Page 1

                                     1 of 1 DOCUMENT

                            SON, RESPONDENT

                                        NO. 06-1071

                              SUPREME COURT OF TEXAS

                         2009 Tex. LEXIS 470; 52 Tex. Sup. J. 1042

                                  January 15, 2008, Argued
                               July 3, 2009, Opinion Delivered

NOTICE:                                         For Property Casualty Insurers Association of
  PUBLICATION STATUS PENDING.                   Texas, Amicus Curiae: Ms. Linda Jene Bur-
CONSULT STATE RULES REGARDING                   gess, Winstead PC, Austin TX.
                                                For Texas Windstorm Insurance Association,
PRIOR HISTORY: [*1]                             Amicus Curiae: Mr. Peter R. Meeker, Davis &
  ON PETITION FOR REVIEW FROM THE               Wilkerson, P.C., Austin TX.
DISTRICT OF TEXAS.                              JUDGES: JUSTICE BRISTER delivered the
Johnson v. State Farm Lloyds, 204 S.W.3d 897,   opinion of the Court.
2006 Tex. App. LEXIS 9336 (Tex. App. Dal-
las, 2006)                                      OPINION BY: Scott Brister

COUNSEL: For State Farm Lloyds, Petitioner:         Appraisal clauses have appeared in most
Mr. John Christopher Nickelson, Mr. Joseph      property insurance policies in Texas for many
W. Spence, Ms. Julia Ann Dobbins, Shannon,      years. Although they rarely detail the scope of
Gracey, Ratliff & Miller, L.L.P., Fort Worth    appraisal, there has rarely been any litigation
TX; Mr. Michael W. Huddleston, Shannon          about it. The parties here agree that the scope
Gracey Ratliff & Miller, L.L.P., Dallas TX.     of appraisal includes damage questions and ex-
                                                cludes liability questions, but they disagree
For Johnson, Becky Ann, Respondent: Mr.         which is involved in this dispute about hail
Russell J. Bowman, Scott Bowman & Stella,       damage to a homeowner's roof. Because an ap-
Dallas TX.                                      praisal has yet to take place, we agree with the
                                                insured that the record does not establish that it
                                                will exceed the permissible scope of appraisal.
                                                                                                       Page 2
                               2009 Tex. LEXIS 470, *; 52 Tex. Sup. J. 1042

Accordingly, we affirm the court of appeals'                  reasonable time, they shall submit
judgment in favor of the insured.                             their differences to the umpire.
                                                              Written agreement signed by any
I. Background                                                 two of these three shall set the
    A hailstorm moved through Plano, Texas in                 amount of the loss.
April of 2003, damaging the roof of Becky Ann
Johnson's home. She filed a claim under her
homeowners insurance policy with State Farm            State Farm refused to participate in an ap-
Lloyds. State Farm's inspector concluded that          praisal, asserting that the parties' dispute con-
hail had damaged only the ridgeline of her roof,       cerned causation and not "amount of loss."
and estimated repair costs at $ 499.50 (less than      Johnson filed suit seeking only a declaratory
the policy's $ 1,477 deductible). By contrast,         judgment compelling appraisal. On cross-
Johnson's roofing contractor concluded [*2]            motions for summary judgment, the trial court
the entire roof needed to be replaced at a cost        agreed with State Farm that no appraisal was
of more than $ 13,000. 1                               warranted. The court of appeals reversed, hold-
                                                       ing that appraisal was required. We granted

      1     The estimate in the record lists $         State Farm's petition to [*4] decide whether
      13,428.19 as the "Roof Total," but also          the dispute here fell within the scope of this
      lists a "Total Contract Price" of only $         appraisal clause.  3

      6,476.65. We use the larger number as
      that is the figure both parties quote in                2 204 S.W.3d 897. As this suit sought
      their briefs.                                           nothing except appraisal, the judgments
                                                              of both the trial court (denying it) and the
   To settle this difference, Johnson demanded                court of appeals (compelling it) are final
appraisal of the "amount of loss" under the fol-              judgments within our appellate jurisdic-
lowing provision in her standard-form policy:                 tion. See TEX. GOV'T CODE ß
        Appraisal. [*3] If you and we                         3 The Texas Windstorm Insurance As-
      fail to agree on the amount of loss,                    sociation and the Property Casualty In-
      either one can demand that the                          surers Association of America submitted
      amount of the loss be set by ap-                        amicus curiae briefs supporting parts of
      praisal. If either makes a written                      State Farm's petition for review.
      demand for appraisal, each shall
      select a competent, disinterested                     While trial courts have some discretion as
      appraiser. Each shall notify the                 to the timing of an appraisal, they have no dis-
      other of the appraiser's identity                cretion to ignore a valid appraisal clause en-
      within 20 days of receipt of the                 tirely. Accordingly, we review the entire re-

