Blog Archives - Dugas & Circelli, PLLC

Is It Easy To Set Aside An Appraisal Award?

PJD — Tue, 08 Feb 2022 17:19:38 +0000

Not in Texas.

Insurance policies have an excruciating number of clauses that can alter an insured’s claim in ways you might not have thought possible. One of the most important clauses every insured, public adjuster, or appraiser must familiarize themselves with is the appraisal clause. This clause is used to settle the “amount of loss” in an insurance claim.

Most appraisal clauses will be similar to this:

If we and you disagree on the value of the property or the amount of loss, either may make written demand for an appraisal of the loss. In this event, each party will select a competent and impartial appraiser. The two appraisers will select an umpire. If they cannot agree, either may request that selection be made by a judge of a court having jurisdiction. The appraisers will state separately the value of the property and amount of loss. If they fail to agree, they will submit their differences to the umpire. A decision agreed to by any two will be binding. Each patty will:

Pay its chosen appraiser; and
Bear the other expenses of the appraisal and umpire

If there is an appraisal, we will still retain our right to deny the claim.

Once an insurance carrier agrees a covered loss has occurred, an appraisal clause can be key to ensuring the proper amount of loss for damages is calculated. However, once an appraisal award has been made it is very difficult to set aside. See State Farm Lloyds v. Johnson, 290 S.W.3d 886, 888 (Tex. 2009).

There are three recognized circumstances in which an appraisal award will be overturned. First, if the award is made without authority; second, if the award was made on the basis of a mistake, accident, or fraud; and finally, if not made in substantial compliance with the policy. See Gen. Star Indem. Co. v. Spring Creek Creek Vill. Apartments Phase V, Inc., 152 S.W.3d 733, 737 (Tex. App.—Houston [14th Dist.] 2004, no pet.); Barnes v. Western Alliance Ins. Co., 844 S.W.2d 264, 267 (1992).

In State Farm v. Johnson, the Texas Supreme Court did allude to the fact that an appraisal award could be set aside if the award is not “an honest assessment of necessary repairs.” Johnson, 290 S.W.3d, at 895. This comment by the TSC could open the door to future litigation, but as of today there are no case rulings regarding an “outrageous” award.

Improper Influence

One way an appraisal award can be set aside is if an appraiser is biased. However, the party asserting bias bears a heavy burden to prove such bias exists. “For example, merely showing “a pre-existing relationship, without more, does not support a finding of bias.” Franco v. Slavonic Mui. Fire Ins. Ass’n, 154 S.W.3d 777,786 (Tex. App.—Houston [14th Dist.] 2004). Generally, to show bias, the party asserting the bias needs to show that an appraiser has a monetary interest in the case. For example, in General Star Indemnity Co. v. Spring Creek Village Apartments Phase Inc., 152 S.W.3d 733, 737 (Tex. App.—Houston [14th Dist.] 2004), the insured’s appraiser had an agreement where his percentage of compensation would go up if the cost of repair were over $2 million. The court found the appraiser therefore had a direct monetary interest in assuring the value of loss was high enough to trigger a bigger profit for his business.

Additionally, while there is no Texas case law or statutory law discussing what a party’s counsel and appraiser may discuss, it is generally understood that any effort to exercise control or influence over an appraiser is inappropriate and may be used as evidence of bias. This does not mean all communication is banned. But the communication must be factual in nature, should be information for the use of all of the appraisers and the umpire, and should not involve any mention of the weight an appraiser should attach to certain materials, or who an appraiser should retain as an additional expert. For instance, factual information such as photos, repair bills, or an adjuster or expert consultation report may be given by a party’s lawyer so long as there is no suggestion that certain documents are more credible than others. Similarly, contacting an appraiser for a status update on the appraisal process would not be seen as an exercise of control by a party’s attorney.

No Authority

Another means to set aside an appraisal award is where it is made without authority. Here, the insurance policy controls and appraisers should be given a copy of at least the appraisal language in order to abide by the constraints set forth therein. For example, in the appraisal clause shown above, an umpire and an appraiser cannot make an award without the two appointed appraisers first disagreeing and submitting their differences to the umpire. If the umpire and appraiser attempt to agree on an amount before an initial disagreement, then the umpire and appraiser would not have authority under the Policy to make an award. Fisch v. Transcon. Ins. Co., 356 S.W.2d 186, 190 (Tex. Civ. App.—Houston 1962).

