MAY 1 ^5?^(39 CLERK OF COURT MAY SUPREME COURT OF OHIO IN THE SUPREME COURT OF OHIO. Case No EFFICIENT LIGHTING SALES CO., et al.

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1 IN THE SUPREME COURT OF OHIO EFFICIENT LIGHTING SALES CO., et al. vs. Plaintiffs-Appellants JEFF NEVERMAN, et al., Defendants-Appellants Case No On Appeal from the Cuyahoga County Court of Appeals, Eighth Appellate District C.A. Case Nos and MAY MEMORANDUM IN RESPONSE OF APPELLEE MOTORISTS MUTUAL INSURANCE COMPANY Sean P. Allan, Esq. ( ) 614 W. Superior Avenue, Suite 1300 Cleveland, Ohio PH: (216) FX: (216) sallan(& a^llp.com Michael Farrell, Esq. ( ) Law Office of Michael F. Farrell 55 Public Square, Suite 910 Cleveland, Ohio PH: (216) FX: (216) farrellm a,granaeinsurance.com Attorneys for Defendant-Appellant, Neverman Insurance Agency, Inc. ME MAY 1 ^5?^(39 CLERK OF COURT SUPREME COURT OF OHIO Terrance P. Gravens, Esq. ( ) Ryan N. Clark, Esq. ( ) RAWLIN GRAVENS CO., L.P.A. 55 Public Square, Suite 850 Cleveland, Ohio PH: (216) FX: (216) tgravensn_a,rawline,ravens. com rclark grawlingravens. com Attorneys for Defendant-Appellee, Motorists Mutual Insurance Company Steve Forbes, Esq. ( ) Patrick J. Milligan, Esq. ( ) Norchi, Barrett & Forbes, LLC Commerce Park IV Chagrin Boulevard, Suite 600 Cleveland, Ohio sforbes@norchilaw.com pimilligan@norchilaw.com Attorneys for Plaintiffs-Appellants, Efficient Lighting Sales Co., Inc., et al.

2 Darlene E. White, Esq. (072836) Gallagher Sharp 1501 Euclid Avenue Bulkley Building - Sixth Floor Cleveland, Ohio PH: (216) FX: (216) dwhite@allaghersharp.com Attorney for Defendant-Appellant, Jeff Neverman

3 TABLE OF CONTENTS Page 1. EXPLANATION OF WHY THIS CASE IS NOT A CASE OF PUBLIC OR GREAT GENERAL INTEREST...1 II. LAW AND ARGUMENT...2 Response to Proposition of Law: Where an insurance company utilizes abbreviations to describe the "named insured" in a contract of insurance, thereby resulting in a situation where the identity of the "named insured" is reasonably susceptible of more than one interpretation, the interpretation that provides coverage must be adopted. CONCLUSION...13 CERTIFICATE OF SERV ICE...14 i

4 EXPLANATION OF WHY THIS CASE IS NOT A CASE OF PUBLIC OR GREAT GENERAL INTEREST This case does not rise to the level of this court's discretionary jurisdiction as the matter merely involved the correct decisions of the Trial Court and the Eighth District Court of Appeals, granting and affirming Summary Judgment for Appellees, for declaratory relief as to a standard insurance contract. Both the Trial Court and Eighth District Court of Appeals examined the record in this case and determined that the insurance policy was unambiguous and that Appellant Efficient Lighting Sales Co., Inc. ("ELS") was the "Named Insured" as specified in the policy and Appellants, Ultra Violet Resources International ("URI") and International Tanning Technologies, Corp. ("ITT") were only "Additional Insureds" as specifically stated in the policy. The Trial Court and Eighth District's decisions were based on the unambiguous and explicit language of the insurance policy. Their determinations did not involve novel issues of law or issues of great general or public interest and do not rise to the level warranting review by this court. Rather, Appellants are now merely seeking another "bite of the apple" after the Trial Court and Eighth District Court of Appeals appropriately concluded that Appellee was entitled to summary judgment for declaratory relief. The simple fact remains that the lower courts merely applied long standing principles of Ohio law and determined that the express language of the insurance policy was unambiguous and did not provide full coverage to URI or ITT, since they were not Named Insureds under the contract of insurance.

