Mark Scafella v. Erie Insurance Company and Stanley Geho

IN THE INTERMEDIATE COURT OF APPEALS OF WEST VIRGINIA
2023 Fall Term
FILED
_____________________________
November 14, 2023
No. 22-ICA-173 released at 3:00 p.m.
_____________________________ EDYTHE NASH GAISER, CLERK
INTERMEDIATE COURT OF APPEALS
MARK SCAFELLA, OF WEST VIRGINIA

Plaintiff Below, Petitioner,
v.
ERIE INSURANCE COMPANY and STANLEY GEHO,
Defendants Below, Respondents.
________________________________________________________________________
Appeal from the Circuit Court of Marshall County
Honorable Jeffrey D. Cramer, Judge
Civil Action No. 19-C-116

AFFIRMED
________________________________________________________________________
Submitted: October 31, 2023
Filed: November 14, 2023

John R. Angotti, Esq. Amy Smith, Esq.
Chad C. Groome, Esq. STEPTOE & JOHNSON, PLLC
ANGOTTI & STRAFACE, L.C. Bridgeport, West Virginia
Morgantown, West Virginia Counsel for Respondents
Counsel for Petitioner

CHIEF JUDGE DANIEL W. GREEAR delivered the Opinion of the Court.
GREEAR, Chief Judge:

Petitioner, Mark Scafella appeals the September 12, 2022, order of the

Circuit Court of Marshall County granting Erie Insurance Company (“Erie”) and Stanley

Geho summary judgment in the underlying declaratory judgment action. On appeal, Mr.

Scafella argues that the circuit court erred in granting summary judgment as there exists a

genuine issue of material fact as to whether Erie waived application of the business

purposes exclusion (also described as the “business pursuits” exclusion) in his Erie policy.

Further, Mr. Scafella contends that the court abused its discretion in holding that the

business pursuits exclusion contained within the Other Structures coverage of his Erie

policy precluded coverage for fire damage to a structure on his property. Lastly, Mr.

Scafella asserts that the court abused its discretion in finding that his claims were not

covered by the plain language of the “claw-back” provision of his Erie policy. Based upon

our review of the record, we find no error and affirm the circuit court’s September 22,

2022, order.

I. FACTUAL AND PROCEDURAL BACKGROUND
The underlying case arises from a February 2, 2019, fire on Mr. Scafella’s

real property located in Terra Alta, West Virginia, and insurance claims he made following

that fire loss. In 2017, Mr. Scafella purchased the Terra Alta property known as “Country

Chapel Farm” (“Farm”). The farm included a residential home, a large barn with an

adjacent milk house, several sheds or smaller barns, and a small country church.

1
At all relevant times, the subject property was insured under a homeowner’s

policy of insurance issued by Erie, identified as the “ErieSecure Home Insurance Policy”

(“policy”). See A.R. at 0018. The policy included other structures coverage limits of

$101,400, and coverage for personal property of up to $380,250. See A.R. at 0100. The

PROPERTY PROTECTION-SECTION 1, OUR PROMISE- Other Structures provision of

the policy contained a standard business pursuits exclusion, which read as follows:

“We” will pay for loss to:

1. other structures at the “residence
premises” separated from the dwelling, including garages,
fences, shelters, tool sheds or carports.

Structures connected to the dwelling by only a
fence, utility line or similar connection are considered to be
other structures.

2. construction material at the “residence
premises” for use in connection with “your” other structures.

“We” do not pay for loss to structures:

1. used in whole or in part for “business”
purposes [except rental or holding for rental of structures used
for private garage purposes); or

2. used to store “business” property.
However, if the “business” property is solely owned by
“anyone we protect,” “we” do provide coverage for the
structure. The “business” property may not include gaseous or
liquid fuel, unless the fuel is in a fuel tank that is permanently
installed in a vehicle or craft which is parked or stored in the
structure.

2
See A.R. at 0021 (emphasis original). “Business” was defined under the GENERAL

POLICY DEFINITONS section of the policy as “any full-time, part-time or occasional

activity engaged in as a trade, profession or occupation, including farming.” See A.R. at

0020 (emphasis original). The term structure was not defined within the policy.

