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Franklin County Ohio Clerk of Courts of the Common Pleas- 2023 Mar 21 1:06 PM-21CV004885
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IN THE COURT OF COMMON PLEAS, FRANKLIN COUNTY, OHIO
CIVIL DIVISION
1415 SOUTHSIDE PROPERTIES LLC., CASE NO.: 21CV4885
PLAINTIFF,
Vv. JUDGE HAWKINS
ERIE INSURANCE COMPANY,
DEFENDANT.
ORDER AND ENTRY ON ERIE’S MOTION FOR RECONSIDERATION OF
COURT’S AUGUST 19, 2022 ORDER AND ENTRY
AND
ORDER AND ENTRY ON ERIE’S MOTION FOR SUMMARY JUDGMENT ON
ALL PLAINTIFF’S CLAIMS
AND
ORDER AND ENTRY ON PLAINTIFFS MOTION FOR PARTIAL SUMMARY
JUDGMENT
Hawkins, J.
This matter is before the Court on Defendant, Erie Insurance Company’s,
Motion for Reconsideration of this Court’s entry denying Defendant’s Motion for
Summary Judgment. Plaintiff 1415 Southside Properties, LLC opposes this motion.
This this matter is before the Court on the motion of Plaintiff for partial
summary judgment. Defendant opposes this motion.
Lastly, this matter is also before the Court on Defendant’s Motion for Summary
Judgment as to all of Plaintiffs claims. Plaintiff opposes this motion.
After full and careful consideration, this Court issues the following decision on
the motions.
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I Background
This Court entered an order on Defendant’s Motion for Summary Judgment on
August 19, 2022. See docket. Pursuant to that order, this Court found there to be
genuine issues of material fact as to whether Plaintiff would fall under the “tenant
operated business” provision or the “owner of the building” provision. See Order and
Entry, pp. 3,5 see also, Memorandum Contra of Plaintiff to Defendant’s Motion for
Summary Judgment, Exhibit 1.
The provision at issue states, in pertinent part:
Vacancy and Unoccupancy
Property may be unoccupied without limit of time. If the building at which
the “loss” occurs is vacant for more than 60 consecutive days before the “loss,”
then we will:
a) Not pay for any “loss” caused by:
1) Vandalism or malicious mischief, water damage, glass breakage, or
theft; ...
For a tenant operated business, the building means the unit or suite
rented or leased to the tenant. Such building is vacant when it does not
contain enough business personal property to conduct customary
operations.
For the owner of the building, the building means the entire building.
Such building is vacant unless at least 31% of its total square footage
is:
a. Rented to a lessee or sub-lessee and used by the lessee or sub-lessee
to conduct its customary operations....
Memorandum Contra of Plaintiff, Exhibit 1 Section X, Subsection 16.
This Court further found there to be a genuine issue of material fact as to what
percentage of the building was occupied since Plaintiff asserted that 49% of the
building was being used and Defendant asserted that 6.2% of the building was being
used if the “owner of the building” provision applied. See Order and Entry. pp. 4-5.
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Thus, this Court held that summary judgment in favor of Defendant was
inappropriate based upon the factual dispute as to the occupancy level for the vacancy
condition and the factual dispute as to whether Plaintiff was a “tenant operated
business” or the “owner of the building” under the insurance contract. Id. p. 5.
IL. Law and Analysi
a. Clarification of this Court’s August 19, 2022 Decision and
Entry Denying Defendant’s Motion for Summary Judgment
To clarify this Court’s August 2022 decision and entry denying Defendant’s
Motion for Summary Judgment, that decision is hereby revised to state:
This Court finds there to be a factual dispute as to which provision of the
insurance contract Plaintiffs claim is subject to. Specifically, this Court finds
there to be a dispute as to whether the “tenant operated business” provision
applies or whether the “owner of the building” provision applies. Further, if the
“owner of the building” provision applies, this Court finds there to be a factual
dispute as to whether the building was more than 31% occupied or whether the
building was less than 31% occupied for more than 60 days before the loss.
b. Defendant’s Motion for Reconsideration.
