MEMORANDUM OPINION AND ORDER
JANE J. BOYLE, District Judge.
Before the Court is Defendant American Insurance Company's Motion to Compel Completion of Appraisal (doc. 73), filed September 5, 2013. For the reasons that follow, the Motion is hereby DENIED.
This case arises out of a dispute over the amount payable on an insurance claim under a commercial property policy. Plaintiff Devonshire Real Estate & Asset Management, LP, (Devonshire) purchased a commercial property insurance policy, No. S 67 MXF 80466440, from Defendant American Insurance Company (American) to cover certain risks for its Burn Brae Apartments property in Irving, Texas (the "Property"). Id. ¶ 5. Devonshire alleges that, on May 24, 2011, the Property sustained extensive damage to its roof, chimney, carports, and windows from wind and hail. Id. The parties entered into a series of back-and-forth negotiations on the amount of loss on the Property, but after American made a series of payments and Devonshire discovered additional damages, the parties could not agree on how much American ultimately owed. Doc. 18, Def.'s Mtn. to Compel 2. They specifically disagreed over the amount to be paid for the replacement of certain gutters, downspouts, and carports. Id.
On June 6, 2012, Devonshire filed this action against American in state court, alleging claims for breach of contract, breach of the duty of good faith and fair dealing, violations of the Texas Insurance Code, and violations of the Texas Deceptive Trade Practices Act. Doc. 1-5, Pl.'s Orig. Compl. American subsequently removed the case to federal court on July 10, 2012. Doc. 1, Not. of Removal. On December 27, 2012, Defendant filed a Motion to Compel Appraisal and Abate litigation (doc. 18), seeking to compel Plaintiff to participate in the appraisal process to determine the amount of loss on the Property and to abate litigation while appraisal is underway. The Court granted this Motion in part and ordered appraisal on March 26, 2013. Doc. 35. American selected Timothy P. Marshall as its appraiser, and Devonshire selected Jason Lanier to serve as its appraiser. Doc. 36, American's Designation of Experts. On motion, the Court later appointed Bill Weatherford as umpire. Doc. 45.
Lanier and Marshall later inspected the Property and agreed to an Appraisal Award with a replacement cost value (RCV) of $220, 725.19, and an actual cash value (ACV) of $198, 308.13, for the damaged carports, gutters, and downspouts. Doc. 73-1, Marshall Letter and Appraisal Award Ex. A. The Appraisal Award also included an amount for tax, overhead, and profit, but clarified that the award was "less prior payments." Id. The appraisers did not calculate prior payments in the initial Appraisal Award. Instead, Mr. Lanier submitted a letter that was later filed with this Court as a Notice of Appraisal Award (doc. 48-1), which calculated prior amounts paid for the gutters and carports to be $37, 357.88 RCV and $47, 820.66 RCV respectively. Marshall later submitted a letter that disputed Lanier's calculations, stating that Lanier forgot to deduct taxes, overhead, and profit. Doc. 73-1, Marshall Letter Ex. B. Although Devonshire filed an objection to Marshall's testimony on August 27, 2013, asserting that his letter was submitted in order to assist in the "low-balling of and partial payment" of the Appraisal Award, Doc. 58, Pl.'s Objection 3, Devonshire later filed a Notice of Supplemental Appraisal Award (doc. 62) on August 29, 2013, which contained a letter from Lanier admitting that he had erroneously excluded taxes, overhead, and profit from his calculations of prior payments and disputing Marshall's calculation as to the appropriate amount of deductions for prior payments. Lanier calculated that prior payments on the gutters and carports should be valued at $47, 321.14 RCV and $58, 766.75 RCV respectively, and that Devonshire was therefore entitled to an Appraisal Award RCV amount of $114, 638.30. Marshall, by contrast, calculated that prior payments on the gutters and carports should be valued at $49, 629.21 RCV and $58, 766.75 RCV respectively, and that Devonshire was therefore only entitled to an Appraisal Award RCV amount of $112, 329.23. Doc. 73-1, Marhsall Letter Ex. B. Even though the disparity between these award amounts is relatively small, the parties disagree about the proper amount of deductions for prior payments and whether the Court can order the appraisers to confer as to the proper amount of prior payments.
As permitted under Texas law, insurance policies typically contain appraisal clauses, which "provide a means to resolve disputes about the amount of loss for a covered claim." In re Universal Underwriters of Texas Insurance Co., 345 S.W.3d 404, 406-07 (Tex. 2011); State Farm Lloyds v. Johnson, 290 S.W.3d 886, 888 (Tex. 2009). "These clauses are generally enforceable, absent illegality or waiver." Universal Underwriters, 345 S.W.3d at 407; In re Allstate Cnty. Mutual Insurance Co., 85 S.W.3d 193, 195 (Tex. 2002). Indeed, courts are discouraged from interfering with the appraisal process when demanded under an insurance policy. See Universal Underwriters, 345 S.W.3d at 407 (citing Johnson, 290 S.W.3d at 895). Appraisers lack authority to make any determinations as to causation; their function is limited to determining the money value of a loss. Wells v. American States Preferred Insurance Co., 919 S.W.2d 679, 684 (Tex. App.-Dallas 1996, writ denied). "Once it is determined that there is a covered loss and a dispute about the amount of that loss, the appraisal process determines the amount that should be paid because of loss from a covered peril." Johnson v. State Farm Lloyds, 204 S.W.3d 897, 903 (Tex. App-Dallas 2006, pet. granted), aff'd, State Farm Lloyds v. Johnson, 290 S.W.3d 886 (Tex. 2009).
An appraisal award made pursuant to the terms of an insurance contract is binding and enforceable. Wells, 919 S.W.2d at 683. It may only be disregarded for three reasons: (1) when the award was made without authority; (2) when the award was the result of fraud, accident, or mistake; or (3) when the award was not made in substantial compliance with the terms of the contract. Id.
The parties' dispute centers on whether the appraisers fulfilled their duties under the appraisal clause of the insurance contract. American insists that, in order to state the "amount of loss" as required under the contract, the appraisers must calculate the appropriate amount of deductions to apply to the total loss award and provide the "amount of loss payable." Doc. 73, Def.'s Reply 4. If the appraisers cannot agree as to an amount of net loss, American contends that the dispute should be submitted to the umpire. Id. at 5. Devonshire, on the other hand, argues that the appraisers fulfilled their duties when they calculated the total amount of loss to the carports, gutters, and downspouts, and that determining the net loss, or "amount of loss payable, " is beyond the scope of their duties under the appraisal clause. Doc. ...