1 1 IN THE COURT OF COMMON PLEAS 2 CUYAHOGA COUNTY, OHIO 3 1300 WEST NINTH STREET CORPORATION, 4 Plaintiff, 5 JUDGE CORRIGAN 6 -vs- CASE NO. 373342 7 FEDELI GROUP, INC., 8 Defendant. 9 10 - - - - 11 Deposition of JOHN BERTIN, taken as if upon 12 cross-examination before Laura L. Ware, a Notary 13 Public within and for the State of Ohio, at the 14 offices of Linton & Hirshman, 700 West St. Clair 15 Avenue, Hoyt Block Building - Suite 300, Cleveland, 16 Ohio, at 1:40 p.m. on Friday, May 21, 1999, pursuant 17 to notice and/or stipulations of counsel, on behalf 18 of the Plaintiff in this cause. 19 20 - - - - 21 WARE REPORTING SERVICE 22 3860 WOOSTER ROAD ROCKY RIVER, OH 44116 23 (216) 533-7606 FAX (440) 333-0745 24 25 2 1 APPEARANCES: 2 Mark W. Ruf, Esq. Linton & Hirshman 3 700 West St. Clair Ave. Hoyt Block Building - Suite 300 4 Cleveland, Ohio 44113 (216) 781-2811, 5 - and - 6 Scott Stewart, Esq. 7 Stewart & DeChant 668 Euclid Avenue, Suite 850 8 Cleveland, Ohio 44114 (216) 781-2258, 9 On behalf of the Plaintiff; 10 11 Thomas R. Wolf, Esq. Reminger & Reminger 12 113 St. Clair Building Cleveland, Ohio 44114 13 (216) 687-1311, 14 On behalf of the Defendant. 15 E X H I B I T I N D E X 16 PAGE 17 Plaintiff's Exhibits 1 through 3 9 18 Plaintiff's Exhibit 4 17 Plaintiff's Exhibit 5 20 19 Plaintiff's Exhibit 6 82 Plaintiff's Exhibit 7 104 20 Plaintiff's Exhibit 8 105 Plaintiff's Exhibit 9 109 21 Plaintiff's Exhibits 10 through 13 110 Plaintiff's Exhibit 14 118 22 Plaintiff's Exhibit 15 118 Plaintiff's Exhibit 16 119 23 Plaintiff's Exhibit 17 122 Plaintiff's Exhibit 18 123 24 Plaintiff's Exhibit 19 134 Plaintiff's Exhibit 20 137 25 Plaintiff's Exhibit 21 141 Plaintiff's Exhibits 22 through 24 142 3 1 JOHN BERTIN, of lawful age, called by the 2 Plaintiff for the purpose of cross-examination, as 3 provided by the Rules of Civil Procedure, being by 4 me first duly sworn, as hereinafter certified, 5 deposed and said as follows: 6 CROSS-EXAMINATION OF JOHN BERTIN 7 BY MR. RUF: 8 Q. Could you please state your name and spell your 9 name. 10 A. John A. Bertin, J-O-H-N, middle initial A, 11 B-E-R-T-I-N. 12 Q. Mr. Bertin, my name is Mark Ruf. I represent 1300 13 West Ninth Street Corporation in a claim that's been 14 brought against you and the Fedeli Group. 15 If at any time I ask you a question and you do 16 not understand my question, please tell me. If you 17 give me an answer to a question, I'll assume that 18 you have understood the question. Okay? 19 A. Yes, sir. 20 Q. What is your professional address? 21 A. The Fedeli Group, Crown Centre, Fifth Floor, 5005 22 Rockside Road, Cleveland, Ohio, 44131, dash, 6808. 23 Q. How old are you, Mr. Bertin? 24 A. Fifty-two. 25 Q. What is your position with the Fedeli Group? 4 1 A. Title? 2 Q. Yes. 3 A. Senior Vice President. 4 Q. Who is your supervisor? 5 A. Umberto Fedeli. 6 Q. And what is his position? 7 A. President and CEO. 8 Q. Are you the only Senior Vice President or are there 9 other Senior Vice Presidents? 10 A. I think, I think, I'm the only one. 11 Q. How long have you been with the Fedeli Group? 12 A. Since June of '90. 13 Q. From June of '90 up until the present time, could 14 you go through what positions you have held with the 15 Fedeli Group? 16 A. I don't recall exactly when I was made a Senior Vice 17 President, but I started as an Account Executive 18 handling all of Umberto Fedeli's commercial 19 accounts, and I also, later on in my first year, 20 managed personal lines for about a year at the 21 Fedeli Group. 22 Q. So after '91 all you handled was commercial 23 accounts? 24 A. Yes. Handled, yes. 25 Q. In 1993 what was your position? 5 1 A. Title? 2 Q. Yes. 3 A. Account Executive, Senior Vice President. Senior 4 Vice President for the operation, but Account 5 Executive in actuality. 6 Q. So is that the same position that you hold now? 7 A. Correct. 8 Q. And what were your duties as Account Executive? 9 A. To handle the insurance requirements, to help 10 identify exposures to risk on the part of clients, 11 review insurance programs, make sure they're 12 updated. 13 Q. Anything else? 14 A. That's about it. You know, total account client -- 15 total account handling insofar as I would -- some 16 input, say, in claims in terms of coverage issues. 17 Q. What exposures to risk would you identify? 18 A. Are we talking about an existing account or a new 19 account? 20 Q. Either one. What type of exposures would you look 21 for for a commercial building? 22 A. Say we had -- what I did when I first started in 23 1990 is I performed what we'll call a re-underwriter 24 function. I went through each account by expiration 25 date and met with the client and discussed their 6 1 operations, looked at the construction of their 2 buildings, the occupancies, the protection, the 3 exposure and made sure that they were underwritten 4 correctly. 5 Q. When you talk about exposures to risk, what type of 6 exposures do you mean? 7 A. Construction, occupancy, protection. That would be 8 on the property side. If they're a manufacturer, 9 what type of product they're making, who the end use 10 customers are. On the contractor side, the type of 11 work they're doing, the proper classification of 12 that work, the proper rating structure of those 13 classifications of exposure. 14 Q. When you have a new client, do you rely on the 15 client to tell you the exposures to risk or do you 16 make your own independent determination? 17 A. It would depend. 18 Q. For 1300 West Ninth Street Corporation and the 19 Scaravellis, did you make your own independent 20 assessment of the exposures to risk? 21 A. I did not. 22 Q. Why not? 23 A. When I got the call requesting coverage for that 24 location, immediacy was an issue, and I relied on 25 the exposure as defined by the client in order to 7 1 meet his immediacy. 2 Q. At any time after the initial contact did you make 3 your own independent assessment of the exposures to 4 risk for 1300 West Ninth Street Corporation and the 5 Scaravellis? 6 A. Approximately -- see, I don't recall exactly when it 7 was, but I would say two, three weeks later, amongst 8 my other duties when I had time I did run down there 9 to review briefly what we had -- what I had put 10 together. What we had put together. 11 Q. So you actually went in the building? 12 A. Uh-huh. 13 MR. WOLF: Is that a yes? 14 Q. You need to give a verbal answer. 15 A. Yes. Strictly on the outside, did not go on the 16 inside. The building was locked. 17 Q. In July of 1994 you did not go into the inside of 18 the building? 19 A. I recall that was around -- around the second or 20 third week of July of '93. 21 Q. I'm sorry. In July of '93 did you go inside the 22 building? 23 A. I did not. 24 Q. At any time did you go inside the building? 25 A. Yes. My first entrance into the building was in 8 1 March of '94. I don't know the exact date. 2 Q. I want to go back. In July of '93 what exposures to 3 risk did you identify? 4 A. Well, I was looking for 1300 West Ninth and I 5 couldn't -- there was no address marking for 1300, 6 but I knew -- I guess I knew, I don't know if I knew 7 or not, but I guess I must have known that the 8 building was in the northwest corner of West Ninth 9 and St. Clair. 10 So when I looked at the building it looked like 11 it was fire resistive in terms of the exterior 12 construction, and it looked to me like, this has 13 nothing to do really with the property side, but it 14 looked to me like I had estimated my square footage 15 as correct. 16 Q. And what was -- 17 A. Sight unseen, based on the values supplied to me by 18 the client, three million dollars. 19 Q. What was the estimated square footage? 20 A. I think I recall it being around 50,000, which is 21 something I need for general liability. 22 Q. Did you come up with the estimate for square 23 footage? 24 A. Let's put it this way. I was requested to secure 25 three million dollars of coverage on a fire 9 1 resistive sprinklered building. I added to that 2 program general liability coverage, not specifically 3 requested, and business interruption, as I recall. 4 Again, not specifically requested. 5 Q. So on your own initiative you added in some 6 coverages into the policy? 7 A. Yes. 8 Q. And was that based on your assessment of the 9 customer or client and what they would need for this 10 building? 11 A. That was based on my knowledge of exposure to risk 12 for a building purchased lessor's risk. 13 MR. RUF: Could you mark this. 14 - - - - 15 (Thereupon, Plaintiff's Exhibits 1 16 through 3 were mark'd for purposes of 17 identification.) 18 - - - - 19 Q. In July of '93 did you estimate the square footage 20 of the building just by looking at the outside of 21 the building? 22 A. No, based on the three million dollars of value and 23 looking at the outside of the building. 24 Q. Did you ask the customer or client to verify whether 25 that was correct? 10 1 A. No, I did not. Well, to tell you the truth, I don't 2 recall, but I don't think so. I've been thinking 3 about that, but I don't think so. 4 Q. Is the proper term customer or client, which do you 5 use? 6 A. Well, they already had been a customer, so I guess I 7 would call them a client. 8 Q. Is there a distinction between -- 9 A. Well, to tell you the truth, I back up on that. Sam 10 Scaravelli I always dealt with prior to late June of 11 '93. For this particular risk it was Chuck 12 Scaravelli, but he's the son of Sam, so he would 13 still be considered a client, I think. 14 Q. Is there a difference between a customer and a 15 client? 16 A. Well, a customer would be, in my mind, I'm talking 17 strictly in my opinion, would be a prospect, someone 18 I can't see, feel and touch. I don't know who they 19 are, what they're about and so forth, so I have 20 to -- in other words, we would tend to -- I would, 21 anyway, tend to extend myself for a client more than 22 a customer, more than a prospect. 23 Q. So do you see -- 24 A. Unless a prospect was a referral from a client. 25 Q. So do you see your role as more extensive in helping 11 1 a client as opposed to a customer? 2 A. No. I try to employ the same degree of care for 3 both. 4 Q. I'm handing you what's been marked as Plaintiff's 5 Exhibit 3. 6 It's Answers to Plaintiff's First Set of 7 Interrogatories and Request for Production. Have 8 you seen that document before today? 9 A. I have not -- I've seen this document, only the 10 interrogatories, but I've not seen the answers 11 before today. 12 Q. Did you provide the answers? 13 A. I did provide answers, as long as they're -- I don't 14 know if they're -- can I look through this? 15 MR. WOLF: Look through it before you 16 answer it. 17 THE WITNESS: Sorry. 18 A. I have to take off my glasses. Okay. 19 Q. Does Plaintiff's Exhibit 3 contain your sworn 20 answers under oath to the interrogatories? 21 A. No. 22 Q. No, it does not? Are there any answers that are 23 incorrect? 24 MR. WOLF: Are these the answers that 25 you provided to me for these questions? 12 1 A. These are the answers I provided, yes. 2 MR. RUF: Counsel, are you willing to 3 stipulate that Plaintiff's Exhibit 3 contains 4 his sworn answers under oath? 5 MR. WOLF: I'm willing to stipulate to 6 that. 7 Q. Did you provide any written answers to the 8 interrogatories? 9 A. Yes, I did. 10 Q. And does Plaintiff's Exhibit 3 contain those 11 answers? 12 A. Yes. I just didn't swear under oath to them. I 13 don't know if that makes a distinction or not. 14 Q. I'm showing your answer to Interrogatory No. 12. It 15 asks, "State all the dates that you visited or 16 inspected the building located on 1300 West Ninth 17 Street." And you have answered late July, 1993, 18 November of 1993 and March of 1994. 19 A. Uh-huh, that's correct. 20 Q. You only went out one time in late July, 1993? 21 A. Not correct. 22 Q. How many times did you go out in late July of 1993? 23 A. Late July of '93? 24 Q. Yes. One time? 25 A. Yes. 13 1 Q. And that was the time we discussed where you just 2 did an assessment of the building from the outside? 3 A. Right, correct. 4 Q. And you next went back November of 1993? 5 A. That's correct. 6 Q. Did you only visit the building once during the 7 month of November, 1993? 8 A. Just one time for a specific reason. 9 Q. What was the reason? 10 A. I was in a pitched battle with the insurance service 11 office and the Cincinnati Insurance Company with 12 regard to an ISO, I-S-O, report conducted in August 13 of '93 which gave no credit for a sprinkler system. 14 Q. Did you go inside the building in November of 1993? 15 A. Did not. 16 Q. In November of 1993 did you identify any exposures 17 to risk? 18 A. I did not. I went there specifically to make sure 19 that I had seen sprinkler valves on the outside of 20 that building. 21 Q. Did you see sprinkler valves? 22 A. Yes, I did. 23 Q. And did you report that back to the insurance 24 company? 25 A. I did that, no, for my benefit to know that in fact 14 1 there was a sprinkler system in that building, 2 because it looked to me from what the underwriter 3 was telling me was that there was no sprinkler 4 system, but in fact there was. 5 Q. In November of 1993 did you change any of your 6 assessments or assessment of the exposures to risk 7 for the 1300 building? 8 A. I did not. 9 Q. You next went to the building in March of 1994? 10 A. Correct. 11 Q. Why did you go to the building in March of 1994? 12 A. I was to attend a meeting between the Cincinnati 13 adjuster, the engineer hired by Cincinnati to 14 evaluate a loss, Chuck Scaravelli and myself. 15 Q. Did you go inside the building in March of 1994? 16 A. Yes. 17 Q. How long did you spend inside the building? 18 A. I'd say at least a couple hours. 19 Q. Did you go through the entire building? 20 A. Pretty much, pretty much. 21 Q. Would you agree that it takes a couple hours to go 22 through the entire building? 23 A. I was amazed at the immensity of that building. 24 Q. And that was the first time you had ever been inside 25 the building? 15 1 A. That's correct. 2 Q. Before March of 1994 had you ever requested to go 3 inside the building? 4 A. You know, I don't recall. I really don't. I've 5 been trying to think about that. I don't recall. 6 Q. Did the Scaravellis or any employee of 1300 West 7 Ninth Street refuse your right to access the 8 building or go into the building before March of 9 1994? 10 MR. WOLF: Objection. 11 A. Refuse? I don't remember. I really don't. I know 12 they were busy. We're all busy. 13 Q. Well, to your knowledge did either of the 14 Scaravellis or any employee of 1300 West Ninth 15 Street Corporation tell you before March of 1994 16 that you could not go in the building? 17 A. Well, the building was locked. I'll tell you, in 18 July of '93 it was locked. In November of '93 I 19 don't think I checked to see if it was locked or 20 not. But in late July of '93 it was locked. I 21 couldn't get in. 22 Now, I did know that there were offices in 23 there, so I figured, well, it's probably locked up 24 for security reasons. 25 Q. But to your knowledge you don't know if you ever 16 1 made a request before March of 1994 to go inside the 2 building and inspect the interior premises? 3 A. I don't recall it, but I'm not certain that I did 4 not. I don't know if I can add this, but between 5 September of '93 and December of '93, those three 6 months, I was almost in an everyday situation of 7 trying to get the ISO report done in August of '93. 8 Q. I'm going to go into all this in a lot more detail 9 later. 10 A. Okay. 11 Q. Right now I just want to ask about exposures to 12 risk. Did you do any type of assessment to the 13 exposures to risk in March of 1994? 14 A. Yes, I did, insofar as -- 15 Q. And what was the result of your assessment as to the 16 exposures to risk? 17 A. I realized that the building was tremendously larger 18 than what I had imagined or was conveyed to me 19 previously. From street level I realized that there 20 were many floors below grade that no one could ever 21 have known existed. 22 Q. Anything else? 23 A. Yeah, I realized too that the building that I 24 thought I had was in fact not the building that I 25 had. 17 1 Q. I don't understand. 2 A. Well, when I looked at the building in late July of 3 '93, the building to me -- 4 Q. Do you need to draw something to illustrate your 5 testimony? 6 A. Yeah, it would be helpful, I guess. 7 - - - - 8 (Thereupon, a discussion was had off 9 the record.) 10 - - - - 11 MR. RUF: Why don't you mark this. 12 - - - - 13 (Thereupon, Plaintiff's Exhibit 4 was 14 mark'd for purposes of identification.) 15 - - - - 16 Q. I'm handing you what's been marked as Plaintiff's 17 Exhibit 4. It's a blank piece of paper. Would you 18 go ahead and draw on that to illustrate your 19 testimony. 20 A. (Complies.) See, I don't know. I don't know how 21 many stories it was, but I'm going to guess. Can I 22 guess here? Is this going to be -- 23 Q. Why don't you tell me why your assessment of the 24 building was completely different. 25 A. I had a three million dollar at-risk exposure. 18 1 Q. And what did that mean? 2 A. There are appraisal services that underwriters use 3 that give you -- that publish quarterly what's 4 called cost factors per square foot for certain 5 types of construction in certain areas of the 6 county, city, so forth. Framed construction gets a 7 certain cost factor, fire resistive gets a different 8 cost factor. So with a three million dollar 9 building replacement cost, I'm looking for about 50, 10 60,000 square feet. 11 Q. And at that point you realized the building was much 12 larger than 50,000 square feet? 13 A. In March of '94, yes. Apparently, see, this is one 14 section of the building, and then I think there's 15 another section over here, and then it goes all the 16 way down here to like the railroad tracks down in 17 the Flats, and then it comes up around here. It 18 comes up here and this elevation is lower than 19 this. 20 Q. Okay. Why don't you -- 21 A. If you look at that from the naked eye from outside 22 it looks like you've just got this building. 23 Q. So before March of 1994 you thought only the front 24 part of the building was the building, was the 25 entire building? 19 1 A. Well -- 2 Q. Or did you realize before March of 1994 that the 3 building went all the way down to the next street? 4 A. I can't recall that. I can't recall that because I 5 was in discussion with the Cincinnati underwriter 6 with regard to the rating problem, and he was 7 telling me that it was a big building, but I did not 8 physically see the square footage or realize the 9 square footage myself until March of '94. 10 Q. Before March of 1994 did you -- 11 A. In other words, with the client, so that I could see 12 in fact how big the building was. 13 Q. Before March of 1994 did you ever ask either of the 14 Scaravellis the total square footage for the 15 building? 16 A. I don't recall. 17 Q. Did they ever tell you what the total square footage 18 was for the building before March of 1994? 19 A. I don't think so. I know it didn't come up in the 20 initial discussion. 21 Q. After March of 1994 did you ask the total square 22 footage for the building? 23 A. In March of 1994, as I recall, I got a copy -- I got 24 a hold of my own copy of the ISO sprinkler report. 25 Q. And as a result of that, what did you realize? 20 1 A. I realized that they had a sprinkler system but it 2 was getting no -- it was, according to ISO, it was 3 deficient. It was getting no -- the building was 4 enjoying no credit from the sprinkler system, no 5 rate credit. And also, I was able to verify the 6 immensity of the square footage which coincided with 7 my visit down there. 8 MR. RUF: Why don't you mark this. 9 - - - - 10 (Thereupon, Plaintiff's Exhibit 5 was 11 mark'd for purposes of identification.) 12 - - - - 13 Q. I'm handing you the exhibit marked as Plaintiff's 14 Exhibit 5. Is that the ISO sprinkler report? 15 A. Yeah. 16 Q. What did you realize about the total square footage 17 based on the ISO report marked as Exhibit 5? 18 MR. WOLF: Do you want to review it 19 before you answer? 20 A. Well, I know what it basically says. I wasn't so 21 much interested at that time about the square 22 footage as I was, and still at that time, trying to 23 get ISO to reverse its decision and reinspect and 24 get that sprinkler credit reinstituted. 