While Hurricane Ike made landfall in Texas almost ten years ago, the resulting litigation is alive and well as evidenced by the recent decision in Texas Windstorm Insurance Association v. Dickinson Independent School District, 14-16-00474-CV, 2018 WL 2436924 (Tex. App.—Houston [14th Dist.] May 31, 2018, no pet. h.). In that case, Houston’s Fourteenth District Court of Appeals addressed whether an unpaid appraisal award established an insurance company’s liability under a named-peril insurance policy as a matter of law. In analyzing and applying the Supreme Court of Texas’s decision in State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009), the court held that the appraisal award, by itself, did not conclusively establish liability for purposes of the policyholder’s motion for summary judgment as to causation and damages.
Background
At the time Hurricane Ike hit Galveston County, Texas in 2008, the Dickinson Independent School District’s (“DISD”) property was insured under a named-peril commercial policy issued by the Texas Windstorm Insurance Association (“TWIA”). Id. at *2–3. DISD made a claim with TWIA for hurricane-related property damage, and eventually filed suit against TWIA for underpayment of the claim. Id. at *3. In response, TWIA invoked the appraisal process. Id. Thereafter, the court-appointed umpire and the policyholder’s appraiser signed an appraisal award for over $10 million (about $8 million more than TWIA’s prior claim payments). Id.
After the appraisal award was issued but not paid, DISD filed a motion for partial summary judgment on its breach-of-contract claim. Id. at *3–4. Specifically, DISD argued that the appraisal award “conclusively established certain elements of DISD’s breach of contract claim, namely the amount of damages caused by wind from Hurricane Ike.” Id. at *3. The trial court granted the motion for summary judgment, and entered subsequent orders which barred TWIA from contesting damages or causation at trial. Id. at *4. A five-day jury trial was held on the single issue of whether TWIA breached the insurance policy by failing to pay the appraisal award. Id. at *1, 4. Unsurprisingly, the jury found that TWIA breached the policy, and a final judgment was entered against TWIA which exceeded $9 million. Id. Read more ›
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