Motion for Entry of Judgment in 1415 SOUTHSIDE PROPERTIES LLC Vs ERIE INSURANCE COMPANY VS.ERIE INSURANCE COMPANY| Trellis.Law

On August 02, 2021 a Motion,Ex Parte was filed involving a dispute between and for OTHER CIVIL in the District Court of Franklin County.

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Franklin County Ohio Clerk of Courts of the Common Pleas- 2023 Feb 13 3:26 PM-21CV004885
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Gordon D. Amold (0012195)
Bartholomew T. Freeze (0086980)
Attorneys for Defendant Brie Insurance Company

IN THE COMMON PLEAS COURT OF FRANKLIN COUNTY, OHIO
CIVIL DIVISION

1415 SOUTHSIDE PROPERTIES, * No. 21CV004885
LLC,
Judge Dan Hawkins
Plaintiff,

ve
ERIE’S MEMORANDUM IN
ERIE INSURANCE EXCHANGE OPPOSITION TO PLAINTIFF’S
MOTION FOR PARTIAL
Defendant. SUMMARY JUDGMENT

The parties agree that contract interpretation is a question of law to be decided by the Court

before trial, that pursuant to Civ. R. 54(B) the Court should reconsider its August 19, 2022, Order

and Entry, and that the Court should construe the insurance contract. In doing so, the Court should

overrule plaintiff 1415 Southside’s Motion for Partial Summary Judgment, and should sustain

Erie’s summary judgment motion filed on October 27, 2022, now fully briefed and at issue. The

material and dispositive facts are cited in Erie’s two earlier filed summary judgment motions.

Plaintiff claims the vacancy condition in the insurance contract applies only to “the owner

of the building” and not to plaintiff 1415 Southside, but 1415 Southside is the party to the insurance

contract who requested the insurance, and 1415 Southside represented itself to be the owner when

obtaining the insurance. Plaintiff 1415 Southside Properties LLC is the named insured for the

building, the Declarations page of the insurance contract identifies “Owner” as the “[i]nterest of

the Named Insured in Such Premises,” and plaintiffs managing member Mark Cecutti explained,

in his sworn Examination Under Oath testimony, that the building owner per deed of record is not

listed as a named insured only because “there is an insurable interest for 1415 Southside Properties

because all three entities are tied to our SBA loan.” (Cecutti EUO, pp. 38-39.)

FREUND, FREEZE & ARNOLD
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The undisputed material facts are that the deeded owner of the building is 1802 Southside

Properties LLC, the tenant using the building is Vitale Meats Poultry & Provisions LLC, the named

insured on the insurance contract with Erie is 1415 Southside Properties LLC, and all three entities

are Ohio limited liability companies with sole members Mark Cecutti and Michael Scott. (Id. pp.

6-13.) Vitale Meats uses the building to store pallets of dry goods. (Id., pp. 57-58, 62, 64, 70-71;

Pl.’s Responses to Request for Admissions, 10/18/2021, pp. 2, 4.)

The status of a corporation as separate from its owners is a legal fiction that can be

disregarded in specific situations.

That a corporation is a legal entity, apart from the natural persons who compose it,
is a mere fiction, introduced for convenience in the transaction of its business, and
of those who do business with it; but like every other fiction of the law, when urged
to an intent and purpose not within its reason and policy, may be disregarded.

State ex rel. Atty. Gen. v. Standard Oil Co., 49 Ohio St. 137, 30 N.E. 279 (1892), paragraph one

of the syllabus. Be/vedere Condominium Unit Owners’ Ass’n v. RE. Roark Cos., 67 Ohio St.3d

274, 289, 1993-Ohio-119, 617 N.E.2d 1075, held the corporate form may be disregarded if (1)

control over the corporation by the owners is so complete the corporation has no separate mind,

will, or existence of its own, (2) control was exercised in such a manner as to commit fraud or an

illegal act against the person seeking to disregard the corporate entity, and (3) injury or unjust loss

resulted to the person dealing with the corporate entity from such control and acts.