25 Let's put it this way, get sprinkler credit, 21 1 they didn't have it there before, it's -- in other 2 words, our initial policy was predicated on a 3 sprinklered fire resistive building. And by looking 4 at this, I was trying to figure out what the client 5 needed to do to obtain a sprinkler rating credit for 6 that building. 7 Q. In March of 1994 did you believe that your initial 8 assessment of risk for the building was correct, 9 other than the size of the building? 10 A. Other than the size of the building, the sprinkler 11 system looked like it was old. Now, that's when I 12 visited down there with the adjuster, whatnot, 13 and -- 14 Q. Well, did you believe that -- 15 A. And then after I saw what was included with regard 16 to the entire building, yes, I knew I had a 17 different building. 18 Q. Well, do you believe that the condition of the 19 sprinkler system changed the risk for the building? 20 A. The key, the key is what ISO says with regard to 21 whether that building is eligible for a sprinkler 22 rate credit or not. 23 Q. But you were arguing with ISO, correct? 24 A. I was trying to -- I was trying to determine where 25 they were deficient, why and what would be needed to 22 1 obtain a credit rating. 2 Q. Well, in your own personal opinion did that change 3 the risk for the building? 4 A. Well, being an ex-underwriter, certainly. 5 Q. And you thought it increased the risk for the 6 building? 7 A. Certainly. 8 Q. Did you notify the clients of that? 9 A. Yes, I did. 10 Q. When did you tell them that? 11 A. I don't recall, but I know that I did. I don't know 12 if I -- well, I know I did. 13 Q. Did any of your other assessments for a risk change 14 in March of 1994? 15 A. Yeah. I knew that -- I knew that the policy was 16 grossly undervalued in terms of the amount requested 17 per the amount that should be insured on a 18 replacement cost basis. 19 Q. Did you communicate that to the clients? 20 A. I did. I don't -- 21 Q. Was that in writing or orally? 22 A. I think it was both orally and in writing. 23 Q. Any other assessments to risk that changed? 24 A. The building was substantially unoccupied, but not 25 vacant, but substantially unoccupied. 23 1 Q. Any other assessments to risk that changed? 2 A. I realized it was a very old building and had the 3 heavy timber, heavy timber joisted construction, 4 which would indicate based on my mentors that it was 5 something that was built back before the turn of the 6 century. That's about it. 7 Q. Between March of 1994 and the loss that occurred in 8 January of 1995, did you inform the client that any 9 of these changes in the assessment of risk could 10 result in either no coverage for the building or a 11 substantial reduction in coverage for the building? 12 A. Yes. 13 Q. When did you do that? 14 A. I did it both orally and in writing. 15 Q. Did you ever tell them that there were potential 16 exclusions that could apply that would eliminate 17 coverage for the building between March of 1994 and 18 the loss that occurred in January of '95? 19 A. I don't recall. I don't remember. I don't recall. 20 But I do recall talking to Chuck several times about 21 the fact that the building was substantially 22 unoccupied. 23 Q. Did you -- 24 A. I do recall that. 25 Q. Did you ever specifically tell him there was a 24 1 vacancy exclusion in the policy that could result in 2 no coverage? 3 A. No, I don't believe I did. And the reason is 4 because the building, although substantially 5 unoccupied, was not vacant. 6 Q. Do you know what the definition of vacant was in the 7 insurance policy? 8 A. Vacant, completely not used for any business for 9 which it was intended, the building was intended. 10 No occupancy, none. 11 Q. Do you know if the insurance company has interpreted 12 that clause differently? 13 A. I do not know. 14 Q. Did you have any discussions with the insurance 15 company from the time coverage was bound up until 16 January of '95 as to whether this building was 17 vacant? 18 A. You know, the only thing I can recall is like an 19 oral, we had an oral conversation, I and the 20 adjuster for Cincinnati, back in March of '94, that 21 the building was substantially unoccupied, but the 22 agreement was that it was not vacant. 23 Q. Did the adjuster ever -- 24 A. There was some occupancy in the building. 25 Q. Did the adjuster ever use the term vacant during 25 1 your discussions in March of '94? 2 A. Not in March of '94. We basically talked about the 3 unoccupancy. 4 Q. In March of '94 did he ever state that the loss may 5 not be covered because the building was vacant? 6 A. No. The March of '94 was what we were looking at 7 was the roof, the roof of the building, and some 8 crack about four or five floors below grade on the 9 northern wall of the building. 10 Q. But March of '94 you did have a discussion with the 11 adjuster about a concern that the building was 12 mostly unoccupied? 13 A. I did not. The adjuster raised the issue with 14 myself -- 15 Q. And -- 16 A. -- while we were walking through it. 17 Q. -- did you have a response to that? 18 A. I think -- look, I think I recall, this is a long 19 time ago, I think I recall telling him that the 20 building was large. I was amazed at how large it 21 was and how you couldn't tell that from the 22 outside. But, let's see. Can you rephrase the 23 question again? 24 MR. RUF: Could you read back the 25 question, please. 26 1 - - - - 2 (Thereupon, the requested portion of 3 the record was read by the Notary.) 4 - - - - 5 A. Yeah, I think I recall discussing with the adjuster 6 that the building, although substantially 7 unoccupied, was not vacant. 8 Q. Did that trigger any concerns in your mind that 9 there may be a problem with the building being 10 substantially unoccupied? 11 A. Well, what an adjuster can do, what he can do is he 12 can write in information, information to the 13 underwriter about what he views at a risk and -- 14 Q. But I'm asking you about whether it was a concern to 15 you based on this discussion. 16 A. No, not in March of '94, no. 17 Q. So you didn't communicate anything to the client 18 about this discussion with the adjuster, correct? 19 A. I do recall telling Chuck orally. It may be in some 20 of the writing, I don't know, I did a lot of writing 21 on the account. I do recall telling him about the 22 substantial unoccupancy, the immensity of the 23 building and the substantial unoccupancy and also of 24 the fact that the insurance value is not adequate, 25 we've got a significant coinsurance problem here. 27 1 Q. But you never specifically told him that that could 2 potentially result in no coverage because of a 3 vacancy exclusion, correct? 4 A. I don't believe, I don't believe vacancy was an 5 issue at that point in time. Unoccupancy was more 6 the issue than vacancy. 7 Q. So to your knowledge vacancy was not an issue until 8 after January of '95 when the second loss occurred, 9 correct? 10 A. You know, I just, to tell you the truth, I think 11 this vacancy thing -- I think this vacancy thing 12 started mostly after July of '95. 13 Q. So before July of '95 you never discussed a vacancy 14 endorsement with the client, correct? 15 A. I know that between '94 and '95 I discussed 16 unoccupancy, substantial unoccupancy. 17 MR. WOLF: That's not his question. 18 Can you answer his question? 19 Q. My question is did you specifically discuss a 20 vacancy permit endorsement with the client before 21 January of '95? 22 A. I don't think so. 23 Q. And a vacancy permit endorsement would provide 24 coverage even if the building was vacant, correct? 25 A. Yes, but it would limit coverage. 28 1 Q. Okay. Between March of 1994 and January of 1995, 2 did your assessments to risk change in any way? 3 A. Yes. I realized from the ISO report that the 4 building was being rated as JM, joisted masonry. I 5 realized also that the building did not have a 6 credible sprinkler system, and I realized also that 7 the building was substantially unoccupied but not 8 vacant. 9 Q. And you realized that because the first time you 10 actually went to the building and looked at the 11 inside was March of 1994? 12 A. That's correct. I was able to look inside, I was 13 able to get inside and look inside, right. 14 Q. I want to go way back and ask you some background 15 materials. I got off on this because of an answer 16 you gave. What did you review prior to your 17 deposition? 18 A. The only thing I reviewed was the, very briefly, the 19 ISO sprinkler report. 20 Q. And that's marked as Plaintiff's Exhibit 5? 21 A. Uh-huh, this thing here. 22 Q. Is that the document marked as Plaintiff's Exhibit 23 5? 24 A. Yes. I'm sorry, yes, sir. 25 Q. What else did you review? 29 1 A. Let's see. I'm trying to think what it was. It was 2 some -- it was a legal thing. It was supplied to me 3 by Cincinnati Insurance Company. 4 Q. Is that in the Fedeli file? 5 A. It was in my file. It had to do with -- 6 Q. Did you have a file separate from the Fedeli file? 7 A. No. I mean -- no. 8 Q. Do you see the document from Cincinnati in the 9 documents I've just handed you? 10 A. No. 11 Q. What was stated on this document from Cincinnati? 12 A. As I recall, it was something to do with 13 coinsurance. 14 Q. What did it say? 15 A. I don't recall verbatim. It was a long thing. It 16 was just -- I was just trying to -- I did it last 17 night to just quickly get a little familiar. 18 Q. Were you involved in responding to the request for 19 production of documents that was issued to the 20 Fedeli Group? 21 A. Which request, yours? 22 Q. I made a request for the entire file from the Fedeli 23 Group. Were you involved in responding to that? 24 A. Yes. 25 Q. To your knowledge were all documents that were held 30 1 by the Fedeli Group produced in response to my 2 request? 3 A. Yes. 4 Q. Were there any documents that were held back? 5 A. I don't recall, to tell you the truth. I mean, I 6 don't think so. 7 Q. Was anybody else involved in responding to the 8 request for production for the entire file of the 9 Fedeli Group? 10 A. For your request? 11 Q. Yes. 12 A. I think that was just myself. 13 Q. And to the best of your knowledge was the complete 14 file produced? 15 A. Yes. 16 Q. And to the best of your knowledge were true and 17 accurate copies of the files produced? 18 A. Yes. 19 Q. Did the documents that were produced contain all 20 correspondence with 1300 West Ninth Street 21 Corporation? 22 A. As far as I know, yes. 23 Q. Did the documents that were produced contain all 24 correspondence with Cincinnati Insurance Company? 25 A. I don't know about that. 31 1 Q. Would the correspondence with Cincinnati Insurance 2 Company be kept in a separate file? 3 A. It would be like in the claim file. 4 Q. Could you identify the type of files that are kept 5 by the Fedeli Group? 6 A. You have an underwriting file and you have a claim 7 file. 8 Q. To your knowledge was the claim file held back? 9 A. Not to my knowledge, no. 10 Q. Because in my response to -- strike that. 11 In my request for production of documents, 12 number one, I asked for, "Your entire file for 1300 13 West Ninth Street Corporation, Charles Scaravelli, 14 Samuel Scaravelli or the building located at 1300 15 West Ninth Street Corporation." It should be 1300 16 West Ninth Street. 17 Number two, "Any and all documents in your 18 possession with 1300 West Ninth Street Corporation, 19 Samuel Scaravelli or Charles Scaravelli written on 20 the document." 21 To your knowledge were all documents responsive 22 to those requests produced? 23 A. To my knowledge, yes. 24 Q. I also asked for, "Any and all documents received 25 from or sent to Cincinnati Insurance Company 32 1 concerning 1300 West Ninth Street Corporation or 2 policy no. CPP 065 12 10." 3 To your knowledge were all documents responsive 4 to that request produced? 5 A. To my knowledge they were all produced, to my 6 knowledge. 7 MR. RUF: Counsel, do you know if the 8 claims file was produced? 9 MR. WOLF: The claims file that was 10 produced that was given to me was taken to the 11 copy service that you wished to have and it was 12 copied, to the best of my knowledge. 13 MR. RUF: So to the best of your 14 knowledge both the underwriting file and claims 15 file were produced? 16 MR. WOLF: Yes. 17 Q. To your knowledge was there any correspondence to 18 any other party that was not produced? 19 A. Not to my knowledge. 20 Q. Did you have any videotapes or pictures of the 21 building at 1300 West Ninth Street Corporation or 22 videotapes or pictures of the loss? 23 A. Of the what, the loss? 24 Q. The loss. 25 A. I did not have a -- yeah, I think I did have a 33 1 picture of the building, I think. You know, I don't 2 know, I really don't. I'm not trying to be 3 evasive. It's been so long. 4 Q. I'm just asking you, do you have possession of 5 pictures that were not produced? 6 A. I believe I recall seeing a picture of that 7 building, of the building, with the ISO report when 8 I got the ISO report. 9 Q. Do you know what happened to that picture? 10 A. I would imagine you guys have got it or somebody has 11 got it. Cincinnati has it. 12 Q. But it was not in the file at the time the request 13 for production was responded to? 14 A. Apparently not. 15 Q. Could you tell me about your educational background? 16 A. I graduated from -- I don't know, where do you want 17 to start, high school? 18 Q. College. Did you go to college? 19 A. Yes. 20 Q. Where did you go to college? 21 A. University of Cincinnati. 22 Q. What -- 23 A. Well, Quincy College for two years and then the 24 University of Cincinnati. I got a Bachelor of 25 Arts. 34 1 Q. What did you study at both Quincy College and 2 University of Cincinnati? 3 A. Quincy College was philosophy and Cincinnati was 4 history. 5 Q. Did you have any further education? 6 A. I got drafted, went in the Army. I came out and 7 went to Cleveland State for business courses but no 8 formal degree. 9 Q. What year did you go to Cleveland State for business 10 courses? 11 A. 1973 to 1975. 12 Q. Did you receive a certificate? 13 A. No. 14 Q. Why did you stop taking classes? 15 A. Got married and started having a real job. 16 Q. Where did you work after you took these classes in 17 '75? 18 A. O'Hanlon Reports. 19 Q. What is that? 20 A. It's an inspection and auditing service. 21 Q. Is that for insurance companies or some other 22 industry? 23 A. For insurance companies. 24 Q. What was your position there? 25 A. Inspector. 35 1 Q. What did you do? 2 A. Looked at buildings and reported on their condition, 3 construction, occupancy, protection and exposure. 4 Q. And then you would produce a report as a result of 5 your inspections? 6 A. Correct. 7 Q. And was that so companies could assess risk and 8 assign a premium? 9 A. Assess risk, verify the accuracy of applications and 10 verify their -- the premiums that they placed on 11 those risks. 12 Q. So you received experience in how to inspect a 13 building and what to look for to assess risk for 14 insurance purposes? 15 A. Yes. 16 Q. Anything else you did at O'Hanlon? 17 A. Got a little bit into auditing. 18 Q. What's that? 19 A. You go and you look at the books of insureds for 20 insurance companies and ascertain what their payroll 21 is, if they have classifications of risk that are 22 where the premium is determined by payroll amounts 23 or sales amounts. 24 Q. Anything else you did with the auditing? 25 A. That's about it there. 36 1 Q. How long did you work for O'Hanlon? 2 A. A couple of years. Well, yeah, a couple years. 3 Q. Did you remain an inspector that entire time or did 4 your position change? 5 A. Just an inspector, yeah, part-time auditor. 6 Q. What did you do next? 7 A. I started with Buckeye Union Insurance Company. 8 Q. What was your position there? 9 A. I started as a Loss Control Trainee Inspector. 10 Q. Why did you leave O'Hanlon to go to Buckeye? 11 A. Buckeye Union was a huge insurance company. They 12 were the largest writer of commercial insurance in 13 the State of Ohio at the time. 14 Q. So you were the one -- 15 A. It was an -- it's a way to start a career and get 16 going. 17 Q. You were the one that decided to leave because you 18 thought it was a better opportunity? 19 A. That's correct. 20 Q. What did your job involve at Buckeye Union 21 Insurance? 22 A. At the request of underwriters looking at risks and 23 assessing their physical characteristics, their 24 construction, their occupancies, their protection 25 and their exposures. 37 1 By exposures meant if you've got a mercantile 2 building that's next to a paint manufacturer, the 3 exposure to the mercantile building from a fire 4 standpoint and a general liability standpoint is 5 substantially increased by an occupancy next door 6 over which they have no control. 7 Q. Is there a difference between risk and exposures? 8 A. Well, I don't know. 9 Q. Can those terms be interchanged? 10 A. They can be interchanged, yeah. A lot of times it's 11 exposure to risk. 12 Q. Did you receive further experience and training in 13 how insurance companies assess risks? 14 A. Yeah. I was mentored at Buckeye Union by a 15 professional engineer, but I didn't stay at that 16 long. I just did that for a year and then I went 17 into the Audit Department where I was stronger. 18 Q. While you were at Buckeye Union, did you actually go 19 out and inspect buildings or did you just review 20 reports from inspectors? 21 A. I actually went out in the field and inspected. 22 Q. Did you also review reports from other inspectors? 23 A. No, they would review mine. 24 Q. So that job involved your making your own 25 independent determination of the risk involved? 38 1 A. No, I would just report on characteristics of 2 exposure, make a report to an underwriter. And 3 mostly what I looked at was what we call very light 4 lines, light lines. 5 Q. Did that -- 6 A. Mercantiles, apartments, office buildings. 7 Q. Were those commercial lines? 8 A. All commercial. 9 Q. And when you were with O'Hanlon was that also 10 commercial? 11 A. No, it was mostly personal lines. 12 Q. How long did you work in the Auditing Department at 13 Buckeye Union? 14 A. Can I backtrack one thing? 15 Q. Sure. 16 A. Okay. While in Loss Control, the Continental, I've 17 got to add this because I want to tell you 18 something, the Continental Insurance Company was 19 starting to operationally take control of the 20 Buckeye Union back in 1978. 21 I went to the Branch Manager who came from 22 Continental, told him of my career aspirations to be 23 a Branch Manager and that I would like, if possible, 24 as long as my work record justified it, to move 25 laterally and learn the various aspects of 39 1 commercial insurance processing. 2 And so therefore I went from Loss Control to 3 Audit and then into Multi-peril Underwriter in 4 1979. 5 Q. How long were you in underwriting? 6 A. Underwriting at Continental? 7 Q. Yeah. 8 A. Until 1981. 9 Q. What did your underwriting job involve? 10 A. I was a Multi-peril Underwriter. I was able to 11 underwrite, learn how to underwrite and underwrite 12 all lines of insurance, all commercial lines of 13 insurance except boiler and machinery. 14 Q. So that also involved an assessment of risk for 15 insurance companies? 16 A. Correct. 17 Q. What was your next position? 18 A. I was a Senior Property Underwriter at the Aetna. 19 Q. When did you leave Buckeye Union and go to Aetna? 20 A. 1981. 21 Q. What did you do as a Senior Property Underwriter? 22 A. Again, evaluate submissions from agents, rely on 23 appropriate reference material and come up with 24 rates and hope that they sell. 25 Q. So that also involved an assessment of risk for the 40 1 insurance company and assigning a rate? 2 A. Correct. 3 Q. What was your next position? 4 A. I was a Senior Multi-peril Underwriter with 5 Lumberman's Mutual Insurance Company. 6 Q. How long did you do that? 7 A. Seven years. 8 Q. And that job also involved an assessment of risk for 9 the company, correct? 10 A. Yeah, that was a combination job. That was a 11 combination of marketing and underwriting for 12 agents. 13 Q. Was that your first experience with marketing? 14 A. Yes. 15 Q. And how long were you with Lumberman's? 16 A. Seven years. 17 Q. And that takes us up to what year? 18 A. 1990. 19 Q. And then you left Lumberman's and went to work for 20 the Fedeli Group? 21 A. That's correct. Well, actually I went to work for 22 Cavaluchi, Fedeli. 23 Q. How long was that? 24 A. It changed over to the Fedeli Group in May of '91. 25 Q. Where is Cavaluchi, Fedeli located? 41 1 A. They were in North Olmsted. 