Guideone Mut. Ins. Co. v. First Baptist Church of Brownfield
| Decision Date | 20 October 2020 |
| Docket Number | No. 5:19-CV-086-H,5:19-CV-086-H |
| Citation | 495 F.Supp.3d 428 |
| Parties | GUIDEONE MUTUAL INSURANCE COMPANY, Plaintiff, v. FIRST BAPTIST CHURCH OF BROWNFIELD, Defendant. |
| Court | U.S. District Court — Northern District of Texas |
R Chad Geisler, Weldon Paul Miller, Germer Beaman & Brown PLLC, Austin, TX, Christina Herrera, GuideOne Insurance, Des Moines, IA, for Plaintiff.
Christopher G. Lyster, Lyster & Associates, PLLC, Fort Worth, TX, for Defendant.
Before the Court is GuideOne Mutual Insurance Company's Motion for Summary Judgment. Dkt. No. 15. GuideOne seeks a declaratory judgment (1) finding the appraisal award void; (2) striking the appointed umpire; and (3) setting aside the appraisal award. Id. Having considered the motion, the parties' briefing, the contractual language, and the applicable law, the Court finds that the motion should be granted. Because First Baptist failed to satisfy the sworn proof-of-loss condition precedent to the appraisal process, the award was not entered with the appropriate authority or in substantial compliance with the Policy. Consequently, the Court declares the appraisal award void and strikes the appointed umpire.
GuideOne issued a commercial property insurance policy (Policy) to First Baptist. Dkt. No. 16 at 102. Subject to many exceptions, the Policy covers "direct physical loss of or damage to [First Baptist's] Covered Property." Id. at 121. Insureds have eight duties in the event of loss or damage. Id. at 141. One of these is to Id. If, after a claim on the Policy has been made, the parties disagree on the extent of property damage, either may make a written demand for an appraisal of the loss. Id. at 108.
During the Policy term, First Baptist made a claim for property damage caused by a hailstorm. Id. at 259. After investigating the claim, GuideOne sent nearly $38,000 to First Baptist to repair the hail damage. Id. Several months later, GuideOne received a letter from First Baptist that disputed the value of the loss as determined by GuideOne and sought to invoke the appraisal clause in the Policy. Dkt. No. 22-1 at 176. GuideOne responded and informed First Baptist that their actions were premature. Dkt. No. 16 at 282. GuideOne then made its first request for a sworn proof of loss. Id. First Baptist subsequently requested that the 121st Judicial District Court for Terry County appoint an umpire. Dkt. No. 22-1 at 179. GuideOne did not participate in the application proceeding, and the court appointed Todd D. Bilbrey to umpire the dispute. Id. at 254. After Bilbrey was appointed, GuideOne hired their own appraiser. Dkt. No. 17 at 6. At no point in this process did First Baptist send GuideOne a sworn proof of loss.
The appraisers submitted evaluations that were over one million dollars apart, and the umpire issued an award totaling $918,085.38. Dkt. No. 22-1 at 255–76. Bilbrey and First Baptist's appraiser signed the award. Id. at 276. GuideOne's appraiser did not. Id.
GuideOne seeks a declaratory judgment setting aside Bilbrey's appraisal award, arguing that it was not made in compliance with the terms of the Policy. Dkt. No. 1 at ¶¶ 17–18. GuideOne asserts that "[First Baptist] has not complied with the terms of the Policy by unilaterally having an umpire appointed and by failing to provide GuideOne with sworn proof of loss and estimates related to [First Baptist's] position on the damages sustained." Id. at ¶ 17. GuideOne now moves for summary judgment and requests a declaration from the Court "(1) finding that the Appraisal Award was not made or achieved with proper authority and/or in substantial compliance with the Policy, (2) striking the improperly appointed umpire for the appraisal of this matter, and (3) setting aside the improper Appraisal Award as void." Dkt. No. 15 at 2.
Summary judgment is appropriate when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The precise standard for summary judgment depends on whether the movant bears the burden of proof on the claim for which summary judgment is sought. When "the movant bears the burden of proof on an issue, either because [it] is the plaintiff or as a defendant [it] is asserting an affirmative defense, [it] must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor.’ " Fontenot v. Upjohn Co. , 780 F.2d 1190, 1194 (5th Cir. 1986) (emphasis in original). "Once the movant does so, the burden shifts to the nonmovant to establish an issue of fact that warrants trial." Smith v. Reg'l Transit Auth. , 827 F.3d 412, 420 n.4 (5th Cir. 2016).
