Providence Lloyds Ins. Co. v. Crystal City Independent School Dist.
| Decision Date | 08 June 1994 |
| Docket Number | No. 04-93-00483-CV,04-93-00483-CV |
| Citation | 877 S.W.2d 872 |
| Parties | 92 Ed. Law Rep. 719 PROVIDENCE LLOYDS INSURANCE COMPANY v. CRYSTAL CITY INDEPENDENT SCHOOL DISTRICT. |
| Court | Texas Court of Appeals |
Patricia Montgomery, Austin, Julie Kraatz, Law Office of Louis J. Sandbote, Dallas, for appellant.
Jesse M. Gamez, Sherry A. Muller, Law Offices of Jesse Gamez, Inc., Preston H. Dial, Jr., San Antonio, for appellee.
Before BUTTS, PEEPLES and GARCIA, JJ. 1
Providence Lloyds Insurance Company (Providence), insurer, appeals a judgment granted in favor of Crystal City Independent School District (the District), insured, following a jury trial regarding the disputed cash values and loss after a fire. The trial court awarded the District $222,199 which is the difference between the $1,237,000 jury verdict and a $1,014,801 sum previously paid by Providence.
In eight points of error, Providence argues that (1) the trial court erred by not enforcing the appraisal process and by permitting this case to be tried, and (2) various errors occurred during the trial regarding pleading and evidence, as well as the jury charge. By cross point, the District argues that it is entitled to attorney fees. We reverse and render.
The essential facts surrounding this controversy are undisputed. Following a February 9, 1992 fire at the Benito Juarez Elementary School, Providence and the District disagreed as to cash values of the loss. The District filed a lawsuit in March 1992, alleging both (1) bad faith by Providence regarding handling of the claim and (2) breach of the insurance contract and the resulting claim for damages. The trial court severed the bad faith cause of action. This appeal is from the judgment on the breach of contract cause of action.
By agreement of the parties, the trial court abated the suit for the parties to participate in the insurance policy appraisal process. Providence and the District had failed to agree on the cash values of the loss. After abatement, they engaged in the required appraisal process with an umpire pursuant to the following insurance policy clause:
Appraisal. In case the Insured and this Company shall fail to agree as to the actual cash value of the amount of loss, then, on the written demand of either, each shall select a competent and disinterested appraiser and notify the other of the appraiser selected within twenty days of such demand. The appraisers shall first select a competent and disinterested umpire; and failing for fifteen days to agree upon such umpire, then, on request of the Insured or this Company, such umpire shall be selected by a judge of a district court of a 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, shall submit their differences only to the umpire. An award in writing, so itemized, of any two when filed with this Company shall determine the amount of actual cash value and loss. Each appraiser shall be paid by the party selecting him and the expenses of appraisal and umpire shall be paid by the parties.
(emphasis added).
The District selected Joe Lopez as its appraiser; Providence selected Preston Harvey. The trial court appointed George Ozuna as the umpire, after the parties 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 of the forty-eight items in dispute, Harvey and Lopez then resolved their differences and agreed on the following twenty-six items:
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
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
Ozuna then reviewed the twenty-two 2 remaining items, 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, 47,500.00
walls, roof and carpet
5. masonry 28,000.00
6. metal stud walls, sheetrock, wall insulation, int. & ext. gyp 39,901.00
board
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 & 111,000.00
sheetmetal
13. lockers 0.00
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
Ozuna then added $132,365.38 as one lump sum which included overhead, insurance and profit, previously separated items. Additionally, Ozuna awarded $1,254.72 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 the disputed items as follows:
Ozuna added his value for the disputed items ($778,127.26) to the total sum upon which the appraisers previously agreed ($236,674.10), resulting in $1,014,801.36 as the total appraisal sum pursuant to the appraisal clause. It is significant that both Harvey and Lopez signed the umpire's determination, concurring with the cash value amounts, on the attached "Certificate of Concurrence." Providence immediately paid the District $1,014,801.30, and the District accepted payment and deposited the check. 4
We note that the District did not amend its original petition with pleadings to set aside the award. The District's own appraiser, together with Providence's appraiser, concurred in the final amount as submitted by the umpire, thereby signifying their approval of the cost values of the items. The District amended its petition, alleging that Providence had made a "partial payment" ($1,014,801.30) for the loss, but that the District was entitled to recover an additional sum, $735,198.70, for repairs or replacement.
Subsequently, after a hearing, the trial court permitted the District to proceed with this lawsuit despite the appraisal process. In so doing, the court ruled, as a matter of law, that the umpire's final sum, which included the agreed amounts of the two appraisers and the umpire's own cost values, was not in substantial compliance with the contractual appraisal mandates. The court based this on the final appraisal document which denominated the twenty-six items agreed to by both parties' appraisers as "court award" rather than "agreed award." Other than calling the appraisers' agreed cost values "court award", the umpire set out the accurate agreed amounts. At trial the court excluded the evidence of the appraisal and the testimony of...
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