2 Q. And you worked there for a year? 3 A. Yeah, but it's -- 4 Q. It's the same group? 5 A. It's the same group. 6 Q. Just a different -- 7 A. Different name. 8 Q. Different location? 9 A. Yeah, different name. 10 Q. Were you involved in selling insurance policies 11 while you worked for Lumberman's? 12 A. Not directly. Agents, we dealt with independent 13 agents. 14 Q. Were you involved in marketing the Lumberman's 15 policies to insurance agents? 16 A. Correct. I was responsible for production and loss 17 ratio. So production is marketing and loss ratio is 18 underwriting. 19 Q. From 1975 through 1990 were you involved at all in 20 reviewing insurance policies, the actual language? 21 A. Yes. I mean, from -- certainly from 1979 to 1990. 22 Q. Did you receive education and training during your 23 work experience as to how insurance companies 24 interpret policies? 25 A. Yeah. Buckeye Union was a training -- it was a 42 1 training company. We would study forms every day 2 for an hour a day all day -- I mean every day, you 3 know, each day of the week. 4 Q. And was that for commercial policies? 5 A. Commercial policies. And that was based on ISO 6 forms, insurance service office forms. 7 Q. So you did a lot of studying of insurance policies 8 and endorsements? 9 A. We became aware of how the language is interpreted. 10 The problem is -- well, they change the forms every 11 four or five years, major change. 12 Q. And did you also receive training and experience 13 from '75 to '90 on application of exclusions in 14 insurance policies? 15 A. All the companies have different exclusions. 16 Q. But did you receive training on how certain 17 exclusions were applied or when they were to be 18 applied? 19 A. I recall training on exclusions. I don't recall how 20 comprehensive that was. Some of this was self 21 taught. 22 Q. Is taking into consideration exclusions part of the 23 underwriting process? 24 A. Uh-huh. 25 MR. WOLF: Is that a yes? 43 1 Q. You need to give verbal answers. 2 A. Oh, I'm sorry, yes. 3 Q. And you were aware that exclusions can affect the 4 rate for an insurance policy? 5 A. No. 6 Q. During this time period, did you receive education 7 and experience as to whether endorsements could be 8 purchased so that exclusions did not apply? 9 A. Yes. 10 Q. From '79 to -- I'm sorry, from '75 to '90 did you 11 have any experience with application of vacancy 12 exclusions? 13 A. Yes. 14 Q. What experience did you have? 15 A. I placed insurance on vacant buildings, applied for 16 and requested placement of insurance on vacant 17 buildings. 18 Q. Was it made known to the insurance company up front 19 that the building was vacant? 20 A. Yes, if I knew that, certainly. 21 Q. Because that affects the assessment of the risk and 22 the premium, correct? 23 A. Actually it affects what market will potentially 24 take the risk in the first place. 25 Q. Certain companies won't even write -- 44 1 A. Correct. 2 Q. -- if a building is vacant? 3 A. Will not. 4 Q. So that's something that needs to be taken into 5 consideration from the very beginning? 6 A. Exactly. 7 Q. Do you know whether all of those buildings were 8 completely vacant or were they partially vacant or 9 did you have a mixture of both? 10 A. What buildings? 11 Q. The buildings you had experience with from '75 to 12 '90? 13 A. No, completely vacant. 14 Q. Did you actually go out to all the buildings that 15 you underwrote? 16 A. You try to make an attempt to see everything. Are 17 we talking on the company side or the agency side? 18 Q. I'm talking about from 1975 to 1990 when you were 19 involved in underwriting. 20 A. If I underwrote them, then someone else -- I would 21 order an inspection, someone else would look at it. 22 Q. And would they inspect both the inside or the 23 outside or would you underwrite a building just 24 based on an outside inspection? 25 A. You can do both. You can order both. You can ask 45 1 for both. 2 Q. Under what circumstances would you want an 3 inspection of the inside of a building? 4 A. If I was concerned about exposure, occupancy, the 5 exposure of occupancy. 6 Q. Do you agree that there's information you can obtain 7 about the risk for a building by going inside a 8 building that cannot be assessed from the outside of 9 the building? 10 A. Correct. 11 Q. And one of those things would be the condition of a 12 sprinkler system? 13 A. No. It requires a very highly trained individual to 14 assess the efficacy of a sprinkler system. 15 Q. Did you have experience in examining sprinkler 16 systems from '75 to '90? 17 A. Did not. 18 Q. Were you aware that there were different types of 19 sprinkler systems? 20 A. I do know that there's a wet system and a dry 21 system. That's the extent of my knowledge. 22 Q. What's the difference between the two? 23 A. One holds water and one doesn't. 24 Q. Do you know if there's different types of dry 25 systems? 46 1 A. No. 2 Q. Typically with a vacant building, what type of 3 sprinkler system does the building have? 4 A. It can have none. 5 Q. If it has a sprinkler system, is the insurance rate 6 based on whether it's got a wet or dry system? 7 A. I don't know. I don't know. 8 Q. Is that something you looked at in underwriting? 9 A. No. My extent of underwriting with regard to like a 10 sprinkler system would be looking to ISO for a 11 published rate, insofar as what they told me about 12 whether it's got an approved system or not. 13 Q. And what factors were taken into consideration in 14 determining an ISO rate? 15 A. Construction, occupancy, protection and adjacent 16 exposure to that risk. 17 Q. What factors are evaluated in the construction of a 18 building? 19 A. If it's frame, wood, if it's masonry, Vanier, 20 masonry over wood joist, if it's noncombustible, if 21 it's masonry noncombustible, it's got a lot of glass 22 on it, glass on the framing walls, fire resistive. 23 Q. And what factors are evaluated in the occupancy of a 24 building? 25 A. Is it an office, is it a warehouse, is it a 47 1 restaurant, is it a bolt/nut manufacturer. 2 Q. And what factors are involved in the protection of a 3 building? 4 A. If it's got extinguishers, if it's got a security 5 alarm, if it's got a watchman, if it's got a 6 sprinkler system, if it's got bars on the windows. 7 It all depends on where I'm underwriting. 8 Q. What factors are involved in adjacent exposure? 9 A. Hazardous type occupancies, well-kept construction 10 adjacent. 11 Q. And that has to do with what's going on in the 12 buildings next to the building you're insuring? 13 A. Correct, adjacent to it on all sides. 14 MR. WOLF: Is now a good time for a 15 break? 16 MR. RUF: Sure. 17 - - - - 18 (Thereupon, a recess was had.) 19 - - - - 20 Q. Are there any other factors that are taken into 21 consideration in underwriting? 22 A. Location of the risk too. Location is a big 23 factor. 24 Q. What about location do you look for? 25 A. Stability of the area, proximity to the street, 48 1 mounted plate glass up front. Every risk is 2 different. 3 Q. For occupancy do you also look as to whether the 4 building is vacant or how much of the building is 5 being used? 6 A. No. It depends. If it's an apartment building I 7 know it's apartments. I don't need to get inside to 8 know it's apartments. 9 Q. Can all of these risks be assessed from the outside 10 of a building or do some of them have to be assessed 11 from the inside? 12 A. Some can be outside and some have to be outside and 13 inside. 14 Q. Which ones would have to be outside and inside? 15 A. Say it's a manufacturing risk, I would have to be 16 inside and outside. 17 Q. What about for a commercial building? 18 A. Say it's an office occupancy, just outside. 19 Q. What about a warehouse? 20 A. Outside and/or inside. 21 Q. Under what circumstances would you want to look on 22 the inside of a warehouse? 23 A. If I was concerned about storage, certain types of 24 storage with high fire loads. 25 Q. Are almost all sprinkler systems on the inside of a 49 1 building or are there components that are outside? 2 A. There's valves on the outside of the building. 3 That's how I was trained to tell quickly if a 4 building has a sprinkler system or not. 5 Q. So you look to see whether there's valves on the 6 outside of the building. Can you tell the type of 7 system by looking at the valves? 8 A. No. 9 Q. So you have -- 10 A. Well, I don't. I don't know. I don't think so. 11 Q. But to assess the type of sprinkler system, you 12 would have to go inside the building, you can't tell 13 from the outside? 14 A. No, I don't assess it one way or the other, okay, I 15 rely upon ISO. 16 Q. When were you licensed to sell insurance in the 17 State of Ohio? 18 A. That's a good question. I think around in the 19 spring of '86, I believe. I'm pretty close there, I 20 think. 21 Q. Are you licensed in any other state other than 22 Ohio? 23 A. No. 24 Q. Have you been licensed in any other state? 25 A. No. 50 1 Q. You seem to hesitate. Why did you hesitate? 2 A. It's -- I did a huge worker's comp risk, worker's 3 comp and commercial general liability coverage down 4 in Puerto Rico back about eight years ago, and I'm 5 trying to be completely truthful here, and I think I 6 had to get a counter signature. I think I had to, 7 but I don't think that went through. 8 I had to get a counter signature done in order 9 for us, our agency, to get a commission for the 10 risk. And I don't think it went through. It's not 11 a factor. No other license in any other state. I 12 never lived in any other state. 13 Q. And you've never lost a license in any other state? 14 A. No. 15 Q. Has your license in Ohio ever been subject to any 16 kind of disciplinary action? 17 A. None. 18 Q. How long have you been selling insurance? 19 A. Since about ten years. 20 Q. What lines have you sold? 21 A. Commercial property and casualty. 22 Q. Exclusively during that ten years? 23 A. Some personal lines, some personal auto, personal 24 homeowners. 25 Q. And that was only for about a year, correct? 51 1 A. No, that was, I'm sorry, that was strictly managing 2 the Personal Lines Department at Fedeli. I have 3 clients that require personal lines type coverage. 4 Q. What percentage is commercial as opposed to 5 personal? 6 A. Oh, it's 95 percent commercial. 7 Q. What carriers do you provide coverage for? 8 A. We're a large independent insurance brokerage. We 9 represent numerous. 10 Q. Could you list them? 11 A. Fireman's Fund, Travellers, CHUB, Commercial Union, 12 slash, General Accident, St. Paul, Cincinnati, 13 Westfield, Heritage. I've got the major ones. 14 Q. And those are all commercial carriers? 15 A. They're large companies that have both commercial 16 and personal units. They're segmented. 17 Q. Have you been selling coverage for all those 18 companies for the last ten years? 19 A. Placing coverage with all those carriers. I'd 20 rather use that term. 21 Q. Why do you use placing? 22 A. I am primarily an account executive with the Fedeli 23 Group. 24 Q. Which means what? 25 A. I handle the technical issues and problems connected 52 1 with servicing various types of risks owned or 2 produced by Umberto Fedeli. In fact, I handle the 3 majority of his accounts. 4 Q. Is that because of your underwriting background? 5 A. Partly because of that and partly because I was 6 specifically hired for that reason. 7 Q. How long have you been placing coverage with 8 Cincinnati? 9 A. Well, Cincinnati, all coverage that I have ever done 10 with them is usually through Steve for that 11 particular carrier. But -- 12 Q. And how is Steve involved in that process? 13 A. I would make out, based on information from a 14 client, I would make out an application and refer 15 the application to him. 16 Q. Does he handle the actual binding of coverage? 17 A. Yes. I mean, both of us would. We interchange a 18 lot. 19 Q. What authority do you have for writing coverage from 20 Cincinnati? 21 A. I'm not familiar what the authority requirements are 22 with Cincinnati. 23 Q. Do you know if your agency has the authority to bind 24 coverage with Cincinnati? 25 A. Yes, we do. 53 1 Q. What limits? 2 A. That's what I'm unaware of. 3 Q. Do you have any idea? 4 A. Not really. I mean, I don't deal with it. It would 5 change all the time. It depends really on a lot of 6 factors. I mean, what your relationship is with a 7 carrier at any given time, what their servicing 8 representative is willing to give you based on 9 demonstrated ability. I don't deal with it. I 10 don't deal with it with regard to Cincinnati with 11 that market alone. 12 Q. How is Fedeli paid from Cincinnati? 13 A. Commission. 14 Q. Is that a 20 percent commission? 15 A. It varies. It varies by lines, you know, like auto 16 is 15 percent. 17 Q. What about insurance for commercial buildings? 18 A. It can be 10 percent, 15 percent, 20 percent. It's 19 a set amount, but it can't be negotiated down. 20 Q. Why does it vary? 21 A. Competitive factors, our perception that we don't 22 require a lot of service, we don't envision a lot of 23 service with a risk. So we want to try to make the 24 commission commensurate with the amount of service 25 required. 54 1 Q. Does the rate of commission with Cincinnati vary 2 from others or are they all about the same? 3 A. For certain lines they're about the same. Typically 4 your regional companies, regionals, Cincinnati, 5 Westfield, Heritage, pay more on property and less 6 on auto. And your nationals pay more on auto and 7 less on property. 8 National carriers would be like Fireman's 9 Fund. By nationals means they're licensed in all 50 10 states. Usually that's what's meant by the term. 11 Q. Do you have samples for all of the policies that you 12 write for in your office? 13 A. Samples of what? 14 Q. Samples of the insurance policies. 15 A. No. 16 Q. Do you ever ask for the insurance policy when you 17 replace coverage with a certain carrier? 18 A. We get the policy, we get the insureds policy. 19 Q. They send it to you first? 20 A. To us first. 21 Q. And then you send it to the insured? 22 A. Correct. First we review it for accuracy and then 23 send it to the insured, yes. 24 Q. Do you only review the declarations page or do you 25 review the entire policy? 55 1 A. I don't usually review anything unless it was a very 2 complicated situation. Our servicing representative 3 reviews the policy. 4 Q. Who is that? 5 A. A lady on this account, a lady by the name of Barb 6 C. 7 Q. And if she finds a problem with the policy, she'll 8 notify you and then you take care of it? 9 A. That's correct. 10 Q. Do you know for the 1300 West Ninth Street building 11 were the commissions higher with Cincinnati than 12 they were with other companies? 13 A. No. 14 Q. Did you try and apply for coverage with any company 15 other than Cincinnati? 16 A. No. 17 Q. Did you pick Cincinnati or did the Scaravellis? 18 A. Oh, I picked Cincinnati. 19 Q. Why did you pick Cincinnati? 20 A. Very simply, the immediacy of the request required 21 it. 22 Q. And why is that? 23 A. Cincinnati was the only company in our agency that 24 at that time was our go-to market, go-to market, for 25 getting coverage placed immediately on a risk that 56 1 size, that nature, of that nature. 2 Q. In 1993 did they have the same commercial policy for 3 all the risks that were written or did their 4 policies vary? 5 A. Their basic standard policy would be the same, but 6 different risks brought different endorsements. 7 Q. But the exclusions would generally be the same? 8 A. Yeah. The boiler plate, the basic boiler plate 9 would be the same. 10 Q. So the exclusions would be the same from policy to 11 policy? 12 A. We're talking a CPP policy. 13 Q. Yes. 14 A. Okay. 15 Q. Yes. 16 A. A CPP, right. 17 Q. And that's unless the client purchased an 18 endorsement to change one of the exclusions? 19 A. Well, yes, but, you know, it's not like pulling tuna 20 fish off the grocery shelf. You just can't -- the 21 company may decide not to do it. 22 Q. But you could apply for an endorsement that could 23 change an exclusion? 24 A. We could apply for it. 25 Q. What potential endorsements were there in '93 that 57 1 would apply to exclusionary provisions? 2 A. There's a pollution exclusion on every policy, so I 3 could apply to delete the pollution exclusion. 4 Q. What other types of endorsements? 5 A. There's an asbestos exclusion, and so if I knew 6 about asbestos and I knew there was an exclusion 7 there I could apply to delete the asbestos 8 exclusion. 9 Q. And there's also a vacancy permit endorsement? 10 A. There's vacancy permit language in the policy, in 11 the boiler plate of the policy. 12 Q. Were you aware that in the boiler plate of the 13 policy there was a vacancy exclusion for 14 Cincinnati? 15 A. Yes. 16 Q. And were you also aware in '93 that a vacancy permit 17 endorsement could be purchased for an additional 18 premium? 19 A. No, I was not. 20 Q. Do you have a reference at your office that you can 21 go to to see what potential endorsements there are? 22 A. Yes. 23 Q. What's the name of that book? 24 A. We have an ISO forms book. 25 Q. I'm sorry, a what? 58 1 A. An ISO, Insurance Service Office, forms book, and 2 that book -- we have two books, one is nonsimplified 3 and simplified. 4 Q. What's the difference between the two? 5 A. Basically, nonsimplified is forms printed prior to 6 1986, more or less. And simplified is forms printed 7 since 1986. 8 Q. And Cincinnati Insurance Company uses the ISO forms 9 book? 10 A. Cincinnati has their own forms. A lot of the -- 11 Cincinnati has their own forms. 12 Q. Do you have a forms book for Cincinnati in your 13 office? 14 A. Yes. 15 Q. And does that contain all the potential 16 endorsements? 17 A. Well, I would say not, but we try to keep it 18 updated. 19 Q. Have you ever called Cincinnati or any other company 20 and said that a potential exclusion might apply, 21 what can be done about that? 22 A. Have I ever done that? 23 Q. Yes. 24 A. Yes. 25 Q. How many times have you done that during the time 59 1 you've placed coverage? 2 A. Generally or -- 3 Q. Yes. 4 A. -- on this risk? 5 Q. Generally. 6 A. Generally, more than a few. 7 Q. Is that something that's done regularly? 8 A. Depends. Depends on what the client is doing. If 9 he tells me that he's going to -- it's like a 10 gentleman's agreement between an agency and a 11 company, that we keep a company aware of anything 12 that's going on with a risk within our knowledge. 13 So if a guy is going to put a painting line in, say 14 he's -- I don't know, you know -- 15 Q. So do you make your own independent assessment as to 16 whether a client may potentially need an 17 endorsement? 18 A. We can, and a lot of it can be client based in terms 19 of he tells us what's going on and we assess the 20 situation, identify the exposures for him and ways 21 to resolve it through -- by transfer of risk to an 22 insurance company or by other means or strictly self 23 insurance. 24 Q. So generally you rely on the client to provide you 25 with information you request; is that correct? 60 1 A. Yes. 2 Q. And then you take the information that you request 3 and then you assess the situation and determine what 4 the client needs? 5 A. Correct. 6 Q. And that's determining the appropriate coverage for 7 the client's situation? 8 A. Correct. 9 Q. Do you rely on the client to do anything other than 10 give you information that you request? 11 A. Do I rely on the client to do anything other than 12 give me the information I request? No. 13 Q. Do you have any ownership interest in the Fedeli 14 Group? 15 MR. WOLF: Objection. 16 A. I do not. 17 Q. And are you also paid based on commissions? 18 A. I am paid on commission only for my individually 19 produced accounts. 20 Q. How was the 1300 account produced? 21 A. Umberto Fedeli account. 22 Q. So you would not receive a commission for that 23 account? 24 A. Would not. 25 Q. Do you receive any kind of compensation for your 61 1 involvement? 2 A. None. 3 Q. Do you receive a salary? 4 A. I get a salary for handling all of his accounts. 5 Q. So you get a salary plus you get a percentage if you 6 produce the account yourself? 7 A. Produced -- prospected, produced and placed the 8 account myself. 9 Q. Are you a member of any professional organizations? 10 A. The Blue Goose. 11 Q. What is the Blue Goose? 12 A. It's an old line underwriting society. It's kind 13 of -- it's underwriters and field men. It's a 14 company society. 