___________________________________________________ 

 

 

 

 

 

 

 

 

______________________________________________________________________________ 

 

2016 IL App (1st) 151166 and 151184 

Nos. 1-15-1166 and 1-15-1184 cons. 

Opinion filed November 16, 2016 

IN THE
 

APPELLATE COURT OF ILLINOIS
 

FIRST DISTRICT
 

EMPRESS CASINO JOLIET CORPORATION, 

Plaintiff-Appellant, 

v. 

W. E. O’NEIL CONSTRUCTION CO., an Illinois corporation, 

LINDEN GROUP, INC., an Illinois corporation, R.L. 

MILLIES & ASSOCIATES, INC., an Indiana corporation, 

GLOBAL FIRE PROTECTION COMPANY, an Illinois 

corporation, JAMESON SHEET METAL, INC., an Illinois 

corporation, and AVERUS, INC., f/k/a FACILITEC 

CENTRAL, INC., a Wisconsin corporation, 

Defendants-Appellees. 

NATIONAL FIRE AND MARINE INSURANCE 

COMPANY, a Nebraska corporation, LLOYD’S 

SYNDICATE 1414 (Ascot), a British underwriting syndicate, 

and AXIS INSURANCE COMPANY, an Illinois corporation, 

as subrogees of Empress Casino Joliet Corporation, an Illinois 

corporation, 

Plaintiffs-Appellants, 

v. 

W. E. O’NEIL CONSTRUCTION CO., an Illinois corporation, 

LINDEN GROUP, INC., an Illinois corporation, R.L. 

MILLIES & ASSOCIATES, INC., an Indiana corporation, 

GLOBAL FIRE PROTECTION COMPANY, an Illinois 

corporation, JAMESON SHEET METAL, INC., an Illinois 

corporation, and AVERUS, INC., f/k/a FACILITEC 

CENTRAL, INC., a Wisconsin corporation, 

Defendants-Appellees. 

) 

) Appeal from the Circuit Court 

) of Cook County, Illinois, 

) Cook County, Illinois, 

) County Department, 

) Law Division. 

) 

) Nos. 2012 L 012077 and 

) 2014 L 003223 

) 

) The Honorable 

) John P. Callahan, Jr., 

) Judge Presiding. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 
 

 

 

 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

PRESIDING JUSTICE FITZGERALD SMITH delivered the judgment of the

 court, with opinion. 

Justices Lavin and Cobbs concurred in the judgment and opinion. 

OPINION 

¶ 1 This cause of action arises from a fire that occurred during an extensive renovation project, at 

Empress Casino Joliet (hereinafter the casino) on March 20, 2009. As a result of the fire, the 

casino, which is owned by the insured plaintiff, Empress Casino Joliet Corporation (hereinafter 

Empress), sustained extensive damages. Empress received $81,150,000 in insurance payments 

from three separate insurers—Axis Insurance Company (hereinafter Axis), National Fire and 

Marine Insurance Company (hereinafter National Fire), and Lloyd’s Syndicate 1414 (Ascot) 

(hereinafter Lloyd’s)—under three separate insurance policies. The Axis policy was a “builder’s 

risk” policy specific to the renovation project, while the National Fire and Lloyd’s policies 

provided general property coverage for the casino. At issue in this appeal are the subrogation 

rights of the three insurers. 

¶ 2 Specifically, in this appeal Empress and the three insurers appeal the trial court’s grant of 

summary judgment against them in two underlying consolidated actions against numerous 

defendants that they claim were responsible for the fire. The first cause of action (case No. 2012 

L 012077) was filed by Empress against W.E. O’Neil Construction Co. (hereinafter W.E. 

O’Neil), Global Fire Protection Company (hereinafter Global), Jameson Sheet Metal Inc. 

(hereinafter Jameson), the Linden Group, Inc. (hereinafter Linden), R. L. Millies & Associates, 

Inc. (hereinafter Millies) and Averus, Inc. (hereinafter Averus) and asserted claims for 

$83,700,00 in damages to cover: (1) the $2,550,000 deductibles that Empress incurred as a result 

of the fire; and (2) the $81,150,000 in payments that the three insurers made for Empress’s 

covered losses and for which they should have been subrogated. The second action (case No. 

2 
 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

2014 L 003223) was filed by the three insurers (Axis, National Fire and Lloyd’s) against the 

same defendants and asserted their subrogation claims. Both actions alleged claims of negligence 

and willful and wanton misconduct against all of the defendants, and claims for breach of 

contract against all of the defendants, except for Averus. 

¶ 3 After the two cases were consolidated, the circuit court granted summary judgment in favor 

of all the defendants, on all claims, holding that a waiver of subrogation clause contained in the 

construction contract for the casino renovation project prevented all the plaintiffs from asserting 

their respective subrogation claims. The plaintiffs now appeal. 

¶ 4 On appeal, all of the plaintiffs (Empress, Axis, National Fire and Lloyd’s) argue that the trial 

court erred when it found that the waiver of subrogation clause in the renovation construction 

contract applied to the defendant, Averus, since Averus operated under a separate pre-existing 

oral contract and was not involved in the renovation project. All of the plaintiffs also assert that 

the trial court erred when it found that the waiver of subrogation clause prevented them from 

proceeding with their willful and wanton misconduct claims because public policy should bar 

enforcement of such exculpatory clauses where heighted misconduct is alleged. 

¶ 5 In addition, Empress, National Fire, and Lloyd’s argue that the waiver of subrogation 

clause is limited to Axis’s builders risk policy and does not apply to Empress’s general property 

insurance policies with National Fire and Lloyd’s. In the alternative, Empress, National Fire, and 

Lloyd’s argue that to the extent that waiver of subrogation might apply, it is limited to those 

losses related to the work (i.e., the renovation project), as it is defined in the construction 

contract. In addition, Empress, National Fire and Lloyd’s argue that the defendants’ material 

breaches of the construction contract should bar enforcement of the waiver of subrogation clause. 

Finally, Empress asserts that it never waived its right to recover its deductibles under its general 

3 
 

 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

property insurance policies with National Fire and Lloyd’s. For the reasons that follow, we 

affirm in part and reverse in part. 

¶ 6 I. BACKGROUND 

¶ 7 The record below us is voluminous. For purposes of clarity, we will set forth only those facts

 and procedural history relevant for this appeal. 

¶ 8 A. The Parties 

¶ 9 In 2008, Empress, which owned and operated the casino complex located in Joliet, Illinois, 

began performing extensive renovations to its property. For this purpose, Empress entered into a 

construction contract with O’Neil as the general contractor. O’Neil then hired, inter alia, 

subcontractors Jameson (for HVAC and sheet metal work) and Global (for sprinkler installment). 

Linden was the architect and Millies the mechanical, electrical, and plumbing engineer 

(responsible for inter alia, the fire sprinkler and mechanical systems) for the renovation project. 

The parties do not dispute that prior to the renovation project, Empress had entered into a 

separate contract with Averus, for Averus periodically to perform cleaning and maintenance 

services at the casino, including the cleaning and removal of cooking grease and other 

combustible residue from ductwork in and above the kitchen. Averus continued to perform these 

services for Empress during the renovation project. 

¶ 10 B. The Renovation Project Construction Contract 

¶ 11 The parties agree that on September 15, 2008, Empress entered into a construction contract 

with O’Neil for the renovation project. That contract was comprised of, inter alia: (1) the 

American Institute of Architects (AIA) Standard Form of Agreement Between Owner and 

Contractor (AIA Document A111-1997), and (2) the General Conditions of the Contract for 

Construction (AIA A21-1997) (hereinafter the construction contract). Relevant to the issues in 

4 
 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

this appeal, as to insurance coverage, the construction contract required Empress as the “Owner” 

to maintain both liability (section 11.2) and property (section 11.4) insurance. With respect to 

property insurance section 11.4 provides in pertinent part: 

“§ 11.4.1 Unless otherwise provided, the Owner shall purchase and maintain, in a 

company or companies lawfully authorized to do business in the jurisdiction in which the 

Project is located, property insurance written on a builder’s risk “all-risk” or equivalent 

policy form in the amount of the initial GMP, plus value of subsequent Contract 

modifications and cost of material supplied or installed by others, comprising total value 

for the entire Project at the site on a replacement cost basis without optional deductibles. 

Such property insurance shall be maintained, unless otherwise provided in the Contract 

Documents or otherwise agreed in writing by all persons and entities who are 

beneficiaries of such insurance, until final payment has been made as provided in Section 

9.10 or until no person or entity other than the Owner has an insurable interest in the 

property required by this Section 11.4 to be covered, whichever is later. This insurance 

shall include interest of the Owner, the Contractor, Subcontractors, and Subsubcontractors in the Project.” 

¶ 12	 Section 11.4.1.1 further provides that the property insurance shall be on “an ‘all risk’ or 

equivalent policy form, and must include, “without limitation, insurance against the perils of fire 

(with extended coverage) and physical loss or damage, including *** [inter alia], theft, 

vandalism, malicious mischief, collapse, earthquake, flood, windstorm, falsework, testing and 

startup.” The property insurance also must cover “reasonable compensation” for services and 

expenses incurred by the architect and contractor “as a result of such insured loss.” 