      written demand. The two apprais-                 cord to decide whether either party was entitled
      ers shall then select a competent,               to summary judgment as a matter of law.     5

      impartial umpire . . . . The apprais-
      ers shall then set the amount of the                    4 In re Allstate County Mut. Ins. Co., 85
      loss. If the appraisers submit a                        S.W.3d 193, 196 (Tex. 2002).
      written report of an agreement to                       5    See Canyon Reg'l Water Auth. v.
      us, the amount agreed upon shall                        Guadalupe-Blanco River Auth., 258
      be the amount of the loss. If the                       S.W.3d 613, 616 (Tex. 2008); Texas
      appraisers fail to agree within a                       Mun. Power Agency v. Pub. Util. Com-
                                                              m'n, 253 S.W.3d 184, 192 (Tex. 2007).
                                                                                                   Page 3
                                2009 Tex. LEXIS 470, *; 52 Tex. Sup. J. 1042

                                                               A Four-Step Program, 37 U. TOL. L.
II. A Brief History of Appraisal Clauses                       REV. 931, 931 (2006).
    Insurance appraisal clauses have been                      9 Timothy P. Law & Jillian L. Starino-
around for a long time. In 1888 in Scottish Un-                vich, What Is It Worth? A Critical Analy-
ion & National Insurance Co. v. Clancy, this                   sis of Insurance Appraisal, 13 CONN.
Court [*5] enforced an appraisal clause much                   INS. L.J. 291, 292-93 (2006-07).
like the one used here. It would be going too
                         6                                     10 Br. of Prop. Cas. Insurers Ass'n of
far to say the Court approved of such clauses,                 Am. as Amicus Curiae Supporting Pet'rs
but we unequivocally found them enforceable:                   at 8.
                                                             Although the history of such clauses is both
        However injudicious it may be                   deep and wide, they have required this Court's
      for parties to bind themselves by                 attention only five times since Scottish Union:
      such agreement, it seems to be well               in 1892, 1897, 1919, 1965, and 2002.
                                                                   11          12   13     14          15

      settled that, having done so, they                All of these cases concerned waiver or enforce-
      cannot disregard it . . . . In the ab-            ability of the appraisal clause itself; we have
      sence of fraud, accident, or mis-                 never resolved a dispute about the scope of ap-
      take, the parties having agreed that              praisal, or the meaning of "amount of loss."
      the amount of loss shall be deter-                Accordingly, in addressing this issue for the
      mined in a particular way, we are                 first time we keep in mind that appraisals have
      constrained to hold that such stipu-              apparently resolved such matters for many
      lation is valid ....
                                                        years without our aid.

                                                               11 See Scottish Union & Nat'l Ins. Co.
                                                               v. Clancy, 83 Tex. 113, 18 S.W. 439, 441
                                                               (Tex. 1892) (holding insurer's attempt to
      6 71 Tex. 5, 8 S.W. 630, 631 (Tex.                       adjust and settle claim did not waive its
      1888) (providing for three appraisers and                right to appraisal).
      that "the award of any two, in writing,                  12 See Am. Cent. Ins. Co. v. Bass, 90
      shall be binding and conclusive as to the                Tex. 380, 38 S.W. 1119, 1120 (Tex.
      amount of such loss or damage").                         1897) (holding insurer's denial of liabil-
      7 Id.                                                    ity did not waive its right to appraisal).
    Today, appraisal clauses "are uniformly in-                13 See Del. Underwriters v. Brock, 109
cluded in most forms of property insurance                     Tex. 425, 211 S.W. 779, 781 (Tex. 1919)
policies ." "Virtually every property insurance
          8                                                    (holding [*7] insurer's appointment of
policy for both homeowners and corporations                    biased appraiser waived its right to ap-
contains a provision specifying 'appraisal' as a               praisal).
means of resolving disputes about the 'amount                  14 See Glens Falls Ins. Co. v. Peters,
of loss' for a covered claim." An appraisal
                                  9                            386 S.W.2d 529, 532 (Tex. 1965) (hold-
clause like the one used here "appears in almost               ing appraisal required as building was
every homeowners, automobile, and property                     not a total loss).
policy in Texas." 10                                           15 See In re Allstate County Mut. Ins.
                                                               Co., 85 S.W.3d 193, 195 (Tex. 2002)
      8 Johnny C. Parker, Understanding the                    (holding appraisal clause was not an un-
      Insurance Policy Appraisal Clause: [*6]                  enforceable arbitration agreement).
                                                                                                         Page 4
                                2009 Tex. LEXIS 470, *; 52 Tex. Sup. J. 1042

