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by Andrew Hilgenkamp

Appraisal awards seem to be a hot topic in Texas courts as of late, and Petropoulos v. Safeco Ins. Co. of Indiana, No. 4:23-CV-00500-ALM-BD, 2026 WL 408597 (E.D. Tex. Feb. 12, 2026), report and recommendation adopted, No. 4:23-CV-00500, 2026 WL 640977 (E.D. Tex. Mar. 6, 2026) is one of the latest decisions to address them. Emphasizing the burden parties have in setting aside such an award, the Petropoulos court upheld an appraisal award against a challenge that it did not reflect an honest evaluation and did not consider all available evidence.

Background

The insureds submitted a claim for alleged damage to their home due to an April 2021 storm in north Texas. In its investigation of the claim, Safeco retained a roofing consultant company to examine the insureds’ property. The insureds claimed that, during the inspection, the consultant company’s representative determined that their home had suffered hail damage. The insureds further asserted that Safeco had informed them that it would take care of this damage. The consultant company’s actual report, however, attributed the observed roof damage to a 2016 storm and not the claimed April 2021 weather event.

After reviewing this report, the insureds hired engineers to evaluate the property. An engineering report pertaining to the alleged damage was later sent to Safeco based on the engineers’ inspections. Unpersuaded by these findings, Safeco denied the insureds’ claim.

Believing Safeco had acknowledged the presence of damage to their roof only to later incorrectly attribute such damage to an earlier storm, the insureds sued Safeco in Texas state court, asserting causes of action 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 (“DTPA”). After filing an answer and removing this case to federal court, Safeco invoked the policy’s appraisal provision. The case was subsequently abated pending appraisal.

The Appraisal

Both parties retained their own appraisers, and an umpire was eventually appointed to resolve the dispute. Facing differing estimates, the umpire sided with Safeco’s appraiser for the ultimate award. The insureds moved to vacate this award and to appoint a new umpire, specifically asserting that the award did not reflect “an honest assessment of necessary repairs,” and that “the umpire did not completely consider all evidence submitted.” In response, Safeco argued that these allegations amounted to an inadequate challenge on the basis of an alleged mistake or accident. Safeco additionally filed a motion for summary judgment to dismiss the insureds’ claims.

The Court’s Ruling

The Petropoulos court analyzed the insureds’ motion to vacate the appraisal award prior to assessing their other causes of action. In doing so, the court agreed that the insureds’ motion consisted of a challenge on the basis of mistake, since the lack of an honest assessment is not a separate ground to vacate an appraisal award under Texas law. Thus, to succeed on this mistake challenge, the insureds had the burden of establishing that the appraisal award did not reflect the intention of the appraisers. In other words, they needed to show that the appraisers were operating under a mistake of fact rather than an error of judgment.

The Court elected to uphold the appraisal award, finding that it did not involve the requisite “mistake” pursuant to Texas law. Specifically, the court held that the umpire’s decision to side with Safeco’s appraiser reflected his own informed judgment. Although the insureds submitted letters from contractors stating that the appraisal estimate was both “poorly written” and “severely lacking,” these statements only alleged a mistake of judgment and not the required mistake of fact. Therefore, because the insureds did not allege that the award was made without authority or was not in compliance with the policy, the award could not be set aside and the motion was denied.

The court next turned to the insureds’ breach of contract claim. It explained that a breach of contract claim under an insurance policy is barred upon a showing of (1) an enforceable appraisal award; (2) timely payment of the appraisal award; and (3) the acceptance of the award. Here, because Safeco timely paid an enforceable award and the insureds did not reject the payment on any grounds, the court ruled that this breach of contract claim was barred. Further, because the insureds did not allege injuries outside of those allegedly involved in their original insurance claim, Safeco’s timely payment of the award also served to preclude the insureds’ causes of action for the breach of the duty of good faith and fair dealing, violations of the Texas insurance code, and violations of the DTPA. Given this, the court granted Safeco’s motion for summary judgment and dismissed the insureds’ claims.

The Lowdown

Appraisal may not always be the most sought-after course of action for either a policyholder or its insurer due to the potential unknowns that come with involving a third-party in the handling of a claim, but Petropoulos highlights both the finality and protections appraisal awards often offer parties. As this case and other recent decisions establish, so long as a valid appraisal award is issued and the ensuing award is timely paid, it may be difficult to argue that the award should be set aside and that contractual and/or extra-contractual damages apply.

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The opinions expressed are those of the authors and do not necessarily reflect the views of the firm or its clients. This article is for general information purposes and is not intended to be and should not be taken as legal advice.