¶ 13 Section 11.4.1.2 further explicitly provides that if the owner chooses not to purchase property 

5 
 

 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

insurance, the owner must inform the contractor in writing of such a decision before the work 

begins, so that the contractor may obtain such insurance and protect its interest (as well as the 

interests of the subcontractors and sub-subcontractors) in the work, as well as increase the price 

tag on the renovation project, to cover the cost of having to obtaining such insurance itself. 

¶ 14 The contract also allocates who will be responsible for payment of deductibles after the 

property insurance is obtained. Section 11.4.1.3 explicitly states that “If the property insurance 

requires deductibles, the Owner shall pay costs not covered because of such deductibles.” 

¶ 15 In addition, the contract contains an explicit waiver of subrogation clause. Specifically, 

sections 11.4.5 and 11.4.7 state in pertinent part: 

“§ 11.4.5 If during the Project construction period the Owner insures properties, real or 

personal or both, at or adjacent to the site by property insurance under policies separate 

from those insuring the Project, or if after final payment property insurance is to be 

provided on the completed Project through a policy or policies other than those insuring 

the Project during the construction period, Owner shall waive all rights in accordance 

with the terms of Section 11.4.7 for damages caused by fire or other causes of loss 

covered by this separate property insurance. All separate policies shall provide this 

waiver of subrogation by endorsement or otherwise. 

* * * 

§ 11.4.7 Waiver of Subrogation. The Owner and Contractor waive all rights against (1) 

each other and any of their subcontractors, sub-subcontractors, agents and employees, 

each of the other, and (2) the Architect, Architect’s consultants, separate contractors 

described in Article 6, if any and any of their subcontractors, sub-subcontractors, agents 

and employees, for damages caused by fire or other causes of loss to the extent covered 

6 
 

 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

by property insurance obtained pursuant to this Section 11.4 or other property insurance 

applicable to the Work, except such rights as they have to proceeds of such insurance 

held by the Owner as fiduciary. The Owner or Contractor, as appropriate, shall require of 

the Architect, Architect’s consultants, separate contractors described in Article 6, if any, 

and the subcontractors, sub-contractors, agents and employees of any of them, by 

appropriate agreements, written where legally required for validity, similar waivers each 

in favor of other parties enumerated herein. The policies shall provide such waivers of 

subrogation by endorsement or otherwise. A waiver of subrogation shall be effective as to 

a person or entity even though that person or entity would otherwise have a duty of 

indemnification, contractual or otherwise, did not pay the insurance premium directly or 

indirectly, and whether or not the person or entity had an insurable interest in the property 

damage.” 

¶ 16 Article 6 referenced above is titled “Construction By Owner or by Separate Contractors.” 

Section 6.1 of that article, states in pertinent part: 

“[T]he Owner reserves the right to perform construction or operations related to the 

Project with the Owner’s own forces, and award separate contracts in connection with 

other portions of the Project or other construction or operations on the site under 

Conditions of the Contract identical or substantially similar to these including those 

portions related to insurance and waiver of subrogation.” 

In addition, section 6.1.2 of that article provides that “[w]hen separate contracts are awarded for 

different portions of the Project or other construction or operations on the site, the term ‘ 

Contractor’ in the Contract Documents in each case shall mean the Contractor who executes each 

separate Owner-Contractor Agreement.” Finally, section 6.1.4 states that: 

7 
 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

“when the Owner performs *** operations related to the Project with the Owner’s own 

forces, the Owner shall be deemed to be subject to the same obligations and to have the 

same rights which apply to the Contractor under the Conditions of the Contract, including 

without excluding others, those stated in [inter alia] Article[ ] *** 11 ***.” 

¶ 17 C. Empress’s Insurance Policies 

¶ 18 At the time of the fire, Empress had in place three insurance policies. Specifically, for 

purposes of the renovation project, Empress purchased a “builder’s risk policy” from Axis. This 

policy was in effect from December 22, 2008, to December 22, 2009. The Axis policy provided 

coverage for “direct physical ‘loss’ to Covered Property caused by or resulting from any of the 

Covered Causes of Loss.” Under the policy “Covered Property” was defined as, inter alia, 

“[b]uildings or structures (including foundations, underground flues, pipes or drains) while under 

construction, erection or fabrication at the project site shown in the Coverage Form 

Declarations.” The Axis policy contained explicit language indicating that Axis (as the insurer) 

“may waive [its] rights against another party in writing” prior to a loss to covered property. 

¶ 19 In addition, to the Axis policy, at the time of the incident, Empress also had in place two 

general “all-risk” property insurance policies for the casino with National Fire and Lloyd’s. Both 

policies were in effect for the period between August 8, 2007 and December 31, 2010. National 

Fire was responsible for 90% of the property coverage, and Lloyd’s for 10%. The parties do not 

dispute that Lloyd’s policy incorporates by reference the wording of the National Fire policy, so 

that the language of the two policies is essentially the same. Specifically, the policies “insure[ ] 

against all risk of direct physical loss or damage to property insured by this policy occurring 

during the policy period except as hereinafter excluded.” The policies define “property” as “real 

or personal property,” including,” inter alia, “improvements and betterments”; “property in the 

8 
 

 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

care, custody or control of the Insured or for which the Insured is legally liable to insure”; 

“property of the Insured in the care, custody or control of others”; “property while in the 

incidental course of construction, installation, erection or assembly”; “demolition and increased 

cost of construction”; and “debris removal.” 

¶ 20 The policies further provided that “[u]nder no circumstances shall insurer be liable for 

cover, nor drop down in the event of erosion of aggregate for the following,” inter alia, 

“Property in the Course of Construction (except for incidental Course of Construction) being 

property in due course of construction, renovation, erection, installation, or assembly.” 

“Incidental Course of Constriction” is separately defined in National Fire’s policy as “total 

contracted works costs of $10,000,000 or lower.” 

¶ 21 In addition, both National Fire and Lloyd’s policies contain a “Subrogation” provision, which 

states in relevant part that they as “[t]he Insurer[s] will not acquire any rights of recovery that the 

Insured has expressly waived prior to loss, nor will such waiver affect the Insured’s rights under 

the Policy.” 

¶ 22 D. The Fire and the Complaints 

¶ 23 On March 20, 2009, during the first phase of the renovation project, large portions of the 

casino were destroyed by a fire. After Empress received $81,150,000 in insurance proceeds from 

Axis, National Fire and Lloyd’s,1

 on October 23, 2012, it filed a complaint against the 

defendants to recoup damages for itself and for its insurers, resulting from the fire (case No. 

2012 L 012077). 

9 

1 According to the insurers’ complaint, National Fire paid $64,215,000, Lloyd’s paid $7,135,000, 

and Axis paid $9,800,000 to Empress for the fire damage. 
 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

¶ 24 According to Empress’s complaint, the fire was started when a Jameson employee, Mike 

Haberzetle (hereinafter Haberzetle), was welding ductwork in the kitchen area. Haberzetle was 

attaching new duct to the existing duct for the kitchen hood exhaust, and started welding the 

existing ductwork even though the duct was coated with grease and other residue from cooking. 

During the welding the existing duct ignited on the inside, causing extensive damage to the 

casino complex. In a written statement, which is part of the record on appeal, Haberzetle 

described the incident as follows: 

“I was welding in the new kitchen area attaching new duct to the existing [duct] for the 

kitchen hood exhaust. The existing duct started on fire on the inside. I took the lift down 

to the ground, went for the fire extinguisher, [but] it was not on the pole for it. So I went 

to get another and tell Lance [the foreman] about it. When I got back to put it out, it was 

out of control and we called the fire department.” 

¶ 25 In its complaint, Empress further alleged that during the welding operations, O’Neil and 

Jameson both failed to provide the necessary fire watch required as protection during hot work. 

Specifically, Empress complained that O’Neil and Jameson did not have a fire extinguisher near 

Haberzetle, and permitted or participated in the decision to allow the welding to occur when fire 

sprinklers in other areas of the casino were out of operation. In addition, Empress alleged that 

O’Neil and Jameson failed to maintain the required clearance between the welding operations 

and combustibles. 

¶ 26 Empress also alleged that the architect Linden and the mechanical engineer Millies failed to 

provide for sprinklers in the concealed attic/truss spaces above the kitchen as required by the 

building code. Similarly, Empress alleged that the sprinkler subcontractor, Global, had installed 

the non-complaint sprinkler system. 

10 
 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

¶ 27 As to Averus, Empress alleged that four months prior to the incident, Averus purportedly 

spent five hours performing cleaning services at the casino and submitted a written report to 

Empress stating that it had spent this time cleaning the “kitchen hot line” and certifying that the 

“ductwork [was] clean.” Nonetheless, according to the complaint, the ductwork in the kitchen 

was coated with grease. 

¶ 28 Accordingly, Empress alleged that as a result of the defendants’ negligence, and willful and 

wanton misconduct, the fire resulted in $83,695,000 in damages. Accordingly, Empress sought 

$81,150,000 for the insurers, and the remainder to cover Empress’s deductibles. 

¶ 29 The three insurers—Axis, National Fire, and Lloyd’s—subsequently filed a direct

 subrogation suit against the defendants, seeking to recover the same damages as those in the 

Empress lawsuit (case No. 2014 L 003223). The allegations in the insurers’ complaint were 

identical to those in Empress’s complaint. These two cases were later consolidated. Empress 

subsequently amended its complaint and added breach of contract claims against all the 

defendants, except for Averus. 

