motion 29 S.W.3d 282, 284 (Tex.App.-Houston [14th Dist.] standing alone); Well Solutions, Inc., v. Stafford, 32 2000, no pet.). S.W.3d 313, 316–17 (Tex.App.-San Antonio 2000, no pet.) (holding “a trial court’s ruling on an objection to [1] [2] [3] Because the propriety of summary judgment is a summary judgment evidence is not implicit in its ruling question of law, we review the trial court’s decision de on the motion for summary judgment; a ruling on the novo. See Provident Life & Accident Ins. Co. v. Knott, objection is simply not ‘capable of being understood’ 128 S.W.3d 211, 215 (Tex.2003). In an appeal from a from the ruling on the motion for summary judgment”). summary judgment, issues an appellate court may review As a general rule, a complaint is preserved for appellate are those the movant actually presented to the trial court. review only if the record establishes the complaint was Travis v. City of Mesquite, 830 S.W.2d 94, 100 made known to the trial court in a timely manner, and the (Tex.1992). When the trial court grants summary trial court ruled on the complaint. See TEX.R.APP. P. judgment specifically on fewer than all grounds asserted, 33.1(a). Rule 166a does not prevent an appellate court from affirming the judgment on other grounds the parties Appellants concede that the trial court did not explicitly properly raised before the trial court. Cincinnati Life Ins. rule on their special exception. Instead, appellants Co. v. Cates, 927 S.W.2d 623, 625 (Tex.1996). If the trial contend that the trial court implicitly overruled their court grants a motion for summary judgment without special exception pursuant to Rule 33.1 by (1) granting stating the grounds on which it relied, we must affirm the Slavonic’s motion and not requiring Slavonic to replead summary judgment if any ground argued in the motion its summary judgment grounds, and (2) refusing to sign was sufficient. Star–Telegram, Inc. v. Doe, 915 S.W.2d an order setting forth its denial of the special exception or 471, 473 (Tex.1995); Blan v. Ali, 7 S.W.3d 741, 747–48 the bases for granting Slavonic’s motion for summary (Tex.App.-Houston [14th Dist.] 1999, no pet.). judgment when appellants reurged the special exception in their motion for reconsideration. See TEX.R.APP. P. 33.1(a)(2)(A). Slavonic and Walzel contend that appellants have waived appellate review of this issue by I. Slavonic’s Motion for Summary Judgment not obtaining a ruling on their special exception in the court below. A. The Special Exception to Slavonic’s Motion for Summary Judgment [7] We examine the record to determine whether or not In issue one, appellants challenge the trial court’s denial appellants obtained a ruling on the special exception. of their special exception to Slavonic’s motion. In their First, with regard to appellants’ arguments pertaining to response to Slavonic’s motion, appellants *784 their motion for reconsideration, despite their assertions to complained by special exception that Slavonic’s motion the contrary, nowhere in the motion for reconsideration was vague and unclear in that they were unable to tell do appellants request the trial court to reconsider or rule whether the motion was a traditional, no-evidence, or a on the special exception. Thus, the trial court’s denial of hybrid motion for summary judgment.5 Appellants the motion for reconsideration is not an implicit ruling on requested that Slavonic be required to replead the motion their special exception. See Alejandro v. Bell, 84 S.W.3d for summary judgment with more specificity “so as to 383, 388 (Tex.App.Corpus Christi 2002, no pet.) (holding identify what type of motion it is and clearly distinguish trial court implicitly ruled on objections to summary between traditional grounds and any no-evidence grounds judgment evidence where the appellant complained in his asserted.” motion for new trial of the trial court’s refusal to rule on [4] [5] [6] his objections). When a summary judgment is attacked on specificity grounds, a special exception is required. [8] Second, we address appellants’ contention that the trial McConnell v. Southside Indep. Sch. Dist., 858 S.W.2d court’s order granting summary judgment in favor of 337, 342 (Tex.1993) (“An exception is required should a Slavonic constitutes an implicit denial of appellants’ non-movant wish to complain on appeal that the grounds special exception. Appellants contend a denial is implied relied on by the movant were unclear or ambiguous.”). because the trial court did *785 not order Slavonic to The excepting party must obtain a ruling on the special replead its motion for summary judgment. Slavonic and exception to preserve the issue for appeal. McConnell, WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 4 Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (2004)

Walzel counter that the entry of summary judgment could contract are binding and enforceable, and every just as easily evidence an abandonment of the issue in the reasonable presumption will be indulged to sustain an trial court by appellants and, in addition, holding the entry appraisal award. Providence Lloyds Ins. Co. v. Crystal of a summary judgment constitutes an implicit denial of a City Indep. Sch. Dist., 877 S.W.2d 872, 875 (Tex.App.- special exception would render the refusal to rule San Antonio 1994, no writ). The effect of an appraisal provision of Rule 33.1(a) meaningless. provision is to estop one party from contesting the issue of damages in a suit on the insurance contract, leaving In light of the relevant rules and caselaw, we simply are only the question of liability for the court. Wells v. unable to infer from the record in this case that the trial American States Preferred Ins. Co., 919 S.W.2d 679, court implicitly overruled or implicitly made any ruling 683–85 (Tex.App.-Dallas 1996, writ denied) (analyzing regarding appellants’ special exception. See Dolcefino, 19 similar appraisal provision and concluding authority of S.W.3d at 926–27. The summary judgment order does not appraisal panel limited to determining only the amount of mention the special exception, and a ruling on the special loss). Because every reasonable presumption will be exception cannot be inferred based solely upon the indulged to sustain an appraisal award, the burden of disposition of Slavonic’s summary judgment motion. proof is on the party seeking to avoid the award. Barnes v. Appellants were required to obtain a ruling, and they Western Alliance Ins. Co., 844 S.W.2d 264, 267 failed to do so.6 Having failed to preserve the issue for (Tex.App.-Fort Worth 1992, writ dism’d by agr.). Texas review, we overrule appellants’ first issue. courts recognize three situations in which the results of an otherwise binding appraisal may be disregarded: (1) when the award was made without authority; (2) when the award was made as a result of fraud, accident, or mistake; B. The Appraisal Award or (3) when the award was not in compliance with the [9] In issue two, appellants assert (1) the appraisal award requirements of the policy. Wells, 919 S.W.2d at 683; should be set aside because the appraisal was not Providence Lloyds Ins. Co., 877 S.W.2d at 875. conducted in substantial compliance with the insurance policy, and (2) even if the appraisal award is valid, [15] Appellants argue that exception (1) applies; Slavonic’s payment of the appraisal award is not specifically, that “Garibay had a predetermined opinion as dispositive of the breach of contract action alleged against to what the scope of his appraisal would be and was, Slavonic and Walzel.7 therefore, bias[ed] against the Franco family.” We are required to view the summary judgment proof in the light [10] Appellants contend the appraisal award should be set most favorable to appellants and to resolve against aside because Garibay was an interested, prejudiced, and Slavonic any doubt as to the existence of a genuine issue biased appraiser, due to his status as an investigating of material fact. The evidence relied upon by appellants to engineer for Southland and the fact that he already had support their claim of bias consists of (1) Franco’s issued a report containing his opinions regarding the statement in a deposition excerpt that Garibay was an scope of appellants’ damages and coverage prior to his engineer hired by Southland to inspect their home and appointment as appraiser. Additionally, for the first time that he was appointed as an appraiser, and (2) Garibay’s on appeal, appellants contend that the award should be set affidavit in which he acknowledges being hired by aside because Garibay did not follow the procedure for Southland in mid-July 2002 to conduct an examination of the appraisal process because he did not submit an appellants’ house in order to determine the cause of the appraisal for consideration by Kubala or Taylor in damage from a plumbing leak and discusses his accordance with the appraisal provision of the policy. observations and conclusions concerning the leak.

Because appellants did not raise the second asserted basis [16] Upon reviewing the record before us, we find for setting aside the *786 appraisal award in their appellants have not presented summary judgment proof of response to Slavonic’s motion in the trial court, we may Garibay’s bias against the Franco family, thus no fact only examine whether the summary judgment evidence issue was presented. The showing of a pre-existing raised a fact issue as to whether Garibay was biased and, relationship, without more, does not support a finding of if so, whether evidence of such bias raises a fact issue as bias. See *787 Allison v. Fire Ins. Exchange, 98 S.W.3d to the appraisal award’s validity.8 See TEX.R.APP. P. 227, 255 (Tex.App.-Austin 2002, pet. granted, judgm’t 33.1(a); City of Houston v. Clear Creek Basin Auth., 589 vacated w.r.m.); Gardner v. State Farm Lloyds, 76 S.W.2d 671, 678 (Tex.1979). S.W.3d 140, 143–44 (Tex.App.-Houston [1st Dist.] 2002, no pet.). Here, the summary judgment evidence shows [11] [12] [13] [14] Texas courts have long held that appraisal that Garibay was hired by Southland “to examine the awards made pursuant to the provisions of an insurance WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 5 Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (2004)

premises” and “determine the cause of the damage, was no false advertisement or misleading or false possibly from a reported sink drain line leak.” Garibay statement or representation made to Franco in the sale of was not an employee of Slavonic, and Garibay’s report the insurance policy; (3) any misrepresentations or fraud and conclusions regarding the cause of the plumbing leak regarding the policy’s coverage when it was purchased were his own. There is no evidence suggesting that would have occurred, if at all, in February 1996 and are Slavonic influenced or exercised control over Garibay, barred by limitations; (4) any misrepresentations made that Garibay had a financial interest in Franco’s claim, or concerning the policy or appellants’ claim were not the that Garibay’s previous inspection of the premises producing cause of any damages to appellants because somehow factored into his damages valuation. Moreover, Slavonic paid the amount of the loss as determined by the the final appraisal award was entered into by Kubala, appraisal; (5) even if Slavonic denied appellants’ claim, Franco’s appraiser, and the umpire. Viewing the evidence the damage resulting from the plumbing leak was not a in the light most favorable to appellants, the evidence covered loss or was specifically excluded from coverage does not raise a fact issue as to Garibay being biased by the policy; (6) there is no evidence Slavonic failed to against appellants. meet the time deadlines imposed by article 21.55, or, alternatively, the summary judgment evidence [17] Appellants further allege that “payment of an appraisal conclusively established Slavonic met the time deadlines award is not dispositive of the Franco Family’s entire of article 21.55; and (7) there is no evidence that breach of contract cause of action against Slavonic appellants sustained bodily *788 injury or that Slavonic or Mutual.” Slavonic counters that the appraisal award is Walzel acted criminally, negligently, recklessly, binding and enforceable. The summary judgment record intentionally, or knowingly to cause any bodily injury. reveals that Slavonic did not deny Franco’s claim. Rather, Slavonic paid the full amount of the appraisal award to In response, appellants cite to the following evidence as Franco, and Franco accepted payment of the award. The raising a fact issue with regard to Slavonic’s alleged award is binding and enforceable. Under these violations of article 21.21 of the Texas Insurance Code circumstances, appellants are estopped by the appraisal and the DTPA in the sale of the policy: (1) Villanueva’s award from maintaining a breach of contract claim against deposition testimony that he was told the policy “was a Slavonic. See Gardner, 76 S.W.3d at 143–44 (affirming standard policy that homeowners have” and that he was summary judgment where there was no evidence raising a led to believe that they “had the max[imum]” coverage; fact issue about whether the insurer’s appraiser lacked and (2) Franco’s deposition testimony that she thought the independence). We hold summary judgment was proper Slavonic policy was the same as any other insurance in favor of Slavonic on appellants’ breach of contract policy, and that this evidences an omission of fact claim. regarding the policy by Slavonic’s representative. Appellants further contend the following evidence shows We overrule appellants’ second issue. Slavonic and Walzel violated the Insurance Code and the DTPA during the claim-handling process: (1) Franco’s deposition testimony that King told her that the policy covers damage from plumbing leaks so long as the C. Appellants’ Extra–Contractual Claims Against plumbing leak is above the foundation slab; and (2) Slavonic and Walzel Villanueva’s testimony, in response to being asked what In issue three, appellants contend Slavonic’s motion for was the first conversation he recalled having with Walzel, summary judgment did not conclusively establish that that “I don’t recall the first one. I know a conversation there are no genuine issues of material fact as to any was related to the—where we weren’t happy about what element of appellants’ extra-contractual causes of action. was going to be done to the house and we had—God, I Specifically, appellants argue that Franco and can’t recall, but I know his response was, ‘Well, you hired Villanueva’s lack of knowledge regarding the breaches an appraiser. He needs to represent ya’ll now.’ ” and/or violations is not dispositive of the merits of their Additionally, appellants cite the following evidence as extra-contractual causes of action. proof showing they were met with resistance and delay: (1) Franco’s testimony that Slavonic “took forever” to With regard to appellants’ extra-contractual claims, name their appraiser, and that when she disputed Garibay Slavonic and Walzel moved for summary judgment based as the appraiser, that it took another 20 to 30 days, on the following grounds: (1) there is no evidence that “somewhere around there,” to rename Garibay; and (2) Slavonic or Walzel misrepresented the terms of the policy Villanueva’s testimony that he felt “nothing was getting or made any false representations, statements, or resolved.” Finally, appellants cite to Walzel’s deposition advertisements concerning coverage afforded by the testimony in which he states that he does not know the policy; (2) the summary judgment evidence shows there WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 6 Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (2004)

provisions of article 21.21 “off the top of [his] head” as pleaded or otherwise raised, by proving as a matter of law evidence that Walzel “has a complete lack of that there is no genuine issue of material fact about when understanding with regard to the provisions and the plaintiff discovered, or in the exercise of reasonable requirements of [the] Texas Insurance Code.” diligence should have discovered, the nature of its injury. If the movant establishes that the statute of limitations bars the action, the nonmovant must then adduce summary judgment proof raising a fact issue in avoidance 1. Walzel’s No–Evidence Motion for Summary of the statute of limitations. Id. Judgment [18] [22] [23] The only evidence appellants cite in support of their Generally, a cause of action accrues when a extra-contractual claims asserted against Walzel are (1) wrongful act causes an injury, regardless of when the Walzel’s statement that he did not know the specific plaintiff learns of the injury. Moreno v. Sterling Drug, provisions of article 21.21 of the Texas Insurance Code Inc., 787 S.W.2d 348, 351 (Tex.1990). We note that off the top of his head, and (2) Villanueva’s statement that appellants did not respond to Slavonic’s statute of Walzel told them to contact their appraiser during the limitations summary judgment ground in the trial court or appraisal process. Appellants do not explain how these on appeal. Because appellants did not raise the discovery statements raise a fact issue on their article 21.21, DTPA, rule, Slavonic is not required to negate the applicability of and negligence claims alleged against Walzel. We the discovery rule by proving as a matter of law that there conclude the two cited statements do not raise a fact issue is no genuine issue of fact concerning the date when the on appellants’ extra-contractual claims alleged against Franco’s discovered or should have discovered the injury. Walzel. Additionally, the record shows appellants did not Here, the summary judgment evidence shows that present any evidence of bodily injury or any evidence that Slavonic sold Franco the policy in February 1996, and Walzel acted criminally, negligently, intentionally, or that this suit was filed June 14, 2001, over five years later. knowingly to cause any bodily injury. Accordingly, we overrule appellants’ issue three as to Walzel. We conclude Slavonic proved as a matter of law that the statutes of limitations bar appellants’ fraud, negligent misrepresentation, DTPA, and article 21.21 claims stemming from alleged misrepresentations Slavonic made 2. Article 21.55 Violations when the policy was purchased in 1996. See TEX. BUS. We next address appellants’ article 21.55 claims against & COM.CODE ANN. § 17.565 (Vernon 2002) (providing Slavonic. Appellants do not complain on appeal of the two-year statute of limitations for claims filed under the summary judgment in favor of Slavonic on their article DTPA); TEX. CIV. PRAC. & REM.CODE ANN. §§ 21.55 claims. Furthermore, viewing the evidence in the 16.003, 16.004 (Vernon 2002) (providing two and four- light most favorable to appellants, there is no evidence year statute of limitations, respectively, applicable to raising a fact issue about Slavonic’s compliance with the causes of action for negligent misrepresentation and time deadlines imposed by article 21.55. Accordingly, fraud); TEX. INS.CODE ANN. art. 21.21, § 16(d) summary judgment in favor of Slavonic was proper on (Vernon Supp.2004) (providing two-year statute of appellants’ article 21.55 claims. limitations applicable to actions brought under article 21.21). We affirm the summary judgment in favor of Slavonic on appellants’ extra-contractual claims stemming from the sale of the policy. 3. Statutes of Limitations Slavonic asserted in its motion for summary judgment that appellants’ misrepresentation, *789 fraud, DTPA, and article 21.21 claims stemming from alleged 4. Article 21.21 and DTPA Violations misrepresentations made by Slavonic in the sale of the Slavonic moved for summary judgment on the ground policy are barred by statutes of limitations. that there is no evidence that appellants suffered any [19] [20] [21] damages from the alleged violations of article 21.21 and A defendant moving for summary judgment on the DTPA. Appellants did not produce any summary the affirmative defense of limitations has the burden to judgment evidence of damages in their response. conclusively establish that defense and must conclusively Accordingly, we conclude that summary judgment in prove when the cause of action accrued. KPMG Peat favor of Slavonic on these claims was proper. Marwick v. Harrison County Housing Finance Corp., 988 S.W.2d 746, 748 (Tex.1999). Additionally, a defendant must negate the discovery rule, if it applies and has been

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 7 Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (2004)

5. Other Claims no evidence Southland committed a felony under Texas Slavonic also moved for summary judgment on the Penal Code section 22.04 in the work on Franco’s home. ground that there is no evidence that it prevented Franco [24] from remediating the damage to her home or caused the Appellants, as the non-movants, had the burden to minor appellants any injury. Appellants did not introduce raise a genuine issue of material fact as to the elements any evidence in response to these grounds, nor do challenged in Southland’s motion. See TEX.R. CIV. P. appellants contest these grounds on appeal. Accordingly, 166a(i). In their response to Southland’s motion, we affirm the summary judgment on these grounds. appellants only addressed the no-evidence grounds pertaining to their alleged article 21.21 violations. We overrule appellants’ third issue. Because appellants did not present any evidence in response to Southland’s no-evidence grounds pertaining to appellants’ DTPA, negligence, and gross negligence claims, we affirm the summary judgment in favor of II. Southland’s Motion for Summary Judgment Southland, King, and Afflitto on these claims. See In issues four and five, appellants argue summary Dolcefino, 19 S.W.3d 906, 917. judgment was improper for *790 Southland9 because (1) Southland did not conclusively disprove appellants’ We are left to examine whether summary judgment was “extra-contractual” causes of action; (2) Southlands’ no- proper on appellants’ article 21.21 claims. The evidence evidence motion was legally insufficient; and (3) fact appellants cite in support of their claims under article issues precluded no-evidence summary judgment in favor 21.21 consists of the following: (1) Franco’s deposition of Southland. We first address appellants’ complaints testimony that King told her the policy covers damage regarding Southland’s no-evidence motion. from plumbing leaks so long as the plumbing leak is above the foundation slab; (2) Franco’s testimony that she Appellants argue that the no-evidence motion is legally took out a loan with her attorney and hired a company to insufficient because it does not identify the elements that come out and prepare a scope of remediation with regard are being challenged. However, contrary to appellants’ to mold in her home; (3) a letter dated October 26, 2000, assertions, Southland’s no-evidence motion adequately from Afflitto to Kubala discussing the relevant policy sets forth the elements as to which there is no evidence, provisions and notifying appellants that Slavonic’s offer and we overrule this subissue. of $4,002.42 would be left on the table for an additional thirty days; and (4) a fax cover sheet dated October 24, In fact, Southland’s no-evidence summary judgment 2000, from Afflitto to Walzel, concerning records from motion specifically alleges that there is no evidence of Garibay. damages with regard to appellants’ claims that Southland violated article 21.21 by: wrongfully denying Franco’s *791 [25] One of the grounds in Southland’s motion is that claim; falsely stating the policy does not cover the claim; there is no evidence of damages caused by the alleged not attempting in good faith to effectuate a prompt, fair, article 21.21 violations. Section 16(a) of article 21.21 and equitable settlement of the claim; not promptly provides: providing Franco a reasonable explanation of the basis for denial of the claim; not affirming or denying coverage or Any person who has sustained submitting a reservation of rights; refusing to pay the actual damages caused by another’s claim; and making untrue statements of material fact engaging in an act or practice concerning the policy’s coverage. Southland’s motion declared in Section 4 of this Article further alleges that there is no evidence of a knowing to be ... unfair or deceptive acts or violation of article 21.21. practices in the business of insurance ... may maintain an With regard to appellants’ DTPA claims, Southland’s action against the person or persons motion alleges there is no evidence of damages or of engaging in such acts or practices. unconscionable conduct. As pertaining to appellants’ negligence and gross negligence claims, Southland’s TEX. INS.CODE ANN. art. 21.21, § 16(a) (Vernon motion argues there is no evidence of bodily injury, no Supp.2004). Here, appellants offer Franco’s statement evidence of the breach of any legal duty, no evidence that that she obtained a loan from her attorney for scope of Southland’s conduct was the proximate cause of bodily remediation work conducted at her home as evidence of injury to appellants, no evidence that Southland refused to damages. However, this evidence is not connected to the allow appellants to repair their home, and no evidence of article 21.21 claims (or any other claim for that matter) exemplary damages. The motion further asserts there is and, therefore, does not raise a fact issue as to whether WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 8 Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (2004)

appellants sustained damages attributable to their alleged address the remaining summary judgment grounds. article 21.21 claims. Because appellants did not present Accordingly, we overrule appellants’ fourth and fifth evidence raising a genuine issue of material fact as to issues and affirm the summary judgment in favor of damages, we conclude summary judgment in favor of Southland, King, and Afflitto. Southland, King, and Afflitto was proper on appellants’ article 21.21 claims. We affirm the judgment of the trial court.

