West Bend Mutual Insurance Company v. Athens Construction Company, Inc.
29 N.E.3d 636
Ill. App. Ct.2015Background
- Athens Construction subcontracted plumbing work to R. Carrozza Plumbing for a renovation at 680 N. Lake Shore Drive; a 2008 plumbing incident led to property-damage claims against both Carrozza and Athens.
- Carrozza’s insurer, West Bend, issued a commercial general liability policy with an endorsement covering as an “additional insured any person or organization whom you are required to add as an additional insured on this policy under a written contract or written agreement.”
- The Athens–Carrozza subcontract (Oct. 10, 2008) included article 13.1 referencing certificates of insurance and listing on a certificate that "Athens Construction Co., Inc. Additional insured, on a primary and non-contributory basis," but did not expressly state that Carrozza must name Athens as an additional insured in the underlying policy.
- The subcontract incorporated the prime contract’s AIA General Conditions (AIA Doc. 201–1997), which required the contractor to obtain CGL insurance to protect the contractor against specified claims.
- Athens/Harleysville (insurer intervening for Athens) argued the subcontract and incorporated general conditions together required Carrozza to (1) procure CGL insurance and (2) name Athens as an additional insured; West Bend argued the subcontract did not require naming Athens and the certificate’s disclaimer meant the policy controls.
- The trial court granted summary judgment for West Bend; the appellate court affirmed, holding the subcontract imposed an obligation on Carrozza to obtain its own CGL insurance but did not require Carrozza to add Athens as an additional insured on the West Bend policy.
Issues
| Issue | Plaintiff's Argument (West Bend) | Defendant's Argument (Athens/Harleysville) | Held |
|---|---|---|---|
| Whether the subcontract required Carrozza to procure CGL insurance | Subcontract did not specifically require CGL insurance | The subcontract incorporated AIA general conditions and flow-downs that required CGL insurance | Carrozza was required to procure CGL insurance (held for Athens on this narrow point) |
| Whether the subcontract required Carrozza to name Athens as an additional insured on Carrozza’s CGL policy | No: subcontract only referred to a certificate; certificate disclaimer means policy controls and no written contract required adding Athens | Yes: article 13.1 plus certificate language and incorporated documents show intent to make Athens an additional insured | No: subcontract did not require naming Athens as an additional insured (held for West Bend) |
| Whether the certificate of insurance could convert Athens into an additional insured despite its disclaimer | Certificate disclaimers mean certificates confer no coverage rights; policy language controls | Certificate referencing required additional-insured status shows parties’ intent and satisfied endorsement’s "written contract" requirement | Certificate did not create rights because it disclaimed coverage and the subcontract did not itself require naming Athens; policy governs (held for West Bend) |
| Whether parol evidence (affidavit/testimony) can alter clear subcontract language | Parol evidence cannot create obligations absent ambiguity | Affidavit and testimony show parties’ intent that Athens be added as additional insured | Contract was unambiguous; parol evidence excluded and cannot alter terms (held for West Bend) |
Key Cases Cited
- United Stationers Supply Co. v. Zurich Am. Ins. Co., 386 Ill. App. 3d 88 (2008) (certificate disclaimer and lack of written requirement to add additional insured precluded additional-insured status)
- Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill. 2d 384 (1993) (insurance policy construction is a question of law suitable for summary judgment)
- Air Safety, Inc. v. Teachers Realty Corp., 185 Ill. 2d 457 (1999) (unambiguous contract language excludes parol evidence)
- Clarendon Am. Ins. Co. v. 69 W. Washington Mgmt., LLC, 374 Ill. App. 3d 580 (2007) (incorporation by reference requires clear intent to make the other document part of the contract)
- Liberty Mut. Fire Ins. Co. v. St. Paul Fire & Marine Ins. Co., 363 Ill. App. 3d 335 (2005) (insurance provisions interpreted to require party secure insurance for its own liability absent language obligating addition of another as insured)
- Thompson v. Gordon, 241 Ill. 2d 428 (2011) (court will not add contract terms not agreed to; presumption against inferring omitted terms)