In re Certain Underwriters at Lloyds

• Court: Texas Court of Appeals
• Writing for the Court: AL SCOGGINS
• Decision Date: 12 October 2011
• Docket Number: No. 10-11-00263-CV,10-11-00263-CV
• Citation: In re Certain Underwriters at Lloyds, No. 10-11-00263-CV (Tex. App. Oct 12, 2011)
• Parties: IN RE CERTAIN UNDERWRITERS AT LLOYDS

IN RE CERTAIN UNDERWRITERS AT LLOYDS

No. 10-11-00263-CV

TENTH COURT OF APPEALS

Date: October 12, 2011

Original Proceeding

MEMORANDUM OPINION

Relator, Certain Underwriters at Lloyds, filed a petition for writ of mandamus, arguing that the trial court abused its discretion by: (1) refusing to enforce a valid appraisal clause contained in the contract between relator and real parties in interest, Mittie and Henry Anderson; and (2) denying objections to discovery that allegedly was unduly burdensome and abusive. Through this original proceeding, relator requests that we grant them mandamus relief and direct the trial court to vacate its order denying appraisal and ordering discovery. For the reasons stated herein, we conditionally grant the writ, in part, and deny, in part.

I. BACKGROUND

A. The Andersons' Claim

This case involves an insurance claim made by the Andersons with regard to their house located in New Waverly, Texas, which was damaged as a result of Hurricane Ike on September 13, 2008. The Andersons allege that the roof of their house sustained extensive damage and that water damaged the ceilings, walls, insulation, and flooring of the house. The Andersons further allege that, immediately after the storm, they filed a claim with relator, their insurance company. Thereafter, relator sent an adjustor to the Andersons' home to inspect the damage. The Andersons note that the adjustor only spent ten to fifteen minutes at the house and did not get on the roof. Upset by what they perceived as an inadequate inspection, the Andersons called relator and requested that a different adjuster inspect the property. The Andersons' property was re-inspected, and the adjustor concluded that the extent of the damage to the property did not exceed the $750 deductible associated with the homeowner's policy covering the house. As a result, relator informed the Andersons that no payment would be made on their claim because the damages did not exceed the deductible.¹ In a letter dated December 5, 2008, relator told the Andersons:

If you disagree with or have a question about the enclosed property damage estimate, please call Quality Claims Service. Should you have any questions concerning the above, or if you have any additional information that would help Certain Underwriters at Lloyds re-evaluate your claim, please do not hesitate to call.

In response to relator's December 5, 2008 letter, the Andersons repeatedly called "to complain about the adjuster's poor investigation of [their] damages and [their] disagreement with [relator's] estimate of the claim." In an affidavit, Mittie averred that:

The . . . representative said that there was nothing more that could be done with my claim and that my estimate included the only damage amount I was entitled to. When I asked to speak to a manager, the representative told me that she was the owner of the business along with her husband, that her decision was final, and that the claim would remain closed. During the next few weeks I called . . . again to demand a re-inspection of my home with a different adjuster, but I was told that the evaluation of my claim was final and that my file would remain closed. . . . In sum, starting upon receipt of the denial letter and continuing through the next couple months, I consistently made it clear . . . that I was disputing the amount of my damages, but [relator] [n]ever did anything to reconcile our differences.

. . . .

Despite my several attempts to inform them of the inadequacies of their investigation, [relator] never sent another adjuster, an engineer, or any payments for damages to my home. My husband and I ended up using the money in our savings account we saved in case of an emergency to pay for repairs that should have been covered under our homeowner's insurance policy.

Relator asserts that, after the initial inspection, the Andersons never provided information to them showing additional covered damages, which would have required a re-evaluation of the claim. Nevertheless, after complaining for a couple months from the time the claim was made, the Andersons ceased all communications with relator for a period of approximately two years until they filed this lawsuit, which relator alleges was done without providing notice, though required by section 541.154 of the insurance code. See TEX. INS. CODE ANN. § 541.154 (West 2009).