Defendants filed a motion for reconsideration on the grounds that there are no
genuine issues of material fact which refute that for 60 consecutive days before
Plaintiffs loss, less than 31% of the insured building’s square footage was used to
conduct customary operations and thus the vacancy provision of the insurance
contract excludes coverage. Defendant’s Motion for Reconsideration, p.1
The Ohio Supreme Court has held that motions for reconsideration, while not
provided for in Ohio’s Civil Rules, are a permissible procedural tool. See, Pitts v. Ohio
Dept. of Transp., 67 Ohio St. 2d 378, 380, 31 Ohio Op. 3d 238, 239, 423 N.E.2d 1105,
1106 at fn. 1. This falls within the power of a trial court to review its own interlocutory
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rulings prior to final judgment. Vanest v. Pillbury Co., 124 Ohio App. 3d 525, 535, 706
N.E.2d 825, 831-832. Requests for reconsideration of such orders “may be entertained
at the discretion of the court.” LaBarbera v. Batsch, 117 Ohio App. 273, 276, 21 Ohio
Op. 2d 439, 441, 182 N.E.2d 632, 634.
Subject to Ohio Civil Rule 54(B), an order which “adjudicates fewer than all the
claims or the rights and liabilities of fewer than all the parties shall not terminate the
action as to any of the claims or parties, and the order or other form of decision is
subject to revision at any time before the entry of judgment adjudicating all the claims
and the rights and liabilities of all the parties.” ORCP 54(B)
Here, this Court found there to be genuine issues of material fact as to which
provision Plaintiff is subject to under the insurance contract with Defendant.
Further, this Court found there to be genuine issues of material fact as to the
occupancy level during the alleged loss. This Court finds there still to be genuine
issues of material fact remain with respect to this provision, thus summary judgment
is still improper in favor of Defendant.
Based upon the foregoing, this Court adheres to its prior decision denying
Defendant’s Motion for Summary Judgment and thus DENIES Defendant’s motion
for reconsideration.
c. Plaintiff's Motion for Summary Judgment, filed January 17.
2023
Plaintiff subsequently filed a motion for partial summary judgment on January
17, 2023. In support of its motion, Plaintiff uses language from this Court’s August 19,
2022 Decision and Entry Denying Defendant’s Motion for Summary Judgment.
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Specifically, Plaintiff argues that since this Court found “there to be multiple possible
interpretations of the insurance contract language...” the Court must strictly construe
the language against the insurer and liberally in favor of the insured. Plaintiff's
Motion for Summary Judgment, pp 1-2.
As described in this Court’s clarifying language above, this Court finds there to
be a factual dispute as to which provision of the insurance contract Plaintiff is subject
to. Thus, Plaintiffs motion for summary judgment is not-well taken and is hereby
DENIED.
d. Defendant’s Motion for Summary Judgment as to Plaintiffs
Claim for Bad Faith
This Court’s August 19, 2022 Order further granted Plaintiffs Motion to
Amend their Complaint to include a claim for bad faith. The Court permitted this
amendment on the grounds that this was the first time Plaintiff sought to amend their
Complaint and the trial date was ten months away allowing reasonable time for
discovery as to this claim.
Defendant now seeks summary judgment as to Plaintiffs claim for bad faith
because “Erie acted with reasonable justification in denying the claim.” Defendant’s
Motion for Summary Judgment, p. 12. Specifically, Erie asserts it investigated
Plaintiffs claim, including inspections and measurements of the building, and took
Mark Cecutti’s Examination Under Oath, after Cecutti and his lawyer were fully
informed of the issues, were told of the insurance conditions being considered, and told
the controlling law involved. Jd. citing (Beiter Aff. at 9/4; see also Beiter Depo. At 12”7-
14; Arnold Aff.).
