The Risk Pool Waived the Proof of Loss Provision Contained in the Coverage Document

The Risk Pool argues that by failing to agree to its pre-filled out proof of loss and satisfy certain alleged conditions precedent, the City cannot invoke appraisal.

See Appellant’s Brief at p. 22. This argument is also baseless, as Texas courts have

found that “[p]rovisions of an insurance policy requiring proof of loss and appraisal are inserted for the insurer’s benefit and may be waived by it.” Int’l Serv. Ins. Co. v.

Brodie, 337 S.W.2d 414, 415 (Tex. Civ. App.—Fort Worth 1960, writ ref’d n.r.e).

The City’s pleading states, “all conditions precedent to recovery have been performed, waived, or have occurred.” CR 658.

Although the City maintains that a proof of loss is not a condition precedent to appraisal or suit, the Risk Pool nonetheless waived the alleged proof of loss requirement.

The provisions of an insurance policy regarding an insured’s duties after a loss, including submission of a proof of loss, are for the benefit of the insurance company and may be waived by it. See Sanders v. Aetna Life Ins. Co., 205 S.W.2d 43, 44-45 (Tex. 1947). Further, “[i]t is a well-known principle…that the acts relied on as constituting waiver should be such as are reasonably calculated to make the assured believe that a compliance on his part with the stipulations providing the mode of proof of loss, and regulating the appraisement of the damage done, is not desired, and that it would be of no effect if observed by him.” Scottish Union & Nat’l Ins. Co. v. Clancy, 18 S.W. 439, 441 (Tex. 1892). In the case at bar, the Risk Pool only provided the City with a proof of loss that had already been filled out by the Risk Pool with the information contained in its initial assessment of the claim. CR 898. Therefore, compliance with this previously-completed proof of loss would have

virtually no effect on the Risk Pool’s adjustment of the City’s claim, as the proof of loss contained all information that that the Risk Pool already knew. Consistent with the view in Scottish Union, the Risk Pool thereby waived the proof of loss requirement.

Further, the “Payment of Loss” provision states “[a]ll adjusted claims shall be due and payable no later than 60 days after presentation and acceptance of proofs of loss by the Fund.” CR 572. However, the Risk Pool made an initial payment on the claim, albeit insufficient, on June 27, 2016, without requiring a proof of loss. CR 652, 897. At the same time of its payment, the Risk Pool sent the City a proof of loss that had already been filled out by the Risk Pool with the same information contained in its initial coverage decision. CR 989. It is clear that the proof of loss was to serve no purpose other than an attempt to get the City to agree with the Risk Pool’s determination. By making a claim payment prior to even sending its prefilled-out proof of loss, it is clear the Risk Pool waived the proof of loss provision because the Risk Pool’s payment of the claim without requiring the submission of a proof of loss would lead the City to reasonably conclude that the proof of loss was not necessary and had been waived by the Risk Pool.

Additionally, the Risk Pool was provided all information considered in a proof of loss prior to invoking appraisal. The Risk Pool was also put on notice of the disagreement as to the amount of loss by an email dated November 16, 2016. CR

900. And the City sent the Risk Pool a demand letter on December 8, 2017, which described all information that would be contained in a proof of loss. CR 793-94.

As it applies to the case at bar, by signing the proof of loss furnished to it, the City would have accepted that the damages to the properties insured by the Coverage Document only amounted to $499,010.55, when in actuality the City learned that damages to the Property alone were in excess of $7,000.000.00. CR 19, 153-54, 653, 793-94. Therefore, because the Risk Pool wanted the City to agree with the findings in its initial adjustment of the claim by swearing to the proof of loss, the Risk Pool effectively represented to the City that it was denying liability for any damages beyond the $499,010.55 mentioned therein. The furnishing of this proof of loss unequivocally represented to the City that the Risk Pool had no intention of paying the claim because of some reason other than the City’s failure to file the required proof of loss.15

Furthermore, beyond the June 27, 2016 letter, the City never again heard about the purported necessity of a proof of loss until it retained counsel for this claim. CR

15In examining the relationship between denial of liability and waiver of proof of loss, Texas courts have held that it is of no consequence “whether the insurance company informs the insured that the claim absolutely will not be paid or simply indicates that it is not planning to pay the claim unless some new development arises.” See N. River Ins. Co. v. Pomerantz, 492 S.W.2d 312, 313 (Tex. Civ. App. 1973), writ refused NRE (July 3, 1973).“It is enough that the actions of the insurance company would reasonably lead the insured to believe that the company is not going to pay the claim because of some reason other than failure to file the required proof of loss.” Id. at 314. Therefore, an unconditional denial of liability within the period allowed for filing a proof of

798-799. At no time did the Risk Pool indicate that it necessitated this documentation in an effort to make its claim decision. Furthermore, the City had no way of knowing that the proof of loss submission would affect its rights pursuant to the Coverage Document, as the Risk Pool issued payment without a proof of loss—clear evidence of waiver. As such, and in light of the foregoing, if the Court is inclined to accept the Risk Pool’s claim that the proof of loss is due 60 days after the date of loss, which it is not, the Risk Pool still waived the proof of loss requirement and the City has substantially complied with the requirement.