Safway Services, LLC v. Anthony Filo Construction, Inc., 122613 OHCP, CV 12 781207

Docket Nº:CV 12 781207
Party Name:SAFWAY [1] SERVICES, LLC, Plaintiff v. ANTHONY FILO CONSTRUCTION, INC., Defendant/third-party plaintiff v. AUTO-OWNERS (MUTUAL) INSURANCE, Third-party defendant
Case Date:December 26, 2013
Court:Court of Common Pleas of Ohio



ANTHONY FILO CONSTRUCTION, INC., Defendant/third-party plaintiff


AUTO-OWNERS (MUTUAL) INSURANCE, Third-party defendant

No. CV 12 781207

Court of Common Pleas of Ohio, Cuyahoga

December 26, 2013




This case began as a lawsuit by plaintiff Safway Services, LLC against defendant Anthony Filo Construction, Inc. to collect unpaid rent due under a lease for scaffolds and related equipment, as well as the value of the equipment, which Filo never returned.2

Filo then filed a third-party complaint against its insurance carrier, Auto-Owners (Mutual) Insurance. The third-party complaint avers that Filo was in possession of the building and land at 1662 Cherry Street, Youngstown, pursuant to a land contract. On October 16, 2010, the building and its contents were destroyed by a fire.3 The third-party complaint alleges that Auto-Owners insured the premises under two liability policies -- one for commercial general liability, the other an umbrella policy -- and breached those contracts by failing to pay claims for the damaged building and its contents. The third-party complaint also includes causes of action for 1) a declaratory judgment to the effect that Auto-Owners owes coverage to Filo and 2) bad faith denial of coverage.

Auto-Owners asserted a counterclaim4 to the third-party complaint. The counterclaim seeks a declaratory judgment that Auto-Owners does not owe Filo indemnity and a defense for Safway's claims. The counterclaim seeks a further declaration that Auto-Owners is not required to indemnify Filo for claims against Filo by the building's owner for damage to the structure and its other contents.

On April 23, 2013, Safway's complaint against Filo was resolved by a stipulated judgment. On that same date, counsel for Auto-Owners and Filo agreed that Auto-Owners's pending motion for summary declaratory judgment would be decided and that, after that ruling, whatever genuine issues of material fact that remained on the counterclaim for declaratory judgment would be decided by the court, as a fact finder, based on all of the record evidence: the insurance policies attached to the pleadings, the documents submitted in connection with the January 22, 2013, motion for summary judgment, the evidence attached to Filo's March 1 brief in opposition and Auto-Owners's March 8 reply brief, and a stipulation of undisputed facts filed on May 2, 2013.

In the meantime, with no objection by Auto-Owners and with the consent of the court, the third-party complaint was voluntarily dismissed.

Hence, this entry constitutes my ruling on the motion for summary declaratory judgment and, where issues of fact remain, my findings of fact and conclusions of law on Auto-Owners's counterclaim for a declaratory judgment.


The property at 1662 Cherry Street in Youngstown is owned by the Florence E. Hirt Family Trust. As of October 16, 2010, Filo was in possession of the premises under a lease, with a purchase option, from the trust.

The building and all its contents were destroyed by a fire on October 16, 2010. The night before the fire, Filo employee David Oracio was in the building using a mechanical saw to cut metal rebar. The process generated a lot of sparks in the old building. Because that process created a risk of fire, Anthony Filo, the owner of Filo Construction, had previously warned his workers not to cut rebar inside the building. This is the only evidence of the fire's cause.

On October 15, 2012, the trust filed a lawsuit in the Mahoning County Court of Common Pleas6 against Filo alleging that Filo or its employees negligently started the fire and caused damage equal to the value of the building.

At the time of the fire, Filo had two insurance policies through Auto-Owners: a commercial general liability policy and a commercial umbrella policy. When Filo was sued by the trust, it tendered the lawsuit to Auto-Owners with a request that Auto-Owners provide a defense and, if necessary, indemnify Filo for the trust's claimed damages. Auto-Owners has provided for Filo's defense against the Mahoning County negligence lawsuit while reserving its right to disclaim coverage.

In the meantime, about six months earlier, Safway had filed this lawsuit alleging only breach of contract and unjust enrichment.7 Auto-Owners did not provide for Filo's defense against Safway's lawsuit, prompting the third-party complaint by Filo and the September 13, 2012, counterclaim for declaratory judgment.


The CGL policy and Safway's claims

The commercial general liability contract between Auto-Owners and Filo is policy number 062303-05069130-09. The policy includes several provisions that are implicated by Safway's claims.

First, by Section 1, Coverage A, Auto-Owners agrees to pay " those sums that [Filo] becomes legally obligated to pay as damages" because of " 'property damage' to which this insurance applies." 8 This coverage applies only where the damage is caused by an " occurrence, " defined in the policy as an accident.9 But the liability coverage is limited by several exclusions. Two of those exceptions from coverage are for damages that Filo is responsible for under a contract and damage to certain property in Filo's possession.10

The first of these exclusions provides, in pertinent part:

This insurance does not apply to:

b. Contractual Liability " Bodily injury" or " property damage" for which the insured is obligated to pay damages by reason of the assumption of liability in a contract or agreement. This exclusion does not apply to liability for damages: That the insured would have in the absence of a contract or agreement.

The second relevant exclusion is for damage to " [p]roperty you own, rent, occupy or use" and personal property " in the care, custody or control" 11 of Filo.

The CGL policy goes on to include Auto-Owners's agreement to pay for Filo's defense against any lawsuit claiming damages covered under the policy. Specifically, the policy provides:

We will have the right and duty to defend [Filo] against any " suit" seeking [covered] damages.12

The umbrella policy and Safway's claims

Although the language of the umbrella policy is not identical to the CGL policy, its essence is the same. By the policy, Auto Owners agrees to pay -- after underlying insurance is exhausted, or, if it does not apply, after the amount of Filo's retained limit is used up -- property damage...

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