Court Opinion

ID: 6348401
Source: CourtListenerOpinion
Date Created: 2022-06-09 18:04:35.570858+00
Date Added: 2024-06-11T08:42:16.574377
License: Public Domain

2022 IL App (1st) 191804-U
                                          No. 1-19-1804
                                     Order filed June 9, 2022
                                                                                       Fourth Division

NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the
limited circumstances allowed under Rule 23(e)(1).
______________________________________________________________________________
                                             IN THE
                              APPELLATE COURT OF ILLINOIS
                                        FIRST DISTRICT
______________________________________________________________________________
WESTFIELD INSURANCE COMPANY,                                    )   Appeal from the
                                                                )   Circuit Court of
         Plaintiff and Counterdefendant-Appellant,              )   Cook County.
                                                                )
    v.                                                          )   No. 15 CH 10596
                                                                )
DYNACOM MANAGEMENT, INC., NAVIGATORS                            )
SPECIALTY INSURANCE COMPANY, as Assignee of                     )
Dynacom Consulting, Services, Inc., KINGERY STEEL               )
FABICATORS, INC., and JEFF THULIN,                              )
                                                                )
         Defendants                                             )
                                                                )
(Navigators Specialty Insurance Company, as Assignee of         )
Dynacom Consulting Services, Inc., Defendant-Appellee,          )
Kingery Steel Fabricators, Inc., Defendant and                  )   Honorable
Counterplaintiff-Appellee and Cross-Appellant, and              )   Raymond W. Mitchell,
Schmidt Steel, Inc., Counterdefendant-Cross-Appellee).          )   Judge, presiding.

         JUSTICE LAMPKIN delivered the judgment of the court.
         Presiding Justice Reyes and Justice Martin concurred in the judgment.
No. 1-19-1804

                                              ORDER

¶1     Held: Where the insurer sought a declaration that it did not owe a duty to defend or
             indemnify the construction site general contractor and steel fabricator for an
             underlying bodily injury lawsuit, the appellate court affirms the trial court’s
             judgment, which held that (1) the evidence established that the insured had agreed
             to the written terms that required the insured to add the general contractor and steel
             fabricator as additional insureds to the insurance policy, and (2) the terms of the
             additional insured provision of the policy required merely a written agreement, not
             an executed contract, to add a third party as an additional insured.

¶2     When a steel worker injured at a construction site sued the general contractor and steel

fabricator for negligence, the general contractor and steel fabricator then tendered the defense and

indemnification of the lawsuit to the insurer of the subcontractor steel erector. However, the insurer

rejected the tender and sought a declaration that it had no duty to defend or indemnify the general

contractor and steel fabricator because the subcontractor steel erector had not agreed to any of the

terms of the unsigned written subcontract.

¶3     The steel fabricator counterclaimed against the insurer for a declaration of coverage and

breach of the policy. The steel fabricator also asserted an alternative count against the

subcontractor steel erector for breach of an oral contract to add the general contractor and steel

fabricator as additional insureds to the subcontractor’s liability policy.

¶4     The circuit court concluded that (1) the evidence established that the subcontractor steel

erector had agreed to the terms of the unsigned written subcontract that required it to add the

general contractor and steel fabricator as additional insureds to the subcontractor’s liability policy,

and (2) the subcontractor’s assent to the terms of the unsigned written subcontract entitled the

general contractor and steel fabricator to status as additional insureds under the policy because the

insurance terms of the parties’ agreement were in writing.

                                                 -2-
No. 1-19-1804

¶5      On appeal, the insurer argues that the circuit court’s factual finding that the subcontractor

steel erector agreed to the terms, other than price, of the steel fabricator’s unsigned written

subcontract was against the manifest weight of the evidence. The insurer also argues that the circuit

court erroneously determined that the general contractor and steel fabricator were entitled to

additional insured status under the subcontractor’s liability policy.

¶6      The steel fabricator cross-appeals, in the alternative, that if it and the general contractor are

not additional insureds under the subcontractor’s policy, then the circuit court erroneously

dismissed as moot the steel fabricator’s claim against the subcontractor for breach of an oral

contract.

¶7      For the reasons that follow, we affirm the judgment of the circuit court. 1

¶8                                       I. BACKGROUND

¶9      This case involves a dispute over insurance coverage for an underlying lawsuit brought by

a steel worker who was injured at a construction site. Specifically, Westfield Insurance Company

(Westfield) sought a declaratory judgment that it had no duty to defend or indemnify Dynacom

Consulting Services, Inc. (Dynacom Consulting) and Kingery Steel Fabricators, Inc. (Kingery).

Specifically, Westfield argued that its insured, Schmidt Steel, Inc. (Schmidt Steel), had not agreed

to any of the terms of Kingery’s unsigned written subcontract form.

¶ 10    Dynacom Management, Inc. (Dynacom Management) was an owner of the construction

site project in Naperville, Illinois, and Dynacom Consulting was the project’s general contractor.