5 Indeed, as set forth in Appellant, Neverman Insurance Agency, Inc.'s ("Neverman") Memorandum, the circumstances before the lower courts involved ELS's "assumption" that URI and ITT were covered as "Named Insureds", despite express contrary language in the insurance policy and ELS's request that the other entities be covered only as "Additional Insureds". Contrary to Appellants' assertions, the straightforward interpretation of the express terms of the insurance policy will have absolutely no effect on the business environment in Ohio. The facts and legal issues before this court do not elevate this matter to that of public or great general interest and accordingly, Appellee respectfully requests that this Honorable Court decline Appellants' request for discretionary jurisdiction. LAW AND ARGUMENT Response to Proposition of Law: When an insurance company utilizes abbreviations to describe the "named insured" in a contract of insurance, thereby resulting in a situation where the identity of the "named insured" is reasonably susceptible of more than one interpretation, the interpretation that provides coverage must be adopted. A. The "Et Al" Designation Refers To URI and ITT As Opposed To The Registered Trade Name, "Light Bulb Sunnlv". Throughout this litigation, the Neverman Agency, which still has pending against it a claim for negligence brought by its co-appellants, has taken the lead on this strained coverage argument to avoid liability for any errors or omissions on its part in not requesting from Motorists Mutual Insurance Company the appropriate coverages for these three related but separate legal entities. The co-appellants have throughout and z

6 here in the Supreme Court have only filed "me too" briefs. They all assert the same proposition of law and make the same essential arguments. In essence, they have now asked three separate courts to declare that the insurance contract requires something the insurance contract does not provide: That all three separate legal entities are "Named Insureds" when the policy specifically states that the Named Insured is only Efficient Lights Sales Co., Inc. dba Light Bulb Supply and the other two entities are only listed as Additional Insureds on a separate endorsement. The insurance contract on its face defeats this strained coverage argument. Appellee submits that the coverage dispute between the parties was straightforward and properly determined by both the Trial Court and Eighth District Court of Appeals. The opinion set forth by the Eighth District Court of Appeals demonstrates that it merely applied fundamental principles of Ohio law, in concluding that in order to be a Named Insured an entity must be listed on the Declarations page of the policy. (Eighth District Court of Appeals, Journal Entry and Opinion, p. 10.) The Eighth District examined the express language of the policy and concluded that ELS was the only entity listed on the policy's Declarations page and was the only Named Insured in the policy. (Id. at 11). The lower courts also properly concluded that URI and ITT were merely Additional Insureds pursuant to the Special Endorsement, which was specifically requested by ELS. These conclusions were reached based upon the express and unambiguous language of the insurance policy. Several fundamental principles of law govern the coverage dispute herein and both the Trial Court and Eighth District Court of Appeals properly applied those principles. 3

7 First and foremost, the right of an insured to recover under a liability policy is determined by the terms of the contract and in interpreting those terms, Ohio courts shall consider the policy language as a whole. Couch on Insurance, 3`d Edition, 126:1; Pearne, Gordon, McCoy and Granger v. American Home Assurance Co. (1993), 92 Ohio App. 3d 251. Indeed, this court has stated: "it is equally well settled that all provisions of a contract must be construed together in determining the meaning or intention of any particular clause or provision thereof." Stickel v. Excess Insurance Company of America (1939), 136 Ohio St. 49. Additionally, the terms of an insurance contract are contained within its four corners and Ohio courts do not allow parties to "hunt for ambiguities" in an effort to create coverage under a policy. Bower v. The Cincinnati Insurance Company, 1997 WL (Ohio App. 8t1i Dist, September 11, 1997); Miller v. Hartford, aka Hartford Casualty Insurance Company, et al. (2001), 118 Ohio Misc. 2d 211. The above identified fundamental principles of Ohio law, applied to the unambiguous endorsements cited below, establish why both the Trial Court and Eighth District decided in favor of Appellee. The first endorsement is contained at the very front of the policy after the schedule of forms and endorsements and is titled the Named Insured Endorsement (IL 7007 (01-87), which clearly states who is the Named Insured: Named Insured IL 7007 (01-87) THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. 4