Improper Basis

Appraisals that are the result of fraud, accident, or mistake may also be set aside. Fraud is found where a party simply lies about the basis on which an award is made. For instance, in Barnes vs. Western Alliance Insurance Co., 844 S.W.2d 264 (Tex. App.—Fort Worth 1992, writ dism’d by agr.) an insured homeowner made a hail claim on two buildings and invoked appraisal. An appraiser and the Umpire entered an award for $402,798, but the award was set aside at trial when the jury determined that based on the evidence and testimony the homeowner had lied about the hail damage and repair costs which the appraiser and umpire had relied on in determining the award.

An award may also be set aside by mistake. Mistake occurs when appraisers are “operating under a mistake of fact that result[s] in an unintended award.” Nemo Cay Resort Townhome Ass’n v. Rockhill Ins. Co., No. 2:19-CV-00386, 2021 U.S. Dist. LEXIS 59518, at *10 (S.D. Tex. 2021). For example, an appraisal panel intends to award the replacement cost value to return a damaged roofing system back to its pre-loss condition. If the panel then reviews an incomplete quote to repair the roof that does not include roof flashing, and based on this document, agrees to not include the cost to remove and replace flashing in its award, then the appraisal award would be based on a mistake. This award would not give effect to the panel’s true intention to award the actual cost to return the roof to its pre-loss condition. See id. at 9–12.

Failing to Follow the Insurance Policy

An appraisal award may also be overturned if an appraiser or the umpire do not comply with the Policy’s requirements. For instance, if the Policy requires the appraisers create an itemized estimate, or even for the appraisal award to be itemized, the appraisers and umpire must do so. See Richardson v. Allstate Tex. Lloyd’s, No. 05-06-00100-CV, 2007 Tex. App. LEXIS 5384, at *7–10 (Tex. App.—Dallas July 11, 2007) (setting aside appraisal award where appraisers did not make itemized estimates, appraisers did not submit only disagreed to items to the umpire, and the final award was not itemized, all of which was required under the Policy).

Conclusion

An appraisal award is very difficult to set aside. As a result, Insureds should be fully informed of their options before agreeing to participate in the appraisal process. Not all claims are good for appraisal. In that same regard, appraisers must read the Policy to ensure their actions do not lead to an award being set aside.

By Andrew Spadoni

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Tornado touches down in North Dallas

PJD — Wed, 30 Oct 2019 14:20:00 +0000

In Texas, October is considered our second most severe weather month after the spring storms that hit between the months of March and June. The recent tornados in the DFW Metroplex left behind devastating damage to homeowners and commercial property owners throughout the region. The tornados destroyed homes, businesses, and cars; delayed, rerouted, or canceled flights; caused school closures; and resulted in over 130,000 people throughout North Texas without power due to the excessive damage.

According to the National Weather Service, the first tornado touched down in North Dallas on Sunday night October 20^th around 9 p.m. and was rated an EF-3 with winds up to 140 mph. The second tornado, which was rated an EF-1, touched down about 30 minutes later in Rowlett, Texas where winds were approximately 100 mph.

Texas weather is unpredictable at best, and these storms can cause serious damage to your property. Property damage may include the functionality of your roof, the livability of your home, or the profitability of your business.

The following is a checklist that property owners should follow after a storm has damaged your property:

File a claim as soon as possible;
Keep copies of everything you send your insurance company, and a record of every adjuster you speak with;
Research contractors/roofers;
Get an independent inspection of the damage;
Make temporary reasonable repairs to prevent further damage; and
Document damage, the date of the storm, and make a list of all necessary repairs.

If your insurance company denies your claim after it is filed, and that denial is for reasons such as improper installation, damage from a prior storm that did not occur during the policy period, wear and tear, or marring, this decision may have been made in bad faith. An insurance company’s Bad Faith Insurance practices are potentially violations of the Texas Insurance Code, Texas Deceptive Trade Practices Act (DTPA), and the Common Law Duty of Good Faith and Fair Dealing, and you should consider seeking an attorney if you believe that an insurance company has wrongfully underpaid or denied your claim. Because an insurance policy is a contract that is signed between an insured and the insurer, then you may also have a breach of contract claim against the insurance company for failure to pay the claim according to the terms of the insurance policy.

At Preston Dugas Law Firm, we are familiar with the tactics that insurance companies use to avoid paying insurance claims to homeowners and commercial property owners. We are dedicated to preventing insurance companies from taking advantage of property owners. We have your best interest in mind to help you recover money so that repairs can be made to restore your property to its pre-loss condition. If you believe you have been wrongfully denied, or underpaid on, a property damage claim, we encourage you to contact us right away.