        1
          In adherence with the requirements of Illinois Supreme Court Rule 352(a) (eff. July 1, 2018),
this appeal has been resolved without oral argument upon the entry of a separate written order.
        Although this case was fully briefed in December 2020 and this court had ruled in January 2021
that a motion to strike cross-appellant’s reply brief would be taken with the case, this case was not
designated as ready for disposition until April 2022.

                                                  -3-
No. 1-19-1804

In early 2013, Schmidt Steel submitted a subcontract bid to Kingery to perform the steel erection

work for $112,000. Kingery used Schmidt Steel’s bid to calculate Kingery’s own bid for the steel

fabrication and erection work at the project. Dynacom Consulting then awarded Kingery the

contract as memorialized in their September 2013 contract for structural steel fabrication and

erection work at the project. That contract required Kingery to make its subcontractors add

Dynacom Consulting as an additional insured to the subcontractors’ liability policies. Schmidt

Steel began work on the construction project on January 3, 2014.

¶ 11   Kingery has subcontracted steel erection work to Schmidt Steel on at least 80 occasions.

On prior projects, Schmidt Steel agreed to abide by the terms of Kingery’s standard form

subcontract, which required Schmidt Steel to include Kingery and the respective project’s general

contractor as additional insureds under Schmidt Steel’s commercial general liability (CGL) policy.

Schmidt Steel was the named insured of a CGL insurance policy issued by Westfield. This policy

contained a blanket additional insured provision, which provided additional insured coverage for

qualifying third-party claims. The policy provision defined an additional insured as “all persons or

organizations when [Schmidt Steel has] agreed in writing in a contract or agreement that such

persons or organization be added as an additional insured.”

¶ 12   On January 13, 2014, Kingery emailed Schmidt Steel a written subcontract for $102,000

on Kingery’s standard form subcontract. The contract price was based on Schmidt Steel’s

$112,000 bid minus a $10,000 discount. The written subcontract contained a requirement that

Schmidt Steel add Kingery and Dynacom Consulting as additional insureds to Schmidt Steel’s

CGL policy and was accompanied by a request for a certificate of insurance that identified Kingery

and Dynacom Consulting as additional insureds at the project.

                                               -4-
No. 1-19-1804

¶ 13   At some point, Schmidt Steel’s owner, Max Schmidt, realized that he had significantly

underbid the work and informed Kingery’s president, David Ash, that the price term contained in

Schmidt Steel’s initial bid was unacceptable. They ultimately agreed that, instead of a fixed price

covering Schmidt Steel’s work, the work would be performed on a time and materials basis (i.e.,

billing Kingery for labor on an hourly basis and the cost of materials). Their testimony, however,

differed regarding the timing and other content of their conversation.

¶ 14   According to Ash’s deposition and trial testimony, after Kingery sent Schmidt Steel the

subcontract for $102,000 on January 13, 2014, Max called and advised Ash that Max had misread

the project drawings and erroneously bid on a two-story instead of a four-story building. Based on

their history, Ash agreed to accommodate Schmidt Steel by paying it on a time and materials basis.

Ash did not believe that this accommodation changed any other terms of the parties’ deal. Ash also

testified that Kingery and Schmidt Steel, over the course of their dealings, also had entered into a

handful of agreements without a written signed contract. In those cases, Schmidt Steel still agreed

to provide Kingery with additional insured coverage as evidenced by Schmidt Steel’s provision to

Kingery of certificates of insurance in those matters. Ash testified that, according to his general

practice, he obtained evidence of insurance coverage, e.g., a certificate of insurance, before

permitting a subcontractor to engage in major work at a project site, which in this case was

scheduled to begin January 14, 2014, when the structural steel arrived at the worksite. Thereafter,

Schmidt Steel (1) erected the structural steel at the site according to the drawings identified in

section 1 of the unsigned written subcontract, (2) enforced an OSHA-compliant safety policy as

required by section 6.1 of the unsigned written subcontract, and (3) requested all work changes be

in writing as required by section 4 of the unsigned written subcontract. Schmidt Steel began

                                               -5-
No. 1-19-1804

invoicing Kingery for Schmidt Steel’s time and materials on February 28, 2014. Although Schmidt

Steel’s invoices totaled $226,298.14, it agreed to accept $200,638.14.

¶ 15   According to Max Schmidt’s trial testimony, he and Ash reached an agreement regarding

pricing before January 3, 2014, i.e., before Kingery sent Schmidt Steel the subcontract for

$102,000. Max testified that he had walked the jobsite with Ash and discussed the project before

work began on January 3, 2014. That evening, Max reviewed his bid price, realized that he had

bid on a two-story instead of a four-story building, and then called Ash to tell him Schmidt Steel

could not perform the work for the bid price. However, according to Max’s deposition testimony,

he did not recall a conversation with Ash at the jobsite about price. Rather, Max recalled a single

telephone conversation with Ash about price but did not recall when that conversation occurred.

