Wells v. American States Preferred Ins. Co.

• Citation: 919 S.W.2d 679
• Decision Date: 29 January 1996
• Docket Number: No. 05-95-00200-CV,05-95-00200-CV
• Parties: Donald WELLS and Emma Wells, Appellants, v. AMERICAN STATES PREFERRED INSURANCE COMPANY, Appellee.
• Court: Court of Appeals of Texas

Page 679

919 S.W.2d 679

Donald WELLS and Emma Wells, Appellants, v. AMERICAN STATES PREFERRED INSURANCE COMPANY, Appellee.

No. 05-95-00200-CV.

Court of Appeals of Texas Dallas.

Jan. 29, 1996.

Thomas M. Richards, Smith Merrifield & Richards, L.L.P., Dallas, Dixon Jace Reynolds, Bush, Fulton, Hurlbut & Morrison, P.C., Arlington, Gayle E. Oler, Dallas, for Appellants.

Wesley W. Chambers, Gollaher & Chambers, Dallas, for Appellee.

Before LAGARDE, BARBER and WHITHAM ¹, JJ.

OPINION

WHITHAM (Retired), Justice.

Appellants, Donald Wells and wife, Emma Wells, appeal from a summary judgment in favor of appellee, American States Preferred Insurance Company. The principal issues involve the appraisal provision of the Texas Homeowner's Policy and the interpretation and consequences of the appraisal made pursuant to that insurance policy. The issues focus upon the question of whether the appraisers are authorized and empowered to determine what caused or did not cause the loss claimed. Here, the policy insured the dwelling against foundation and structural damage due to foundation movement caused by leaks in the plumbing system. The Wellses assert the dwelling suffered foundation and structural damage caused by a plumbing leak. The Wellses made a claim on the policy. American States denied the claim, demanded an appraisal, and then sued to require an appraisal. The Wellses counterclaimed on the policy and on other causes of action. The trial court abated the counterclaim until an appraisal was done. The two appraisers and an umpire determined that the resulting damage to the dwelling due to foundation movement was $22,875.94. However, one appraiser and the umpire also determined that the plumbing leak caused no loss; i.e., that the plumbing leak did not cause the damage. Based on this latter determination, the trial court entered a take-nothing summary judgment against the Wellses. Because we conclude that the appraisal section of the policy, as a matter of law, did not authorize the appraiser and umpire to determine that the plumbing leak did not cause the 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 and remand.

Factual Background

Donald and Emma Wells own a home in Wylie, Texas. American States insured the home under a Texas Homeowner's Policy. The policy contained the following provision for determining the amount of loss by appraisal at request of either party:

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 written demand. The two appraisers will choose an umpire. If they cannot agree upon 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 actual cash value and loss to each item. If you or we request that they do so, the appraiser will also set:

a. the full replacement cost of the dwelling.

b. the full replacement cost of any other building upon which loss is claimed.

c. the full cost of repair or replacement of loss to such building, without deduction for depreciation.

If the appraisers fail to agree, they will submit their difference 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.

When their home sustained damage due to foundation movement, the Wellses investigated. They discovered a leak in the plumbing system underneath the foundation. A structural engineer who examined the property reported that the plumbing leak caused the foundation movement. On April 20, 1992, the Wellses made a claim on the policy. An adjuster from American States inspected the property and stated that the sewer-line leak did not cause the damage. The adjuster included that statement on a written non-waiver agreement dated May 7, 1992, which Donald Wells signed only after noting on the writing his disagreement with the statement. American States then had its own engineer examine the property, who reported that the plumbing leak did not cause the foundation movement, conflicting with the report from the Wellses' engineer as to causation of the loss.

On July 20, 1992, American States again denied the Wellses' claim and at the same time demanded an appraisal under the "Appraisal" section quoted above, designating John O. Lochridge, Jr. as its appraiser. American States then sued for a declaratory judgment that it had properly invoked the appraisal provisions of the policy. American States also asked for an order requiring the Wellses to submit their claim to appraisal. The Wellses answered and filed a counterclaim on the policy and on other causes of action. American States responded with a first supplemental petition containing a 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. Butler as umpire.

Both appraisers and the umpire unanimously determined that the Wellses' home had resulting damage to the dwelling due to foundation movement in the amount of $22,875.94. However, appraiser Lochridge and umpire Butler determined that damage to the dwelling related to the plumbing leak was zero.

American States then filed its motion for summary judgment based on the appraisal determination that the plumbing leak did not cause the loss claimed. The Wellses filed their own motion for partial summary judgment based on the unanimous determination of the appraisers and umpire that the amount of loss to the dwelling resulting from foundation movement was $22,875.94. American States responded to the Wellses' motion, and the Wellses responded to American States's motion. The trial court granted American States's motion, denied the Wellses' motion, and rendered a take-nothing summary judgment against the Wellses.

The trial court's summary judgment contains this language:

The court further finds that [American States] is entitled to a Declaratory Judgment maturing the appraisal award rendered herein, into a final judgment as requested and prayed for in [American States's] Summary Judgment and thus, it is further ORDERED, ADJUDGED and DECREED that Declaratory Judgment be, and the same hereby is, rendered in favor of [American States] and against [the Wellses], that the appraisal award rendered on or about June 24, 1994 is binding on and enforceable against [the Wellses], that said appraisal award's finding that the amount of loss is zero be matured into final judgment, and judgment is hereby RENDERED that [American States] is not liable to [the Wellses] on [the Wellses'] insurance claim made the basis of this suit.

Summary Judgment Principles

We begin by repeating well-known rules governing the summary judgment practice. The function of a summary judgment is not to deprive a litigant of his right to a full hearing on the merits of any real issue of fact, but to eliminate patently unmeritorious claims and untenable defenses. Gulbenkian v. Penn, 151 Tex. 412, 415-16, 252 S.W.2d 929, 931 (1952). The standards for 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 showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.

2. In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the nonmovant will be taken as true.

3. Every reasonable inference must be indulged in favor of the nonmovant and any doubts resolved in its favor.

Nixon v. Mr. Property Management, 690 S.W.2d 546, 548-49 (Tex.1985). It is not the purpose of the summary judgment rule to provide either a trial by deposition or a trial by affidavit, but rather to provide a method of summarily terminating a case when it clearly appears that only a question of law is involved and that there is no genuine issue of fact. Gaines v. Hamman, 163 Tex. 618, 626, 358 S.W.2d 557, 563 (1962).

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 whether the summary judgment proof raises fact issues with reference to the essential elements of a counterclaim plaintiff's cause of action, but is whether the summary judgment proof establishes as a matter of law that there is no genuine issue of fact as to one or more of the essential elements of the counterclaim plaintiff's cause of action. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). Therefore, a counterclaim defendant is entitled to a summary judgment if he establishes, as a matter of law, that at least one element of counterclaim plaintiff's cause of action does not exist. See Rosas v. Buddies Food Store, 518 S.W.2d 534, 537 (Tex.1975).

Furthermore, summary judgment is not entitled to the same deference given to a judgment following a trial on the merits. Elam v. Yale Clinic, 783 S.W.2d 638, 641 (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 of the trial court. Elam, 783 S.W.2d...