Under the SPECIAL LIMITS – Personal Property Coverage section of the

policy, property described as “[p]roperty on the “residence premises” used primarily for

“business” purposes conducted on the “residence premises,” including property in

storage, held as samples, or held for safe or delivery after sale” had a “total amount of

insurance in any one loss” denoted as $2,500. See A.R. at 0023 (emphasis original). Also

contained in the policy was a document titled CONTINUATION NOTICE, which included

an express statement that “no business pursuits are conducted at the premises,” except as

follows, wherein the only item listed was a McCormick CX95 tractor, with an “amount of

insurance” noted as $35,000. See A.R. at 0043.

It is undisputed that in December of 2016 and January of 2017, Mr. Scafella’s

then fiancé (Ms. Lisa Smith), obtained two insurance quotes from Erie for subject property,

one including an incidental farming endorsement and one without the endorsement. 1

1
The record reflects that the application for insurance, signed by Mr. Scafella on
April 5, 2017, noted a total annual premium of $2,795.29 and did not include the incidental
farming endorsement. See A.R. at 0311-14. Following the application, the first quote,
which including the incidental farming endorsement (noted as “Livestock: Blanket”), had
a total annual premium quote of $3,440.82. However, the second quote did not include a
3
Ultimately, Mr. Scafella chose the insurance quote that did not include the incidental

farming endorsement, a less costly option. See A.R. 0298-0310. It is further undisputed

that in completing his application for insurance with Erie for the property at issue, that Mr.

Scafella averred that there were no farm animals or pets on the premises and that he did

not conduct “any business or occupational pursuits at the premises.” See A.R. 0311-0316.

Despite indicating to the contrary in his application for insurance, Mr.

Scafella does not deny that after taking possession of the property, he began operating a

business out of the milk house. That business, Olivia’s, LLC (“Olivia’s”), was a retail store

selling meat, cheese, and sandwiches. Prior to the fire, Mr. Scafella alleges that he had

begun to renovate the large barn structure into a catering hall and restaurant (to be known

as Sophie’s Serendipity, LLC), as part of his plan to develop the farm into a destination

wedding venue.

There is no question that the February 2, 2019, fire caused significant

structural damage to the large barn and resulted in the loss of numerous items of Mr.

Scafella’s personal property, which were stored in the large barn structure. Although the

milk house, was adjacent and physically abutted the barn, Mr. Scafella claims that it was

farming endorsement and had a total annual premium quote of $3,195.48. See A.R. at 0303-
04 and 0308-09 (emphasis original).

4
not affected by the fire and that the origin of the fire had nothing to do with the business

operations therein.

Shortly after the fire loss, Mr. Scafella filed an insurance claim with Erie for

that loss. Property adjuster Stanley Geho was assigned by Erie to handle the claim. As part

of his investigation, Mr. Geho visited the fire-damaged property and drew a diagram that

depicted the milk house as an addition to the barn structure with an interior doorway

connecting the two areas. Mr. Geho’s depiction of the premises was consistent with a

statement made by Ms. Smith who, during a recorded statement taken by Mr. Geho,

described Olivia’s as being “in a different part of the [barn] building,” but “in the barn

itself.” See A.R. at 0162-69.

During its investigation, Erie initially provided coverage for 120 items

identified by Mr. Scafella as his personal property (as opposed to his business property),

which were located in the large barn structure, and paid Mr. Scafella $67,640.80. See A.R.

at 0402-0412. However, Erie denied the portion of the fire loss claim for the structure of

the large barn, under the business pursuits exclusion of the Other Structures provision of

the policy, as Mr. Scafella was operating a business (Olivia’s) out of the structure.

On May 15, 2019, Mr. Scafella filed the underlying three count complaint

against Erie and Mr. Geho. In count one of the complaint, Mr. Scafella sought a declaratory

judgment on the issue of insurance coverage for the barn structure and, if appropriate,

5
Hayseeds 2 damages. In counts two and three, respectively, Mr. Scafella alleged Erie and

Mr. Geho’s violations of the West Virginia Unfair Trade Practices Act and/or common law

bad faith in the handling of his fire loss claim and breach of contract.