¶ 16   The unsigned form subcontract Kingery emailed to Schmidt Steel on January 13, 2014,

contained the following provision requiring Schmidt Steel to obtain insurance on behalf of Kingery

and Dynacom Consulting:

                “6.2 INSURANCE - The Sub-contractor shall maintain during the progress of the

       Work, and if required to return during the warranty period: Insurance written by insurance

       companies acceptable to the General Contractor with the minimum limits and coverage[s]

       as shown below or, if higher, the requirements set forth in the Contract Documents.

                       ***

                       (B) COMPREHENSIVE GENERAL LIABILITY Insurance on an

                occurrence basis providing limits for bodily injury and property damage including

                its own employees of $2,000,000 general aggregate, $2,000,000 for occurrence and

                $2,000,000 product and completed operations aggregate. The policy must include

                                               -6-
No. 1-19-1804

                the General Contractor, [Kingery], the Owner, the Architect, and others if required

                in the Contract Documents as ADDITIONAL INSURED, on ISO Additional Insured

                Endorsement (C020-10 11/85 edition or its equivalent), and must provide Premises-

                Operations, Independent Contractors, Contractual Liability, Product & Completed

                Operations coverage[s] which shall be maintained in force for a period of two years

                after substantial completion of the project or for such longer period of time as is

                described in the Contract Documents. XCU Exclusions must be deleted when

                applicable to operations performed by the Sub-contractor; Subcontractor’s

                insurance will be primary/non-contributory to any insurance carried by any of the

                additional insured. In addition, Sub-contractor shall maintain an umbrella policy

                providing the same coverage[s] and with the same ADDITIONAL INSURED as

                the basic policy with a minimum amount of $5,000,000.” (Emphasis added.)

The subcontract contained signature blocks but was never signed by either Kingery or Schmidt

Steel. Schmidt Steel forwarded the writing to its insurance broker, Assurance Agency, Ltd., which

provided a certificate of insurance to Kingery that included Kingery and Dynacom Consulting as

additional insureds under Schmidt Steel’s CGL policy.

¶ 17   The Assurance Agency Ltd. broker testified in her evidence deposition that Schmidt Steel

sent Kingery’s written subcontract and request for a certificate of insurance to her for review.

Based on her experience, she understood that Schmidt Steel was seeking a certificate of insurance

that complied with the forwarded subcontract’s requirements. Her general practice was to review

the insurance requirements of the written subcontract, including the additional insured

requirements, to ensure that Schmidt Steel had proper coverage in place. If the coverage was in

                                               -7-
No. 1-19-1804

place, she would issue a certificate of insurance—as she did here—identifying the relevant parties

as additional insureds at the project “per written contract.” If Schmidt Steel did not have the proper

coverage in place, she would have alerted Schmidt Steel and given it the opportunity to purchase

such coverage.

¶ 18   Schmidt Steel’s employee, Jeff Thulin, was working at the construction site on April 11,

2014, when he slipped, fell and sustained injuries while installing bridging between bar joists.

¶ 19   It is undisputed that Kingery and Schmidt Steel never signed the written subcontract.

However, on May 5, 2014, Kingery’s office clerk emailed Schmidt Steel and requested a copy of

the signed written subcontract and certificate of insurance. On January 14, 2015, Thulin sued

Kingery for negligence based on his April 2014 injury. On January 22, 2015, Kingery’s office

clerk again emailed Schmidt Steel and requested a copy of the signed written subcontract and

certificate of insurance.

¶ 20   Catie Schmidt, who is Max’s wife and Schmidt Steel’s office manager, testified at trial that

Max told her the contract had been “changed” to a time and materials deal, and therefore Max

would not sign the written subcontract, which listed a fixed price term of $102,000. Max put a note

dated January 30, 2015, on the unsigned subcontract form, stating: “Max said not to send since

this is a T&M job.” Accordingly, Catie did not provide a signed copy of the subcontract to Kingery.

Ash testified that he was not aware of his office clerk’s requests to Schmidt Steel for copies of a

signed subcontract. Ash thought his clerk was merely attempting to ensure that her office records

were in order.

¶ 21   In February 2015, Thulin’s amended complaint against Dynacom Management, Dynacom

Consulting and Kingery sought relief based on theories of construction negligence, premises

                                                -8-
No. 1-19-1804

liability and direct negligence. Kingery tendered its defense and indemnification of Thulin’s action

to Westfield and included a copy of the unsigned written subcontract.

¶ 22   Dynacom Consulting tendered its defense and indemnification of Thulin’s lawsuit to

Kingery and Kingery’s insurer, Navigators Specialty Insurance Company (Navigators), which

accepted Dynacom Consulting’s tender under a reservation of rights. Dynacom Consulting also

tendered its defense and indemnification to Schmidt Steel and Westfield. Dynacom Management,

which did not sign a contract with Kingery, did not tender its defense and indemnification to

Kingery and Navigators. Later, Navigators was substituted for Dynacom Consulting in April 2019

following an assignment of rights.