Because we conclude that no-evidence summary judgment was proper in favor Southland, King, and Afflitto on all of appellants’ causes of action, we do not

Footnotes 1 In 1996, Franco purchased a fire and extended coverage insurance policy from Slavonic to insure her home, and this same policy had been renewed each year and was in effect in June 2000. 2 During the appraisal process, Slavonic offered Franco $4,002.52 to compromise the claim, but this offer was not accepted.

3 Appellants did not seek in their petition to set aside the appraisal award.

4 Slavonic asserted the plumbing leak claim was not covered by the policy because of a specific provision in the policy governing coverage for accidental water damage: ACCIDENTAL WATER DAMAGE—Water damage is limited to a loss of a sudden nature or circumstance.... Water damage covers loss above foundation from accidental discharge, leakage, or overflow of water or steam from within a plumbing, heating or air-conditioning system or domestic appliance.... This Association shall not be liable for loss caused directly or indirectly by ... (4) by continuous or repeated seepage or leakage over a period of weeks, months, years[.] 5 Slavonic’s motion raises both traditional and no-evidence grounds, and appellants concede the rules do not prohibit a hybrid summary judgment motion such as Slavonic’s. 6 Appellants did not identify in their special exception (or on appeal) the particular grounds in Slavonic’s motion that lack specificity. We recognize that Slavonic’s motion is not a model of clarity—the motion does not set forth the applicable standards of review under Rule 166a(c) and (i) and does not segregate the traditional from the no-evidence grounds; however, the motion does comply with Rule 166a in stating the grounds and sufficiently puts appellants on notice of the claims and causes of action being challenged by appellees. The better practice is to file two separate motions or to file one document containing both motions but with the arguments and authorities for each clearly delineated and separated from one another. For example, Southland’s motion also was a hybrid, but it clearly segregated the traditional from the no-evidence grounds. 7 Notably, appellants do not allege a cause of action to set aside the appraisal award in their petition. The claims and facts alleged in appellants’ live petition focus on alleged misrepresentations made by appellees concerning the policy and the alleged mishandling of Franco’s claim. However, despite not having alleged a cause of action to set aside the award, appellants are not barred from raising the issue of the appraisal award’s validity for the first time in their summary judgment response, and this issue was properly before the trial court and is subject to review by this court. See Womack v. Allstate Ins. Co., 156 Tex. 467, 473, 296 S.W.2d 233, 237 (1956) (holding when summary judgment proof discloses facts rendering summary judgment untenable for the moving party, summary judgment should be denied regardless of defects in the pleading of the non-movant); Patterson v. First Nat. Bank of Lake Jackson, 921 S.W.2d 240, 244 (Tex.App.-Houston [14th Dist.] 1996, no writ) (holding same). 8 In the last section of their summary judgment response entitled, “Jed Walzel’s deposition reveals a total lack of adherence to the Insurance Code,” appellants allege that Slavonic allowed Garibay “to avoid actually participating in the process and to completely neglect even submitting an appraisal for either Plaintiffs’ appraiser’s consideration or the umpire’s consideration” and that this “reveals a total lack of adherence to the Insurance Code, as well as a lack of adherence to the insurance contract at issue.” Appellants do not allege anywhere in their response to Slavonic’s motion that the appraisal award should be set aside because Garibay allegedly did not substantially comply with the procedure for the appraisal process. 9 References in this section to “Southland” also include King and Afflitto.

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 9 Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 S.W.3d 777 (2004)

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 10 Harris County Appraisal Dist. v. Bradford Realty, Ltd., 919 S.W.2d 131 (1994)

contending the property was incorrectly appraised for 1988 and 1989. We reverse and remand. 919 S.W.2d 131 Court of Appeals of Texas, Houston (14th Dist.). On December 31, 1986, Bradford purchased an industrial facility for $2.2 million. The appraisal district valued the HARRIS COUNTY APPRAISAL DISTRICT and property for tax year 1987 at approximately $7.2 million. Harris County Appraisal Review Board, Bradford protested the appraisal to the review board, Appellants, which reduced the appraisal to approximately $4.5 v. million. Bradford timely filed notice of appeal with the BRADFORD REALTY, LTD., Appellee. review board and filed suit in district court. While the 1987 suit was pending, appellants appraised the property No. 14–93–01152–CV. | Dec. 15, 1994. for tax years 1988 and 1989. For 1988, the property was again appraised at approximately $4.5 million. For 1989, Taxpayer challenged real property tax appraisals for three the appraisal was reduced to approximately $3.5 million. years. The 165th District Court, Harris County, Elizabeth Bradford amended its lawsuit to include the 1988 and Ray, J., entered judgment for taxpayer. Taxing authorities 1989 valuations to its appeal. Prior to trial, the parties appealed. The Court of Appeals, Lee, J., held that: (1) agreed to a $2.5 million appraisal for the 1987 tax year. having exhausted administrative remedies for first year, taxpayer was not required to exhaust administrative Appellants filed a plea to the jurisdiction contending that remedies for succeeding years before amending petition Bradford had not exhausted its administrative remedies to add them to case; (2) reduction of appraisal as to one for tax years *133 1988 and 1989. Appellants also filed a taxing authority but not as to two others was motion to dismiss, contending Bradford had forfeited its unconstitutional; (3) taxpayer forfeited its right to appeal right to appeal because it had not paid the undisputed as to one tax year by its complete failure to pay portion of its 1988 and 1989 taxes to the three affected undisputed tax; and (4) taxpayer’s timely payment to one taxing units: Spring Independent School District (Spring taxing authority but not to two others for another tax year ISD), Harris County Municipal Utility District # 36 would not bar its appeal if it is was in substantial (MUD # 36) and Harris County. See TEX. TAX CODE compliance with statutory payment requirements. ANN. § 42.08 (Vernon 1992). After a trial to the court on stipulated facts, the court overruled appellants’ plea to the Reversed and remanded. jurisdiction and partially granted the motion to dismiss. The court dismissed the 1989 appeal because Bradford had not substantially complied with § 42.08. The court Attorneys and Law Firms also precipitously dismissed Spring ISD and MUD # 36 from the 1988 appeal and reduced the Harris County 1988 *132 Robert P. McConnell, Houston, for appellants. appraised value to $2.4 million. Irving C. Stern and Randall P. Crump, Houston, for [1] In their first point of error, appellants contend that appellees. Bradford failed to exhaust its administrative remedies for Before ROBERTSON, CANNON and LEE, JJ. tax years 1988 and 1989. Bradford counters that amending its preexisting suit gave appellants sufficient notice of its intent to protest the 1988 and 1989 valuations. The parties stipulated Bradford had complied with the administrative prerequisites for tax year 1987.

OPINION Property is generally appraised for tax purposes by the appraisal district as of January 1. TEX. TAX CODE LEE, Justice. ANN. § 23.01 (Vernon 1992); Beck & Masten Pontiac– GMC v. Harris County Appraisal Dist., 830 S.W.2d 291, This is a property tax case. Appellants, Harris County 292 (Tex.App.—Houston [14th Dist.] 1992, writ denied). Appraisal District and Harris County Appraisal Review Once the appraisal is complete, the appraisal district Board, appeal a judgment in favor of Bradford Realty, delivers to the taxpayer notice of the property’s appraised Ltd. (Bradford). Appellants bring two points of error value. A taxpayer must file a notice of protest of the asserting Bradford’s 1988 property appraisal was appraisal with the appraisal review board within thirty improperly reduced. Bradford brings five cross points WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Harris County Appraisal Dist. v. Bradford Realty, Ltd., 919 S.W.2d 131 (1994)

(30) days after receiving the appraisal district’s notice. same value as the 1984 appraisal. He simply amended his TEX. TAX CODE ANN. § 41.44(a) (Vernon 1992). If a 1984 suit to include the 1985 appraisal. The court of notice of protest is timely filed, the appraisal review board appeals held that the suit challenging the initial appraisal must schedule a hearing on the protest. The property put the appraisal board and appraisal district on notice owner is entitled to an opportunity to appear and offer that Miller also disputed the application of that appraisal evidence or the property owner may offer evidence by to subsequent years. affidavit. TEX. TAX CODE ANN. § 41.45 (Vernon 1992). A property owner may appeal the appraisal review The facts in the instant case are nearly identical to the board’s determination by filing a petition for review with facts in Estepp. Bradford’s suit was pending when the a district court within forty-five (45) days of receiving 1988 and 1989 appraisals were issued. Appellants notice that a final order has been entered. TEX. TAX appraised the property for 1988 at the same value as 1987. CODE ANN. § 42.21 (Vernon 1992). A notice of protest For 1989, appellants reduced the appraisal by is sufficient if it identifies the property, identifies the approximately $1 million. Appellants were clearly aware property owner who is protesting, and indicates that the that Bradford was dissatisfied with the appraisals. property owner is dissatisfied with the appraisal district’s Because the amended petition sufficiently identifies the determination. TEX. TAX CODE ANN. § 41.44(d) property, the property owner, and the owner’s (Vernon 1992); Estepp v. Miller, 731 S.W.2d 677, 680 dissatisfaction, we, like the Austin Court of Appeals in (Tex.App.—Austin 1987, writ ref’d n.r.e.). Estepp, hold that appellants had the required notice of Bradford’s protest. TEX. TAX CODE ANN. § 41.44 Appellants cite Atascosa County Appraisal District v. (Vernon 1992). The supreme court was dealing with a Tymrak, 858 S.W.2d 335 (Tex.1993), as authority that different question in Tymrak. Appellants’ reliance on that Bradford was required to complete these administrative case is misplaced, and their first point of error is procedures for tax years 1988 and 1989. In Tymrak, the overruled. taxpayer appealed the appraisal review board’s property [2] valuation for four tax years. Before trial, the parties In their second point of error, appellants argue that the settled on a valuation of the property, but they did not 1988 appraised value was incorrectly reduced as to Harris settle the amount of attorney’s fees the taxpayer was County. The trial court found that the 1988 undisputed entitled to recover under § 42.29 of the Tax Code. When taxes were timely paid to Harris County while Spring ISD the case went to trial, § 42.291 authorized the trial court to and MUD # 36 were not timely paid. The trial court also award a prevailing taxpayer up to $5,000 in attorney’s determined the 1988 appraised value as to only Harris fees per “appeal.” The trial court determined that each tax County would be $2.4 million. Appellants contend that year constituted a separate “appeal” and awarded the the trial court’s determination violates the Texas taxpayer $20,000 in attorney’s fees. On appeal, the only constitution because the property is appraised with two question before the supreme court was whether “appeal” different values. limited the taxpayer’s recovery to $5,000 for all the tax years. The supreme court reviewed the various steps The constitution requires the legislature to provide for a required to bring an appeal to the district court and held single tax appraisal of property. TEX. CONST. Art. VIII, that an “appeal,” for purposes of § 42.29 of the Tax Code, § 18(b). By enacting the Property Tax Code,3 the concerns only one tax year. Thus, the supreme court legislature has fulfilled this constitutional mandate. affirmed the district court’s holding that the taxpayer Wilson v. Galveston County Cent. Appraisal Dist., 713 should be allowed to recover $20,000. Atascosa County S.W.2d 98, 101 (Tex.1986). The Property Tax Code Appraisal District v. Tymrak, 858 S.W.2d 335, 337 established appraisal districts in each county and charged (Tex.1993); see also TEX. TAX CODE ANN. § 42.29 these districts with the responsibility for appraising (Vernon 1992). property within the district. The purpose of each district is to place a single value on each piece of taxed property *134 Appellants, in the instant case, argue that the steps located within the district. See TEX. TAX CODE ANN. reviewed by the court in Tymrak were required to be § 6.01 (Vernon 1992). It is this appraisal that may be followed before Bradford could bring its appeal. 2 To the appealed by the property owner to the district court. TEX. contrary, Bradford cites Estepp v. Miller, 731 S.W.2d 677 TAX CODE ANN. § 42.01 (Vernon 1992). The taxing (Tex.App.—Austin 1987, writ ref’d n.r.e.), in which the units are bound by the appraisal determined at the taxpayer, Miller, completed all the administrative conclusion of the appellate process. TEX. TAX CODE procedures and filed suit in district court for the 1984 ANN. §§ 42.25, 42.26 (Vernon 1992). In the instant case, appraisal of his property. In 1985, while his appeal was the trial court’s judgment resulted in an appraisal for the pending, Miller received his tax bill which reflected the 1988 tax year of approximately $4.5 million being used

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 Harris County Appraisal Dist. v. Bradford Realty, Ltd., 919 S.W.2d 131 (1994)

by Spring ISD and MUD # 36 while an appraisal of $2.5 2. to assure that the activities of the local million was used by Harris County. The trial court governments which relied on ad valorem taxes erroneously assessed the property with two different would not be unduly impeded by granting the appraisals. Appellants first contention in their second property owner the right of judicial review. point of error is sustained. Krupp, 787 S.W.2d at 515 (quoting Missouri Pac. R.R. v. [3] Dallas County Appraisal Dist., 732 S.W.2d 717, 721 *135 Appellants further contend that Bradford has forfeited its right to appeal because it did not comply with (Tex.App.—Dallas 1987, no writ)). Each case is to be Tax Code § 42.08. Section 42.08 requires a property determined on a case by case basis. Whether the taxpayer owner who appeals an appraisal to pay the greater of the substantially complied will depend on various factors undisputed tax amount or the tax imposed in the such the amount paid timely, the amount left unpaid by preceding year. TEX. TAX CODE ANN. § 42.08(b) the delinquency date, and the promptness of the late (Vernon 1992). Bradford admits that it paid all 1989 taxes payment. Dipaola, 841 S.W.2d at 490. after their due dates. A complete failure to timely pay any tax unit as is required under Tax Code § 42.08 results in By timely paying Harris County, Bradford at least forfeiture of the right to appeal. Because Bradford did not partially complied. Other courts of appeals have held that comply with § 42.08, it is bound by the appraisal district an appealing taxpayer substantially complied even though and appraisal review board’s 1989 valuation of the the taxpayer paid some of the affected taxing units after property. Harris County Appraisal Dist. v. Dipaola Realty the undisputed taxes became delinquent. See Harris Assoc., 841 S.W.2d 487, 490 (Tex.App.—Houston [1st County Appraisal Dist. v. Krupp Realty Ltd. Partnership, Dist.] 1992, writ denied). See also TEX. TAX CODE 787 S.W.2d 513, 515 (Tex.App.—Houston [1st Dist.] ANN. § 42.08(b) (Vernon 1992). 1990, no writ); Missouri Pac. R.R. v. Dallas County Appraisal Dist., 732 S.W.2d 717, 721 (Tex.App.—Dallas [4] [5] The trial court found that Harris County was timely 1987, no writ). In order for “substantial compliance” to paid for the 1988 tax year while Spring ISD and MUD # have any meaning, we must reject appellants’ contention 36 were not. Taxpayers must “substantially comply” with that Bradford has forfeited its right to appeal because it the requirement to pay undisputed taxes or forfeit their did not timely pay Spring ISD and MUD # 36. See right to appeal. TEX. TAX CODE ANN. § 42.08(d) Dipaola, 841 S.W.2d at 490. Appellants’ second (Vernon 1992); Lawler v. Tarrant Appraisal Dist., 855 contention in their second point of error is overruled. S.W.2d 269, 271 (Tex.App.—Fort Worth 1993, no writ). “Substantial compliance” has been defined to mean Whether Bradford substantially complied with the Tax performance of the essential requirements of a statute. A Code requirement or forfeited its right to appeal because deviation from the requirements of the statute which does it was delinquent in paying the undisputed taxes is a not seriously hinder the legislature’s purpose in imposing factual matter to be determined by the court. TEX. TAX the requirement is “substantial compliance.” Harris CODE ANN. § 42.08(d) (Vernon 1992). The district court County Appraisal Dist. v. Krupp Realty Ltd. Partnership, below did not determine whether Bradford substantially 787 S.W.2d 513, 515 (Tex.App.—Houston [1st Dist.] complied with the requirements of § 42.08 for the 1988 1990, no writ). In Krupp, the court indicated there were tax year. Therefore, we must reverse for that express two purposes behind § 42.08: purpose. We do not need to address Bradford’s five cross points. 1. to insure that taxpayers would not use the right of judicial review as a subterfuge for delaying or The judgment of the trial court is reversed and remanded avoiding the payment of at least some tax, and for further proceedings consistent with this opinion.

Footnotes 1 Amended by Acts 1991, 72nd Leg., ch. 836, § 4.1 (effective September 1, 1991). Section 42.29 now allows the trial court to award in reasonable attorney’s fees the greater of $15,000 or 20 percent of the total amount by which the property owner’s tax liability is reduced. The award of attorney’s fees may not exceed the total amount that the taxpayer tax liability is reduced. TEX. TAX CODE ANN. § 42.29 (Vernon 1992). 2 In their brief, appellants quote Tymrak at length. The following most clearly supports their contention that Bradford did not exhaust its administrative remedies:

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The taxpayer must complete these steps for each year that it desires to challenge the valuation because the completion of all the administrative requirements, the filing of a timely petition in the trial court, and the prosecution of the lawsuit to its final disposition affects only the appraised value of the property for that one tax year. Unless a property owner repeats this almost yearlong administrative process and files another petition in a separate lawsuit or files an amended petition in a pending lawsuit filed appealing from an appraisal review board order issued in a previous year, the taxpayer loses its right to litigate the appraised value for the subsequent year. Tymrak, 858 S.W.2d at 337 (emphasis added). 3 The Property Tax Code is chapters 1 through 43 of the Texas Tax Code. See TEX. TAX CODE ANN. § 1.01 (Vernon 1992).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 4 In re Barrentine, Not Reported in S.W.3d (2013)

Robert L. Collins, Robert E. Ray, Houston, TX, for relator. 2013 WL 6466574 Only the Westlaw citation is currently available. Catherine L. Hanna, Laura D. Tubbs, Hanna & Plaut, SEE TX R RAP RULE 47.2 FOR DESIGNATION L.L.P., Austin, TX, for real party in interest. AND SIGNING OF OPINIONS. Before Justices PURYEAR, ROSE and GOODWIN. MEMORANDUM OPINION Court of Appeals of Texas, Austin.

