“A corporation, partnership, or any other group of individuals which has been appointed to act as an appraiser would necessarily have to delegate the duty to an individual, and the delegation of an appraiser’s duty is unauthorized.” Int’l Serv. Ins. Co. v. Brodie, 337 S.W.2d 414, 417(Tex.Civ.App. — Fort Worth 1960, writ ref’d n.r.e.).
“An appraisal clause binds the parties to have the extent or amount of loss determined in a particular way.” State Farm Lloyds v. Johnson, 290 S.W.3d 886, 888 (Tex. 2009). “This clause of the policy (appraisal) was inserted wholly for the protection of the insurer. . . But the insurer will not be permitted to use this clause oppressively, or in bad faith. The insurer must proceed promptly to take the necessary steps to have the amount of the loss adjusted as provided in the policy.” Int’l Serv. Ins. Co. v. Brodie, 337 S.W.2d 414, 417(Tex.Civ.App. — Fort Worth 1960, writ ref’d n.r.e.) (internal citations omitted).
In Brodie, the insurer demanded appraisal and named ‘Wallace Williams (Martin-Duvall Lumber Company) and Blackmon-Mooring Furniture & Rug Company as appraisers for the insurer. The insured refused to proceed to appraisal, filed suit and tried the matter before the bench. On appeal, the insurer complained that the parties should have proceeded to appraisal and not submitted the amount of loss to the court. The court of appeals found “the [insurer] did not demand an appraisal ‘in accordance with the terms and conditions of the policy.’ It did not appoint ‘a’ competent and disinterested appraiser, but appointed one individual and two companies.” Id. “Mrs. Brodie might have been to some disadvantage had she been represented by one person who would have to cope with a galaxy of appraisers.” Id. “It is our opinion that the procedure invoked by the [insurer] was unwarranted and Mrs. Brodie was not required under the terms of the policy to submit to the delay, inconvenience, expense, and probable futility of such an appraisal.” Id.
There are essentially two takeaways here: 1) Appoint an individual, not a company; and 2) the appointment of multiple appraisers, without segregating the role of each appraiser, is problematic and a possible violation of the terms of the policy. Of course, all this assumes the specific appraisal clause continues to require the appointment of ‘an appraiser.’ Might things be different if the appraisal clause allowed for the appointment of a company to nominate its appraiser?
Disclaimer
This article is for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem. Use of and access to this article or any of the e-mail links contained within the site do not create an attorney-client relationship between Thomas W. Hamrick and the user or browser. The opinions expressed in this article are the opinions of the individual author and may not reflect the opinions of other lawyers.
Coffee with Tom 