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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Happy Law Day
ZIFL – Volume 30, Issue 9 – May 1, 2026
Read the full article at https://www.linkedin.com/pulse/zalmas-insurance-fraud-letter-may-1-2026-barry-zalma-esq-cfe-2tywc, see the video at at and at https://zalma.com/blog plus more than 5300 posts.
THE SOURCE FOR THE INSURANCE FRAUD PROFESSIONAL
ZIFL – Volume 30, Issue 9 – May 1, 2026
Zalma’s Insurance Fraud Letter (ZIFL) continues its 30th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year and is written by Barry Zalma.
DOJ Creates National Fraud Enforcement Division
Will the Feds Take on Insurance Fraud? Possibly as Part of a National Anti-Fraud Effort
On April 7, 2026, the Acting Attorney General, Todd Blanche, issued a memorandum establishing the Department of Justice National Fraud Enforcement Division (NFED). The memo describes an ambitious, but perhaps redundant, vision for this ...
When Abalone Died As a Result of Multiple Causes The Efficient Proximate Cause Requires Payment
Post number 5345
Read the full article at https://www.linkedin.com/pulse/efficient-proximate-cause-doctrine-saves-claim-barry-zalma-esq-cfe-yndlc, see the video at and at and at https://zalma.com/blog plus more than 5300 posts.
In American Abalone Farms, LLC v. Star Insurance Company et al., H052643, California Court of Appeals, Sixth District (April 27, 2026) the Court of Appeals dealt with an insurance coverage issue that required application of the efficient proximate cause doctrine.
FACTS
American Abalone Farms, LLC ("American Abalone" ) operates an aquaculture farm in Santa Cruz County, California, raising abalone in tanks. In August 2020, the CZU Lightning Complex Fires led to a prolonged power outage and road closures near the farm. As a result, the farm’s water pumps failed, causing the death of most of the ...
Breach of a Specific Condition Precedent Is a Complete Defense
See the video at and at and at https://zalma.com/blog plus more than 5300 posts.
In United Services Automobile Association and State Farm Mutual Automobile Insurance Company v. Anthony Wenzell, 2026 CO 25 (Colo. Apr. 27, 2026) Anthony Wenzell was rear-ended in a car accident. He had a significant prior 2014 accident that required back surgery.
Wenzell claimed underinsured-motorist (UIM) benefits under three policies: (1) the tortfeasor’s liability policy, (2) his own primary UIM policy with State Farm, and (3) an excess UIM policy issued by USAA (under his brother’s policy, which contained an “other insurance” clause making USAA’s coverage excess over any collectible insurance).
After receiving the claims, both USAA and State Farm repeatedly requested that Wenzell execute comprehensive medical-release authorizations so they could obtain his full medical records and ...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
It is Fraud to Make the Same Claim Twice
Read the full article at https://www.linkedin.com/pulse/fraud-make-same-claim-twice-barry-zalma-esq-cfe-c4g8c and at https://zalma.com/blog.
Chutzpah: After Being Paid for a New Roof Insured Makes Second Claim For Same Damages
Post number 5347
No One is Entitled to be Paid for the Same Loss Twice
In Mohammed Ali Khalili v. State Farm Lloyds, No. 14-25-00611-CV, Court of Appeals of Texas (April 30, 2026) Khalili maintained a State Farm Lloyds homeowners insurance policy for decades. In 2008 he filed a roof-damage claim; State Farm paid him to replace the entire roof (shingles and gutters). Khalili never replaced the roof and repeated his claim.
BACKGROUND
In 2021 he filed a second roof claim. State Farm’s inspectors found the roof “very old” with extensive non-storm-related damage. The claim was denied because (1) the damage did not exceed the deductible and (2) State Farm had already paid for a full roof replacement.
PROCEDURAL HISTORY
State Farm filed motion for summary...
What Must be Done after Notice of a Claim is Received by the Insurer
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A first party property policy does not insure property: it insures a person, partnership, corporation or other entity against the risk of loss of the property. Before an insured can make a claim for indemnity under a policy of first party property insurance the insured must prove that there was damage to property the risk of loss of which was insured by the policy. The obligation imposed on the insured ...