B. The Lawsuit and Appraisal Request

In their lawsuit, which was filed on August 25, 2010, the Andersons asserted causes of action against relator for: (1) violations of the insurance code, including unfair settlement practices and the failure to promptly pay claims; (2) fraud; (3) conspiracy to commit fraud; (4) breach of contract; and (5) breach of the duty of good faith and fair dealing. In their original answer and in a separate motion to compel, relator requested that the proceedings be abated and that the matter be sent to appraisal, as allowed by the underlying homeowner's insurance policy.² Specifically, the policy provided:

8. Appraisal. If you and we fail to agree on the actual cash value, amount of loss, or 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 written demand. The two appraisers will choose an umpire. If they cannot agree on an umpire within 15 days, you or we may request that the choice be made by a judge of a district court of a judicial district where the loss occurred. The two appraisers will then set the amount of loss, stating separately the actually [sic] cash value and loss to each item.

If the appraisers fail to agree, they will submit their differences to the umpire. An itemized decision agreed to by any two of these three and filed with us will set the amount of the loss. Such award shall be binding on you and us.

Each party will pay its own appraiser and bear the other expenses of the appraisal and umpire equally.

. . . .

12. Suit Against Us. No suit or action can be brought unless the policy provisions have been complied with. Action brought against us must be started within two years and one day after the cause of action accrues.. . . .

18. Waiver or Change of Policy Provisions. Changes in this policy may be made and perils insured against added only by attaching a written endorsement properly executed by our authorized agent. No provision of this policy may be waived unless the terms of this policy allow the provision to be waived. Our request for an appraisal or examination will not waive any of our rights.

(Emphasis in original). The Andersons responded to relator's request for appraisal by arguing that the request had been waived.

On November 8, 2010, the trial court denied relator's appraisal request. However, after the trial court denied relator's appraisal request, the Texas Supreme Court issued its opinion in In re Universal Underwriters of Texas Insurance Company, which, as relator asserts, requires the trial court to grant its request for appraisal. See 2011 Tex. LEXIS 357 (Tex. May 6, 2011). In light of the Universal Underwriters decision, relator moved the trial court to re-hear its motion to compel appraisal. In response, the Andersons once again argued waiver. Thereafter, on June 15, 2011, the trial court again denied relator's motion to compel appraisal.

C. Discovery Issues

After filing their lawsuit, the Andersons propounded discovery requests on relator. In response to the requests, relator produced the claim file and underwriting file pertinent to the Andersons' insurance policy and to the adjustment of their claim. However, realtor notes that the Andersons sought additional information from them, including: (1) adjusters' personnel files; (2) material provided to appraisers in other losses; (3) criteria used to qualify persons for an approved vendors list; (4) copies of jobdescriptions of adjusters; and (5) claims from other losses beyond Hurricane Ike. Relator objected to the production of the above-mentioned information on various grounds to which the Andersons responded by filing a motion to compel. Realtor states that, on June 15, 2011, the trial court overruled its discovery objections and granted the Andersons' motion to compel. Relator further states that it was ordered to respond to the Andersons' discovery requests by July 15, 2011. However, relator does not direct us to a trial court order specifically requiring relator to provide the information they complain about.

D. The Mandamus

On July 14, 2011, relator filed a petition for writ of mandamus in this Court. Accompanying its mandamus petition was an emergency motion to stay the trial court proceedings. Upon receiving the filings, we granted relator's emergency motion to stay the trial court proceedings and requested a response. The Andersons filed a response to relator's petition on September 2, 2011.

In this original proceeding, relator argues that the trial court abused its discretion: (1) in denying appraisal; and (2) by ordering "responses to discovery that is overbroad on its face, unduly burdensome, and abusive."

II. STANDARD OF REVIEW

Mandamus is an "extraordinary" remedy. In re Sw. Bell Tel. Co., L.P., 235 S.W.3d 619, 623 (Tex. 2007) (orig. proceeding); see In re Team Rocket, L.P., 256 S.W.3d 257, 259 (Tex. 2008) (orig. proceeding). To obtain mandamus relief, the relator must show that the trial court clearly abused its discretion and that the relator has no adequate remedyby appeal. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135-36 (Tex. 2004) (orig. proceeding); see In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 462 (Tex. 2008) (orig. proceeding). A trial court abuses its discretion if it reaches a decision so arbitrary and unreasonable as to constitute a clear and prejudicial error of law, or if it clearly fails to correctly analyze or apply the law. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (orig....