In re James BARRENTINE and Patricia MEMORANDUM OPINION Barrentine. MELISSA GOODWIN, Justice. No. 03–13–00752–CV. | Nov. 27, 2013. *1 The petition for writ of mandamus is denied. See Original Proceeding from Bastrop County. Tex.R.App. P. 52.8(a). Attorneys and Law Firms

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Michels v. Safeco Ins. Co. of Indiana, 544 Fed.Appx. 535 (2013)

Attorneys and Law Firms 544 Fed.Appx. 535 This case was not selected for publication in the *536 Robert Edwin Ray, Robert L. Collins Houston, TX, Federal Reporter. for Plaintiffs–Appellants. Not for Publication in West’s Federal Reporter. See Fed. Rule of Appellate Procedure 32.1 generally Catherine L. Hanna, Esq., Eric Scott Peabody, Hanna & governing citation of judicial decisions issued on or Plaut, L.L.P., Austin, TX, David A. Ward, Jr., The Ward after Jan. 1, 2007. See also Fifth Circuit Rules 28.7, Law Firm, Woodlands, TX, for Defendants–Appellants. 47.5.3, 47.5.4. (Find CTA5 Rule 28 and Find CTA5 Rule 47) Appeals from the United States District Court for the United States Court of Appeals, Western District of Texas, USDC No. 1:12–CV–511. Fifth Circuit. Before REAVLEY, JONES, and PRADO, Circuit Judges. Wayne MICHELS; Marie Michels, Plaintiffs– Appellants, Opinion v. SAFECO INSURANCE COMPANY OF INDIANA; PER CURIAM:* Jason Christopher Womack, Defendants– Appellees. Safeco Insurance Company Of Indiana, Plaintiff– This case arises out of an insurance coverage dispute Appellee, relating to smoke damage to the plaintiffs’ home. The v. plaintiffs appeal the district court’s dismissal of a Wayne Michels; Marie Michels, Defendants– nondiverse defendant as being improperly joined, the Appellants. grant of the remaining defendant’s motion to compel appraisal, the denial of their motion to vacate the No. 13–50321 | Summary Calendar. | Nov. 6, 2013. appraisal award, and the grant of summary judgment in favor of defendants. We AFFIRM. Synopsis Background: Insureds brought action against insurer its investigator relating to smoke damage to their home. The United States District Court for the Western District of I. FACTUAL AND PROCEDURAL BACKGROUND Texas dismissed investigator, a nondiverse defendant, as being improperly joined, granted insurer’s motion to The home of Plaintiffs–Appellants Wayne and Marie compel appraisal, denied insureds’ motion to vacate the Michels (collectively “the Michelses”) was damaged by appraisal award, and granted summary judgment in favor smoke from the September 2011 Bastrop, Texas wildfires. of insurer. Insureds appealed. The Michelses filed a claim with their homeowner’s insurance carrier, Safeco Insurance Company of Indiana (“Safeco”). Safeco assigned an adjuster, Daniel Etzel, to investigate the damage to the house and report his Holdings: The Court of Appeals held that: findings back to Safeco. After Etzel’s inspection found no [1] visible damage, Safeco hired ServPro to clean the insureds did not have a “reasonable basis of recovery” Michelses’ home. In total, before suit or appraisal, Safeco against investigator; paid $12,005.19 to the Michelses for general cleaning and [2] attic insulation replacement. District Court did not abuse its discretion by granting insurer’s motion to compel appraisal; and Safeco adjuster Kevin Glassel was assigned to coordinate [3] the continuing investigation and adjustment of the District Court did not abuse its discretion in denying Michelses’ claim. Glassel notified the Michelses via *537 insureds’ motion to vacate umpire’s appraisal award. mail that Safeco was having a man named Jason Womack come to their home to complete an inspection. After receiving Womack’s report, Safeco informed the Affirmed. Michelses that no additional payments would be made.

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Michels v. Safeco Ins. Co. of Indiana, 544 Fed.Appx. 535 (2013)

The Michelses sought an appraisal, and the two appraisers III. STANDARDS OF REVIEW selected an umpire, as outlined by the policy. Later, the Michelses rescinded their appraisal demand, and Safeco This Court reviews de novo a district court’s denial of a then made its own demand for appraisal. When the motion to remand. Guillory v. PPG Indus., Inc., 434 F.3d parties’ designated appraisers were unable to agree on an 303, 308 (5th Cir.2005). The party seeking to remove umpire, Safeco filed suit in the district court, asking the bears the burden of showing that federal jurisdiction court to appoint an umpire in accordance with the policy. exists and that removal was proper. Manguno v. Shortly after Safeco filed its federal suit, the Michelses Prudential Prop. & Cas. Ins. Co., 276 F.3d 720, 723 (5th filed suit in state court against Safeco and Womack for Cir.2002). A trial court’s decision to “pierce the damages exceeding $72,700. Safeco and Womack pleadings” to determine whether a plaintiff has a removed the Michelses’ state court suit to the federal reasonable basis of recovery against a particular district court, which consolidated the two suits after nondiverse defendant under state law is reviewed for an dismissing Womack and denying the Michelses’ motion abuse of discretion. Smallwood v. Ill. Cent. R.R. Co., 385 to remand. The Michelses and Jason Womack are citizens F.3d 568, 573 (5th Cir.2004) (en banc). The district of Texas. Safeco is a citizen of Indiana. court’s dismissal is subject to de novo review. Causey v. Sewell Cadillac–Chevrolet, Inc. 394 F.3d 285, 288 (5th The district court appointed an umpire, who issued an Cir.2004). award that was agreed to by Safeco’s appraiser. The award set the replacement cost value of the loss at The district court’s grant of a motion for summary $17,600, the recoverable depreciation at $100, and the judgment and denial of a motion to set aside or vacate an actual cash value of the loss at $17,500. Safeco issued appraisal award as a defense to the motion for summary payment to the Michelses in the amount of $3,928.41— *538 judgment are subject to de novo review. See the difference between the replacement cost value and Federated Mut. Ins. Co. v. Grapevine Excavation, Inc., Safeco’s prior payments and the policy deductible. 197 F.3d 720, 723 (5th Cir.2000).

After paying the appraisal award, Safeco filed a motion for summary judgment as to all the Michelses’ remaining claims. The Michelses filed a response and a motion to set aside the award. The district court denied the Michelses’ IV. DISCUSSION motion to set aside the appraisal award, granted Safeco’s The Michelses contend the district court made four errors. motion for summary judgment, and signed a final, take- We address each in turn, affirming the district court on nothing judgment in favor of Safeco. each one. On appeal, the Michels raise four points of error. Specifically, they argue the district court erred in: (1) finding that Womack was improperly joined and in 1) Improper Joinder and Dismissal of Womack dismissing him; (2) granting Safeco’s Motion to Compel As discussed above, the district court dismissed Womack Appraisal; (3) denying the Michelses’ Motion to Set as having been improperly joined.1 The district court Aside or Vacate Umpire Award; and (4) granting found that there was no reasonable basis of recovery summary judgment in favor of Safeco. We address each against Womack because he was not a “person” engaged in turn. in the business of insurance as defined by the Texas Insurance Code. “Because all the claims the Michels bring against Womack are predicated on their belief he was (1) somehow acting within the auspices of the II. JURISDICTION Insurance Code, or (2) in privity with them, when, in fact, he was neither, there is no possibility they could recover The Michelses seek review of a final judgment of the from him under their Original Petition.” Thus, the district district court. Accordingly, this Court has jurisdiction court found that Womack was improperly joined and that pursuant to 28 U.S.C. § 1291. The district court’s therefore his citizenship status would be disregarded for jurisdiction under 28 U.S.C. § 1332 is discussed below. jurisdiction purposes. Once Womack was dismissed from the action, complete diversity existed between the parties.

As the Michelses concede, the district court correctly stated that it first had to examine whether the Michelses

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 Michels v. Safeco Ins. Co. of Indiana, 544 Fed.Appx. 535 (2013)

sufficiently pleaded a cause of action under the Texas fair joinder was improper, the district court acted within its notice pleading standard. See Smallwood, 385 F.3d at 573. discretion to “pierce the pleadings” and conduct a brief Then, the district court erred, the Michelses contend, by inquiry. The district entered its order that Womack was viewing and considering evidence beyond the Michelses’ improperly joined only thirty-two days after the state court pre-removal pleading. The Michelses submit Michelses moved to remand. No depositions were taken, that a motion to remand is analyzed with reference to only and Womack did not propound any new discovery. the complaint. According to the Michelses, the district court erred by looking beyond the pleadings to determine After conducting its summary inquiry, the district court whether Womack met the definition of a “person” correctly determined that the Michelses has no engaged in the business of insurance as defined by the “reasonable basis of recovery against” Womack. See Texas Insurance Code. Guillory, 434 F.3d at 311. Because, as the district court correctly noted, the claims the Michelses brought against A district court’s improper joinder decision is subject to Womack were based on the idea that he was acting under de novo review. McDonal v. Abbott Labs., 408 F.3d 177, the Insurance Code or in privity with them, it was critical 182 (5th Cir.2005) (citing Great Plains Trust Co. v. to determine whether Womack was a “person” under the Morgan Stanley Dean Witter & Co., 313 F.3d 305, 311 Insurance Code such that he could be held liable. (5th Cir.2002)). “[Improper] joinder can be established in According to the Code, “ ‘Person’ means an individual, two ways: (1) actual fraud in the pleading of jurisdictional corporation, association, partnership, reciprocal or facts, or (2) inability of the plaintiff to establish a cause of interinsurance exchange, Lloyd’s plan, fraternal benefit action against the non-diverse party in state court.” society, or other legal entity engaged in the business of McKee v. Kan. City S. Ry. Co., 358 F.3d 329, 333 (5th insurance.” Tex. Ins.Code Ann. § 541.002(2). Cir.2004) (quoting Travis v. Irby, 326 F.3d 644, 647 (5th Cir.2003)). This Court has stated that the second way of The Michelses seem to concede that Womack’s role as an establishing improper joinder “stated differently means appraiser after they made their appraisal demand does not that there is no reasonable basis for the district court to subject Womack to any liability. Rather, the Michelses predict that the plaintiff might be able to recover against argue that the district court failed to acknowledge their an in-state defendant.” Smallwood, 385 F.3d at 573. argument that Womack was an adjuster before he was an appraiser, and that his role as an adjuster gives the This Court’s en banc opinion in Smallwood sets out a Michelses a “reasonable basis of recovery” against him. procedure for determining whether a nondiverse [1] defendant was improperly joined. First, the court should The summary inquiry confirms that Womack was focus on the complaint: “Ordinarily, if a plaintiff can improperly joined. Womack’s undisputed affidavit survive a Rule 12(b)(6) challenge, there is no improper testimony was that he (1) was hired only to determine the joinder.” Id. at 573. However, where a complaint states a cause and extent of damages to the Michelses’ home; (2) claim that satisfies 12(b)(6), but *539 has “misstated or was a registered professional engineer in Texas at all omitted discrete facts that would determine the propriety times during the Michels assignment; (3) did not know of joinder ... the district court may, in its discretion, pierce what coverage the policy provided and never spoke to the the pleadings and conduct a summary inquiry.” Id. (citing Michelses about policy coverage; and (4) made no Badon v. RJR Nabisco, Inc., 224 F.3d 382, 389 n. 10 (5th decisions with respect to insurance coverage and at all Cir.2000)). If a district court pierces the pleadings, and times was acting pursuant to a contract for professional the defendant has produced evidence supporting improper services with Safeco. The district court also knew that joinder, the plaintiff must produce at least some Womack was employed by Rimkus Consulting, not controverting evidence. Badon, 224 F.3d at 393 (“We Safeco, and that a Safeco adjuster, Gressel, *540 handled agree with the district court that, considering defendants’ the adjustment of the Michelses’ loss. Moreover, the affidavits ‘in light of the plaintiffs’ lack of evidence,’ Safeco insurance policy specifies that the results of the there is no reasonable basis for predicting that plaintiffs appraisal process are not an adjustment. The Michelses might establish liability in their conspiracy claim against did not object to Womack’s affidavit or submit the in-state defendants.”). There must be a “reasonable controverting evidence. The Michelses relied exclusively possibility of recovery” against the nondiverse defendant, on the allegations within their petition. “not merely a theoretical one.” Ross v. Citifinancial, Inc., 344 F.3d 458, 462 (5th Cir.2003). On appeal, the Michelses state that Womack provided an adjustment of their claim. However, the document they The district court did not abuse its discretion in looking cite from the record is not an adjustment. Instead, it is a beyond the Michelses’ pleadings.2 In assessing whether letter from Safeco’s adjuster, Kevin Glassel, stating that

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 Michels v. Safeco Ins. Co. of Indiana, 544 Fed.Appx. 535 (2013)

based on Womack’s report from his inspection of the district court did not order the appraisal until after it had house, Safeco had determined that no additional payments denied the Michelses’ motion to remand and dismissed would be made. Beyond the Michelses’ assertion that Womack. Every Texas court to consider the “anticipatory Womack was an adjuster or de facto adjuster, there is no breach” argument the Michelses raise has rejected it as evidence that he was, and substantial evidence that was being incompatible with the mandatory contractual not. Womack is an engineer employed by a third-party remedy and the strong public policy favoring appraisal company to inspect damaged properties. He is not a clauses. See, e.g., In re State Farm Lloyds, Inc., 170 licensed adjuster and does not provide insurance or S.W.3d 629, 634–35 (Tex.App.–El Paso 2005, no pet.); adjusting services. In sum, Womack was not an adjuster. see also Johnson, 290 S.W.3d at 894 (holding that appraisals should go forward as a preliminary matter *541 Although adjusters can be liable under Texas law, Texas because “[a]llowing litigation about the scope of appraisal courts have held that engineers who investigate and before the appraisal takes place would mark a dramatic consult with insurance companies in the adjustment of a change in Texas insurance practice, and surely encourage claim are not “persons” engaged in the business of much more of the same”). Thus, the district court did not insurance. An independent engineering firm hired by an abuse its discretion by denying the Michelses’ request to insurer to investigate a claim is not “engaged in the delay the appraisal. business of insurance” under the Insurance Code. Dagley v. Haag Eng’g Co., 18 S.W.3d 787, 793 (Tex App.–Hous. [14th Dist.] 2000, no pet.); Medistar Twelve Oaks Partners, Ltd. v. Am. Econ. Ins. Co., 2010 WL 1996596, 3) District Court Denied Michelses’ Motion to Set Aside at *3, *4 (S.D.Tex. May 17, 2010); see also Castillo v. or Vacate Umpire Award Prof’l Serv. Indus. Inc., 1999 WL 155833, at *1–2 The umpire issued what he called an “Umpire Appraisal (Tex.App.–San Antonio March 24, 1999, no pet.). In fact, Award” of the total lump sum of $17,500.3 The district the Insurance Code explicitly exempts engineers from court, finding that the award substantially complied with getting licensed as adjusters, despite the technical the terms of the policy, held that there was no basis for assistance they provide to adjusters. See Tex. Ins.Code § vacating or setting aside the umpire’s appraisal award, 4101.002(3)(B). and thus denied the Michelses’ motion to vacate the award. Because the district court correctly dismissed Womack as improperly joined, complete diversity existed between the The Michelses argue that the process by which the proper parties—the Michelses and Safeco. Umpire Appraisal Award was reached was flawed, and that the appraisal award does not comply with the requirements of the insurance policy.4 As such, the Michelses assert that the district court should have 2) District Court Granted Safeco’s Motion to Compel vacated the appraisal award. The “Appraisal” section of Appraisal the insurance policy reads, in full: The district court denied the Michelses’ opposition to the Motion to Compel Appraisal. The Michelses argue on appeal that the district court abused its discretion by 8. Appraisal. If you and we do not agree on the amount ordering the parties to appraisal. Specifically, the of the loss, including the amount of actual cash value Michelses contend that because Safeco breached its or replacement cost, then, on the written demand of contract with the Michelses with respect to adjusting the either, each shall select a competent and disinterested property damage claim, Safeco should not have been appraiser and notify the other of the appraiser selected permitted to invoke the benefits of the contract. The within 20 days of such demand. The appraisers shall Michelses insist that they were not seeking an order first select a competent and disinterested umpire; and denying the appraisal process, but instead a remedy that failing for 15 days to agree upon such umpire, then, on would “prevent[ ] Safeco from essentially picking and request of you or the company, such umpire shall be choosing which provisions of the contract it would selected by a judge of a court of record in the state in honor.” which the property covered is located. The appraisers shall then resolve the issues surrounding the loss, [2] appraise the loss, stating separately the actual cash Under Texas law, appraisal is an enforceable, contractually agreed upon method of determining the value or replacement cost of each item, and, failing to amount of loss. In re Universal Underwriters of Tex. Ins. agree, shall submit their differences, only, to the Co., 345 S.W.3d 404, 407 (Tex.2011); State Farm Lloyds umpire. An award in writing, so itemized, of any two of v. Johnson, 290 S.W.3d 886, 888–89 (Tex.2009). The WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 4 Michels v. Safeco Ins. Co. of Indiana, 544 Fed.Appx. 535 (2013)

these three, when filed with the company shall complied with the procedures outlined by the insurance determine the amount of loss. policy, the district court is entitled to uphold that award, Each party will: notwithstanding the non-itemized award form.

a. pay its own appraiser; and

b. bear the other expenses of the appraisal and umpire 4) District Court Granted Safeco’s Motion for Summary equally. Judgment After Safeco tendered the appraisal award amount to the As both the Michelses and Safeco point out, in Texas, Michelses, the trial court granted summary judgment in appraisal awards “are binding and enforceable, and every favor of Safeco and entered a take nothing judgment reasonable presumption will be indulged to sustain an based on Safeco’s tender of the appraisal award amount to appraisal award.” Franco v. Slavonic Mut. Fire Ins. Ass’n, the Michelses. The Michelses contend that Safeco was not 154 S.W.3d 777, 786 (Tex.App.–Hous. [14th Dist.] 2004, entitled to summary judgment as a matter of law. The no pet.). “Because every reasonable presumption is Michelses’ claim that summary judgment was not indulged in favor of the award, the burden of proof is on appropriate hangs, for the most part, on their earlier the party seeking to avoid the award.” Id. (citing Barnes arguments, namely that the district lacked jurisdiction v. W. Alliance Ins. Co., 844 S.W.2d 264, 267 (Tex.App.– because the parties were not diverse, that the appraisal Fort Worth, 1992, writ dism’d by agr.)). An award made process should have been stayed pending resolution of in substantial compliance with the policy is presumptively other contract issues, and that the appraisal award did not valid; minor discrepancies in the appraisal process or comply with the insurance policy. We have affirmed, award do not invalidate the award. See *542 Providence above, the district court’s disposition of those issues. Lloyds Ins. Co. v. Crystal City Indep. Sch. Dist., 877 S.W.2d 872, 875 (Tex.App.–San Antonio 1994, no writ). On appeal, a district court’s grant or denial of summary The results of an otherwise binding appraisal may be judgment is reviewed de novo. Dunn–McCampbell disregarded when the appraisal award is not in Royalty Interest, Inc. v. Nat’l Park Serv., 630 F.3d 431, compliance with the requirements of the policy. Franco, 435 (5th Cir.2011). Summary judgment shall be rendered 154 S.W.3d at 786. when the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no [3] The Michelses mainly complain that the appraisal genuine dispute as to any material fact and that the award was not in compliance because the umpire’s award moving party is entitled to judgment as a matter of law. was not fully itemized, as the insurance policy required. Fed R. Civ. P. 56(a); Celotex Corp. v. Catrett, 477 U.S. This argument is estopped, as the district court pointed 317, 323–25, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A out, because the appraiser the Michelses appointed dispute regarding a material fact is “genuine” if the requested that the umpire use a non-itemized, lump sum evidence is such that a reasonable jury could return a form. verdict in favor of the nonmoving party. *543 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, Even assuming that the Michelses’ contention about the 91 L.Ed.2d 202, (1986). When ruling on a motion for non-compliance of the appraisal award could be brought, summary judgment, the court is required to view all the Michelses offer no citation in support of their position inferences drawn from the factual record in the light most that even small variances from the appraisal process as favorable to the nonmoving party. Matsushita Elec. Indus. outlined by the insurance policy require setting aside the Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. appraisal award. 1348, 89 L.Ed.2d 538 (1986).