¶ 23   Meanwhile, Westfield disclaimed any obligation to defend Kingery and Dynacom

Consulting based on the failure of Schmidt Steel and Kingery to sign the written subcontract form.

¶ 24   In July 2015, plaintiff Westfield filed a complaint for declaratory relief against defendants

Dynacom Management, Dynacom Consulting, Kingery and Thulin, seeking a declaration that it

did not owe a duty to defend or indemnify Dynacom Management, Dynacom Consulting or

Kingery against Thulin’s underlying bodily injury lawsuit. Westfield alleged that Dynacom

Management, Dynacom Consulting and Kingery did not qualify as additional insureds on the

Westfield policy because Westfield’s insured, Schmidt Steel, performed at the project under an

oral contract and did not agree in a written contract to name Dynacom Management, Dynacom

Consulting and Kingery as additional insureds with respect to the work at issue.

¶ 25   Kingery filed an answer to Westfield’s complaint for declaratory relief and raised the

affirmative defenses of the parties’ written contract and the failure to join Schmidt Steel as a

necessary party. Kingery also filed a counterclaim against Westfield for a declaration of coverage

                                               -9-
No. 1-19-1804

and breach of the policy. In the alternative, Kingery filed a counterclaim against Schmidt Steel for

breach of an oral contract to add Kingery and Dynacom Consulting as additional insureds to its

CGL policy for work at the project.

¶ 26   In June 2018, Westfield and Schmidt Steel moved for summary judgment against Dynacom

Management, Dynacom Consulting and Kingery, arguing that Westfield’s policy limited

additional insured status to those parties Schmidt Steel agreed to add by a written contract and

Schmidt Steel never had a written contract adding the Dynacom entities and Kingery as additional

insureds.

¶ 27   In its response, Kingery argued that summary judgment was improper because either

(1) Kingery and Dynacom Consulting qualified as additional insureds under the CGL policy

Westfield issued to Schmidt Steel, or (2) Schmidt Steel breached its contract with Kingery to add

Kingery and Dynacom Consulting as additional insureds to Schmidt Steel’s CGL policy for

liabilities arising out of its work at the construction project. Kingery argued that Westfield’s policy

merely required an agreement “in writing,” not a signed written contract, and the written

subcontract between Kingery and Schmidt Steel was unsigned because its price term had been

changed to accommodate Schmidt Steel’s bidding error. Nevertheless, substantial evidence

showed that Schmidt Steel agreed to the remaining subcontract terms through its acts and conduct

and this agreement was in effect when Thulin was injured. These agreed-upon terms included the

requirement that Schmidt Steel add Kingery and Dynacom Consulting as additional insureds to

Schmidt Steel’s Westfield liability policy for work at the project. In the alternative, Kingery argued

that Schmidt Steel breached its agreement to provide Kingery and Dynacom Consulting with

additional insured coverage.

                                                - 10 -
No. 1-19-1804

¶ 28   On October 11, 2018, the circuit court denied Westfield and Schmidt Steel’s motion for

summary judgment. Specifically, the court concluded that the additional insured provision of

Schmidt Steel’s Westfield policy did not require a formally executed written contract between

Kingery and Schmidt Steel to effectuate the additional insured provision. The court also concluded

that a genuine issue of material fact existed about whether the unsigned writing at issue represented

an agreement between Schmidt Steel and Kingery for Schmidt Steel to provide additional insured

coverage to Kingery and Dynacom Consulting.

¶ 29   The circuit court held a bench trial in April 2019 to resolve whether Schmidt Steel had

agreed to the terms of the unsigned written subcontract. Based on the evidence presented at the

trial, the court concluded in a written interim order dated June 6, 2019, that, excepting price,

Schmidt Steel had agreed to the terms of the unsigned written subcontract, including the term that

required it to add Kingery and Dynacom Consulting as additional insureds to its liability policy.

The court also found that Schmidt Steel’s assent to the terms of the unsigned written subcontract

entitled Kingery and Dynacom Consulting to status as additional insureds under the policy, which

the court construed in favor of coverage. Specifically, the court ruled that the policy’s language

did not unambiguously require a formally executed written contract, but only written evidence of

an agreement to provide insurance. The court concluded that Kingery and Dynacom Consulting

qualified as additional insureds under the policy because the insurance terms of the parties’

agreement were in writing.

¶ 30   Accordingly, the court (1) entered judgment in favor of the Dynacom entities and Kingery

and against Westfield on Westfield’s complaint for declaratory relief, (2) entered judgment in

favor of Kingery and against Westfield on Kingery’s counterclaim for a declaration of coverage,

                                               - 11 -
No. 1-19-1804

(3) reserved ruling on Kingery’s counterclaim against Westfield for breach of contract until the

completion of the evidentiary hearing on damages, and (4) dismissed as moot Kingery’s

counterclaim against Schmidt Steel for breach of an oral contract. The court declared that

Westfield owed a duty to defend and indemnify Kingery, Dynacom Management, and Dynacom

Consulting against the underlying complaint filed by Thulin.

