The Austin Court of Appeals has granted an insurance company’s request for mandamus relief to compel a trial court to grant its motion to compel appraisal under a homeowner’s policy.
In re American Mercury Lloyds Insurance Company (No. 03-26-00794-CV; October 21, 2026) arose from a dispute between homeowners and their insurance company. After a water leak damaged their house, Plaintiffs filed a claim. The insurer initially denied coverage because long-term or repeated seepage caused the water damage. Plaintiffs retained a public appraiser to estimate the damage, and shortly thereafter sent a pre-suit notice to the insurer demanding more than $76,000, including the appraiser’s and attorney’s fees. The insurer requested inspection, but Plaintiffs didn’t respond. The insurer tried again, offering to consider making a settlement offer following reinspection. It further volunteered to mediate in good faith. Plaintiffs sued anyway. The insurer answered and subsequently invoked the appraisal provision of the policy and expressly stated that appraisal “cannot resolve coverage questions.” Plaintiffs failed to appoint an appraiser, so the insurer filed a motion to compel appraisal and abate the lawsuit. The trial court denied the motion. The insurer sought mandamus relief.
In an opinion by Justice Crump, the court of appeals granted relief. The insurer argued that the policy had a valid and enforceable appraisal provision and the parties’ dispute involved the amount of loss. Plaintiffs countered that the insurer didn’t establish the provisions “condition precedent to appraisal: a genuine, existing disagreement over the amount of a covered loss.” As the court observed, SCOTX has rejected Plaintiffs’ argument on the basis that a failure to disagree means “to disagree.” Here the parties failed to agree as to the amount of loss “because Mercury did not agree to the amount [Plaintiffs] demanded, and [Plaintiffs] did not agree that no amount of loss was covered by their policy….And if the trial court ultimately concludes that [Plaintiffs’] claims are covered under the insurance policy, the amount of loss will already have been determined.” The trial court abused its discretion by denying the insurer’s motion to compel based on the appraisal provision.
The insurer argued further that it did not waive its right to appraisal, as Plaintiffs’ claimed. “Generally,” the court noted, “a party may waive the right to appraisal if it waits an unreasonable amount of time to invoke appraisal after the parties reached an impasse in their negotiations and the delay causes prejudice to the opposing party” (citations omitted). By itself, “the denial of a homeowner’s claim for damages does not [] constitute waiver of a contractual right to appraisal” (citations omitted). Contrary to Plaintiffs’ claim that their pre-suit notice evidenced an impasse had occurred, the policy contained a nonwaiver provision, didn’t set a deadline for when a party could invoke appraisal, and both sides had the contractual right to invoke appraisal. There simply wasn’t any evidence that the insurer waived its right to appraisal in writing or that it understood further negotiations would be futile before it sought appraisal. In fact, the insurer went out of its way to try to resolve the dispute “amicably.” In any event, Plaintiffs couldn’t show any prejudice to begin with (by the way, litigation costs incurred by a plaintiff don’t show “prejudice”). The trial court again abused its discretion by denying the insurer’s motion on the ground that the insurer waived its right to appraisal.
