Summary Calendar) Boler-Phillips Body Shop, Inc. v. Employers Mutual Casualty Company

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 07-60284
(Summary Calendar)
Boler-Phillips Body Shop, Inc.
Plaintiff-Appellant
v.
Employers Mutual Casualty Company
Defendant-Appellee
Appeal from the United States District Court
for the Southern District of Mississippi
(2:04-CV-140)
Before WIENER, BENAVIDES, and PRADO, Circuit Judges.
PER CURIAM:*
Plaintiff-Appellant Boler-Phillips Body Shop, Inc. (“Boler”) appeals the
district court’s dismissal of Boler’s bad faith claim against its insurer, Employers
Mutual Casualty Company (“EMC”). We affirm.
I. FACTS AND PROCEEDINGS
In December 2002, a fire damaged Boler’s body shop. The facilities were
covered by an insurance policy issued by EMC, which included business
United States Court of Appeals
Fifth Circuit
F I L E D
October 24, 2007
Charles R. Fulbruge III
Clerk

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interruption coverage with a limit of $120,000. After the fire, Boler timely filed
a proof of loss for business interruption. Boler maintained that its business
interruption losses amounted to $120,000.00. EMC, in contrast, determined
that Boler’s covered losses totaled only $51,525.57. This sum was tendered to
and accepted by Boler; yet Boler continued to demand the remaining balance of
the $120,000 policy limit. In June 2005, pursuant to the terms of the policy,
EMC requested an appraisal. Approximately six months later, Boler’s
representative contacted EMC to discuss the possibility of mediating or
arbitrating the dispute. EMC promptly declined, stating that the statute of
limitations had expired.
The following month, Boler filed suit against EMC in state court, seeking
the balance of the policy limit. EMC removed the matter to federal district court
and filed a motion to dismiss the complaint on the ground that Boler’s claim was
time barred. EMC also filed a motion for summary judgment, contending that
the court should dismiss Boler’s claim for failure to comply with the policy’s
appraisal clause which EMC had invoked in June 2005; or, alternatively, that
the court should require Boler to comply with the provisions of the appraisal
clause.
Holding that Boler’s claim was not time barred, the district court rejected
EMC’s motion to dismiss on that ground. The court determined, however, that
Boler had failed to comply with the appraisal clause, which was a condition
precedent to a suit against EMC. Accordingly, the court granted EMC’s motion
for summary judgment and dismissed Boler’s claim. Boler timely filed a notice
of appeal.

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II. ANALYSIS
1. Standard of Review

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1 Cutrera v. Bd. of Supervisors of La. State Univ., 429 F.3d 108, 110 (5th Cir. 2005).
2 Lamar Advertising Co. v. Continental Cas. Co., 396 F.3d 654, 659 (5th Cir. 2003)
(quoting American Intern. Specialty Lines Ins. Co. v. Canal Indem. Co., 352 F.3d 254, 260 (5th
Cir. 2003).
3 Maryland Cas. Co. v. Williams, 377 F.2d 389, 392-93 (5th Cir. 1967).
4
We review a district court’s summary judgment ruling de novo, applying
the same standards as the district court.1 “‘In a diversity case such as this one,
federal courts must apply the choice of law rules in the forum state in which the
court sits.’”2 This requires us to apply Mississippi law in interpreting Boler’s
Mississippi insurance contract issued by EMC.3
2. Merits
Boler contends that the appraisal clause in the insurance contract is not
a condition precedent to a suit against EMC, because (1) EMC “denied” Boler’s
claim on the ground that it was time barred, thus EMC cannot now assert
Boler’s failure to comply with the appraisal clause as a defense, (2) EMC’s
“denial” of Boler’s claim prevented Boler from complying with the appraisal
clause, (3) EMC waived its right to assert the appraisal clause as a defense, and
(4) the appraisal clause is unenforceable because it is unconscionable.
Boler’s first and second arguments are premised on the erroneous
assertion that EMC “denied” Boler’s claim. At no time did EMC assert that
Boler’s claim was not covered by the policy. Rather, EMC and Boler disagreed
on the total dollar amount of Boler’s business interruption loss. EMC timely and
properly invoked the appraisal clause in June 2005. EMC’s subsequent refusal
to submit to additional mediation or arbitration with Boler does not invalidate
the appraisal clause or EMC’s invoking it; neither does it constitute a “denial”
of Boler’s claim. As there was no denial of Boler’s claim, the cases cited by Boler
are inapposite so their holdings do not prevent EMC from asserting its invoking
of the appraisal clause as a defense.

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4 Home Ins. Co. v. Watts, 91 So.2d 722 (Miss. 1957); Hartford Fire Ins. Co. v. Conner,
79 So.2d 236 (Miss. 1955).
5
Equally feckless is Boler’s contention that EMC waived its right to assert
Boler’s non-compliance with the appraisal clause by (1) not raising the appraisal
issue until after Boler filed suit, and (2) not seeking to compel Boler to
participate in the appraisal process. This contention is both unpersuasive and
factually incorrect. EMC properly invoked the appraisal clause prior to Boler’s
filing of the lawsuit. Additionally, nothing in the insurance policy requires EMC
to take affirmative steps to compel Boler to participate in the appraisal process
once invoked by EMC.
Boler’s contention that the appraisal clause is unconscionable because
EMC is not bound by the appraisal process and Boler must pay part of the cost
of the appraisal, is grounded in an erroneous interpretation of that clause.
Under the terms of the appraisal clause, both parties are bound by the result of
the appraisal process, as long as the loss is covered under the policy. This type
of appraisal clause has been repeatedly enforced by Mississippi courts.4 That
Boler may be required to pay part of the appraisal costs does not make the
provision unconscionable.
III. Conclusion
EMC properly invoked the appraisal provision of the insurance policy.
Contrary to Boler’s argument, EMC never “denied” Boler’s claim. The district
court did not err in determining that the Boler’s compliance with the appraisal
clause was a condition precedent to a suit by Boler against EMC, and thus did
not err in granting summary judgment dismissing Boler’s action.
AFFIRMED.

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