SOUTHERN DISTRICT OF TEXAS JUDGE ABATES ENTIRETY OF HURRICANE IKE CASE PENDING APPRAISAL

On February 8, U.S. District Judge Melinda Harmon of the Southern District of Texas granted Hartford’s motion to abate a Hurricane Ike business property damage case pending appraisal, and rejected the Plaintiffs’ call to abate only the valuation portion of the case and allow the coverage portion to proceed. In United Neurology, P.A. v. Hartford Lloyd’s Insurance Co., Case No. 4:10-cv-04248 (S.D. Tex.), Judge Harmon entered an order compelling appraisal, and abating the entire case.  The Plaintiffs did not oppose the appraisal, but argued that discovery should be allowed to go forward during the appraisal process.  In the alternative, they suggested that the court should at least proceed with the coverage portion of the case.

In the opinion accompanying her order, Judge Harmon acknowledged the precedent offered by the Plaintiffs, but determined that the greater weight of judicial authority gave her the discretion to decide whether  the  case  should  be  abated  or  not.   Noting  that  “if  Hartford  satisfies  the  appraisal  award, Plaintiff[s’] breach of contract and bad faith claim will be subject to dismissal,” Judge Harmon decided that a full abatement was appropriate.  Judge Harmon also was not persuaded by the Plaintiffs’ argument that the appraisal clause was merely a covenant, the breach of which could be addressed by an award of damages, as opposed to a mandatory condition precedent to liability.