These Belvedere factors are only factors to consider, are not dispositive, and the issue is

whether the corporate shell is used to commit an unjust act. State ex rel Petro v. Mercomp, Inc.,

167 Ohio App. 3d 64, 853 N.E.2d 1193 (2006), 26. Plaintiff 1415’s attempt to insure the property

for storage, assert a claim based on that use, then use the corporate shell to deny an interest in the

insured property and in the tenant’s storage, is an attempt to commit an unjust act by exercising

control over the corporate shells owned by Mark Cecutti, barred by Be/vedere and Mercomp

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Minno vy. Pro-Fab, Trumbull App. No. 2007-T-0021, 2007 WL 4292625 (December 7,

2007), is an instructive case somewhat similar to the manner in which Mark Cecutti operated and

insured his three corporate shells. In Minno, the parent and subsidiary company had similar

directors and officers, who knowingly subcontracted dangerous work to the subsidiary, knowing

that the subsidiary did not have liability insurance. The Court noted that the logical conclusion was

the parent did this to insulate itself from liability. Thus, the court held there were genuine issues

of material fact for a jury to decide.

Plaintiff 1415 Southside argues that the grammar and spacing of the vacancy condition (1)

applies it only to owners and tenants and separately to each, (2) does not require at least 31%

occupancy by a tenant, and (3) does not apply to a named insured who contracted as an owner to

insure the building but now claims it is neither owner nor tenant. But this grammar argument by

plaintiff 1415 is contradicted by a proper reading of the grammar in the vacancy condition, by the

case law construing the vacancy condition, and by Mark Cecutti’s use of his corporate shells to

claim ownership of the building and its fixtures by 1415 Southside in obtaining the insurance and

then deny for the first time in this lawsuit any interest in the building and fixtures in an effort to

avoid the vacancy condition restriction on vandalism coverage when the building is vacant.

First, as to the grammar of the vacancy condition. There is only one building,

grammatically and factually; the 31% use requirement of the vacancy condition is expressly

applied to the situation of that building, when either used by the owner or when rented; the

antecedent word to which the 31% refers is “building” and “such building”; the 31% is itself an

antecedent for both the word “lessee” used in the following subparagraph a. of the vacancy

condition, and for the word “owner” used in the following subparagraph b. of the vacancy

condition. Second, as to case law construing the vacancy condition, plaintiff offers none, in any of

its many filings in this case, construing the vacancy conditions as it asserts it be construed.

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Third, as to Mark Cecutti’s use of his three corporate shells, and the only three entities

involved with the building, as owner, tenant and named insured, are corporate shells for the same

two men. When plaintiff 1415 Southside applied for the insurance, and entered the insurance

contract for which 1415 Southside now claims a contractual right to payment for a loss, 1415

Southside agreed it was the owner, for purposes of the insurance contract’s potential benefits and

other controlling language. But 1415 Southside now seeks to renege on its agreement that for

insurance purposes it is the owner, and renege on Mark Cecutti’s admission of 1415 Southside’s

insurable interest, in order to simultaneously (1) assert a loss (2) while it denies any interest in the

asserted loss. If 1415 is the insured claimant, but asserts it is neither owner nor tenant, it has no

loss.

Not only did plaintiff 1415 Southside represent itself to be the owner when contracting for

the insurance, it has a legal duty to read and correct any errors in the insurance obtained, and is

estopped from changing its representation of ownership after Erie justifiably relied on that

representation. The insured has a duty to review the delivered insurance contract and know the

extent of insurance coverage issued. See, e.g., Amankwah vy. Liberty Mut. Ins. Co., 1st Dist.

Hamilton No. C-150360, 2016-Ohio 1321, 62 N.E.3d 814; Zhe Island House Inn, Inc. v. State Auto

Ins. Cos., 150 Ohio App.3d 522, 2002-Ohio-7107, P16, 782 N.E.2d 156 (Ohio 6" Dist., 2002). To
avoid injustice, estoppel enforces a promise or assertion which the promisor should reasonably

expect to induce action or forbearance, and which does induce action or forbearance in justifiable

reliance on the assertion or promise. See Restatement of the Law 2d, Contracts ,(1973), adopted

in Ohio in Talley v. Teamsters, Chauffeurs, Warehousemen & Helpers, Local No. 377,48 Ohio