In response to the complaint, Erie argued that as Mr. Scafella was operating

a business (Olivia’s) out of the fire-damaged barn, his fire loss claim for the large barn

structure was excluded under the business pursuits exclusion of the Other Structures

coverage portion of his Erie policy. Mr. Scafella now argues that the denial of his claim in

this regard was improper, as Olivia’s operated from the milk house, which, he contends,

was a separate structure, from the large barn.

On May 19, 2020, the circuit court entered an Agreed Order Bifurcating and

Advancing Determination of Declaratory Judgment Claim, effectively staying all

proceedings, including discovery and trial, relating to the claims in counts two and three of

the complaint, until final resolution of the declaratory judgment claim in count one was

resolved. Discovery then began as to the declaratory judgment claim.

2
In Hayseeds, Inc. v. State Farm Fire & Cas., the Supreme Court of Appeals of West
Virginia held that: “[w]henever a policyholder substantially prevails in a . . . suit against its insurer,
the insurer is liable for: (1) the insured’s reasonable attorney’s fees in vindicating its claim; (2) the
insured’s damages for net economic loss caused by the delay in settlement, and damages for
aggravation and inconvenience.” Syl. Pt. 1, Hayseeds, 177 W. Va. 323, 352 S.E.2d 73 (1986).
6
On March 12, 2021, Erie and Mr. Geho filed a motion for summary judgment

as to the declaratory judgment claim, asserting that the exclusionary language of the Other

Structures coverage barred Mr. Scafella’s claim. Mr. Scafella asserted that his claim fell

within a “claw-back” provision of the exclusion, and that Erie and Mr. Geho had waived

the application of the exclusion by issuing the policy with knowledge of Mr. Scafella’s

business activities on the premises.

The circuit court found that the “milk house and the barn are one structure”

but then allowed the parties to complete additional discovery on the issue of the application

of the exception to the business pursuits exclusion and supplemental briefing. After

supplemental briefing, the court concluded that the evidence on the record does not support

Mr. Scafella’s claims. Specifically, the court determined that his claims were excluded by

the business pursuits exclusion of the Erie policy; that the “claw-back” provision of the

Erie policy does not apply; and that there was no waiver by Erie. Having made such

findings, the court awarded summary judgment to Erie and Mr. Geho and, ultimately,

entered a Rule 54(b) Order finding that the September 12, 2022, Order Granting Summary

Judgment in Favor of Defendants on Count I of Plaintiff’s Complaint should be treated as

a final appealable order. This appeal followed.

7
II. STANDARD OF REVIEW
“A circuit court’s entry of summary judgment is reviewed de novo.” Syl. Pt.

1, Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994). In Gray v. Boyd, 233 W. Va.

243, 757 S.E.2d 773 (2014), the Court further discussed summary judgment and found that:

2. “‘“A motion for summary judgment should be
granted only when it is clear that there is no genuine issue of
fact to be tried and inquiry concerning the facts is not desirable
to clarify the application of the law.” Syllabus Point 3, Aetna
Casualty & Surety Co. v. Federal Insurance Co. of New York,
148 W. Va. 160, 133 S.E.2d 770 (1963).’ Syllabus Point 1,
Andrick v. Town of Buckhannon, 187 W. Va. 706, 421 S.E.2d
247 (1992).” Syl. Pt. 2, Painter v. Peavy, 192 W. Va. 189, 451
S.E.2d 755 (1994).

3. “The circuit court’s function at the summary
judgment stage is not to weigh the evidence and determine the
truth of the matter, but is to determine whether there is a
genuine issue for trial.” Syl. Pt. 3, Painter v. Peavy, 192 W.
Va. 189, 451 S.E.2d 755 (1994).

* * *

6. “Summary judgment is appropriate where the
record taken as a whole could not lead a rational trier of fact to
find for the nonmoving party, such as where the nonmoving
party has failed to make a sufficient showing of an essential
element of the case that it has the burden to prove.” Syl. Pt. 4,
Painter v. Peavy, 192 W. Va. 189, 451 S.E.2d 755 (1994).

Syllabus Pts. 2, 3, and 6, Gray, 233 W. Va. at 245, 757 S.E.2d at 776. With these standards

in mind, we now consider Mr. Scafella’s assignments of error.

8
III. DISCUSSION
On appeal, Mr. Scafella asserts that the business pursuits exclusion within

his Erie policy did not apply and advances three assignments of error, which we will

address in turn.

