Mitchell et al v. Allstate Vehicle and Property Insurance Company

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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
BROWNSVILLE DIVISION
ELIZABETH ARLENE MITCHELL 	§
AND GREGORY SCOTT DAVIS, 	§
Plaintiffs, 	§
§
v. 	§ 	CIVIL ACTION NO. 1:25-cv-285
§
ALLSTATE VEHICLE AND 	§
PROPERTY INSURANCE CO., 	§
Defendant. 	§
REPORT AND RECOMMENDATION TO DISMISS DEFENDANT’S
MOTION TO COMPEL ARBITRATION AND ABATEMENT (Dkt. No. 8)
Before the Court is “Defendant’s Motion to Compel Appraisal and Abatement” (Dkt. No.
8) and “Plaintiff’s Response to Defendant’s Opposed Motion to Compel Appraisal and Abatement”
(Dkt. No. 9). Defendant Allstate Vehicle and Property Insurance Co. requests the Court compel
appraisal of Plaintiffs Elizabeth Arlene Mitchell and Gregory Scott Davis’s property damage claim
and abate the lawsuit pending the appraisal process. Although Texas law usually requires granting
a motion to compel appraisal in insurance cases concerning the amount of loss a party suffered,
the present case is unique: to compel appraisal in this case, the Court would grant Defendant entry
into a home owned by a party not before the Court.
Because the principles of contract law do not grant Allstate the right to enforce a contract
provision against a nonparty, the Court recommends denying “Defendant’s Motion to Compel
Appraisal and Abatement” (Dkt. No. 8). Further, for the reasons explained below, this case is
exceptional enough to warrant finding Allstate waived the right to invoke the appraisal clause.
I. 	Jurisdiction
The Court has jurisdiction over this action pursuant to the federal diversity statute. 28
U.S.C. § 1332. It is uncontested that Elizabeth Arlene Mitchell and Gregory Scott Davis are
citizens of Texas and Defendant Allstate is a citizen of Illinois. Further, Plaintiffs request appears
to exceed the jurisdictional minimum because Plaintiffs pled to damages of “monetary relief of
$250,00 or less.” Dkt. No. 1-3 at 1, ¶ 1.1 Additionally, Allstate represents that Plaintiffs “sent a
1 The citation to the record refers to the Bates-stamped number on each record page.
United States District Court
Southern District of Texas
ENTERED
February 27, 2026
Nathan Ochsner, Clerk
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pre-suit demand stating property damages alone of $111,510.42.” Dkt. No. 1 at 5, ¶ 16. The Court
finds this representation qualifies as an “other paper” giving this Court subject matter jurisdiction
over the amount in controversy. 28 U.S.C. 1446(c)(3)(A).
II. 	Venue
Venue is proper in the United States District Court for the Southern District of Texas,
Brownsville Division pursuant to 28 U.S.C. § 1391(b)(2) because the insured property is in
Cameron County, Texas,2 a county served by the Brownsville Division. Additionally, because the
case was pending in the 444th Judicial District Court in Cameron County, Texas, Allstate properly
removed the case to the district and division within which the case was pending in state court. 28
U.S.C. § 1446(a). See Dkt. No. 1 at 1; Dkt. No. 1-3.
III. 	Removal
The state court docket sheet shows Plaintiffs’ lawsuit was served on Allstate on October
24, 2025. Dkt. No. 1-2 at 3. Additionally, Allstate shows its own record noting that it received
service of process of Plaintiffs’ lawsuit against Allstate on October 24, 2025. Dkt. No. 1-3 at 13.
Allstate removed the case to federal court on November 21, 2025, under diversity jurisdiction. Dkt.
No. 1. Given these facts, Allstate properly removed the case within 30 days after receiving a copy
of Plaintiffs’ initial pleading. 28 U.S.C. § 1446(b)(1).
IV. 	Factual History
Plaintiffs filed their lawsuit against Allstate in state court on October 16, 2025. Dkt. No. 1-
3 at 2. Plaintiffs allege that they had a property insured by Allstate, and Plaintiffs’ causes of action
arise from the alleged damage caused by hail and a windstorm to the insured property on or about
June 10, 2024. Dkt. No. 1-3 at 4. Allstate removed the case to federal court on November 21, 2025,
under diversity jurisdiction. Dkt. No. 1.
On January 26, 2026, Allstate filed an opposed Motion to Compel Appraisal and Abate.
Dkt. No. 8. Plaintiffs filed a timely response to the Motion. Dkt. No. 9.
The Motion is now ripe for the Court’s consideration.
2 The insured property is located at 1517 Santa Ana Ave., Rancho Viejo, Texas 78575. Dkt. No. 1-3 at 4,
¶ 5.2.
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V. 	Analysis
a. 	The Court cannot enforce a contractual provision against a nonparty under
Texas law.
Because this case was removed from Texas state court, Texas substantive law applies.
