                                  IN THE
                          TENTH COURT OF APPEALS




                                 No. 10-16-00404-CV

           IN RE GUIDEONE MUTUAL INSURANCE COMPANY



                                Original Proceeding


                           MEMORANDUM OPINION


      GuideOne Mutual Insurance Company brings this petition for writ of mandamus

to compel the trial court to vacate its order denying GuideOne’s Motion to Compel

Appraisal and to direct the trial court to order the appraisal to proceed under the

procedure authorized by contract. Because the trial court abused its discretion in denying

the motion to compel, GuideOne’s petition for writ of mandamus is conditionally

granted.

BACKGROUND

      This proceeding arises from a dispute between an insurance company, GuideOne,
and its insured, D.S. Patel d/b/a Western Motel, regarding payment for claimed property

damage to the motel from a storm. GuideOne made two payments to Patel for the

damages, but Patel contends the payments are inadequate. After Patel filed suit against

GuideOne and mediation was unsuccessful, GuideOne invoked its right to appraisal

pursuant to the insurance contract. GuideOne filed a motion to compel appraisal after

Patel refused to voluntarily proceed with the appraisal process. After a hearing, the trial

court denied the motion to compel appraisal.

APPRAISAL CLAUSE

       In its sole issue, GuideOne argues the trial court abused its discretion by failing to

enforce a contractual appraisal clause in the parties’ insurance contract.         Appraisal

clauses, commonly found in homeowners, automobile, and property policies in Texas,

provide a means to resolve disputes about the amount of loss for a covered claim. In re

Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404, 406-07 (Tex. 2011); State Farm Lloyds

v. Johnson, 290 S.W.3d 886, 888 (Tex. 2009). These clauses are generally enforceable, absent

illegality or waiver. In re Universal Underwriters, 345 S.W.3d at 407.

       Trial courts have no discretion to ignore a valid appraisal clause. State Farm Lloyds

v. Johnson, 290 S.W.3d 886, 888 (Tex. 2009). A trial court abuses its discretion in failing to

enforce a valid appraisal clause and such abuse of discretion cannot be remedied by

appeal. See In re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404, 412 (Tex. 2011); In

re Allstate Cnty. Mut. Ins. Co., 85 S.W.3d 193, 195-96 (Tex. 2002).



In re GuideOne Mut. Ins. Co.                                                            Page 2
          Patel did not argue at the trial court, nor does he argue here, that the appraisal

clause is illegal. Instead, Patel argued that GuideOne waived the ability to assert the use

of the clause. GuideOne’s argument before us is two-fold: first, GuideOne contends it

did not waive the appraisal clause by delaying the invocation of it; and second, GuideOne

argues it could not waive the appraisal clause because the insurance contract included a

“non-waiver clause.” Because it is dispositive of this case, we review GuideOne’s second

argument first.

Non-Waiver Clause

          The insurance contract between the parties contains the following non-waiver

clause:

          12.   Waiver or Change of Provisions.

          This policy contains all of the agreements between you and us concerning
          the insurance afforded. The first Named Insured shown in the Declarations
          is authorized to make changes in the terms of this policy with our consent.

          This policy’s terms can be amended or waived only by endorsement issued
          by us and made a part of this policy.

          Non-waiver clauses are generally considered valid and enforceable. See American

Cent. Ins. Co. v. Bass, 38 S.W. 1119, 1119-20, 90 Tex. 380 (1897); Breof BNK Tex., L.P. v. D.H.

Hill Advisors, Inc., 370 S.W.3d 58, 66 (Tex. App.—Houston [14th Dist.] 2012, no pet.); accord

A.G.E., Inc. v. Buford, 105 S.W.3d 667, 676 (Tex. App.—Austin 2003, pet. denied). See also

In re GuideOne Nat'l Ins. Co., No. 07-15-00281-CV, 2015 Tex. App. LEXIS 10138, at *7

(App.—Amarillo Sep. 29, 2015, orig. proceeding) (mem. op.). There is nothing in the


In re GuideOne Mut. Ins. Co.                                                            Page 3
record before us, and Patel does not argue otherwise, that indicates GuideOne issued an

endorsement waiving the appraisal clause.

          In response to GuideOne’s argument regarding the non-waiver clause, Patel does

not argue that the non-waiver clause is not part of the contract or that the clause is not

valid. Rather, Patel argues that because the appraisal clause was unilateral, i.e., that only

GuideOne could invoke the appraisal process, the appraisal clause was more like an

option that would not change the policy if GuideOne chose not to exercise it.

