                                          In The

                                   Court of Appeals
                      Ninth District of Texas at Beaumont
                                _________________
                                  NO. 09-12-00581-CV
                                _________________


              IN RE GUIDEONE MUTUAL INSURANCE COMPANY

________________________________________________________________________

                           Original Proceeding
________________________________________________________________________

                              MEMORANDUM OPINION

       GuideOne Mutual Insurance Company seeks mandamus relief from an order that

denies a motion to compel appraisal. The commercial insurance policy covering the

premises of First Baptist Church of Silsbee at the time of Hurricane Rita included

appraisal clauses and a non-waiver provision. GuideOne invoked the appraisal clause

several years after the litigation commenced and two months before a trial setting. The

trial court found GuideOne waived its appraisal rights by failing to demand appraisal

within a reasonable time after impasse and that its failure prejudiced the insured.

       “While trial courts have some discretion as to the timing of an appraisal, they

have no discretion to ignore a valid appraisal clause entirely.” State Farm Lloyds v.

Johnson, 290 S.W.3d 886, 888 (Tex. 2009). A party seeking to establish waiver must

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show that the party compelling appraisal failed to invoke the appraisal provision within a

reasonable time after an impasse was reached, and that the delay caused prejudice. See In

re Universal Underwriters of Tex. Ins. Co., 345 S.W.3d 404, 408, 410-11 (Tex. 2011)

(orig. proceeding). “[W]hile the time period may be instructive in interpreting the parties’

intentions, it alone is not the standard by which courts determine the reasonableness of a

delay.” Id. at 408. Delay is measured from the point of impasse, which requires an

examination of the circumstances and the parties’ conduct. Id. “An impasse is not the

same as a disagreement about the amount of loss. Ongoing negotiations, even when the

parties disagree, do not trigger a party’s obligation to demand appraisal.” Id. Impasse

occurs when the parties reach a mutual understanding that neither will negotiate further.

Id. at 410. “We will not infer waiver where neither explicit language nor conduct

indicates that such was the party’s intent.” Id. If a party is genuinely engaging in

settlement negotiations, it cannot have intended to relinquish its right to appraisal unless

it expressly waives that right. See In re Certain Underwriters at Lloyds, No. 10-11-

00263-CV, 2011 WL 4837869, at *6 (Tex. App.—Waco Oct. 12, 2011, orig. proceeding)

(mem. op.).

       The trial court found impasse occurred no later than December 13, 2007, when

GuideOne filed its answer to First Baptist’s suit. However, the existence of a dispute and

the development of an impasse are two different things. See Universal Underwriters, 345

S.W.3d at 408. GuideOne and First Baptist engaged in mediation in October 2011, which


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indicated that they were still negotiating years after the suit commenced. The mandamus

record contains no explicit rejection of appraisal by GuideOne. Significantly, the intent

of the parties expressed in the contract allowed the appraisal process to occur without

affecting the parties’ rights to litigate. The insurance policy placed no time limit on

making a written demand for an appraisal, and stated that in the event of an appraisal the

insured retained its right to sue and the insurer retained its right to deny the claim. The

policy also expressed the parties’ intention that waiver not be implied, as the insurance

policy expressly provides that the policy’s terms “can be amended or waived only by

endorsement issued by us and made a part of this policy.” We conclude that GuideOne

did not waive its right to an appraisal merely by waiting until May 2012 to invoke that

provision in the policy. The issue, therefore, is whether by waiting until the litigation

matured to invoke the appraisal clause GuideOne prejudiced First Baptist’s enforcement

of its rights under the policy.

       GuideOne invoked the appraisal process in May 2012. At that time, the parties

had a July 2012 trial setting. At the hearing conducted in June 2012, counsel represented

that the appraisal could be completed within sixty days. In September 2012, the trial court

granted GuideOne’s motion to compel appraisal and abated the case. However, in

October 2012, the trial court granted First Baptist’s motion to reconsider and denied

GuideOne’s motion to compel appraisal. A trial court generally has broad discretion in

managing its docket. See In re Allied Chem. Corp., 227 S.W.3d 652, 654 (Tex. 2007)


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(orig. proceeding). However, the mandamus record contains no docket control order or

other indication of a new trial setting at the time the trial court ruled. Because the trial

setting had already passed and thus, there was no active trial setting to disturb, we may

not infer that the trial court denied the motion to compel to preserve any pending trial

setting or other docket control setting.

