COURT OF APPEALS OF OHIO, EIGHTH DISTRICT COUNTY OF CUYAHOGA NO. 73593 HAMED SALEM : : Plaintiff-Appellant : JOURNAL ENTRY : -vs- : AND : FIRST FINANCIAL INSURANCE CO. : OPINION : Defendant-Appellee : Date of Announcement of Decision: NOVEMBER 25, 1998 Character of Proceeding: Civil appeal from Court of Common Pleas Case No. 299823 Judgment: AFFIRMED Date of Journalization: Appearances: For Plaintiff-Appellant: THOMAS M. MORONEY, ESQ. Thomas M. Moroney Co., L.P.A. 1230 Standard Building 1370 Ontario Street Cleveland, Ohio 44113-1739 For Defendant-Appellee: DONALD J. MORACZ, ESQ. BRIAN D. SULLIVAN, ESQ. Reminger & Reminger 113 St. Clair Building Cleveland, Ohio 44114 -2- JAMES M. PORTER, P.J.: Plaintiff-appellant Hamed Salem appeals from the summary judgment in favor of defendant-appellee First Financial Insurance Company on plaintiff's claim for a fire loss on his inner-city property. Plaintiff claims the trial court should have granted summary judgment in his favor rather than defendant's. We find no error and affirm. On June 15, 1990, plaintiff purchased a commercial building at 9913 St. Clair Avenue, Cleveland, Ohio. At the time, the first floor tenants consisted of a beauty salon, a church and a beverage store. There were four apartment units on the second floor which plaintiff rented. Effective August 19, 1993, plaintiff insured his building with First Financial. Up until this point he had insurance with various other insurance companies who had canceled his policy upon learning of the high risk nature of the property. The First Financial policy provided coverage for direct physical loss or damage to covered property caused by or resulting from any covered cause of loss. However, the policy specifically provided that it would not cover any loss or damage if the building was vacant or unoccupied pursuant to the following Endorsement: We will not pay for any loss or damage if the building where loss or damage occurs has been vacant or unoccupied for more than 30 consecutive days before that loss or damage, whether or not such vacancy or unoccupancy begins before the inception of this policy. But we will pay if the building is unoccupied due to circumstances that are -3- usual or incidental to the described occupancy. This policy is void if any building is vacant at the inception of this policy. This condition does not apply if the Vacancy Permit endorsement is attached. Buildings under construction are not considered vacant or unoccupied. (Endorsement BG-F-044 492 of Commercial Property Policy). Further, the policy defined unoccupied to mean containing contents pertaining to the occupancy of the building while operations or other customer activities are suspended. Vacant is defined under the policy as containing no contents pertaining to operations or activities customary to occupancy of the building. (Endorsement CP 00 990788 at page 12). On March 29, 1994, plaintiff's property was raided by the Cleveland Police Department because of suspicions of drug activity in the beverage store located in plaintiff's building. At this time, besides the beverage store, the plaintiff only had the beauty salon and one residential tenant as tenants in the building. The church had vacated the premises a few months before and he had no other residential tenants. On April 12, 1994, the City of Cleveland inspected the building and forced all the tenants to vacate, boarded up all the windows and put locks on the doors. On April 19, 1994, plaintiff received a violation notice that deemed the building condemned and indicated a plan for demolition of the building if thirty violations were not corrected. Shortly thereafter, plaintiff made some repairs to the building and during -4- June 1994, the beverage store reopened. On July 10, 1994, however, the beverage store closed. At this point, there were no tenants or business operations on the premises. On August 19, 1994, plaintiff renewed his policy with First Financial upon the same terms and conditions as in the original policy. Plaintiff acknowledged that at the time he renewed his policy, the building was not occupied: Q. Will you agree with me that at the time you renewed the policy on August 19, 1994, the building is not occupied? A. When? 1994? Q. Yes. A. It was. Q. Not occupied? A. Right. (Pltf's Depo. at 107). On August 29, 1994, there were two small fires in the upstairs portion of the building. The police report of these incidents indicated that the building was a boarded up drug house. Thereafter, on September 5, 1994, another fire broke out in the beverage store. All of these fires were determined to be caused by arson. As a result of these fires, plaintiff submitted claims for the fire losses to First Financial. First Financial investigated the fires and declined to