Movants must cite to particular parts of the record to show the absence of a genuine dispute or explain why the cited materials do not create a genuine dispute. Fed. R. Civ. P. 56(c)(1). The Court must consider materials cited by the parties but may also consider other materials in the record. Fed. R. Civ. P. 56(c)(3).
In evaluating a motion under Rule 56, the Court must determine whether, after considering the evidence in the light most favorable to the nonmoving party, a rational jury could find in favor of that party. Scott v. Harris , 550 U.S. 372, 380, 127 S.Ct. 1769, 167 L.Ed.2d 686 (2007) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 586–87, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ). "[T]he mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 247–48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) (emphasis in original). "[T]he substantive law will identify which facts are material." Id. at 248, 106 S.Ct. 2505.
A federal court sitting in diversity applies state substantive law. See Gasperini v. Ctr. for Humanities, Inc. , 518 U.S. 415, 427, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996). Neither party disputes that Texas law governs this action.
GuideOne seeks summary judgment for a declaratory judgment and argues that the appraisal award should be set aside because (1) First Baptist did not submit a sworn proof of loss and therefore failed to satisfy a condition precedent to appraisal; and (2) the appointment of an umpire was premature and improper. Dkt. No. 18 at 12. In response, First Baptist argues that (1) a sworn proof of loss is not a condition precedent to the appraisal process; (2) appointment of the umpire was not premature; (3) GuideOne must show prejudice from the failure to fulfill a condition precedent; and (4) GuideOne waived any condition precedent to appraisal because it fully participated in the appraisal process. Dkt. No. 21. The Court grants summary judgment because the appraisal award was made without authority and not in substantial compliance with the Policy, and GuideOne did not waive any condition precedent.
Under the Declaratory Judgment Act, 28 U.S.C. § 2201, a court may declare rights and other legal relations of any party if there is a judicially remediable right. Schilling v. Rogers , 363 U.S. 666, 677, 80 S.Ct. 1288, 4 L.Ed.2d 1478 (1960). The Fifth Circuit has summarized this jurisprudence as requiring an actual controversy "that the dispute must be definite and concrete, real and substantial, and admit of specific relief through a decree of a conclusive character." Vantage Trailers, Inc. v. Beall Corp., 567 F.3d 745, 748 (5th Cir. 2009) (citations omitted).
Here, the Court finds that the requirements for a declaratory judgment under 28 U.S.C. § 2201(a) are met. The dispute between GuideOne and First Baptist is justiciable and is not merely academic or moot. The Texas state court already appointed an umpire that subsequently entered an appraisal award in favor of First Baptist, which GuideOne now contests. Dkt. Nos. 1 at 4, 22-1 at 276. This dispute also satisfies the requirement that it be definite and concrete. Both parties have indicated adverse legal interests, and the dispute relates directly to legal relations through their contractual obligations under the insurance Policy. The dispute here is real and substantial and requests specific relief through a decree of a conclusive character—rendering the appraisal award void.
An order from this Court would not merely be an advisory opinion, but rather would clearly resolve the legal status of the appraisal award at issue. Consequently, the Court has the authority to enter a declaratory judgment in this case.
An appraisal clause is a standard, enforceable provision commonly found in insurance contracts or policies in Texas. State Farm Lloyds v. Johnson , 290 S.W.3d 886, 888–89 (Tex. 2009). The appraisal process is available to settle valuation disputes between policyholders and insurers when the parties fail to agree on the amount of loss or the scope of damages. Id. at 887–88. Ordinarily, appraisal provides an efficient way for an insurer and the insured to resolve differences through the evaluation of competing estimates by a neutral third-party umpire. Nolan v. GeoVera Specialty Ins. Co. , No. 1:11-CV-207, 2012 WL 12892787, at *4 (E.D. Tex. Aug. 10, 2012) ().
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...rule to notice-of-loss provision in property insurance policy); but see GuideOne Mut. Ins. Co. v. First Baptist Church of Brownfield , 495 F. Supp. 3d 428, 435–37 (N.D. Tex. 2020) (predicting that Texas law would not apply the notice-prejudice rule to proof-of-loss provision in property ins......