The Corpus Christi Court of Appeals has for the second time conditionally granted an insurer’s petition for writ of mandamus for a Hidalgo County trial court’s abuse of discretion.
In re Certain Underwriters at Lloyd’s, London Subscribing Severally to Policy No. THM000938-01 (No. 13-25-00088-CV; July 11, 2025) arose from a disputed property damage claim involving alleged hailstorm damage to Plaintiffs’ home. Unable to resolve the claim, Plaintiffs’ counsel sent a pre-suit demand notice to Underwriters, which declared an impasse and demanded appraisal pursuant to the policy. Underwriters then notified Plaintiffs that it elected to assume whatever liability their agents might have for any acts or omissions related to their claim, as permitted by § 542A.006, Insurance Code. Plaintiffs proceeded to file suit against American Claims Management (the adjusters) for negligence, violations of the Texas Insurance Code, and violations of the Texas Deceptive Trade Practices Act. Underwriters was not a party to this lawsuit.
Underwriters promptly filed a “Plea in Intervention and Petition to Compel Appraisal,” arguing they were entitled to appraisal under the policy and that they had elected to accept all liability for their agents. Consequently, they contended that they possessed a justiciable interest and further argued that Plaintiffs should be compelled to submit to appraisal. Plaintiffs filed a motion to strike Underwriters’ plea. After a hearing, the trial court struck the plea and denied the motion to compel appraisal and abatement. The trial court, however, failed to provide Underwriters with notice of a hearing or opportunity to be heard. Underwriters sought mandamus relief, which the court of appeals granted. This time the trial court gave the mandated notice, but the outcome was the same. Underwriters once more sought mandamus.
In an opinion by Chief Justice Tijerina, the court of appeals granted the writ. Underwriters asserted that it had a justiciable interest and was entitled to intervene because they would be affected by any potential judgment. They had, after all, accepted liability on behalf of the adjusters and the suit was based on their policy. Furthermore, only Underwriters could enforce the terms and conditions of the policy and properly invoked their rights under the policy. And because they filed the § 542A.006 notice before Plaintiffs filed suit, Plaintiffs could not artfully plead a case against the adjusters that was properly brought against the insurer. Indeed, that election “eviscerate[d] any claim against [Underwriters’] agent.” Plaintiffs responded that the adjusters failed to investigate their claim, misrepresented material facts, and committed extracontractual violations, the Santoyos allege that their claim was “improperly adjusted, inadequately paid, and wrongfully denied.” Any recovery for damages, consequently, would be separate from the policy, rendering Underwriters’ intervention improper.
The court rejected Plaintiffs’ theory and concluded that intervention was essential to the protection of Underwriters’ interests. Underwriters possessed a justiciable interest in the litigation, which itself was factually premised on the original insurance policy. Because the claims against the adjusters cannot be considered in a vacuum, especially because Underwriters had already assumed liability, the inclusion of Underwriters as an intervenor will not complicate the case. In an erroneous ruling on a motion to strike, which is not subject to appeal, mandamus relief was the only available remedy. The court directed the trial court to vacate the order denying Underwriters’ plea and to enter an order denying Plaintiffs’ motion to strike Underwriters’ plea in intervention.
This is an unfortunate example of a trial court simply ignoring the law in a vain (and egregious) attempt to allow Plaintiffs to avoid appraisal under their homeowners policy. What is doubly disappointing is the fact that the court of appeals had to compel the trial court to do its job twice, at the expense of the insurer who was simply trying to follow the policy in the first place. This is not the sort of justice Texans should expect of their trial courts, and we applaud the court of appeals for not letting it slip through the cracks.
TCJL Intern Satchel Williams researched and assisted in drafting this article.