provide coverage for the claimed losses because the building was vacant or unoccupied at the time of the fires. On February 16, 1995, First Financial issued a notice of cancellation on the basis that the property was vacant at the -5- inception of the policy and refunded the pro rata share of the premium. On December 11, 1995, plaintiff brought suit against First Financial seeking declaratory judgment that First Financial should provide coverage for the fire damage at the building. First Financial answered with a general denial. Plaintiff also alleged claims for breach of contract related to First Financial's refusal to pay a theft claim and for bad faith. Plaintiff, however, has not assigned error to the trial court's grant of summary judgment on those claims. First Financial moved for summary judgment arguing that plaintiff's property was unoccupied or vacant at the time of the fire and the damage was not a covered loss under the policy. Plaintiff responded and filed a cross-motion for summary judgment. Plaintiff asserted that the building's vacancy was due to circumstances that were usual and incidental to the characteristics of the property. On October 29, 1997, the trial court granted summary judgment in favor of First Financial and in its opinion stated in part as follows: There are no material facts at issue. As a matter of law, the building was vacant for more than thirty (30) days, and therefore, coverage in contravention of the contract was excluded for these claims. There was no insurance coverage for the claimed losses. Therefore, it is the finding of this court that defendant's motion for summary judgment should be granted and it is so ordered. Plaintiff filed a timely notice of appeal herein. -6- Plaintiff's sole assignment of error states as follows: I. THE TRIAL COURT ERRED IN FAILING TO GRANT APPELLANT'S MOTION FOR SUMMARY JUDGMENT ON THE INSURANCE POLICIES ISSUED BY APPELLEE. Under Civ.R. 56, summary judgment is proper when: (1) no genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the nonmoving party, that conclusion is adverse to the party against whom the motion for summary judgment is made. State ex rel. Parsons v. Fleming (1994), 68 Ohio St.3d 509, 511; Temple v. Wean United, Inc. (1977), 50 Ohio St.2d 317, 327. It is well settled that the party seeking summary judgment bears the burden of showing that no genuine issue of material fact exists for trial. Celotex Corp. v. Catrett (1987), 477 U.S. 317, 330; Mitseff v. Wheeler (1988), 38 Ohio St.3d 112, 115. Doubts must be resolved in favor of the nonmoving party. Murphy v. Reynoldsburg (1992), 65 Ohio St.3d 356, 358-59. However, the nonmoving party must produce evidence on any issue for which that party bears the burden of production at trial. Wing v. Anchor Media, Ltd. (1991), 59 Ohio St.3d 108, 111; Celotex, supra, at 322-323. In accordance with Civ.R. 56(E), "a nonmovant may not rest upon the mere allegations or denials of his pleadings, but must set forth specific facts showing there is a genuine issue for trial." Chaney v. Clark Cty. Agricultural Soc. (1993), 90 Ohio App.3d 421, 424. -7- In Dresher v. Burt (1996), 75 Ohio St.3d 280, the Supreme Court of Ohio modified the summary judgment standard as was applied under Wing v. Anchor Media, Ltd. of Texas (1991), 59 Ohio St. 3d 108. Presently, under the new standard, "*** the moving party bears the initial responsibility of informing the trial court of the basis for the motion, and identifying those portions of the record which demonstrate the absence of a genuine issue of fact or a material element of the nonmoving party's claim." Dresher at 296. This Court reviews the lower court's granting of summary judgment de novo. Brown v. Scioto Bd. of Commrs. (1993), 87 Ohio App.3d 704, 711 ("We review the judgment independently and without deference to the trial court's determination"). An appellate court reviewing the grant of summary judgment must follow the standards set forth in Civ.R. 56(C). "The reviewing court evaluates the record *** in a light most favorable to the nonmoving party. *** [T]he motion must be overruled if reasonable minds could find for the party opposing the motion." Saunders v. McFaul (1990), 71 Ohio App.3d 46, 50; Link v. Leadworks Corp. (1992), 79 Ohio App.3d 735, 741. Plaintiff does not dispute that the building was unoccupied or vacant for at least thirty days prior to the fire losses, a circumstance which would ordinarily negate coverage. However, plaintiff contends that, since the building was located in an inner city neighborhood, a drug raid and condemnation by the City of Cleveland was a usual incident for such property, bringing it -8- within an exception to the non-coverage. The policy at issue defined unoccupied as containing no contents pertaining to the