A. Waiver

In his first assignment of error, Mr. Scafella argues that the circuit court erred

in granting Erie and Mr. Geho’s motion for summary judgment, as genuine unresolved

issues of material fact remain as to whether Erie waived the business pursuits exclusion

contained within the policy.

The Supreme Court of Appeals of West Virginia (“SCAWV”) has held that

“[t]o effect a waiver, there must be evidence which demonstrates that a party has

intentionally relinquished a known right.” Syl. Pt. 1, in part, Potesta v. U.S. Fid. & Guar.

Co., 202 W. Va. 308, 504 S.E.2d 135 (1998). Further, the SCAWV has found, as stated in

syllabus point five of Potesta, that “[g]enerally, the principles of waiver and estoppel are

inoperable to extend insurance coverage beyond the terms of an insurance contract.” Id. at

311, 504 S.E.2d at 138. The Potesta Court additionally noted, in syllabus point seven, as

to waiver, that:

[e]xceptions to the general rule that the doctrine of estoppel
may not be used to extend insurance coverage beyond the terms
of an insurance contract, include, but are not necessarily
limited to, instances where an insured has been prejudiced
because: (1) an insurer's, or its agent's, misrepresentation made

9
at the policy's inception resulted in the insured being prohibited
from procuring the coverage s/he desired; (2) an insurer has
represented the insured without a reservation of rights; and (3)
the insurer has acted in bad faith.

Id. at 311, 504 S.E.2d at 138.

Moreover, it is well settled under West Virginia law that, “[w]here the

soliciting agent has knowledge of past conditions or existing facts which at the time would

serve to void the policy, the company issuing the policy cannot insist upon such facts for

the purpose of avoiding its liability.” Syl., Kimball Ice Co. v. Springfield Fire & Marine

Ins. Co., 100 W. Va. 728, 132 S.E. 714 (1926). Mr. Scafella contends that, given the

SCAWV’s rulings in Potesta and Kimball, a genuine issue of fact remains as to waiver,

that the circuit court erred in awarding summary judgment to Erie and Mr. Geho. We

disagree.

The facts of Kimball are dissimilar to the facts herein. The insurance policy

in Kimball contained a stipulation that the insurer would not be “liable for loss or damages

occurring . . . if the [insured’s] manufacturing establishment . . . ceases to be operated

beyond a period of ten days.” Id. at 729, 132 S.E.2d at 715. However, the evidence

established that the Kimball insurer knew, before issuing the policy, that the insured’s

manufacturing establishment would not be operational within a period of ten days, thereby

invoking the stipulation which held the insurer not liable for loss or damages. Thus, the

Kimball Court reasoned that “[w]here the soliciting agent has knowledge of past conditions

10
or existing facts which at the time would serve to void the policy, the company issuing the

policy, with this knowledge upon the part of its agent, cannot insist upon such facts for the

purpose of avoiding its liability.” Id. at 732, 132 S.E.2d at 716-17.

Unlike Kimball, here, there is no evidentiary support for Mr. Scafella’s

contention that Erie knew or should have known that he was using his property for various

business purposes prior to issuing the policy. Further, there is no indication that, under

Potesta, either the insurer or agent made any misrepresentations at the policy’s inception

that resulted in Mr. Scafella being prohibited from procuring the coverage he desired,

defended Mr. Scafella under a reservation of right, or acted in bad faith, as to “extend

insurance coverage beyond terms of an insurance contract.” See Potesta 202 W. Va. 308,

311, 504 S.E.2d 135, 138. In fact, we, like the circuit court, find that Mr. Scafella’s

arguments are wholly rebutted by the express notation in the application for insurance

coverage he endorsed on April 5, 2017, wherein he “clearly denied (1) any animals,

including pets or farm animals, present on the insured premises, and (2) any business or

occupational pursuits on the insured premises.” See A.R. 0311-0316.

