Chi. White Sox v. St. Auto. Mut. Ins. Co.

240 N.E.3d 1153

2023 IL App (1st) 230101

CHICAGO WHITE SOX, LTD.; CHISOX Corporation; CWS Maintenance Company; At Your Service, LLC; and AXIS Insurance Company, Individually and as Subrogee of Chicago White Sox, Ltd., CHISOX Corporation, CWS Maintenance Company, and At Your Service, LLC, Plaintiffs,

v.STATE AUTOMOBILE MUTUAL INSURANCE COMPANY and We Clean Maintenance and Supplies, Inc., Defendants

(AXIS Insurance Company, Plaintiff-Appellant; and State Automobile Mutual Insurance Company, Defendant-Appellee).

No. 1-23-0101

Appellate Court of Illinois, First District, Third Division.

Filed November 29, 2023

Appeal from the Circuit Court of Cook County. No. 16 CH 6403, The Honorable Anna M. Loftus, Judge Presiding.

Brian C. Bassett and Danielle K. Kegley, of Traub Lieberman Straus & Shrewsberry LLP, of Chicago, for appellant.

Robert Marc Chemers and David N. Larson, of Pretzel & Stouffer, Chtrd., of Chicago, for appellee.

OPINION

PRESIDING JUSTICE REYES delivered the judgment of the court, with opinion.

¶ 1 The instant appeal arises from a dispute between plaintiff AXIS Insurance Company (AXIS), as subrogee for plaintiffs Chicago White Sox, Ltd., CHISOX Corporation, CWS Maintenance Company, and At Your Service, LLC (collectively, the White Sox plaintiffs), and defendant State Automobile Mutual Insurance Company (State Auto), the insurer for defendant We Clean Maintenance and Supplies, Inc. (We Clean). After a patron was injured at a Chicago White Sox game, he filed a lawsuit against the White Sox plaintiffs, and the White Sox plaintiffs tendered the defense of that suit to State Auto, the insurer for We Clean, a company with which the White Sox plaintiffs had contracted to perform cleaning services at the ballpark. State Auto, however, rejected the tender and refused to defend the suit, claiming that the White Sox plaintiffs were not "additional insureds" under its policy. The White Sox plaintiffs—and AXIS, as their insurer—filed suit against State Auto and We Clean, alleging that State Auto had wrongfully denied coverage. Both AXIS and State Auto filed motions for summary judgment, and the circuit court granted summary judgment in favor of State Auto, finding that the White Sox plaintiffs were not "additional insureds." AXIS now appeals, and for the reasons that follow, we affirm.

¶ 2 BACKGROUND

¶ 3 Parties and Underlying Lawsuit

¶ 4 Beginning in 2008 and continuing at least through 2012, the White Sox plaintiffs entered into a series of written agreements with We Clean pursuant to which We Clean agreed to provide cleaning services for all home games played by the Chicago White Sox during the applicable baseball season.

¶ 5 In 2011, while at U.S. Cellular Field,¹ Raymond Myles was injured as he was walking down a ramp. Myles filed a lawsuit against the White Sox plaintiffs in the circuit court of Cook County (the underlying lawsuit), alleging that they were negligent in causing his injuries due to, inter alia, failing to inspect the premises to ensure that the ramps were free from excessive garbage. The lawsuit was later voluntarily dismissed and subsequently refiled under a different case number and was ultimately settled for an undisclosed amount.

¶ 6 In 2014, the White Sox plaintiffs tendered the defense of the underlying lawsuit to State Auto, the insurer for We Clean, as additional insureds under We Clean’s insurance policy. The White Sox plaintiffs made a second tender in 2015, but State Auto refused to provide them with a defense. A third tender was made in 2016, which State Auto again refused to accept, and the White Sox plaintiffs and AXIS, their insurer, ultimately incurred the costs of defending and settling the case.

¶ 7 State Auto Policy and We Clean Contract

¶ 8 As noted, We Clean was insured by State Auto under a commercial general liability insurance policy. While We Clean was the sole named insured on the policy, the policy contained an endorsement adding as an additional insured "[a]ny person or organization for whom you are performing operations when you and such person or organization have agreed in a written contract or written agreement that such person or organization be added as an additional insured on your policy."