III. The Scope of Appraisal: Damages vs.                that purpose. The word "appraisal" itself gen-

Liability                                               erally means "[t]he determination of what con-
   In Scottish Union, we referred to the scope          stitutes a fair price; valuation; estimation of
of appraisal in the course of distinguishing it         worth." The policy directs the appraisers to

from arbitration:                                       decide the "amount of loss," not to construe the
                                                        policy or decide whether the insurer should
        But here the [appraisal clause]                 pay. And the policy requires each party to se-

      does not divest the courts of juris-              lect a "competent, disinterested appraiser," not
      diction, but only binds the parties               a lawyer or insurance expert.      23

      to have the extent or amount of the
      loss determined in a particular                              18 See In re Am. Homestar of Lancas-
      way, leaving the question of liabil-                         ter, Inc., 50 S.W.3d 480, 484 (Tex. 2001)
      ity for such loss to be determined,                          ("Congress passed the Federal Arbitra-
      if necessary, by the courts. 16                              tion Act in 1925 to reverse the longstand-
                                                                   ing judicial hostility to arbitration agree-
                                                                   ments . . . .").
In 1897, we repeated this distinction between                      19 See In re Allstate, 85 S.W.3d at 198
damage questions for appraisers and liability                      (citing Scottish Union for the proposition
questions for the courts:                                          [*9] that appraisal "binds the parties to
        It seems to be generally held that                         have the extent or amount of the loss de-
      a stipulation that the question of li-                       termined in a particular way, leaving the
      ability shall be determined by arbi-                         question of liability for such loss to be
      tration is contrary to public policy                         determined, if necessary, by the courts").
      and void, but it is otherwise, as we                         20 Don's Bldg. Supply, Inc. v. OneBea-
      have seen, as to the ascertainment                           con Ins. Co., 267 S.W.3d 20, 23 (Tex.
      of the amount of the loss. There is                          2008) ("Policy terms are given their or-
      neither repugnancy nor inconsis-                             dinary and commonly understood mean-
      tency in leaving [*8] the former                             ing unless the policy itself shows the par-
      question to the courts when the li-                          ties intended a different, technical mean-
      ability is disputed, and at the same                         ing.").
      time in providing that the amount                            21 BLACK'S LAW DICTIONARY 110
      of the recovery shall be settled by                          (8th ed. 2004).
      arbitration. 17
                                                                   22 See 15 COUCH ON INSURANCE ß
                                                                   210:42 ("As a general rule, the sole pur-
                                                                   pose of an appraisal is to determine the
                                                                   amount of damage. As a consequence, an
                                                                   appraisal clause does not permit apprais-
      16 8 S.W. at 631.                                            ers to determine whether a loss was, in
      17 Am. Cent., 38 S.W. at 1119.                               fact, total. However, the replacement cost
                                                                   of real property may be appraised, that is,
    While policies hostile to arbitration have                     estimated or evaluated.").
largely been preempted, limiting appraisal to
                                                                   23 See 15 COUCH ON INSURANCE ß
damages and not liability is surely still correct.                 213:44 ("An appraiser can make no legal
   Most appraisal clauses do not define the                        determinations."); Br. of Tex. Windstorm
scope of appraisal in detail (as is the case here),                Ins. Ass'n as Amicus Curiae Supporting
but the ordinary meaning of the words serves                       Pet'rs at 8 ("In actual practice, appraisers
                                                                                                    Page 5
                                2009 Tex. LEXIS 470, *; 52 Tex. Sup. J. 1042

