SOUTHERN DISTRICT JUDGE REJECTS FORM ANTI-APPRAISAL ARGUMENTS

Federal District Judge Ewing Werlein (of the Houston Division of the Southern District) last week granted a motion to compel appraisal urged by Hartford and, in doing so, he rejected a number of arguments from Plaintiffs’ counsel with the Mostyn firm which the Judge criticized as “repetitious and erroneous.”  In James v. Property and Casualty Ins. Co. of Hartford, Civ. No. H-10-1998, 2011 WL 4067880 (S.D. Tex. Sept. 12, 2011), Judge Werlien first concluded that the insurer had not waived its right to appraisal, either by delay or anticipatory breach of contract.  Relying on the Texas Supreme Court’s May 2011 decision in In re Universal Underwriters, the judge stated that the Plaintiff had not shown prejudice from any delay, and quoted the Universal court’s statement that “it is difficult to see how prejudice could ever be shown when the policy, like the one here, gives both sides the same opportunity to demand appraisal.”  Judge Werlein then noted that the Plaintiff’s anticipatory breach argument would effectively negate any appraisal clause, which would contravene public policy in favor of such clauses.

Next, Judge Werlein addressed Plaintiff’s argument that only the contract portion of the suit should be abated during the appraisal process, and she should be able to maintain her extracontractual claims. Relying on an opinion from the Amarillo Court of Appeals and language from the Texas Supreme Court endorsing the Amarillo opinion, Judge Werlein concluded that the entire case should be abated, and added a detailed footnote articulating a second alternative rationale in support of a total abatement.  In closing, the court held the appraisal clause was not unconscionable and noted that the Plaintiff had shown nothing to the contrary.

Notably, Judge Werlein explicitly criticized the Plaintiff’s attorneys with the Mostyn firm in a footnote addressing the Plaintiff’s motion for leave to file a motion in excess of the court’s page limits.  Judge Werlein noted that he would normally deny such a motion.  However, noting the “repetitious and erroneous” arguments asserted by the Plaintiff’s law firm, the court granted the motion “to obviate any need for [the Plaintiff’s] Law Firm to incur additional hours of attorney time to downsize its erroneous arguments to a memorandum of appropriate size.”