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by Alexander Masotto

The Southern District of Texas recently denied an insured’s motion to compel appraisal because the insured failed to cooperate pursuant to the Policy’s conditions.

In Funes v. Allstate Vehicle and Property Insurance Company, No. 4:24-CV-00808, 2024 WL 4294677 (S.D. Tex. Sept. 25, 2024), the insured submitted a claim for pipe damage resulting from the February 2021 Texas freeze. However, the insured swiftly withdrew his claim a month later. After approximately two years passed, the insured retained counsel, and resubmitted the same claim on February 7, 2023.

The insurer inspected the property and found that the subject piping was replaced. The insurer requested reports/invoices for the re-piping, but the insured failed to oblige.

Soon after, the insured’s counsel invoked appraisal under the Policy to determine the “amount of loss;” however, the insurer refused to participate due to the insured’s lack of cooperation and potential coverage issues. The Policy at issue included certain Conditions that required the insured to, among other things, “give [the insurer] all accounting records, bills, invoices, and other vouches, or certified copies, which [the insurer] may reasonably request to examine and permit [the insurer] to make copies.”

The insured proceeded to file suit against the insurer, move to compel appraisal, and abate the suit until the completion of appraisal. Interestingly, the insured argued that appraisal was appropriate because appraisal is a condition precedent to filing suit under the Policy. In response, the insurer argued that the duty to cooperate was also a condition precedent, and that the “nature of the repairs makes it impossible to determine what damage was caused by a covered loss versus what was caused by non-covered events such as long-term deterioration of the pipes.”

Relying on State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009), the Court noted that appraisal may move forward when coverage issues exist in conjunction with a dispute over the amount of loss. Nonetheless, the Court denied the insured’s motion to compel appraisal “until such time as [the insured] furnishes [the insurer] with the requested plumbing report, all photographs of the pipes and the area in question (if any), and/or all invoices and satisfies any other relevant conditions precedent.”

Funes recognizes that insurers may refuse to participate in appraisal until an insured properly complies with the Policy’s conditions, including the duty to cooperate and provide relevant documentation. 

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The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.