      and umpires are frequently unqualified to                381, 386 (5th Cir. 2008) (following Wells
      make complex liability determinations                    as Texas law); Holt v. State Farm Lloyds,
      under an insurance policy. There is no                   No. CA 3:98-CV-1076-R, 1999 U.S.
      requirement that they be licensed. Um-                   Dist. LEXIS 6257, 1999 WL 261923, at
      pires are often lawyers [*10] or media-                  *3 (N.D. Tex. April 21, 1999) (same).
      tors with no particular experience or ex-                25 Compare CIGNA Ins. Co. v. Didimoi
      pertise in property insurance coverage or                Prop. Holdings, N. V., 110 F. Supp. 2d
      claims. Appraisers are often contractors                 259, 264 (D. Del. 2000) (holding causa-
      who may be familiar with repair costs but                tion was for appraisers), Augenstein v.
      are not qualified to make policy interpre-               Ins. Co. of N. Am., 372 Mass. 30, 360
      tations or to determine cause and origin                 N.E.2d 320, 324 (Mass. 1977) (same),
      of the damage being claimed. There is no                 and Am. Cent. Ins. Co. v. Dist. Ct., Ram-
      explicit requirement that the appraisers                 sey County, Second Jud. Dist., 125 Minn.
      and umpire inspect the property or read                  374, 147 N.W. 242, 244 (Minn. 1914)
      the policy, and many do not.").                          (same), with HHC Assocs. v. Assurance
    The line between liability and damage                      Co. of Am., 256 F. Supp. 2d 505, 511
questions may not always be clear, as discussed                (E.D. Va. 2003) (holding causation was
below. But while appraisal clauses might be                    question for court rather than appraisers),
drafted more precisely, the scarcity of suits on               Wausau Ins. Co. v. Herbert Halperin
the subject suggests the 1888 test is still ade-               Distrib. Corp., 664 F. Supp. 987, 989 (D.
quate: the scope of appraisal is damages, not                  Md. 1987) (same), Rogers v. State Farm
liability.                                                     Fire & Cas. Co., 984 So. 2d 382, 392
                                                               (Ala. 2007) (same), Munn v. Nat'l Fire
IV. The Scope of Appraisal: Causation                          Ins. Co., 237 Miss. 641, 115 So. 2d 54,
                                                               58 (Miss. 1959) (same), and [*12] Mer-
    State Farm argues that no appraisal is                     rimack Mut. Fire Ins. Co. v. Batts, 59
needed here because appraisers cannot decide                   S.W.3d 142, 153 (Tenn. Ct. App. 2001)
causation issues. Texas courts have split on this              (same); see also Knapp v. Allstate Ins.
question, as have the few courts elsewhere to
                                                               Co., 134 F.3d 378, 1998 WL 23225, at
address it. But the record here does not estab-
                                                               *1 (9th Cir. 1998) (unpublished table
lish as a matter of law either that this dispute is            mem.) (holding appraisers could discount
about causation or that it is beyond the scope of              appraisal for pre-existing wear-and-tear);
appraisal.                                                     Johnson v. Nationwide Mut. Ins. Co., 828
                                                               So. 2d 1021, 1022 (Fla. 2002) (holding
      24 Compare Lundstrom v. United Servs.                    causation is for appraisers when insurer
      Auto. Ass'n-CIC, 192 S.W.3d 78, 89                       admits part of loss is covered and for
      (Tex. App.--Houston [14th Dist.] 2006,                   court when insurer denies any coverage).
      pet. denied) (rejecting [*11] claim that
      consideration of causation bars appraisal)        A. Is this a causation dispute?
      with Germania Farm Mut. Ins. Ass'n v.
      Williams, No. 11-00-00393-CV, 2002                   First, the record does not prove that the dis-
      WL 32341841, at *3-4 (Tex. App.--                 pute here is about causation.
      Eastland May 23, 2002, no pet.) (citing               In its motion for summary judgment, State
      Wells for proposition that appraisers can-        Farm asserted that "the only shingles on John-
      not consider causation); see also Salinas         son's roof that were actually damaged by hail
      v. State Farm Lloyds, 267 Fed. Appx.              were the shingles on the ridge of her roof." A
                                                                                                    Page 6
                              2009 Tex. LEXIS 470, *; 52 Tex. Sup. J. 1042