8 For the purpose of this insurance, the name shown in Item I. will be shown on the declarations and shall mean the Named Insured (Item II). The name shown in item I. may act as the Named Insured for all purposes of the policy and a premium notice or notice of cancellation mailed to such entity shall be considered the same as mailing to the Named Insured as provided in the premium notice and Cancellation conditions of the policy. 1. Acting Named Insured: EFFICIENT LIGHTING SALES CO. INC. ET AL 11. Named Insured: EFFICIENT LIGHTING SALES CO. INC. DBA LIGHT BULB SUPPLY Throughout the rest of the policy, the abbreviated form of the "Acting Named Insured": EFFICIENT LIGHTING SALES CO., INC. ET AL is used to "... mean the Named Insured": EFFICIENT LIGHTING SALES CO. INC. DBA LIGHT BULB SUPPLY. Thus, from the very policy itself, there is one and only one Named Insured - Efficient Lighting Sales Co. Inc. dba Light Bulb Supply, for which the full coverage of the policy is provided. This includes the coverage provided under the Commercial Umbrella Coverage Form, which is not a separate insurance policy but which is an endorsement incorporated into the business policy. The Commercial Umbrella policy is addressed in Section "B" of this Memorandum. The second coverage form which is pertinent to this matter is the Special Endorsement with form specification BPSPIP2 which is set forth hereafter: 5

9 BPSPIP2 SPECIAL ENDORSEMENT THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED - DESIGNATED PERSON OR ORGANIZATION This endorsement modifies insurance provided under the following: BUSINESSOWNERS POLICY SCHEDULE Name of Person or Organization: International Tanning Technologies Elmwood Ave Cleveland OH Ultraviolet Resources International Athens Ave. Lakewood OH The following is added to Paragraph C. WHO IS AN INSURED in the Businessowners Liability Coverage form: 4. The person or organization shown in the Schedule is also an insured, but only with respect to liability arising out of your operations or premises owned by or rented to you. A review of this Endorsement within the context of the total insurance policy reflects the following: First, it specifically states that it changes the policy and that it should be read carefully. Secondly, it states up front that it references as an "Additional Insured" a designated person or organization. Thereafter, URI and ITT are listed as the 6

10 Additional Insureds and thereafter specifies that these organizations are "Insureds", but only with respect to liability arising out of your operations or premises owned by or rented to you. Thus, once again the policy, itself, clearly specifies that those two separate legal entities are not "Named Insureds" but rather are only Additional Insureds for the limited purposes specified in the endorsement. Significantly, ELS, through Neverman Insurance Agency, specifically requested that URI and ITT be added only as "Additional Insureds" and attached to the policy change request was the above cited BPSPIP2 form. The fact remains that ELS was responsible for URI and ITT's status as "Additional Insureds", yet Appellants now seek this court's jurisdiction in an attempt to create coverage where none exits. The simple and straightforward fact remains that the insurance policy at issue identified only a single "Named Insured" "Efficient Lighting Sales Co., Inc., dba Light Bulb Supply". Further, ELS was responsible for requesting that URI and ITT be included under the policy only as "Additional Insureds". These two simple and straightforward facts alone demonstrate that both the Trial Court and Eighth District Court of Appeals correctly determined that Appellee was entitled to summary judgment as a matter of law. Nowhere in the policy were URI or ITT designated as "Named Insureds". Rather, as set forth in the second above identified endorsement, URI and ITT were specifically designated under the Special Endorsement, BPSPIP2, as "Additional Insured - Designated Person or Organization". Appellants' argument requires that the fundamental principles cited herein, as well as the clear coverage designations under the policy, be totally disregarded. ^

