United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT, UNITED STATES DISTRICT JUDGE.
before the Court are Defendant Safeco Insurance Company of
Indiana's (“Safeco”) Motion to Compel
Appraisal and for Abatement (Dkt. #18) and Defendant's
Motion to Strike Darold Adami's Surreply to Safeco's
Motion to Compel Appraisal and to Abate Pending Appraisal
(Dkt. #29). Having reviewed the motions and relevant
pleadings, the Court finds that Defendant's motion to
compel should be granted and Defendant's motion to strike
should be denied.
September 2016, Plaintiff Darold Adami (“Adami”)
noticed standing water next to the back right or northeast
corner of his house (the “Property”). Adami
discovered that there was a hairline crack in the
Property's pool and had it fixed. After fixing the crack,
Adami discovered that it did not cause the standing water and
contacted a landscaping company who discovered a leak or a
burst in the Property's underground sprinkler system.
Adami hired someone to fix this leak. On November 15, 2016,
Adami contacted Safeco to inform Safeco of the leak and the
damage that arose from the leak, including a heaved
foundation. The property was covered by an insurance policy
issued, sold, and maintained by Safeco (the
“Policy”). Two days later, an adjuster was
assigned to the claim. On December 15, 2016, Safeco sent an
engineer from Nelson Engineering to the Property to evaluate
the damage and draft a report concerning the coverage of the
damage. The engineer completed the report and delivered it to
Safeco on January 3, 2017. Safeco reviewed it and provided
the report to Adami on January 9, 2017. Adami noticed that
the report did not include an estimate for foundation repair.
In turn, Safeco fixed created supplemental estimate on March
7, 2017 that included foundational repairs. Adami believed
the estimate was still low and requested a larger amount,
which Safeco denied on May 9, 2017.
on these general facts, Adami sued Safeco on June 29, 2017 in
the 59th Judicial District Court of Grayson County, Texas for
breach of the duty of good faith and fair dealing and
violations of the Texas Deceptive Trade Practice Act and
Texas Insurance Code. On August 18, 2017, Safeco removed the
case to the Eastern District of Texas. After the Court signed
its Order and Advisory (Dkt. #6), Adami filed his Second
Amended Complaint on September 20, 2017 (Dkt. #9). Safeco
answered the Second Amended Complaint on October 10, 2017
(Dkt. #13). Adami filed his Third Amended Complaint on
January 9, 2018 (Dkt. #34).
relevant portion of the Policy states:
I - Property Conditions
8.Appraisal. If you and we do not agree on
the amount of the loss, including the amount of
actual cash value or
replacement cost, then, on written
demand of either, each shall select a competent and
disinterested appraiser and notify the other of the appraiser
selected within 20 days of such demand. The appraisers shall
first select a competent and disinterested umpire; and
failing for 15 days to agree upon such umpire, then, on
request of you or the company, such umpire shall be selected
by a judge of a court of record in the state in which the
property covered is located. The appraisers shall then
resolve the issues surrounding the loss, appraise the loss,
stating separately the actual cash
value or replacement
cost of each item, and, failing to agree, shall
submit their differences, only, to the umpire. An award in
writing, so itemized, of any two of these three, when filed
with the company shall determine the amount of the loss.
Each party will:
a. pay its own appraiser; and b. bear the other expenses of
the appraisal and umpire equally.
9.Suit Against Us. No suit or action can be
brought against us unless there has been compliance with the
policy provisions and the action is started within two years
and one day after the cause of action accrues.
(Dkt. #18, Exhibit A at pp. 35-36). On October 20, 2017,
Safeco sent a letter to Adami's counsel invoking the
Policy's appraisal clause. Adami refused to engage in the
appraisal process. Accordingly, on November 13, 2017, Safeco
filed the present motion to compel (Dkt. #18). Adami
responded to the motion on November 27, 2017 (Dkt. #22).
Safeco filed a reply on December 4, 2017 (Dkt. #24) and Adami
filed a sur-reply on December 11, 2017 (Dkt. #27). Further,
Safeco filed the present motion to strike Adami's
sur-reply on December 12, 2017 (Dkt. #29) and Adami filed a
response to the motion to strike on December 26, 2017 (Dkt.
clauses, a common component of insurance contracts, spell out
how parties will resolve disputes concerning a property's
value or the amount of a covered loss.” In re
Universal Underwriters of Tex. Ins. Co.,345 S.W.3d 404,
405 (Tex. 2011). “These clauses are generally
enforceable, absent illegality or waiver.” Id.
at 407; TMM Invs., Ltd. v. Ohio Cas. Ins. Co., 730
F.3d 466, 471 (5th Cir. 2013). Once invoked, courts are
discouraged from interfering with the appraisal process.
See State Farm Lloyds v. Johnson,290 S.W.3d 886,
895 (Tex. 2009). A valid appraisal does not ...