dispute about how many shingles were dam-                    27 Gulf Ins. Co. v. Pappas, 73 S.W.2d
aged and needed replacing is surely a question               145, 146-47 (Tex. Civ. App.--San Anto-
for the appraisers. If the parties must agree on             nio 1934, writ ref'd).
precisely which shingles have been damaged                B. Are causation disputes a question of
before there can be an appraisal, appraisals          liability or damages
would hardly be necessary. What's more, either
party could avoid appraisal by simply picking a           Even if the parties' dispute involves causa-
few extras. The cost of replacing shingles (or        tion, that does not prove whether it is a ques-
anything else) is a function of both price and        tion of liability or damages.
number; appraisers must [*13] factor in both              Causation relates to both liability and dam-
shingle prices and shingle numbers to decide          ages because it is the connection between them.
the "amount of loss." To the extent the parties       For example, the Texas Pattern Jury Charges
disagree which shingles needed replacing, that        place causation in both the broad-form liability
dispute would fall within the scope of ap-            questions,   28
                                                                     and in the broad-form damage
praisal.                                              questions that limit damages to those "result-
    On appeal, State Farm emphasizes it is dis-       ing" from a particular occurrence, and ex-

puting not just which shingles were damaged,          clude damages due to other causes. In the ab-

but which were damaged by hail. But nothing           stract, it is hard to say whether causation is
in the summary judgment record establishes            more a question of liability or damages.
Johnson's roof was damaged by anything else.
In State Farm's denial letter, its summary                   28 See, e.g., STATE BAR OF TEX.,
judgment motion, and even its briefs in this                 TEXAS PATTERN JURY CHARGES-
Court, there is neither evidence nor even a hint             GENERAL NEGLIGENCE PJC 4.1
about what else caused the damage. The trial                 (2008); STATE BAR OF TEX., TEXAS
court could not conclude this was a causation                PATTERN          JURY        CHARGES-
dispute just because State Farm claimed it was.              MALPRACTICE, PREMISES, PROD-
                                                             UCTS PJC 51.3, 51.7, 51.19, 61.5, 66.4,
    Nor does the record conclusively establish               66.5, 71.3-71.7 (2008); STATE BAR OF
that the parties' dispute is solely about how                TEX., TEXAS PATTERN JURY
much of the roof was damaged rather than how                 CHARGES-BUSINESS, CONSUMER,
much needs to be replaced. Sometimes it may                  INSURANCE, EMPLOYMENT [*15]
be unreasonable or even impossible to repair                 PJC 102.1, 102.7, 102.8, 102.14 (2008).
one part of a roof without replacing the whole.              29 See, e.g., STATE BAR OF TEX.,
  The policy provides that State Farm will pay               TEXAS PATTERN JURY CHARGES-
reasonable and necessary costs to "repair or                 GENERAL NEGLIGENCE PJC 8.2-8.5,
replace" damaged property, and repair or re-                 8.11, 9.2-9.5, 11.3 (2008); STATE BAR
placement is an "amount of loss" question for                OF TEX., TEXAS PATTERN JURY
the appraisers. On this record, the trial court

                                                             CHARGES-MALPRACTICE, PREM-
[*14] could not conclude as a matter of law that             ISES, PRODUCTS PJC 80.3-80.6,
the parties' dispute was about causation rather              80.13, 81.3-81.6, 83.4, 84.3-84.4 (2008);
than something else.                                         STATE BAR OF TEX., TEXAS PAT-
                                                             TERN JURY CHARGES-BUSINESS,
      26 See, e.g., Wausau Ins. Co., 664 F.                  CONSUMER,          INSURANCE,        EM-
      Supp. at 987.
                                                             PLOYMENT PJC 110.2, 110.5, 110.8,
                                                             110.13, 110.14, 110.18-110.22, 110.26-
                                                             110.28, 110.30 (2008).
                                                                                                     Page 7
                                2009 Tex. LEXIS 470, *; 52 Tex. Sup. J. 1042