11 Further, numerous Ohio courts have recognized that the plain language of the insurance contract dictates whether an insured constitutes a "Named Insured" or an "Additional Insured". In the Sixth District case of Colonial Village Partners v. Great Central Insurance Co WL , (Ohio App. 6th Dist., October 6, 1999) the trial court granted summary judgment on behalf of the defendant insurance company on the basis that the plaintiff was not a "Named Insured", but rather an "Additional Insured" with limited coverage under the Additional Insured Endorsement. In reaching its decision, the court stated: The court further stated: The rules governing construction of insurance contracts are well settled. The court must look to the everyday meaning of all terms within the contract which must have been plainly in the minds of the contracting party (citation omitted). The court has a duty to enforce an insurance contract as made by the parties, and not rewrite or distort, under the guise of judicial construction, contract terms which are unambiguous, so long as they do not offend some rule of law or public policy. (citation omitted)... Applying these principals to the present case, this court finds that the insurance policy is not ambiguous or uncertain. The policy clearly states that the Colonial Village is an additional insured and not a named insured.... (Emphasis added) Accordingly, the Sixth District upheld the lower court's decision that plaintiff was merely an additional insured and not entitled to the broader coverage provided by the policy to named insureds. Further, the Eighth District has held that: "In order to be a named insured a person must be listed as such on the declarations page of the policy." 8

12 (Emphasis added.) Hillyer et al. v. State Farm Mutual Automobile Insurance Company, (1999) 131 Ohio App. 3d 172. In the present matter, the policy language unambiguously identifies only a single "Named Insured" and lists URI and ITT as "Additional Insureds". The policy can not be interpreted to simultaneously identify URI and ITT as "Named Insureds" and "Additional Insureds", as Appellants seek. Neither URI nor ITT are listed as "Named Insureds" on the declarations page and, indeed, ELS specifically requested that each entity be listed as an "Additional Insured". Ohio courts have a duty to enforce insurance contracts as they are written by the parties and not rewrite or distort the insurance contract language. Accordingly, both the Trial Court and Eighth District Court of Appeals reached the proper decisions. Appellants' make numerous strained arguments regarding the "et al." abbreviation in the "Acting Named Insured" endorsement. First and foremost, Appellants incorrectly assert in their Memorandum that the "et al." abbreviation is found in the "Named Insured" designation. Rather, Efficient Lighting Sales Co., Inc. dba Light Bulb Supply is the only "Named Insured". The "et al." provision is found in the "Acting Named Insured" Declaration, which served as an abbreviation of the more lengthy "Named Insured" Endorsement and was utilized for computer purposes, notice purposes and mailing purposes. As set forth above, Appellants' arguments ignore both fundamental principles of Ohio law and the express provisions of the insurance policy. Appellants' efforts are nothing more than an effort to create ambiguities in their ultimate effort of creating insurance coverage, where no such coverage exists pursuant to the express 9

13 language of the policy. Additionally, contrary to Appellants' assertion, Motorists never issued a Certificate of Insurance designating URI and ITT as Named Insureds. Contrary to Appellants' assertions Motorists also did not create the perception of coverage nor can such an argument be asserted in good faith, wherein Appellant ELS, itself, sought the limited coverage status of URI and ITT as "Additional Insureds". Finally, Appellants cite the New York Federal District Court case of Gerling America Insurance Company v. Steadfast Insurance Company, 2001 WL , in support of their argument. The Gerling case is entirely distinguishable and inapplicable to the present matter as it involved a dispute between insurance companies and different provisions of an insurance policy, as well as distinguishable facts, which lead the court to its conclusion. B. COMMERCIAL UMBRELLA POLICY Even if URI and ITT Are Not "Named Insureds" Under The Business Liability Coverage, They Oualify as "Insureds by Definition" Under the Commercial Umbrella Policy. At the outset, Appellee would ask this Honorable Court to note that Sections B of Appellants' arguments in Support of Proposition of Law are not contained within their proposition of law, through which they seek this court's discretionary jurisdiction. No separate proposition of law is submitted for this separate argument. This court is also asked to note that the Commercial Umbrella Policy is part of the entire policy. Accordingly, the Named Insured Endorsement IL 7007, set forth above, is applicable, and the Named Insured for all the policy forms is: Efficient Lighting Sales Co., Inc., dba 10