15 Q. Does the Blue Goose have a code of ethics? 16 A. Yes. 17 Q. Do you keep a copy of the code of ethics? 18 A. No, I don't have it for reference. I mean, I could 19 find it. 20 Q. Is there a copy of that anywhere in the Fedeli 21 office? 22 A. No, no, it's not a Fedeli Group sponsored 23 organization. 24 Q. Are you a member of Independent Insurance Agents of 25 America? 62 1 A. Yes, the agency is a member of it. They're a member 2 of the Independent Agents Association, it's called 3 Big Eye, and the Professional Insurance Agents 4 Association, called the PIA. 5 Q. Are you a member of either of those groups? 6 A. I'm a member through the Fedeli Group. 7 Q. Are you aware of whether or not those groups have a 8 code of ethics? 9 A. Not formally. 10 Q. What's CLU? 11 A. Certified Life Underwriter. 12 Q. Are you a member of that organization? 13 A. No, I'm strictly a commercial property casualty 14 person. 15 Q. What's CHFC? 16 A. I don't know. Chartered Financial Consultant. 17 Q. And you're not a member of that group? 18 A. No. 19 Q. Any other professional organizations that you're a 20 member of? 21 A. None. 22 Q. When you're involved in writing coverage, do you 23 consider yourself to be a consultant to the client? 24 MR. WOLF: Objection. 25 A. I consider myself to be an insurance person. 63 1 Q. In placing coverage, what do you believe your 2 professional obligations or duties are to a client? 3 A. To identify or receive information as to the 4 identification of a risk and exposures to risk, with 5 that information make application for insurance 6 coverage, secure a price, explain the coverage and 7 the price to the client, and put the deal together. 8 Q. Do you have a professional obligation or a duty to 9 advise the client as to what type of coverage would 10 be best for that client? 11 MR. WOLF: Objection. 12 A. Yes, but, but -- and I do. 13 Q. Well, isn't that why the customer is coming to you, 14 because of your expertise in insurance? 15 MR. WOLF: Objection. 16 A. Not always. A customer comes to us because of need, 17 based on their need for coverage, for their exposure 18 to risk. I would say that's primarily why customers 19 come. 20 Q. When the Scaravellis came to you for coverage on the 21 1300 building, what did you know about as far as 22 their experience in obtaining coverage? Did you 23 know anything about their past experiences with 24 insurance? 25 A. Yeah, I knew that they knew about insurance. I 64 1 wrote the coverage for the building at 2065 Scranton 2 Avenue and the coverage for the Perry-Payne 3 Building, and I was involved, unsuccessfully, at the 4 tail end of trying to get replacement coverage for 5 them for Marina Bay. 6 Q. What were the size of those buildings that coverage 7 was written for? 8 A. The 2065 Scranton Road building I believe was about 9 a million bucks, and I think it was like around 10 40,000 square feet. I'm going by memory here. 11 Okay. And Perry-Payne I believe was like four, four 12 to five million. 13 Q. And what was the size of that building? 14 A. I know it was around five or six stories. It's 15 right over here. I don't know. 80,000 square feet, 16 90, I don't know. If it was four or five million it 17 was around 80 or 90,000 square feet total. 18 Q. So those buildings were substantially smaller than 19 the 1300 building? 20 A. Viewed today? 21 Q. Yes. 22 A. Yes. 23 Q. Do you know what the practice was with the 24 Scaravellis as far as obtaining coverage? I mean, 25 what would they request? 65 1 A. Well, let's see. On Perry-Payne I was unable, I was 2 unable to secure the original requested coverage. 3 Q. Why was that? 4 A. Sam was going to renovate that building and I was 5 unable after a search of over 50 markets, both 6 standard and excess surplus lines, to secure him a 7 builders risk policy in conjunction with a 8 completed -- builders risk policy in conjunction 9 with a renovation, a planned renovation of that 10 building, which apparently he purchased and it was 11 on the historic register because of a lack of 12 documented -- basically, basically, a number of 13 factors, but primarily a lack of documented 14 experience as a developer, as a successful 15 developer, and the problems in the insurance 16 industry as a whole with regard to development 17 projects and renovations around the country. 18 Q. What year was that? 19 A. I believe it was around 1991. 20 Q. So in 1991 you had difficulty obtaining coverage for 21 them because of their lack of experience in 22 developing? 23 A. A combination of things, but that was the crux. 24 That was the crux in terms of the major markets that 25 I really thought I could get it covered through. 66 1 That was the crux of it. 2 Q. Did they ask you just to obtain coverage for the 3 building or did they ask for any specifics regarding 4 coverage? 5 A. He wanted -- he told me what he was going to do with 6 the building. I know now what coverage I need to 7 protect him adequately based on what he's going to 8 do with the building. 9 Q. So he would tell you what he was going to do with 10 the building and you would decide what coverage he 11 needed? 12 A. Well, yeah, I would make application for it, right. 13 Q. What about the other building before 1300? 14 A. 2065 Scranton, that was an interesting situation. 15 Q. Why is that? 16 A. Well, it's all open. The building is all open and 17 they have a little office over there. And I knew 18 Sam, I knew of Sam Scaravelli back long ago, that he 19 was a wine wholesaler. In fact, I think there's a 20 sign on that building to indicate that. 21 But he had an office area there and they were 22 parking a few cars there, and I was securing 23 standard coverage for him for that building even 24 though it was not completely vacant but certainly 25 substantially unoccupied. 67 1 And in my assessment of the risk, the fact that 2 it was gated, he's got it fenced all the way around, 3 and the frontage for the building is really on the 4 river. He's got a lot of glass there, but it's on 5 the river. It's not on a main street outside the 6 gate. And the fact that he's had a, you know, nice 7 corner office there, no insurance company ever gave 8 me a tough time with regard to whether that building 9 was more vacant than not, and I was able to keep 10 standard coverage because the rate differential 11 typically between a vacant and nonvacant building 12 can be as much as three times. 13 Q. So once again, he told you what he was doing at the 14 building and you decided what coverage he needed? 15 A. Yeah. Well, I mean, he told me the nature of the 16 building, the construction. I went down there, I 17 was down there for -- I had been down there prior 18 for Marina Bay consultations. That was in 1990, 19 though I knew about that building. 20 Q. How long did the Fedeli Group have dealings with the 21 Scaravellis? 22 A. My involvement started in June of '90, but I would 23 imagine -- I don't know, but I think it went back to 24 around maybe about '87, '86, '87. 25 Q. But based on your working at the group, you thought 68 1 they had a long-standing relationship with the 2 group? 3 A. Oh, yeah, that was my perception. 4 Q. Do you know if the Scaravellis relied on the Fedeli 5 Group for all their insurance needs? 6 MR. WOLF: Objection. 7 A. No, because I was -- I was subject to competitive 8 factors all the time. 9 Q. For the Scranton Road building vacancy was not an 10 issue, correct? 11 A. Potentially it could be an issue, potentially. 12 Q. Did you discuss that with Sam Scaravelli? 13 A. Yeah. We had discussions on it orally, but it was 14 my determination in concert with him that with the 15 grading, the outside grading of the building and the 16 fact that you could not get in there unless you 17 punched through and they accepted you because they 18 had like a screen in their office, and the fact that 19 that was his regular office in that building, I was 20 certain that I could get around any objections with 21 regard to whether that building should be 22 considered -- understand, if it's completely vacant 23 it's vacant, and we don't get around complete 24 vacancy. You don't get around complete vacancy. If 25 it's substantially -- if it's unoccupied but 69 1 occupied a little bit -- 2 Q. But he had told you about the nature of the 3 occupancy in the building and you decided what 4 coverage to obtain, correct? 5 A. No. I was down there and I knew the situation. 6 Q. So you saw the situation for yourself? 7 A. Correct. 8 Q. And you decided what coverage to obtain for the 9 building? 10 A. Well, let's back up here. We're way off here. We 11 have a one-story building and he's got an office 12 there. When I wrote the coverage we didn't address 13 vacancy at all. 14 MR. WOLF: That's not the question. Do 15 you understand the question he asked you? 16 A. All right, please, could you rephrase the question? 17 Q. Well, you knew about whether the building was 18 occupied or unoccupied because you went to the 19 building and inspected it yourself, correct? 20 A. I had been to the building before. 21 Q. And then based on that, did you determine what type 22 of coverage should apply to the building? 23 A. Yes. I squared it out, I squared it out, got the 24 square footage times an appropriate cost factor and 25 we wrote it for a million dollars. There was a big 70 1 dispute over whether it should be written for a 2 million dollars or a half million dollars. 3 Q. Why was that? 4 A. Because the premium for a half million is a hell of 5 a lot less than a million and the perception of 6 exposure to this client was that it's not worth more 7 than a half million. 8 Q. Was price a concern for the Scaravellis? 9 A. Always. 10 Q. Did you ever explain to them by trying to put a 11 building that was substantially unoccupied into a 12 nonvacancy policy that may result in no coverage? 13 A. Which building are we talking about? 14 Q. Well, let's first talk about the Scranton Road 15 building. 16 A. Yes, I had numerous discussions about that with 17 Sam. 18 Q. And when did you bring that up? 19 A. Back in 1991, '92, '90, '91, two, somewhere around 20 there, '90 to '92. 21 Q. Did you tell them that potentially there would be a 22 vacancy exclusion that could result in no coverage 23 for the building, or did you just -- 24 A. No, I was mostly on the underwriting side of it in 25 the sense that I may not be able to keep this 71 1 coverage standard because standard companies do not 2 write vacant buildings. 3 Q. So you were more concerned about the vacancy issue 4 as far as the rate goes? 5 A. And underwriting as to whether, yeah, whether the 6 carrier would continue to accept the risk. 7 Q. When were you first approached about the 1300 8 building? 9 A. I was approached on the phone approximately -- I'd 10 have to see a calendar back then, but I'm guessing 11 it was a Friday afternoon. The last Friday 12 afternoon of June of '93, or maybe a Thursday. And 13 I don't want to pin down on a date. 14 Q. I don't need the specific day. It was in the month 15 of June though you were first contacted? 16 A. The last part of June. The very end of June. 17 Q. Who contacted you? 18 A. Chuck Scaravelli. 19 Q. And what did Chuck tell you when he contacted you? 20 A. He told me that he had a building at 1300 West Ninth 21 Street. I'm a little familiar with the warehouse 22 district. I asked him -- I do recall I asked him if 23 it was going to be a vacant. He told me he was 24 going to have offices, he had offices in the 25 building. 72 1 I asked him what the construction was, and he 2 immediately told me that it was fire resistive. And 3 there was somebody else in the room with him because 4 the mention came up of a sprinkler system. 5 Q. And what did he say about the sprinkler system? 6 A. Nothing, just a sprinkler system. It had a 7 sprinkler system. 8 Q. Did he tell you anything else about the building? 9 A. Not that I recall. 10 Q. Did he tell you the amount of coverage that they 11 wanted? 12 A. Yes. He told me he needed three million dollars. 13 Q. Did he tell you what they were paying for the 14 building? 15 A. No, not at that time. 16 Q. Your understanding is that he requested three 17 million dollars in coverage rather than telling you 18 that they were purchasing the building for three 19 million? 20 A. My understanding was he was -- he just told me three 21 million dollars, so my understanding was that the 22 building was worth three million dollars. 23 Q. What other discussions occurred during this 24 conversation? 25 A. I was very concerned whether the building was vacant 73 1 or not because in that area of town there are some 2 vacant buildings, and if the building was vacant I 3 would not be able to use a standard market. He also 4 expressed to me his immediacy of coverage. 5 Q. Was that the most important thing to him, the 6 immediacy of coverage? 7 A. Yes, I believe so. 8 Q. And did he tell you that the deal couldn't go 9 through unless he obtained coverage? 10 A. No, I didn't know that. I didn't know that. That 11 didn't come up. 12 Q. But it was apparent to you during the phone 13 conversation that the immediacy was the primary 14 concern? 15 A. Yes. I had to move very quickly. 16 Q. Did you discuss with him the fact that you were 17 concerned about a vacancy issue? 18 A. I asked him specifically if the building was 19 vacant. He said, no, that it was going to be -- it 20 was occupied by some offices and that he was going 21 to have some other occupancy in the building. 22 Q. Did you ask him what percentage of the building that 23 constituted? 24 A. Did not. 25 Q. Did you -- 74 1 A. I don't recall, let's put it this way. 2 Q. Did you ask any additional questions as to what was 3 going to be in the building other than these 4 offices? 5 A. No. I took him at his word in terms of what he 6 said. 7 Q. Did you ask how big the offices were going to be? 8 A. No. 9 Q. Did he tell you or did you ask what he was going to 10 be doing with the building? 11 A. I don't know if I did. I think I did because, see, 12 I do recall a conversation I know later on over at 13 2065 Scranton Avenue where he showed me some 14 renderings of -- he was going to have a TV studio in 15 there or something like that, I do recall that, some 16 deal with NBC. 17 Q. So they disclosed to you that they had plans to 18 renovate the building? 19 A. Yeah, yeah. In fact, I think I do recall that -- I 20 don't know if I recall or not, but let's put it this 21 way, when he called that day I think that subject 22 did come up as to what they were going to do with 23 the building. 24 Q. Did he tell you anything about the condition of the 25 building? 75 1 A. No. 2 Q. Did you ask about the condition of the building? 3 A. Yeah. I mean, I asked what kind of a building it 4 was. I mean, that's how I got fire resistive and 5 then later on sprinklered. It was later on, but in 6 that conversation. The conversation was probably a 7 two or three-minute conversation. Coverage was very 8 important that it be placed immediately. Frankly -- 9 Q. Did you ask him what the current occupancy was of 10 the building? 11 A. Yes. 12 Q. And what did he tell you? 13 A. Offices. 14 Q. And you don't know the size of those offices and you 15 didn't ask about the size? 16 A. I didn't ask about the size, no. 17 Q. Did you ask about the square footage of the 18 building? 19 A. No, I did not. In fact, he had only asked for 20 property coverage. 21 Q. And what was your response? Did you recommend other 22 coverages? 23 A. I told him he would have to have liability 24 coverage. 25 Q. Why? 76 1 A. I think he was -- see, I'm guessing here, okay. 2 MR. WOLF: Don't guess. 3 A. Okay. I'm not going to guess. 4 MR. WOLF: You're not helping anybody. 5 A. All right. Yes, sir. 6 Q. I'm just asking you what you remember to the best of 7 your ability. 8 A. To the best of my abilities it's been a long time. 9 He asked for three million dollars of coverage. I 10 determined the location of the building, 11 construction, protection and the amount that he 12 wanted. 13 Q. What information did you get on each of those 14 subjects? 15 A. I got fire resistive, sprinklered, three million, 16 offices. 17 Q. Did you ask him anything about the nature of the 18 sprinkler system? 19 A. No. 20 Q. Did you ask him to fax or send any documents to you 21 that contained information about the building? 22 A. No. 23 Q. Did you ask him to provide you with any follow-up 24 information on the building? 25 A. No. 77 1 Q. So you had this phone conversation and he wanted a 2 quote or he just wanted -- 3 A. He had to get coverage placed immediately. 4 Q. So -- 5 A. Urgency was -- it was conveyed to me, the immediacy 6 was conveyed to me. 7 Q. So he wasn't even asking about premiums, he just 8 wanted coverage immediately? 9 A. Correct. 10 Q. And he did not ask for coverage with any specific 11 company, did he? 12 A. No, he did not. 13 Q. It didn't matter as long as you could get the 14 coverage immediately? 15 A. He needed -- I don't know why, but he needed 16 coverage immediately. 17 Q. Did he ask for it or did you give him any 18 recommendations as to the type of coverage he needed 19 for this building? 20 A. I gave him an all-risk property form. 21 Q. Did he ask for that or did you just voluntarily give 22 him that? 23 A. I gave him the best. In common use for the day I 24 gave him the best. 25 Q. So you made a determination as to what type of 78 1 coverage you thought would be best for him? 2 A. He needed three million dollars of coverage. I gave 3 him three million of all-risk at 80 percent 4 coinsurance, which I would typically do for any 5 client. 6 Q. Did you tell him -- 7 A. Based on that type of -- 8 Q. Did you tell him that an appraisal should be done 9 for this property to determine the appropriate 10 amount of coverage? 11 A. I did not. 12 Q. Did you have any discussions with him that a claim 13 could be evaluated based on actual cash value or 14 replacement cost rather than the price paid? 15 A. In that conversation, no. 16 Q. Did you tell him that market value could be 17 different than repair or replacement cost or actual 18 cash value? 19 A. In that conversation, no. 20 Q. Did you have any discussions about coinsurance 21 during that conversation? 22 A. No. 23 Q. He never requested coinsurance, did he? 24 A. The subject never came up. 25 Q. Do you know if the Scaravellis even knew what 79 1 coinsurance was? 2 MR. WOLF: Objection. 3 A. I had discussed it with Sam on 2065 Scranton Road. 4 I had it on a no coinsurance policy, that building. 5 Q. What did you discuss with him about coinsurance? 6 A. I discussed that if he covered it for market value 7 instead of replacement cost and he had a coinsurance 8 contract that if his market value was a half million 9 and his replacement costs was a million and he 10 sustained a $100,000 loss, he would get a $50,000 11 reimbursement. 12 Q. Did you recommend anything to correct that situation 13 or avoid that from happening? 14 A. Yes. I recommended and he agreed and we complied 15 with it to insure the risk to value, to 100 percent 16 value of estimated replacement cost, and in return I 17 got a no coinsurance contract, an agreed value 18 contract. 19 Q. So based on the situation, you made a recommendation 20 and he followed it? 21 A. Correct. Well -- 22 Q. When you talked to Chuck did you raise this 23 coinsurance issue? 24 A. I don't recall. I don't recall. I don't think so. 25 I don't think so. Not at that time. The immediacy 80 1 of the call required an immediate placement. 2 Q. Did you tell Chuck that a further evaluation might 3 have to be done on the building at a later time and 4 that the coverage may have to be adjusted based on 5 the circumstances? 6 A. Well, I had numerous discussions between -- 7 Q. During the initial conversation. 8 A. I don't recall. I mean, I think the thing going 9 through my mind at the time was where was he going 10 to place the risk, you know, where was I going to 11 get the deal done, where was I going to get three 12 million dollars worth of coverage, but I know what I 13 got, a fire resistive, sprinklered building down 14 there in the warehouse district and, I mean, well, 15 whatever. 16 Q. Do you agree that if you placed coverage for the 17 1300 building and an exclusion applied, that could 18 potentially result in no coverage? 19 MR. WOLF: Objection. 20 A. I had established construction -- 21 MR. WOLF: Do you understand his 22 question? 