St.2d 142, 146 (1976); see also, Olympic Holding Co., LLC v. ACE Ltd., 122 Ohio St.3d 89, 90

2009-Ohio-2057, 909 N.E.2d 93, 939. State Farm Mut. Auto. Ins. Co. v. Ingle, 180 Ohio App. 3d

201, 2008 Ohio 6726, 904 N.E.2d 934, 939 (2d Dist. Ct. App. 2008)

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Although plaintiff 1415 cites no case law for its alleged construction of the language in the

vacancy condition, there is on point case law providing guidance for construing the owner and

lessee terms in the vacancy condition. In case law applying the vacancy condition to claims by

owner insureds, when the property is leased by the owner, the vacancy condition is construed as

being one paragraph, with the 31% requirement applied to the building, and to both owners and

tenants. See, e.g., Oakdale Mall Assoc. v. Cincinnati Ins. Co, 702 F.3d 1119, 1125 (8th Cir. 2013);

Bedford Internet Office Space, LLC v. Travelers Cas. Ins. Co, 41 F. Supp.3d 535 (N.D. Tex. 2014).

In Oakdale Mall Assoc., the insured owner of a commercial mall claimed rented but

unoccupied space should be considered space in which the owner was conducting “customary

operations” due to the insured owner’s customary operations being efforts to lease the unused

space to new tenants. The appellate court affirmed the district court’s finding that “Oakdale's

interpretation of the policy would render the vacancy provision meaningless.” /d. at 1122.

First, the Oakdale decision construed the vacancy condition as being one paragraph with

the 31% requirement applied to both owners and tenants.

The vacancy clause in the Cincinnati policy stated the mall would be deemed vacant
"unless at least 31% of its total square footage [was]: 1) Rented to a lessee or sub-
lessee and used by them to conduct their customary operations; or 2) Used by the
building owner to conduct customary operations."

Id. at 1123. Then the court applied the purpose of the vacancy condition as the guide to

interpreting and applying its language.

Oakdale faults the district court for failing to include in its calculation of the mall's
"[o]ecupied space . that space for which Oakdale was actively seeking tenants."
Oakdale contends "[t]he language of the policy should be interpreted, with regard
to a shopping center, to define 'vacancy' as a shopping center that has no tenants
and is not seeking new tenants." In Oakdale's view, by posting "a large sign outside
the mall advertising available space for rent" and "seeking out new tenants,
[Oakdale] was using the property to conduct normal business operations" in
satisfaction of the vacancy provision.

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We agree with the district court that Oakdale's interpretation of the policy "would
render the vacancy clause of the policy meaningless." The primary purpose of the
vacancy provision is to reduce the risk of loss by requiring a physical presence at
the property to help secure the property from vandals and thieves. Under Oakdale's
interpretation of the policy—"[a] shopping center may not be 'vacant' if the owner
is trying to rent the space"—the mall could be completely vacant, but would be
deemed fully occupied for purposes of the vacancy provision if the owner simply
posted a sign outside or placed an advertisement online or in the newspaper.
Oakdale's interpretation is unreasonable, bordering on the absurd.

Id. at 1124. Then the court returned to the language of the vacancy condition, and noted the two

parts that 1415 wishes to treat as separate conditions must not be so treated.

We again reject Oakdale's strained interpretation of the policy. Not only is
Oakdale's interpretation contrary to the purpose of the vacancy provision, it also
creates a conflict between the first and second clauses of that provision. The first
clause has two parts: (1) the space be rented to a lessee or sub-lessee, and (2) the
space be "used by them to conduct their customary operations." The second clause
includes the space used in Oakdale's customary operations as occupied.

Oakdale's interpretation of the second clause—a valid lease satisfies the vacancy
provision because leasing space is Oakdale's customary operation—would render
the requirements in the first clause—the space be both rented and used by the tenant
to be occupied—without effect. Oakdale's interpretation of the vacancy provision
is unreasonable, and the district court did not err in rejecting it. See Mut. Serv. Cas.
Ins. Co. v. Wilson Twp., 603 N.W.2d 151, 153 (Minn. Ct. App. 1999) "If a phrase
is subject to two interpretations, one reasonable and the other unreasonable in the
context of the policy, the reasonable construction will control and no ambiguity
exists."); see also Noran Neurological Clinic, P.A. v. Travelers Indem. Co., 229
F.3d 707, 709 (8th Cir. 2000) (explaining, under Minnesota law, the reasonable
construction of a policy controls over an unreasonable interpretation).