       First Baptist relies on arbitration cases to establish prejudice, but a crucial

distinction between arbitration and appraisal relates directly to First Baptist’s prejudice

argument: arbitration provides an alternative forum for dispute resolution while appraisal

concerns the method of determining damages. See In re Fleetwood Homes of Tex., L.P.,

257 S.W.3d 692, 694 (Tex. 2008) (orig. proceeding); see also Perry Homes v. Cull, 258

S.W.3d 580, 597 (Tex. 2008). By substantially invoking the litigation process, a party can

be deemed to have chosen to forego its rights to have the dispute resolved in an alternate

forum; but, under the policy being enforced in this case, First Baptist’s right to sue is

unaffected by GuideOne’s demand for an appraisal. See Fleetwood Homes, 257 S.W.3d

at 694. The parties contractually agreed that either party could demand to have the

amount of the loss be determined by appraisers rather than by a jury.

       First Baptist contends it has been prejudiced because it incurred litigation

expenses due to GuideOne’s delay before invoking the appraisal process. Over a period

of several years, the parties engaged in the discovery process, answering written

discovery, taking depositions, and disclosing experts. The expenses First Baptist incurred


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developing its case included approximately $10,000 in expert fees for accounting services

and over $100,000 in attorney fees.        Nevertheless, the mandamus record does not

establish that these expenses would not have been incurred if GuideOne had moved for

appraisal earlier. Regardless of any appraisal, First Baptist needed an accountant and an

attorney to pursue its claims and to establish the amount of its damages. Because First

Baptist did not identify specific expenses that would not have been incurred had the

appraisal process occurred earlier, its evidence on the total fees and expenses it incurred

does not support the trial court’s finding of prejudice.

       Appraisal does not divest the trial court of jurisdiction, but it does provide an

alternate method of determining the amount of the property loss under the policy. First

Baptist contends that by demanding an appraisal, GuideOne is attempting to start the

entire claims handling process over, even for those claims that have been paid but

allegedly involve violations of the prompt pay statute.       See Tex. Ins. Code Ann. §

542.058 (West Supp. 2012). In its submissions to the trial court, GuideOne suggested to

the trial court that the appraisal would effectively determine First Baptist’s claims for

delayed payment. We agree the appraisal is germane to GuideOne’s defense. Because the

appraisal is related to GuideOne’s defense, the trial court abused its discretion in denying

its motion to compel. See In re Allstate Cnty. Mut. Ins. Co., 85 S.W.3d 193, 196 (Tex.

2002) (orig. proceeding) (granting mandamus relief where denial of an appraisal would

vitiate the insurer’s breach of contract defense). The effect of the appraisal process on


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First Baptist’s claims is a matter yet to be determined by the trial court. See generally

Security Nat’l Ins. Co. v. Waloon Inv., Inc., No. 14-11-00130-CV, 2012 WL 4788114, at

* 3 (Tex. App.—Houston [14th Dist.] Oct. 9, 2012, no pet.) (holding an appraisal award

does not, by itself, entitle either the insured or the insurer to judgment in its favor as to

the insured’s claim against the insurer for breach of contract). A flawed appraisal award

may be disregarded, but denying an appraisal altogether deprives GuideOne of a

contractual right that cannot be remedied by appeal. See Johnson, 290 S.W.3d at 895;

Allstate, 85 S.W.3d at 196. The amount of the loss is determined through the process in

the appraisal clause, but liability for the loss is determined by the courts. Johnson, 290

S.W.3d at 889.

       Absent an adequate showing of prejudice, the trial court abused its discretion by

denying GuideOne’s motion to compel an appraisal. See Universal Underwriters, 345

S.W.3d at 411-12. The timing of the appraisal and the effect of the appraisal on the

parties’ claims and defenses are not appropriate matters for mandamus review, and we

express no opinion concerning GuideOne’s motion for abatement.             See Allstate, 85

S.W.3d at 196.

       We conditionally grant the petition for a writ of mandamus. We are confident that

the trial court will vacate its order denying GuideOne’s motion to compel, and that it will

enforce the appraisal provision of the policy. The writ of mandamus will issue only if the

trial court fails to act in accordance with this opinion.


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      PETITION CONDITIONALLY GRANTED.




                                                 PER CURIAM


Submitted on December 17, 2012
Opinion Delivered January 24, 2013

Before McKeithen, C.J., Kreger and Horton, JJ.




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