FHMBK obtains significant victory for the insurance industry – In re Universal Underwriters
On Friday, May 6, 2011, the Supreme Court of Texas issued a unanimous decision in In re Universal Underwriters of Texas Insurance Company. The court concluded that the trial court abused its discretion in denying Universal’s motion to compel appraisal based on Universal’s alleged waiver of the appraisal provision in its commercial property policy. The court reversed the decision by the trial court and the Fort Worth Court of Appeals opinion denying Universal’s Petition for Writ of Mandamus. The court reasoned that a waiver must be an intentional relinquishment of a known right and that an insurer’s delay in requesting appraisal, standing alone, is not sufficient to constitute a waiver. While the court acknowledged that the length of delay is relevant to the waiver analysis, the court emphasized that the delay must be measured from the point of impasse in negotiations, that is, the point when the parties reach a mutual understanding that neither will negotiate further, rather than from when the parties merely disagree about the valuation of the loss. The court also found that a finding of waiver requires a showing that the insured was prejudiced by the delay in requesting appraisal. The court also added that a showing of prejudice will be difficult when, as here, the insured has the right to protect itself against delay by demanding appraisal. After concluding that Universal has no adequate legal remedy for the erroneous denial of its motion to compel appraisal, the Supreme Court directed the trial court to grant Universal’s motion.
This is an important victory for the insurance industry because it signifies that the court recognizes the importance of appraisal as a non-judicial means for resolving property insurance claims in Texas. It also insures that the parties to the ongoing hurricane litigation in Texas will be entitled to use the appraisal process to assist the parties in resolving those claims as well.
Don Martinson of this firm represented the Universal Underwriters in this appeal before the Fort Worth Court of Appeals and the Supreme Court of Texas.