The appraisal award substantially complied with the The district court did not err in granting Safeco summary policy. It identified the Actual Cash Value and judgment. The Michelses’ argument on the issue of Replacement Cost Value of the loss, as the policy summary judgment is that “once the district court erred in required. The appraisers prepared itemized estimates, met finding improper joinder and overruled the Michels’ to discuss them, and then submitted the disputes to the motion to remand, all subsequent rulings, including the umpire. Further, the record before the district court summary judgment, were tainted by the initial error.” The demonstrates that the umpire performed his own Michelses insist that, assuming arguendo that the case inspection of the property in addition to considering the was not remanded and that the breach of contract claims evidence and arguments of the appraisers.5 Because the were negated once Safeco paid the Michelses the balance award indicates the umpire considered the evidence from on the appraisal award, they should nonetheless have been both sides to arrive at an award and substantially entitled to continue their state court claims. Despite this WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 5 Michels v. Safeco Ins. Co. of Indiana, 544 Fed.Appx. 535 (2013)

assertion, the Michelses’ brief goes on to only restate their V. CONCLUSION concern about the joinder and remand issue tainting the rest of the court’s determination. Above, we affirmed the For the foregoing reasons, we AFFIRM the district court. district court’s resolution of those issues.

Footnotes * Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4. 1 The Fifth Circuit adopted the terminology “improper joinder,” Smallwood, 385 F.3d at 571 n. 1, instead of the terminology “fraudulent joinder,” which is “a term of art” used in other circuits to describe the doctrine that ignores a lack of complete diversity where the plaintiff joins a nondiverse defendant to avoid federal jurisdiction. E.g., Morris v. Princess Cruises, Inc., 236 F.3d 1061, 1067 (9th Cir.2001). 2 The Michelses’ brief does not address the district court’s actions as “piercing the pleadings.” But because the district court, in conducting a summary inquiry, looked at evidence beyond the pleadings, we consider the court to have pierced the pleadings. The Michelses did not reply to Safeco’s briefed argument that the district court’s consideration of evidence beyond the pleadings was permitted because of the allowance for “piercing the pleadings.” 3 The Michelses state “the umpire issued what he called a ‘Final Ruling’ on [sic] in the total lump sum of $17,500.00 (R. 592).” However, page 592 of the record is titled “Umpire Appraisal Award.” A search of the record does not reveal a “Final Ruling” from the umpire. 4 Specifically, the Michelses contend that the umpire failed to consider all available information, to require the appraisers to submit their “differences only” as required by the policy, and to assess actual costs related to the claims. 5 The Umpire asserted the following in his signed award: “I have held a total 6 hours of hearings on October 12, 2012, and November 19, 2012, read numerous exhibits and reports, and inspected the property on November 2, 2012. I have twice allowed each side to supplement the record based on my questions and requests for further information.”

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 6 Providence Lloyds Ins. Co. v. Crystal City Independent..., 877 S.W.2d 872 (1994) 92 Ed. Law Rep. 719

The essential facts surrounding this controversy are undisputed. Following a February 9, 1992 fire at the 877 S.W.2d 872 Court of Appeals of Texas, Benito Juarez Elementary School, Providence and the San Antonio. District disagreed as to cash values of the loss. The District filed a lawsuit in March 1992, alleging both (1) PROVIDENCE LLOYDS INSURANCE COMPANY bad faith by Providence regarding handling of the claim v. and (2) breach of the insurance contract and the resulting CRYSTAL CITY INDEPENDENT SCHOOL claim for damages. The trial court severed the bad faith DISTRICT. cause of action. This appeal is from the judgment on the breach of contract cause of action. No. 04–93–00483–CV. | June 8, 1994. By agreement of the parties, the trial court abated the suit Insured sued insurer for breach of contract. The 293rd for the parties to participate in the insurance policy District Court, Zavala County, Rey Perez, J., entered appraisal process. Providence and the District had failed judgment on jury verdict for insured. Insurer appealed. to agree on the cash values of the loss. After abatement, The Court of Appeals, Butts, J., held that appraisal award they engaged in the required appraisal *874 process with precluded recovery on breach of contract claim. an umpire pursuant to the following insurance policy clause: Reversed and rendered. Appraisal. In case the Insured and this Company shall fail to agree as Attorneys and Law Firms to the actual cash value of the amount of loss, then, on the written *873 Patricia Montgomery, Austin, Julie Kraatz, Law demand of either, each shall select Office of Louis J. Sandbote, Dallas, for appellant. a competent and disinterested appraiser and notify the other of the Jesse M. Gamez, Sherry A. Muller, Law Offices of Jesse appraiser selected within twenty Gamez, Inc., Preston H. Dial, Jr., San Antonio, for days of such demand. The appellee. appraisers shall first select a Before BUTTS, PEEPLES and GARCIA, JJ.1 competent and disinterested Opinion umpire; and failing for fifteen days to agree upon such umpire, then, on BUTTS, Justice. request of the Insured or this Company, such umpire shall be selected by a judge of a district Providence Lloyds Insurance Company (Providence), court of a judicial district where the insurer, appeals a judgment granted in favor of Crystal loss occurred. The appraisers shall City Independent School District (the District), insured, then appraise the loss, stating following a jury trial regarding the disputed cash values separately actual cash value and and loss after a fire. The trial court awarded the District loss to each item; and, failing to $222,199 which is the difference between the $1,237,000 agree, shall submit their differences jury verdict and a $1,014,801 sum previously paid by only to the umpire. An award in Providence. writing, so itemized, of any two when filed with this Company shall In eight points of error, Providence argues that (1) the determine the amount of actual trial court erred by not enforcing the appraisal process and cash value and loss. Each appraiser by permitting this case to be tried, and (2) various errors shall be paid by the party selecting occurred during the trial regarding pleading and evidence, him and the expenses of appraisal as well as the jury charge. By cross point, the District and umpire shall be paid by the argues that it is entitled to attorney fees. We reverse and parties. render. (emphasis added).

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Providence Lloyds Ins. Co. v. Crystal City Independent..., 877 S.W.2d 872 (1994) 92 Ed. Law Rep. 719

The District selected Joe Lopez as its appraiser; of the forty-eight items in dispute, Harvey and Lopez then Providence selected Preston Harvey. The trial court resolved their differences and agreed on the following appointed George Ozuna as the umpire, after the parties twenty-six items: disagreed about the umpire choice.

Harvey (for Providence) initially determined the school could be restored for $851,149.98; Lopez (for the District) estimated repairs at $1,747,640.00. The record shows that 1. supervision $24,000.00

2. project manager & travel 20,000.00

3. portable commode 600.00

4. office trailer 2,000.00

5. dumpster rental & debris removal 10,000.00

6. crane rental 2,000.00

7. clean & seal for smoke odor 21,202.04

8. clean & treat concrete slab for odor 1,500.00

9. glass, windows & doors 4,500.00

10. suspended ceiling with insulation 35,250.00

11. laminated cabinets 23,397.75

12. remove & replace bath accessories & toilet partitions 20,247.01

13. chalk & tack boards 9,100.00

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 Providence Lloyds Ins. Co. v. Crystal City Independent..., 877 S.W.2d 872 (1994) 92 Ed. Law Rep. 719

14. structural steel 37,175.00

15. clock system 2,995.00

16. a/c heat energy control (Honeywell) 2,990.00

17. remove & replace wall a/c & heating unit in Room 17 966.00

18. general cleaning during and after construction 6,133.00

19. remove & replace wood window frames 0.00

20. plywood walls 1,191.80

21. marlyte wall in bath 268.00

22. repair concrete columns 150.00

23. remove & reset metal stairway and gate and burglar bars 1,540.00

24. remove & replace molding and trim 4,493.50

25. 6″ construction fence and gate 2,475.00

26. permits 2,500.00

__________

$236,674.10

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 Providence Lloyds Ins. Co. v. Crystal City Independent..., 877 S.W.2d 872 (1994) 92 Ed. Law Rep. 719

—————

Ozuna then reviewed the twenty-two2 remaining items, *875 those upon which the appraisers were unable to agree, and assigned values to them, as follows: 1. builders risk $ 0.00

2. power & telephone 0.00

3. project secretary 0.00

4. demolition of acoustic tile, ceiling, metal grid, insulation, walls, 47,500.00 roof and carpet

5. masonry 28,000.00

6. metal stud walls, sheetrock, wall insulation, int. & ext. gyp board 39,901.00

7. doors & frames 16,620.00

8. hardware 5,965.41

9. plaster exterior 16,950.00

10. carpet, vinyl & base 60,000.00

11. painting & vinyl walls 41,783.00

12. remove & replace 4–ply built-up roof, roof insulation & sheetmetal 111,000.00

13. lockers 0.00

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 4 Providence Lloyds Ins. Co. v. Crystal City Independent..., 877 S.W.2d 872 (1994) 92 Ed. Law Rep. 719

14. plumbing 40,000.00

15. fire alarm system 14,405.00

16. intercom 7,560.00

17. electric with switch gear and light fixtures 93,380.00

18. HVAC 100,164.00

19. clean metal ducts 0.00

20. performance bond 21,278.75

21. labor 0.00

22. labor (subs) 0.00

$644,507.16

the cash value amounts, on the attached “Certificate of Ozuna then added $132,365.38 as one lump sum which Concurrence.” Providence immediately paid the District included overhead, insurance and profit, previously $1,014,801.30, and the District accepted payment and separated items. Additionally, Ozuna awarded $1,254.72 deposited the check.4 for “remove & replace wood window frames,” one item upon which Harvey and Lopez had previously agreed (item 19, $0.00).3 Thus, Ozuna awarded $778,127.26 for We note that the District did not amend its original petition with pleadings to set aside the award. The the disputed items as follows: District’s own appraiser, together with Providence’s appraiser, concurred in the final amount as submitted by Ozuna added his value for the disputed items the umpire, thereby signifying their approval of the cost ($778,127.26) to the total sum upon which the appraisers previously agreed ($236,674.10), resulting in values of the items. The District amended its petition, $1,014,801.36 as the total appraisal sum pursuant to the alleging that Providence had made a “partial payment” ($1,014,801.30) for the loss, but that the District was appraisal clause. It is significant that both Harvey and entitled to recover an additional sum, $735,198.70, for Lopez signed the umpire’s determination, concurring with repairs or replacement. WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 5 Providence Lloyds Ins. Co. v. Crystal City Independent..., 877 S.W.2d 872 (1994) 92 Ed. Law Rep. 719

question of law. Reilly v. Rangers Management, Inc., 727 Subsequently, after a hearing, the trial court permitted the S.W.2d 527, 529 (Tex.1987); Coker v. Coker, 650 S.W.2d District to proceed with this lawsuit despite the appraisal 391, 394 (Tex.1983). We ascertain the subject appraisal process. In so doing, the court ruled, as a matter of law, clause is unambiguous, and neither party claims that the umpire’s final sum, which included the agreed otherwise. Pursuant to the appraisal clause, Harvey and amounts of the two appraisers and the umpire’s own cost Lopez were charged to agree on all possible items, and values, was not in substantial compliance with the then submit both disputed estimates to Ozuna. Ozuna, in contractual appraisal mandates. The court based this on turn, as the independent umpire, was to be the “tie- the final appraisal document which denominated the breaker.” twenty-six items agreed to by both parties’ appraisers as “court award” rather than “agreed award.” Other than Finally, we agree with the Fisch court which quoted a calling the appraisers’ agreed cost values “court award”, statement from 6 APPLEMAN ON INSURANCE LAW the umpire set out the accurate agreed amounts. At trial & PRACTICE, p. 368 (now § 3933, pp. 586–87): the court excluded the evidence of the appraisal and the testimony of the umpire. Where the policy provided that the appraisers should submit their In its first point of error, Providence argues that the trial differences to an umpire, it was court erred by not enforcing its appraisal award and, thus, held that the signature of the by permitting this breach of contract case to be tried. We umpire was without validity unless agree. and until the two appraisers failed to agree. * * * An umpire may act [1] [2] [3] In deciding Providence’s point of error, we are to settle differences between guided by several well-settled principles. Appraisal appraisers respecting the amount of awards made pursuant to the provisions of an insurance a loss, when such differences contract are binding and enforceable. Scottish Union and become known to him. But an Nat’l Ins. Co. v. Clancy, 8 S.W. 630, 71 Tex. 5 (1888); umpire, appointed to decide on Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264, 267 matters of difference only, has no (Tex.App.—Fort Worth 1992, writ dism’d by agr.). Every authority to pass on matters reasonable presumption will be indulged to sustain an concerning which there was no appraisal award. Continental Ins. Co. v. Guerson, 93 difference between the appraisers. S.W.2d 591, 594 (Tex.Civ.App.—San Antonio 1936, writ The function of an umpire who is dism’d). An award entered by appraisers and an umpire to act in matters of difference only can be disregarded if: (1) the award was made without is not to coincide with one or the authority; (2) the award was made as a result of fraud, other of the appraisers, but he is to accident or mistake; or (3) the award was not made make his award independently of substantially *876 in compliance with the requirements of such estimates. the policy. Scottish Union, 8 S.W. at 631; Barnes, 844 S.W.2d at 267. See also Fisch v. Transcontinental Ins. Fisch, 356 S.W.2d at 190. Co., 356 S.W.2d 186, 190 (Tex.Civ.App.—Houston 1962, writ ref’d n.r.e.). [6] Applying these principles here, we must decide [4] whether there was substantial compliance with the In addition, well-settled contract principles apply. We seek to implement the intention of the parties as expressed appraisal mandates. See Fisch, 356 S.W.2d at 190; see in the language of the contract. Sun Oil Co. v. Madeley, also Barnes, 844 S.W.2d at 267. The District does not 626 S.W.2d 726, 727–28 (Tex.1981); R & P Enter. v. allege lack of authority or fraud, mistake or accident LaGuarta, Gavrel & Kirk, Inc., 596 S.W.2d 517, 518 regarding the appraisal award. Id.5 (Tex.1980). The parties usually intend for each clause to have meaning and effect. Ogden v. Dickinson State Bank, The District complains of two “flaws” in the umpire 662 S.W.2d 330, 332 (Tex.1983); City of Pinehurst v. award and argues that they demonstrate the appraisal Spooner Addition Water Co., 432 S.W.2d 515, 518 award was not made in substantial compliance with the (Tex.1968). appraisal provisions: (1) Ozuna exercised independent judgment with five items, instead of agreeing with one [5] appraiser or the other; and (2) the *877 agreed awards Further, whether a disputed provision is unambiguous or whether it can have more than one meaning is a were included in Ozuna’s award summary and were labeled “court award.” WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 6 Providence Lloyds Ins. Co. v. Crystal City Independent..., 877 S.W.2d 872 (1994) 92 Ed. Law Rep. 719

unprejudiced and disinterested within the meaning of Regarding the five items which Ozuna, the umpire, the contract of insurance. calculated without agreeing with either appraiser, the record reveals that the District failed to object to the cost ****** value appraisal on that ground or specify that particular basis for the trial court’s ruling that Ozuna failed to The question still is, Was the umpire guilty of substantially comply with the insurance policy terms. In misconduct in appraising the loss on the 17 items at line with the District’s argument of non-compliance, the figures beyond the limits fixed by the appraisers and in trial court did state its specific basis for its ruling: “[T]hat discarding the estimates of the appraisers as to the this Court ordered certain awards, was used as his sound value of one of the articles? ... Where an umpire foundation and he built on that foundation. And it must ... exceeds his authority, the effect of his act is the same fail, it must fall. This Court never awarded any amount ... whether it was done consciously or by mistake, as in [E]ven if the language [“court” instead of “agreed”] were either case his award was void.... to be taken out ... still, it is not in substantial compliance even with the appraisal clause provisions as mandated by The position taken by the complainants is, and they law. Motion to strike is granted.” contend, that, as the umpire was to act “in matters of difference only,” his function was to coincide with one or The record contains no mention of the five items not the other of the appraisers or to somehow warp his being correctly determined, which the District now judgment between the high and low figures that marked maintains demonstrates failure to substantially comply their differences. The position is not sound. with the terms of the appraisal clause. The matter was raised for the first time on appeal. Since the District did ****** not submit to the court that same objection to the appraisal award it now raises on appeal, the trial court did [I]f the three are of one mind, or if not rule upon it. We will address this argument, however, any two of them are in accord as to for the purpose of clarification. sound value and loss, the award is a finality. Manifestly, it would have In all but the following five items, Ozuna agreed with been an abuse of authority had the either Harvey’s or Lopez’s estimate: (1) builders risk, (2) umpire arbitrarily confined himself doors & frames, (3) plumbing, (4) fire alarm system, and within the limits of the appraisers’ (5) HVAC. estimates.

The duty of the umpire under the terms of the insurance Dennis, 107 A. at 162–63. Accord Atlas Constr. Co. v. policy was to ascertain and determine, in the exercise of Indiana Ins. Co., 160 Ind.App. 33, 309 N.E.2d 810 his own best judgment, the cash value of the items of (1974). property about which the appraisers had disagreed, independent of the findings of the appraisers, or either of Concerning the same contention made in the present case them. This is what the umpire did, according to the by the District, we find that in acting independently as to record, and both appraisers agreed with his findings and the disputed values, the umpire did not exceed the signed the award, which included their agreed findings. authority *878 conferred upon him. On the contrary, it See Orient Ins. Co. v. Harmon, 177 S.W. 192 was the duty of the umpire under the terms of the contract (Tex.Civ.App.—Dallas 1915, writ ref’d). of insurance to ascertain and determine, in the exercise of his own judgment and as the result of his own [7] investigation, the cost values of the disputed items, The umpire is required to act with the appraisers in matters of difference. He is a third appraiser. If the three independent of the findings of the appraisers, or either of are of one mind, or if any two of them are in accord as to them. value and loss, the appraisal award is a finality. See Dennis v. Standard Fire Ins. Co., 90 N.J.Eq. 419, 107 A. Finally, regarding this contention, the parties concurred in 161 (1919). In expounding on the duties of an umpire the result. Not one, but both the appraisers agreed with the acting pursuant to a similar contractual provision, the final appraisal award, making it a binding one. Following court wrote: this, the District accepted the payment of the award. As noted previously, the District did not file suit to set aside It was hardly to be expected that the appraisers would the award. agree in all matters. They were partisans, within bounds, but were nevertheless unbiased and WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 7 Providence Lloyds Ins. Co. v. Crystal City Independent..., 877 S.W.2d 872 (1994) 92 Ed. Law Rep. 719

[8] Regarding the District’s complaint about the column Providence filed its motion to enforce the appraisal award labeling on Ozuna’s report, the record shows that Ozuna after trial began. It stressed that the parties entered into labeled the column listing these twenty-six sums, upon the appraisal process, a condition precedent to recovery which the appraisers had agreed, as “court award.” The under the terms of the policy. The District participated, record supports the argument that this list should have accepted the appraisal award, and received the proceeds. been appropriately titled “agreed award.” However, Providence cited the “loss payable clause” of the policy though arguably confusing, this labeling does not render which required the insurer to pay the appraisal award the appraisal award not in substantial compliance.6 Here within 60 days after it was filed, and it complied. It the record is clear that Harvey and Lopez agreed on these asserted the District failed to timely contest the appraisal twenty-six items and that Ozuna examined only the award by a suit to set aside and had waived that right. In disputed twenty-two items. We hold the appraisal award its motion for judgment n.o.v., Providence again argued was the intended result. that the appraisal award should have been enforced by the court. Also it argued that there was no evidence of breach [9] [10] The District argues that we cannot respond to point of contract. Our previous discussions and rulings of error one without Ozuna’s entire deposition, which the demonstrate that we agree with the first argument. trial court considered at the pre-trial hearing at which it Therefore point of error one is sustained. We have no excluded from evidence the appraisal award. We disagree. need to address the remaining points of error. Providence brought forth relevant portions of Ozuna’s deposition with its bill of exception at trial when it argued *879 By cross point the District argues that it was entitled that the appraisal award should be enforced. The record is to $123,700 in attorney fees, despite the jury’s “0.00” clear that Harvey and Lopez agreed on twenty-six items answer as to a reasonable fee for necessary service by the and that Ozuna was authorized to and did examine only District’s attorneys. Because of our disposition of the first the disputed twenty-two items. Also, we need not go point of error, we need not address this point. behind Ozuna’s award and analyze his mental processes. See Continental, 93 S.W.2d at 594. The judgment is reversed and judgment is rendered that the appraisal award made pursuant to the provisions of the [11] We believe the entire record before us demonstrates insurance contract is binding on the District and that the the appraisal was conducted in a fair and proper manner, District take nothing in this suit. and the award was determined, after full investigation by both appraisers and the umpire. There was no partiality or collusion shown; the appraisers and umpire acted in an honest and conscientious manner. Under these Parallel Citations circumstances the trial court was not warranted, in effect, in setting aside the appraisal award. 92 Ed. Law Rep. 719

Footnotes 1 Justice Orlando Garcia not participating.