occupancy of the building while operations or other customer activities are suspended. Plaintiff offered no evidence indicating that the building contained contents related to its customary activities. In fact, plaintiff testified that the building was vacant, had no heat, no hot water, and was boarded up. (Pltf's Depo. at 79, 112-113). Whether a building is unoccupied depends upon the nature and character of the building, the purpose for which it was designed, and the use contemplated by the parties as expressed in the insurance contract. Cashen v. Campden Fire Ins. Co. (1961), 348 S.W.2d 883; Crutchfield v. Century Surety Co. (Dec. 22, 1992), Franklin App. No. 92AP-908, unreported. See Young v. Linden (Sept. 3, 1998), Cuyahoga App. No. 73153, 73619 (tavern unoccupied as owner admitted he used space for storage of tavern items since tavern closed year previously, therefore, claim was excluded under insurance policy provision). The contemplated use [for a building] is determined by the terms expressed on the contract. Camaron v. Frances Slocum Bank and Trust Company (1987), 824 F.2d 570, 573, footnote 2, citing Trustees of Erskine College and Central Mutual Ins. Co. (1978), 241 S.E.2d 160; see Eureka Fire & Marine Ins. Co. v. Baldwin (1990), 62 Ohio St. 368. In this case, the policy provided that the property was to be used as a mercantile occupancy. (See Commercial Property Coverage Part Declaration). Subsequent to the April 12, 1994 -9- condemnation by the City inspector, the building was not suitable for its contemplated use. The fact that the building was located in an inner city neighborhood does not mean that its condemnation is a usual incident. A usual incident of a mercantile occupancy does not include the property's use as a drug house and its subsequent condemnation and boarding up by city authorities. Additionally, the fact that there may be a high turnover rate of businesses who occupy property located within inner city neighborhoods does not deem the building's vacancy a usual or incidental use of the property. Consequently, the provision in the policy that indicates that First Financial will pay a loss if a property is unoccupied due to circumstances that are usual or incidental to the property has no application to the facts of this case. Plaintiff also argues that the building was under construction at the time of the fires, relying on the policy provision which indicates that buildings under construction are not considered vacant or unoccupied. The term under construction in an insurance policy, however, has been construed to refer to the building or erection of something new. Under construction does not include repairs or renovations to property which already exists. In Crutchfield v. Century Surety Co. (Dec. 22, 1992), Franklin App. No. 92AP-908, unreported, the Tenth District Court of Appeals concluded that remodeling work in a vacant house does not constitute occupancy for purposes of obtaining coverage under an -10- insurance policy. In Crutchfield, the plaintiff submitted a fire loss claim to his insurance company for property damage to his home that was vacant for at least six months preceding the fire. The insurance company denied the plaintiff's claim on the basis that the home was vacant and unoccupied at the time of the loss. The plaintiff presented evidence that a prospective tenant had been doing remodeling work on the home and had left tools in the home during the time the property was vacant. The trial court determined that the insurance company properly refused to provide coverage. On appeal, the Franklin County Court of Appeals affirmed. The court held that coverage was properly denied since the house was, by plaintiff's admission, vacant for six months prior to the fire. The court also concluded that the insurance company was unaware that the remodeling was apparently in progress. The court stated that, even if [the insurance company] knew of the activity on the premises, they had a fair argument that it did not constitute occupancy. Id. Likewise, the Seventh Circuit Court of Appeals in Myers v. Merrimack Mut. Fire Ins. Co. (C.A.7, 1986), 788 F.2d 468 held that renovations do not constitute construction. In that case, the plaintiff filed a claim with his insurance company for fire damage to an apartment building. The insurance company denied coverage on the basis that the building was vacant for a sixteen-month period prior to the fire. Plaintiff argued that the building was being renovated during that period and that the renovations fell within the category of construction. Consequently, plaintiff argued -11- that his fire loss was covered since it fell within the exception to the vacancy exclusion. The district court concluded that the insurance company properly declined