      30 See, e.g., STATE BAR OF TEX.,                  can decide whether water or mold damage is
      TEXAS PATTERN JURY CHARGES-                       covered, but if they can also decide the amount
      GENERAL NEGLIGENCE PJC 8.7-8.9                    of damage caused by each, there would be no
      (2008); STATE BAR OF TEX., TEXAS                  damage questions left for the appraisers.
      PATTERN        JURY      CHARGES-
      MALPRACTICE, PREMISES, PROD-                             33   192 S.W.3d 78, 88 (Tex. App.--
      UCTS PJC 80.7-80.9 (2008); STATE                         Houston [14th Dist.] 2006, pet. denied).
      BAR OF TEX., TEXAS PATTERN                               34 Id. at 89, 95.
      JURY CHARGES-BUSINESS, CON-                           The [*17] same is true when the causation
      SUMER, INSURANCE, EMPLOY-                         question involves separating loss due to a cov-
      MENT PJC 110.7, 110.25 (2008).                    ered event from a property's pre-existing condi-
    But in actual cases, causation usually falls        tion. Wear and tear is excluded in most prop-
into one category or the other. Thus, when dif-         erty policies (including this one) because it oc-
ferent causes are alleged for a single injury to        curs in every case. If State Farm is correct that
property, causation is a liability question for the     appraisers can never allocate damages between
courts. For example, in Wells v. American               covered and excluded perils, then appraisals
States Preferred Insurance Co., appraisers as-          can never assess hail damage unless a roof is
sessed foundation damage due to plumbing                brand new.       That would render appraisal

leaks (a covered peril) as "0" but damage due to        clauses largely inoperative, a construction we
settling (an excluded peril) as $ 22,875.94.      31
                                                        must avoid.   36

The Dallas [*16] Court of Appeals set aside
the appraisal, holding appraisers could decide                 35 See, e.g., CIGNA Ins. Co. v. Didimoi
the amount of damage but not what caused it.      32
                                                               Prop. Holdings, N. V., 110 F. Supp. 2d
Appraisers can decide the cost of repairs in this              259, 263 (D. Del. 2000) (holding that if
context, but if they can also decide causation                 "amount of loss" does not include causa-
there would be no liability questions left for the             tion, "appraisal would be a useless exer-
courts.                                                        cise because it would not fix the amount
                                                               of loss and either party could still contest
      31 919 S.W.2d 679, 685-86 (Tex. App.-                    damages").
      -Dallas 1996, writ denied).                              36     Fiess v. State Farm Lloyds, 202
      32 Id. at 685.                                           S.W.3d 744, 748 (Tex. 2006) ("[I]t has
    By contrast, when different types of dam-                  again long been the rule that we must
age occur to different items of property, ap-                  read all parts of a policy together, giving
praisers may have to decide the damage caused                  meaning to every sentence, clause, and
by each before the courts can decide liability.                word to avoid rendering any portion in-
For example, in Lundstrom v. United Services                   operative.").
Automobile Ass'n, the appraisers assessed $                 This was the conclusion we reached in Gulf
4,226.19 for damages due to water (a covered            Insurance Co. of Dallas v. Pappas, a case in
peril) but made no finding for damages due to           which a fire worsened pre-existing sags in the
mold (as to which coverage was disputed).         33
                                                        floors and roof of [*18] a building. The par-

Rejecting the argument that appraisal is barred         ties hotly disputed how much the floors sagged
"whenever causation factors into the award,"            before the fire, and whether the building's inte-
the court of appeals affirmed the water damage          rior should be repaired or completely replaced
award, and rendered mold damage moot by                 to restore it to its previous condition. The38

finding no coverage. In this context, courts
                                                        court of appeals held these issues were for the
                                                                                                  Page 8
                              2009 Tex. LEXIS 470, *; 52 Tex. Sup. J. 1042

appraisers rather than the jury, and by refus-
                                                          Even if the appraisal here turns out to in-
ing the writ we adopted that opinion. If ap-
                                                      volve not just damage but liability questions,
praisers cannot take pre-existing wear and tear       that does not mean appraisal should be prohib-
into consideration in valuing the amount of           ited as an initial matter.
loss, then we should have reversed it instead.            This case comes to us in an unusual pos-
                                                      ture. At least a dozen Texas cases involve ap-
      37 73 S.W.2d 145, 146 (Tex. Civ. App.-          praisals of hail damage, every one challenging
      -San Antonio 1934, writ ref 'd).                an appraisal after it had taken place. By con-