2 We note that appellant states in its brief that eighteen items were disputed. However, the record reflects the twenty-two listed items. 3 The District does not complain of this $1,254.72 sum in their favor. Neither party having complained, we need not address it.

twenty-two itemized items $644,507.16

overhead, insurance and profit 132,365.38

window frames 1,254.72

$778,127.26 4 As previously noted, the trial court deducted this sum from the jury verdict, in its judgment.

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5 In Barnes, which was a suit by the insured to enforce an insurance appraisal award after the insurance company refused to pay the appraisal award, definitions of fraud, accident and mistake were submitted to the jury. The jury was asked whether it found from a preponderance of the evidence that the [appraisal] award should be set aside because of fraud, accident or mistake. The jury answered that it should be set aside. Another question asked the jury: [F]rom a preponderance of the evidence, [w]hat sum of money, if paid now in cash, would fairly and reasonably compensate [the insured] for his damages, if any, for the storm, hail, and resulting damage to the insured from the occurrence in question? 844 S.W.2d at 268. The jury awarded a much lesser amount than the original appraisal award. In the present case the jury answered three questions. The first question asked: Did [Providence] fail to fairly and reasonably compensate [the District] for the cost to repair or replace the [school] and thereby fail to comply with the insurance contract? ANSWER: Yes Conditioned upon an affirmative response to number one, the second question was: What sum of money, if any, if paid now in cash, would fairly and reasonably compensate [the District] for the cost to repair or replace [the school]? “Cost to repair or replace” is the amount to repair or replace [the school] with material of like kind or quality, without deduction for depreciation and intended for the same occupancy and use. ANSWER: 1,237,000 The third question regarding the amount of attorney fees to award the District’s attorneys was answered –––0.00–––. 6 Nor do we believe that the mere column labeling gives rise to a “mistake.” This is illustrated by prior case law. See Providence Wash. Ins. Co. v. Farmers Elevator Co., 141 S.W.2d 1024, 1026–27 (Tex.Civ.App.—Amarillo 1940, no writ) (trial court judgment setting aside an award by two appraisers and an umpire reversed and rendered in part because there was no mistake— award was intended result); Continental, 93 S.W.2d at 594 (court cannot concern itself where the award embodies the appraisers real judgment); Camden Fire Ins. Ass’n v. McCain, 85 S.W.2d 270, 271 (Tex.Civ.App.—San Antonio 1935, writ dism’d) (award not set aside where no evidence of interest, bias or prejudice); Gulf Ins. Co. of Dallas v. Pappas, 73 S.W.2d 145, 146–47 (Tex.Civ.App.—San Antonio 1934, writ ref’d) (court will not substitute its own award for that of the appraisers unless the mistake is one by which the award fails to operate in a way the appraisers intended); Home Ins. Co. v. Walter, 230 S.W. 723, 724 (Tex.Civ.App.—Dallas 1921, no writ) (an award which is the result of fraud, mistake or accident means one which was made by appraisers who were incompetent, interested or partial).

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 9 Richardson v. Allstate Texas Lloyd’s, Not Reported in S.W.3d (2007)

2007 WL 1990387 Only the Westlaw citation is currently available. FACTUAL AND PROCEDURAL BACKGROUND SEE TX R RAP RULE 47.2 FOR DESIGNATION AND SIGNING OF OPINIONS. In December 2001, “a catastrophic pressurized infusion of raw sewage spewed through every plumbing opening” in MEMORANDUM OPINION Richardson’s home in Lancaster, Texas. Richardson’s Court of Appeals of Texas, home was insured by Allstate. Immediately after her Dallas. home was flooded with sewage, Richardson contacted Linda RICHARDSON, Appellant Allstate to make a claim under her insurance policy. v. Shortly thereafter, a dispute arose between Richardson ALLSTATE TEXAS LLOYD’S, Appellee. and Allstate concerning the amount of Richardson’s insured loss. Accordingly, Allstate sent Richardson a No. 05-06-00100-CV. | July 11, 2007. | Rehearing written notice informing her that Allstate was invoking Overruled Sept. 26, 2007. the appraisal provision of her insurance policy. The terms of that provision read, in pertinent part, as follows: On Appeal from the 160th Judicial District Court, Dallas County, Texas, Trial Court Cause No. 02-01779-H, Joe Appraisal. If you and we fail to agree on the actual Cox, J. cash value, amount of loss, or cost of repair or replacement, either can make a written demand for Attorneys and Law Firms appraisal. Each will then select a competent, independent appraiser and notify the other of the Charles Raymond Nichols, Chet Dingler, John H. Carney, appraiser’s identity within 20 days of receipt of the John H. Carney & Associates, Dallas, for Appellant. written demand. The two appraisers will choose an umpire. If they cannot agree upon an umpire within 15 Roger D. Higgins, Jacquelyn Chandler, Thompson, Coe, days, you or we may request that the choice be made by Cousins & Irons, L.L.P., Dallas, for Appellee. a judge of a district court of a judicial district where the loss occurred. The two appraisers will than [sic] set the Before Justices MOSELEY, O’NEILL, and LAGARDE. amount of loss, stating separately the actual cash value and loss to each item.

MEMORANDUM OPINION ... 1 Opinion by Justice LAGARDE. If the appraisers fail to agree, they will submit their *1 Appellant Linda Richardson sued Allstate Texas differences to the umpire. An itemized decision agreed Lloyd’s (Allstate), seeking to overturn an appraisal award to by any two of these three and filed with us will set entered on her insurance claim for sewer damage to her the amount of such loss. Such award shall be binding home. After originally denying Allstate’s successive on you and us. motions for summary judgment, upon reconsideration, the Allstate selected Jim Greenhaw as its independent trial court granted Allstate’s second motion and dismissed appraiser. Richardson selected C.R. Johnson as her Richardson’s claims with prejudice. independent appraiser. The parties then agreed to use Sally Montgomery as the umpire, and she was appointed Richardson appeals the summary judgment order and the by the trial court in March 2002. On March 25, 2002, trial court’s denial of her motion to designate experts. For Johnson and Greenhaw signed their names on a blank reasons that follow, we conclude the summary judgment form “Appraisal Award.” The top of that one-page form was improperly granted and we remand this case to the contains general information about the claim, including trial court for further proceedings. Because all dispositive the names of the parties, the appraisers, and the umpire. issues are settled in law, we issue this memorandum The appraiser’s signatures are in the middle of the page opinion. TEX.R.APP. P. 47.2(a), 47.4. beneath that general information. Directly underneath the

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Richardson v. Allstate Texas Lloyd’s, Not Reported in S.W.3d (2007)

appraisers’ signatures on the form award is a chart with granted Allstate’s second motion and dismissed three columns. The first column is titled “ITEM,” and the Richardson’s claims with prejudice. phrase “to be determined by hygienist” is hand-written beneath that title on the first numbered line. The next two In this appeal, Richardson asserts five main points of columns, titled “LOSS REPLACEMENT COST” and error, each with multiple subpoints. In her first point, “LOSS ACTUAL CASH VALUE,” are blank. Richardson argues the summary judgment order is improper because the appraisal award is “void as a matter *2 According to the record, after they signed the blank of law,” based, inter alia, on her contention that the form, Greenhaw and Johnson each conferred separately appraisal procedure was not followed. In her second with the umpire during the next few months. It appears, point, Richardson argues she is entitled to summary however, that neither appraiser prepared an itemized list judgment on Allstate’s affirmative defense of accord and of the cash value and loss to each item in Richardson’s satisfaction. In her third issue, Richardson argues she is house. According to Richardson, sometime prior to June not estopped to assert her breach of contract claim. In her 21, 2002, Johnson sent Montgomery a written estimate fourth issue, Richardson argues genuine issues of material totaling approximately $141,000. The written estimate fact preclude summary judgment dismissing her extra- itself is not in the record. On June 21, 2002, Montgomery contractual claims. Finally, in her fifth point, Richardson met with Greenhaw at Greenhaw’s office. During that argues the trial erred in denying her motion to designate meeting, Montgomery or Greenhaw wrote “$39,650.75” experts. on the form appraisal award under the column “LOSS REPLACEMENT COST,” next to the phrase “to be determined by hygienist” previously written on the form award. Montgomery and Greenhaw then dated the award June 21, 2002 and both signed it. There is no evidence in THE APPRAISAL PROCEDURE the record that Montgomery or Greenhaw discussed this award with Johnson either before or after it was entered. A. Applicable Law On July 16, 2002, Allstate sent Richardson a check for *3 Because courts “seek to implement the intention of the $27,813.95, the net amount of the award after deducting parties as expressed in the language of a contract,” it has the amounts already paid to Richardson and half of the long been the rule in Texas that “[a]ppraisal awards made umpire’s fee. The next day, Johnson and Richardson pursuant to the provisions of an insurance contract are wrote to the trial court complaining about the impropriety binding and enforceable.” Providence Lloyds Ins. Co. v. of the appraisal award and requested a meeting with the Crystal City Ind. Sch. Dist., 877 S.W.2d 872, 875 trial judge. There is no evidence in the record about (Tex.App.-San Antonio 1994, no writ) (citing Scottish whether such meeting occurred. On October 2, 2002, Union and Nat’l Ins. Co. v. Clancy, 71 Tex. 5, 8 S.W. 630 Richardson cashed Allstate’s check. (Tex.1888)). “Although every reasonable presumption will typically be made in favor of an appraisal award, Thereafter, Richardson filed a petition seeking to set aside when reviewing a summary judgment proceeding, that the appraisal award. In her suit against Allstate, rule must yield to the degree its application conflicts with Richardson asserted claims against Allstate for breach of the presumptions required to be made in favor of the contract, breach of the duty of good faith and fair dealing, nonmovant.” Wells v. Am. States Preferred Ins. Co., 919 negligence, negligence per se, and violation of articles S.W.2d 679, 683 (Tex.App.-Dallas 1996, writ denied) 21.21 and 21.55 of the Texas Insurance Code. (citing Hennessey v. Vanguard Ins. Co., 895 S.W.2d 794, 797-98 (Tex.App.-Amarillo 1995, writ denied)). There are Allstate moved for summary judgment twice. In its three circumstances in which an appraisal award may be second motion for summary judgment, Allstate asserted it set aside on appeal: (1) the award was made without was entitled to summary judgment because (i) Richardson authority, (2) the award was made as a result of fraud or could not establish any grounds for setting aside the accident, or (3) the award was not make in substantial appraisal award, (ii) Richardson’s claims were barred by compliance with the terms of the insurance policy. the affirmative defense of accord and satisfaction, (iii) Crystal City, 877 S.W.2d at 875-76. Richardson was estopped to assert a breach-of-contract claim, and (iv) Richardson’s extra-contractual claims were “unsupportable, as a matter of law.” The trial court denied Allstate’s first and second motions; but upon Allstate’s one-page motion to reconsider, the trial court B. Analysis

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 Richardson v. Allstate Texas Lloyd’s, Not Reported in S.W.3d (2007)

In her first issue, Richardson argues the award in this case before any award was issued. Allstate also argues the should be set aside because it was not made in substantial award is proper because “nothing in the policy requires compliance with the policy. We agree. The policy that the two individuals agreeing on the award delineate expressly requires that the appraisers each make an every item to be replaced.” We agree that in a situation itemized list, “stating separately the actual cash value and like this, in which raw sewage may have contaminated the loss to each item.” It also requires the appraisers to submit entire contents of a home, it would not be necessary to list to the umpire only the items on which the two appraisers and separately appraise, for example, every item of fail to agree. The policy then requires at least two of these clothing and kitchen utensil in the home. Nevertheless, we individuals must agree on the final appraisal award, and reject Allstate’s contention that the appraisers were the final award must be “itemized.” entirely relieved of their obligation to make an itemized list that at least categorized the contents of the home in a The record in this case does not reflect substantial manner customary in the insurance industry. compliance with this required procedure. There is no evidence in the record the appraisers made the requisite *4 Under these facts, we conclude the appraisal award itemized lists or that they submitted only disputed items to should be set aside because the award was not made in the umpire for a decision. Instead, the record contains substantial compliance with the terms of the insurance testimony that, prior to Montgomery and Greenhaw policy. E.g., Fisch v. Transcon. Ins. Co., 356 S.W.2d 186, signing the award, Johnson never saw any written 189-90 (Tex.Civ.App.-Houston 1962, writ ref’d n.r.e.) estimate from Greenhaw and did not meet with Greenhaw (setting aside appraisal award because record contained or Montgomery to discuss the appraisers’ disputed items. no evidence appraisers failed to agree and only submitted The record contains no itemized list prepared by either disagreements to umpire, as required by policy). appraiser. There is testimony in the record that Johnson prepared a written estimate and forwarded it to the umpire, but that estimate is not in the record. There is no evidence that Johnson ever met with Greenhaw to discuss their itemized estimates so the appraisers could determine CONCLUSION their differences. Moreover, the appraisal award signed by Montgomery and Greenhaw is not an “itemized decision” We reverse the trial court’s summary judgment and as required by the terms of the insurance policy. Instead, remand this case for further proceedings consistent with it merely reflects a lump-sum award written next to the this opinion. TEX.R.APP. P. 43.2(d). The ultimate phrase “to be determined by hygienist.” disposition of this case, including Richardson’s extra- contractual claims and Allstate’s affirmative defenses, Allstate argues that a document prepared by Greenhaw will depend on the facts developed and decisions made several days after Greenhaw and Montgomery signed the during the further proceedings in the trial court. award “comprises the itemized decision upon which the Accordingly, we need not address Richardson’s appraisal award was based.” We reject this argument. A remaining issues at this time. TEX.R.APP. P. 47.1. document prepared after the appraisal award was issued cannot, as a matter of common sense and law, constitute the itemized list Greenhaw was supposed to prepare

Footnotes 1 The Honorable Sue Lagarde, Justice, Court of Appeals, Fifth District of Texas at Dallas, Retired, sitting by assignment.

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WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 Safeco Lloyds Insurance Company v. Barrentine, Not Reported in S.W.3d (2014)

Texas. In September 2011, wildfires damaged the Barrentines’ home, and they filed a claim under the 2014 WL 7399307 Only the Westlaw citation is currently available. insurance policy. In May 2012, pursuant to the provisions of the policy, Safeco demanded an appraisal of the SEE TX R RAP RULE 47.2 FOR DESIGNATION amount of loss suffered by the Barrentines and designated AND SIGNING OF OPINIONS. its appraiser. The policy provided the Barrentines were entitled to appoint their own appraiser, and the two MEMORANDUM OPINION appraisers would agree on an umpire. If the appraisers Court of Appeals of Texas, were unable to agree on an umpire, the policy permitted Dallas. either party to request that the choice of an umpire be made by a judge of a district court of a judicial district Safeco Lloyds Insurance Company, Appellant where the loss occurred. v. James & Patricia Barrentine, Appellees In August 2012, Safeco filed a motion in Bastrop County district court seeking the appointment of an umpire No. 05–13–01011–CV | Opinion Filed December 17, because the parties’ appointed appraisers were unable to 2014 agree on an umpire. In September 2012, the Bastrop County court appointed an umpire. On January 25, 2013, On Appeal from the 193rd Judicial District Court, Dallas the umpire issued a proposed appraisal award, allegedly County, Texas, Trial Court Cause No. DC–13–04453. without considering the estimate or opinions of Safeco’s Carl Ginsberg, Judge. appraiser. On January 31, following a hearing, the Bastrop County court appointed a different umpire. On Attorneys and Law Firms April 13, the Barrentines nonsuited the suit in Bastrop Catherine L. Hanna, Laura Tubbs, Eric S. Peabody, County and re-filed suit in Dallas County district court. Austin, TX, for Appellant. Among other things, the Barrentines sought a temporary restraining order barring the Bastrop County court from Robert L. Collins, Robert Edwin Ray, Houston, TX, conducting a re-appraisal of the Barrentines’ property in Kathleen Kearney, Michael Nathaniel Barbera, Paul Bastrop. On July 3, 2013, the Dallas County district court Wesley Black, Dallas, TX, for Appellees. entered an order temporarily enjoining the re-appraisal of Before Justices Bridges, Lang, and Evans the Bastrop property, and this interlocutory appeal followed.

In its first issue, Safeco argues the Dallas County district court erred in entering a temporary injunction. Specifically, Safeco argues the temporary injunction MEMORANDUM OPINION impermissibly disrupted the status quo of the underlying case by ignoring and unwinding the orders of the Bastrop Opinion by Justice Bridges County court, “allowing the Barrentines to collaterally attack those orders in a court of concurrent jurisdiction.” *1 Safeco Lloyds Insurance Company appeals the trial We agree. court’s order temporarily enjoining a re-appraisal of the Barrentines’ residence in Bastrop, Texas. In three issues, The purpose of a temporary injunction is to preserve the Safeco argues the trial court’s injunction was an improper status quo of the subject matter of a suit pending a trial on collateral attack on the orders and jurisdiction of the the merits. Butnaru v. Ford Motor Co., 84 S.W.3d 198, Bastrop court, the trial court abused its discretion by 204 (Tex.2002); El Tacaso, Inc. v. Jireh Star, Inc., 356 finding the Barrentines had a probable right to recovery S.W.3d 740, 743 (Tex.App.–Dallas 2011, no pet.). A under the invalidated appraisal, and the trial court erred party asking for a temporary injunction seeks by refusing to dissolve the injunction. We reverse the trial extraordinary equitable relief. El Tacaso, 356 S.W.3d at court’s order granting temporary injunctive relief, 743; Wilson N. Jones Mem’l Hosp. v. Huff, 188 S.W.3d dissolve the temporary injunction, and remand for further 215, 218 (Tex.App.–Dallas 2003, pet. denied). The proceedings. extraordinary equitable remedy of an injunction must be carefully regulated and confined to proper cases. El In March 2011, the Barrentines purchased a homeowner’s Tacaso, 356 S.W.3d at 743. The decision to grant or deny insurance policy from Safeco for their home in Bastrop, WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Safeco Lloyds Insurance Company v. Barrentine, Not Reported in S.W.3d (2014)

a temporary injunction lies in the sound discretion of the Where two actions involving the same subject matter are trial court, and the court’s grant or denial is subject to brought in different courts having concurrent jurisdiction, reversal only for a clear abuse of discretion. Butnaru, 84 the court which first acquires jurisdiction should retain S.W.3d at 204. jurisdiction, undisturbed by the interference of another court and dispose of the controversy. In re Sims, 88 *2 To be entitled to a temporary injunction, an applicant S.W.3d at 303. It is not required that the exact issues and must plead and prove three specific elements: (1) a cause all the parties be included in the first action before the of action against the defendant; (2) a probable right to the second action is filed, provided that the claim in the first relief sought; and (3) a probable, imminent, and suit may be amended to bring in all necessary and proper irreparable injury in the interim. Id. “Probable injury” parties and issues. Id. The test is whether there is an includes the elements of imminent harm, irreparable inherent interrelation of the subject matter in the two injury, and no adequate remedy at law. El Tacaso, 356 suits. Id. As long as the forum of the first action is proper, S.W.3d at 743. For purposes of a temporary injunction, an the plaintiff’s choice of forum must be respected, and a injury is irreparable if the injured party cannot be defendant is “simply not at liberty to decline to do battle adequately compensated in damages or if the damages in the forum chosen by the plaintiff.” Id. (quoting Wyatt, cannot be measured by any certain pecuniary standard. Id. 760 S.W.2d at 248). The general rule at equity is that before injunctive relief can be obtained, it must appear that there does not exist an Here, the record shows that the Dallas County district adequate remedy at law. Butnaru, 84 S.W.3d at 210. An court’s temporary injunction, rather than preserving the adequate remedy at law is one that is as complete, status quo of the underlying suit pending a trial on the practical, and efficient to the prompt administration of merits, usurped the role of the Bastrop County court as justice as is equitable relief. El Tacaso, 356 S.W.3d at the court granted authority to conduct an appraisal under 744. the terms of the parties’ contract. See Butnaru, 84 S.W.3d at 204. The temporary injunction states the Dallas County As a general rule, when cases involving the same subject district court’s finding that “re-appraisal and its attendant matter are brought in different courts, the court with the delay poses a risk of irreparable harm to the Barrentines’ first-filed case has dominant jurisdiction and should health and to their rights in their unique real property.” As proceed, and the other case should be abated. Ashton a result, the temporary injunction was granted “barring a Grove, L.C. v. Jackson Walker L.L.P., 366 S.W.3d 790, second or subsequent appraisal of the insured risk at issue 794 (Tex.App.–Dallas, 2012, no pet.); see In re Sims, 88 in the above-captioned litigation pending [the Dallas S.W.3d 297, 302 (Tex.App.–San Antonio 2002, orig. County district court’s] ruling on the summary judgment proceeding) (citing Wyatt v. Shaw, 760 S.W.2d 245, 248 now pending in connection with the completed appraisal.” (Tex.1988); Curtis v. Gibbs, 511 S.W.2d 263, 267 Thus, rather than preserving the status quo, the temporary (Tex.1974)). In Curtis, the Texas Supreme Court stated: injunction purportedly cut off the Bastrop County court from taking further action to effectuate the appraisal the Any subsequent suit involving the contract between the parties mandated. See id. The same parties and the same Bastrop County court, as the court with dominant controversy must be dismissed if a jurisdiction, should have been left undisturbed to dispose party to that suit calls the second of the underlying controversy. See In re Sims, 88 S.W.3d court’s attention to the pendency of at 302–03. We conclude the trial court erred in entering the prior suit by a plea in its temporary injunction in this case. We sustain Safeco’s abatement. If the second court first issue. Because of our disposition of Safeco’s first refuses to sustain a proper plea in issue, we need not address Safeco’s remaining issues. abatement or attempts to interfere with the prior action, this court has *3 We reverse the trial court’s order granting temporary the power to act by mandamus or injunctive relief, dissolve the temporary injunction, and other appropriate writ to settle the remand this case to the trial court for further proceedings. conflict of jurisdiction.