We are also unpersuaded by Mr. Scafella’s contention that his discussion

with his insurance agent about the possibility of farming and keeping livestock on the

property at some point in the future was evidence of the insurer having knowledge of his

cattle farming business. Here, the record reflects that while Mr. Scafella (through his

fiancé) may have initially requested insurance to cover his cattle business upon the subject

11
property by getting a quote that included an incidental farming agreement, it is undisputed

that a second quote was requested by Mr. Scafella (again through his fiancé), without the

incidental farming endorsement. See A.R. at 0298-316. There is no indication that Erie

prevented or prohibited Mr. Scafella from procuring an incidental farm endorsement or a

commercial general liability policy for the property at issue—in fact, just the opposite

occurred; they presented a quote to him including an incidental farm endorsement. Rather,

it can be inferred from the record that Mr. Scafella reduced the amount of insurance

coverage initially requested as a calculated decision to save money, as the quote for the

premiums for his homeowner’s insurance with the incidental farm endorsement was higher

than the quote without such coverage.

Likewise, we are not persuaded by Mr. Scafella’s argument that because Erie

insured his contracting business, which had the same mailing address as his personal

residence (both before and after his move), that Erie knew he was operating his contracting

business from his home. We find this argument to be against the clear weight of the

evidence. In the proceedings below, Mr. Scafella’s insurance agent averred, in part, that:

I also sold a 5 star CGL Policy to Mark Scafella d/b/a
Marksman Contracting issued December 31, 2015. At the time
the homeowner’s policy [the policy at dispute herein] was
issued to Mr. Scafella, the CGL policy had an insured business
location of 3001 City View Drive, Morgantown, WV. On April
25, 2017, the insured amended the mailing address for the CGL
policy to 401 Aurora Ave, Terra Alta, WV 26274, but the
business location remained unchanged. The CGL [p]olicy was
subsequently renewed, but canceled on March 9, 2018 for non-
payment.

12
Accordingly, as Mr. Scafella failed to meet his burden to establish waiver,

we find no error in the circuit court’s award of summary judgment to Erie and Mr. Geho.

B. Other Structures Provision

Next, Mr. Scafella contends that the circuit court erred when it held the

business purpose exclusion contained within the Other Structures coverage of the Erie

policy excluded fire damage to the large barn. Specifically, Mr. Scafella argues that the

court erred by determining that the milk house where Olivia’s was located was a part of

the large barn structure and was not a separate structure. Following our review of the

extensive record, we disagree and find no error.

In considering Mr. Scafella’s argument we must first determine whether the

terms contained in the policy are clear or subject to interpretation. In Motorists Mutual

Insurance Co. v. Zukoff, 244 W. Va. 33, 851 S.E.2d 112 (2020), the SCAWV, citing Payne

v. Weston, 195 W. Va. 502, 507, 466 S.E.2d 161, 166 (1995), noted:

In West Virginia, insurance policies are controlled by the rules
of construction that are applicable to contracts generally. We
recognize the well-settled principle of law that this Court will
apply, and not interpret, the plain and ordinary meaning of an
insurance contract in the absence of ambiguity or some other
compelling reason. Our primary concern is to give effect to the
plain meaning of the policy and, in doing so, we construe all
parts of the document together. We will not rewrite the terms
of the policy; instead, we enforce it as written. Syllabus Point
1 of Russell v. State Automobile Mutual Insurance Company,
188 W. Va. 81, 422 S.E.2d 803 (1992), states: “‘Where the

13
provisions of an insurance policy contract are clear and
unambiguous they are not subject to judicial construction or
interpretation, but full effect will be given to the plain meaning
intended.’ Syllabus, Keffer v. Prudential Ins. Co., 153 W. Va.
813, 172 S.E.2d 714 (1970.” Thus, we are to ascertain the
meaning of the policy as manifested by its language.

The SCAWV has further defined the term ambiguity as “language

‘reasonably susceptible of two different meanings’ or language ‘of such doubtful meaning

that reasonable minds might be uncertain or disagree as to its meaning.’” Syl. Pt. 1, in part,

Shamblin v. Nationwide Mut. Ins. Co., 175 W. Va. 337, 332 S.E.2d 639 (1985). However,

“[t]he mere fact that parties do not agree to the construction of a contract does not render

it ambiguous. The question as to whether a contract is ambiguous is a question of law to

be determined by the court.” Syl. Pt. 1, Berkeley Cty Pub. Serv. Dist. V. Vitro Corp. of Am.,

152 W. Va. 252, 162 S.E.2d 189 (1968). The SCAWV has further held that

a court should read the policy provisions to avoid ambiguities
and not torture the language to create them. “‘If a court
properly determines that the contract is unambiguous on the
dispositive issue, it may then properly interpret the contract as
a matter of law and grant summary judgment because no
interpretive facts are in genuine issue.’” Williams. v. Precision
Coil, Inc., 194 W. Va. [52] at 66 n. 26, 459 S.E.2d [329] at 343
n. 26 [(1995)], quoting Goodman v. Resolution Trust Corp. 7
F.3d 1123 (4th Cir. 1993). Payne, 195 at 507, 466 S.E.2d at 166.

