Award Signed by Two of Three Appraisers Binding on Insured and Insurer
Post 5168
See the full video at https://rumble.com/v6xj16m-appraisal-award-sets-amount-of-loss.html and at https://youtu.be/XBy4m31c0AM, and at https://zalma.com/blog plus more than 5150 posts.Dispute Over Extent of Damages is not Bad Faith
Kelly Mallady filed a lawsuit against Homeowners of America Insurance Company due to damages sustained from a nearby explosion in January 2020 that the insurer rejected in part.
In Kelly Mallady v. Homeowners Of America Insurance Company, No. 14-24-00147-CV, Court of Appeals of Texas, Fourteenth District (August 7, 2025) resolution was obtained of the disputes.
CASE BACKGROUND:
1 Mallady’s homeowners insurance policy was effective from September 15, 2019, to September 15, 2020 .
2 The initial claim was acknowledged, and an independent adjuster estimated the property damage to be $13,014.79, covering only the dwelling and fence.
3 Mallady invoked appraisal, demanding $247,860.40 for property and contents damages, plus $10,000 in attorney’s fees .
APPRAISAL AWARDS:
1 The first appraisal award (April award) set the loss for the dwelling at $24,000 replacement cost value and $21,900 actual cash value .
2 The April award did not address contents damages and was later voided.
3 A subsequent appraisal award (June award) assessed damages at $215,616.65 and $145,778.70 actual cash value, covering the dwelling, fence, and contents .
LEGAL PROCEEDINGS:
1 Homeowners of America filed a motion to set aside the June award and confirm the April award, arguing the April award was binding once signed by two parties .
2 The trial court set aside the June award and confirmed the April award .
3 Mallady filed suit alleging breach of contract, bad faith, deceptive trade practices, and other claims .
4 The trial court granted summary judgment in favor of Homeowners of America, which Mallady appealed .
COURT’S DECISION:
1 The appellate court affirmed in part and reversed and remanded in part.
2 The court concluded that the trial court erred in granting summary judgment on Mallady’s breach of contract claim.
3 The court sustained several of Mallady’s issues challenging the trial court’s grant of summary judgment.
ANALYSIS
Breach of Contract Claim:
The court concluded that the trial court erred in granting summary judgment on Mallady’s breach of contract claim. The April award did not set the amount of loss for contents, and the evidence showed that content damages were to be addressed in a separate award after inspection of the property. Therefore, the trial court’s decision to grant summary judgment was incorrect as there was a genuine issue of material fact regarding the contents damages.
Appraisal Awards:
The award, which assessed damages only for the dwelling, was signed by two of the three parties, making it binding. However, the June award, which included damages for the dwelling, fence, and contents, was issued later and signed by McLeod and Choate. The trial court set aside the June award and confirmed the April award, but the appellate court found that the trial court erred in this decision.
Appraisal clauses estop a party from contesting the issue of damages in a lawsuit based on an insurance contract. If a party seeks to avoid an appraisal award, the burden of proof is theirs to raise an issue of material fact as to why the resolution they contractually agreed to should be set aside. If the appraisal award is not set aside, this contractual process settles the issue of damages, and settlement of the full amount owed estops the insured from bringing a breach of contract claim against the insurer.
Examination Under Oath:
The trial court’s order requiring Choate to submit to an examination under oath was vacated. The court concluded that the policy did not require Choate to submit to an examination under oath as he was not considered Mallady’s representative. However, since Choate as a independent appraiser is not a representative of the insured he may not be compelled to testify at EUO.
Independent Injury Rule:
Mallady’s claims for mental anguish and attorney’s fees were not considered independent injuries that could support her extra-contractual claims. The court found that the mental anguish damages stemmed from the denial of policy benefits and were not truly independent injuries.
ZALMA OPINION
Once an appraisal award becomes final – signed by two of the three appraisers – the amount of loss is established. When there is a second appraisal making findings of loss and damage more than $200,000 greater than the first, and final award, the original award must be honored. However, since the first award failed to consider contents damages, it was incomplete and another appraisal of contents was required. The breach of contract can be tried but the bad faith claim was eliminated.
You can find a permanent public version of the document here: https://public.fastcase.com/jaEE2PXzRXmZ99jOLMt1IuUELJK35ulC0JH4o2YTkiYe9ytM%2bHEzVcf4Tgc1Kro9RcFaidgUpgfDK0dIpLN22Q%3d%3d
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Exclusions Defeat Claim for Defense & Indemnity
Genuine Dispute Dispels Claim of Bad Faith
Post 5167
See the full video at https://lnkd.in/gvGAeT7t and at https://lnkd.in/gh67UEyB.
