Appraisal Compelled and Suit Held in Abeyance

Court Understands the Importance of Appraisal
Post 5188
Appraisal Clauses Provide A Less Expensive, More Efficient Alternative To Litigation For Resolving Insurance-Claim Disputes

In Rockbrook Place Townhomes Association, Inc. v. Lio Insurance Company, CIVIL No. 4:24-CV-1021-SDJ, United States District Court, E.D. Texas, Sherman Division (September 3, 2025) the USDC compels appraisal and stops litigation.

Summary:

This insurance-coverage dispute between Rockbrook Place Townhomes Association, Inc. ("Rockbrook") and LIO Insurance Company ("LIO"). The dispute arises from alleged hail damage to Rockbrook's property, the key points are as follows:

Background:

Rockbrook owns property in Lewisville, Texas, insured by LIO. Following a hailstorm, Rockbrook submitted a claim to LIO for hail damage, which LIO denied after an investigation. Rockbrook requested a reinspection and demanded over $4.5 million for roof replacements, which LIO also denied after further inspections.

Legal Proceedings:

Rockbrook sent a notice letter indicating potential legal claims and damages, expressing a preference for settlement. LIO conducted additional inspections and denied the claim for a third time, invoking the appraisal process under the insurance policy. Rockbrook did not select an appraiser within the required timeframe and subsequently sued LIO in Texas state court.

Court's Decision:

The court found that LIO did not waive its right to demand appraisal and that the appraisal process should proceed. The court granted LIO's motion to compel appraisal and abate the litigation pending the resolution of the appraisal. The case is abated until the appraisal process is completed, with joint status updates required every sixty days .

Legal Standards

Appraisal clauses provide a means to resolve disputes about the amount of loss for a covered claim. These clauses are generally enforceable, absent illegality or waiver. Because appraisals can provide a less expensive, more efficient alternative to litigation, the Texas Supreme Court has held that appraisals should generally go forward without preemptive intervention by the courts.

Under Texas law, waiver is an affirmative defense, and the party seeking to defeat appraisal bears the burden of proof. To establish waiver, a party must show either the intentional relinquishment of a known right or intentional conduct inconsistent with claiming that right.

DISCUSSION

The Court's discussion proceeds in two parts. First, the Court must decide whether LIO waived its right to demand appraisal. After finding that LIO has not, the Court addresses whether this case should be abated pending resolution of the appraisal.

Even if LIO's delay in seeking appraisal were unreasonable, Rockbrook has not shown that it was prejudiced by that delay.

Because the Court agrees that the appraisal could result in the prompt resolution of this controversy, and because judicial-efficiency concerns drive the abatement decision, the Court will grant the abatement until the appraisal process is complete.

Appraisal clauses provide a less expensive, more efficient alternative to litigation for resolving insurance-claim disputes. And they are generally enforceable, absent illegality or waiver. Because LIO timely invoked its appraisal rights under the policy, Rockbrook must submit to the appraisal process before seeking judicial resolution of its claims.

Conclusion:

The court's decision emphasizes the enforceability of appraisal clauses in insurance policies as a means to resolve disputes efficiently and cost-effectively. The case will remain abated until the appraisal process concludes.

ZALMA OPINION

People who sue insurance companies think that the denial of their claim will give them the opportunity to profit beyond their loss. LIO Insurance demanded appraisal after denying a claim and faced with suit. The court recognized the importance of appraisal as a means to reduce litigation and resolve disputes short of trial.

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c) 2025 Barry Zalma & ClaimSchool, Inc.

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