The Supreme Court of Ohio today upheld a trial court’s decision to dismiss a church’s lawsuit challenging its insurer’s refusal to pay more than the amount the parties' appraisers agreed to during a binding appraisal procedure that the church had initiated under its policy. The Court ruled that the church’s complaint did not articulate any material mistakes that would justify setting aside the appraisal amount.

In a 6-1 decision, the Supreme Court found One Church and Brotherhood Mutual Insurance Company agreed to a “binding appraisal” to determine the amount to be paid for roof damage the Gahanna church allegedly incurred from a February 2019 windstorm. The Franklin County Common Pleas Court dismissed the church’s breach of contract claim against Brotherhood when the insurer refused to pay for additional damage the church discovered after concluding the binding appraisal process.

Writing for the Court majority, Justice Joseph T. Deters explained that a payment based on a binding appraisal can be challenged only on grounds of fraud or mistake. The Court determined that One Church failed to present a specific allegation of an appraiser's mistake that would prevent the trial court from dismissing the case.

“Indeed, One Church’s complaint does not allege that the appraisers were mistaken, but instead that the award is incomplete,” Justice Deters wrote.

The Court reversed a Tenth District Court of Appeals’ decision allowing One Church’s case to proceed.

Chief Justice Sharon L. Kennedy and Justices R. Patrick DeWine, Jennifer Brunner, Daniel R. Hawkins, and Megan E. Shanahan joined Justice Deters’ opinion.

In a dissenting opinion, Justice Patrick F. Fischer wrote that the trial court should not have dismissed the case at its early stages. He stated that One Church did not seek to overturn the appraisal and was not alleging that any mistake was made by the appraisers. Instead, One Church was seeking additional payment for hidden damages, which it alleged it was entitled to under its Brotherhood policy, he concluded.

Church Seeks Additional Payment
One Church submitted a claim to Brotherhood for damage to several of its buildings from a windstorm. When the parties were unable to agree on the amount of loss One Church incurred, the church invoked the appraisal process provided in its insurance policy.

Under the contract, either One Church or Brotherhood could demand that the amount of loss be determined by an appraisal. Each party would pick an independent appraiser, and if the appraisers agreed on the amount of damages, the agreed amount would be binding on the parties.

Each side selected an appraiser, and both inspected One Church’s property. They agreed to an appraisal amount of about $313,000, and in August 2020, Brotherhood issued a check for the amount minus a $900 deductible. One Church cashed the check for $312,371.

After reaching the agreement, One Church submitted a claim to Brotherhood for “additional hidden damages” that were discovered. When Brotherhood refused One Church’s request for $206,663, the church sued the insurance company in Franklin County Common Pleas Court for breach of contract and other claims.

Brotherhood responded to the lawsuit and filed a counterclaim against One Church. The insurer then asked the trial court for judgment on the pleadings and for dismissal of the case. The trial court agreed with Brotherhood and dismissed the case, explaining that the appraisal award was binding and that the court did not find “any evidence of fraud, misfeasance, or mistake” that would justify allowing the lawsuit to continue.

One Church appealed to the Tenth District, which reversed the trial court’s decision. The appellate court concluded that One Church had sufficiently pleaded that a mistake was made.

Brotherhood appealed the Tenth District’s decision to the Supreme Court.

Supreme Court Analyzed Church’s Allegations
Justice Deters explained that under the Ohio Rules of Civil Procedure, when a party seeks a judgment on the pleadings, a court only reviews the initial filings of the case, including the complaint, the answer, and any attached documents, such as a contract.

One Church alleged in its complaint that the full amount of its loss had not been determined or paid because Brotherhood refused to pay for the additional damage. The Court noted One Church invoked the binding appraisal provision of the policy. Citing its 1920 Pfleger v. Renner decision, the Court stated a trial court will only interfere with an appraisal award “if there is a defect so egregious that it undermines the nature of the award” and is more than an error of judgment.

One Church argued it was not refuting the accuracy of the appraisal based on the damage the appraisers could identify. Instead, it maintained the appraisal award could stay in place, but it could seek additional funds for its “supplemental claim.” Because it was not challenging the initial appraisal, One Church claimed it did not need to demonstrate fraud or mistake.

But the complaint filed by One Church in the trial court and its later arguments on appeal did not allege it was submitting a new claim, rather it was challenging Brotherhood’s “refusal to reopen the appraisal process.”

Because it challenged the result of the binding appraisal process, the Court explained, One Church had to plead fraud or mistake. Court rules require a claim of mistake or fraud “shall be stated with particularity,” the opinion noted.

The parties were unable to point to Court case law explaining how to satisfy the particularity standard for claims of mistake, so the Court turned to its decisions regarding particularity of claims of fraud. As the Court explained, a complaint must contain factual allegations that would satisfy each element of the offense of fraud or mistake and put the defendant on notice of the specific claims.

One Church’s complaint had to allege that the appraisal included a manifest mistake, which means a mistake of such character that if called to the appraiser’s attention, the appraiser would have corrected the error, the opinion noted. The Court stated the trial court would only set aside an appraisal award for “an error so palpably wrong that it undermines the intent of the agreement.”

One Church did not include factual allegations supporting a claim of mistake and did not use the word “mistake” in its complaint, the Court wrote.

“And while the complaint states that ‘additional hidden damages were discovered,’ it does not state who discovered the damages, how they were discovered, where they were found, why they were previously hidden, or why they rise to the level of manifest mistake that the ‘appraiser would have corrected … had it been called to his attention,’” the Court stated.

Because the church’s complaint failed to sufficiently state a claim for mistake, the trial court properly dismissed the case, the Court concluded.

Church Alleged that Contract Allowed for Additional Damage Claim, Dissent Maintained
In his dissent, Justice Fischer wrote that the majority opinion gives too much weight to One Church’s statement that it wanted to “reopen” the appraisal process, and it incorrectly interpreted this to mean the church was challenging the appraisal. Rather, One Church’s complaint does not seek to overturn the binding appraisal or argue a mistake was made, Justice Fischer stated.

One Church’s complaint alleged that its policy required a binding appraisal for a determination of the amount of loss for “known and discoverable damages at the time the appraisal was completed.” The trial court relied on Brotherhood’s characterization that One Church was seeking to nullify the appraisal, but the church was claiming the appraisal covered only the payment for known and discoverable damages, the dissent stated. One Church alleged that the appraisal was not binding for damage that was not discoverable at the time of the appraisal, Justice Fischer wrote.

One Church sufficiently pleaded that binding appraisal only covered property damage that was known and discoverable, and that it was entitled to additional compensation because Brotherhood did not pay for damage that was hidden or undiscoverable at the time of the appraisal, the dissent concluded.

2024-1329. One Church v. Bhd. Mut. Ins. Co., Slip Opinion No. 2026-Ohio-2764.

View oral argument video of this case.

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