¶ 31   The parties entered a joint agreed stipulation that all claims and counterclaims brought by

and against Dynacom Management were resolved, waived and released; moved to vacate the

court’s June 6, 2019 order to the extent that it entered any relief in favor of Dynacom Management;

and moved to dismiss any claims and counterclaims brought by and against Dynacom

Management, with prejudice.

¶ 32   On August 7, 2019, the court issued a written final judgment order that, on the motion of

Dynacom Management, vacated the June 6, 2019 order insofar as any relief entered in favor of

Dynacom Management. But in all other respects, the court incorporated and adopted all of its prior

rulings. In addition, the court entered judgment in favor of Kingery and against Westfield on

Kingery’s counterclaim for breach of contract in the amount of $350,000. The court stayed

enforcement of the judgment pending appeal.

¶ 33   Westfield appealed the circuit court’s determination that Kingery and Dynacom Consulting

qualified as additional insureds under Schmidt Steel’s CGL policy. Kingery, while maintaining

that there was no basis to reverse the circuit court’s judgment, in the alternative cross-appealed the

circuit court’s dismissal as moot of Kingery’s breach of oral contract claim against Schmidt Steel.

                                                - 12 -
No. 1-19-1804

¶ 34                                       II. ANALYSIS

¶ 35                           A. Motion to Strike Kingery’s Reply Brief

¶ 36   Westfield and Schmidt Steel move to strike all but section II.B of Kingery’s cross-

appellant’s reply brief pursuant to Illinois Supreme Court Rule 343(b)(1) (eff. July 1, 2008), for

allegedly failing to confine its argument to the issue of challenging the circuit court’s dismissal as

moot of Kingery’s counterclaim against Schmidt Steel for breach of an oral contract. Rule

343(b)(1) provides that “the cross-appellant may file a reply brief confined strictly to replying to

those arguments raised on the cross-appeal.” Id.

¶ 37   Kingery responds that its reply brief is properly directed to arguments relevant to its cross-

appeal, which overlap substantially with the issues in the main appeal.

¶ 38   We conclude that portions of Kingery’s reply brief are not confined to strictly replying to

its cross-appeal of the dismissal of its oral contract claim against Schmidt Steel. Accordingly, the

portions of Kingery’s cross-appellant’s reply brief that contain argument that is not confined to

Kingery’s cross-appeal are stricken and we will consider only the arguments in Kingery’s reply

brief that are confined to its cross-appeal. See Graham v. Illinois State Toll Highway Authority,

182 Ill. 2d 287, 293-94 (1998).

¶ 39                            B. Manifest Weight of the Evidence

¶ 40   Westfield argues the circuit court’s factual findings were contrary to the manifest weight

of the evidence because Schmidt Steel’s performance of the steel erection according to the

drawings and Kingery’s routine request for a certificate of insurance from Schmidt Steel were not

evidence of Schmidt Steel’s assent to Kingery’s draft subcontract. Westfield contends the circuit

court inappropriately regarded Ash’s subjective beliefs about principles of contract formation as

                                                - 13 -
No. 1-19-1804

issues of credibility. Westfield argues that Kingery and Schmidt Steels’ practice to always

memorialize their written agreements with a signature strongly supports the conclusion that this

subcontract was oral, not “in writing.” Westfield also argues that Kingery’s post-accident conduct,

i.e., sending its January 13, 2014 subcontract form to Schmidt Steel after Thulin’s April 2014

accident and asking for copies of a signed subcontract, confirms that Kingery and Schmidt Steel

never agreed in writing to procure additional insured coverage.

¶ 41   The issues of the existence and terms of a contract present questions of fact. Trapani

Construction Co., Inc. v. Elliot Group, Inc., 2016 IL App (1st) 143734, ¶ 35. This court gives great

deference to the trial court’s factual findings made after a hearing with live witness testimony and

will reverse the trial court’s ruling based on those findings only if it is against the manifest weight

of the evidence. Apollo Heating & Air Conditioning Corp. v. American National Bank & Trust

Co., 135 Ill. App. 3d 976, 978-79 (1985). The trial court’s fact determinations are against the

manifest weight of the evidence only “when an opposite conclusion is apparent or when the

judgement appears to be unreasonable, arbitrary, or not based on evidence.” Trapani Construction

Co., Inc., 2016 IL App (1st) 143734, ¶ 37.

¶ 42    A party may assent to an agreement’s terms, not only by its words, but also by its conduct.

Midland Hotel Corp. v. Reuben H. Donnelley Corp., 118 Ill. 2d 306, 313-14 (1987); Restatement

(Second) of Contracts § 19 (1981) (“The manifestation of assent may be made wholly or partly by

written or spoken words or by other acts or by failure to act.”). “It is well settled that a party named

in a contract may, by his acts and conduct, indicate his assent to its terms and become bound by

its provisions even though he has not signed it. [Citations.] For course of conduct to act as consent

to a contract, it must be clear that the conduct relates to the specific contract in question.