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Senate Bill 2

PJD — Fri, 31 May 2019 14:26:00 +0000

On May 27, 2019, the final version of Senate Bill 2, the Texas Property Tax Reform and Transparency Act of 2019, was signed by the House and Senate. S.B. 2 addresses the rate of growth of local property taxes and transparency of property tax revenue. Among its many provisions, the bill requires cities and counties to get permission from voters to raise property taxes over the previous year more than 3.5 percent. While this bill has garnered a lot of attention this session, it will likely provide little tax relief for most property owners, because it does not affect the appraised value placed on the property by the appraisal district, which plays a significant role in determining the property owner’s tax bill. S.B. 2 was sent to Governor Abbott on May 28, and he has until Sunday, June 16 to sign or veto the bill; however, if the bill goes unsigned, it will become a law. Governor Abbott has been outspoken about his support of property tax reform in the current legislative session, so there is little doubt that S.B. 2 will pass on June 16.

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Legislative Update- Texas Property Tax Reform and Relief Act of 2019

PJD — Sun, 03 Feb 2019 15:02:00 +0000

On January 31, 2019, Senator Paul Bettencourt, Chairman of the Senate Committee on Property Tax, filed Senate Bill 2, cited as the Property Tax Reform and Relief Act of 2019. That day, an identical companion bill, House Bill 2, was filed by Representative Dustin Burrows.

SB 2 and HB 2 address the rate of growth of local property taxes. First, taxing entities, including local school districts, would have to get permission from voters in a November election to raise property taxes more than 2.5 percent annually. This limitation would be subject to some exceptions, including an exception for small taxing units. The bill is also an overhaul on the tax notification system and introduces a more transparent and consistent process for challenging a home’s appraised value.

Importantly, these bills are being supported by Governor Abbott, Lt. Governor Patrick and House Speaker Bonnen. While both chambers have failed to pass similar bills in past legislative sessions, the support from these high-ranking and high-profile members could push this significant piece of property tax legislation all the way.

This Wednesday, February 6, the Senate Committee on Property Tax will hold a public hearing to discuss the newly filed SB 2. House Speaker Bonnen soon will assign HB 2 to a committee. HB 2 author Representative Burrows chairs the House Ways & Means Committee, which is scheduled to meet this week.

Preston Dugas Law Firm is following SB 2 and HB 2 closely, among a handful of others that could have a profound effect on the property tax landscape in Texas.

You can read the full text of SB 2 “Texas Property Tax Reform and Relief Act of 2019” here: https://capitol.texas.gov/tlodocs/86R/billtext/pdf/SB00002I.pdf#navpanes=0.

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Homeowners vs. Flood Insurance in Hurricanes: Help Maximize Your Claim

PJD — Mon, 19 Nov 2018 14:26:00 +0000

Hurricane Michael wrought tremendous damage to the state of Florida. Lives and livelihood were devastated, and the effects of the hurricane will be felt for years to come. The Fort Worth, TX-based legal team at the Preston Dugas Law Firm, PLLC believes in helping our neighbors in the Gulf Coast who have survived the storm and are looking to rebuild. We are here for you and your loved once when insurance companies make this difficult period even harder to endure.

When it comes to rebuilding after a hurricane, property damage disputes with insurance companies can be frustrating. There are different kinds of insurance for specific forms of hurricane damage. Let’s consider homeowners insurance, flood insurance, and how a lawyer can help you navigate the differences and maximize claims.

About Homeowners Insurance in a Hurricane

Homeowners insurance will cover various kinds of damage that are related to a hurricane affecting your property. This may include wind damage and any harm to the home. In certain areas that have a high risk for hurricanes, wind damage may not be covered. Homeowners may have to purchase windstorm coverage to address hurricane wind damage. Be sure to check with your insurance provider regarding these matters.

About Flood Insurance in a Hurricane

While homeowners insurance can cover the cost of damage caused by burst water pipes at a property, it will not cover the damage caused by flooding outside of the home. This means that storm surges will require a separate insurance policy. That is where flood insurance comes into play.

Flood insurance is provided by the National Flood Insurance Program (NFIP). These NFIP policies cover a maximum of $250,000 in property damage caused by flooding and $100,000 for certain contents in a home that have been damaged by flooding. Money, stock certificates, and jewelry is typically not covered by these flood insurance policies, so keep that in mind.

Temporary Accommodations When Evacuating a Hurricane

Generally, homeowners insurance and flood insurance will not cover temporary accommodations (such as travel and hotel expenses) when evacuating a hurricane. However, some homeowners insurance policies will cover the expense of temporary lodgings if you have returned home after the hurricane and have found your property uninhabitable.

