December 2, 2010
Gravely & Pearson, L.L.P. the policyholders law firm, has filed an amicus curiae (“friend of the court”) brief in In re Universal Underwriters of Texas Insurance Company with the Supreme Court of Texas. The case concerns the treatment of an appraisal clause in insurance policies. Gravely & Pearson, L.L.P. filed the brief as part of its commitment to advocacy for the rights of property owners and policyholders because the case involves important issues of public policy and legal significance.
The amicus brief filed today states that insurers are using the appraisal process to absolve themselves from several Texas statutes that impose liability on insurance companies to promptly investigate and pay covered claims. If Texas law allows insurers to delay the investigation and payment of claims through the appraisal process, it will encourage insurers to underpay the coverage they owe to their policyholders to trigger the appraisal process and allow them to pressure their policyholders to accept less than what they are owed.
Gravely & Pearson, L.L.P. filed its brief on behalf of three “friends of the court,” including Texas Apartment Association, Inc. (“TAA”), an organization consisting of over 10,000 members holding multifamily properties valued in excess of 150 billion and paying over 3 billion in annual property taxes. TAA is one of the most influential advocates for property rights in Texas.
The brief was also filed on behalf of Texas Association of School Boards Legal Assistance Fund, an organization of nearly 800 public school districts in Texas that advocates the positions of local school districts in litigation with potential statewide impact, and the Texas Organization of Rural & Community Hospitals (“TORCH”), an organization of rural and community hospitals, corporations, and interested individuals working together to address the special needs and issues of rural and community hospitals, staff, and patients they serve.
The case now before the Supreme Court of Texas started after massive hail damage to a Euless, Texas car dealership, Grubbs Infiniti. Grubbs’ made a claim on its commercial property insurance policy with Universal Underwriters of Texas Insurance Company. Universal determined that there was only minimal damage caused to the property despite damage estimates stating that the entire roof had to be replaced because of the hail damage.
Grubbs sued Universal for breach of contract and bad faith. Only then, six months after Universal was originally aware of Grubbs’ disagreement, did Universal try to avoid liability in the lawsuit by asking the trial court to send the parties through a binding “appraisal” process to determine the amount of the covered loss.
Marc Gravely, one of the brief’s authors, stated “the importance of this appraisal issue to Texas policyholders cannot be understated. The insurance industry’s position on appraisal eviscerates the rights of a property owner to recover their full measure of damages and undermines critical public policies that were put in place to make sure that policyholders who suffer a catastrophic loss to their businesses or their homes get the help from their insurance companies when they really need it.”