Falling tree, but no windfall - Court reduces recovery of damages awarded by umpire

AUTO INSURANCE COVERAGE - Houston appeals court, in opinion by Chief Justice Adele Hedges, holds that additional damage for "re-repair" following defective repair work on car damaged by tree was not covered by Texas automobile policy even though awarded by the umpire who performed the role of arbitrator with respect to determing dollar value of the loss. Court bases its ruling on absence of coverage for the additional amount; also denies appellate sanctions for alleged misrepresentations. Plaintiff will have to seek to recover the additional damages from the body shop, which was not a party to the appeal. Walker v. Travelers Indemnity Co. No. 14-07-00238-CV (Tex.App. - Houston [14th Dist.] Jan. 15, 2008)(Hedges)(insurance coverage, auto damage, repair, appellate sanctions denied) Opinion by Chief Justice Hedges Before Chief Justice Hedges, Justice Anderson, Senior Justice Murphy Full case style: Bari Walker v. Travelers Indemnity Company A/K/A Travelers Insurance Trial Court: 113th District Court of Harris County Disposition: Summary Judgment for Insurance Company Affirmed M E M O R A N D U M O P I N I O N This appeal involves an automobile insurance coverage case. Appellant, Bari Walker, appeals an order denying her motion for summary judgment and granting summary judgment in favor of appellee, Travelers Indemnity Company A/K/A Travelers Insurance. Appellant has also filed a motion for sanctions and to strike appellee's responsive brief for alleged misrepresentations stated in its brief, which has been ordered taken with this appeal. We deny the motion for sanctions and affirm. BACKGROUND On April 13, 2002, appellant purchased a new 2003 automobile for $39,664.20. From the date of its purchase, the automobile was insured by appellee under a standard Texas personal automobile insurance policy ("the Policy"). On August 3, 2002, less than four months after the purchase, a tree fell on the automobile during a rainstorm. The automobile sustained interior and exterior damage and was towed to Independent Body Paint Shop ("Independent Body"). While appellant filed a claim with appellee and demanded that the automobile be totaled, appellee determined that the automobile could be restored and elected to repair it. Appellee initially estimated the repairs at $8,407.50 and later supplemented the estimate with an additional $8,494.58. Thus, appellee's total damage estimate was $16,902.08, which appellee paid to appellant. Although Independent Body performed certain repairs on the automobile, it was not restored to its pre-accident condition, and appellant requested additional policy benefits. When appellee refused, appellant sued appellee for breach of contract and extra-contractual claims.[1] Appellant took the automobile to a second body shop, Guidry=s Body Shop, to be inspected. Appellant then invoked her right to appraisal pursuant to the terms of the Policy to resolve the dispute over the amount of the loss. The appraisal provision in the Policy states: If we and you do not agree on the amount of loss, either may demand an appraisal of the loss. In this event, each party will select a competent appraiser. The two appraisers will select an umpire. The appraisers will state separately the actual cash value and the 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 . . . . We do not waive any of our rights under this policy by agreeing to an appraisal. Appellant chose James Walden as her appraiser, and appellee chose Joe Conwill as its appraiser. Walden and Conwill chose J.A. ADoc@ Watson as the umpire. Watson determined that the cost to repair the automobile was $25,177.52. Appellee disagreed with the $25,177.52 figure because it believed that Watson had awarded additional money that he was not authorized to award. Specifically, appellee contended that Watson arrived at the $25,177.52 figure by adding the cost of repairing the vehicle, $16,902.08, to the cost of Are-repairing@ the automobile, $8,275.44. The latter sum represented the amount necessary to correct substandard work performed by Independent Body. Appellee filed a motion to strike the umpire award on the basis that Watson had awarded an additional $8,275.44 for re-repairs unrelated to the tree incident. The trial court denied appellee=s motion. Thereafter, both parties moved for summary judgment. Appellant argued in her motion that appellee breached the Policy by failing to pay additional benefits in accordance with the umpire award. Appellee argued that the Policy did not cover the additional $8,275.44 for the re-repairs; therefore, it was only liable for $16,904.08, which had been paid to appellant. The trial court denied appellant=s motion for summary judgment and granted appellee=s motion. On appeal appellant argues that (1) there is insufficient evidence supporting the trial court=s decision to set aside the umpire award, and (2) summary judgment in favor of appellee was improper because it failed to show that it had performed its obligation under the Policy. STANDARD OF REVIEW Summary judgment under rule 166a(c) is proper only when a movant establishes that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Randall=s Food Mkts., Inc. v. Johnson, 891 S.W.2d 640, 644 (Tex. 1995). We review a summary judgment de novo. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). A defendant is entitled to summary judgment if the evidence disproves as a matter of law at least one element of each of the plaintiff=s causes of action or if the evidence conclusively establishes all elements of an affirmative defense. See Randall=s, 891 S.W.2d at 644. Where the trial court grants the judgment without specifying the grounds, we affirm the summary judgment if any of the grounds presented are meritorious. FM Props. Operating Co. v. City of Austin, 22 S.W.3d 868, 872-73 (Tex. 2000). When both parties, as here, move for summary judgment on the same issues and the trial court grants one motion and denies the other, the reviewing court considers the summary judgment evidence presented by both sides, determines all questions presented, and renders the judgment the trial court should have rendered. Dorsett, 164 S.W.3d at 661; FM Props., 22 S.W.3d at 872. In reviewing a summary judgment, we must indulge every reasonable inference in favor of the nonmovant and resolve any doubts in its favor. Randall=s, 891 S.W.2d at 644; Lawson v. B Four Corp., 888 S.W.2d 31, 33 (Tex. App.CHouston [1st Dist.] 1994, writ denied). ANALYSIS Setting Aside the Umpire Award In appellant=s first issue, she argues that the evidence is insufficient to support the trial court=s decision to set aside the umpire award. Appraisal awards made under the provisions of an insurance contract are binding and enforceable, and a court will indulge every reasonable presumption to sustain an appraisal award. Franco v. Slavonic Mut. Fire Ins. Ass=n., 154 S.W.3d 777, 786 (Tex. App.CHouston [14th Dist.] 2004, no pet.). The effect of an appraisal provision is to estop one party from contesting the issue of damages in a suit on the insurance contract, leaving only the question of liability for the court. Id. Because a court indulges every reasonable presumption to sustain an appraisal award, the burden of proof is on the party seeking to avoid the award. Id. There are, however, three situations in which the results of an otherwise binding appraisal may be disregarded: (1) when the award was made without authority; (2) when the award was made as a result of fraud, accident, or mistake; or (3) when the award was not in compliance with the requirements of the policy. Id. Appellees=s motion for summary judgment was premised on the argument that the actual cost to repair the automobile was $16,902.08, and that the additional $8,275.44 awarded by the umpire for Are-repairs@ was not covered under the Policy. According to appellant, however, the $24,275.44 figure relates back to when the tree fell on the automobile and that the re-repairs were not considered in calculating the $24,275.44 figure. To support this argument, appellant relies on Watson=s affidavit in which he states that he arrived at the total amount from damages incurred Aat the time the loss was sustained.@ According to appellant, Aat the time the loss was sustained@ refers to the fallen tree incident and not the time period after the repairs were performed by Independent Body. While the issue raised by appellant is whether the trial court erroneously set aside the umpire award, the record reflects that the trial court did not strike the umpire award. Rather, it sustained the award, comprised of current damages and the amount needed to make necessary repairs to the automobile. Subsequently, the trial court adopted appellee=s coverage argument that it had fully performed under the Policy by paying $16,902.08. The trial court determined this amount to be the extent of appellee=s liability under the Policy. This dispute involves the extent of an umpire=s authority. There is a distinction between loss and coverage. Appraisers have no power or authority to determine questions of coverage or liability. See Wells v. American States Preferred Ins. Co., 919 S.W.2d 679, 684-85 (Tex. App.CDallas 1996, writ denied) (holding that an appraiser=s power is limited to the function of determining the money value of the property damage and, therefore, has no authority to determine questions of coverage or liability). Watson=s umpire award determines loss and damages, the Policy determines coverage and liability.[2] See id. Because the trial court sustained the umpire award and appellee moved for summary judgment on the basis of coverage, the trial court did not set aside the umpire award. We overrule appellant=s first issue. Coverage and Full Performance Under the Policy In appellant=s second issue, she argues that summary judgment was improper because appellee failed to show performance of its obligation under the Policy. According to appellant, appellee=s argument that the re-repairs were solely and exclusively the result of Independent Body=s work is a misrepresentation of fact. Appellant contends that there were additional necessary repairs not included in the $16,902.08 figure. Therefore, according to appellant, appellee failed to pay for the total loss covered by the Policy. Coverage under an insurance policy is a question of law reviewed de novo. See Utica Nat=l Ins. Co. v. Am. Indem. Co., 141 S.W.3d 198, 202 (Tex. 2002). The general rules of contract construction govern insurance policy interpretation. State Farm Life Ins. Co. v. Beaston, 907 S.W.2d 430, 433 (Tex. 1995). Here, the relevant portions of the Policy state: We will pay for direct and accidental loss to your covered auto . . . . . . . . Our limit of liability for loss will be the lesser of the: 1. Actual cash value of the stolen or damaged property; 2. Amount necessary to repair or replace the property with other of like kind and quality . . . . The coverage provided by the Policy includes loss from a collision or a direct accident, with the exception of specific exclusions not relevant to appellant=s loss. The Policy specifically defines collision as Athe upset, or collision with another object.