Assessing Wind and Water Damage

Wind and water damage affects property in different ways. In order to determine how much your homeowners insurance and flood insurance will cover, it’s important to determine the amount of damage done by wind and by outside flooding. Insurance companies will take these differences seriously, and may attempt to lower the amount of your claim by suggesting that the hurricane damage is not technically covered by your policy.

How Our Attorneys Can Help

Given the various differences between homeowners insurance and flood insurance, it can be easy to have claims denied or receive less coverage than you are entitled to. That’s where an attorney can help.

An experienced property insurance attorney will be able to note the damage to your property and help you seek the maximum amount possible based on the nature of the damage. The attorney can also parse the language of your insurance policy to determine an ideal method to seek maximum coverage. For those trying to rebuild and recover after Hurricane Michael, this experience will prove invaluable.

Contact Our Law Firm

To learn more about the importance of legal counsel as you recover and rebuild after Hurricane Michael, be sure to contact the Preston Dugas Law Firm, PLLC. Our legal team is here to help you. You can reach our law office by phone at (817) 945-3061.

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Hurricane Property Damage Claim Denials: How an Attorney Can Help

PJD — Sat, 17 Nov 2018 10:50:00 +0000

Hurricane Michael was devastating. The third-most intense Atlantic hurricane to make contact with the United States. The hurricane claimed 60 lives, 45 of which were in the United States. The damage of Hurricane Michael has been estimated around $14.58 billion across Central America and North America, which includes $3.3 billion in US insurance claims. Even with billions in insurance claims, people in Florida might experience setbacks related to insurance claim denials.

Even though Preston Dugas Law Firm, PLLC is based in Fort Worth, TX, we have helped people in the Gulf Coast receive rightful compensation for property damage following a hurricane or other type of natural disaster. We’d like to consider the appeals process following claim denial, and how our lawyers can help.

Hurricane Damage Insurance: Difficulties for Homeowners

If you are insuring your home for a hurricane, your may need to buy two separate policies to address all of the damage that may occur. Damage from hurricane winds and debris will typically be covered by homeowners insurance; keep in mind that some insurance policies may require homeowners in hurricane-prone areas to purchase additional wind coverage for their property.

However, to cover water damage and flooding, you will need to have purchased a separate flood insurance policy. Many homeowners are not aware of this, meaning that they will have to shoulder the losses associated with flood damage on their own.

Why There May Be a Claim Denial

Even though insurance policies are meant to help homeowners are victims of natural disasters like Hurricane Michael, insurance companies may try to save money based on technicalities regarding property damage and loss of personal property. For instance, homeowners insurance and flood insurance may cover damage to the property itself, but any money, stock certificates, and certain high-value personal items (e.g., jewelry) may not be covered.

We noted above that flood insurance and homeowners insurance are different, and there may be disputes regarding wind damage or flood damage. Trying to claim certain kinds of property damage the result of wind damage or flood damage may lead to denied claims from the insurance company, which can be difficult when personal property has been wrecked by wind and water during the hurricane.

About Insurance Bad Faith

Insurance bad faith refers to cases in which insurance companies do not properly investigate an insurance claim, improperly value the amount of damage to property, or refusal to acknowledge a rightful insurance claim. In the case of Hurricane Michael, this could mean undervaluing the amount of damage to a home or personal property, or denying that the insurance policy covers the damage related to the hurricane.

Bad faith may apply to homeowners insurance and flood insurance in these cases, particularly in the assessment of wind damage vs. water damage.

How a Property Damage Attorney Can Help

If your insurance claim has been denied, a property damage lawyer can go over the evidence in your case. The attorney can help determine wind damage and flood damage based on photos and expert assessments. If a claim has been denied in bad faith, your attorney can help you seek rightful compensation from the insurance to help you move forward, rebuild, or start again somewhere new.

Because we know the damage done by Hurricane Michael, we can provide a free case review and help you make a good decision concerning your case with the insurance company.

Learn More About You Legal Options

If you are rebuilding your life after Hurricane Michael or know someone who is trying to movie forward after this tremendous storm, we encourage you to contact a property damage attorney. We are here to listen and to help. Preston Dugas Law Firm, PLLC can be reached by phone at (817) 945-3061.

2019 Texas Rising Stars List

PJD — Thu, 18 Oct 2018 10:59:00 +0000

Our law firm is extremely excited that Preston made the 2019 Texas Rising Stars list again. Every year, Super Lawyers selects attorneys who exhibit excellence in the practice of law that are either 40 years old or younger or have been in practice for 10 years or less. Preston is still only 38 and made the list again for the fourth time!

Know your are in good hands if you hire Preston Dugas Law Firm, PLLC!

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