¶ 30 E. Discovery 

¶ 31 The parties proceeded with discovery, during which the following relevant deposition 

testimony was obtained. 

¶ 32 Norman Nelms (hereinafter Nelms), Empress’s vice president for design and construction, 

testified, inter alia, that the casino renovation project was budgeted at $50 million and involved 

both the renovation of the land and vessel portion of the casino. Nelms stated that Empress hired 

Linden as project architect to develop the renovation design, and that Linden in turn hired Millies 

as mechanical engineer. 

¶ 33 In his deposition, Nelms acknowledged that after the design was discussed but before the 

11 
 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

project began, he was aware of certain problems with the fire safety of the casino. Specifically, 

Nelms knew that the dry pipe system in the casino’s pavilion was unable to hold pressure 

effectively and was therefore compromised. Nelms did not know if the area above the kitchen 

duct in the pavilion was sprinklered. He stated, however, that he was aware that the pavilion area 

had a functional wet system (sprinklers) in case of fire. He explained that the wet system covered 

all of the “below ceiling” spaces in the pavilion and the dry system covered all of the spaces in 

the pavilion above the ceiling (i.e., the attic space). Nelms also testified that the casino engaged 

in fire watches, but did not know details as to how these were conducted. 

¶ 34 Nelms next explained that, during the renovation project, the responsibility for the safety of 

the job site fell to the general contractor, O’Neil, who had control of the job site. Nelms 

explained that this responsibility was accorded to O’Neil by way of: (1) the construction project; 

(2) O’Neil’s own safety program; and (3) industry custom and practice. Nelms averred that since 

renovation always involved some aspects of demolition, there would necessarily be times when 

the sprinkler system would have to be out of commission. Therefore, there were special safety 

considerations for the project for which O’Neil was responsible, including anything related to 

protecting customers, the building, and the workers during the renovation. Nelms explained that 

Empress’s role in terms of safety would have been to collaborate with O’Neil. 

¶ 35	 During his deposition, Nelms was shown a Site Assessment Report for February 11, 2009 

(about a month before the fire), which states that if any element of the fire protection system has 

to come down due to renovation activities, Empress’s casino security guards would perform fire 

watch walks in those areas. Nelms averred that this report evidenced the “collaboration” that was 

required between O’Neil and Empress during the renovation. He admitted, however, that he did 

not know if the Empress security guards ever actually performed those walks. 

12 
 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

¶ 36 Nelms acknowledged that the responsibility for the presence of fire extinguishers on site was 

shared by Empress and O’Neil, with O’Neil being responsible for the fire extinguishers within 

the construction zone, and Empress for those in the remainder of the facilities. 

¶ 37 Nelms had no personal knowledge as to how the fire occurred, but testified that it was his 

opinion that the “unfortunate accident” occurred by “a lapse of judgment or supervision” by 

either Jameson or O’Neil. He explained that the welder should have had better instruction, a fire 

extinguisher should have been present, or hot work permits should have been properly obtained. 

¶ 38 Nelms was next questioned about the content of the construction contract Empress entered 

into with O’Neil. He acknowledged that the contract contained a liquidated damages provision 

and that section 4.3.10 contained a waiver of consequential damages (namely that the contractor 

and owner waive claims against each other for consequential damages arising out of or relating 

to the contract). Nelms also acknowledged that contracts of this nature usually involve a concept 

known as “flow down,” which means that whatever is contained in the contract is “flowed down” 

to the lower tier to the subcontractors, so that whatever burdens are placed on a general 

contractor and whatever benefits are given to the general contractor flow down to the 

subcontractors without creating privity of contract between the subcontractors and the owner. 

¶ 39 With respect to the waiver of subrogation provision in the contract, Nelms admitted that it 

was his understanding that Empress provided builders risk insurance coverage for the renovation, 

but he did not understand what this type of insurance entailed or what type of subrogation rights 

were obtained or triggered thereunder. He also admitted that the casino had property insurance 

but could not speak as to what that insurance covered. 

¶ 40 In his deposition, Jacques Arragon (hereinafter Arragon), Empress’s director of risk 

13 
 

Nos. 1-15-1166 & 1-15-1184 cons. 

management, next testified, inter alia, that he was responsible for negotiating and drafting all of 

the insurance portions of the construction contract between Empress and O’Neil. Arragon 

acknowledged that for purposes of the renovation project, Empress ensured that it had a builder’s 

all-risk insurance policy (with Axis), which had a miscellaneous property under construction 

supplement with a threshold sublimited to $10 million. 

¶ 41 Arragon stated that the waiver of subrogation clause in the construction contract was a 

modification from the original AIA form. According to Arragon, the purpose of that provision 

was to have Empress protect the interests of the owner, contractor, subcontractors and subsubcontractors of the project by way of builder’s risk insurance. Arragon testified that it was his 

understanding that section 11.4.7 of the construction contract applied only to the builder’s risk 

policy because it covered only insurance relating to work—i.e., the renovation project. 

According to Arragon, the work was supposed to be covered by the builder’s risk insurance, 

while the remainder of the adjacent buildings where the renovation was not taking place were to 

be covered by Empress’s general property insurance policies. Arragon conceded, however, that 

section 11.4.5 of the construction contract applied to the two property insurance policies issued 

by Lloyd’s and National Fire, and that it includes a requirement that Empress waive any 

subrogation claims as to these two policies. Arragon, however, could not remember whether any 

special endorsements for such mandatory waivers under section 11.4.5 were ever completed. 

¶ 42 Arragon admitted that, since the fire, Empress has changed its insurance coverage template to 

have higher builder’s risk insurance and not have multiple insurers on the same loss covering 

different things. Rather, now, Empress obtains property insurance and builder’s risk under just 

one program. 

¶ 43 With respect to his knowledge of any problems at the casino prior to the fire, Arragon 

14 
 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

testified he could not recall if he was aware of any fire safety issues. When presented with the 

February 23, 2009, site assessment report, Arragon acknowledged that he ordered that report be 

prepared, but testified that, because the report was overall satisfactory, he relied on the fact that 

Empress’s security guards would perform some of the fire watches and accordingly did nothing 

further about it. 

¶ 44 Arragon also explained in his deposition that a hot works permit is a document used 

during the renovation that states when there will be any type of hot works, including welding, 

and whether the area where such welding will occur is secured (i.e., if there are any combustibles 

within a specific distance, whether fire extinguishers are available etc.). The hot works permits 

must be signed by an individual responsible for the safety of the hot works site. Arragon 

admitted that after the fire, upon his order, Empress has strengthened its hots works permit 

process. 

¶ 45 In his deposition, Donald Stewart (hereinafter Stewart), vice president of the fire protection 

division of Averus, testified that Averus was responsible for cleaning the hoods at the casino 

since 2008. According to Stewart, there was no written contract between Averus and Empress for 

services. Instead, Averus submitted a signed proposal, and received a verbal approval from 

Empress to perform the services. A copy of Averus’s proposal is included in the record below us 

and is a two-page document, which is neither in AIA format, nor includes any reference to a 

waiver of subrogation. What is more, Stewart explicitly admitted in his deposition that in coming 

to their verbal agreement, there was never any discussions between Averus and Empress about 

any waiver of subrogation. In addition, no one ever asked Stewart to sign a waiver of subrogation 

form. Stewart also acknowledged that when Averus entered into the agreement with Empress, 

Averus was operating under the National Fire Protection Association (NFPA) 96 standard as to 

15 
 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

the frequency of the cleanings it recommended in its proposals, and that under those rules it was 

required to clean any contaminated portions of the exhaust system or provide Empress with a 

written report specifying all areas that were inaccessible or not cleaned. 

¶ 46 In his deposition, Stewart further admitted that at the time of the fire, Averus was working 

directly for the casino, and that it was not a subcontractor to anyone relative to the ongoing 

renovation project. 

¶ 47 Stewart stated that, prior to the fire, the last time Averus cleaned the buffet kitchen exhaust 

hood was on October 19, 2008. On the advice of his attorney, Stewart refused to answer 

counsels’ questions about when Averus last cleaned the horizontal main line in the pavilion area. 

¶ 48 In his deposition John Russell (hereinafter Russell), president of O’Neil, next testified, inter 

alia, that he was principally responsible for negotiating the construction contract between O’Neil 

and Empress, with some help from Nelms and Arragon. Russell testified that it was his 

understanding, both from the language of the contract and the negotiations he had with 

Empress’s principals, that during the renovation project O’Neil would have access to all of 

Empress’s insurance policies (including builder’s risk, property, use, etc.). Specifically, Russell 

averred that when read as a whole section 11.4 of the construction contract clearly required 

Empress to purchase builder’s risk insurance, and make available to O’Neil insurance for any 

adjacent property, as well as insurance for any loss of use. According to Russell, section 11.4.1 

required Empress to provide the builder’s risk insurance. Section 11.4.1.3 confirmed that 

Empress was responsible for all deductibles associated with its policies, and required Empress to 

purchase insurance for loss of use and make it available to O’Neil. This section also included a 

waiver of subrogation. According to Russell, section 11.4.5 further required Empress to provide 

O’Neil with insurance for adjacent properties, and included a waiver of subrogation. Under 

16 
 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

section 11.4.7, Empress waived subrogation for any damage caused by fire. Finally, section 

11.4.1.2 provided that if Empress did not provide any of those coverages, it would have an 

obligation to notify O’Neil so that it could purchase the insurance and change the order to 

increase the price of the renovation project. 