Zukoff at 39, 851 S.E.2d at 118.

In the case sub judice, Mr. Scafella argues that the failure of Erie to define

the term “structure” in the policy renders the policy ambiguous in its application. However,

14
the circuit court found no ambiguity within the Erie policy and determined that Mr.

Scafella’s argument that the milk house and large barn were two structures was

unsupported by the record. The court noted that photographs of the barn and milk house

show a “single integrated structure” and that they are not only directly “adjacent to each

other, but physically attached together with adjacent common walls.” In fact, the court

referenced that there is “an entry way or door leading from the milkhouse directly into the

main barn area,” such that you do not have to exit the structure to go from milkhouse

directly to the large barn. We agree with the circuit court’s reasoning and conclusion and

find that the Other Structures exclusion within the Other Structures provision stating that

Erie will not pay for loss to structures “used in whole or in part for business purposes,” is

clear and unambiguous and should be given its ordinary meaning. See Id. See also, Murray

v. State Farm Fire and Casualty Company, 203 W. Va. 477, 490, 509 S.E.2d 1, 14 (1998)

(SCAWV reasoned that policy language at issue did not define the term “external,” thus

the Court found that it must “give the word its ‘plain, ordinary meaning.’”). Merriam-

Webster defines the term structure as:

(1) the action of building: construction; (2)(a) something (such
as a building) that is constructed, (b) something arranged in a
definite pattern of organization; (3) a manner of construction;
(4) (a) the arrangement of particles or parts in a substance or
body, (b) organization of parts as dominated by the general
character of the whole, (c) coherent form or organization; and
(5) the aggregate of elements of an entity in their relationships
with each other.

“Structure,” Merriam-Webster.com https://www.merriam-webster.com/dictionary/structure

(last visited Nov. 13, 2023).

15
Our interpretation is supported by cases from Missouri and Louisiana. In

Winston v. Hartford Fire Ins. Co., 317 S.W.2d 23 (Mo. Ct. App. 1958), the Springfield

Court of Appeals, Missouri, determined that a later added shed addition attached to a barn

was a single structure for purposes of insurance coverage. The Winston Court determined

whether the two are one depends on a number of things, including whether the addition

was erected in such close proximity to the other structure as to be physically joined thereto.

Similarly in McMahon v. People’s Nat. Fire Ins. Co., 14 Teiss. 269 (La. Ct. App. 1917),

the Court of Appeal of Louisiana considered the question of additions and determined that

any additions to a building included only such structures that are attached to or structurally

connected with the main building. While neither of these cases are determinative, both are

persuasive to the notion that when considering if an addition is part of the main structure,

factors such as close proximity and physically joined are key considerations.

Based upon our review of the record and the arguments of counsel, we find

that the large barn area where the fire occurred and the milk house (where Mr. Scafella

operated Olivia’s) are one in the same structure. Photographs show that the large barn and

milk house are not only adjacent but have abutting walls and share an interior entryway.

Likewise, there is no separation between the wall of the barn and the wall of the milk house,

suggesting that the milk house is simply a joined addition and part of the large barn. In fact,

when providing a recorded statement to Erie after the fire loss, Ms. Smith identified the

barn and the milk house as being part of one building. Accordingly, we find that the circuit

16
court did not err in determining that the large barn and milk house are the same structure.

As we have determined that the policy is unambiguous on the dispositive issue, per the

SCAWV’s reasoning in Williams, we find that the circuit court did not err in interpreting

the contract as a matter of law and awarding summary judgment to Erie and Mr. Geho.

Williams at 194 at 66 n. 26, 459 S.E.2d at 343 n. 26.