23 THE WITNESS: Well, yes. 24 Q. I mean, if an exclusion applies, there's no 25 coverage, correct? 81 1 A. That's correct, yes. 2 Q. Did you do anything to assess whether the nature of 3 this building would fall into any of the exclusions 4 in the Cincinnati policy? 5 A. Yes. 6 Q. What did you do? 7 A. I determined if it was occupied. 8 Q. And what did you do to determine that? 9 A. I asked the client if it was occupied. 10 Q. And he told you there were some offices and that was 11 the extent of the discussion about occupancy? 12 A. Right, because I mentioned to him that I have to 13 cover a vacant building differently and I have to 14 use other markets to cover a vacant building. 15 Q. Do you agree that if the vacancy exclusion applied 16 to the 1300 building there would be no coverage for 17 that building? 18 MR. WOLF: Objection. 19 A. No, there would be plenty of coverage for the 20 building. Certain perils, certain perils would not 21 be covered the same. 22 Q. What type of perils would not be covered the same if 23 the building was vacant and a vacancy exclusion 24 applied? 25 MR. WOLF: Objection. 82 1 Q. Go ahead. 2 A. Vandalism, malicious mischief. I'm relying on 3 memory on the form. It's glass breakage. 4 Q. Is there a form that you review to assess the 5 exclusions as you're writing coverage? 6 A. There's a coverage checklist form boiler plate. 7 MR. RUF: Here, could you mark this. 8 - - - - 9 (Thereupon, Plaintiff's Exhibit 6 was 10 mark'd for purposes of identification.) 11 - - - - 12 Q. I'm handing you what's been marked as Plaintiff's 13 Exhibit 6. Could you turn to page 9 of 12 of the 14 policy. 15 Were you aware when you placed coverage with 16 Cincinnati that Cincinnati had a vacancy exclusion 17 identified as paragraph 6 in this policy? 18 A. Yes. 19 Q. Were you aware that if the building at 1300 had been 20 vacant for more than 60 consecutive days before the 21 loss or damage Cincinnati would not pay any damage 22 caused by vandalism, sprinkler leakage, building 23 glass breakage, water damage, theft or attempted 24 theft? 25 A. I was aware of some of these. I mean, I can't 83 1 memorize them all but, yeah, I do know -- yes. 2 Q. Were you also aware that if the building was vacant 3 for more than 60 days, damage from sprinkler leakage 4 would not be covered unless the building had a 5 system protected against freezing? 6 A. Yes. 7 Q. Did you tell Chuck that it was important for the 8 building to have a sprinkler system that protected 9 against freezing? 10 A. I know the subject came up in May of '94 and 11 thereafter. 12 Q. But before May of '94 the subject did not come up? 13 A. No, it did not come up. 14 Q. And before May of '94 you did not tell him that the 15 issue of vacancy could affect the coverage for the 16 building? 17 A. No, because in that phone conversation the building 18 was not vacant. 19 Q. Do you know how Cincinnati defines the term vacancy 20 in its policies? 21 A. You know -- 22 MR. WOLF: Do you know or don't you? 23 A. No, I don't. I really don't. I mean -- 24 Q. Were there references that you could go to to look 25 up how Cincinnati defined the term vacancy? 84 1 A. The only reference would be the form. 2 Q. Have you ever called Cincinnati or any other 3 insurance company to ask them what they meant by a 4 certain term in a policy? 5 A. Yes, many times. 6 Q. Do you do that at the time you're writing coverage 7 or do you wait until there's a loss? 8 A. Both, but primarily with the adjuster. 9 Q. But if it would be a concern to you from the very 10 beginning, you might call the company to ask them 11 how they define a certain term? 12 A. Yes and no. 13 Q. Did you have any discussions with anyone at 14 Cincinnati on the vacancy issue when you were first 15 writing the coverage? 16 A. On that day? 17 Q. Yes. 18 A. No. 19 Q. When was the first time you had any discussions with 20 anybody at Cincinnati Insurance Company about the 21 vacancy issue? 22 A. In March of '94. 23 Q. And was that the conversation with the adjuster that 24 we previously went over? 25 A. Yes. 85 1 Q. Did you have any other discussions with any employee 2 of Cincinnati Insurance Company about the vacancy 3 issue up until the loss in January of '95? 4 A. Not that I recall. 5 Q. Did it occur to you that you may need to reevaluate 6 the type of coverage that was being provided for 7 this building, given the nature of the building as 8 you saw it in March of '94? 9 A. Yes. 10 Q. And what did you do to reevaluate the coverage? 11 A. I did three major things. 12 Q. What? 13 A. I applied for, specifically, for a copy of the ISO 14 report, the sprinkler report. 15 Q. And that was in March of '94? 16 A. (Indicating.) 17 Q. You need to give verbal answers. 18 A. Yes. Number two, I knew that I was going to try to 19 rededicate my efforts to get the sprinkler -- the 20 sprinkler deficiency situation resolved with ISO in 21 favor of our client. 22 And number three, in connection with the 23 upcoming anniversary of 7 -- July of '94, that I had 24 to get this policy reworked either off replacement 25 cost and onto an actual cash value contract. I had 86 1 a valuation problem in terms of a future lost. 2 Q. Why did you have a valuation problem? 3 A. Because the square footage of that entire building 4 on the estimated replacement cost was substantially 5 over the amount of face value of the policy. 6 Q. So if there would be a claim after that period there 7 would be a substantial penalty because the building 8 was under insured? 9 MR. WOLF: Objection. 10 A. Correct. 11 Q. What did you do to correct that situation? 12 A. I -- 13 Q. Did you make any recommendations to the client? 14 A. Yeah. I orally and -- let's put it this way, 15 between March of '94 and around May of '94 I 16 didn't -- I was -- my focus, my primary focus, was 17 concentrating on getting the ISO situation resolved 18 on the rate. Around May of -- no I -- around May of 19 '94 I basically was apprized that the sprinkler 20 system was defunct and there was no use in trying to 21 get it fixed, get the situation fixed with ISO and, 22 then I attacked the values problem. 23 Q. At the time you became aware that the sprinkler 24 system was defunct, were you aware that an exclusion 25 could apply in the policy as a result to that? 87 1 A. No. 2 Q. Were you aware that it could affect the application 3 of the vacancy exclusion in the policy? 4 A. I don't know how to answer these questions. The 5 building was not vacant. 6 Q. It was your opinion that the building was not vacant 7 from March of '94 up until the date of the loss in 8 January of '95? 9 A. Yes. 10 Q. Was it ever a concern to you that that assessment 11 might be incorrect? 12 MR. WOLF: Objection. 13 A. No. At that time the major problems were ISO and 14 replacement cost values. 15 Q. Well, in March of '94 you walked through the entire 16 building, correct? 17 A. Well -- 18 Q. Did you walk -- 19 A. Sir, I think I walked through a substantial part of 20 the building, but I don't know if I walked through 21 the entire building. What we did is I was down 22 there to meet the adjuster and the engineer for the 23 insurance company, and Chuck Scaravelli and we went 24 to the roof, from the ground floor up to the roof of 25 the building, and then from there we went down to 88 1 some crack in the wall about four foot -- four 2 floors below grade, as I recall. And so, I mean, to 3 take a complete walk through, no. 4 Q. But you spent several hours at the building? 5 A. Right, but a lot of that was discussion between the 6 engineer, the adjuster and Chuck Scaravelli. 7 Q. And during the several hours that you spent at the 8 building -- 9 A. Two. 10 Q. Two hours. Did you see that most of the building 11 was not occupied? 12 A. Correct. 13 Q. What areas did you observe that were occupied, if 14 any? 15 A. The whole front area of the building on the grade 16 floor, like the second floor and the third floor, 17 that whole -- 18 Q. And what was the size of the space that was 19 occupied? 20 A. When I first looked at it, approximately say a third 21 of the building in terms of what I knew the building 22 could be. 23 Q. After you had knowledge of the full size of the 24 building -- 25 A. Okay, after knowledge of the full size of the 89 1 building, then it was substantially unoccupied. 2 Q. Which means what percentage? 3 A. In my mind, in my mind, and maybe I'm way off -- 4 Q. That's all I'm asking you. 5 A. In my mind I was in a 10 percent and 90 percent 6 situation. 7 Q. It was 90 percent unoccupied, 10 percent occupied? 8 A. In my mind at the time. 9 Q. And there may have been areas of the building that 10 you did not see that were also unoccupied, the 11 building could have been even bigger than you saw in 12 March of '94, correct? 13 A. Well, yeah. Sir, when I got this ISO report, my own 14 copy of the ISO report, see, it costs us money to 15 get it, and saw the amount of square footage, yeah, 16 I said, wow, that's an immense building. 17 Q. What was the amount of square footage you were aware 18 of? 19 A. 360,000, I think. 20 MR. WOLF: It's on the front page. 21 MR. RUF: What? 22 MR. WOLF: It's on the front page. 23 MR. RUF: Where is it? 24 MR. WOLF: Oh, I'm sorry. It's not the 25 front page. 90 1 MR. RUF: Let's go off the record. 2 - - - - 3 (Thereupon, a discussion was had off 4 the record.) 5 - - - - 6 Q. Based on the ISO report, what was the square footage 7 of the building? 8 A. I think the total square footage was something 9 around a half million, but I was looking at the 10 above grade, my estimation of above grade square 11 footage. 12 Q. Why was above grade square footage important? 13 A. Because I'm trying to estimate exposure to loss and 14 what I think is a PML for the risk, a probable 15 maximum loss for the risk, for fire, tornado, things 16 like that, you know. Typically you exclude coverage 17 for below grade with those perils in mind. 18 Q. Would you estimate the amount of the building that 19 was occupied in March of '94 to be more or less than 20 10,000 square feet? 21 A. In March of '95? 22 Q. March of '94 when you went out and saw the 23 building. 24 A. In my head, and I still feel this way, I was feeling 25 that building was about ten percent occupied, ten 91 1 percent. 2 Q. But you really didn't know the exact square 3 footage? 4 A. No. But in my head -- well, I won't talk. 5 Q. In the ISO report marked as Plaintiff's Exhibit 5 6 there is a section entitled vacancy; is there not? 7 A. Yeah, I think there is. 8 Q. There's a section titled vacant building section? 9 A. Uh-huh. 10 Q. Were you aware -- could you give a verbal answer? 11 A. In March of '94 when I saw the report it basically 12 confirmed for me what I had seen when I was 13 physically there. 14 Q. What is this analysis under vacant building 15 section? 16 A. This is just the inspector's -- this is the 17 inspector's evaluation as to the amount of square 18 footage that is vacant in the entire building. 19 Q. And what did the calculation reveal? 20 A. It looks like, let's see, about a 180,000 square 21 feet of vacant space. 22 Q. Was that for the entire building or just for the 23 above ground section? 24 A. For an ISO report it would be for the entire 25 building. 92 1 Q. After you reviewed the ISO report, from that time up 2 until the loss in January of '95 did you ever have a 3 discussion with the Scaravellis that there may be no 4 coverage for certain types of losses because the 5 building could be classified as vacant? 6 A. I know I had discussions with Chuck about 7 unoccupancy and the degree of unoccupancy. Whether 8 I used the term vacant or not, I don't know. 9 Q. Did you ever specifically tell him that that could 10 result in no coverage for certain types of losses? 11 A. I don't believe so. 12 Q. Did you ever tell them that they should consider 13 getting a new policy or a different policy because 14 potential exclusions might apply? 15 A. No, I -- no. 16 Q. Now, you were concerned, based on the ISO report, 17 that the sprinkler system was defunct or not 18 operational, correct? 19 A. In March of '94? 20 Q. Yes. 21 A. I was still trying, still trying, to get the rate 22 adjustment made by the insurance company based on 23 the report revoked. 24 Q. From that point until the loss in January of '95 did 25 you tell either of the Scaravellis that they should 93 1 consider getting a different policy because of the 2 nature of the sprinkler system? 3 A. Yes. I don't recall with regard to the sprinkler 4 system. I do recall with regard to valuation. 5 Q. To you valuation was the primary issue because the 6 building was much larger than you anticipated in the 7 past? 8 A. Correct. I had a coinsurance contract out there. 9 Q. Do you know whether Cincinnati writes commercial 10 coverage for buildings without a coinsurance 11 contract? 12 A. (Indicating.) 13 Q. You need to give a verbal answer. 14 A. Yes. 15 Q. Did you explain that to the Scaravellis? 16 A. No. 17 Q. Are there other companies who write policies without 18 coinsurance provisions for commercial buildings? 19 A. Yes. 20 Q. Did you explain that to the Scaravellis? 21 A. No. 22 Q. At any time from March of '94 up until the loss 23 occurred in January of '95 did you tell the 24 Scaravellis that they needed to get an evaluation of 25 either actual cash value or repair or replacement 94 1 cost? 2 A. Between '94 and '95 I know I talked to them orally 3 and wrote to them, I believe, several times on the 4 issue. 5 Q. But did you ever tell them they needed to get a 6 professional evaluation of those issues? 7 A. I don't recall. 8 Q. Did you ever tell them that they should get an 9 appraiser to estimate the actual cash value or 10 repair or replacement cost? 11 A. I do recall a conversation with Chuck where we 12 talked about different markets that he could go to, 13 we could go to, to replace coverage and the fact 14 that other markets do have appraisers on their 15 staff. 16 Q. But did you ever tell him he needed to get an 17 appraiser to evaluate the actual cash value or 18 repair or replacement cost? 19 A. I don't remember ever telling him that, no. 20 Q. Why didn't you do that, given that this coinsurance 21 was a big concern to you? 22 A. I already have an idea, based on my March, '94 visit 23 and the ISO report, as to the amount of square 24 footage I have. I know that I'm never going to get 25 an agreed value, which is a no coinsurance contract, 95 1 from any market for that building. 2 Q. Why is that? 3 A. Without a professional appraisal. And even then it 4 would be very difficult because underwriters don't 5 want to do agreed value contracts on very, very old 6 buildings that are not updated. 7 Q. Did you tell the Scaravellis that? 8 A. I don't remember. I mean -- 9 Q. The loss that occurred -- 10 A. I do know that I've wrote -- I wrote to them. I 11 don't know if you have anything on it, on 12 replacement cost, on my perception of replacement 13 cost and actual cash value, I do know that, between 14 March of '94 and January of '95. 15 Q. Did the Scaravellis obtain a copy of the Cincinnati 16 insurance policy through the Fedeli Group? 17 A. Yes. 18 Q. And that's based on Plaintiff's Exhibit 6 that has 19 the Fedeli Group on the first page? 20 A. Yes, right. 21 Q. When were they given that policy, to your 22 knowledge? 23 A. I don't remember. I mean, we would have some file 24 correspondence on it. 25 Q. Were they given any modified or additional policies 96 1 between the time they were first given Plaintiff's 2 Exhibit 6 and January of '95? 3 A. Policies? 4 Q. Yes. 5 A. No. It was a three-year policy. 6 Q. Now, what was the type of loss that occurred January 7 of '94? 8 A. I don't remember. It's been so long since I looked 9 at it, I don't remember. Water damage, I would 10 imagine, something to the sprinkler system. 11 Q. Were you aware that the sprinkler malfunctioned and 12 it caused water damage? 13 A. Yeah, something like that. 14 MR. WOLF: What was the date you asked 15 about? 16 MR. STEWART: January of '94. 17 Q. January of '94. There was a loss in January of '94 18 which was a smaller loss and then there was a major 19 loss in January of '95, correct? 20 A. As purported by the insured, yes. In fact, I think 21 there was three. 22 Q. Given the loss and your inspection in '94, did you 23 go back in and look at the policy to see whether any 24 potential exclusions would apply? 25 A. In '94? 97 1 Q. Yes. 2 A. The first loss? 3 Q. Right. 4 A. No. 5 Q. After you got the ISO report, did you go back and 6 look at the policy to see whether any of the 7 exclusions would apply? 8 A. I don't think so, no. 9 Q. Do you agree that if someone is paying for coverage 10 and an exclusion applies that's essentially illusory 11 coverage? 12 MR. WOLF: Objection. 13 Q. Illusory, do you know what that term means? 14 A. Yeah, illusory, yeah. There's no insurance company 15 out there, no insurance policy out there, without 16 exclusions. All-risk is a misnomer, but it's 17 all-risk except for the exclusions. 18 Q. Did the exclusions vary between companies? 19 A. They can on certain types of policies, but there is 20 an ISO standard boiler plate policy that has the 21 same exclusions. 22 Q. Do you know if the policies vary based on vacancy 23 exclusions? 24 A. They can, but for the most part, no. I mean, 25 there's a boiler plate exclusion, vacancy 98 1 exclusion. 2 Q. From March of '94 until January of '95, did you tell 3 the Scaravellis that they might want to consider 4 purchasing a vacancy endorsement since the building 5 was approximately 90 percent vacant? 6 A. I don't think I was able to get that far, no. 7 MR. RUF: Do you want to take a break? 8 - - - - 9 (Thereupon, a recess was had.) 10 - - - - 11 MR. RUF: What was my last question? 12 - - - - 13 (Thereupon, the requested portion of 14 the record was read by the Notary.) 15 - - - - 16 Q. Did you ever tell the Scaravellis that they had full 17 coverage for this building? 18 A. I did not. 19 Q. What was the term that you used when you described 20 the coverage for this building? 21 A. You're talking now -- we're talking June, July of 22 '93? 23 Q. Yeah, let's first start with June, July of '93. 24 A. June, July of '93 I told them I got placed three 25 million dollars of coverage with a thousand dollars 99 1 deductible. 2 Q. Did you use any term to describe the nature of the 3 coverage? 4 A. All-risk. 5 Q. What about in March of '94, did you continue to tell 6 them that they had all-risk coverage? 7 A. I don't think it came up. I mean, not specific. In 8 March of '94, no. 9 Q. Did you ever tell them that they had any other type 10 of coverage other than all-risk coverage? 11 A. No. 12 Q. Between March of '94 and January of '95 did you ask 13 the Scaravellis for any additional information about 14 the building? 15 A. March of '94, no. 16 Q. During the entire time that you were involved in 17 coverage for the 1300 building, did the Scaravellis 18 ever refuse to provide you with any information? 19 A. They refused to provide me with premium. Does that 20 count? 21 Q. Other than premium, did they refuse to provide you 22 with any information that you requested? 23 A. No. 24 Q. They didn't want to pay the premium? 25 A. Never wanted to pay the premium. 100 1 Q. When did they object to paying the premium? 2 A. From the second month on. 3 Q. The second month of '93 on? 4 A. Uh-huh. 5 MR. WOLF: Is that a yes? 6 A. Yes, August of '93 on. 7 Q. And what did you tell them when they were objecting 8 to the premium? 9 A. I told them that I got the best pay plan available 10 from that market, which was quarterly pay. They did 11 not have a monthly pay plan, but he began remitting 12 the premiums monthly, the annual divided by twelve, 13 irrespective of the quarterly pay plan. 14 Q. Was he paying what he needed to but just on a 15 monthly basis as opposed to a quarterly? 16 A. No. 17 Q. Was he paying less than he was supposed to? 18 A. Yes. 19 Q. Was that for the entire time the coverage was 20 written or only after March of '94? 21 A. The entire time coverage was written, to the best of 22 my knowledge. 23 Q. All right. At some point you had a discussion with 24 them that the premiums were going to increase, 25 correct? 101 1 A. Yes. 2 Q. Was that after you had been to the building in March 3 of '94? 4 A. No. That was somewhere -- somewhere -- I don't 5 know. It had to have been in late 1993. 