                                                 - 14 -
No. 1-19-1804

[Citation.]” Landmark Properties, Inc. v. Architects International-Chicago, 172 Ill. App. 3d 379,

383 (1988).

¶ 43   The trial court’s finding that Schmidt Steel agreed to the terms of the unsigned subcontract,

with the exception of the price, was not against the manifest weight of the evidence. Ash testified,

based on his interactions with Schmidt Steel and observations of its work at the project, that the

parties understood that the work was to be performed according to the terms of the written

subcontract other than price. The trial court found Ash’s testimony credible because it was

supported by documentary evidence including evidence of the parties’ course of dealing, Schmidt

Steel’s failure to object to any term other than price, and Schmidt Steel’s performance of the terms

of the written subcontract. The trial court was within its rights to find that Max Schmidt’s

testimony lacked credibility and reject it. Racky v. Belfor USA Group, Inc., 2017 IL App (1st)

153446, ¶ 107 (“reviewing court will not disturb the trial court’s determination of credibility

because the trial court has a superior vantage point, which cannot be reproduced from the cold

record, to observe and judge the witnesses’ demeanor and credibility”).

¶ 44   The evidence at trial established that Schmidt Steel signed Kingery’s standard subcontract

form on at least 85 other projects, so Max Schmidt was familiar with the form’s terms and knew

that he was expected to comply with them. Schmidt Steel’s agreement to operate according to the

same terms in all the other instances was evidence that Max agreed to the same terms in this case.

See Gaslite Illinois, Inc. v. Northern Illinois Gas Co., 46 Ill. App. 3d 917, 922-24 (1977) (prior

dealings were evidence of contract’s terms).

¶ 45   Furthermore, Max did not object to any term in the written subcontract other than the price.

Both Max and Ash testified that the only dispute Max raised about the written subcontract was the

                                               - 15 -
No. 1-19-1804

$102,000 price, and that dispute was resolved when they agreed that Kingery would pay Schmidt

Steel on a time and materials basis. Schmidt Steel’s failure to object to any term other than price

is evidence of assent to the remaining terms. See Landmark Properties, Inc., 172 Ill. App. 3d at

383-84 (plaintiff’s failure to object to written agreement was evidence of assent to same); see also

Construction Aggregates Corp. v. Hewitt-Robins, Inc., 404 F.2d 505, 510 (7th Cir. 1968)

(plaintiff’s request for a change to the payment terms of the defendant’s offer, without objection

to the offer’s other terms, constituted a counteroffer that included the remaining terms).

¶ 46   The evidence also established that Schmidt Steel performed the tasks required of it by the

written subcontract, including the scope of the work to unload and erect the steel, obtaining work

change orders in writing, implementing OSHA-compliant safety procedures at the site, and

maintaining $500,000 in workers’ compensation insurance and $7 million combined in CGL and

umbrella insurance. Schmidt Steel also complied with the subcontract requirement to add Kingery

and Dynacom Consulting as additional insureds to its liability policy and give Kingery a certificate

of insurance before starting major work at the project. Schmidt Steel’s performance of the

obligations listed in the written subcontract, particularly Schmidt Steel’s provision of a certificate

of insurance that identified Kingery and Dynacom Consulting as additional insureds for the project

at issue, is evidence that Schmidt Steel assented to the other written terms on the unsigned

subcontract except for the price. West Bend Mutual Insurance Co. v DJW-Ridgeway Building

Consultants, Inc., 2015 IL App (2d) 140441, ¶¶ 25-26, 30 (provision of a certificate of insurance

was evidence that the named insured assented to the terms of the unsigned written contract that

required the insured to name the defendant as an additional insured).

                                                - 16 -
No. 1-19-1804

¶ 47      Westfield cites West Bend Mutual Insurance Co. v. Athens Construction Co., 2015 IL App

(1st) 140006 (2015), to support its argument that a certificate of insurance does not serve as

evidence of an insured’s intent to name a party as an additional insured. Westfield’s reliance on

Athens Construction Co. is misplaced. In Athens, the issue was not whether the named insured had

assented to the terms of a written contract, but whether the actual, plain language of the parties’

written contract required the named insured to add defendant Athens as an additional insured to its

policy. Id. at ¶ 28. Here, there is no dispute that the unsigned written subcontract unambiguously

required Schmidt Steel to add Kingery and Dynacom Consulting as additional insureds to its

policy.

¶ 48      Similarly misplaced is Westfield’s reliance on United Stationers Supply Co. v. Zurich

American Insurance Co., 386 Ill. App. 3d 88, 92 (2008), where the court determined that there was

no written contract that required the named insured to add United Stationers Supply Company to

the insured’s policy. The court also held that a certificate of insurance, without more, did not trump

the insurance policy’s language and confer coverage. Id. at 104. Here, Kingery and Dynacom

Consulting do not contend that the certificate of insurance entitled them to coverage. Rather, they

contend that the written agreement, which was absent in United Stationers Supply Co., entitled

them to coverage and the certificate is evidence that Schmidt Steel assented to the written

agreement.