@ The necessity of re-repairs due to shoddy work does not constitute a collision as defined under the Policy. Furthermore, the defective work performed by Independent Body is not a direct accident under the Policy. Though appellant contends that there were additional repairs needed not included in Wilson=s initial estimate of $16,902.08, there is competent summary judgment evidence to the contrary. Watson indicates in his official umpire report: The very complete review by Guidry=s of the after-repair condition of this vehicle lists a plethora of defects needing re-repair. The estimate of re-repairs needed of $8,274.44 is accepted . . . Using Mr. Wilson=s total estimate of $16,902.08 plus the re-repair estimate of Guidry=s of $8,275.44 together determine a total loss of $25,177.52 . . . . The umpire report reveals that Watson itemized his total award of $25,177.52 in two parts: (1) $8,274.44 for Adefects needing re-repair@ due to the Aafter repair condition of this vehicle@ and (2) $16,902.08 for Mr. Wilson=s initial estimate for the damage caused by the fallen tree. The Policy does not cover the additional award of $8,274.44. Appellant also relies on Watson=s affidavit which states that he arrived at the total amount from damages incurred Aat the time the loss was sustained.@ However, there is no evidence establishing that the Aloss@ mentioned here by Watson included only damages sustained at the time the tree fell on the automobile and not at the time he inspected it, which was after Independent Body performed the inadequate repairs. As a matter of law, the Policy did not cover damages resulting from the substandard work performed by Independent Body; only damages from the fallen tree were covered by the Policy. There is summary judgment evidence establishing that the extent of damages incurred by the fallen tree was $16,902.08. It is undisputed that appellee paid this amount to appellant. Accordingly, summary judgment was proper on the issue of coverage and full performance by appellee under the Policy.[3] We overrule appellant=s second issue. We also deny appellant=s motion for sanctions, which was taken with the case. Appellant moves for sanctions and to strike appellee=s responsive brief on the basis that appellee (1) acted in bad faith when it advanced the argument that the umpire award was bifurcated in two amountsB $16,902.06 and $8,274.44, (2) gave false testimony when counsel read the umpire report as if it was the umpire award, (3) misrepresented the dates between appellee=s first estimate of $8,407.50 and supplemental estimate of $8,494.58, and (4) withheld information regarding necessary and fundamental safety repairs needed, but not paid by appellee. Rule 52.11 of the Texas Rules of Appellate Procedure provides that we may impose sanctions upon a party who grossly misstates or omits an obviously important and material fact in the petition or response. See Tex. R. App. P. 52.11. Appellee=s argument that the umpire award was comprised of $16,902.06 for damages related to the fallen tree and $8,274.44 for re-repairs is supported by the evidence, including the umpire report. Therefore, the argument does not constitute a misrepresentation. Additionally, misstating the dates of appellee=s initial and supplemental estimates does not constitute Agrossly misstating obviously important and material facts@ under rule 52.11. See id. The record does not reveal that appellee misrepresented the umpire report as the umpire award. Nor does it reflect that appellee withheld information regarding unpaid repairs necessary to restore the automobile. We deny appellant=s motion for sanctions and to strike appellee=s responsive brief. We affirm the trial court=s judgment. /s/ Adele Hedges Chief Justice Judgment rendered and Memorandum Opinion filed January 15, 2008. Panel consists of Chief Justice Hedges, Justice Anderson, and Senior Chief Justice Murphy.* Do Not Publish C Tex. R. App. P. 47.2(b). *Senior Chief Justice Paul C. Murphy sitting by assignment. [1] Although appellant later added Independent Body as a defendant for breach of contract, breach of warranty, fraud, and deceit for shoddy repairs, Independent Body is not a party to the instant appeal. Appellant=s claims against Independent Body were severed from this case and are still pending in the trial court. [2] Watson also indicated in a February 23, 2006 letter that he did not consider coverage when making the appraisal award. [3] Appellant also contends that Texas law does not exclude coverage for re-repairs where the repair election was inappropriate, the insurer underpaid for the repair, or the insurer otherwise contributed to the inadequacy of the repairs. However, appellant cites no authority supporting this contention. See Tex. R. App. P. 38.1(h).