¶ 9 As relevant to the instant appeal, We Clean entered into several "Contract[s] for Services" with the White Sox plaintiffs between 2008 and 2012 (the service contracts). All of the service contracts contained the same language: "Vendor will comply with all insurance requirements set forth by the Chicago White Sox, and will provide certification of such insurance."²

¶ 10 As to 2008, 2009, and 2012, the record also contains an "Indemnification and Insurance Agreement," which provides that We Clean "shall procure, at its sole cost and expense, the insurance coverages set forth below, and shall maintain such coverages in full force and effect as specified in this Agreement. The Contractor shall include the Indemnified Parties and such other parties as CWS may designate as additional insureds to the insurance policies described below ***. The insurance coverage afforded under the policies described herein shall be primary and noncontributing with respect to any insurance or self-insurance carried independently by the additional insureds." The agreement further provided that We Clean "shall promptly furnish CWS with certificates of insurance evidencing the coverages hereunder, and shall not commence any services until such insurance is obtained." The "insurance policies described below" in the agreement consisted of four different types of insurance, including a commercial general liability insurance policy. No "Indemnification and Insurance Agreement" for either 2010 or 2011 is contained in the record on appeal, and an affidavit from a White Sox representative indicates that the White Sox plaintiffs were unable to locate such a document.³

¶ 11 Finally, the record on appeal contains certificates of insurance for each year, which provide that "[t]he following are listed as primary & non-contributory additional insured under general liability & primary additional insured under automobile liability" and which list the White Sox plaintiffs as additional insureds. The certificates of insurance include disclaimers that "THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER" and that, "[i]f the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. *** A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s)." (Emphases in original.)

¶ 12 Complaint

¶ 13 The White Sox plaintiffs filed a complaint for declaratory judgment in May 2016; the complaint was amended twice, and it is the second amended complaint, which added AXIS as a plaintiff, that was the operative complaint at the time of the motions for summary judgment at issue in the instant appeal. While the second amended complaint raised a total of 11 counts, we discuss here only the ones relevant to the issues on appeal.

¶ 14 Count I of the complaint was against State Auto for breach of contract concerning the underlying lawsuit and alleged that State Auto breached its 2010-11 policy by refusing to provide a defense to the underlying lawsuit. Count II alleged that, due to State Auto’s unreasonable refusal to defend the underlying lawsuit, it should be estopped from raising any defenses to coverage. Count III was similar to count I, except it alleged that State Auto had breached its duty to indemnify the expenses incurred in the underlying lawsuit. Count IV alleged a violation of section 155 of the Illinois Insurance Code (215 ILCS 5/155 (West 2018)) based on State Auto’s conduct. Count V sought equitable subrogation, as the complaint alleged the AXIS insurance policy was secondary to the State Auto policy, while count VI, in the alternative, requested equitable contribution for the amounts expended by AXIS. Finally, count VIII⁴ was for declaratory judgment and sought a declaration that State Auto was responsible for paying the amounts owed by We Clean for We Clean’s breach of the contract between We Clean and the White Sox plaintiffs, which required We Clean to provide a defense and indemnification to the White Sox plaintiffs with respect to the underlying lawsuit.

¶ 15 Both AXIS and State Auto ultimately filed motions for partial summary judgment with respect to counts I, II, III, IV, V, and VIII of the second amended complaint.⁵ Both motions primarily concerned the question of whether the 2011 service contract constituted a written agreement that the White Sox plaintiffs be added as additional insureds on the State Auto policy such that they would be afforded coverage under We Clean’s policy. AXIS contended that the service contract, which required We Clean to comply with the White Sox plaintiffs’ "insurance requirements," sufficed despite the absence of a 2011 indemnification and insurance agreement, based on the parties’ course of conduct. State Auto, by contrast, maintained that the absence of an indemnification and insurance agreement meant that We Clean and the White Sox plaintiffs never expressly agreed to add the White Sox plaintiffs as additional insureds under We Clean’s policy, as required by the terms of the policy.

¶ 16 On December 15, 2022, the circuit court granted State Auto’s motion for summary judgment on counts I, II, III, IV, V, and VIII. The circuit court found that the provision in the service contract that We Clean "comply with all insurance requirements" was not ambiguous and it therefore could not look to parol evidence to determine whether the insurance requirements included adding the White Sox plaintiffs as additional insureds to We Clean’s insurance policy. The circuit court further found that there was no just reason to delay enforcement or appeal of its order, as judgment had been entered in favor of State Auto and against AXIS. AXIS timely filed a notice of appeal, and...