¶ 49      Finally, Westfield argues that Kingery’s post-accident conduct confirms that Kingery and

Schmidt Steel never agreed in writing to procure additional insured coverage. Specifically,

Westfield contends that when Kingery sent its January 13, 2014 subcontract form to Schmidt Steel

after Thulin’s April 2014 accident and asked for copies of a signed subcontract, Kingery confirmed

                                                - 17 -
No. 1-19-1804

that it and Schmidt Steel never agreed in writing to procure additional insured coverage.

We disagree. “[A] judgment is not against the manifest weight of the evidence merely because

there is sufficient evidence to support a contrary conclusion.” Apollo Heating & Air Conditioning

Corp., 135 Ill. App. 3d at 978-79. Furthermore, Ash testified that, unknown to him, his office clerk

had contacted Catie Schmidt to obtain signed copies of the subcontract, and Ash thought his clerk

was simply trying to ensure that her office records were in order.

¶ 50   We conclude that the trial court’s determination that Schmidt Steel assented to the terms

of the unsigned written subcontract, except for the price term, was not against the manifest weight

of the evidence.

¶ 51                                 C. Agreement in Writing

¶ 52   Based on its factual finding that Schmidt Steel assented to the terms of the written

subcontract other than price, the trial court concluded based on the language of Schmidt Steel’s

CGL policy that Kingery and Dynacom Consulting qualified as additional insureds.

¶ 53   On appeal, Westfield urges this court to correct the clear legal error of the trial court and

reverse. Westfield argues that an agreement in writing was an indispensable condition to additional

insured coverage under the Westfield policy language and Kingery failed to prove that it had

anything more than an oral agreement with Schmidt Steel to add Kingery and Dynacom Consulting

as additional insureds on Schmidt Steel’s CGL policy before Thulin’s accident. According to

Westfield, even though Kingery’s unsigned form subcontract was written, it was merely an

attachment to a clerical request for a certificate of insurance and did not constitute a contract or

agreement between Kingery and Schmidt Steel.

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No. 1-19-1804

¶ 54   We review de novo the trial court’s ruling that Schmidt Steel’s assent to the terms of the

written subcontract other than price entitled Kingery and Dynacom to additional insured status

under Schmidt Steel’s CGL policy. The interpretation of the provisions of an insurance policy

presents a question of law and is subject to de novo review. Travelers Insurance Co. v. Eljer

Manufacturing, Inc., 197 Ill. 2d 278, 292 (2001); see also Bituminous Casualty Corp. v. Iles, 2013

IL App (5th) 120485, ¶ 19 (under de novo review, the reviewing court performs the same analysis

a trial judge would perform and gives no deference to the judge’s conclusions or specific rationale).

       “In construing the language of the policy, the court’s primary objective is to ascertain and

       give effect to the intent of the parties to the contract. [Citations.] In order to ascertain the

       meaning of the policy’s language and the parties’ intent, the court must construe the policy

       as a whole and ‘take into account the type of insurance purchased, the nature of the risks

       involved, and the overall purpose of the contract.’ [Citations.] If the words of a policy are

       clear and unambiguous, ‘a court must afford them their plain, ordinary, and popular

       meaning.’ (Emphasis in original.) [Citation.] Conversely, if the language of the policy is

       susceptible to more than one meaning, it is considered ambiguous and will be construed

       strictly against the insurer who drafted the policy and in favor of the insured. [Citations.]

       However, this court ‘will not strain to find ambiguity in an insurance policy where none

       exists.’ [Citations.]” Travelers Insurance Co., 197 Ill. 2d at 292-93.

¶ 55   The plain language of the policy requires only that Schmidt Steel’s agreement to provide

additional insured coverage be in writing. Schmidt Steel’s CGL policy confers additional insured

status on persons or organizations when Schmidt Steel “agrees in writing in a contract or

agreement that such person or organizations be added as additional insureds.” (Emphasis added.)

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No. 1-19-1804

The plain meaning of this provision requires only that Schmidt Steel’s agreement to provide

additional insured coverage be in writing. It does not require that all the terms of the parties’

agreement be in writing, nor does it require that those terms be encompassed in a formally executed

written contract. If Westfield had wanted to require its insured to enter into a written contract,

Westfield could have simply said so.

¶ 56   We conclude that Kingery and Schmidt Steel’s agreement satisfies the requirements of

Westfield’s CGL policy because the policy’s language can be reasonably interpreted to require

only that the insurance portion of the parties’ agreement be in writing, as opposed to the entire

agreement. Even if Westfield’s interpretation, i.e., that the policy’s language required an executed

written contract of the parties’ entire agreement, were also reasonable, then the policy language

would be deemed ambiguous and Illinois law requires that an ambiguity must be construed in favor

of coverage. See Pekin Insurance Co. v. Miller, 367 Ill. App. 3d 263, 270-72 (2006).