Id. at 1125. The court also rejected 1415’s argument for measuring the square footage in a creative

manner, and as in 1415’s claim against Erie, held that the insured’s own submitted and repeated

statements were properly relied upon by the insurance company.

In opposing Cincinnati's summary judgment motion, Oakdale again repeatedly
referred to 34,595 sq. ft. as the correct amount of common area and provided
calculations based on that figure. Oakdale's calculations indicated the 34,595 sq. ft.
of common area included the common hallways maintained by Globe College.
Oakdale again vaguely referred to thousands of feet of additional hallways not
included in its calculations that put the mall "well above the occupancy
requirement," but did not provide any actual square footage or alternative
calculations.

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Based on the figures Oakdale provided, the district court determined "[e]ven using
Oakdale's calculations for common space and office space, Oakdale has failed to
establish that the mall was at least 31% occupied at the time of the theft at issue."
Oakdale claims this was error because the district court failed to include the
"additional hallways of unspecified size" in the former Globe College space. We
disagree.

While a disagreement about the size of any additional hallways and the total
common area could create a genuine dispute of material fact under different
circumstances, we conclude the district court was entitled to rely on Oakdale's
specific calculations and repeated statements that the total common area was
34,595 sq. ft. See Delapaz v. Richardson, 634 F.3d 895, 899-900 (7th Cir. 2011)
(rejecting plaintiffs’ claimed error based upon conflicting paragraphs in their
summary judgment response because the district court could rely on the plaintiffs'
admissions)
> Inreviewing the record, we suspect Oakdale's recent assertion—the Globe College hallways added thousands
of additional common area square footage—tesults from a double counting of those areas and already is
included in the 34,595 sq. fi. of common area calculation.

Id. at 1123-1124.

In Bedford Internet Office Space, LLC v. Travelers Cas. Ins. Co, 41 F. Supp.3d 535 (N.D

Tex. 2014), the court construed the vacancy condition in a loss similar to Oakdale. The commercial

tenant was going to move in but had done nothing more than come to the property several times.

The insured owner relied on the fact the property was leased to claim it was not vacant. The court

held that requiring only a lease “to overcome the vacancy exclusion would be to render the second

prong of the "vacancy" definition — that either the building owner or its lessee was using the

property to conduct customary operations — without effect” and that “mere access to or incidental

use does not constitute "customary operations." /d. at 547-548

Ohio law is in agreement with Oakdale and Bedford Internet that the vacancy provisions

in insurance contracts reflect “the commonplace observation that the risk of casualty is higher

when premises remain unattended.” Belich v. Westfield, 11th Dist. Lake No. 99-L-163, 2000 Ohio

App. LEXIS 6212, at *7 (Dec. 29, 2000), affirming summary judgment for the insurer, citing Will

Realty Corp. v. Transportation Ins. Co., 22 Mass. App. Ct. 918, 492 N.E.2d 372 (1986).

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As noted in Oakdale and Bedford Internet, the risk of unattended premises focused on in

Belich is not reduced because the premises are leased to a tenant who leaves the premises vacant.

The decisions in Oakdale and Bedford Internet are on point, conform to the more general law of

Ohio on the vacancy condition provided by Belich, and all three decisions interpret the vacancy

condition by focusing on its purpose, “to reduce the risk of loss by requiring a physical presence

at the property to help secure the property from vandals and thieves” as noted in Oakdale, because

the vacancy provisions in insurance contracts reflect “the commonplace observation that the risk

of casualty is higher when premises remain unattended” as noted in Belich.

Moawad-Ball Holdings LLC v. Erie Ins., Lucas C.P. No. CI-2018-2850, 2019 Ohio Misc.

LEXIS 5919 (September 27, 2019), cited by plaintiff, is not on point. It involved only the issues

of whether renovation took place sufficient to comply with the vacancy condition, and whether

alleged tenants were conducting amy customary operations. Neither issue is involved with 1415

Southside’s claim.

