In re State Farm Lloyds (No. 13-22-00545-CV; filed February 15, 2023) arose from a dispute between a homeowner and his insurance carrier over the extent of property damage to the home in a 2020 hurricane. Unable to agree on damages, the appraisal provision of the homeowner’s policy kicked in. When the appraisers for the homeowner and carrier could not agree on the damages, the homeowner applied to a district court for the appointment of an appraisal umpire, as required by the policy. The umpire candidates named in the application, however, did not meet the policy’s requirement that the umpire “be either an engineer or an architect, an adjuster or public adjuster or a contractor ‘with experience and training in the construction, repair, and estimating of the type of property damage in dispute.’” The carrier filed a response requesting the appointment of a qualified umpire. After a hearing, the trial court appointed a lawyer as appraiser, prompting the carrier to request reconsideration, which the trial court denied. The carrier filed a petition for writ of mandamus in the court of appeals.
The court had little trouble concluding that the trial court did not appoint a qualified appraiser as required by the policy and that the failure to do so constituted an abuse of discretion. The more interesting question in the case was whether the carrier lacked an adequate remedy by appeal to address the trial court’s abuse of discretion. Citing In re Prudential Ins. Co. of Am., 148 S.W.3d 124 (Tex. 2004), the court observed that the term “adequate . . . is simply a proxy for the careful balance of jurisprudential considerations that determine when appellate courts will use original mandamus proceedings to review the actions of lower courts.” This requires the court to weigh “both public and private interests” to ensure that interlocutory proceedings do not “unduly interfere[] with trial court proceedings, district[] appellate court attention to issues that are unimportant both to the ultimate disposition of the case at hand and to the uniform development of the law, and add[] unproductively to the expense and delay of civil litigation.” On the other hand, in “exceptional cases [it] may be essential to preserve important substantive and procedural rights from impairment or loss, allow the appellate courts to give needed and helpful direction to the law that would otherwise prove elusive in appeals from final judgments, and spare private parties and the public the time and money utterly wasted enduring eventual reversal of improperly conducted proceedings . . . When the benefits [of review] outweigh the detriments, appellate courts must consider whether the appellate remedy is adequate.” In re Prudential Ins. Co. of Am., 148 S.W.3d at 135-36.
Walking through the balancing test, the court first found that a request to appoint an appraisal umpire is “within the nature of an ancillary proceeding,” and not a lawsuit with an appealable final judgment. Moreover, no case authority exists for treating the appointment of an umpire as a final, appealable judgment. Consequently, with no final judgment to appeal, the carrier had no remedy except to proceed to trial with an appraisal award issued by an incompetent appraiser. Case law does exist for the proposition that an award signed by one party’s appraiser and by an umpire with no authority to act is invalid. Those cases have further held “that an appraisal award may be set aside when the award was made: (1) without authority; (2) by fraud, accident, or mistake; or (3) without complying with the policy requirements” (citations omitted). Here the court found that denying relief would produce the situation SCOTX’s balancing test is designed to avoid: the utter waste of time and money enduring eventual reversal of improperly conducted proceedings. “Further,” the court stated, “allowing the appointment of an unqualified umpire would engender additional litigation and would affect relator’s ability to defend any claims for breach of contract that might be filed in the future” (citations omitted). The court issued a conditional writ of mandamus ordering the trial judge to appoint a qualified umpire.
This case exemplifies a court of appeals properly applying the law and correcting a trial court when it needed to do so. It is not hard to see why appellate courts have to be wary of mandamus proceedings. Open the door too far and every “incidental” trial court ruling could come rushing in. Open the door not far enough and rulings that are simply erroneous and will propagate unnecessary litigation will go unchecked. Although it probably could have done the job without a lengthy opinion, the court of appeals clearly felt that it was necessary to lay out its legal reasoning, as SCOTX put it in the Prudential case, “to give needed and helpful direction to the law that would otherwise prove elusive in appeals from final judgments.” That’s polite SCOTX-speak for “don’t do that again or we’ll open a can of whoop-ass on you.” That’s certainly what the court of appeals did in this case.