C. Claw-Back Provision

In his final assignment of error, Mr. Scafella contends that the plain terms of

the “claw-back” provision contained within the Other Structures coverage under the Erie

policy extends to provide coverage for his business property and that the circuit court erred

in finding otherwise.

What Mr. Scafella describes as the “claw-back” provision of the Erie policy

at issue clearly states that Erie does “not pay for losses to structures” “used to store business

property,” unless that “business property is solely owned by ‘anyone’” Erie protects. In

such situations, the claw-back provision provides that Erie does provide coverage for the

structure. Mr. Scafella now argues that as the contents stored in the large barn were his

business property, which he solely owned, that the “claw-back” provision of the policy

triggers and extends coverage to the milk house structure. We disagree and find that the

“claw-back” provision is not triggered as the large barn was not used to store Mr. Scafella’s

business property, but his personal property.

17
There is no dispute that following the fire loss, that as part of his associated

insurance claims, that Mr. Scafella identified 120 items stored in the large barn area which

he classified as his “personal property,” and under the personal property coverage in the

Erie policy, Erie issued payment to Mr. Scafella in the amount of $67, 640.80. As Erie and

Mr. Geho note, had the contents identified by Mr. Scafella as personal property been

deemed “business personal property,” the personal property coverage limits would not

have been available to him under the policy. See A.R. at 0296.

The record supports that the property contained within the barn was

categorized by Mr. Scafella as his “personal property.” The record reflects that in his

response to Erie’s First Set of Requests for Admission, Interrogatories, and Request for

Production of Documents to Plaintiff, that Mr. Scafella replied to Request for Admission

No. 3 as follows:

[Erie’s] Request No. 3: Admit that as of February 2, 2019,
the [large barn] located on the subject
property was a multi-use barn that
included a smaller area for a butcher shop
and store, known as “Olivia’s,” and a
larger area for a restaurant and wine and
cheese shop, known as “Sophie’s
Serendipity.”

[Mr. Scafella’s Response
to ]Request No. 3: Deny. The barn was not a multi-use barn.
The barn was used to store the personal
property of Mark Scafella, for farming
activities, and was being renovated with .
. . .”

18
Further, a review of the Erie claim file notes that on March 15, 2019, Mr.

Geho noted that he was advised by Mr. Scafella that the listing of property items he

submitted to Erie “were for personal use and not business related.” See A.R. at 0415. Mr.

Scafella now attempts to place these items in the category of “personal business property”

in an attempt to trigger the “claw-back” provision to obtain coverage for the barn structure.

In a June 14, 2022, Affidavit, Mr. Scafella averred that the large barn was used to store his

“personal business property” belonging solely to him. Further, he averred that “[t]he items

of personal business property . . . for which [he] was compensated by Erie following the

fire loss were substantially, if not all, personal business property items stored in the fire-

damaged barn.”

This attempted “reclassification” of the property from personal property to

“personal business property” violates the tenets of equitable estoppel. Generally, estoppel

applies when a party is induced to act or to refrain from acting to his/her detriment because

of his/her reasonable reliance on another party's misrepresentation or concealment of a

material fact. See Hunter v. Christian, 191 W. Va. 390, 446 S.E.2d 177 (1994).

Here, Mr. Scafella represented that the property within the large barn was his

personal property to collect $67,640.80 under the personal property coverage in his Erie

policy, possibly to avoid the $2,500.00 limit to “business” personal property under the

SPECIAL LIMITS – Personal Property Coverage section of policy. To permit Mr. Scafella

19
to change his classification of the property at issue to recover under corresponding portions

of the policy is impermissible and would permit him a windfall and coverage for which he

did not pay. Such prohibition is in line with the SCAWV’s ruling in Potesta, wherein the

Court held that “[g]enerally, the principles of waiver and estoppel are inoperable to extend

insurance coverage beyond the terms of an insurance contract.” Id. at 311, 504 S.E.2d at

138. Accordingly, we find no error in the circuit court’s determination that the “claw-back”

provision of the policy is not triggered and does not extend to provide additional coverage

to Mr. Scafella.

IV. CONCLUSION
For the foregoing reasons, the September 12, 2022, order of the Circuit Court

of Marshall County is affirmed.

Affirmed.

20