The terms of the vacancy condition are not ambiguous generally, or in connection with the

facts of this claim, because they expressly contemplate use of the space when rented to a lessee or

sub-lessee, in this case a co-owned lessee, and requires the lessee to meet the 31% requirement

before the party with an insurable interest! has a valid claim. In plaintiff 1415’s claim, the

coolers/refrigeration equipment and drying units were turned off in 2016, were never turned back

on or used for any purpose. (Cecutti EUO, pp. 62-64, 68; see also Pl.’s Resps. to Request for

Admissions at 3.) Other than a few pallets of boxes and bags, no equipment was stored at the

l Ownership is immaterial when there is an insurable interest, which exists when a person “would profit by or gain
some advantage by its continued existence and suffer some loss or disadvantage by its destruction.” Phillips v.
Cincinnati Ins. Co., 60 Ohio St. 2d 180, 182, 398 N.E.2d 564 (1979). “An insurable interest does not of necessity
depend upon ownership of the property. It may be a special interest entirely disconnected with title, lien, or
possession.” Strip v. Buckeye Union Ins. Co., 10th Dist. Franklin No. 73AP-56, 1973 Ohio App. LEXIS 1656, at *16-
17 (June 26, 1973), quoting Stauder v. Associated General Fire Co., 105 Ohio App. 105, 151 N.E.2d 583 (9th Dist.
1957).
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building after March 2020. (Id., pp. 61, 64-65, 68-69, 72-73; see also Pl.’s Resps. to Request for

Admissions at 2.) There is no genuine issue rebutting the fact the building was vacant as defined

by the vacancy condition. Plaintiff's arguments for additional square footage used in conducting

customary operations are of the type rejected by case law, because they render the vacancy

provision meaningless. See Oakdale Mall Assoc. v. Cincinnati Ins. Co, 702 F.3d 1119, 1124 (8th

Cir. 2013)
Mark Cecutti, as the owner and managing member of his three LLCs, testified under oath

that other than a few pallets of boxes and bags, no equipment was stored at the building after March

2020, and therefore on May 27, 2021, Erie denied plaintiff's claim, and in the denial letter sent to

Mark Cecutti through his lawyer, Erie summarized Cecutti’s sworn testimony, including Ernie

Stepp’s lack of knowledge as testified to by Cecutti, quoted the vacancy condition in the insurance

contract, stated that coverage for the claimed loss was therefore barred, and invited Mark Cecutti

to provide different facts if available. (Beiter Aff. at J 8, citing Ex. A-3; see also Konkel Aff. at J

15.) Mark Cecutti did not provide additional facts, although he did file this lawsuit just over two

months later, on August 2, 2021.

The facts Mark Cecutti provided under oath included that coolers/refrigeration equipment

and drying units at the building were turned off in 2016, were never turned back on, nor were the

coolers/refrigeration equipment used for storage after April 18, 2018;? poultry was never stored

at the building, other than one time in 2018 when poultry was located there to thaw;* the normal

amount of dry goods stored at the building was reduced around March 2020, the time of the

pandemic, and before the alleged loss;* although the amount of dry goods at the 1802 Lockbourne

? Id. pp. 62-64; see also Pl.’s Resps. to Request for Admissions at 3.
3 Id. pp. 61-62, 66-67;see also Pl.’s Resps. to Request for Admissions at 2.
‘Id. pp. 61, 64-65, 72-73; see also PI.’s Resps. to Request for Admissions at 2
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Road building varied, there were between 15 to 40 pallets there “on a busy time” and “not over a

long period of time’ 2.5> all the pallets were 4’ x 4’ or 4’ x 5’ in measurement and stacked eight feet

high.° Those 40 pallets would sit on only 800 square feet of the buildings 13,000 square feet, and

at most the pallets constituted only 6.2% of the building’s total square footage. (Beiter Aff. at

4,7.)7
After plaintiff 1415 Southside filed this lawsuit, Erie within three months filed a motion

for summary judgment, on November 2, 2021. Erie cited the sworn testimony of Mark Cecutti, the

terms and conditions of the vacancy condition, and the decisions in Oakdale Mall Assoc. v.