Curtis, 511 S.W.2d at 267.

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WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 Safeco Lloyds Insurance Company v. Barrentine, Not Reported in S.W.3d (2014)

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 TMM Investments, Ltd. v. Ohio Cas. Ins. Co., 730 F.3d 466 (2013)

Frank M. Mason, Longview, TX, for Plaintiff–Appellee– Cross Appellant. 730 F.3d 466 United States Court of Appeals, Richard Brent Cooper, Esq., Diana L. Faust, Michelle Fifth Circuit. Elaine Robberson, Cooper & Scully, P.C., Dallas, TX, for TMM INVESTMENTS, LIMITED., Plaintiff– Defendant–Appellant–Cross Appellee. Appellee–Cross Appellant Appeals from the United States District Court for the v. Eastern District of Texas. OHIO CASUALTY INSURANCE COMPANY, Defendant–Appellant–Cross Appellee. Before JOLLY, DAVIS, and PRADO, Circuit Judges. No. 12–40635. | Sept. 17, 2013. Opinion

EDWARD C. PRADO, Circuit Judge: Synopsis Background: Insured, the owner of a shopping center, brought action in state court against insurer seeking to This appeal arises out of an insurance dispute between have an appraisal award regarding hailstorm damage TMM Investments, Ltd. (“TMM”), which owned a declared invalid. Following removal, the United States shopping center, and Ohio Casualty Insurance Co. District Court for the Eastern District of Texas entered (“OCIC”), which insured the property. The property was partial summary judgment for insured, set aside the damaged in a hailstorm, but the parties disagreed about appraisal award, found that insured was entitled to the extent of the damage. An appraisal was conducted damages and attorney fees, and denied insurer’s motion according to the terms of the insurance contract, but for new trial. Both parties appealed. TMM was not pleased with the appraisal award and sued to have the award declared invalid. The district court set aside the appraisal award and had the case proceed to trial Holdings: The Court of Appeals, Prado, Circuit Judge, for liability and coverage determinations. An advisory held that: jury assessed a damage award, and after a bench trial on the remaining issues, the district court delivered a number [1] umpire lacked authority to exclude heating, ventilation, of findings of fact and conclusions of law, including that and air-conditioning (HVAC) damages estimate from OCIC had breached the insurance contract and that TMM appraisal award; was entitled to damages, attorney’s fees, and prejudgment interest. OCIC appeals the district court’s order setting [2] umpire’s error in excluding HVAC damages estimate aside the appraisal award and the district court’s findings from appraisal award did not justify throwing out the of fact and conclusions of law. TMM appeals the district entire appraisal award; court’s determination that TMM was entitled to only the actual cash value of the damage, rather than the [3] appraisal panel did not exceed its authority in replacement cost, and the district court’s failure to award considering causation; and appellate attorney’s fees. Because we find that the original appraisal award should not have been set aside, [4] insurer fulfilled the terms of the insurance contract we reverse. when it tendered the amount articulated in the appraisal award.

Reversed. I. FACTUAL AND PROCEDURAL BACKGROUND

TMM owns a shopping center (“Liberty Square”) in Texarkana, Texas, which was insured by OCIC under a Attorneys and Law Firms policy that was *469 in force from June 1, 2005 to June 1, *468 Andy Tindel, Andy Tindel, Attorney & Counselor at 2006. According to TMM, the roof of the Liberty Square Law, P.C., Tyler, TX, Frank M. Mason, Law Office of property was severely damaged when a hailstorm passed through the area on or around June 6, 2005. TMM

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 TMM Investments, Ltd. v. Ohio Cas. Ins. Co., 730 F.3d 466 (2013)

notified OCIC of the damage around March 30, 2007. infiltration is not covered under the policy. It is my TMM conducted an assessment of the damage and understanding that the policy would only cover interior estimated it to be between $654,796 and $955,910. damage if there was not a covere[d] peril related OCIC’s engineers, on the other hand, estimated the opening(s) in the roof. I feel confident in my position damage to be only around $17,949. OCIC made TMM a on this matter but ask my client for confirmation and payment offer on the basis of that estimate. TMM filed a advi[c]e. Once I have the confirmation I will issue an sworn proof of loss for $679,725.68 on April 9, 2008. estimate that cover[s] all item[s] I attribute to the storm and my recommended quantification of expense. Because the disparity between the parties’ estimates was so great, TMM refused the payment offer and invoked the On July 15, citing concerns over the way the appraisal Appraisal Property Loss Conditions section of the was being conducted, Crites resigned. insurance policy, which reads, in pertinent part: On July 29, 2009, Boyd issued an appraisal award, which If we and you disagree on the Butler also signed, listing the “Replacement Cost” of the amount of loss, either may make damage to Liberty Square as $73,014.83, and the “Actual written demand for an appraisal of Cash Value” of the loss as $49,632.63. The award the loss. In this event, each party contained line items for “Clean and coat modified will select a competent and [illegible] roof 188 sqs,” “Repair & coat EFIS,” and impartial appraiser and notify the “Replace and paint aluminum shingles,” but apparently other of the appraiser selected the final figure was not inclusive of any estimate for within 20 days of such demand. damage to the roof membrane or to the skylights. Boyd, in The two appraisers will select an drawing up the award, also chose to exclude damage to umpire. If they cannot agree within Liberty Square’s heating, ventilation, and air-conditioning 15 days upon such umpire, either (HVAC) system because he did not believe the damage may request that selection be made affected the unit’s operation, even though Crites and by a judge of a court having Butler had both stated in their own appraisal awards that jurisdiction. Each appraiser will the HVAC system had sustained $2,794.80 *470 worth of state separately the amount of loss. damage. At some point, OCIC tendered payment for the If they fail to agree, they will “Actual Cash Value” listed in the award Boyd issued, less submit their differences to the the policy deductible. After TMM notified OCIC that the umpire. A decision agreed to by award had excluded the HVAC damage, OCIC sent TMM any two will be binding as to the a check for $51,427.43, the amount of the appraisal award amount of loss. plus the agreed-upon $2,794.80 damage to the HVAC system. Because it took issue with the appraisal process and award, TMM refused the money. The appraisal process initially encountered a number of delays, but ultimately TMM and OCIC appointed Clifford Crites and Mitchell Butler as their respective appraisers. TMM then sued OCIC in state court on August 21, 2009, Crites and Butler designated Gary Boyd to serve as seeking a declaratory judgment pursuant to the Texas Declaratory Judgments Act that the appraisal process was umpire. In March 2009, Crites, Butler, and Boyd began flawed and that the appraisal award should be set aside. their appraisals. On April 13, Butler sent Boyd and Crites TMM additionally alleged that OCIC had breached the an e-mail that read: terms of the insurance contract by failing “to pay any Gentlemen, claim loss in a timely manner when liability and loss had become reasonably clear.”1 OCIC timely removed the While I appreciate and do not question the [ ] case to federal court on diversity grounds.2 See 28 U.S.C. directions, warnings and procedures quoted below from § 1332(a) (2013). The parties took discovery, and Boyd, the various expert agencies, the insurance issue remains Butler, and Crites each gave sworn depositions. In his what was damage[d] by the storm/hail and what is the deposition, Butler testified that he believed some of the reason the moisture levels are what they are. It is my damage to Liberty Square’s skylights had been caused by position that from the roofing stand point the old projectiles from inside the building such as bullets or aluminum coating was scuffed and displaced by the rocks, rather than hail. storm. The membrane was not damaged. The water infiltration was not as a result of the storm and the On January 31, 2011, OCIC moved for summary subsequent interior water damage resulting from that judgment. TMM in turn filed a cross-motion for partial summary judgment on February 1, 2011, arguing that the WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 TMM Investments, Ltd. v. Ohio Cas. Ins. Co., 730 F.3d 466 (2013)

appraisal award should be set aside because the appraisers Both parties have raised a number of issues on appeal, had erred in a number of ways. First, TMM argued that many of which are contingent on the outcome of the Boyd, the umpire, had exceeded his authority when he dispute over the validity of the appraisal award. We hold improperly excluded damage to Liberty Square’s HVAC that the appraisal award was incorrect in that it excluded system. See Fisch v. Transcon. Ins. Co., 356 S.W.2d 186, damage to the HVAC unit from the award, but that the 189 (Tex.Civ.App.—Houston 1962, writ ref’d n.r.e.) rest of the award should remain unaffected by this (“[T]he umpire’s power to act is conditioned upon a determination. The appraisers did not exceed their disagreement between the appraisers and the submission authority when they considered causation issues, and of their differences only to him....”). Second, TMM therefore the appraisal award should not have been set argued that Butler and Boyd, in considering whether it aside. OCIC thus was only obligated to pay the amount had been hail, or instead wind, improper installation, and articulated in the award, plus the cost of repair for the deterioration that had caused the damage to Liberty HVAC system. OCIC therefore fulfilled the terms of the Square’s roof, had “improperly considered causation and insurance contract when it tendered the amount coverage issues” in arriving at the appraisal award. 3 Third, articulated in the award and the cost of the repair to the TMM claimed that Boyd and Butler had ignored pertinent HVAC system to TMM, and the district court erred when evidence in arriving at their appraisal award. it determined OCIC had breached the insurance contract. Accordingly, the district court’s award of attorney’s fees On March 25, 2011, the district court granted partial and prejudgment interest to TMM is also reversed. summary judgment for TMM, finding that the appraisal Because we hold that there was no breach of contract, the award was invalid and should be set aside. The district issues raised in TMM’s cross-appeal are moot. court agreed with TMM that the appraisal panel had exceeded the scope of its authority, first, because Boyd was not authorized to exclude the HVAC damage from the appraisal award, and second, because Butler and Boyd A. Standard of Review and Applicable Law improperly considered causation and coverage issues “We review a grant of summary judgment de novo, when evaluating the damage to certain parts of the viewing all evidence in the light most favorable to the property, namely the roof membrane and skylights, citing nonmoving party and drawing all reasonable inferences in Wells v. Am. States Preferred Ins. Co., 919 S.W.2d 679, that party’s favor.” Pierce v. Dep’t of the U.S. Air Force, 685 (Tex.App.—Dallas 1996, writ denied). The court 512 F.3d 184, 186 (5th Cir.2007). “[S]ummary judgment determined that “[t]he case [would] proceed to trial on is proper if the pleadings, depositions, answers to matters of causation, liability, and damages[,]” because interrogatories, and admissions on file, together with the “[i]t *471 would be inappropriate to remand this matter affidavits, if any, show that there is no genuine issue as to for a new appraisal determination.” any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, The district court empaneled an advisory jury, which 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 eventually found that it would cost $654,795.84 “to repair (1986) (internal quotation marks omitted). and replace Liberty Square Shopping Center property [1] damaged by the hailstorms of June 6, 2005, November 27, Because this case was removed to federal court on 2005, and/or May 16, 2006.” The district court then diversity grounds, Texas substantive law applies. See Erie conducted a bench trial, and issued its findings of fact and R.R. Co. v. Tompkins, 304 U.S. 64, 78–80, 58 S.Ct. 817, conclusions of law on November 15, 2011. The court 82 L.Ed. 1188 (1938). “To determine issues of state law, concluded that OCIC had breached the terms of the we look to final decisions of the state’s highest court, and insurance policy and that TMM was entitled to “the actual when there is no ruling by that court, then we have the cash value of the damage: $445,261.17,” or sixty-eight duty to determine as best we can what the state’s highest percent of the replacement cost. The court also awarded court would decide.” Westlake Petrochems., L.L.C. v. TMM attorney’s fees, court costs, expert fees, and United Polychem, Inc., 688 F.3d 232, 238 n. 5 (5th prejudgment interest running from October 6, 2008. Cir.2012) (citation omitted). “In making an [Erie ] guess OCIC moved for a new trial, but the district court denied in the absence of a ruling from the state’s highest court, the motion. OCIC and TMM both timely appealed. this Court may look to the decisions of intermediate appellate state courts for guidance.” Howe ex rel. Howe v. Scottsdale Ins. Co., 204 F.3d 624, 627 (5th Cir.2000) (citation omitted).

II. DISCUSSION

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[7] B. Analysis However, Boyd’s error does not justify, on its own, [2] [3] [4] [5] “Because courts ‘seek to implement the throwing out the entire appraisal award. The district court intention of the parties as expressed *472 in the language had no occasion to decide the issue of what should be of a contract,’ it has long been the rule in Texas that done in the event the HVAC damages omission ‘appraisal awards made pursuant to the provisions of an constituted the only error on the part of the appraisal insurance contract are binding and enforceable.’ ” panel, because it also found that the appraisal panel’s Richardson v. Allstate Tex. Lloyd’s, No. 05–06–00100– consideration of causation rendered the appraisal invalid CV, 2007 WL 1990387, at *3 (Tex.App.—Dallas July 11, in its entirety. Because we find that the award is otherwise 2007, no pet.) (mem.op.) (alteration omitted) (quoting unobjectionable, see infra Part II.B. 2., we must Providence Lloyds Ins. Co. v. Crystal City Indep. Sch. determine if, given Boyd’s error, the “valid” portion of Dist., 877 S.W.2d 872, 875 (Tex.App.—San Antonio the award should stand. While Texas courts have never 1994, no writ)); see also Lundstrom v. United Servs. Auto. addressed the issue, the related case law suggests that Ass’n, 192 S.W.3d 78, 87 (Tex.App.—Houston [14th minor mistakes that do not taint the entire award should Dist.] 2006, pet. denied). Every reasonable presumption not frustrate the parties’ intent to be bound by the will be indulged to sustain an appraisal award, and the appraisal provision of their contract. burden of proof lies on the party seeking to avoid the award. Franco v. Slavonic Mut. Fire Ins. Ass’n, 154 In Crystal City, the trial court set aside an appraisal award S.W.3d 777, 786 (Tex.App.—Houston [14th Dist.] 2004, because a section in the award listing damages agreed no pet.); Continental Ins. Co. v. Guerson, 93 S.W.2d 591, upon by the appraisers had been mislabeled. 877 S.W.2d 594 (Tex.Civ.App.—San Antonio 1936, writ dism’d). An at 876–77. The court of appeals, while acknowledging the appraisal award will be upheld unless at least one of three error, nonetheless reinstated the award and noted that “[i]f circumstances exists: (1) the award was made without the [umpire and the two other appraisers] *473 are of one authority; (2) the award was the result of fraud, accident, mind, or if any two of them are in accord as to value and or mistake; or (3) the award was not made in substantial loss, the appraisal award is a finality.” Id. at 877–78 compliance with the terms of the contract. Crystal City, (citation omitted). A federal district court case 877 S.W.2d at 875–76. “The effect of an appraisal interpreting Texas law also suggests that the acceptable provision is to estop one party from contesting the issue portions of the award should continue to bind the parties. of damages in a suit on the insurance contract, leaving In MLCSV10 v. Stateside Enterprises, Inc., the court only the question of liability for the court.” Lundstrom, explained, “To the extent the appraisal award implicitly 192 S.W.3d at 87. determined that the ductwork damage was not covered ..., the plaintiffs have provided a sufficient basis for setting aside that part of the appraisal award. There is, however, no basis for setting aside the entire award or any other 1. Exclusion of the HVAC system damages part of it.” 866 F.Supp.2d 691, 707–08 (S.D.Tex.2012). [6] The district court was correct in determining that the The court went on to say in a footnote, “[A] finding that umpire had no authority to exclude the HVAC damages appraisers were biased would require setting aside the estimate from the appraisal award. Texas courts have entire award. But as all parties admitted ..., there is no clearly held that unless there is a discrepancy between the precedent that compels setting aside an entire appraisal findings of the two appraisers appointed by the parties, award based on a finding that one part of the award was there is no duty for the umpire to perform. See Fisch, 356 incomplete or implicitly determined a coverage issue.” Id. S.W.2d at 189–90 (“Since the umpire’s power to act is at 708 n. 6. Here, there is no contention that Boyd lacked conditioned upon a disagreement between the appraisers authority to speak on the numerous damage items that and the submission of their differences only to him, we Butler and Crites disagreed about. We do not believe the are of the opinion that the award, which was signed by omission of the HVAC damage from the award justifies only one appraiser and the umpire who had no authority ignoring the intent of the parties to have damages issues to act, is invalid.”); Crystal City, 877 S.W.2d at 876 submitted to and decided by an appraisal panel. Cf. State (“[A]n umpire, appointed to decide on matters of Farm Lloyds v. Johnson, 290 S.W.3d 886, 895 (Tex.2009) difference only, has no authority to pass on matters (“Like any other contractual provision, appraisal clauses concerning which there was no difference between the should be enforced.”). We therefore uphold the remainder appraisers.” (quoting Fisch, 356 S.W.2d at 190)). Here, of the award.4 no party disputes that Butler and Crites agreed as to how much damage the HVAC system sustained. Boyd was thus without authority to strike it from the appraisal award. 2. Whether the appraisal panel exceeded its authority in considering causation WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 4 TMM Investments, Ltd. v. Ohio Cas. Ins. Co., 730 F.3d 466 (2013)