6 Q. Why was there going to be a change in the premiums? 7 A. The Cincinnati underwriter called me and told me 8 that he was in possession of the ISO sprinkler 9 report -- that ISO inspection report on that 10 building, which apparently they -- I don't know when 11 they ordered it but -- 12 Q. Well, the ISO report was dated March of '94, 13 correct? 14 A. No. The inspector actually at the request of 15 Cincinnati inspected that building, I believe it 16 was, in August or September of '93. I don't know. 17 You know, it would be on that report. Where is that 18 report at? 19 MR. STEWART: It's right here. 20 A. Yeah, there you go. 21 Q. What are you referring to? 22 A. Surveyed 8-93 by CRS, Commercial Risk Services. 23 That must be -- that's a location number on there, 24 map, for that building. 25 Q. And what was the result of that assessment? 102 1 A. They got no sprinkler credit. The big thing was 2 this. Can I go back to something? 3 Q. Sure. 4 A. This thing here. Here's our guess rate, our 5 guess -- now this is our guess RCP code, okay. RCP 6 code is -- it gives the protection, protection class 7 at risk, okay. Our guess was 4603 because the four 8 means sprinklered, the six means fire resistive and 9 the three means protection class three, which is 10 City of Cleveland. 11 All the City of Cleveland is protection class 12 three. It's got the highest fire protection 13 capability in the county. City of Cleveland is the 14 best, I'll just tell you that. Okay. 15 Now, RCP here is 1203. One means 16 nonsprinklered, two means joisted masonry and three, 17 protection class three. So I got protection class 18 three. That was my biggest problem. 19 Q. What was your biggest problem? 20 A. Right there, that RCP code. 21 Q. And why is that a problem? 22 A. When I see that our guess at 4603 sprinklered, fire 23 resistive based on information conveyed to us by our 24 client conflicts with 1203, it's not the same. The 25 rate jumps. 103 1 Q. Do you know if the Scaravellis were qualified to 2 assess the sprinkler system? 3 A. I don't know about that. No, I don't. I don't know 4 if they were or not. I do know they've owned 5 property before. 6 Q. Although, I think you said before the assessment of 7 sprinkler systems requires special training, 8 correct? 9 A. The operation of the system. I mean, I can look at 10 this building and see it's sprinklered. There's a 11 head. I can also tell by looking at that head that 12 that's a pretty good sized head. And the reason why 13 that's a good sized head is because this is probably 14 a joisted masonry building, it's not fire 15 resistive. And even though the load here is 16 offices, it recognizes the fact that it's JM 17 construction and not fire resistive. 18 And so if you've got a fire here that damn 19 thing, that head, excuse the language, that's going 20 to put out a lot of water. And there's another big 21 head right there. 22 Q. But you can't tell whether a sprinkler system is 23 functional just looking at the head, can you? 24 A. Not at all. Not at all. We could put a match up 25 there. 104 1 MR. RUF: Why don't you mark that. 2 - - - - 3 (Thereupon, Plaintiff's Exhibit 7 was 4 mark'd for purposes of identification.) 5 - - - - 6 Q. I'm handing you what's been marked as Plaintiff's 7 Exhibit 7. 8 Was the premium that the Scaravellis were 9 originally paying listed on Plaintiff's Exhibit 7? 10 A. Yes. 11 Q. What's the premium? 12 A. $5,884. 13 Q. And what was the deductible? 14 A. I don't know. Oh, a thousand. 15 Q. Did the Scaravellis ever give you authority to 16 change the deductible? 17 A. No, no, they did not. 18 Q. Was the deductible ever changed? 19 A. Yes, it was. 20 Q. Who decided to change the deductible? 21 A. The Cincinnati underwriter. Well, a discussion 22 between myself and the Cincinnati underwriter. 23 Q. Did you consent to increasing the deductible on the 24 policy? 25 A. Eventually, yes. Initially, no. 105 1 Q. When did you do that? 2 A. I believe it was somewhere in November of -- I'm 3 guessing. It's November of '93. 4 Q. Why do you say eventually no then? 5 A. Let's see. No, initially no, eventually yes. 6 Q. So you consented in November of what year? 7 A. '93. 8 Q. To raising the deductible? 9 A. I think, okay, I think. 10 MR. RUF: Would you mark this. 11 - - - - 12 (Thereupon, Plaintiff's Exhibit 8 was 13 mark'd for purposes of identification.) 14 - - - - 15 Q. I'm handing you what's been marked as Plaintiff's 16 Exhibit 8. It's a Commercial Property Coverage Part 17 Declarations form. 18 Down at the bottom it says deductible $250 19 unless otherwise stated. It has 1,000 crossed out, 20 then 10,000 crossed out, then 1,000 written in 21 there. 22 A. Uh-huh. 23 Q. Do you know who wrote those numbers in there and who 24 crossed out the numbers? 25 A. Yeah, our servicing representative, Barb C. 106 1 Q. Do you know why the numbers were crossed out and 2 then written in and crossed out again? 3 A. Yes. We would have gotten an endorsement from the 4 company instituting a $10,000 deductible instead of 5 the thousand dollars. 6 Q. Do you know when that occurred? 7 A. I know it was around -- it was between October and 8 December of '93. 9 Q. And then what happened? 10 A. I had to go to a $10,000 deductible at the 11 insistence of the underwriter in order to get a 12 credit structure instituted on the risk retroactive 13 to 7-2-93 that was much more amenable to our client, 14 because the rate shot up with the lowered 15 construction and the nonapplication of a sprinkler 16 credit. 17 MR. STEWART: Could we go off the 18 record for a minute. 19 - - - - 20 (Thereupon, a discussion was had off 21 the record.) 22 - - - - 23 MR. RUF: Let's go back. 24 Q. On Plaintiff's Exhibit 8, it says 1,000 first. And 25 that's typewritten, correct? 107 1 A. That's correct. 2 Q. Who crossed out that number? 3 A. Our servicing representative. 4 Q. And that would have been crossed out in November of 5 '93? 6 A. I'm going to say sometime between October and 7 December of '93, right. Well, keep in mind, that is 8 done because of an endorsement coming in from the 9 company instituting a $10,000 deductible instead of 10 a thousand. 11 Q. And then when would 10,000 have been crossed out 12 again? 13 A. Well, right here it was -- I remember I had a change 14 of underwriters. 5-4-94 I was able to get back a 15 reinstitution of the thousand dollars deductible. 16 So a $10,000 deductible applied to the first claim 17 and a thousand dollars deductible applied to the 18 second and the third claims. 19 Q. Oh, so there were three claims? 20 A. It's my recollection. I remember that there was an 21 incident in January of '95 and then another one in 22 February of '95. That was my recollection, because 23 I remember at that time I was thinking to myself how 24 could I have -- well, it doesn't matter. 25 Q. Was the major loss in January or February of '95? 108 1 A. I think that January and February of '95 were all 2 the same loss. 3 Q. You're aware that about 85,000 square feet of wood 4 flooring was damaged due to water? 5 MR. WOLF: Objection. 6 A. No, I was not aware of it. I know they had some 7 water damage to the floors, I understand that. 8 Q. Did you know the amount of water damage or the 9 amount of square footage involved? 10 A. No, but -- no. 11 Q. I have another question on Plaintiff's Exhibit 8. 12 Down at the bottom it says CP 9993 and then it says 13 paren., 10, slash, 90, end paren., and there's a 14 line through it and it says deleted. What does that 15 mean? 16 A. I don't know if that was the actual deductible form 17 or not. I don't recall. I just don't recall what 18 that form relates to. That's why I have a forms 19 manual. It's got like a thousand pages. 20 But what that means is that form has an 21 addition date of October of '90, and it's a boiler 22 plate form, and I don't know. 23 Q. Okay. But it was your understanding there was a 24 thousand dollar deductible when the losses occurred 25 in January and February of '95? 109 1 A. That's correct. 2 MR. RUF: Could you mark that. 3 - - - - 4 (Thereupon, Plaintiff's Exhibit 9 was 5 mark'd for purposes of identification.) 6 - - - - 7 MR. STEWART: We need the form 8 CP 999 -- 9 THE WITNESS: 3. 10 MR. STEWART: 9993, right, 10 of '90. 11 Q. Okay. I'm handing you Plaintiff's Exhibit 9. What 12 is that document? 13 A. That's an agency produced document that Umberto 14 Fedeli liked to have so that he could easily review 15 the basics of coverage with his clients when I would 16 accompany him or when he would go alone, which was 17 very rare. So it's really just a -- it's 18 information for him. 19 Q. And that also reflects the fact that the deductible 20 was originally a thousand? 21 A. Uh-huh. 22 Q. Then changed to 10,000 and then changed back to a 23 thousand? 24 A. That's correct. 25 MR. RUF: Why don't you mark that. 110 1 - - - - 2 (Thereupon, Plaintiff's Exhibits 10 3 through 13 were mark'd for purposes of 4 identification.) 5 - - - - 6 Q. I'm handing you what's been marked Plaintiff's 7 Exhibits 10 through 13. Would you take a look at 8 those documents and identify what they are? 9 A. This is 10 through 13. This is an application. 10 Q. Let's start with 10. Excuse me, sir. Let's start 11 with 10. What is document 10? 12 A. It's a cover page of an Acord application. 13 Q. How many pages is an Acord application? 14 A. It varies by the nature of the risk and the types of 15 coverages required. 16 Q. For 1300 how many pages was it? 17 A. One, two, three -- 18 Q. I don't know if that's part of the application or 19 not. 20 A. Oh, yeah. We're missing a page. There should be 21 five pages with this application. 22 Q. What page should be attached? 23 A. Non-owned and hired auto. 24 Q. Well, let's start with number 10. 25 A. Uh-huh. 111 1 Q. What is document number 10? 2 A. It's a cover page, a cover page, an applicants 3 information page. 4 Q. How was the information on that page obtained? 5 A. From Chuck Scaravelli. 6 Q. And that was by telephone? 7 A. I'm going to tell you one thing. Prior to 7-2-93 or 8 around there, a week before, whatever, I had never 9 dealt with Chuck. 10 MR. WOLF: That's not his question. 11 A. I'm sorry. Only Sam. Yes, Chuck Scaravelli gave 12 me -- 13 Q. Was that information obtained by telephone? 14 A. Yes. 15 Q. And in Plaintiff's Exhibit 10 it says see separate 16 policy with CIC. Were you relying on information 17 from that policy? 18 A. No. I was -- I put this together. I wanted -- I 19 needed immediacy of placement and I was showing that 20 I had collateral business with Cinci. and I was 21 using -- 22 Q. That was to help get the coverage? 23 A. Exactly, because I needed to get it quick. 24 Q. Under part occupied it says what? 25 A. LRO. 112 1 Q. What does that stand for? 2 A. Lessor's risk only. 3 Q. What does that mean? 4 A. That means that he owns the building but he's not 5 going to occupy anything there. He's not going to 6 maintain an occupancy there. He's not going to -- 7 in other words, you have a building -- he's not 8 going to maintain an occupancy there. 9 Q. So Chuck told you he was not maintaining an 10 occupancy in the building? 11 A. No, he told me that he was going to have offices in 12 the building. 13 Q. Why was LRO written in then? 14 A. It's a notice to the insurance company that it's a 15 lessor's risk only. It's a building that's rented 16 to others, rented out to others. 17 Q. What I don't understand is why was LRO written in if 18 you were told by Chuck he was going to have an 19 office in the building? 20 A. I was not told that he was going to have an office 21 in the building. When I inquired about whether the 22 building was vacant or not I was told that there was 23 offices in the building and he was going to have 24 offices in the building, the implication being on a 25 lessor's risk basis. He was going to be the 113 1 landlord absentee and he'd have tenants there. 2 Q. What other abbreviations could be used on that 3 document? 4 A. Part. That would be the applicant would occupy part 5 and rent it out to others, rent the rest out to 6 others. Or I could put -- could have put OCCPD. 7 That indicates that the guy owns it and he occupies 8 it 100 percent. 9 Q. Is there an abbreviation for unoccupy? 10 A. No, I've never seen it used. 11 Q. What's Plaintiff's Exhibit 11? 12 A. This is the back end of the -- this is the same page 13 as that and it shows character history -- prior 14 history, prior history of the risk. In fact, 15 there's -- we have to really, you know, in this case 16 here he just purchased it, so it had no prior 17 history to him. 18 Q. Is this your writing on Exhibits 10 and 11? 19 A. Yeah. And I could see I put this together quick. 20 Q. So Chuck told you that the title was expected to 21 pass 7-2-93? 22 A. No, no, he told me he needed coverage immediately, 23 and I believe I had coverage -- I got coverage done 24 that day and then later on I think he probably 25 figured out the title passed a little bit later. 114 1 Q. So is that why 6-28-93 is crossed out? 2 A. Yeah, I think so. I think because I did not know 3 who the mortgagee was. I only found out later it 4 was this warehouse restoration thing, and when we 5 became aware of that -- 6 Q. So he called you back to inform you that the date of 7 title transfer was going to be different? 8 A. I know that -- yes. I was relying upon him for the 9 named insured and any mortgagee clause. I knew 10 there was a mortgagee involved. 11 Q. And did he give you those two things? 12 A. Yes. 13 Q. What's Exhibit 12? 14 A. 12 is the property section, the property section of 15 the -- the property application, the property debt 16 page application. 17 Q. And you filled out Plaintiff's Exhibit 12? 18 A. Yes, I did real quick. 19 Q. Did you just fill that out or did you go over any of 20 that information with Chuck on the telephone? 21 A. I ascertained what he needed and I put it together. 22 Q. Did Chuck tell you it was a dry system? 23 A. He must have because I would not have written that 24 down. I would not have known it. 25 Q. And what's the AS? 115 1 A. AS means sprinklered. 2 Q. Where did you get the information about the square 3 footage for the building? 4 A. I didn't get it. 5 Q. Well, why is 54,500 written down? 6 A. I came in after the fact, after the fact, because I 7 needed general liability coverage and I figured a 8 three million fire resistant building must have 9 around 50 to 60,000 square feet, so I plugged that 10 value in there. 11 Q. So you just estimated it based on the value of the 12 building? 13 A. Right, and based on my experience in dealing with 14 three million dollar fire resistive sprinklered 15 buildings. The client did not specifically ask for 16 general liability coverage. 17 Q. Let's go to the next document, 13. What is that 18 document? 19 A. This is the commercial general liability section 20 application. 21 Q. Why does this one contain limits of two million? 22 Weren't you trying to get coverage for three 23 million? 24 A. Yeah. Now, this is strictly commercial general 25 liability. This is to protect our client for his 116 1 negligence in causing bodily injury or property 2 damage to others. 3 Q. And that's coverage that was not requested by the 4 client, correct? 5 A. That's correct. 6 Q. Do you know what the premium for that was? 7 A. I think, to tell you the truth, I think the property 8 was 50 percent of the total and general liability 9 was the other 50 percent. 10 Q. Did you ever give the client the option of 11 increasing the property damage and decreasing the 12 general liability? 13 A. Between May of '94 and January of '95, plenty of 14 times. 15 Q. And what did the client tell you? 16 A. He would not accept -- he would not accept the 17 building as being undervalued. 18 Q. Did you explain to them the difference between the 19 property coverage and the general liability? 20 A. I think I recall Chuck asking about it. I just 21 explained to him what general liability was. I knew 22 that he hadn't specifically asked for it and I don't 23 think he probably wanted to pay the premium for it. 24 Q. But initially they just requested property coverage 25 for the building? 117 1 A. That's correct. I know he's going to be upset, but 2 the thing is that you have -- you put a package 3 together and there is a little bit of a rate credit 4 for putting a package together, property and 5 liability together. 6 Q. So that would result in an increased premium and 7 increased commission? 8 MR. WOLF: Objection. 9 A. No, no, it's -- 10 Q. What's the credit? 11 A. It's -- these are internal underwriting rates. A 12 mono-line policy is usually more expensive than two 13 types of coverages wove together into a policy. 14 Q. Did you ever give the client copies of Exhibits 10 15 through 13? 16 A. No. 17 Q. And neither Chuck nor Sam came in and signed an 18 application, correct? 19 A. No, there was no time. 20 Q. Did you ever ask them to sign an application after 21 the coverage was bound? 22 A. No. 23 MR. RUF: Mark that. 24 25 - - - - 118 1 (Thereupon, Plaintiff's Exhibit 14 was 2 mark'd for purposes of identification.) 3 - - - - 4 Q. What's Plaintiff's Exhibit 14? 5 A. It's a mortgagee clause. 6 Q. Where did you get that document from? 7 A. Probably from the insurance company, Cincinnati. 8 Q. Were you aware that the seller of the building was 9 demanding insurance coverage in order for the deal 10 to go through? 11 A. No, I did not know. 12 Q. Do you know if carrying insurance was a contract 13 term for the purchase of this building? 14 A. No, I saw no contract, no contract whatsoever. 15 Q. Were you aware that the purchase of the building by 16 the Scaravellis was owner financed? 17 A. Not aware of anything. 18 Q. When was coverage bound for the building? 19 A. I know from the policy it was bound 7-2-93, but I 20 believe that I bound it before that and we replaced 21 it and made the bind date 7-2. 7-2 was the official 22 bind date. 23 - - - - 24 (Thereupon, Plaintiff's Exhibit 15 was 25 mark'd for purposes of identification.) 119 1 - - - - 2 Q. I'm handing you Plaintiff's Exhibit 15. Is that the 3 binder? 4 A. That's correct. 5 Q. And what's the date on the binder? 6 A. 7-13-93. 7 - - - - 8 (Thereupon, Plaintiff's Exhibit 16 was 9 mark'd for purposes of identification.) 10 - - - - 11 Q. I'm handing you what's been marked as Plaintiff's 12 Exhibit 16. Do you know what that document is? 13 A. It's my scribble and it was probably a face-to-face 14 with Chuck Scaravelli. 15 Q. Do you know when those notes were written? 16 A. Let's see. 17 Q. At the top it says 7-2-93 to 7-2-94. 18 A. Well, they were written between 7-2-93 and 7-2-94. 19 Well, wait a minute. No, I think this was done -- I 20 just don't know. I'm trying to be -- let's see. 21 ISO 10,000. This would have been around -- it would 22 be after the first loss because the 10,000 wouldn't 23 have come up until the first loss, so I would say it 24 would be between January of -- when was the first 25 loss, January of '94? 120 1 Q. Yes, January of '94. 2 A. And April of '94. 3 Q. There's a -- 4 A. Or maybe July of '94. I mean, I don't know. 5 Q. There's a bunch of numbers on there. What were you 6 calculating? 7 A. I was showing the premium at inception of 5,884, and 8 the premium here -- 9 Q. Okay. What was the premium at inception? 10 A. $5,884. 11 Q. And the later premium was what? 12 A. 12,988. 13 Q. And what was the date of the later premium? 14 A. 7-2-94 to 7-2-95. 15 Q. What are the other numbers that you're showing 16 there? 17 A. Well, I think -- I believe this is one of my famous 18 favorite discussions with Chuck over ACV, actual 19 cash value, and replacement cost. And I'm showing 20 him premiums because obviously the rates are based 21 per hundred of value on a property form. 22 Q. So what were you trying to demonstrate there? 23 A. I'm trying to show him what adequacy of insurance 24 would cost for that size building on a replacement 25 cost basis and the need for him to go to an actual 121 1 cash value basis. 2 Q. And what else were you showing on that document? 3 A. I was trying to explain to him that it was quarterly 4 pay. I was showing him the quarterly pay dates and 5 I was trying to override his assertion that he was 6 going to continue to pay on a monthly basis because 7 it was causing problems with our accounting 8 department. 9 Q. And he objected to the premium increase? 