Appeals court grants writ for Allstate in dispute with homeowner over storm damage repairs

By Tomas Kassahun | Feb 28, 2018

BEAUMONT – The 9th District of Texas at Beaumont conditionally granted a petition for writ of mandamus for Allstate in a dispute with homeowner Pamela Bailey.

A writ of mandamus is "is an order from a court to an inferior government official ordering the government official to properly fulfill their official duties or correct an abuse of discretion," according to the Wex Legal Dictionary.

The court granted the petition in an opinion issued Feb. 22. The Montgomery County Court at Law No. 2 had denied the insurance company's motion to "enforce the appraisal clause in Bailey's policy," the opinion states.

“The trial court did not have the discretion to re-write the policy in a way that required Allstate to invoke its right to appraisal before Bailey filed suit,” the court of appeals said. “We hold the trial court abused its discretion by denying Allstate’s motion.”

According to the opinion, Bailey’s home was damaged in a storm shortly after it was insured with Allstate in April 2015.

After it was "given an estimate showing that the home needed $13,776 in repairs, Allstate determined that the home suffered only $2,766 in damages," the opinion states.

Allstate applied Bailey’s deductible and told her that it would pay her $766 for the “storm-related damages identified by Allstate in connection with the reported loss,” the opinion states.

Bailey’s attorney wrote a letter in July 2017 and demanded Allstate pay $11,776. The attorney also said Allstate owes Bailey $3,405 for penalties as well as $3,533 for the expenses associated with the attorney.

"If you wish to appraise this loss under the policy’s appraisal condition, please notify us of the identity of your appraiser within 20 days of your receipt of this letter," the letter said, according to the opinion. "Otherwise we intend to move forward, in reliance on your decision, with litigation." 

About 40 days later, Allstate responded to the letter. Allstate disagreed with the attorney’s demands, saying it was “not in agreement on the amount of loss claimed by your client as set out in your letter, and respectfully declines to pay your $18,713 demand,” according to the opinion.

Allstate added that “Bailey’s policy included a no action clause and that the clause did not allow Bailey to file suit unless Bailey had fully ‘complied with all policy terms,’” the opinion states.

Bailey sued Allstate in August 2017, alleging breach of contract, misrepresentation, failing to pay claim promptly and bad faith.

Allstate pointed to Bailey’s homeowner policy, which says either party can make a written demand for an appraisal if they don’t agree on the amount of loss. The two parties can then choose an unbiased appraiser.  

“Each party must select a competent and impartial appraiser and notify the other of the appraiser’s identity within 20 days after the demand is received,” the policy says, according to the opinion.

If the two parties don’t agree on an appraiser within 15 days, the policy says they can ask a judge to select an umpire.  

Bailey said Allstate has waived its appraisal rights by waiting until she filed suit before it applied its right for appraisal. 

The trial court denied Allstate’s request to go through the appraisal process. In its petition for mandamus relief, Allstate said the trial court abused its discretion by not allowing the appraisal process. 

“Bailey’s policy places no time limit on the parties regarding when the appraisal clause must be invoked,” the court's opinion states.

The appeals court wrote it is "confident that the trial court will vacate its order denying Allstate's motion to comple and enforce the appraisal clause in Bailey's policy."

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