coverage: In drawing its own conclusion about the plain meaning of the term construction as derived from these definitions, the court is persuaded like the Georgia Appellate Court in Travelers' Indemnity Co. v. Wilkes County, 102 Ga. App. 362, 116 S.E.2d 314, 317 (1960) that: When used in this sense, the word `construction' imports the building or erection of something which theretofore did not exist; the creation of something new rather than the repair or improvement of something already existing. Id. at 623. The Seventh Circuit affirmed the judgment of the district court and noted that the term construction did not include repairs or renovations: Several state courts have held that in an insurance policy, the term construction does not include repairs, maintenance, reconstruction, renovation and the like to an already existing structure. Travelers' Indemnity Co. v. Wilkes County, 102 Ga. App. 362, 116 S.E.2d 314, 317 (1960); Crescent Co. of Spartenburg, Inc. v. Insurance Company of North America, 266 S.C. 598, 225 S.E.2d 656, 658 (1976), many state courts have made the same distinction in defining the term construction and other context. Commonwealth v. Brown, 391 Mass. 157, 460 N.E.2d 606, 609 (1984); Muirhead v. Pilot Properties, Inc., 258, So.2d 232 (Miss. 1972); ***. Moreover, this distinction accords with the probable purpose of this clause. Such a clause balances the willingness to extend coverage through the construction. With a desire to guard against excessive vandalism that occurs when a dwelling is vacant, *** and the interpretation urged by plaintiffs would intolerably alter this balance by greatly extending the construction period to include any time during which some repairs or renovations are being made. Construction cannot go on forever. -12- Id. at 472 (internal citations omitted). We agree with the trial court that the building was not under construction at the time of the loss and was vacant within the meaning of the policy. Plaintiff also argues that Harvey Lewis' interpretation of the insurance contract binds First Financial since Lewis was First Financial's agent. In his deposition, Lewis stated that the fact that the plaintiff's property was boarded up due to a drug raid was a usual incident of the property since it was inner-city property. However, during his deposition, Lewis admitted he was not an agent of First Financial, but instead worked as a broker for InternationalExcess who in turn obtained the insurance from First Financial. Q. How would you describe your relationship to International Excess Agency? A. They are what is deemed to be a surplus line broker. They primarily write the difficult to place risks. Q. You are an independent contractor? A. Yes, sir. Q. Do you deal with different agencies like International Excess Agency? A. Yes, sir. * * * Q. Do you have a contract with First Financial Insurance? A. No. Q. Do you have some sort of contract with International Excess Agency? -13- A. I don't believe. I think we just place business with them on strictly a brokerage basis. (Tr. 5-6). Q. *** The fact that Mr. Salem was canceled by three other insurance companies in the three years prior to this placing of insurance with First Financial, and the fact the property was damaged by a fire bomb is not material to the placing of insurance with First Financial? A. Number one, you're bringing up First Financial. I did not place insurance with First Financial, International Excess did that. I have no say-so where International Excess places insurance ***. (Tr. 18-19). Therefore, the plaintiff's contention that Lewis' statements were binding on First Financial is without merit. Accordingly, summary judgment was properly entered for defendant and denied for plaintiff. Plaintiff's sole assignment of error is overruled. Judgment affirmed. -14- It is ordered that appellee recover of appellant its costs herein taxed. The Court finds there were reasonable grounds for this appeal. It is ordered that a special mandate issue out of this Court directing the Court of Common Pleas to carry this judgment into execution. A certified copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of Appellate Procedure. KARPINSKI, J., and MICHAEL J. CORRIGAN, J., CONCUR. JAMES M. PORTER PRESIDING JUDGE N.B. This entry is an announcement of the court's decision. See App.R. 22(B), 22(D) and 26(A); Loc.App.R. 27. This decision will be journalized and will become the judgment and order of the court pursuant to App.R. 22(E) unless a motion for reconsideration with supporting brief, per App.R. 26(A), is filed within ten (10) days of the announcement of the court's decision. The time period for review by the Supreme Court of Ohio shall begin to run upon the journalization of this court's announcement of decision by the .