Cincinnati Ins. Co, 702 F.3d 1119, 1124 (8th Cir. 2013) and Belich v. Westfield, 11th Dist. Lake

No. 99-L-163, 2000 Ohio App. LEXIS 6212, at *7 (Dec. 29, 2000).

To avoid summary judgment, from the unambiguous language of the vacancy condition

applied to the facts under oath from Mark Cecutti, managing member of plaintiff 1415 Southside,

plaintiff alleged that employees of Cecutti’s LLCs were the persons with knowledge of the square

footage used in conducting customary operations at the insured building. Plaintiff 1415 Southside

presented affidavits from Cecutti’s own employees, including a Mr. Erie Stepp, proffered

allegedly new facts, essentially that the employees visited the building two or three times a week,

used various areas and rooms throughout the building for storage, and used an office area as a

break room. But these affidavits did not introduce material facts, the employees of Cecutti did not

know more than Cecutti, and Cecutti should have revealed their information during the claim if it

had been material, because the information of his employees was at all times available to him.

$Id. pp. 64-66, 69; see also Pl.’s Resps. to Request for Admissions at 3-4
51d. p. 66.
7 Mike Beiter of Erie personally observed, measured, and calculated the building’s square footage at approximately
13,000 square feet. (Id. at { 4.) The Franklin County Auditor’s Office further estimated the building at 12,929 square
feet. (Pl.’s Resps. to Request for Admissions at 4-5.) At most, the pallets constituted only 6.2% of the building’s total
square footage. (Beiter Aff. at § 7.)

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Mark Cecutti’s sworn testimony was that Stepp was only provided a key to the building

“[w]hen he needed to go in. He didn’t have it all the time.” (Cecutti EUO at 80:25-81:4.) When

Mark Cecutti was asked if there was anyone else who would have additional information about

the customary use of the building, or what was stored there, Cecutti testified under oath, “Not

really. They couldn’t give you any more information than I have. No.” (Id. pp. 84, 126.)

The employee affidavits did not introduce material facts, and therefore did not create

genuine issues of material fact. The customary use claimed when the insurance contract was

obtained, and confirmed when Mark Cecutti testified under oath, was storage. The storage use of

Mark Cecutti’s three interlocking shell corporations was undeniably small. The amount of storage

use is measured by square footage of the pallets, not by how much walking some employees do

over the unused floor space, walking around the building, on occasion, to allegedly use the pallets.

Otherwise, a single pallet located at the farthest point from the entrance door would equate to

100% use of the building’s entire square footage for storage, because someone would sometimes

walk the entire length of the building to add or remove something from the single pallet.

The court decision that rejects such an approach, speaks to the relevant use of the space,

and renders the affidavits of Mark Cecutti’s employees immaterial, is Oakdale Mall Assoc. v.

Cincinnati Ins. Co, 702 F.3d 1119, 1125 (8th Cir, 2013), previously discussed. The appellate court

applied the purpose of the vacancy condition as the guide to interpreting and applying the language,

and affirmed the district court’s finding that “Oakdale's interpretation of the policy would render

the vacancy provision meaningless.” /d. at 1122. The purpose of the vacancy condition is “to

reduce the risk of loss by requiring a physical presence at the property to help secure the property

from vandals and thieves” as noted in Oakdale, supra, because the vacancy provisions in insurance

contracts reflect “the commonplace observation that the risk of casualty is higher when premises

remain unattended” as noted in Be/ich, supra

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But if plaintiff 1415 Southside now argues the affidavits of Mark Cecutti’s employees

provide material facts, and if the Court accepts that proposition, then Mark Cecutti and his

company, 1415 Southside, failed to cooperate in Erie’s investigation, by waiting until after (1)

Erie’s denial of plaintiffs insurance claim with full explanation of the facts from Cecutti on which

Erie relied, and (2) after plaintiff filed this lawsuit, and (3) after and in response to Erie’s initial

Motion for Summary Judgment, to for the first time disclose the allegedly but not truly new facts

proffered in the affidavits from Cecutti’s own employees. The cooperation clause of the insurance

contract with Erie places a duty on the insured to make a “fair and frank” disclosure of information

sought by the insurance company. Jemplin v Grange Mutual Casualty Company, 81 Ohio App. 3d

572, 576, 611 N.E. 2d 944 (1992). When cooperation is a condition precedent to the fulfillment of

an insurance policy, an insurer is relieved of its obligations if the insured fails to cooperate. Luntz

yv. Stern, 135 Ohio St. 225, 236-237, 20 N.E.2d 241 (1939).