10 A. Yes. He did not -- 11 Q. Why did he -- 12 A. -- recognize the validity. He claimed ISO was a 13 concoction -- I don't know. There's a lot of 14 things. I mean -- 15 Q. Was he upset because he had been paying the same 16 premium for a year and now the premium was almost 17 going to be doubled? 18 A. Actually, the premium changed in November of '93. 19 He would not accept it from November of '93 until 20 July of '94. He would not accept the increase 21 because he did not accept the fact that the building 22 was not fire resistive nor that it did not have an 23 approved sprinkler system. 24 25 - - - - 122 1 (Thereupon, Plaintiff's Exhibit 17 was 2 mark'd for purposes of identification.) 3 - - - - 4 Q. What's Exhibit 17? 5 A. It's an ISO loss cost release. 6 Q. Do you know when that was done? 7 A. The ISO department made it on August 11th of '93. 8 Q. Do you know what it means down at the bottom, vacant 9 building section voids? 10 A. Yeah. 11 Q. What does that mean? 12 A. That's sections of the building are vacant. 13 Q. What does it void? 14 A. I don't know what voids means. I don't know what 15 he's replying there to. 16 Q. Does that indicate it voids the coverage? 17 A. No. It has nothing to do with coverage. This is an 18 independent rating service. It does not underwrite, 19 it does not pay claims, it has nothing to do with 20 coverage. 21 Q. Do you know what it voids? 22 A. Now, the only thing I could think of there, knowing 23 that there was so many floors below grade, huge 24 floors below grade, all dark, that that's probably 25 what he's talking about. It's got nothing to do 123 1 with it. 2 Q. Do you know who prepared Exhibit 17? 3 A. An ISO inspector. Well, let's put it this way, a 4 clerk down in the ISO in Columbus, Ohio, printed 5 this form. 6 Q. And that form was given to your agency? 7 A. We got -- I got -- this should have been part of 8 that sprinkler report. This is part of the 9 sprinkler report. 10 Q. So you would have gotten that in March of '94? 11 A. Correct. 12 Q. Did you want to say something about Exhibit 17? 13 A. Uh-uh. 14 - - - - 15 (Thereupon, Plaintiff's Exhibit 18 was 16 mark'd for purposes of identification.) 17 - - - - 18 Q. I'm giving you what has been marked as Exhibit 18. 19 What is that document? 20 A. A cover sheet from the sprinkler report. 21 Q. Do you know whose handwriting is on here? 22 A. That's mine. 23 Q. What were you writing there? 24 A. I was in a discussion on the phone with the ISO desk 25 clerk in Columbus who was telling me, I believe, in 124 1 late February, late February, about the sprinkler 2 report. 3 I needed to know what the deficiencies were 4 exactly because I needed to know how to circumvent 5 ISO's objections for the benefit of our client. 6 Q. Did you figure out a way to circumvent those 7 objections? 8 A. I got their issues, their main issues, from their 9 guy down there and I sought to contact Chuck and get 10 it revamped. 11 Q. Did Chuck try and take corrective action based on 12 the ISO report? 13 A. Initially, no. He refused to believe there was 14 anything wrong with the sprinkler system. He 15 refused to believe that ISO existed. He refused to 16 believe the validity of anything I was saying. 17 Q. And then what about later? 18 A. Continued to believe those things. 19 Q. Did he ever do anything to change the sprinkler 20 system or update it? 21 A. My knowledge, no. I think there was that claim in 22 '94 and I think there was some revamping based on 23 the damage asserted in the '94 claim of the 24 sprinkler systems, pipes, heads, I don't know what. 25 Q. Do you know how much it was going to cost to bring 125 1 the sprinkler system up to ISO standard? 2 A. No, I did not know. To tell you the truth, at that 3 time I didn't know whether I was dealing with a 4 defective sprinkler system itself in terms of pipes 5 or whether I was dealing with a flow test, flow test 6 blockage out there at the city street level with 7 regard to hydrants. 8 Q. Did you ever sit down and go over the Cincinnati 9 insurance policy with the Scaravellis? 10 A. No. 11 Q. Did you tell either Chuck or Sam that the 12 nonfunctioning of the sprinkler system or the 13 condition of the sprinkler system could result in no 14 coverage for certain types of losses? 15 A. I don't remember. I really don't remember. 16 Q. Did the Scaravellis ever tell you they did not want 17 coinsurance? 18 A. No. 19 Q. Well, after you brought up the subject of 20 coinsurance, didn't they tell you that they did not 21 want coinsurance and that they had never requested 22 it? 23 A. Well, he told me in a conversation I recall in the 24 summer of '94 where Chuck said he had never asked 25 for coinsurance. 126 1 Q. And what was your response? 2 A. I told him that you asked me for coverage on a three 3 million dollar building that was fire resistive and 4 sprinklered, it is normal practice to issue a policy 5 with coinsurance. 6 Q. Did you ever tell him that you're going to get rid 7 of the coinsurance? 8 A. No. It came up, I think, with the discussion with 9 the first claim, with the first claim. I think I 10 remember telling him something to the extent that I 11 think we would help him not make coinsurance an 12 issue with regard to the first claim. Keep in mind, 13 that was in -- after my viewing the building in 14 March of '94 and seeing how big it was. 15 Q. Well, you raised coinsurance after that point, 16 correct? 17 A. I made him aware of it, yeah. I made him aware of 18 it in terms of we needed to raise the value. 19 Q. And he said he never requested coinsurance; is that 20 correct? 21 A. He never asked for coinsurance, that was his -- 22 that's what he said to me verbatim. 23 Q. Did he tell you that he did not want coinsurance? 24 A. He did not tell me that he did not want 25 coinsurance. 127 1 Q. Well, did he seem to object to the coinsurance? 2 A. The only thing he said to me I remember, I recall, 3 in the middle of 1994 was that he never asked for 4 coinsurance in our brief discussion that afternoon 5 in late June, '93. 6 Q. Well, was he upset that he never asked for 7 coinsurance and it was inserted in the policy? 8 MR. WOLF: Objection. 9 Q. Based on your observations? 10 A. It is standard practice -- 11 MR. WOLF: Do you understand his 12 question? 13 THE WITNESS: No, I don't. 14 Q. Did Chuck seem upset about this coinsurance? 15 A. He was upset in the sense that I needed to raise the 16 value and it would substantially increase the 17 premium. 18 Q. How were the limits determined in the binder? 19 A. You're talking about the three million dollar 20 limit? 21 Q. The three million dollar property limit. 22 A. It was requested by the client. 23 Q. Do you know if anyone from Cincinnati Insurance 24 Company ever went out to assess the insurable value 25 of the 1300 building? 128 1 A. To my knowledge, no. 2 Q. Did you ever do that? 3 A. I did a quick look at it around late July of '93 and 4 I was comfortable that what I did quick for him was 5 in the ballpark. 6 Q. Did you consider yourself to be an agent of 7 Cincinnati Insurance Company? 8 MR. WOLF: Objection. 9 A. I'm independent, independent agent. 10 Q. Were all communications sent through you to the 11 client from Cincinnati? 12 A. They would come to the servicing representative who 13 would pass them to me if they needed my looking at. 14 Q. Was Cincinnati Insurance Company relying on you to 15 set the value of the building? 16 MR. WOLF: Objection. 17 A. No. 18 Q. Did anyone from Cincinnati Insurance Company ever 19 ask you what the value of the building was? 20 A. We're talking July of '93, August of '93? No. 21 Q. What about from '93 to '95? 22 A. I think the marketing rep for Cincinnati raised some 23 issues about values and the amount of square footage 24 down there in the summer of '94. 25 Q. At that point did you explain to the Scaravellis 129 1 that market value may be something different than 2 actual cash value or repair or replacement cost? 3 A. Yeah, I would say it was around -- it was prior to 4 the anniversary, the second anniversary, so I would 5 say June of '94 we had discussions about market 6 value, replacement cost, actual cash value. 7 Q. What did you tell him? 8 A. I told him that market value has no relation 9 sometimes to replacement cost. They're not 10 related. He was under the belief, and that's when I 11 found out, that's when I figured out about the 12 mortgage amount. He was under the belief that he 13 insured it for -- he asked for me, a value from me, 14 for more than the mortgage amount, which apparently 15 must have been the sales price, I'm guessing, and 16 therefore he insured it for more than its value. 17 Q. So he thought he was insuring the building for more 18 than its value? 19 A. Correct. 20 Q. And that was even when you had these discussions 21 about coinsurance? 22 A. That was connected with the discussions about 23 coinsurance, after the discussions about 24 coinsurance. They're related. 25 Q. How were you notified of the first loss? 130 1 A. I believe Chuck called me on the phone. 2 Q. And did you report the loss to Cincinnati? 3 A. I gave it to our claims girl, but I think I put the 4 loss notice together, as I recall. I put the loss 5 notice together -- 6 Q. And -- 7 A. -- in terms of what happened, what was described to 8 me by the client in terms of what happened. There's 9 an Acord form for that. 10 Q. So you guys filled out a form and sent it to 11 Cincinnati? 12 A. Back in those days we were more hands-on and we had 13 less staff and so people had multiple job 14 functions. 15 Q. What about the first loss in January of '95 or the 16 second loss in January of '95? 17 A. I think I recall getting a phone call, but I think 18 our claims girl put together the loss form at my 19 direction probably. 20 Q. What about the loss in February of '95? 21 A. Same thing, I think, you know. 22 Q. Were you involved at all in the adjustment process 23 for any of the claims? 24 A. The first loss I was actively involved. 25 Q. What about for the two losses in '95? 131 1 A. I was less -- I was much less involved. 2 Q. Were you aware that Cincinnati Insurance Company was 3 raising the vacancy exclusion to the claims in '95 4 arguing that there was no coverage for the water 5 damage? 6 A. No, I was not aware of that. I was not aware of 7 that defense by them in '94 or '95. 8 Q. Did there ever come a point where you were aware of 9 that? 10 A. Yeah, I think so. I think around about a year and a 11 half ago. 12 Q. How were you notified of that fact? 13 A. I'm going to figure it's either the adjuster told me 14 from Cincinnati or the marketing rep. 15 Q. And what were you told? 16 A. I heard that Cincinnati was sued. Well, there was a 17 lawsuit for a million dollars against Cincinnati and 18 I believe it was emanating from those two claims 19 together, January and February of '95. 20 Q. Were you aware of the fact that Cincinnati was also 21 taking the position that there was no coverage 22 because there was not a sprinkler system that was 23 protected against freezing? 24 A. No, I don't recall that. We're talking the second 25 claim or the first claim? 132 1 Q. The claims in '95. 2 A. No. They paid on the claim in '94 for that 3 situation. 4 Q. And in '94 they didn't raise any objection to 5 coverage, correct? 6 A. Not that I am aware of. 7 Q. But in '95 when there was a claim for substantially 8 more, they raised these coverage issues? 9 A. I don't know when they raised them, but it had to 10 have been after '95. I don't know if they raised 11 them in '95 or -- I don't think they did. I don't 12 think they raised them in '95. I think they raised 13 them later on. 14 Q. Were you aware that the insurance company was 15 claiming that the actual cash value of the building 16 was about 13 and a half million dollars? 17 A. No, it was not. I know that I did my own 18 independent assessment back in the summer of '94 and 19 I think I came up with a range of around nine to 20 twelve million for ACV and 20 million plus for 21 replacement cost. That's in my ballpark, in my 22 head. I'm starting to remember more now about 23 this. 24 Q. And if the actual cash value was 13 and a half 25 million, what you would do to adjust a claim is -- 133 1 do you know how you would adjust the claim? 2 A. You're asking me what actual cash value was? 3 Q. Yes. 4 A. Replacement cost less depreciation. 5 Q. But you wind up doing a calculation where you take 6 the actual insurance coverage, in this case it was 7 three million dollars, correct? 8 A. Now, you're conflicting ACV with coinsurance. 9 Actual cash value was replacement cost less 10 depreciation. 11 Q. But if the actual cash value was -- 12 A. It has nothing to do with market value. 13 Q. -- somewhere between 9 and 13 million dollars, there 14 would be a substantial penalty in calculating the 15 amount of coverage for a claim, correct? 16 A. If the claim was adjusted on a coinsurance basis, 17 yes, and the amount face value was three million. 18 Q. And that would be done by doing a calculation using 19 the amount the building was actually insured by and 20 then figuring out a percentage based on the actual 21 cash value, correct? 22 A. No. On this policy here I believe it was 23 replacement cost. That policy contract was issued 24 replacement cost, so it would have been the amount 25 carried, three million, over the replacement cost 134 1 amount, that fraction times the loss. 2 Q. What was the estimated replacement cost amount? 3 A. I don't know. I think I did my own at 20 million 4 plus. 5 MR. RUF: Why don't you mark that. 6 - - - - 7 (Thereupon, Plaintiff's Exhibit 19 was 8 mark'd for purposes of identification.) 9 - - - - 10 Q. I'm handing you a blank piece of paper marked as 11 Exhibit 19. At a replacement cost of 20 million 12 dollars, how would you do the calculation for the 13 coinsurance? 14 MR. WOLF: Objection. 15 A. Can we make it easy? 16 Q. Sure. 17 A. 21 million? 18 Q. Sure. I'm not asking you to do the actual 19 calculation, just to set it up. Do you know how to 20 do that? 21 A. Have I ever actually done one of these adjustments? 22 Q. Yes. 23 A. No, I've never been an adjuster. 24 Q. If you don't know how to do it -- 25 A. As an underwriter I know the formula. 135 1 Q. Yes? 2 A. Amount carried, three million, over the amount 3 required, 21 million, times the loss. 4 Q. Don't you actually multiply the 21 million by 80 5 percent? 6 A. No. It's got nothing to do with it. 7 MR. WOLF: Just for clarity, can you 8 fill this in so when we look at it later we 9 know what this figure is? 10 THE WITNESS: Oh, yes. 11 A. Amount carried over amount required. I gave you the 12 coinsurance formula. 13 Q. So for three million over 21 million, that would 14 equal .143? 15 A. Correct. 16 Q. Do you want to use the calculator? 17 A. So if you add $140,000 loss you'd collect 20,000, 18 one seventh. 19 Q. So if you had a million dollars' loss, you'd 20 multiply that times 1.4, so essentially you're only 21 getting 14 percent of the coverage, correct? 22 MR. WOLF: Objection. 23 A. No, that's not true. You're getting what's asked 24 for, three million dollars of coverage. 25 Q. But as far as payment on the loss, you're only 136 1 getting payment of 14 percent of the loss, correct? 2 A. If the building burned to the ground he would 3 collect three million. If a tornado came through 4 there, blew it apart, he would collect three 5 million. 6 Q. But other than totally wiping out the building, 7 there's a penalty -- 8 MR. WOLF: Objection. 9 Q. -- with the coinsurance formula, correct? 10 MR. WOLF: Objection. 11 A. No -- yes. I mean, it depends. 12 Q. Well, with a million dollar loss -- 13 A. Uh-huh. 14 Q. -- the payment under the coinsurance formula, as 15 we've put on Exhibit 14, would be $140,000, 16 correct? 17 MR. WOLF: Wait a minute. He said 18 that's not the coinsurance formula. 19 Q. Okay. What is the formula? 20 A. Yeah, I'm sorry, it is. 21 Q. The formula on Plaintiff's Exhibit 14 is the 22 coinsurance formula, correct? 23 A. It's a coinsurance formula. It's not the, what he's 24 referring to, it's not the coinsurance formula on 25 1300 West Ninth Street Corporation. 137 1 Q. Do you know what the coinsurance formula would be on 2 1300 West -- 3 A. I had no idea. 4 Q. That's determined based on the -- 5 A. Based on the policy, the adjustment process. I'm 6 sorry, you're right. This is a hypothetical. 7 - - - - 8 (Thereupon, Plaintiff's Exhibit 20 was 9 mark'd for purposes of identification.) 10 - - - - 11 Q. How did you calculate the estimated repair or 12 replacement cost? 13 A. Back in the summer of '94 I was basing it on the ISO 14 report and their estimations of square footage and 15 then also my determination from that report of the 16 amount of square footage above grade. 17 Q. So there's a formula that you can follow to try and 18 calculate -- 19 A. Not a formula. It's an inexact science. It's just 20 something you acquire with experience. You learn 21 from your elders. It's passed down. 22 Q. But that repair or replacement cost can vary a lot? 23 A. By construction and protection, yes, and location. 24 You could build a building -- this same type 25 building I can build in Canton cheaper than I can in 138 1 Cleveland, all things else being equal. 2 Q. Well, can that number be manipulated to make it 3 bigger or smaller? 4 MR. WOLF: Objection. 5 A. It has to be based on reality. I mean, yeah, you 6 spin it up or down. 7 Q. But you said it's an inexact science, correct? 8 A. In terms of exactness, yes, but we deal with ball 9 parks. We deal with, you know, whether a building 10 is 21 million or 20 million. It's pretty close. 11 Q. I'm handing you what's been marked as Plaintiff's 12 Exhibit 20. It's an estimate to Mr. Scaravelli from 13 a Michael Gluntz concerning the estimated damage to 14 the floor. Had you ever seen that document? 15 A. No, I have never seen it. 16 Q. It was not given to you at any time during the 17 adjustment process? 18 A. No. 19 Q. Do you have any reason to dispute that evaluation? 20 MR. WOLF: Objection. 21 A. I don't know anything about it. 22 Q. This obviously went -- 23 A. I don't know anything about it. 24 Q. Don't you think it would be in the client's best 25 interests to know the repair or replacement cost at 139 1 the time you write the policy? 2 MR. WOLF: Objection. 3 A. No. 4 Q. Well, that can substantially change the amount of 5 coverage that could be paid under the policy, can't 6 it? 7 MR. WOLF: Objection. 8 A. I secured what was requested. 9 MR. WOLF: Do you understand his 10 question? 11 A. No. 12 Q. Well, the coinsurance clause can result in a 13 substantial reduction in the payment for a claim, 14 can't it? 15 MR. WOLF: Objection. 16 THE WITNESS: Do I have to answer? 17 MR. WOLF: Yes. 18 A. If the value was adequate, no penalty. 19 Q. Right, so you need -- 20 A. If the value was a replacement cost value, no 21 penalty. 22 Q. Right, so you need to assess up front what the value 23 is, correct? 24 A. Yes. 25 Q. So that you can get adequate coverage under the 140 1 policy? 2 A. That's correct. 3 Q. Was that something you normally do in your office 4 when you're initially writing coverage? 5 A. Yes, that's something we try to do every time. 6 Q. But you didn't do that in this case initially, 7 correct? 8 A. I had no time. 9 Q. And even after the coverage was bound, you didn't go 10 out and do a calculation? 11 A. I guess I did but not immediately. The Scaravellis 12 were existing clients. I wrote a building for them 13 on Scranton Avenue, I wrote Perry-Payne. I knew 14 they knew about values. 15 Q. Were you worried that if you went in and changed the 16 coverage on the building it might affect that 17 business relationship? 18 A. I don't understand the question. 19 Q. Were you worried that if you went out and assessed 20 the replacement cost and told them that that would 21 substantially change the premium that that would 22 affect the business relationship with them? 23 A. No. 24 Q. Well, then after this guesstimate was done, why 25 didn't you go out and do anything to confirm the 141 1 numbers? 2 A. I did about three weeks later. I did a quick 3 pass-through on that building and felt that the 4 value of three million was close to replacement and 5 the square footage that I used for commercial 6 general liability was in the ballpark for 7 accurateness. 8 Q. So you thought your initial estimate was accurate 9 after you drove out? 10 A. Based on what I thought the building was, yes. Can 11 I go back to my map? 12 MR. RUF: Why don't you mark that. 13 - - - - 14 (Thereupon, Plaintiff's Exhibit 21 was 15 mark'd for purposes of identification.) 