The First District Court of Appeals has granted an insurance company’s writ of mandamus after a trial court denied its motion to compel appraisal.
In Re American Zurich Insurance Company (No. 01-25-00580-CV; November 20, 2025) arose from a dispute between homeowners and their insurer over a claim for fire damage to their new residence. Construction for Plaintiffs’ West University Place home in Houston began in 2021. The builder, Southhampton Group, obtained a Zurich builder’s risk insurance policy, and shortly thereafter, a subcontractor allegedly caused a fire that significantly damaged the home. Zurich began an investigation of the incident. Around February 2024, Zurich issued a $500,000 advance payment to Plaintiffs to begin repairs. Throughout 2023 and 2024, Plaintiffs and Zurich continued to negotiate on the total amount of the loss. Zurich’s building consultant estimated the damages at $1,480,394.80 in reconstruction costs. Conversely, Plaintiffs sent Zurich a notice demanding $4.5 million and an early settlement. After what Plaintiffs considered was an inadequate response, they brought suit.
Several disagreements later, Zurich reinspected the property. Plaintiffs opposed an appraisal, forcing Zurich to file a motion to compel appraisal and stay the litigation. Plaintiffs responded, arguing that Zurich “failed to comply with contractual deadlines within its own policy.” Specifically, the policy gave Zurich 15 days following Plaintiffs’ notice of claim to request a signed proof of loss. Plaintiffs would then have 91 days to return the proof of loss to trigger a demand for appraisal within 60 days. Plaintiffs asserted that Zurich had never commenced this process and that it constituted a “condition precedent to demanding appraisal.” Plaintiffs additionally argued that coverage barriers precluded an efficient and effective appraisal and that Zurich was withholding the remainder of the payments owed to Plaintiffs. Finally, Plaintiffs argued that Zurich had waived its right to appraisal because it had not timely invoked appraisal after the parties reached an impasse. Plaintiffs claimed the parties reached an impasse in February 2024 because: “(1) Zurich only released $500,000 instead of the full undisputed amount; (2) Zurich told [Plaintiffs] it would “not be able to honor [Plaintiffs’] request”; and (3) Plaintiffs informed Zurich that they had retained counsel on March 1, 2024. Zurich replied that the policy deadline had not elapsed because it had not been triggered. Zurich additionally argued that the insurer could waive the loss provision and that both parties had not reached an impasse. The trial court denied Zurich’s motion to compel. Zurich sought mandamus relief.
In an opinion by Justice Rivas-Molloy, the court of appeals granted relief. As the court observed, “[t]rial courts have no discretion to ignore a valid appraisal clause.” Here the policy stated, “[i]f we and you disagree on the value of the property or the amount of loss, either may make written demand, within 60 days after our receipt of a signed, sworn proof of loss, for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser.” The policy required the insured to submit a signed, sworn proof of loss containing the information requested to settle the claim within 91 days of the request. Within 15 days of receiving a written notice of claim, the insurer “will (a) acknowledge receipt of the claim; (b) begin any investigation of the claim; and (c) request a signed, sworn proof of loss, specify the information you must provide and supply you with the necessary forms. We may request more information at a later date, if, during the investigation of the claim, such additional information is necessary.” Additionally, the policy provided that suit may not be brought unless the insured fully complied with these provisions.
Plaintiff argued that Zurich waived its contractual right to appraisal because it did not timely demand appraisal, but the court, noting that the contract stated that Zurich had 60 days from receipt of sworn proof of loss to request an appraisal, found no evidence that Zurich ever received a sworn proof of loss from Plaintiffs. Consequently, the 60-day deadline was not triggered. Plaintiffs next claimed that Zurich waived its right to appraisal because it did not supply them with the necessary form to provide proof of loss. But, as the court observed, Plaintiffs did not explain with citation to authority how Zurich’s contractual obligation to supply them with the necessary forms created a condition precedent to Zurich’s appraisal rights. Trying once more, Plaintiffs contended that Zurich’s reliance on coverage defenses precluded the appraisal process. However, even if Zurich denied coverage, appraisal may still be requested (State Farm Lloyds v. Johnson, 290 S.W. 3d 886, 893 (Tex. 2024)). Finally, Plaintiffs argued that Zurich waived its right to appraisal because it unreasonably delayed requesting it. To predicate this argument, Plaintiffs asserted that both parties were at an impasse. To the contrary, the court found that none of the events on record show that the two parties ceased negotiations. The court thus concluded that Zurich’s request for an appraisal eight days after mediation was not an unreasonable delay, and as such, Zurich did not waive its right to appraisal.
Thus, the court concluded that the trial court abused its discretion and conditionally granted mandamus relief
TCJL Legal Intern George E. Christian researched and drafted this article.