      38 Id. at 146-47                                trast, this appraisal has yet to occur. That
      39 Id.                                          makes a big difference for several reasons.
      40 See Fiess, 202 S.W.3d at 749; Hyun-
      dai Motor Co. v. Vasquez, 189 S.W.3d                   41 See, [*20] e.g., Citizens' Ins. Co. v.
      743, 754 n.52 (Tex. 2006).                             Schofield, 116 Tex. 418, 293 S.W. 802,
    Indeed, appraisers must always consider                  805 (Tex. 1927) (adopting opinion of
causation, at least as an initial matter. An ap-             Commission that allowed claim by in-
praisal is for damages caused by a specific oc-              surer for expenses incurred in pre-suit
currence, not every repair a home might need.                appraisal); American Cent. Ins. Co. v.
When asked to assess hail damage, appraisers                 Bass, 90 Tex. 380, 38 S.W. 1119, 1120
look only at damage caused by hail; they do not              (Tex. 1897) (holding pre-suit appraisal
consider leaky faucets or remodeling the                     had not been waived); Gardner v. State
kitchen. When asked to assess damage from a                  Farm Lloyds, 76 S.W.3d 140, 142 (Tex.
fender-bender, they include dents caused by the              App.--Houston [1st Dist.] 2002, no pet.)
collision but not by something else. Any ap-                 (affirming pre-suit appraisal); Germania
praisal necessarily includes some causation                  Farm Mut. Ins. Ass'n v. Williams, No.
element, because setting the [*19] "amount of                11-00-00393-CV, 2002 WL 32341841, at
loss" requires appraisers to decide between                  *4 (Tex. App.--Eastland May 23, 2002,
damages for which coverage is claimed from                   no pet.) (rejecting pre-suit appraisal);
damages caused by everything else.                           Vanguard Underwriters Ins. Co. v.
    This of course does not mean appraisers can              Smith, 999 S.W.2d 448, 451 (Tex. App.--
rewrite the policy. No matter what the apprais-              Amarillo 1999, no pet.) (abating suit for
ers say, State Farm does not have to pay for                 appraisal); Toonen v. United Servs. Auto.
repairs due to wear and tear or any other ex-                Ass'n, 935 S.W.2d 937, 940 (Tex. App.--
cluded peril because those perils are excluded.              San Antonio 1996, no writ) (affirming
But whether the appraisers have gone beyond                  pre-suit appraisal); Hennessey v. Van-
the damage questions entrusted to them will                  guard Ins. Co., 895 S.W.2d 794, 796
depend on the nature of the damage, the possi-               (Tex. App.--Amarillo 1995, writ denied)
ble causes, the parties' dispute, and the struc-             (involving pre-suit appraisal); Barnes v.
ture of the appraisal award (as discussed more               W. Alliance Ins. Co., 844 S.W.2d 264,
fully below). State Farm cannot avoid appraisal              267 (Tex. App.--Fort Worth 1992, writ
at this point merely because there might be a                dism'd by agr.) (setting aside pre-suit ap-
causation question that exceeds the scope of                 praisal); Pyles v. United Servs. Auto.
appraisal.                                                   Ass'n, 804 S.W.2d 163, 164 (Tex. App.--
                                                             Houston [14th Dist.] 1991, writ denied)
C. When should appraisals be reviewed?                       [*21] (affirming pre-suit appraisal); Gulf
                                                             Ins. Co. v. Carroll, 330 S.W.2d 227, 231
                                                             (Tex. Civ. App.--Waco 1959, no writ)
                                                                                                     Page 9
                                2009 Tex. LEXIS 470, *; 52 Tex. Sup. J. 1042

      (holding pre-suit appraisal had been              appraisers can still set the amount of loss in
      waived); U.S. Fid. & Guar. Co. v. Jor-            case the insurer turns out to be wrong. And 44

