Trial Court Abuses Discretion in Appointing Unqualified Umpire for Appraisal

    The Texas Court of Appeals agreed with the insurer that the trial court abused its discretion in appointing an attorney as umpire in a property damage dispute. In re State Farm Lloyds, 2023 Tex. App. LEXIS 966 (Tex. Ct. App. Feb. 15, 2023).

    The insured filed an application for the appointment of an umpire regarding his insurance claim for property damage to his residence. The home was damaged by a hurricane on July 25, 2020, and the parties disagreed regarding the full extent of the property damage to the residence. The appraisers appointed by the insured and State Farm disagreed on the damages, leading to the insured asking the trial court to appoint a competent and disinterested umpire. 

    The trial court appointed Derek Salinas, an attorney, as umpire. State Farm challenged the appointment because the policy required the umpire to be either an engineer, architect, adjuster, public adjuster, or a contractor with experience and training in the construction, repair and estimating the type of property damage in dispute. State Farm argued that Salinas met none of the criteria. The trial court rejected State Farm’s motion for reconsideration. 

    State Farm filed a petition for mandamus with the Texas Court of Appeals. The appellate court found that the trial court abused its discretion in appointing an attorney as umpire, contrary to the provisions in the policy. The appellate court also agreed that a petition for mandamus was the proper request for relief instead of waiting to appeal from the umpire’s decision. The court found that State Farm lacked an adequate remedy by appeal to address the trial court’s error in appointing an individual as umpire who failed to meet the requirements in the policy. Allowing the appointment of an unqualified umpire would create additional litigation and would affect State Farm’s ability to defend any claims for breach of contract that might be filed in the future,.