[8] The district court, in its order setting aside the appraisal “[c]ausation relates to both liability and damages because award, concluded that the appraisal panel had exceeded it is the connection between them[,]” id. at 891–92. its authority in “attribut[ing] the roof membrane damage to improper installation and the skylight damage to rocks The court discussed both Wells and Lundstrom v. United thrown from below.” The district court relied primarily on Services Automobile Ass’n, a case somewhat at odds with a Texas Court of Appeals case, Wells v. American States Wells, in which the appeals court upheld an appraisal Preferred Insurance Co., 919 S.W.2d 679 (Tex.App.— award that considered damages from an “initial wetting” Dallas 1996, writ denied), in coming to that conclusion. but not damages from mold. Id. at 892; see Lundstrom, According to the district court, Wells “held that the 192 S.W.3d at 89 (“The cases cited in Wells stand for the appraisal panel’s responsibility is simply to determine the narrower proposition that appraisers exceed their value of property damage and that ‘questions of what authority when they engage in making the legal caused or did not cause the loss are questions to be determination of what is or is not a covered loss based on decided by the court.’ ” (quoting Wells, 919 S.W.2d at their determination of what caused the loss or a portion of 685). In Wells, the appraisal panel unanimously it.”). The Johnson court reconciled these cases as follows: concluded that the claimant’s house had suffered damage “due to foundation movement in the amount of Appraisers can decide the cost of $22,875.94[,]” but that the amount of damage attributable repairs in [the context of cases like to a plumbing leak that had allegedly created the Wells ], but if they can also decide foundation movement—which the policy would have causation there would be no covered—was zero. 919 S.W.2d at 682. The trial court liability questions left for the approved the appraisal award, but the appeals court courts. By contrast, when different reversed, concluding that “the appraisal section of [the types of damage occur to different policy] establishes an appraisal procedure to determine items of property, appraisers may the dollar amount of the insured’s loss only, and that it have to decide the damage caused does not authorize or empower the appraisal panel created by each before the courts can thereunder to determine what caused or did not cause that decide liability.... In [the context of loss.” Id. at 685. The appraisal award was therefore made cases like Lundstrom ], courts can without authority, and the court remanded the case to the decide whether water or mold trial court for a new trial. Id. at 686–87. damage is covered, but if they can also decide the amount of damage OCIC argues, however, that the district court did not take caused by each, there would be no full account of a more recent Texas Supreme Court case damage questions left for the that modifies the scheme established by Wells. That case, appraisers. The same is true when State Farm Lloyds v. Johnson, does indeed provide the the causation question involves controlling law on *474 the issue of the scope of the separating loss due to a covered appraisal panel’s authority. 290 S.W.3d 886 (Tex.2009). event from a property’s pre- In Johnson, the claimant alleged that her roof had been existing condition.... If State Farm damaged in a hailstorm and filed a claim with her is correct that appraisers can never insurance company. Id. at 887. When the insurance allocate damages between covered company provided a much lower damage estimate than and excluded perils [such as wear her claim requested, the claimant invoked the policy’s and tear], then appraisals can never appraisal provision. Id. at 887–88. The insurance assess hail damage unless a roof is company, however, argued that appraisal should not be brand new. required because the panel would necessarily have to decide issues of causation, not “amount of loss.” Id. at Johnson, 290 S.W.3d at 892–93. The court concluded that 888. The claimant then filed suit seeking a declaratory appraisal should be compelled, noting that “[a]ny judgment compelling appraisal. Id. appraisal necessarily includes some causation element, because settling the ‘amount of loss’ requires appraisers The Texas Supreme Court began by repeating the rule, to decide between damages for which coverage is claimed established in earlier case law, that “damage questions from damages caused by everything else.” Id. at 893. [are] for appraisers and liability questions [are] for the [9] courts[.]” Id. at 889. It quickly acknowledged, though, At the very least, Johnson arguably establishes that that “[t]he line between liability and damage questions appraisal panels are within their rights when they consider may not always be clear [,]” id. at 890, and that whether damage was caused by a particular event or was instead the result of non-covered pre-existing perils like WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 5 TMM Investments, Ltd. v. Ohio Cas. Ins. Co., 730 F.3d 466 (2013)

wear and tear. Indeed, this is the way many subsequent is a case of the second variety because damage is alleged cases have interpreted Johnson’s guidance. See, e.g., to have occurred to the roof membrane and the skylights. MLCSV10, 866 F.Supp.2d at 705 (“Lochridge’s causation Additionally, the closeness of the facts in Johnson to evaluation involved no more than ‘separating loss due to a those at bar—both involved roofs damaged in part by covered event from a property’s pre-existing condition.’ ” hailstorms—militates in favor of arriving at a holding (quoting Johnson, 290 S.W.3d at 892)); Essex Ins. Co. v. similar to the one arrived at by the Johnson court. Helton, 4:10–cv–2229, at *2 (S.D.Tex. Jan. 24, 2012) Coupled with the requirement that we indulge “every (slip op.) (“However, where there are different types of reasonable presumption to sustain an appraisal award,” damage to different items of property, or *475 where the Johnson appears to compel reversal of the district court’s property is not new and has suffered wear and tear, order setting aside the award in this case. appraisers may have to decide causation in order to decide damages.”). To the extent the appraisers merely distinguished damage caused by pre-existing conditions from damage caused by the storm, they were acting 3. Claims related to breach of contract [11] within their authority. Because the appraisal award was not invalid, when OCIC tendered the amount articulated in the appraisal The district court appears to have concluded that Johnson award plus an amount for the damage to the HVAC required setting aside the appraisal award because “TMM system, it fulfilled the terms of the insurance contract. See contends the storm damaged the skylights, but [OCIC] Probus Props. v. Kirby, 200 S.W.3d 258, 262 contends rocks caused the damage.... TMM contends the (Tex.App.—Dallas 2006, pet. ref’d) (explaining that storm damaged the roof membrane, but [OCIC] contends tendering a check “suspends the obligation until dishonor the roof membrane was damaged due to improper of the check or until it is paid or certified ” (emphasis installation. The parties have alleged different causes for added) (internal quotation marks omitted)). Because the same injuries.” There are two principal problems with TMM thus did not bring a “valid claim” for breach of this conclusion. First, it is not entirely clear from the contract, it should not have been awarded attorney’s fees, record what reasons Butler or Boyd had for excluding and we reverse the district court’s determination to that certain items from the award. TMM itself acknowledges effect. See Tex. Civ. Prac. & Rem.Code Ann. § 38.001(8) that multiple causes of damage, including wear and tear, (2013). Similarly, because TMM was not a “prevailing have been alleged. Its summary judgment motion stated, party” in its breach of contract claim, we reverse the “Here, the moisture levels were allegedly caused by hail district court’s award of costs to TMM. See Fed.R.Civ.P. storm, wind storm and/or windstorm, improper 54(d); Carter v. Gen. Motors Corp., 983 F.2d 40, 43 (5th installation and deterioration.” If that is the case, Johnson Cir.1993) (explaining that “federal procedural law appears to foreclose setting aside the appraisal award—it ordinarily governs the award of costs in diversity cases”). was entirely appropriate for the appraisers to consider Because the claims in TMM’s cross-appeal are uniformly whether damage was caused by these pre-existing related to the breach of contract found by the district conditions. court, we dismiss these claims as moot.

[10] Second, it appears the district court misapplied the law even if its statements about the reasons for Butler’s and Boyd’s exclusions are accurate. Johnson stated, “[W]hen different causes are alleged for a single injury to property, *476 III. CONCLUSION causation is a liability question for the courts.... By For the foregoing reasons, we REVERSE the district contrast, when different types of damage occur to court’s decision and REMAND the case so that the different items of property, appraisers may have to decide district court may reinstate the appraisal award, including the damage caused by each before the courts can decide the HVAC damage amount of $2794.80. liability.” Johnson, 290 S.W.3d at 892. Putting aside the question of why this distinction should matter, even according to the facts as the district court found them, this

Footnotes 1 The complaint also contained claims for breach of fiduciary duty and violations of the Texas insurance code but TMM later agreed to reserve those issues for a separate trial, to be held once causation, damages, and coverage issues had been resolved. 2 The original complaint also included Boyd and Butler, who are Texas domiciliaries, as defendants, but TMM voluntarily

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dismissed all claims against them pursuant to a settlement agreement, creating complete diversity between the parties. 3 As with similar insurance policies, TMM’s policy did not cover wear and tear.

4 The appraisal award amount and the HVAC damage amount were tendered to TMM, but it appears TMM never cashed the check. If this is the case, OCIC is obviously required to furnish that amount to TMM again.

End of Document © 2015 Thomson Reuters. No claim to original U.S. Government Works.

WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 7 Wells v. American States Preferred Ins. Co., 919 S.W.2d 679 (1996)

consequences of the appraisal made pursuant to that insurance policy. The issues focus upon the question of 919 S.W.2d 679 Court of Appeals of Texas, whether the appraisers are authorized and empowered to Dallas. determine what caused or did not cause the loss claimed. Here, the policy insured the dwelling against foundation Donald WELLS and Emma Wells, Appellants, and structural *681 damage due to foundation movement v. caused by leaks in the plumbing system. The Wellses AMERICAN STATES PREFERRED INSURANCE assert the dwelling suffered foundation and structural COMPANY, Appellee. damage caused by a plumbing leak. The Wellses made a claim on the policy. American States denied the claim, No. 05–95–00200–CV. | Jan. 29, 1996. demanded an appraisal, and then sued to require an appraisal. The Wellses counterclaimed on the policy and Insurer sought declaration that it had properly invoked on other causes of action. The trial court abated the appraisal provisions of homeowners’ policy, following counterclaim until an appraisal was done. The two insureds’ claim for loss from foundation movement appraisers and an umpire determined that the resulting allegedly caused by plumbing leak. After appraisers damage to the dwelling due to foundation movement was determined that insureds’ loss was not covered, the 199th $22,875.94. However, one appraiser and the umpire also Judicial District Court, Collin County, John R. Roach, J., determined that the plumbing leak caused no loss; i.e., granted summary judgment to insurer, and insureds that the plumbing leak did not cause the damage. Based appealed. The Court of Appeals, Whitham, Retired on this latter determination, the trial court entered a take- Justice, sitting by assignment, held that policy’s appraisal nothing summary judgment against the Wellses. Because clause authorized appraisers to determine amount of loss we conclude that the appraisal section of the policy, as a only, not what caused or did not cause loss. matter of law, did not authorize the appraiser and umpire to determine that the plumbing leak did not cause the Reversed and remanded. damage and loss to the Wellses’ property, we conclude that the trial court erred in entering a take-nothing judgment against the Wellses. Accordingly, we reverse *680 On Appeal from the 199th Judicial District Court and remand. Collin County; Trial Court Cause No. 199–1235–92.

Attorneys and Law Firms

Thomas M. Richards, Smith Merrifield & Richards, Factual Background L.L.P., Dallas, Dixon Jace Reynolds, Bush, Fulton, Hurlbut & Morrison, P.C., Arlington, Gayle E. Oler, Donald and Emma Wells own a home in Wylie, Texas. Dallas, for Appellants. American States insured the home under a Texas Homeowner’s Policy. The policy contained the following Wesley W. Chambers, Gollaher & Chambers, Dallas, for provision for determining the amount of loss by appraisal Appellee. at request of either party: Before LAGARDE, BARBER and WHITHAM1, JJ. 7. Appraisal. If you and we fail to agree on the actual cash value, amount of loss or the cost of repair or replacement, either can make a written demand for appraisal. Each will then select a competent, independent appraiser and notify the other of the appraiser’s identity within 20 days of receipt of the OPINION written demand. The two appraisers will choose an WHITHAM (Retired), Justice. umpire. If they cannot agree upon an umpire within 15 days, you or we may request that the choice be made by Appellants, Donald Wells and wife, Emma Wells, appeal a judge of a district court of a judicial district where the from a summary judgment in favor of appellee, American loss occurred. The two appraisers will then set the States Preferred Insurance Company. The principal issues amount of loss, stating separately the actual cash value involve the appraisal provision of the Texas and loss to each item. If you or we request that they do Homeowner’s Policy and the interpretation and so, the appraiser will also set: WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 1 Wells v. American States Preferred Ins. Co., 919 S.W.2d 679 (1996)

a. the full replacement cost of the dwelling. $22,875.94. However, appraiser Lochridge and umpire Butler determined that damage to the dwelling related to b. the full replacement cost of any other building the plumbing leak was zero. upon which loss is claimed. American States then filed its motion for summary c. the full cost of repair or replacement of loss to judgment based on the appraisal determination that the such building, without deduction for depreciation. plumbing leak did not cause the loss claimed. The Wellses filed their own motion for partial summary If the appraisers fail to agree, they will submit their judgment based on the unanimous determination of the difference to the umpire. An itemized decision agreed appraisers and umpire that the amount of loss to the to by any two of these three and filed with us will set dwelling resulting from foundation movement was the amount of the loss. Such award shall be binding on $22,875.94. American States responded to the Wellses’ you and us. motion, and the Wellses responded to American States’s motion. The trial court granted American States’s motion, Each party will pay its own appraiser and bear the other denied the Wellses’ motion, and rendered a take-nothing expenses of the appraisal and umpire equally. summary judgment against the Wellses. When their home sustained damage due to foundation The trial court’s summary judgment contains this movement, the Wellses investigated. They discovered a language: leak in the plumbing system underneath the foundation. A structural engineer who examined the property reported that the plumbing leak caused the foundation movement. The court further finds that On April 20, 1992, the Wellses made a claim on the [American States] is entitled to a policy. An adjuster from American States inspected the Declaratory Judgment maturing the property and stated that the sewer-line leak did not cause appraisal award rendered herein, the damage. The adjuster included that statement on a into a final judgment as requested written non-waiver agreement dated May 7, 1992, which and prayed for in [American Donald Wells signed only after noting on the writing his States’s] Summary Judgment and disagreement with the statement. American States then thus, it is further ORDERED, had its own engineer examine the property, who reported ADJUDGED and DECREED that that the plumbing leak did not cause the foundation Declaratory Judgment be, and the movement, conflicting with the report from the Wellses’ same hereby is, rendered in favor engineer as to causation of the loss. of [American States] and against [the Wellses], that the appraisal On July 20, 1992, American States again denied the award rendered on or about June Wellses’ claim and at the same time demanded an 24, 1994 is binding on and appraisal under the “Appraisal” section quoted above, enforceable against [the Wellses], designating John O. Lochridge, Jr. as its appraiser. that said appraisal award’s finding American States then sued for a declaratory judgment that that the amount of loss is zero be it had properly invoked the appraisal provisions of the matured into final judgment, and policy. American States also asked for an order requiring judgment is hereby RENDERED the Wellses to submit their claim to appraisal. The that [American States] is not liable Wellses answered and filed a counterclaim on the policy to [the Wellses] on [the Wellses’] and on other causes of *682 action. American States insurance claim made the basis of responded with a first supplemental petition containing a this suit. plea that the Wellses’ counterclaims be abated until they participated in an appraisal and the appraisal was completed. The trial court sustained the plea in abatement. Thereafter, the Wellses designated Rob Brown as their appraiser, and the two appraisers designated Mitchell L. Summary Judgment Principles Butler as umpire. [1] [2] [3] [4] [5] We begin by repeating well-known rules governing the summary judgment practice. The function Both appraisers and the umpire unanimously determined of a summary judgment is not to deprive a litigant of his that the Wellses’ home had resulting damage to the right to a full hearing on the merits of any real issue of dwelling due to foundation movement in the amount of fact, but to eliminate patently unmeritorious claims and WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 Wells v. American States Preferred Ins. Co., 919 S.W.2d 679 (1996)

untenable defenses. Gulbenkian v. Penn, 151 Tex. 412, court erred in granting American States’s motion for 415–16, 252 S.W.2d 929, 931 (1952). The standards for summary judgment. reviewing a motion for summary judgment are well established. As mandated by the Supreme Court of Texas, they are as follows:

1. The movant for summary judgment has the burden of The Appraisal Award showing that there is no genuine issue of material fact [8] and that it is entitled to judgment as a matter of law. In the present case, the Wellses insist that the appraisal section of the policy, as a matter of law, did not authorize 2. In deciding whether there is a disputed material fact the appraisers and umpire to determine that the plumbing issue precluding summary judgment, evidence leak did not cause the loss to the Wellses’ property. Thus, favorable to the nonmovant will be taken as true. we reach the question whether the appraisal section of the policy, invoked by American States, authorized and 3. Every reasonable inference must be indulged in empowered the appraisers to determine what caused or favor of the nonmovant and any doubts resolved in its did not cause the loss claimed. It is obvious that two of favor. the three designated persons named to make the appraisal determined that the Wellses’ amount of loss also included Nixon v. Mr. Property Management, 690 S.W.2d 546, authority to determine that the loss was not caused by the 548–49 (Tex.1985). It is not the purpose of the summary undisputed plumbing leak. We reach this conclusion judgment rule to provide either a trial by deposition or a because the “Appraisal Award” recites: trial by affidavit, but rather to provide a method of summarily terminating a case when it clearly appears that Damage to dwelling related to plumbing leak. only a question of law is involved and that there is no genuine issue of fact. Gaines v. Hamman, 163 Tex. 618, Loss Replacement Cost –0– 626, 358 S.W.2d 557, 563 (1962). Loss Actual Cash Value –0– [6] Moreover, when the counterclaim defendant is the movant, as in the present case, we must be alert to ..... additional rules controlling summary judgment practice. The question on appeal, as well as in the trial court, is not CLARIFICATIONS IF ANY: Resulting damage to whether the summary judgment proof raises fact issues dwelling due to foundation movement $22,875.94 with reference to the essential elements of a counterclaim plaintiff’s cause of action, but is whether the summary We note the appraisal award’s language “Damage to judgment proof establishes as a matter of law that there is dwelling related to plumbing leak,” and followed by two no genuine issue of fact as to one or more of the essential loss figures of “0.” We interpret this language as a elements of the counterclaim plaintiff’s cause of action. determination that the “plumbing leak” was not the cause Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 of any damage, hence the two “Loss” findings of “–0–.” (Tex.1970). Therefore, a counterclaim *683 defendant is We reach the interpretation because the appraisal award entitled to a summary judgment if he establishes, as a proceeds to determine the cause of damage to the matter of law, that at least one element of counterclaim dwelling to be due to “foundation movement.” Taken in plaintiff’s cause of action does not exist. See Rosas v. the context of this litigation, we treat “Damage to Buddies Food Store, 518 S.W.2d 534, 537 (Tex.1975). dwelling” and “Loss” to be one and the same. Therefore, for the reasons that follow, we conclude that the appraisal [7] Furthermore, summary judgment is not entitled to the section of the policy invoked by American States does not same deference given to a judgment following a trial on authorize and empower the appraisers to determine what the merits. Elam v. Yale Clinic, 783 S.W.2d 638, 641 caused or did not cause the loss claimed. (Tex.App.—Houston [14th Dist.] 1989, no writ). Unlike an appeal following a trial on the merits, when reviewing a summary judgment, the appellate court does not view the evidence in the light most favorable to the judgment Helpful Texas Cases of the trial court. Elam, 783 S.W.2d at 641. With these principles in mind, we turn to consider the Wellses’ first [9] [10] [11] [12] In reaching this conclusion, we find language point of error in which the Wellses contend that the trial in certain Texas cases to be instructive. An appraisal award made pursuant to the provisions of an insurance WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 3 Wells v. American States Preferred Ins. Co., 919 S.W.2d 679 (1996)

contract is binding and enforceable. Barnes v. Western been directed to estimate the value of the loss occasioned Alliance Ins. Co., 844 S.W.2d 264, 267 (Tex.App.—Fort by the walls being damaged.”); see also Jefferson Ins. Co. Worth 1992, writ dism’d by agr.). Texas courts recognize of N.Y. v. Superior Court, 3 Cal.3d 398, 90 Cal.Rptr. 608, three situations in which an appraisal award may be 475 P.2d 880, 883 (1970) (the function of the appraisers is disregarded: (1) when the award was made without to determine the amount of damage resulting to various authority; (2) when the award was the result of fraud, items submitted for their consideration, and not to resolve accident, or mistake; or (3) when the award was not made questions of coverage and interpret provisions of the in substantial compliance with the terms of the contract. policy, which exceed the scope of their powers); Providence Lloyds Ins. Co. v. Crystal City Indep. Sch. Appalachian Ins. Co. v. Rivcom Corp., 130 Cal.App.3d Dist., 877 S.W.2d 872, 875 (Tex.App.—San Antonio 818, 182 Cal.Rptr. 11, 16 (Ct.App. 2d Dist.1982) (the 1994, no writ). The effect of an appraisal award is to appraisal clause provides the device to be utilized to estop one party from contesting the issue of damages in a determine the amount of loss if the parties cannot agree suit on the insurance contract, leaving only the question of on the amount; once the amount of the loss has been liability for the court. Scottish Union & Nat’l Ins. Co. v. fixed, whether by agreement between insurer and insured Clancy, 71 Tex. 5, 8 S.W. 630, 631 (1888); Hennessey v. or by appraisal procedure, if the insurer refuses to pay Vanguard Ins. Co., 895 S.W.2d 794, 797–98 (Tex.App.— such amount, the insured is not without jury trial rights); Amarillo 1995, writ denied). Although every reasonable Lewis Food Co. v. Fireman’s Fund Ins. Co., 207 presumption will typically be made in favor of an Cal.App.2d 515, 24 Cal.Rptr. 557, 561 (Ct.App. 2d appraisal award, when reviewing a summary judgment Dist.1962) (the appraisers’ function under the policy is to proceeding, that rule must yield to the degree its determine the amount of damage resulting to various application conflicts with the presumptions required to be items submitted for their consideration; it is certainly not made in favor of a nonmovant. Hennessey, 895 S.W.2d at their function to resolve questions of coverage and 798. interpret provisions of the policy); Oakes v. Franklin Fire Ins. Co., 122 Me. 361, 120 A. 53, 54 (1923) (the right of The parties agree that no reported Texas case has decided the insured to recover the loss is not submitted to the the issue of whether the authority of appraisers under the referees, only the amount of the damages); Wausau Ins. appraisal *684 section of an insurance policy is limited to Co. v. Herbert Halperin Dist. Corp., 664 F.Supp. 987, determination of only the amount of loss as distinguished 989 (D.Md.1987) (where insurer does not factually from determining cause of loss, and coverage and liability dispute the consequences of the occurrence, but contests for the loss. We conclude, however, that the weight of the issue of legal “causation” on the basis that the policy authority from other jurisdictions discussing the issue exclusions apply so as to limit the scope of coverage, the follows the rule that appraisers have no power or issue is one of contract interpretation, and is within the authority to determine questions of causation, coverage, competence of the court, not an appraiser, to resolve); or liability, which is consistent with the Texas courts’ Hogadone v. Grange Mut. Fire Ins. Co., 133 Mich. 339, discussion of the effect of the appraisal award. See 94 N.W. 1045, 1047 (1903) (the policy provision relates Scottish Union, 8 S.W. at 631; Hennessey, 895 S.W.2d at only to cases of disagreement as to the amount of 798. valuation, in whole or in part, and not whether the claim itself is valid); Denton v. Farmers’ Mut. Fire Ins. Co., 120 Mich. 690, 79 N.W. 929, 930 (1899) (the sections of the charter do not give board of auditors the power to pass upon questions of liability, but contemplate a valid loss, Applicable Holdings of Other Jurisdictions and confer upon the auditors only the power to fix the amount); St. Paul Fire & Marine Ins. Co. v. Wright, 97 We have considered the holdings of other jurisdictions Nev. 308, 629 P.2d 1202, 1203 (1981) (contrary to interpreting appraisal provisions containing substantially arbitration, where the arbitrator is frequently given broad similar language to that contained in the policy at issue in powers, appraisers generally have more limited powers; this case in concluding that appraisers have no power to an appraiser’s power generally does not encompass the determine the cause of the damages. Their power is disposition of the entire controversy between the parties, limited to the function of determining the money value of but extends merely to the resolution of the specific issues the property damage. Munn v. National Fire Ins. Co. of of actual cash value and the amount of loss); In re Delmar Hartford, 237 Miss. 641, 115 So.2d 54, 55, 58 (1959) Box Co., 309 N.Y. 60, 127 N.E.2d 808, 811 (1955) (“The chancellor should have judicially determined what (agreement for appraisal extends merely to the resolution force caused the walls to lean and twist[;] [t]hat was not a of specific losses of actual cash value and the amount of question for the appraisers to decide. If that damage was loss, with all other issues being reserved for determination the result of the storm, then the appraisers should have