United Neurology, P.A. v. Hartford Lloyd's Ins. Co., 995 F. Supp. 2d 647, 648 (S.D. Tex. 2014)
(citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78–80 (1938)). “In Texas appraisal clauses are
enforceable and binding against the parties to the dispute.” Waterhill Companies Ltd. v. Great Am.
Assur. Co., 2006 WL 696577, at *2 (S.D. Tex. Mar. 16, 2006) (citing In re Allstate County Mutual
Ins. Co., 85 S.W.3d 193, 195 (Tex. 2002)).
In the present case, Plaintiffs state “they no longer own or have access to the subject
property.” Dkt. No. 9 at 1. As noted above, the appraisal clause is enforceable against only the
parties to the dispute. The fact that Plaintiffs no longer own the home and did not retain any right
to access the property now involves a third party who is not a party to the appraisal clause nor a
party to this lawsuit.
Allstate states that “[t]he appraisal clause requires the parties, upon written demand, to
submit to the appraisal process when they fail to agree on the ‘amount of loss.’” Dkt. No. 8 at 2.
Plaintiffs argue that following through on the appraisal process requires physical inspection of the
property. Dkt. No. 9 at 4.
The Court assumes physical inspection of the property is required. For this reason, to
compel appraisal, the Court requires access to the property so that inspection may be performed
by the appraiser. However, the Court cannot enforce the appraisal clause which exists between
Allstate and Plaintiffs against a party not before the Court. Accordingly, the Court recommends
denying Defendant’s Motion to Compel Appraisal and Abatement.
b. 	Given the unique circumstance where Plaintiffs no longer owns the home, to
compel the appraisal would prejudice Plaintiffs.
Although Texas state law greatly favors enforcing appraisal clauses and grants few
exceptions, this case presents an insurmountable hurdle for the Court because the Court cannot
compel a nonparty to the insurance policy to participate in the appraisal process. In re Universal
Underwriters of Texas Ins. Co., 345 S.W.3d 404, 412 (Tex. 2011). The Court takes up a secondary
issue supporting denial of Allstate’s Motion to Compel Appraisal, their waiver of the contractual
provision.
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To establish waiver of an appraisal clause, “a party must show that an impasse was reached,
and that any failure to demand appraisal within a reasonable time prejudiced the opposing party.”
In re Universal Underwriters of Texas Ins. Co., 345 S.W.3d 404, 412 (Tex. 2011). In the present
case, Allstate claims it “invoked the appraisal provision after the parties reached an impasse in
negotiations.” Dkt. No. 8 at 7. For the sake of argument, even if the Court considers the December
11, 2025, email/letter from Allstate to Plaintiffs invoking the appraisal clause as the date an
impasse was reached, the Court cannot ignore the prejudice Plaintiffs would suffer as a result of
no longer owning the home to be appraised. In re Universal, 345 S.W.3d at 412 (stating also “But
waiver is an equitable doctrine, and we have frequently required a showing of prejudice before
concluding that rights are waived.”).
The Texas Supreme Court has stated that “it is difficult to see how prejudice could ever be
shown when the policy . . . gives both sides the same opportunity to demand appraisal.” Id. The
Court further stated that this is the case because “[i]f a party senses that impasse has been reached,
it can avoid prejudice by demanding an appraisal itself.” Id. However, even if Plaintiffs “sensed
an impasse” had been reached, if this occurred after they sold the home,3 demanding the appraisal
themselves could not avoid the prejudice. In this case, Plaintiffs can show harm to their legal rights
because they no longer have the legal right to enter the property.
In conclusion, given the unique circumstance of this case, the Court finds that if an impasse
was reached as Allstate states, then it failed to demand the appraisal within a reasonable time
because the demand now prejudices against the legal rights of the Plaintiffs, the opposing party.
Thus, the Court finds that Allstate waived the right to invoke their right to compel the appraisal
clause against Plaintiffs.
VI. 	Recommendation
For the reasons stated above, it is RECOMMENDED that the Court DENY Allstate’s
Motion to Compel Appraisal and Abatement (Dkt. No. 8).
VII. 	Notice to the Parties
The parties have fourteen (14) days from the date of being served with a copy of this Report
and Recommendation in which to file written objections, if any, with United States District Judge
Rolando Olvera. 28 U.S.C. § 636(b)(1). When filing an objection, a party must object to specific
3 Plaintiffs do not provide information on when exactly the home was sold.
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facts or legal findings in this Report and Recommendation. The District Judge is not required to
consider frivolous, conclusive, or general objections. Battle v. United States Parole Comm’n, 834
F.2d 419, 421 (5th Cir. 1987).
If any party fails to timely object to any factual or legal findings in this Report and
Recommendation, the District Judge is not required to conduct a de novo review of the record before
adopting these findings. If the District Judge chooses to adopt such findings without conducting a de
novo review of the record, the parties may not attack those findings on appeal, except on the grounds
of plain error. Alexander v. Verizon Wireless Servs., L.L.C., 875 F.3d 243, 248 (5th Cir. 2017).
Signed on February 27, 2026.
Karen Betancourt
United States Magistrate Judge
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