In Diversified Restaurant Group, LLC, et al. v. Houston Casualty Company, et al., No. 25-cv-02344-EMC, United States District Court, N.D. California (July 31, 2025) Diversified Restaurant Group, LLC (DRG) and Golden Gate Bell, LLC (GGB) sued Houston Casualty Company (HCC), Pennsylvania Manufacturers Indemnity Company (PMIC), and Manufacturer’s Alliance Insurance Company (MAIC) around the denial of insurance coverage for a lawsuit filed by a former employee who alleged sexual harassment and assault by a supervisor.
Insurance Policies and Denial of Coverage:
DRG and GGB had insurance policies with PMIC and MAIC, which included general liability, workers’ compensation, and employer’s liability coverage. Both PMIC and MAIC denied coverage for the underlying lawsuit, citing various exclusions in their policies.
Exclusions:
The PMIC policy ...
Coverage for Fraud Encourages Crime
Post 5166
Posted on August 12, 2025 by Barry Zalma
See the full video at and at
Tandem Fund II, L.P. (“Tandem”) a venture capital firm, provided loans to Cuff, Inc. (“Cuff”), a startup company. Cuff failed as a business, and Tandem was never repaid on the loans. Tandem assigned the loans to Bijoux Corp. (“Bijoux”), which then initiated arbitration against Cuff and its CEO, Deepa Sood, for intentional misrepresentation and fraudulent concealment. The arbitration panel ruled in favor of Bijoux, awarding damages against Cuff and Sood.
In Tandem Fund II, L.P. v. Scottsdale Insurance Company, No. 23-16187, United States Court of Appeals, Ninth Circuit (August 4, 2025) Scottsdale argued that the award was uninsurable under California law, which prohibits insurance coverage for restitution of wrongfully acquired funds. The district court agreed with ...
Interrelated Acts Constitute a Single Claim
Post 5165
See the full video at https://lnkd.in/geriBpJT and at https://lnkd.in/gJxi77kg and at https://zalma.com/blog plus more than 5150 posts.
In Yonah Rothman v. Complete Packaging & Shipping Supplies, Inc. and Mitchell Mankosa, Complete Packaging & Shipping Supplies, Inc. v. Arch Insurance Company, No. 22-CV-2821-SJB-ST, United States District Court, E.D. New York (August 4, 2025) dealt with the issue of parties seeking a partial judgment to be resolved on appeal.
Complete Packaging & Shipping Supplies, Inc. (“Complete”) and Arch Insurance Company (“Arch”) litigated disputes about coverage in relation to the Rothman employment discrimination action.
THE KEY ISSUES
Background:
Yonah Rothman filed a lawsuit against Complete and Mitchell Mankosa, alleging employment discrimination, underpayment, and wrongful termination. Rothman claims he was retaliated against for participating in a separate lawsuit brought by another employee.
Insurance Coverage Dispute:
Complete ...
Rulings on Motions Reduced the Issues to be Presented at Trial
Read the full article at https://lnkd.in/gwJKZnCP and at https://zalma/blog plus more than 5100 posts.
CASE OVERVIEW
In Richard Bernier v. State Farm Mutual Automobile Insurance Company, No. 4:24-cv-00002-GMS, USDC, D. Alaska (May 28, 2025) Richard Bernier made claim under the underinsured motorist (UIM) coverage provided in his State Farm policy, was not satisfied with State Farm's offer and sued. Both parties tried to win by filing motions for summary judgment.
FACTS
Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
1. negligent and reckless claims handling;
2. violation of covenant of good faith and fair dealing; and
3. award of punitive damages.
Both Bernier and State Farm dispositive motions before ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
Professional Health Care Services Exclusion Effective
Post 5073
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This opinion is the recommendation of a Magistrate Judge to the District Court Judge and involves Travelers Casualty Insurance Company and its duty to defend the New Mexico Bone and Joint Institute (NMBJI) and its physicians in a medical negligence lawsuit brought by Tervon Dorsey.
In Travelers Casualty Insurance Company Of America v. New Mexico Bone And Joint Institute, P.C.; American Foundation Of Lower Extremity Surgery And Research, Inc., a New Mexico Corporation; Riley Rampton, DPM; Loren K. Spencer, DPM; Tervon Dorsey, individually; Kimberly Dorsey, individually; and Kate Ferlic as Guardian Ad Litem for K.D. and J.D., minors, No. 2:24-cv-0027 MV/DLM, United States District Court, D. New Mexico (May 8, 2025) the Magistrate Judge Recommended:
Insurance Coverage Dispute:
Travelers issued a Commercial General Liability ...