      dan, 278 S.W.2d 569, 571 (Tex. Civ.               when the parties disagree whether there has
      App.--Amarillo 1955, writ dism'd) (hold-          been any loss at all, nothing prevents the ap-
      ing insurer waived pre-suit appraisal);           praisers from finding " $ 0" if that is how much
      Cont'l Fire & Cas. Ins. Corp. v. Surber,          damage they find.
      231 S.W.2d 750, 752 (Tex. Civ. App.--
      Fort Worth 1950, no writ) (involving pre-                 43 See, e.g., Lundstrom v. United Servs.
      suit appraisal).                                          Auto. Ass'n-CIC, 192 S.W.3d 78, 87-89
    First, appraisal is intended to take place be-              (Tex. App.--Houston [14th Dist.] 2006,
fore suit is filed; this Court and others have                  pet. denied) (rejecting argument that ap-
held it is a condition precedent to suit. Ap-
                                                                praisal is barred "whenever causation
praisals require no attorneys, no lawsuits, no                  factors into the award," and affirming
pleadings, no subpoenas, and no hearings. It                    appraisal in which appraisers separated
would be a rare case in which appraisal could                   water [*23] damage from mold damage).
not be completed with less time and expense                     44 Am. Cent. Ins. Co. v. Bass, 90 Tex.
than it would take to file motions contesting it.               380, 38 S.W. 1119, 1119-20 (Tex. 1897).
Allowing litigation about the scope of appraisal            Third, the scant precedent involving dis-
before the appraisal takes place would mark a           putes about the scope of appraisal suggests that
dramatic change in Texas insurance practice,            appraisals generally resolve such disputes. The
and surely encourage much more of the same.             final appraisal award here may substantiate
                                                        State Farm's claim that only the ridgeline suf-
      42 Scottish Union & Nat'l Ins. Co. v.             fered hail damage, or reach some in-between
      Clancy, 71 Tex. 5, 8 S.W. 630, 631-32             figure that proves acceptable to all concerned.
      (Tex. 1888) (holding appraisal was con-           Litigating the scope of appraisal is wasteful and
      dition precedent to litigation); Am. Cent.        unnecessary if the appraisal itself can settle this
      Ins. Co. v. Terry, 26 S.W.2d 162, 166             controversy.
      (Tex. Comm'n App. 1930, holding ap-                   Finally, even if an appraisal award is
      proved); [*22] Vanguard Underwriters              flawed, that can be easily remedied by disre-
      Ins. Co. v. Smith, 999 S.W.2d 448, 450            garding it later. Thus, when insureds objected
      (Tex. App.--Amarillo 1999, no pet.);              to appraisal procedures that were allegedly "in-
      Providence Lloyds Ins. Co. v. Crystal             accurate, unreliable, and biased," we held in
      City Indep. Sch. Dist., 877 S.W.2d 872,           2002 that the appraisal should go forward and
      878 (Tex. App.--San Antonio 1994, no              the results could be challenged later if the in-
      writ).                                            sureds were dissatisfied. If an appraisal is not

    Second, in most cases appraisal can be              an honest assessment of necessary repairs, that
structured in a way that decides the amount of          can be proved at trial and the award set aside.  46

loss without deciding any liability questions.
As already noted, when an indivisible injury to                 45 In re Allstate County Mut. Ins. Co.,
property may have several causes, appraisers                    85 S.W.3d 193, 196 (Tex. 2002).
can assess the amount of damage and leave                       46 See Gulf Ins. v. Pappas, 73 S.W.2d
causation up to the courts. When divisible                      145, 146-47 (Tex. Civ. App.--San Anto-
losses are involved, appraisers can decide the                  nio 1934, writ ref 'd).
cost to repair each without deciding who must                 But in every property damage claim, some-
pay for it. When an insurer denies coverage,

                                                        one     [*24] must determine the "amount of
                                                                                                     Page 10
                                  2009 Tex. LEXIS 470, *; 52 Tex. Sup. J. 1042

loss," as that is what the insurer must pay. An                  agreed to try first whether building was a
appraisal clause "binds the parties to have the                  total loss).
extent or amount of the loss determined in a                  ***
particular way." Like any other contractual

provision, appraisal clauses should be enforced.               We do not decide today whether the ap-
There may be a few times when appraisal is so             praisal conducted on remand will necessarily
expensive and coverage is so unlikely that it is          be binding. The summary judgment record does
worth considering beforehand whether an ap-               not, and probably cannot, answer that question
praisal is truly necessary.  48
                                 But unless the           until after the appraisal has taken place. But for
"amount of loss" will never be needed (a diffi-           the reasons stated above, we affirm the court of
cult prediction when litigation has yet to be-            appeals' [*25] order granting Johnson's motion
gin), appraisals should generally go forward              for summary judgment to compel State Farm to
without preemptive intervention by the courts.            participate in the appraisal process, and re-
                                                          manding the issue of her attorney's fees to the
      47 In re Allstate, 85 S.W.3d at 195                 trial court for consideration.
      (quoting Scottish Union & Nat'l Ins. Co.                Scott Brister
      v. Clancy, 71 Tex. 5, 8 S.W. 630, 631
      (Tex. 1888)).                                           Justice
      48 See, e.g., Glens Falls Ins. Co. v. Pe-               OPINION DELIVERED: July 3, 2009
      ters, 386 S.W.2d 529, 532 (Tex. 1965)
      (remanding for appraisal after parties

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