¶ 49 Russell also testified in his deposition that it was his understanding that Empress would 

waive any rights to subrogation under the contract. He testified that his objective in negotiating is 

to make sure, if at all possible, that his company transfers all of the risk that is available to the 

owner’s policies. Otherwise, O’Neil needs to purchase additional polices and burden the project 

with additional costs. Accordingly, Russell expected that the standard text of the AIA would be 

in play. 

¶ 50 Russell further testified that the renovation project was not limited to any particular area of

 the casino complex, and that O’Neil’s work encompassed the whole property. 

¶ 51 In his deposition Joseph Cassacio (hereinafter Cassacio), an officer of National Fire, 

testified, inter alia, that the sublimit of $10 million contained in National Fire’s property 

insurance policy for Empress was intended to delineate between minor and large construction 

projects. Specifically, if a construction project involved costs of up to $10 million, then those 

costs would be covered under the National Fire policy. Cassacio admitted, however, that 

National Fire paid Empress insurance proceeds after the fire for the “loss of the property that was 

next door,” and caused by that fire. 

¶ 52 In addition, Cassacio testified that it was his opinion that National Fire had not waived any 

subrogation rights under the construction contract. While Cassacio acknowledged that the 

National Fire policy states that if the insured (Empress) has waived its rights to recover prior to a 

loss then the insured cannot pursue subrogation, he testified that such a waiver must be express 

17 
 

 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

(by naming the additional insured, and by way of endorsement of the existing insurance policy). 

According to Cassacio any waiver of subrogation in the construction contract applies only to the 

builder’s risk policy. Specifically, Cassacio asserted that section 11.4.5 of the construction 

contract does not pertain to National Fire because National Fire’s policy was not obtained during 

the renovation project and there was no endorsement of any such waiver by National Fire. 

¶ 53 F. Summary Judgment 

¶ 54 After discovery, the defendants moved for summary judgment, arguing that the plaintiffs’ 

claims were barred by the waivers of subrogation in the construction contract.2 In support of their 

motion for summary judgment the defendants attached the following exhibits: (1) their two 

complaints; (2) the construction contract; (3) Empress’s three insurance policies; (4) Empress’s 

discovery responses (admitting to having received the insurance proceeds from the insurers); and 

(5) the depositions of Nelms, Arragon, and Cassacio. 

¶ 55 The plaintiffs filed their response to the motion for summary judgment, arguing inter alia, 

that under the plain language of the construction contract: (1) the waiver of subrogation clause 

did not apply to the two property insurers (National Fire and Lloyd’s) or to Averus; and (2) 

Empress did not waive its right to recover its deductibles. In support they attached, inter alia: (1) 

the depositions of Stewart and Russell; (2) a subcontract with Jameson; (3) the AIA official 

guide; and (4) Haberzetle’s statement. 

2 Although the defendants initially filed their motion for summary judgment only against 

Empress in case No. 12 L 12077, all the parties agreed and the trial court subsequently ordered, 

that the defendants’ motion for summary judgment (as well as the parties’ briefs with respect to 

that motion) be considered as a motion for summary judgment brought by all defendants against 

all plaintiffs in both cases (Nos. 12 L 12077 and 14 L 3223). 

18 
 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

¶ 56 After reviewing the extensive briefs filed by the parties, and having heard oral arguments on 

the issues raised, on March 30, 2010, the trial court granted summary judgment in favor of the 

defendants. In doing so, the court held that the plain language of the construction contract reveals 

the parties’ intent that Empress assume the risk of loss for any fire loss and look to its different 

insurance policies as the single source of recovery. Accordingly, the court concluded that 

Empress had agreed to waive all rights to subrogation against all possible at-fault parties. In 

addition, the court found that pursuant to the plain language of the construction contract Empress 

was responsible for its own insurance deductibles. The plaintiffs now appeal. 

¶ 57 II. ANALYSIS 

¶ 58 Before addressing the merits, we begin by noting the well-established principles regarding 

grants of summary judgment. “Summary judgment is a drastic measure of disposing of 

litigation” (Bruns v. City of Centralia, 2014 IL 116998, ¶ 12) and should only be granted “if the 

movant’s right to judgment is clear and free from doubt” (Outboard Marine Corp. v. Liberty 

Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992)). See also Schade v. Clausius, 2016 IL App 

(1st) 143162, ¶ 18. Summary judgment is proper where “the pleadings, depositions, and 

admissions on file, together with the affidavits, if any, show that there is no genuine issue as to 

any material fact and that the moving party is entitled to a judgment as a matter of law.” 735 

ILCS 5/2-1005(c) (West 2012); see also Carlson v. Chicago Transit Authority, 2014 IL App (1st) 

122463, ¶ 21; Fidelity National Title Insurance Co. of New York v. West Haven Properties 

Partnership, 386 Ill. App. 3d 201, 212 (2007) (citing Home Insurance Co. v. Cincinnati 

Insurance Co., 213 Ill. 2d 307, 315 (2004)); Virginia Surety Co. v. Northern Insurance Co. of 

New York, 224 Ill. 2d 550, 556 (2007). In determining whether the moving party is entitled to 

summary judgment, the court must construe the pleadings and evidentiary material in the record, 

19 
 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

in the light most favorable to the nonmoving party and strictly against the moving party. Schade, 

2016 IL App (1st) 143162, ¶ 17; see also Happel v. Wal-Mart Stores, Inc., 199 Ill. 2d 179, 186 

(2002). “Although the burden is on the moving party to establish that summary judgment is 

appropriate, the nonmoving party must present a bona fide factual issue and not merely general 

conclusions of law.” Morissey v. Arlington Park Racecourse, LLC, 404 Ill. App. 3d 711, 724 

(2010). “A genuine issue of material fact exists where the facts are in dispute or where 

reasonable minds could draw different inferences from the undisputed facts.” Morrissey, 404 Ill. 

App. 3d at 724; see also Espinoza v. Elgin, Joliet & Eastern Ry. Co., 165 Ill. 2d 107, 114 (1995) 

(“[W]here reasonable persons could draw divergent inferences from the undisputed material 

facts or where there is a dispute as to [the] material fact, summary judgment should be denied 

and the issue decided by the trier of fact.”). Our review of the trial court’s entry of summary 

judgment is de novo. See Village of Palatine v. Palatine Associates, L.L.C, 2012 IL App (1st) 

102707, ¶ 43; see also Ragan v. Columbia Mutual Insurance Co., 183 Ill. 2d 342, 349 (1998); 

Outboard Marine, 154 Ill. 2d at 102. 

¶ 59 On appeal, the plaintiffs make numerous contentions of error, in some instances pertaining to 

all of them and in others only to some. For purposes of clarity, we begin by addressing those 

arguments raised by all of the plaintiffs. 

¶ 60 A. Averus 

¶ 61 First, all of the plaintiffs (Empress, Axis, National Fire, and Lloyd’s) argue that the trial court 

erred when it granted summary judgment in favor of Averus, on the basis of the waiver of 

subrogation clause in section 11.4.7 of the construction contract, where that clause could not 

have applied to Averus, since Averus operated under a separate pre-existing oral agreement with 

Empress and its work in the casino was not related to the renovation project. The defendants, on 

20 
 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

the other hand, assert that pursuant to Article 6 of the construction contract, Averus, who was 

hired by Empress to perform “other operations on site,” became a “contractor” for purposes of 

the waiver of subrogation in section 11.4.7. For the reasons that follow, we disagree with the 

defendants. 

¶ 62 In interpreting a contract, our primary objective is to effectuate the intent of the parties. 

Thompson v. Gordon, 241 Ill. 2d 428, 441 (2011); see also Gallagher v. Lenart, 226 Ill. 2d 208, 

232 (2007). In doing so, we first look to the plain language of the contract to determine the 

parties’ intent. Thompson, 241 Ill. 2d at 441; see also Gallagher, 226 Ill. 2d at 233. If the words 

in the contract are clear and unambiguous, we must give them their plain, ordinary and popular 

meaning. Thompson, 241 Ill. 2d at 441 (citing Central Illinois Light Co. v. Home Insurance Co., 

213 Ill. 2d 141, 153 (2004)). However, if the language of the contract is ambiguous, we may look 

to extrinsic evidence to determine the parties’ intent. Thompson, 241 Ill. 2d at 441; Gallagher, 

226 Ill. 2d at 233. Language in a contract is ambiguous if it is “susceptible to more than one 

meaning.” Thompson, 241 Ill. 2d at 441. However, mere disagreement between the parties 

concerning a provision’s meaning will not automatically render such language ambiguous. 

Thompson, 241 Ill. 2d at 443. Rather, instead of focusing on one clause or provision in isolation, 

we, as the reviewing court, must read the entire contract in context and construe it as a whole, 

viewing each provision in light of the other ones. See Gallagher, 226 Ill. 2d at 233; see also 

Thompson, 241 Ill. 2d at 441. In doing so, we will not add language or matters to a contract 

about which the instrument is silent, nor add words or terms to the agreement to change the plain 

meaning, as expressed by the parties. Sheehy v. Sheehy, 299 Ill. App. 3d 996, 1001 (1998). 