14 LiQht Bulb Supply. This applies to the Declarations page to the Commercial Umbrella Coverage Form by the express terms of the IL 7007: For the purpose of this insurance, the name shown in Item I. will be shown on the Declarations and shall mean the Named Insured (Item 11). Further, under Section III.-Who Is An Insured, Provision A. 3. applies and states "Who Is An Insured... you". (Emphasis added). is stated: In the second paragraph of the Commercial Umbrella Coverage Fonn the following Throughout this policy the words "you" and "your" refer to the Named Insured shown in the Declarations. (Emphasis added) Once again, in this insurance policy there is only one Named Insured and that Named Insured is Efficient Lighting Sales Co., Inc., dba Light Bulb Supply. Both URI and ITT are each Additional Insureds and maintain a limited coverage as specified in that endorsement under that status. Accordingly, for purposes of the Commercial Umbrella portion of the policy, neither URI nor ITT are provided the full coverage of a "Named Insured". Appellants generically argue that umbrella policies are meant to fill gaps in coverage by providing excess coverage over and above the underlying insurance policy, as well as by expanding the scope of coverage beyond that of the underlying policy. With regards to the relevant insurance policy, Appellants primary argument is that Section F provides primary coverage to URI and ITT, despite the clear language dictating otherwise. Significantly, Section F as cited by Appellant states: 11

15 F. Anyone else who is an insured under any policy of "underlying insurance" but only to the extent insurance is provided by that policy and subject to all its limitations, other than the limits of liability. (Emphasis added) URI and ITT are clearly insured by the "underlying insurance" but only as Additional Insureds. Accordingly, any coverage afforded those entities under the Commercial Umbrella Policy is subject to the same coverage limitations applicable pursuant to the Additional Insured Endorsement. Therefore, the limited coverage afforded URI and ITT under both the Business Insurance Policy, as well as the Commercial Umbrella portion of the policy is as follows: The person or organization shown in the schedule is also an insured, but only with respect to liability arising out of your operations or premises owned by or rented to you. Therefore, under all the portions of the policy at issue, neither entity has insurance coverage for the underlying claims brought against the entities. Further, the F(l) exception is inapplicable on its face. The explicit language of the F(l) exception clearly demonstrates that it applies "with respect to any person or organization who is not an insured under any "underlying insurance policy...". As thoroughly set forth throughout this brief, URI and ITT are Additional Insureds under the policy. As such, their Additional Insured status removes them from the applicability of the F(1) exception. Accordingly, the plain language of the F(1) exception clearly demonstrates that this provision of the Commercial Umbrella Policy does not in any way afford coverage to URI or ITT. 12

16 In the present matter, a specific declaration limits the scope of umbrella coverage to that afforded the insureds in the "underlying insurance" and therefore URI and ITT are limited to the coverage provided "Additional Insureds" under the policy. CONCLUSION For all of the above stated reasons, Appellee respectfully requests that this Court decline to accept jurisdiction over this appeal. Respectfully submitted, Terrance P. Gravens ( ) Ryan N. Clark (007698) Rawlin Gravens Co., L.P.A. 55 Public Square, Suite 850 Cleveland, Ohio (216) Telephone (216) Facsimile tlzravens(^a rawlingravens.com rclark@rawlingravens.com Attorneys for Defendant-Appellee, Motorists Mutual Insurance Company 13

17 CERTIFICATE OF SERVICE A copy of the foregoing Memorandum in Response of Appellee Motorists Mutual Insurance Company is being served via regular U.S. Mail, postage prepaid on this _ day of May, 2009 upon the following: Sean P. Allan, Esq. 614 W. Superior Avenue, Suite 1300 Cleveland, Ohio sallangagllp.com Attorney for Defendant-Appellant, Neverman Insurance Agency, Inc. Darlene E. White, Esq. Gallagher Sharp 1501 Euclid Avenue Bulkley Building - Sixth Floor Cleveland, Ohio dwhite(cr^,gal taahersharp. com Attorney for Defendant-Appellant, Jeff Neverman Michael Farrell, Esq. Law Office of Michael F. Farrell 55 Public Square, Suite 910 Cleveland, Ohio farrellm@grangeinsurance.com Attorney for Defendant-Appellant, Neverman Insurance Agency, Inc. Steve Forbes, Esq. Patrick J. Milligan, Esq. Norchi, Barrett & Forbes, LLC Commerce Park IV Chagrin Boulevard, Suite 600 Cleveland, OH sforbes e norchilwa.com yimilligan@norchilaw.com Attorneys for Plaintiffs-Appellants, Efficient Lighting Sales Co., Inc., et al. T rrance P. Gravens ( ) Ryan N. Clark (007698) Attorneys for Defendant-Appellee, Motorists Mutual Insurance Company 14