Tf the facts in the affidavits are material now, they were material when Mark Cecutti

testified under oath. At that time, and when the denial of the claim was fully explained to Mark

and he was invited to correct any errors, the facts from Mark Cecutti’s employees were available

to Mark Cecutti, and the cooperation clause of the insurance contract required prompt disclosure

during the claim investigation; not disclosure only after (1) Erie’s denial of plaintiff's insurance

claim, and (2) after plaintiff filed this lawsuit, and (3) after and in response to Erie’s motion for

summary judgment.

Mark Cecutti was required to submit to an Examination Under Oath and cooperate with

Erie’s investigation. If any statements in the employees’ affidavits are material and contradict

Mark Cecutti, they were not disclosed during the claim investigation, and Mark Cecutti’s sworn

testimony and silence after were material misrepresentations and a lack of cooperation with Erie

during the claims process, voiding any insurance coverage.

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A material misrepresentation made by an insured during an investigation voids coverage

for the insured's claim. Moss v. Nationwide Mut. Ins. Co., 24 Ohio App. 3d 145, 148-149, 493

N.E.2d 969 (10th Dist. 1985). False answers are material if they might have affected the attitude

and action of the insurer. Nationwide Mut. Ins. Co. v. Skeens, 2d Dist. No. 07-CA-29, 2008-Ohio-

1875. “A misrepresentation will be considered material if a reasonable insurance company, in

determining its course of action, would attach importance to the fact misrepresented.” Abon, Ltd.

vy. Transcon. Ins. Co., 2005-Ohio-3052, 82 (5th Dist.)

Most courts construe materiality broadly, emphasizing “the subject of the

misrepresentation need not ultimately prove to be significant to the disposition of the claim, so

long as it was reasonably relevant to the insurer's investigation at the time.” /d., citing Fine v.

Bellefonte Underwriters Ins. Co., 725 F.2d 179, 182-84 (2d Cir.1984) (holding materiality not

judged by what facts later turn out to be, but whether a false statement “concerns a subject relevant

and germane to the insurer's investigation as it was then proceeding[.]”) And, false statements by

plaintiff 1415 Southside in misrepresenting its status as the owner of the building when contracting

for the insurance can void coverage,* although all issues of misrepresentation and failure to

cooperate are relevant to this lawsuit only if the Court accepts the proposition of plaintiff 1415

Southside, first proffered only in this lawsuit, that the affidavits of Mark Cecutti’s employees

provide material facts contradicting Mark Cecutti. As already discussed, they don’t.

8 When an applicant for insurance makes a false statement of facts when applying for the insurance, the consequences
depend on whether the statement is a warranty or a representation. Allstate Ins. Co. v. Boggs, 27 Ohio St.2d 216, 271
N.E.2d 855 (1971). If the statement is a warranty, a misstatement of fact voids the policy “ab initio” or from its
inception. /d. But if the statement is a representation, a false statement by the insured will only render the policy
voidable, and that only if the statement is fraudulently made and the fact is material to the risk. Jd. A representation is
a statement made before the insurance contract is entered by the parties, which tends to cause the insurer to assume
the risk. Jd. A warranty is a statement, description or undertaking by the insured of a material fact either appearing
on the face of the policy or in another instrument specifically incorporated in the policy. Jd. citing Hartford Protection
Ins. Co. v. Harmer, 2 Ohio St. 452 (1853) and 30 Ohio Jurisprudence 2d 415, Section 460.
-13-

FREUND, FREEZE & ARNOLD
A Legal Professional Association
Franklin County Ohio Clerk of Courts of the Common Pleas- 2023 Feb 13 3:26 PM-21CV004885
06263 - P80