¶ 63 In the present case, section 11.4.7 of the construction contract provides in pertinent part: 

21 
 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

“Waivers of Subrogation. The Owner and Contractor waive all rights against (1) each 

other and any of their subcontractors, sub-subcontractors, agents, and employees, each of 

the other *** and separate contractors described in Article 6 *** for damages caused by 

fire or other causes of loss to the extent covered by property insurance obtained pursuant 

to this Section 11.4 or other property insurance applicable to the Work ***.” 

¶ 64 Further, Article 6, which is titled “Construction by Owner or by Separate Contractors,” states

 in relevant part: 

“§ 6.1.1 The Owner reserves the right to perform construction or operations related to the 

Project with the Owner’s own forces, and to award separate contracts in connection with 

other portions of the Project or other construction or operations on the site under 

Conditions of the Contract identical or substantially similar to these including those 

portions related to insurance and waiver of subrogation.” 

¶ 65 In addition, section 6.1.2 provides that “[w]hen separate contracts are awarded for different 

portions of the Project or other construction or operations on the site, the term ‘Contractor’ in the 

Contract Documents in each case shall mean the Contractor who executes each separate OwnerContractor Agreement.” Finally, section 6.1.4 states that “when the Owner performs *** 

operations related to the Project with the Owner’s own forces, the Owner shall be deemed to be 

subject to the same obligations and to have the same rights which apply to the Contractor under 

the Conditions of the Contract, including without excluding others, those stated in [inter alia] 

Article[ ] *** 11 ***.” 

¶ 66 Construing these sections of the contract as a whole, we find that under the plain language of 

the construction contract, Averus does not fall into the category of entities to which the waiver of 

subrogation applies. The plain language of section 11.4.7 makes clear that the waiver is limited 

22 
 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

to a class of defined participants, including (1) the owner; (2) the contractor; (3) the 

subcontractor; (4) the sub-subcontractors; and (5) their respective agents and employees, as well 

as “separate contractors described in Article 6.” The construction contract clearly identifies 

Empress as the owner and O’Neil as the contractor. In addition, the contract defines a 

“subcontractor” as an “entity who has a direct contract with the Contractor to perform a portion 

of the Work at the site” and a “sub-subcontractor” as an “entity who has a direct or indirect 

contract with the Contractor to perform a portion of the Work at the site.” As such, since Averus 

admittedly had no direct contract with either O’Neil or any of O’Neil’s subcontractors, Averus 

does not fall into the category of either subcontractor or a sub-subcontractor. Similarly, because 

Averus admitted that it had a separate and preexisting contract with Empress to periodically 

clean ductwork in the casino, it was neither Empress’s employee, nor agent. Accordingly, aside 

from the class defined by Article 6, Averus does not fall into any of the defined categories to 

which the waiver would apply. 

¶ 67 The defendants nonetheless argue that because section 6.1.1 of the contract permits Empress 

to “award separate contracts” in connection with “other *** operations on the site,” Averus is a 

“separate contractor” within the meaning of Article 6, so as to fall within the purview of the 

waiver of subrogation clause. The defendants, however, conveniently forget to mention that 

section 6.1.1 conditions Empress’s award of separate contracts for the performance of “other 

construction or operations on the site” to those operations “under Conditions of the Contract 

identical or substantially similar to these including those portions related to insurance and waiver 

of subrogation.” “Conditions of the Contract” are explicitly defined in the construction contract, 

and include General, Supplementary and Other Conditions. The “General Conditions” are 

defined as the AIA Document A201-1997, as modified, and the “Supplementary and Other 

23 
 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

Conditions” are defined as those issued and incorporated via Change Orders. Accordingly, it is 

clear from the plain language of section 6.1.1 that separate contracts for “other operations on 

site” do not include just any operations conducted at the casino but, rather, must be made under a 

contract identical or similar to AIA Document A201-1997, i.e., they must be related to 

construction. This is further evidenced by the very title of Article 6, which indicates that it 

applies to “Construction By Owner or By Separate Contractors.” For that same reason, section 

6.1.4 confers on Empress obligations to its separate contractors “under the Conditions of the 

Contract,” and including waiver of subrogation, only where Empress “performs *** operations 

related to the Project with [its] own forces.” Since, in the present case, Averus’s vice president 

Stewart admitted that it operated under a completely separate, pre-existing, oral, non-AIA 

contract with Empress, to clean the casino ductwork, Averus cannot now avail itself of the 

waiver of subrogation provision in section 11.4.7. In addition, Stewart admitted in his deposition 

that in negotiating Averus’s contract with Empress, the parties never discussed or contemplated 

any waiver of subrogation. 

¶ 68 Accordingly, under these circumstances, the trial court erred when it granted summary

 judgment in favor of the defendant Averus. 

¶ 69 B. Waiver of Subrogation for Willful and Wanton Misconduct 

¶ 70 With respect to the remaining defendants, the plaintiffs (Empress, Axis, National Fire, and 

Lloyd’s) all collectively assert that the trial court erred in granting summary judgment pursuant 

to the waiver of subrogation clause, because public policy in Illinois bars the enforcement of 

exculpatory clauses where heighted misconduct is alleged. The plaintiffs assert that because they 

proceeded with claims for willful and wanton misconduct, the court should have found the 

waiver of subrogation provision unenforceable. For the reasons that follow, we disagree. 

24 
 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

¶ 71 The general purpose of a waiver of subrogation provision is to permit parties to a 

construction contract to exculpate each other from personal liability in the event of property loss 

or damage to the work occurring during construction, relying instead on the insurance purchased 

by one of the parties to provide recovery for that loss. Intergovernmental Risk Management v. 

O’Donnell, Wicklund, Pigozzi & Peterson Architects, Inc., 295 Ill. App. 3d 784, 791 (1998); see 

also Village of Rosemont v. Lentin Lumber Co., 144 Ill. App. 3d 651 (1986). Such provisions 

shift the risk of loss to the insurance company to facilitate timely completion of the project and 

avoid the prospect of time-consuming and expensive litigation, regardless of which party is at 

fault. See Intergovernmental Risk, 295 Ill. App. 3d at 793; see also Village of Rosemont, 144 Ill. 

App. 3d at 660 (“ ‘The insurance clause shifts the risk of loss to the insurance company 

regardless of which party is at fault.’ [Citation.]” ); Ralph Korte Construction Co. v. Springfield 

Mechanical Co., 54 Ill. App. 3d 445 (1977). 

¶ 72 In Intergovernmental Risk, this court had an opportunity to address an argument similar to 

the one raised here by the plaintiffs. In that case, the plaintiffs argued that an AIA construction 

contract, with a waiver of subrogation clause identical to the one here, could not apply to 

damages caused by either “negligent” or “wrongful acts” of the defendant. Intergovernmental 

Risk, 295 Ill. App. 3d at 792. This court disagreed, finding that the waiver of subrogation 

provision was contingent upon the types of perils that could result in property damage and loss, 

and not on what caused those perils (i.e., the manner by which the perils were caused). 

Intergovernmental Risk, 295 Ill. App. 3d at 795-96. As the court explained: 

“[The waiver of subrogation clause] identifies the types of perils that could cause 

property damage and loss. It identifies fire as a distinct peril. It does not differentiate 

between the manner in which that peril arises, that is, whether by acts of God or by the 

25 
 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

intentional or unintentional, negligent or reckless acts of human beings. In point of fact, 

fire loss could result from any of these acts, although as noted in one case it ‘nearly 

always [is] caused by negligence. [Citation.] To the extent that this provision does 

purport to enumerate different types of human conduct that could cause losses of 

property, it does so with respect to nonfire-related physical loss or damage; and, even 

there, it purports only to be inclusive, not preclusive. Moreover, strong argument can be 

made that even with respect to those property losses the focus is not upon the differing 

human motivations behind the conduct causing the damage but upon the different type of 

hazards resulting from categories of human conduct conventionally treated as separate 

underwriting coverages.” Intergovernmental Risk, 295 Ill. App. 3d at 795-96. 

Accordingly, the court in that case concluded that under the express language of the contract, the 

owner was required to obtain “property insurance that insured against damage to property 

caused by fire regardless of the fire’s origin or cause” (emphasis added) and as such, the waiver 

of subrogation extended to the fire loss, regardless of how the fire had been started. 

Intergovernmental Risk, 295 Ill. App. 3d at 796. 

¶ 73 We agree with the rationale in Intergovernmental Risk, and find it directly applicable to the 

cause at bar. Just as in Intergovernmental Risk, the parties here negotiated the construction 

contract using the AIA form. In doing so, they obligated Empress, as the owner, to purchase 

insurance covering “without limitation, insurance against the perils of fire (with extended 

coverage) and physical loss or damage, including *** [inter alia], theft, vandalism, malicious 

mischief, collapse, earthquake, flood, windstorm, falsework, testing and startup.” In addition, the 

parties explicitly negotiated a waiver of subrogation for damages caused by fire. Specifically, 

pursuant to section 11.4.5 they agreed that, “if during the Project construction period” Empress 

26 
 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

insured its properties, it would “waive all rights in accordance with the terms of Section 11.4.7 

for damages caused by fire or other causes of loss.” Section 11.4.7 further explicitly provided 

that Empress and O’Neil would waive all rights against “(1) each other and any of their 

subcontractors, sub-subcontractors, agents and employees, each of the other, and (2) the 

Architect, Architect’s consultants, separate contractors described in Article 6, if any and any of 

their subcontractors, sub-subcontractors, agents and employees, for damages caused by fire or 

other causes of loss to the extent covered by property insurance obtained pursuant to this Section 

11.4.” In addition, the parties agreed that the waiver of subrogation would “be effective as to a 

person or entity even though that person or entity would otherwise have a duty of 

indemnification, contractual or otherwise, did not pay the insurance premium directly or 

indirectly, and whether or not the person or entity had an insurable interest in the property 

damage.” 

