Texas Supreme Court’s Decision on Waiver of Appraisal – In re Universal Underwriters

The Supreme Court of Texas issued its unanimous decision in the In re Universal Underwriters of Texas Insurance Company case this morning. The court concluded that the trial court abused its discretion in denying Universal's motion to compel appraisal based on Universal's alleged waiver of the appraisal provision in its commercial property policy. The court reasoned that a waiver must be an intentional relinquishment of a known right and that an insurer's delay in requesting appraisal, standing alone, is not sufficient to constitute a waiver. Although the court said that the length of delay is relevant to the waiver analysis, the court emphasized that the delay must be measured from the point of impasse in negotiations–that is, the point where the parties reach a mutual understanding that neither will negotiate further–rather than from when the parties merely disagree about the valuation of the loss. Additionally, the court held that a finding of waiver requires a showing that the insured was prejudiced by the delay in requesting appraisal. The court also added that a showing of prejudice will be difficult when, as here, the insured has the right to protect itself against delay by demanding appraisal. After concluding that Universal has no adequate legal remedy for the erroneous denial of its motion to compel appraisal, the Supreme Court directed the trial court to grant Universal's motion.

This is an important victory for the insurance industry with implications for the ongoing hurricane litigation in Texas, where insureds have consistently opposed appraisal based on alleged waiver. Thompson Coe partner Wade Crosnoe filed an amicus brief on behalf of the Insurance Council of Texas and the Property Casualty Insurers Association of America in support of Universal's petition for writ of mandamus.

For the full opinion and a copy of the amicus brief prepared by Mr. Crosnoe, see Related File: Brief and Court Opinion.