Plaintiff 1415 Southside Properties has positioned this case as an either or proposition. If

Mark Cecutti was fully frank and accurate in his sworn testimony, and then in not responding to

Erie’s request to Mark Cecutti for any rebuttal of error by Erie, a request made by Erie in the letter

denying coverage and setting forth the facts obtained from Cecutti on which the denial was based,

then the vacancy condition, as construed by the only cited law, applies to bar insurance coverage

for the claim. But if Mark Cecutti now claims his sworn testimony was not accurate on material

facts, and is contradicted on material facts by the affidavits of his employees, then Mark Cecutti

was not fully frank and accurate in his sworn testimony, and in not responding to Erie’s request to

Mark Cecutti for any rebuttal of error. Erie specifically stated for Mark Cecutti the facts from Mark

Cecutti’s sworn testimony it relied on denying insurance coverage. Mark Cecutti at all times had

access to his employees and could and should have obtained from them, during the claim

investigation, any allegedly material facts. Mark Cecutti was either accurate in his sworn testimony

and his silence thereafter, or he provided Erie with misrepresentations and did not cooperate in

presenting evidence to Erie during its investigation.

Plaintiff's only claim of ambiguity concerns the owner and lessee terms in the vacancy

condition. But the vacancy condition is not ambiguous, plaintiff offers the Court no case law to

support its claim of ambiguity, and existing case law rejects the claimed ambiguity. Further,

plaintiff 1415 claimed it was the owner when it insured the building, and is estopped from now

denying any interest in the building, while asserting a loss for that non-existent interest. Further,

Mark Cecutti is the owner and managing member of the three LLCs that, between them, own the

building, lease the building, and insure the building; corporate shells may not be used to commit

an unjust act. The testimony of Mark Cecutti, and the affidavits of his employees, establish without

genuine issue that the customary storage use at the building, insured by Erie, was limited to a small

number of pallets sitting on significantly less than 31% of the building’s total square footage.

-14-

FREUND, FREEZE & ARNOLD
A Legal Professional Association
Franklin County Ohio Clerk of Courts of the Common Pleas- 2023 Feb 13 3:26 PM-21CV004885
0G263 - P81

Erie’s summary judgment motion presents a straightforward assertion. The information

provided by Mark Cecutti during his Examination Under Oath was justifiably assumed to be fully

frank and accurate, and when the vacancy condition in the insurance contract is applied to those

facts, in conformity with persuasive case law, summary judgment is required for Erie. But plaintiff

1415 Southside Properties claims the affidavits of Cecutti’s employees provide facts contradicting

and impeaching Mark Cecutti’s sworn testimony, creating a genuine issue of fact whether the

vacancy condition applies. If the Court accepts that proposition, then Mark Cecutti and his

company, 1415 Southside, failed to cooperate in Erie’s investigation, barring insurance coverage,

and therefore summary judgment should be granted to Erie for that reason.

Respectfully submitted,

A
GordowD. Arnold
Gordon D. Arnold (0012195), Trial Attorney
Bartholomew T. Freeze (0086980), Of Counsel
FREUND, FREEZE & ARNOLD
65 East State Street, Suite 800
Columbus, OH 43215
Ph: 937-913-0103 / Fax: 937-425-0203
arnold @ffalaw.com / bfreeze@ffalaw com
Attorneys for Defendant Erie Insurance
Exchange

CERTIFICATE OF SERVICE

I certify that a true and accurate copy of the foregoing was served February 13, 2023, by
electronic mail upon Geoffrey J. Moul, Murray Murphy Moul + Basil LLP, 114 Dublin Road,
Columbus, OH 43215, moul@mmmb.com, Attorney for Plaintiff.

‘sl Gordow D. Arnold
Gordon D. Arnold (0012195)

-15-

FREUND, FREEZE & ARNOLD
A Legal Professional Association

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Motion,Ex Parte: 1415 SOUTHSIDE PROPERTIES LLC Vs ERIE INSURANCE COMPANY VS.ERIE INSURANCE COMPANY

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Motion,Ex Parte: 1415 SOUTHSIDE PROPERTIES LLC Vs ERIE INSURANCE COMPANY VS.ERIE INSURANCE COMPANY

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