¶ 74 Just as in Intergovernmental Risk, we hold that the parties here expressly foresaw the 

potential of property loss occurring due to fire and chose to impose on Empress the duty to 

insure against any such loss (regardless of fault), expressly waiving all rights against each other 

for damages caused by such perils. See Intergovernmental Risk, 295 Ill. App. 3d at 796; see also 

Village of Rosemont, 144 Ill. App. 3d at 661 (construing similar waiver of subrogation provision 

to hold that “the parties expressly waived all rights against each other for damages caused by 

perils covered under the policy” and “intended to allocate property loss to an insurer and to limit 

the recourse of the plaintiff, the party acquiring the policy, solely to the insurance proceeds”); 

Ralph Korte, 54 Ill. App. 3d at 447 (interpreting waiver of subrogation provision to mean that 

“the parties had agreed, in effect, to assume the risk of loss as between themselves due to fire or 

other perils, to the extent each party was covered by insurance”). Nothing in the language of the 

27 
 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

waiver of subrogation clause indicates that the parties intended there to be an exception for fires 

caused by willful and wanton conduct. Since “[t]he law and the public policy of Illinois permit 

and require that competent parties be free to contract with one another,” we conclude that the 

trial court properly applied the waiver of subrogation clause to bar the plaintiffs’ claims 

attempting to recoup losses they incurred as a result of the fire. Liccardi v. Stotl Terminals, Inc., 

178 Ill. 2d 540, 549 (1997); see also Saba Software, Inc. v. Deere & Co., 2014 IL App (1st) 

132381, ¶ 60 (“Illinois’s public policy strongly favors freedom to contract [citation] and broadly 

allows parties to determine their contractual obligations. [Citation.] Hussein v. L.A. Fitness 

International, L.L.C., 2013 IL App (1st) 121426, ¶ 11. As a result, we exercise sparingly the 

power to declare a private contract void as against public policy.” (Internal quotation marks 

omitted.)) 

¶ 75 In coming to this conclusion, we further find that in making their public policy argument, the 

plaintiffs confuse waivers of subrogation with exculpatory clauses. The law in Illinois is well 

settled that a waiver of subrogation is not an exculpatory clause. See, e.g., Allstate Indemnity Co. 

v. ADT LLC, 110 F. Supp. 3d 856, 862 (N.D. Ill. 2015) (“[S]ubrogation waivers are not true 

exculpatory provisions. They merely allocate risk of loss; they do not immunize the wrongdoer 

from all liability, nor do they require the injured parties to give up all their claims or leave them 

uncompensated.”); see also Hartford v. Burns International Security Services, Inc., 172 Ill. App. 

3d 184 (1988); see also Bastian v. Wasau Homes Inc., 635 F. Supp. 201 (N.D. Ill. 1986). 

¶ 76	 Similar to the present case, in Hartford, 172 Ill. App. 3d 184, the plaintiff insurer 

argued that a waiver of subrogation in a contract for security services for the Board of Trade 

Building was an exculpatory clause that should be deemed void (as against public policy) both 

under New York and Illinois law. This appellate court disagreed, holding: 

28 
 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

“Here, we are dealing with two corporations which voluntarily entered into a contract at 

arm’s length, with full freedom to do so. The waiver provision in question here is not a 

true exculpatory clause. It is merely an agreement between the parties to shift most of the 

risk of loss to a third party, namely: the [insured Building’s] insurance company, i.e., [the 

plaintiff insurer]. The clause did not immunize [the Building] from all liability nor did it 

require [the insured Building] to give up all claims against [the defendant.] The [insured 

Building] gave up only its rights against the [defendant] to the extent that it was insured. 

Thus, the waiver provision *** does not violate Illinois public policy ***.” Hartford, 172 

Ill. App. 3d at 190. 

¶ 77 In coming to this decision, the court in Hartford relied in part on the decision in Bastian, 

635 F. Supp. 201. In that case the plaintiff home purchasers alleged that a waiver of subrogation 

clause in a sales contact was an unenforceable exculpatory clause because it was unconscionable 

and violated Illinois public policy. See Bastian, 635 F. Supp. at 202. Applying Illinois law, the 

federal court in that case disagreed, explaining the distinction between a waiver of subrogation 

and an exculpatory clause: 

“The clause in question here is not even a true exculpatory clause. With it the parties 

agree to shift most of the risk of property loss to a third party, namely the Bastians’s 

insurance company; or, worded another way, by the clause Wausau became an additional 

beneficiary of the Bastians’s insurance policy. [Citations.] Such a clause does not leave 

the injured party uncompensated. Indeed, the Bastians have already been largely 

compensated for their loss, albeit from their own insurance rather than by Wausau.” 

Bastian, 635 F. Supp. at 203. 

¶ 78 In making their argument, the plaintiffs here fail to cite to any Illinois decision in which the 

29 
 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

court refused to enforce an insurance subrogation waiver on the basis that willful and wanton 

misconduct was alleged. Rather, the majority of the decisions they cite discuss contractual 

exculpatory provisions. See, e.g., Oelze v. Score Sports Venture, LLC, 401 Ill. App. 3d 110 

(2010) (exculpatory clause in membership agreement signed by a member who tripped on a rope 

ladder during a tennis match); Garrison v. Combined Fitness Centre, Ltd., 201 Ill. App. 3d 581 

(1990) (exculpatory clause in a health club membership agreement signed by a member who was 

injured while lifting weights); Downing v. United Auto Racing Ass’n, 211 Ill. App. 3d 877 

(1991) (release signed by a pit crew member who was struck by a car during a race); Falkner v. 

Hinckley Parachute Center, Inc., 178 Ill. App. 3d 597 (1989) (exculpatory clause within a 

release signed by a parachutist who died when his parachute became entangled). 

¶ 79 The only Illinois case the plaintiffs offer in support of their argument is Third Swansea 

Properties, Inc. v. Ockerlund Construction Co., 41 Ill. App. 3d 894 (1976). Although at first 

blush that decision appears factually similar, a thorough reading reveals that it is not a waiver of 

subrogation case. In Third Swansea, the plaintiffs, owners (and lessor-occupants) of a property 

on which a bakery addition was being erected and that was damaged by fire during the 

construction, sued, inter alia, a subcontractor involved in the project. Third Swansea, 41 Ill. App. 

3d at 895. While the contract at issue contained a waiver of liability clause, it also obligated the 

plaintiffs to obtain insurance, which they apparently failed to do so, leaving them uncompensated 

for their loss. See Third Swansea, 41 Ill. App. 3d at 896-97. Although the court in Third Swansea 

concluded that the plaintiffs could proceed against the subcontractor with their willful and 

wanton claims, it found that it was unable to determine from the record presented whether the 

insurance, if it had been obtained by the plaintiffs, would have been so comprehensive so as to 

bar the plaintiffs’ subrogation action or whether it would have covered only the subcontractor’s 

30 
 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

interest in the project and thus allowed the action for damages directly against the subcontractor. 

Since the parties here do not dispute that Empress had three insurance policies in place at the 

time of the renovation project, and that the three insurers collectively reimbursed Empress for its 

fire losses, Third Swansea is inapplicable. 

¶ 80 Therefore, we conclude that nothing in our State’s law or public policy prevents competent 

parties to a construction contract to negotiate a full waiver of subrogation rights (regardless of 

fault) among themselves, so as to require one of them to obtain insurance and have the insurer 

provide the sole recovery for the identified loss. Accordingly, we conclude that the waiver of 

subrogation clause in the construction contract was applicable to bar the plaintiffs’ willful and 

wanton claims and permit the trial court to enter summary judgment. As such, we must next 

determine whether that clause applies to all three insurers, and if so to what extent. 

¶ 81 C. Application of Waiver to the Two Property Insurance Policies 

¶ 82 Axis concedes that under the plain language of the construction contract, the waiver of 

subrogation provision applies to it as the builder’s risk insurer. Empress, National Fire, and 

Lloyd’s agree and further contend that the waiver provision is limited to Axis’ builder’s risk 

insurance policy and therefore does not apply to either of Empress’s property insurance policies 

with National Fire and Lloyd’s. We disagree. 

¶ 83 The plain language of the construction contract is clear and contemplates that the waiver of 

subrogation applies both to the specific renovation builder’s risk insurance and the general 

property insurers. 