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in a plenary action); United Boat Serv. Corp. v. Fulton determine questions of what caused or did not cause the Fire Ins. Co., 137 N.Y.S.2d 670, 671 (Sup.Ct.1955) loss. (where appraisers made a determination of a question of [15] liability, they exceeded the powers conferred *685 upon In the present case, we conclude that the one appraiser them, and summary judgment is improper); Kentner v. and the umpire exceeded their authority when they Gulf Ins. Co., 66 Or.App. 15, 673 P.2d 1354, 1356 (1983) determined that the plumbing leak did not cause the (statutory policy language establishes an appraisal Wellses’ loss. It follows, and we so hold, that the trial procedure to determine the amount of the insured’s loss; court erred in finding that American States is entitled to a the procedure does not apply to the determination of the declaratory summary judgment maturing the appraisal insurer’s responsibility). award in the present case and entering a take-nothing summary judgment against the Wellses based upon that determination. Indeed, an appraiser’s acts in excess of the authority conferred upon him by the appraisal agreement are not binding on the parties. Fisch v. Transcontinental Application of the Law Ins. Co., 356 S.W.2d 186, 190 (Tex.Civ.App.—Houston 1962, writ ref’d n.r.e.). Instead, the effect of an appraisal With the above cases in mind, we look to the first award is to estop one party, here the plaintiff, from sentence of the appraisal clause at issue in the present contesting the issue of damages in a suit on the insurance case. We quote: contract, leaving only the question of liability for the court. Scottish Union, 8 S.W. at 631; Hennessey, 895 If you and we fail to agree on the S.W.2d at 797–98. actual cash value, amount of loss, or the cost of repair or In the present case, we note that nowhere in the standard replacement, either can make a form for submission to appraisal is any power vested in or written demand for appraisal. conferred upon the appraisers to determine the cause of the loss, the value of which they are to appraise. See (Emphasis added.) Hence, we must conclude that the Munn, 115 So.2d at 56. Therefore, we hold, as did the appraisal clause at issue pertains to a dispute over the Supreme Court of Mississippi, that the appraisers are not amount of money involved in the controversy. Indeed, we arbitrators. They have no power to arbitrate disputes read the phrases “actual cash value,” “amount of loss,” between the property owner and the insurance company, and “cost of repair or replacement” as triggering the other than to value the property damage. Munn, 115 So.2d demand for appraisal. It cannot be doubted that these are at 56. Indeed, the function of the appraisers is to “dollar” controversies. Thus, nowhere do we read a determine the amount of damage resulting to the property “causation dispute” or a “liability dispute” as the means submitted for their consideration. It is certainly not their or manner by which the demand for appraisal can be function to resolve questions of coverage and interpret made operative. provisions of the policy. St. Paul Fire & Marine Ins. Co., [13] [14] 629 P.2d at 1203. Consequently, we conclude that the trial We conclude that the authority of the appraisal court erred in granting American States’s motion for panel in the present case was limited to determining only summary judgment. We reach this conclusion because the the amount of loss. Therefore, we conclude further that appraisal section of the policy, as a matter of law, did not the appraisal section of the policy, as a matter of law, did authorize the appraisers and umpire to determine that the not authorize and empower the appraisal panel to plumbing leak did not *686 cause the loss to the Wellses’ determine that the plumbing leak did not cause the loss to property. We sustain the Wellses’ first point of error. the Wellses’ property. It follows, and we so hold, that the appraisal section of the Texas Homeowner’s Policy quoted above establishes an appraisal procedure to determine the dollar amount of the insured’s loss only, and that it does not authorize or empower the appraisal The Wellses’ Partial Motion for Summary Judgment panel created thereunder to determine what caused or did not cause that loss. Indeed, we hold that, absent an In their second point of error, the Wellses contend that the agreement to the contrary, questions of what caused or did trial court erred in overruling their partial motion for not cause the loss are questions to be decided by the court. summary judgment. The Wellses advance three principal Moreover, we hold that participation by the insured in the arguments. First, the Wellses argue that the appraisal appraisal process does not constitute agreement by the panel has no authority to determine the cause of the loss, insured to authorize and empower the appraisal panel to only the amount of the loss. We have held in disposition

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of the Wellses’ first point of error that the appraisal panel attorney’s fees incurred in this litigation, the amount has no authority to determine the cause of the loss, only thereof to be determined at trial. In light of our disposition the amount of the loss. Thus, we agree with the Wellses’ of this appeal, all issues in dispute between the parties first argument. will be before the trial court on remand for new trial. Therefore, we conclude that we have no basis at this time While we agree with the Wellses’ first principal to determine that the Wellses recover their reasonable and argument, we are unable to extend that agreement to the necessary attorney’s fees incurred in this litigation. thrust of the Wellses’ second principal argument. In that Hence, we decline to decide at this time the liability of second argument, the Wellses reason that the $22,875.94 American States for the Wellses’ reasonable and damage figure stated in the appraisal award under the necessary attorney’s fees, if any, incurred in this language: litigation. For the reasons expressed above, we conclude that the trial court did not err in overruling the Wellses’ CLARIFICATIONS IF ANY: partial motion for summary judgment. We overrule the Resulting damage to dwelling due Wellses’ second point of error. to foundation movement $22,875.94

(Emphasis ours.) becomes the damage award for the previously mentioned “plumbing leak,” instead of the Abatement and Trial On The Merits figure “–0–” (zero). Hence, the Wellses argue that the [16] appraisal panel ascertained the amount of damages of In their third point of error, the Wellses contend that $22,875.94 as resulting from the plumbing leak. We the trial court erred in abating the Wellses’ counterclaim disagree. We note that the damage amount of $22,875.94 until the Wellses participated in the appraisal demanded results from “foundation movement.” by American States, because the Wellses were not obligated to comply with the appraisal provisions of the “Foundation movement” appears to be excluded by the policy as a condition precedent to filing their policy: counterclaim against American States. We conclude that we need not address this point of error. We reach this conclusion because the issue is now moot. We hold that We do not cover loss under the Wellses have now complied with any obligations Coverage A (Dwelling) caused by settling, cracking, bulging, imposed by the appraisal provisions and that their shrinkage, or expansion of counterclaim is now properly before the court on remand. Furthermore, the time has arrived to try this case on its foundation, walls, floors, ceilings, merits in the trial court. The appraisal has been made. The roof structures, walks, drives, fact that the resulting appraisal is defective is of no curbs, fences, retaining walls or moment; the trial court is directed to try all issues in swimming pools. dispute both as to liability and as to damages. The (Emphasis ours). Consequently, we decline to read the Wellses *687 are not required to again participate appraisal award, as the Wellses would have us do, to say involuntarily in yet another appraisal. The Wellses have that a plumbing leak caused foundation damage to their done all that was required of them as an asserted dwelling in the amount of $22,875.94. We decline to do condition precedent to filing their counterclaim. We so because the appraisal panel, on the face of its award, decline to penalize the Wellses by further delay when separated the damage related to plumbing leak from they have suffered a defective appraisal process through damage due to foundation movement. For these reasons, no fault of their own. We overrule for mootness the third we disagree with the Wellses’ second principal argument point of error. under their second point of error. We reverse the trial court’s judgment and remand the case Lastly, we dispose of the Wellses’ third principal to the trial court for trial on the merits. argument under their second point of error. Here, the Wellses insist that they are entitled to our determination that they recover their reasonable and necessary

Footnotes

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1 The Honorable Warren Whitham, Justice, Retired, Court of Appeals, Fifth District of Texas at Dallas, sitting by assignment.

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WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 7 Wentworth v. Medellin, 529 S.W.2d 125 (1975)

provisions of Article 1301b, Tex.Rev.Civ.Stat.Ann. (Supp.1975), in attempting to cancel said contract. 529 S.W.2d 125 Court of Civil Appeals of Texas, Defendant contends that the trial court erred in granting San Antonio. plaintiffs’ petition for declaratory judgment based on the Earl J. WENTWORTH, Appellant, applicability of Article 1301b, Supra, to the facts in this v. case. Albert MEDELLIN et ux., Appellees. The applicable part of Article 1301b, Supra, provides: No. 15446. | Oct. 29, 1975. ‘Section 1. A forfeiture of the interest and the acceleration of the indebtedness of a purchaser in default under an Purchaser of land under executory contract sought executory contract for conveyance of real property used declaratory judgment that contract was in full force and or to be used as the purchaser’s residence may be effect and that vendor under such contract had to accept enforced only after notice of seller’s intentions to enforce offered payment. The 45th District Court, Bexar County, the forfeiture and acceleration has been given to the Robert R. Murray, J., granted petition for declaratory purchaser and only after the expiration of the periods judgment, and vendor appealed. The Court of Civil provided below: . . . Appeals, Klingeman, J., held that statute, which set forth requirements for giving notice to purchaser in default (b) When the purchaser has paid 10% But less than 20% prior to the forfeiture of interest and acceleration of Of the purchase price, 30 days from the date notice is indebtedness under an executory contract for conveyance given. of land used or to be used as purchaser’s residence, did not apply to situation in which vendor, under terms of (d) Notice must be by mail or other writing. If by mail, it executory contract for the sale of unimproved land, must be registered or certified and shall be considered elected to rescind such contract and take possession of given at the time mailed to his residence or place of land because of purchasers’ default, and that even if such business, and notification by other writing shall be statute were applicable, there was substantial compliance considered given at the time delivered to the purchaser at with terms of statute. his residence or place of business.

Judgment reversed and rendered. (e) Such notice shall be conspicuously set out; shall be printed in 10 point bold face type or upper case Cadena, J., filed a concurring opinion. typewritten letter; and shall include the following:

*126 Jeffrey Wentworth, San Antonio, for appellant. NOTICE

Marvin Miller, San Antonio, for appellees. YOU ARE LATE IN MARKING YOUR PAYMENT UNDER THE CONTRACT TO BUY YOUR HOME. Opinion UNLESS YOU MAKE THE PAYMENT BY (date) THE SELLER HAS THE RIGHT TO TAKE POSSESSION KLINGEMAN, Justice. OF YOUR HOME AND TO KEEP ALL PAYMENTS YOU HAVE MADE TO DATE. Sec. 2. A purchaser in default under an executory contract for the conveyance of real property used or to be used as Defendant, Earl J. Wentworth, appeals from a declaratory the purchaser’s residence, may at any time prior to judgment that an executory contract of sale between expiration of the period provided *127 for in Section 1, plaintiff, Albert Medellin and wife, Rosie S. Medellin, avoid the forfeiture of his interest and the acceleration of dated November 5, 1971,1 is in full force and effect, his indebtedness by complying with the terms of the ordering defendant to accept all payments of principal and contract up to the date of compliance notwithstanding any interest due under said contract in accordance with its agreement to the contrary.’ terms and provisions, and declaring that said contract is in force and effect because defendant did not follow the

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[1] The basic question before us is whether the trial court of the entire statute, particularly the notice provision erred in its application of Article 1301b, Supra, to the therein,2 shows that it was the legislature’s intent to cover contract in question. Defendant’s appeal is founded upon only real estate on which there was a presently existing three basic premises: (1) the property involved in the residence or one in the process of construction; that the executory contract is not the home of the buyer but is legislature would not have used the word ‘home’ in the unimproved real estate, and the statute is not applicable; prescribed notice in the statute if it was their intention to (2) the statute, by its terms, is restricted to cases involving cover unimproved property; that a logical and proper a forfeiture of interest and acceleration of indebtedness of construction of the term ‘real estate used or to be used as a purchaser in default, and this case does not involve a a purchaser’s residence’ can only refer to real estate on forfeiture and acceleration of the indebtedness, but rather which there is a residence which the purchaser is either a rescission of the contract; and (3) if the statute is using or intends to use in the future as his residence. applicable, there has been substantial compliance with the Plaintiffs, on the other hand, argue that it covers any terms and provisions of the statute. property which the purchaser has an intention *128 to use as a residence, present or future, irrespective of whether there is any residence on it or not. The record discloses that, on November 5, 1971, plaintiffs and defendant entered into an executory contract for the This is not a case where the seller sought an acceleration sale and purchase of certain unimproved real estate in of indebtedness. The executory contract here involved Bexar County with the agreed purchase price of $3,000.00 gave the seller two options after default: (a) to declare the to be paid in monthly payments. Plaintiffs, at such time entire purchase price due and payable, or (b) rescind the and continuously thereafter, have lived in a residence in contract and take possession of the property. Defendant San Antonio, Texas, rented from plaintiffs’ parents. here elected to rescind the contract and take possession of According to the contract, if the monthly payments are the property. In a recent case, Marshall v. Garcia, 514 more than 30 days delinquent, defendant has the option to S.W.2d 513 (Tex.Civ.App.—Corpus Christi 1974, writ accelerate payments and declare the entire purchase price ref’d n.r.e.), the court said: ‘Article 1301b by its express due, or to rescind the contract and take possession of the terms limits its application to forfeiture and acceleration property. Plaintiffs, on a number of occasions, have been of indebtedness. The statute neither expressly nor by in arrears in payment of monthly payments, and, on implication purports to cover actions for cancellation and several occasions, defendant has sent them notices of such rescission of executory contracts for the sale of property.’ [2] [3] delinquency. On September 18, 1973, defendant mailed It is apparent that the trial court not only believed plaintiffs a letter stating that they were several months that Article 1301b, Supra, was applicable to the facts of delinquent in their payments and notified them of his this case, but that also there must be strict compliance intention to cancel the contract if plaintiffs were not with all the terms and provisions of such statute. It cannot current in 30 days. This letter was neither registered or be argued that there has been exact compliance with all its certified but it is undisputed that plaintiffs received such terms and provisions. The statute provides that all letters letter. On October 29, 1973, more than 30 days after the must be either registered or certified. It is undisputed that letter above, defendant mailed a certified letter to the defendant’s letter of September 18, 1973, was neither plaintiffs, which was received by them, stating that, since registered or certified, but it is also undisputed that such the required delinquent payments had not been made, the letter was received by plaintiffs. The statute provides that contract was cancelled and revoked. At the time of such all notices must be in a prescribed form, in certain rescission, a little more than 10% But less than 20% Of designated print, or typewritten case. The letters here the purchase price had been paid by plaintiffs to involved were ordinary typewritten letters, but it is clear defendant. On January 15, 1974, plaintiffs attempted to from the record that plaintiffs were in no way misled by pay $211.14 on the delinquent monthly payments, but the letters and, in actuality, the record discloses that defendant refused to accept such payment or any plaintiffs, after receipt of the September 18th letter, talked payments thereafter. On February 14, 1974, defendant, by with defendant about bringing the delinquent payments up check, mailed to plaintiffs’ attorney, returned all to date. The exact verbiage of the notice is not used in payments made under such contract. Plaintiffs testified defendant’s letter and nowhere in defendant’s letter is the that they planned to build a home on the land when Mr. term ‘home’ used. However, in our opinion, there has Medellin retired. There is nothing in the record to show been substantial compliance with the terms and provisions when Mr. Medellin planned to retire. This suit was filed of the statute. Plaintiffs were given 30 days notice, as by plaintiffs on September 25, 1974. provided by the statute, to make up the delinquent payments; the letters involved were received by plaintiffs In support of his contention that the statute does not apply and the letter of notice of intention to cancel the contract to unimproved property, defendant argues that a reading contains all the provisions necessary to put plaintiffs on WestEawNext © 2015 Thomson Reuters. No claim to original U.S. Government Works. 2 Wentworth v. Medellin, 529 S.W.2d 125 (1975)

notice that, if the delinquent payments were not made up involved. The judgment is reversed and judgment here within 30 days, defendant would cancel the contract. rendered that plaintiffs take nothing by their suit. ‘Substantial compliance’ means compliance with the essential requirements, whether of a contract or of a CADENA, Justice (concurring). statute. See Jennings v. Willer, 32 S.W. 24 (Tex.Civ.App.1895), Motion for rehearing overruled, 32 S.W. 375 (Tex.Civ.App.—1895); Fitzgibbons v. I concur in the result solely on the ground that this case Galveston Electric Company, 136 S.W. 1186 does not involve an ‘acceleration,’ and that, therefore, (Tex.Civ.App.1911, no writ). Article 1301b, Tex.Rev.Civ.Stat.Ann. (Supp.1975), is inapplicable. I am unwilling to accept the conclusion that, assuming the statute to be applicable, defendant’s actions In our opinion, the trial court improperly applied Article constitute compliance, ‘substantial’ or otherwise, with the 1301b, Supra, to the facts of this case. The trial court statutory requirements. erred in granting plaintiffs the declaratory judgment here

Footnotes 1 The contract here involved covers a lot in the Von Ormy Heights Subdivision in Bexar County, Texas, and provides for a purchase price of $3,000.00, payable by plaintiffs to defendant in deferred monthly payments. Such contract provides that, if the payments are not made when due or are more than 30 days delinquent, seller may, at his option, declare the entire purchase price due and payable, or may rescind such contract and take possession of the property and, in the event of a rescission, all payments made by the buyer shall be considered as rent for the property. It provides that, when the purchase price is fully paid, seller is to deliver a general warranty deed to the buyer. 2 ‘YOU ARE LATE IN MAKING YOUR PAYMENT UNDER THE CONTRACT TO BUY YOUR HOME. UNLESS YOU MAKE THE PAYMENT BY (date) THE SELLER HAS THE RIGHT TO TAKE POSSESSION OF YOUR HOME AND TO KEEP ALL PAYMENTS YOU HAVE MADE TO DATE.’ (emphasis ours)

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