          In support of this argument, Patel relies on a footnote by the Dallas Court of

Appeals in In re GuideOne Nat'l Ins. Co., No. 05-15-00981-CV, 2015 Tex. App. LEXIS 9079,

at *2-3 n.2 (App.—Dallas Aug. 27, 2015, orig. proceeding) (mem. op.). In that footnote,

the Dallas Court refused to consider GuideOne’s non-waiver clause argument solely

because GuideOne relied on this Court’s decision in In re Certain Underwriters at Lloyds,

10-11-00263-CV, 2011 Tex. App. LEXIS 8151 (Tex. App.—Waco Oct. 12, 2011, orig.

proceeding) (mem. op.). In In re Certain Underwriters, after finding the insurer did not

unreasonably delay in invoking the appraisal clause,1 we held that the issue of waiver of

the appraisal clause was “immaterial” because the insurance policy contained a non-

waiver provision and thus, did not allow for the waiver of the appraisal clause. Id. *30.

The Dallas Court found this Court’s decision to be distinguishable because under the

policy being construed, appraisal was a condition precedent to filing suit and allowing


1
    Unreasonable delay is one of the two prongs needed to establish a waiver of an appraisal clause.


In re GuideOne Mut. Ins. Co.                                                                           Page 4
the case to proceed without an appraisal would modify the terms of the policy. See In re

GuideOne Nat'l Ins. Co., No. 05-15-00981-CV, 2015 Tex. App. LEXIS 9079, at *2-3 n.2

(App.—Dallas Aug. 27, 2015, orig. proceeding) (mem. op.). Without citing authority, the

Dallas Court determined that, in its case, the appraisal clause was merely an option

available only to the insurer and an intention by the insurer not to exercise the option

would not alter the terms of the policy. Id.

        However, since the Dallas Court of Appeals issued its opinion, the Amarillo Court

of Appeals squarely addressed a non-waiver clause argument in a case where the insurer

was the only party to the contract with the ability to demand an appraisal. 2 In re GuideOne

Nat'l Ins. Co., No. 07-15-00281-CV, 2015 Tex. App. LEXIS 10138 (App.—Amarillo Sep. 29,

2015, orig. proceeding) (mem. op.). Rather than rewriting the contract to convert the

appraisal clause into an option as the Dallas Court did, the Amarillo Court noted that

insurance contracts are construed to ascertain the parties’ intent, and the language in the

policy is presumed to reflect the intentions of the parties. Id. at *6. It further noted that

when reviewing a contract, the reviewing court must strive to honor the parties'

agreement and not remake their contract. Id. Keeping these principles in mind, the court

determined that it could not “ignore language in the contract simply because we or one


2
  Also since the Dallas Court of Appeals issued its opinion, the Courts of Appeals in Houston favorably
addressed non-waiver clause arguments by the insurer where both parties could invoke the appraisal
process. See In re Liberty Ins. Corp., 496 S.W.3d 229 (Tex. App.—Houston [1st Dist.] 2016, orig. proceeding);
In re State Farm Lloyds, No. 14-16-00696-CV, 2017 Tex. App. LEXIS 173 (App.—Houston [14th Dist.] Jan. 10,
2017, orig. proceeding) (mem. op.).



In re GuideOne Mut. Ins. Co.                                                                          Page 5
of the parties comes to dislike the provision or thinks that some other action is intended.”

Id. at *7-8. The court decided that the parties chose the language when the decision to

enter into the insurance contract was made, and the court would not “change that

language at this late date.” Id. at *8. Based on these determinations, the court held that

the trial court “clearly abused its discretion by refusing to enforce the contract according

to its terms[,]” and by failing to compel compliance with the appraisal process provided

for in the contract. Id.

APPLICATION

       We agree with the reasoning of the Amarillo Court.             We cannot ignore the

language of the insurance contract between the parties in this case. The policy provides

that its terms can only be waived by endorsement issued by GuideOne and made a part

of the policy. There is no indication in this record that an endorsement waiving the

appraisal clause was issued and made a part of the policy. Also, Patel does not argue the

non-waiver clause is invalid. Patel essentially argues that we should modify the language

in the contract. We decline the invitation to rewrite the agreement of the parties. We

hold the non-waiver clause is valid. Further, because the non-waiver clause is valid, and

based on the undisputed facts in this case, any issue of waiver of the appraisal clause

argued by Patel in the trial court is immaterial. See In re Certain Underwriters at Lloyds, 10-

11-00263-CV, 2011 Tex. App. LEXIS 8151, *29 (Tex. App.—Waco Oct. 12, 2011, orig.

proceeding) (mem. op.). Thus, the trial court abused its discretion in refusing to grant



In re GuideOne Mut. Ins. Co.                                                             Page 6
GuideOne’s motion to compel appraisal, and GuideOne’s sole issue is sustained.

CONCLUSION

       Accordingly, GuideOne’s petition for writ of mandamus is conditionally granted.

We are confident the trial court will vacate its order denying appraisal and promptly

enter an order consistent with this opinion. The writ will issue only if the trial court does

not take the appropriate action within 14 days from the date of this opinion.




                                          TOM GRAY
                                          Chief Justice

Before Chief Justice Gray,
       Justice Davis, and
       Justice Scoggins
Pet. conditionally granted
Opinion delivered and filed May 3, 2017
[OT06]




In re GuideOne Mut. Ins. Co.                                                           Page 7