¶ 84 Under section 11.4.1 of the contract, Empress was obligated to purchase and maintain until 

final payment (i.e., the completion of the project) “property insurance written on a builder’s risk 

‘all-risk’ or equivalent policy form.” Section 11.4.1.1 enumerated the types of coverage that 

31 
 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

must be included “without limitation” in such a builder’s risk policy, and included perils like 

fire. Section 11.4.7 further set forth the waiver of subrogation, obligating the parties to waive all 

rights against each other for “damages caused by fire or other causes of loss to the extent covered 

by property insurance obtained pursuant to this Section 11.4 of other property insurance 

applicable to the Work ***.” Section 11.4.5 contains an additional waiver of subrogation 

provision and further obligates Empress to waive all rights in accordance with the terms of 

section 11.4.7 “for damages caused by fire or other causes of loss covered by” any “separate 

property insurance,” if “during the Project construction period [it] insures properties, *** at or 

adjacent to the site by property insurance under policies separate from those insuring the Project, 

or if after final payment property insurance is to be provided on the completed project through a 

policy or policies other than those insuring the Project during the construction period.” 

¶ 85 Reading the aforementioned language of the construction contract as a whole, for the reasons 

that shall be more fully articulated below, we hold that pursuant to both section 11.4.7 and 

11.4.5, Empress unambiguously agreed to waive any and all of National Fire’s and Lloyd’s 

subrogation rights. 

¶ 86 With respect to the waiver contained in section 11.4.7, the contract here is identical to the 

one at issue in Intergovernmental Risk. In that case, just as here, the plaintiffs argued that the 

section 11.4.7 waiver of subrogation did not apply to the all-risk insurance policies because they 

were not “builder’s all-risk policies” purchased specifically for the construction project, but 

rather were policies that had been purchased by the Village more than 10 years before the 

renovation construction project began. Intergovernmental Risk, 295 Ill. App. 3d at 796. In 

rejecting the plaintiffs’ argument, the court in Intergovernmental Risk, first noted that the 

plaintiffs’ interpretation of the waiver of subrogation would have the effect of rendering the 

32 
 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

phrase in section 11.4.7 “or other property insurance applicable to the Work” redundant and 

meaningless, since it would not allow for any alternative form of insurance implied by the word 

“or.” Intergovernmental Risk, 295 Ill. App. 3d at 796-97. 

¶ 87 The court then relied on the interpretation of similar provisions by courts of other 

Jurisdictions, which also found that general all-risk policies obtained prior to execution of the 

construction contract constituted “other property insurance applicable to the Work” (internal 

quotation marks omitted) triggering the waiver of subrogation contained in section 11.4.7. See 

Intergovernmental Risk, 295 Ill. App. 3d at 797 (quoting Lloyd’s Underwriters v. Craig & Rush, 

Inc., 32 Cal. Rptr. 2d 144, 146 (Ct. App 1994), and citing E.C. Long, Inc v. Brennan’s of Atlanta, 

Inc., 252 S.E.2d 642 (Ga. Ct. App. 1979), and Haemonetics Corp. v. Brophy & Phillips Co., 501 

N.E.2d 524 (Mass. Ct. App. 1986)). 

¶ 88 The court in Intergovernmental Risk further recognized that the issue was not “whether the 

policies [we]re called ‘all-risk’ or ‘general liability’ ” but rather “whether those policies 

cover[ed] the risk and losses delineated in the construction agreement between the [parties].” 

Intergovernmental Risk, 295 Ill. App. 3d at 797-98. 

¶ 89 We agree with the rationale of Intergovernmental Risk and see no reason to depart from it in 

this case. 

¶ 90 Empress, National Fire, and Lloyd's nonetheless argue that Intergovernmental Risk is 

inapplicable to the cause at bar because, unlike in that case, National Fire and Lloyd’s policy 

explicitly contained language excluding coverage for construction projects in excess of $10 

million. We disagree. 

¶ 91 While it is true that the two policies contain language limiting insurance coverage for 

property in the course of construction to incidental course of construction (defined as projects of 

33 
 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

$10,000 million or less), the term “property” in those policies is very broadly defined and also 

includes, without limitation, “property in the care, custody or control of the Insured or for which 

the Insured is legally liable to insure” and “property of the Insured in the care, custody or control 

of others.” Since Empress’s vice president for design and construction Nelms admitted that 

during the construction Empress placed the casino in the care and control of O’Neil and under 

the construction contract was legally liable to insure its property during the renovation, we are 

unpersuaded by National Fire and Lloyd’s argument attempting to limit the policy’s coverage. 

What is more, National Fire and Lloyd's ignore the fact that the language of their policies’ own 

subrogation clause explicitly provides that they “will not acquire any rights of recovery that the 

Insured has expressly waived prior to a loss.” Since Empress agreed to waive any subrogation 

rights against the defendants prior to the fire, by way of the construction contract and by the 

express terms of their own policies, National Fire and Lloyd’s are also bound by that waiver. 

¶ 92 Accordingly, applying the rationale of Intergovernmental Risk to the facts of this case, we 

conclude that the waiver of subrogation clause in section 11.4.7 applied equally to National 

Fire’s and Lloyd’s policies. See Intergovernmental Risk, 295 Ill. App. 3d at 798; see also 

Haemonetics Corp., 501 N.E.2d at 525-26. 

¶ 93 However, even if we were to ignore the holding in Intergovernmental Risk and were to 

construe “other property insurance applicable to the Work,” in section 11.4.7 as excluding 

National Fire and Lloyd’s policies, the two property insurers would nonetheless be bound by the 

waiver of subrogation prescribed in section 11.4.5. That section provides that a section 11.4.7 

waiver of subrogation is triggered “if during the Project construction period [Empress, as] the 

Owner insures properties, real or personal or both, at or adjacent to the site by property 

insurance under policies separate from those insuring the Project.” 

34 
 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

¶ 94 Contrary to National Fire and Lloyd’s position, this provision has no temporal requirement. 

The owner is not required to purchase the separate insurance policy after the project has already 

begun. The key word of this section is “insures.” The plain language of section 11.4.5 does not 

state that the waiver applies if the owner procures policies during the construction period. 

Rather, the paragraph’s present tense use of “insures” suggests only that the separate policy is in 

existence during the project, not that it was procured during the project. See Hunt Construction 

Group, Inc. v. Hun School of Princeton, No. 08-3550, 2010 WL 3724279, at *13 (D.N.J. Apr. 

29, 2010). 

¶ 95 In the present case, there is no dispute that Empress had in existence separate property “allrisk” insurance policies with National Fire and Lloyd during the renovation project. What is 

more, National Fire’s designated representative, Cassacio, admitted in his deposition that 

National Fire “paid for the loss to [Empress’s] property that was next door [to the casino]” (i.e., 

adjacent to the site). Accordingly given this concession, Empress and National Fire cannot 

contest that the plain language of section 11.4.5 contemplated their policies and triggered the 

waiver of subrogation clause in section 11.4.7. 

¶ 96 Empress, National Fire, and Lloyd’s nevertheless contend that we should not focus on the 

language of the subrogation waivers, but rather begin our analysis with the language of section 

11.4, requiring Empress to obtain insurance. They contend that because both the waiver of 

subrogation (section 11.4.7) and the separate property insurance (section 11.4.5) clauses are 

included in section 11.4, and that section requires Empress to procure “builder’s risk all-risk” 

only for the work, and not Empress’s entire property (i.e., buildings adjacent to the casino), the 

scope of the waiver should be just as narrow and apply (1) only to the work; and (2) only to the 

35 
 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

damages related to the work (i.e., the value of the materials, tools and labor incorporated into the 

renovation project, and not the extra expenses, such as business interruption). We disagree. 

¶ 97 In that respect, we note that the majority of jurisdictions that have had the opportunity to 

address this issue have rejected the “work or non-work” distinction proposed here by the 

plaintiffs. See Board of Commissioners v. Teton Corp., 30 N.E.3d 711, 716 (Ind. 2015); 

Lexington Insurance Co. v. Entrex Communication Services, Inc., 749 N.W.2d 124, 135 (Neb. 

2008); Federal Insurance Co. v. Woodruff Construction, No. 12-0821, 2012 WL 5954588 (Iowa 

Ct. App. Nov. 29, 2012); ASIC II Ltd. v. Stonhard, Inc., 63 F. Supp. 2d 85 (D. Me. 1999); 

Lloyd’s Underwriters, 32 Cal. Rptr. 2d 144; Housing Investment Corp. v. Carris, 389 So. 2d 689 

(Fla. Ct. App. 1980); E.C. Long, Inc. v. Brennan’s of Atlanta, Inc., 252 S.E.2d 642 (Ga. Ct. App. 