16 - - - - 17 Q. I'm handing you what's been marked as Plaintiff's 18 Exhibit 21. 19 Are you aware that Chuck Scaravelli filed a 20 complaint with the Department of Insurance? 21 A. Yes, he did. Yes, I'm aware. 22 Q. And you provided several responses to that 23 complaint, correct? 24 A. We did in conjunction with our legal people. 25 Q. But you provided responses and you signed those 142 1 responses, correct? Why don't you mark these. 2 A. I didn't sign it. I don't recall. I don't think 3 so. Maybe. Let's see. 4 Q. Well, let me -- 5 A. Let me look at it. This was done by, I can't think 6 of his name, but his last name was Evangelista at 7 Clamaco. 8 Q. Let's hold off for one second. 9 A. Oh, yeah, well, this is his complaint. 10 Q. Right. 11 - - - - 12 (Thereupon, Plaintiff's Exhibits 22 13 through 24 were mark'd for purposes of 14 identification.) 15 - - - - 16 Q. I'm handing you Exhibits 22, 23 and 24. First of 17 all, Plaintiff's Exhibit 22. 18 A. Uh-huh. 19 Q. Do you agree that that is a response sent to the 20 Ohio Department of Insurance signed by you? 21 A. Yeah, but I don't think I sent this to the Ohio 22 Department of Insurance. I think I gave it to 23 Clamaco and they sent it as a part of a package to 24 the Ohio Department of Insurance. 25 Q. Did you actually sign Plaintiff's Exhibit 22? 143 1 A. 22? Yeah, I think I did. Yeah, I signed that. 2 Q. Did you read that letter before you signed it? 3 A. I wrote the letter. I wrote this letter verbatim, I 4 think. Or maybe I didn't. I don't know. Wait a 5 minute. October of '94. Let me think. I think I 6 wrote this letter, but I think -- I wrote this 7 letter. I mean -- 8 Q. Did you agree with all the facts stated in that 9 letter? 10 A. I don't remember. Can I read through it? 11 Q. Well, would you have signed the letter if you did 12 not agree with the facts in the letter? 13 A. Probably not. 14 Q. Do you want to read through it now? 15 MR. RUF: Off the record. 16 - - - - 17 (Thereupon, a discussion was had off 18 the record.) 19 - - - - 20 Q. Are Exhibits 22, 23 and 24 basically the same thing, 21 and do you know why there's three separate documents 22 with different dates on them? 23 MR. WOLF: Look through all of them. 24 A. Like I said -- 25 MR. WOLF: Look through all of them. 144 1 He wants to know if they're all substantially 2 the same. 3 A. This one is different. 4 Q. Okay. 5 MR. WOLF: Check that one. 6 Q. Do you know, did you ever sign Exhibits 23 or 24? 7 There's no signature on either 23 or 24, but do you 8 remember signing either of those? 9 A. I don't remember this one. 10 Q. That's Exhibit 23? 11 A. Exhibit 23 I do not remember, yeah, 23. 12 Q. What about 24? 13 A. 24, I believe that this was put together, I'm 14 guessing, this was put together based on a 15 compilation of this and this by the people at 16 Clamaco. 17 Q. But to your knowledge you only signed one document 18 that was sent to the Ohio Department of Insurance? 19 A. Well, see, I don't know. To tell you the truth, I 20 don't know. I don't know what was sent to the Ohio 21 Department of Insurance. 22 Q. If you don't know, you don't know. 23 A. I didn't make the filing down there. I didn't make 24 the paperwork. 25 MR. WOLF: If you don't know, you don't 145 1 know. 2 A. Right. I helped in putting the paper together, 3 that's it, some of the paper. 4 Q. What was the policy period for the policy at 1300? 5 A. I believe it was 7-2-93 to 7-2-96. 6 Q. Here. If you need to refer to any of the exhibits 7 that have been marked, go ahead and do that. 8 A. All right, since he at the time issued three-year 9 policies. 10 Q. When a three-year policy is issued -- 11 A. Subject to annual re-rate for parts of it. 12 Q. Does the premium remain the same throughout that 13 three-year period? 14 A. It can or cannot. It's subject to annual re-rate. 15 Usually it stayed the same. 16 Q. Is there any kind of cap that can be put on the 17 amount of the increase? 18 A. No. 19 Q. Did you tell Chuck that when you originally wrote 20 the policy? 21 A. I think I got him -- I told him I got a three-year 22 policy with Cincinnati. 23 Q. Did you tell him that could be subject to re-rate 24 each year? 25 A. I don't remember if I did or not. I think I was so 146 1 overjoyed in just getting the coverage placed. Not 2 an easy feat. 3 Q. Well, later on when this dispute arose about 4 increasing the coverage, he was very upset because 5 he thought this was a three-year policy and the rate 6 would stay the same, correct? 7 MR. WOLF: Objection. 8 A. Yes, because that's incorrect. He did not talk 9 about increasing the coverage, it was a question 10 with regard to keeping the rates stabilized. 11 Q. But he was upset because he thought the rate would 12 stay stable throughout the three-year period and yet 13 the company wanted to substantially increase the 14 rate? 15 MR. WOLF: Objection. 16 A. I think -- I don't know if I can answer for him. I 17 think he may have thought that. 18 Q. Well, didn't he communicate that to you, that he 19 thought this was a three-year rate and he was very 20 upset because the premium was going to be doubled? 21 MR. WOLF: Objection. 22 A. Yeah, I think that's what he thought, three-year 23 policy. 24 Q. Before the rate was actually increased was he ever 25 told that this policy could be subject to yearly 147 1 changes in the premium? 2 A. If this policy had been done for three million 3 dollars' replacement cost, fire resistive, sprinkler 4 building, this policy premium would not have changed 5 or changed very little during that three-year 6 period -- 7 Q. Why do you say that? 8 A. -- with Cincinnati. Because we rated the risk 9 originally based on how it was described to us. 10 Q. But a three million dollar repair or replacement 11 cost policy would be subject to this coinsurance 12 calculation, correct? 13 A. Coinsurance and rate have nothing to do with each 14 other. 15 Q. I understand that. But the coinsurance does have an 16 effect on the adjustment of the claim, correct? 17 A. Coinsurance can have an effect on the adjustment of 18 the claim. 19 Q. And it can have an effect if the actual insured 20 limits are less than the actual cash value or repair 21 or replacement cost to the building, correct? 22 A. Correct. 23 Q. The last thing I want to do is I want to have you go 24 through Plaintiff's Exhibit 21, which is Charles 25 Scaravelli's letter, and have you tell me if you 148 1 think there is anything that is inaccurate in that 2 letter. 3 A. Okay. Right off the first sentence, "By way of 4 background, this complaint describes the collusive 5 and illegal acts of both a major Ohio insurance 6 company and a well-known agency." 7 I dispute collusive and illegal. 8 Q. Okay. Fine. Please continue. 9 A. "In this case, Cincinnati Insurance Company and the 10 Fedeli Group unilaterally, with admittedly no 11 authority to do so, raised this insured's deductible 12 by 9,000. This change was made known to the insured 13 only after it had incurred a claim against the 14 policy." That is inaccurate. 15 Q. Why is that wrong? 16 A. I think we had to have -- when we got the 17 endorsement in from Cincinnati, the servicing rep 18 would have made a change endorsement affecting the 19 $10,000 and sending it to the client. 20 Q. Okay. Please continue. 21 A. Let's see. 22 Q. Is that in the file? 23 A. I don't know, but it should be. 24 MR. RUF: Do you know where it is? 25 MR. WOLF: I don't have the file. 149 1 A. Yeah, there was a general change endorsement done, I 2 believe, and it shows the 10,000. It was sent to 3 Chuck in November, I would imagine, November of 4 '93. 5 Q. Well, did he call you up and object to this 6 deductible, and is that why it was changed back to a 7 thousand? 8 A. No, I never spoke to him with regard to the 9 deductible until the first claim. Well -- 10 MR. WOLF: Go ahead. 11 - - - - 12 (Thereupon, a discussion was had off 13 the record.) 14 - - - - 15 Q. Let's continue. 16 A. Okay. "This change" -- let's see. "These same 17 insurers colluded with an insurance service 18 company." I think he's referring to ISO. To 19 "misrepresent a problem with the City of 20 Cleveland's water pressure. The goal of that 21 collusion was to try to quadruple the insured's 22 annual premium. These insurers have since admitted 23 their errors in private meetings." I don't know 24 what private meetings he's talking about. 25 I mean, keep in mind between September of '93 150 1 and May of '94, May of '94, I was as much of an 2 advocate as I could have been for Chuck Scaravelli 3 and 1300 West Ninth Street Corporation in terms of 4 getting the policy rating to reflect our guesstimate 5 based on the knowledge provided to us by our client 6 at the inception of the marketing process. 7 Q. Well, you felt you were stuck in the middle. 8 A. Oh, I definitely was in the middle. 9 Q. And that's because the insurance company said this 10 thing is underinsured, there's some bad conditions 11 at this property? 12 A. The insurance company did not speak to the issue of 13 underinsurance at all. 14 Q. But the insurance company -- 15 A. Between we've got to get our dates correct. 16 MR. WOLF: Let him ask his question. 17 Q. The insurance company took the position that there 18 needed to be a substantial increase in premium, 19 correct? 20 A. No doubt about it, yes. 21 Q. And that's because the initial assessment of the 22 property was not accurate, correct? 23 A. That's correct. And, yeah, the sprinkler system 24 primarily, and no fire extinguishers in the 25 building. I mean, unbelievable. 151 1 Q. Chuck was upset because he wanted the same rate 2 because he felt there had already been an assessment 3 done and he was given a figure, correct? 4 A. Right, but the guess, we did a guess, based on other 5 buildings on that street of a similar nature with 6 published rates already through ISO. 7 Q. Well, isn't that the whole problem here, you were 8 stuck in the middle because your initial assessment 9 was wrong and it was your own mistake that caused 10 this difference between the parties? 11 MR. WOLF: Objection. 12 A. I disagree completely. There were at the time we 13 rated this thing, there were buildings on that 14 street rated by ISO currently that were fire 15 resistive and had operational sprinkling systems and 16 had rates reflecting those characteristics. So we 17 had every reason to believe that this building could 18 reflect those characteristics too. 19 Q. But you didn't actually know for sure because you 20 didn't go inside the building, correct? 21 A. We had to move on a dime at the request of our 22 client. 23 Q. Okay. Please continue with the letter. 24 A. "The goal of that" -- well, okay, wait a minute. 25 "The insurers are content to more than double the 152 1 insured's annual premium without any factual 2 basis." Well, they're relying, again, on the ISO 3 report. 4 Okay. "1300 West Ninth Street Corporation, 5 hereinafter called 1300, contracted with Cincinnati 6 Insurance Company and the Fedeli Group for a 7 three-year," parentheses, "three, three million 8 dollar, property policy effective 7-2-93." At that 9 time -- 10 MR. WOLF: You don't have to read the 11 whole letter. He's asking you for what things 12 you disagree with. 13 Q. I'm just asking you what you disagree with. 14 A. Oh, okay. Let's see. Okay. 15 "At that time, the insurance policy had a 16 $1,000 deductible at a monthly cost of $490.33." I 17 disagree with that. It was never on a monthly 18 basis, it was quarterly. 19 Let's see. "There was never a request nor 20 suggestion that coinsurance be a stipulation of the 21 policy." That never came up, so I disagree with 22 that. 23 Let's see. "The policy apparently had an STR," 24 subject to -- I don't know. I think we had the STR 25 on our binder. 153 1 Q. What's the STR? 2 A. Subject to review. In other words, subject to 3 verification of the rating basis used by the 4 carrier. 5 "In August 1993, ISO Commercial Risk Services, 6 surveyed the property being insured by Cincinnati 7 Insurance Company. ISO had already done a report on 8 the facility a few years prior and was well aware of 9 the conditions" -- no, they had never done a report 10 on the building because we couldn't find that 11 address on the fiche at all, which means that if 12 they were at that building it was at a different 13 address in prior years. 14 Q. Okay. 15 A. All right. Well, this is what I was told by the 16 desk clerk. The bottom of this page is what I was 17 told by the desk clerk at ISO and he's regurgitating 18 it back to me. Thereafter had the city surrounding 19 fire -- well. 20 You know, this is really, this ISO business, is 21 a deal between ISO and the insurance company 22 underwriter. 23 MR. WOLF: Do you agree with what he 24 said in there or do you disagree? 25 A. I agree. I agree. 154 1 "The premium" -- the second paragraph of page 2 two, "The premium was then raised by Cincinnati due 3 to the inaccurate ISO report." I disagree that the 4 report was inaccurate. 5 The money looks like about right. Yeah, I 6 remember this jockey pump business. I don't know 7 where he got that from. 8 MR. WOLF: Do you agree or disagree 9 with that? 10 THE WITNESS: I don't agree. I don't 11 even know what a jockey pump is. 12 MR. WOLF: Thank you. 13 A. "Fedeli and Cincinnati decided between themselves, 14 without 1300 West Ninth Street Corporation 15 participation or ratification, to raise the 16 property's insurance policy's deductible to 17 10,000." I agreed to it with the Cincinnati 18 underwriter for the benefit of the client based on 19 the ISO report. 20 "By increasing the deductible to 10,000, 21 Cincinnati apparently would keep the premium at 22 $490.33 a month in the first year." That's 23 incorrect. That's not true. 24 "What happened next is what spurred the 25 current problem." I believe he was told about the 155 1 deductible, but it doesn't matter. He would never 2 agree to the deductible anyway because he would 3 never agree to the rate increase, the deductible, 4 anything, because he had a three-year policy at 5 6,000 bucks a year. 6 Let's see. "As stated above" -- I don't know 7 if I can add this in. We also shorted ourselves 8 9,000 to reimburse this deductible, the difference 9 between 10,000 and 1,000. 10 MR. WOLF: Is that in the letter? 11 MR. STEWART: Yeah. 12 A. Yeah, somewhere. I didn't agree with a bunch of 13 this letter. 14 MR. WOLF: Tell him the parts you don't 15 agree with. 16 A. I think too that I do know that the first adjuster 17 that started the first loss was not the adjuster 18 that finished the loss. There could be something 19 lost in translation between the two, but I wouldn't 20 know what that is. 21 I disagree totally with, let's see, paragraph, 22 one, two, three, four, number four on page, what is 23 this, three. 24 Q. Starting with, "It appears to 1300 that Fedeli and 25 Cincinnati made a deal"? 156 1 A. Right. Totally. "In response to" -- I agree with 2 that. Okay. 3 The bottom of that page, "In a May 11th letter, 4 1300 is told by Fedeli that the policy premium is 5 $14,827." That's complicated. That's just totally 6 wrong. It's different. Whatever. It's moot. 7 Q. So he didn't understand the increase in premium 8 calculations? 9 A. Yeah, correct. The top of the next page, May 4th, 10 that thing is strictly for the 1,000. It's the 11 reinstitution of the $1,000 deductible. 12 Yeah, I did tell Chuck that on the first -- 13 MR. WOLF: He asked you if you 14 disagree. 15 A. I don't disagree. The whole bottom section of where 16 it begins, "Fedeli then sends an invoice dated June 17 8th, 1994," it's all inaccurate. 18 I don't know about -- I don't know if I agree 19 with the first paragraph of 1300 requested to meet. 20 Q. Why don't you agree with that? 21 A. Well, I don't handle invoices. 22 Q. Did you agree that they requested to meet with 23 Fedeli to discuss the availability of other 24 insurance without coinsurance? 25 A. Yeah, Chuck met with me and Umberto. And after 157 1 that -- when was the date of this thing? I think 2 before that, before that time. Before that time I 3 was trying to just talk about ACV replacement cost, 4 other markets. 5 Q. When did he request a discussion about availability 6 of other insurance without coinsurance, what year? 7 A. In '94, in July of '94. Yeah, I agree with all of 8 this. Let's see. 9 Well, I would love to give him, this last 10 paragraph, I would love to give him all that credit, 11 but I've got ISO against me. I disagree with that. 12 Q. Do you agree that Plaintiff's Exhibit 21 13 demonstrates a lot of confusion about why the 14 premiums were raised and the basis for the raise in 15 premiums? 16 MR. WOLF: Objection. 17 A. No. 18 Q. Well, you just stated that a lot of these statements 19 are inaccurate, correct? 20 A. That's correct. 21 Q. So he didn't really understand why the premiums were 22 being raised and the basis for that, correct? 23 MR. WOLF: Objection. 24 A. In my opinion? 25 Q. Yes. 158 1 A. He refused to understand. 2 Q. And you're saying that you tried to explain it to 3 him? 4 A. Many, many times. 5 Q. Do you know where it says in Plaintiff's Exhibit 6 6 that you can increase the premiums every year? 7 A. I don't know. I think it's -- well, we can do it 8 through premium audit, that's one big area. 9 Liability section. 10 MR. STEWART: That's under liability? 11 THE WITNESS: Uh-huh. 12 Q. Under paragraph five it doesn't say when there's a 13 premium audit, does it? 14 A. It's in the rules by the company. The rules of the 15 company are at the end of the policy here. 16 Q. And that applies to liability, not property, 17 correct? 18 A. It applies to liability. This is a property 19 liability package policy. It's one policy, one 20 policy. 21 Q. But the change in premium was due mainly to the 22 condition of the property for purposes of insuring 23 the property? 24 A. It could be changed for property or for the 25 liability, for both. 159 1 Q. That's in the liability section of the policy 2 though, correct, premium audit? 3 A. Yes, that's correct. 4 Q. Is there any other section in here that states that 5 the premium can be adjusted on a yearly basis? 6 A. (Indicating.) 7 Q. You're pointing to the tentative rate clause? 8 A. Uh-huh. 9 Q. However -- 10 MR. WOLF: Yes? 11 THE WITNESS: Pardon? 12 MR. WOLF: Is that a yes? 13 A. Yes. 14 Q. However, it doesn't state when they're going to do 15 that or on what time period they're going to do it, 16 correct? 17 A. It's meant to -- back to the inception date of the 18 policy. 19 Q. But there's nothing to state in here that we will 20 adjust the premium on a yearly basis, it doesn't say 21 that, does it? 22 A. Oh, I didn't say that, no, no, I don't know of 23 anything in the policy that says an annual basis. 24 Q. Okay. Thanks. 25 A. Other than the audit. 160 1 Q. That's all I have. Thank you for your time. 2 A. We're done? 3 Q. I'm sorry it took so long. 4 MR. WOLF: John, you have the right to 5 read this deposition transcript if it's typed 6 up or you can waive your right to read it. The 7 length and the amount that's in here, I think I 8 would suggest you read it. 9 THE WITNESS: I want to read it. 10 11 JOHN BERTIN 12 13 14 15 16 17 18 19 20 21 22 23 24 25 161 1 2 C E R T I F I C A T E 3 The State of Ohio, ) SS: 4 County of Cuyahoga.) 5 6 I, Laura L. Ware, a Notary Public within and for the State of Ohio, do hereby certify that the 7 within named witness, JOHN BERTIN, was by me first duly sworn to testify the truth, the whole truth, 8 and nothing but the truth in the cause aforesaid; that the testimony then given was reduced by me to 9 stenotypy in the presence of said witness, subsequently transcribed into typewriting under my 10 direction, and that the foregoing is a true and correct transcript of the testimony so given as 11 aforesaid. 12 I do further certify that this deposition was taken at the time and place as specified in the 13 foregoing caption, and that I am not a relative, counsel or attorney of either party or otherwise 14 interested in the outcome of this action. 15 IN WITNESS WHEREOF, I have hereunto set my hand and affixed my seal of office at Cleveland, 16 Ohio, this day of , 1999. 17 18 Laura L. Ware, Ware Reporting Service 19 3860 Wooster Road, Rocky River, Ohio 44116 My commission expires May 17, 2003. 20 21 22 23 24 25