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In Plaintiffs opposition, Plaintiff asserts that “Brad Kernan of Erie inspected
the equipment at the time he sold the policy and saw nothing to suggest it wasn’t in
good condition.” Plaintiff's Opposition, p.14. Plaintiff further asserts that it notified
Defendant of the loss through its agent on September 23, 2020 and that where was
no evidence that Erie acted on the claim until after October 30, 2020. Id. Additionally,
Plaintiff asserts that Defendant failed to conduct a timely inspection to determine if
the contents and use of the building at issue was relevant to the vacancy exclusion
under the insurance contract. Id. See further, Expert Report of John Petro, Exhibit
10, at p. 3. Plaintiff next asserts that one of Erie’s adjusters, David Zdunski,
concluded that coverage would apply without any exclusions. Jd, pp. 14-15 citing
Geiter Dep. Ex. 1 at Bates Np. 000057; see also Dec. 8, 2021 G. Arnold Letter).
Plaintiff further asserts a second adjuster, John Fetters, reached the same
conclusion. Jd. p. 15, see also (Beiter Dep. Ex. 1 at Bates No. 000053). Plaintiff also
asserts that Plaintiff recommended Defendant to interview Ernie Stepp who was a
material witness to what was being stored at the location subject to the insurance
claim. Plaintiff's Opposition, p. 17, citing (Cecutti Recorded Stmt. At Bates Nos.
001588-1589). Plaintiff asserts that Erie ultimately never interviewed him prior to
the denial of the claim. Plaintiff's Opposition, pp. 22-23.
Plaintiff asserts that after the first two adjusters stated coverage would apply,
Plaintiff subsequently received a notification on March 9, 2021 that a new claims
representative of Defendant overruled the prior decisions to cover the claim. Jd. p. 17.
Specifically, Plaintiff asserts that the new claims representative, Chris Snyder,
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instructed Defendant to deny the claim on the grounds that the “vacancy provision
applies.” Id.
In their reply, Defendant asserts that they notified Plaintiff that the vacancy
provision may apply. Defendant’s Reply in Support of its Motion for Summary
Judgment, p. 3. Further, Defendant argues that an agent of Defendant personally
observed, measured, and calculated the building’s square footage and cross-
referenced that information with the Franklin County Auditor’s Office estimate. Id.
p.4.
Additionally, Defendant argues that Defendant’s agent reviewed Plaintiffs
material witness, Mark Cecutti’s, confirmed sworn testimony. Jd. p. 5. Defendant
further asserts that pursuant to Mr. Cecutti’s testimony, Mr. Cecutti had advised
Erie that Ernie Stepp lacked knowledge relevant to the claim. Jd. p. 6. Further,
Defendant argues that the formal denial of Plaintiffs claim occurred on May 27, 2021
and neither Plaintiff nor Plaintiffs agents responded with rebuttal until August 2021
when Plaintiff initiated this instant action. Jd. Pursuant to the cumulative
information Defendant reviewed, including Mark Cecutti’s sworn testimony, Mark
Beiter’s personal observations and measurements, and the Franklin County Auditor's
Office measurements, Defendant denied Plaintiffs claim. Id. p. 6.
“Under Ohio law, an insurer has a duty to act in good faith in the processing
and payment of valid claims of its insured.” Beever v. Cincinnati Life Ins. Co., 10th
Dist. No. 02AP-543, 2003-Ohio-2942, [ 20. If an insurer improperly refuses to pay a
valid claim, that failure may amount to insurance “bad faith.” Id.
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The Ohio Supreme Court clarified the standard of proof in bad faith litigation
holding “[a]n insurer fails to exercise good faith in the processing of a claim of its
insured where its refusal to pay the claim is not predicated upon circumstances that
furnish reasonable justification therefor.” Zoppo v. Homestead Ins. Co., 71 Ohio St.
3d 552, 554 quoting Hart v. Republic Mut. Ins. Co. (1949), 152 Ohio St. 185, 39 O. O.