1979); Willis Realty Associates v. Cimino Construction Co., 623 A.2d 1287 (Me. 1993); 

Haemonetics, 501 N.E.2d 524; Employers Mutual Casualty Co. v. A.C.C.T., Inc., 580 N.W.2d 

490 (Minn. 1998); Chadwick v. CSI, Ltd., 629 A.2d 820 (N.H. 1993); Westfield Insurance Group 

v. Affinia Development, LLC., 2012-Ohio-5348, 982 N.E.2d 132; Trinity Universal Insurance 

Co. v. Bill Cox Construction, Inc., 75 S.W.3d 6 (Tex. App. 2001). The rationale has been that if 

the waiver extended only to damages to the work, there would be no need to include the waiver 

in section 11.4.5 for damages to property adjacent to the site covered by policies separate from 

those described in section 11.4.7. See Federal Insurance, 2012 WL 5954588, at *,4 (holding that 

“[s]ection 11.4.5 clearly provides for waiver of all rights for damages covered by any property 

insurance policies ‘separate from those insuring the project’ that cover the ‘properties, real or 

personal or both, at or adjacent to the site,’ ” and rejecting any work-non-work distinction, noting 

that it would “render section 11.4.5 of no effect to the construction project because the policies 

described in section 11.4.5 are ‘separate from those insuring the project’ and include ‘property 

36 
 

 

 

 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

*** adjacent to the site’ ”); see also Teton, 30 N.E.3d at 717 (holding that “the AIA contract 

provides that even when the Owner has both builders-risk coverage for the work and separate 

property insurance for ‘adjoining or adjacent’ property, its subrogation waiver *** extends to 

‘fire or other perils covered by this separate property insurance policy,’ ” because the separate 

provision would be “an anomaly within the AIA contractual scheme” if the parties already 

expected the liability insurance to cover “non-work damages”); see also Lexington, 749 N. W.2d 

at 134-35 (“We understand *** [section 11.4.5] to mean that if the owner acquires a separate 

property insurance policy to cover non-Project property—a policy that did not cover the Project 

or Work property—and the non-Project property is damaged, the owner waives subrogation 

rights for the insurer as to those damages. So even though the damage occurred to non-Work 

property, the owner waived subrogation rights because the damages were insured.”). 

¶ 98 We agree with the rationale of these decisions and see no reason to depart from it here. 

Accordingly, we conclude that the waiver of subrogation clause in section 11.4.5 applied to 

National Fire’s and Lloyd’s policies. 

¶ 99 E. Breach of Contract 

¶ 100 Empress, National Fire, and Lloyd’s next contend that the defendants’

3 multiple 

breaches of the construction contract should bar enforcement of the waiver of subrogation clause. 

Specifically, citing to the “time is of the essence clause,” the three plaintiffs first argue that 

because completion of the renovation project on “time” was a material provision of the 

construction contract, and was never fulfilled as a result of the fire, the plaintiffs should not be 

3 The allegations in Empress’s complaint for breach of contract were made against all the 

defendants, except for Averus. The breach of contract issues raised on appeal accordingly also 

exclude Averus. 

37 
 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

forced to fulfill their waiver of subrogation obligations under the agreement. Furthermore, the 

three plaintiffs assert that because the construction contract required the contractor to obtain 

liability insurance and to indemnify the owner for claims arising out of the performance of the 

work, it conflicted with the waiver of subrogation clause, and therefore the waiver is not 

enforceable. For the reasons that follow, we disagree. 

¶ 101 At the outset, we note that contrary to the plaintiffs’ assertion, the waiver of subrogation 

provision is not limited to negligence actions, but can apply with equal force to contract claims. 

See Village of Rosemont, 144 Ill. App. 3d 665-66 (holding that a waiver of subrogation provision 

applied to bar breach of contract, implied warranty and strict liability claims). As already 

explained above in more detail, the parties here agreed that any casualty loss resulting from a fire 

would be borne solely by Empress’s property insurance and that accordingly Empress expressly 

waived all claims against the defendants arising from such a loss covered by such insurance. The 

fire was related to performance on the contract and therefore the loss and damage from the fire 

were all covered under the property insurance policies Empress was required to maintain. As 

such, the waiver of subrogation bars the breach of contract claims as well. See Village of 

Rosemont, 144 Ill. App. 3d 665-66. 

¶ 102 Turning specifically to the plaintiffs’ arguments, with respect to the “time is of the essence” 

clause, we find that the plaintiffs have failed to present any facts establishing that this provision 

was material to the contract, or for that matter, any rationale to support the position that the 

defendants’ failure to complete the project within the contemplated time-frame would or should 

somehow negate the waiver of subrogation provision. It is well-settled that the mere fact that the 

parties include a “time is of the essence” provision in a contract does not automatically make the 

provision material. See Asset Recovery Contracting, LLC v. Walsh Construction Co. of Illinois, 

38 
 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

2012 IL App (1st) 101226, ¶ 73 (holding that “even where the contract contains an express 

clause stipulating that ‘time is of the essence,’ Illinois courts will inquire into the situation of the 

parties and the underlying circumstances to determine whether a delay in performance resulted in 

a ‘material breach’ ” (internal quotation marks omitted)). 

¶ 103 We similarly reject the plaintiffs’ contention that the provisions of the construction contract 

requiring the contractor to obtain liability insurance and to indemnify Empress for claims arising 

out of the performance of the work conflicted with the waiver of subrogation clause, so as to 

render those provisions an exception to the waiver. This same argument was raised and rejected 

by the plaintiffs in Village of Rosemont, 144 Ill. App. 3d at 663. In that case, the appellate court 

held that the waiver of subrogation clause was part of the owner’s property insurance obligations 

while the insurance and indemnity provision were tied to the contractors’ liability insurance 

obligations. Village of Rosemont, 144 Ill. App. 3d at 663. The court explained that it was 

apparent that the liability insurance and the indemnification provisions were “entirely consistent 

with the explicit waiver of claims” in the waiver of subrogation clause, since they were intended 

to provide a different type of coverage (i.e., contractor’s liability insurance versus property 

insurance due to fire loss). Village of Rosemont, 144 Ill. App. 3d at 663. The same is true here, 

where the type of insurance the defendant contractor was required to obtain under the 

construction contract, and to which the three plaintiffs cite, included liability insurance (such as 

workers’ compensation and employers’ liability, commercial auto, umbrella and contractor’s 

equipment), while the property insurance and waivers of subrogation required Empress to 

maintain coverage for property loss in the event of, inter alia, fire damage to the renovation 

project and to waive its subrogation rights. Moreover, the express language of the waiver of 

subrogation makes clear that the waiver will trump any indemnification obligations. See supra 

39 
 

 

 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

¶ 15 (“ ‘A waiver of subrogation shall be effective as to a person or entity even though that 

person or entity would otherwise have a duty of indemnification, contractual or otherwise, *** 

and whether or not the person or entity had an insurable interest in the property damage.’ ”). To 

accept the plaintiffs’ interpretation, in contravention of the already established rule in Village of 

Rosemont, so as to create an exception to the waiver of subrogation for contractor’s liability 

insurance, would render the waiver of subrogation, which was intended to shift the risk of loss to 

the owner’s insurance company, meaningless. 

¶ 104 The plaintiffs do not cite to any Illinois authority to the contrary. Instead they rely on Liberty 

Mutual Insurance Co. v. Perfect Knowledge, Inc., 752 N.Y.S.2d 677 (App. Div. 2002), a case 

decided by the New York appellate court. In light of already existing Illinois precedent to the 

contrary discussed above, we need not, however, consider that decision, as it is not binding upon 

this court. See, e.g., In re M.H., 2011 IL App (1st) 110196, ¶ 58 (“this court is not bound by 

decisions from other jurisdictions”). 

¶ 105 F. Empress’s Deductibles 

¶ 106 Lastly, on appeal, Empress alone asserts that it never waived its right to recover its 

deductibles under its general property insurance policies with National Fire and Lloyd’s. 

Specifically, Empress asserts that the language of the construction contract requiring it to pay 

deductibles only applies to its builder’s risk policy with Axis. In that respect, Empress concedes 

that the language of section 11.4.1.3 states that “if the property insurance requires deductibles,” 

Empress will pay “costs not covered because of such deductibles.” Nonetheless, Empress 

contends that because section 11.4.1.3 is part and parcel of section 11.4, requiring Empress to 

obtain the builder’s risk insurance, this section does not apply to Empress’s policies with 

40 
 

 

 

Nos. 1-15-1166 & 1-15-1184 cons. 

National Fire and Lloyd’s, which were obtained long before the parties entered into the 

construction contract. We disagree. 

¶ 107 While it is true that section 11.4.1.3 is part of section 11.4 of the construction 

contract, the plain language of that section does not limit the deductible requirement to the 

builder’s insurance, but rather speaks of “property insurance” in general. Contrary to Empress’s 

interpretation, the term “property insurance” is used interchangeably in the entirety of section 

11.4, obligating Empress to maintain “property insurance,” and at different times connotes both 

builder’s risk and general property insurance. See supra ¶ 15. At those instances where the 

parties intended to differentiate between the types of property insurance used, they clearly do so. 

As already discussed above, section 11.4.5 of the construction contract explicitly permits 

Empress to use its general “property insurance” to insure its property (at or adjacent to the 

construction site) for losses resulting from a fire, and obligates Empress to waive its subrogation 

rights with respect to those policies. Under such a requirement, it makes no sense to permit 

Empress to avoid its deductibles on such property insurance. Accordingly, since nothing in the 

plain language of section 11.4.1.3 indicates a limitation of the deductible requirement to the 

builder’s risk policy, we conclude that Empress is responsible for its deductibles to National Fire 

and Lloyd’s. 

¶ 108 III. CONCLUSION 

¶ 109 For the reasons that follow, we affirm in part the judgment of the circuit court granting 

summary judgment to all of the defendants on all claims, except for those involving the 

defendant, Averus. We reverse in part that portion of the trial court order with respect to Averus 

and remand for further proceedings against that defendant. 

¶ 110 Affirmed in part; reversed and remanded in part. 

41 
Nos. 1-15-1166 & 1-15-1184 cons. 

42