465, 87 N. E. 2d 347. “Intent is not and has never been an element of the reasonable
justification standard.” Zoppo at *555.
“A lack of reasonable justification exists where an insurer refuses to pay a
claim in an arbitrary or capricious manner.” Nationwide Ins. Ent. v. Progressive
Specialty Ins. Co., 10th Dist. No. 01AP-1223, 2002-Ohio-3070, § 17 (citing Hart v.
Republic Mut. Ins. Co., 152 Ohio St. 185, 188 (1949)).
Further, “an insurance company’s refusal to pay a valid claim is not
conclusive of bad faith, but if the insurer bases its refusal on a belief that there is no
coverage for a particular claim, such belief may not be arbitrary or capricious.”
Kamunikar v. Fiorita, 10th Dist. No. 16AP- 736, 2017-Ohio-5605, {[21 citing Beever v.
Cincinnati Life Ins. Co., 10th Dist. No. 0O2AP-543, 2003-Ohio-2942, 421
However, an insurance company’s failure to properly investigate an insured’s
claim may give rise to a bad-faith cause of action against the insurer. Kamnikar at
4/21, citing Beever at 41.
Here, with this legal standard in mind, as well as the facts set forth in the
record, this Court finds that Defendant, Erie Insurance, did not lack reasonable
justification when it refused to pay Plaintiffs claim. Specifically, this Court finds that
by virtue of Erie notifying Plaintiff that the vacancy provision may apply, reviewing
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Mark Cecutti’s sworn testimony, having Erie’s Agent Mike Beiter go out to the
property to personally observe, measure, and calculate the building’s square footage,
and cross-referencing this information with the Franklin County Auditor’s Office
estimates, Defendant had reasonable justification to deny Plaintiffs claim. Further,
this Court finds that the denial was not done in an arbitrary or capricious manner
because Defendant believed that coverage would not apply pursuant to the vacancy
provision.
Thus, after full and careful consideration, this Court finds Defendant’s motion
for summary judgment as to Plaintiffs claim for bad faith to be well-taken and
hereby GRANTS the same.
IT IS SO ORDERED
Judge Daniel R. Hawkins
Copies to:
All counsel of record.
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Franklin County Court of Common Pleas
Date: 03-21-2023
Case Title: 1415 SOUTHSIDE PROPERTIES LLC -VS- ERIE INSURANCE
COMPANY
Case Number: 21CV004885
Type: ENTRY
It Is So Ordered.
LL
i
of
“.
A
/s/ Judge Daniel R. Hawkins
Electronically signed on 2023-Mar-21 page 10 of 10
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Court Disposition
Case Number: 21CV004885
Case Style: 1415 SOUTHSIDE PROPERTIES LLC -VS- ERIE
INSURANCE COMPANY
Motion Tie Off Information:
1. Motion CMS Document Id: 21CV0048852022-10-2799970000
Document Title: 10-27-2022-MOTION TO RECONSIDER -
DEFENDANT: ERIE INSURANCE COMPANY
Disposition: MOTION DENIED
2. Motion CMS Document Id: 21CV0048852023-01-1799950000
Document Title: 01-17-2023- MOTION FOR PARTIAL SUMMARY
JUDGMENT - PLAINTIFF: 1415 SOUTHSIDE PROPERTIES LLC
Disposition: MOTION DENIED
3. Motion CMS Document Id: 21CV0048852022-12-0599980000
Document Title: 12-05-2022-MOTION FOR LEAVE TO FILE -
PLAINTIFF: 1415 SOUTHSIDE PROPERTIES LLC
Disposition: MOTION RELEASED TO CLEAR DOCKET
4. Motion CMS Document Id: 21CV0048852023-03-0799980000
Document Title: 03-07-2023-MOTION TO EXTEND TIME -
PLAINTIFF: 1415 SOUTHSIDE PROPERTIES LLC
Disposition: MOTION RELEASED TO CLEAR DOCKET