¶ 57   Westfield also argues that Kingery failed to prove the allegation raised in its amended

counterclaim (i.e., the chronological fact that Max Schmidt telephoned Ash about the bidding error

after Max reviewed the January 13, 2014 subcontract form and then they reached a time and

materials agreement), and therefore is not entitled to judgment on the basis articulated by the trial

court because it was never pled. Specifically, Westfield claims that Kingery pled the theory of

incorporation of a document at the time of contract formation, but the trial court ruled in favor of

Kingery based on the distinct theory of modification of an existing contract. Westfield urges this

court to reverse the trial court because Kingery pled that its January 13, 2014 subcontract form

was incorporated into the parties’ contract at the time of formation, but Kingery failed to introduce

any evidence that the subcontract form was even in existence at the time of formation.

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No. 1-19-1804

¶ 58    Westfield argues that, even setting aside Kingery’s failure to plead modification, Kingery

failed to prove that the parties’ oral time-and-materials agreement was modified by the subsequent

email from Kingery to Catie Schmidt on January 13, 2014, attaching a draft subcontract for

$102,000, because there was no fresh consideration for the modification and Schmidt never

accepted the proposed modification. Westfield asserts that even if negotiations were still open as

of January 13, 2014, the terms of Kingery’s standard form subcontract were not incorporated into

the oral contract.

¶ 59    Westfield has forfeited review of its contract modification argument because Westfield

argues for the first time on appeal that the undisputed evidence established that an oral contract

was formed between Kingery and Schmidt Steel before Kingery sent the written subcontract to

Schmidt Steel on January 13, 2014. Staes & Scallan, P.C. v. Orlich, 2012 IL App (1st) 112974,

¶ 36 (appellant failed to preserve an argument for appeal by not raising it below). Nor did Westfield

argue that, because the alleged oral agreement predated Kingery’s transmission of the written

subcontract, the written subcontract was at most a modification to the prior oral agreement. To the

contrary, Westfield asserted exactly the opposite, stating in its posttrial brief that there was “no

evidence that the parties reached any kind of agreement prior to January 13, 2014, or that Kingery’s

counter-proposal as of that date represented or memorialized any kind of agreement at all.”

¶ 60    Furthermore, Westfield’s modification argument relies on its erroneous assertion that it is

an undisputed fact that Ash agreed to pay Schmidt Steel on a time and materials basis before

Kingery sent the subcontract form to Schmidt Steel on January 13, 2014. To the contrary, Ash

testified that the time and materials telephone conversation happened in response to Kingery

emailing the written subcontract to Schmidt Steel.

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No. 1-19-1804

¶ 61   Next, Westfield argues that the circuit court erred in applying the Uniform Commercial

Code (UCC) (810 ILCS 5/1-101 et seq. (West 2020)), which applies to contracts for the sale of

goods, not to contracts for services, instead of the Illinois common law mirror image rule.

According to Westfield, even assuming that contract formation had not yet occurred before

Kingery sent its January 13, 2014 email, Max still did not accept any of the terms of Kingery’s

subcontract form, but instead rejected it, in accordance with the common law mirror image rule.

Westfield cites Finnin v. Bob Lindsay, Inc., 366 Ill. App. 3d 546, 548 (2006), for the proposition

that the mirror image rule provides that “an acceptance requiring any modification or change in

terms constitutes a rejection of the original offer and becomes a counteroffer that must be accepted

by the original offeror before a valid contract is formed.” Westfield asserts that Max implicitly

rejected any fixed-price subcontract for $102,000 when he stated that his $112,000 bid was too

low and therefore was not bound to any of the other terms in the subcontract form regardless of

the fact that the parties went on to reach an agreement. Westfield argues that even if Max’s only

objection to the deal was price, the parties went back to the status quo on their telephone call under

the mirror image rule and then proceeded to execute a freestanding oral contract for time and

materials. Westfield asserts that, even under the UCC standard, the disparity in Kingery’s and

Schmidt Steel’s positions was so great on the fundamental issue of price that Max’s position was

tantamount to a rejection, and, thus, the oral subcontract did not incorporate any of the terms of

Kingery’s rejected form subcontract.

¶ 62   Westfield’s argument regarding the UCC misconstrues the trial court’s ruling and the

mirror image rule. The trial court did not apply the UCC here. Rather, the trial court determined

that the mirror image rule was not applicable because it is used to determine whether a contract is

                                                - 22 -
No. 1-19-1804

formed; once formed, the parties’ conduct is the best evidence of its terms. The issue here was not

whether a contract was formed but rather what terms the contract included. The trial court properly

determined that the party’s conduct, not the mirror image rule, was the best evidence of their

contract terms. See Restatement (Second) of Contracts § 18 (1981) (“Where a bargain has been

fully performed on one side, there is commonly no need to determine the moment of making of

the contract or whether the performing party made a promise before he performed.”). Max’s

objection to only the price term was effectively a conditional acceptance to perform under the

written subcontract for a different price. This conditional acceptance operated as a rejection of the

entire contract and as a counteroffer that included the non-objectional terms. Kingery’s subsequent

offer to pay on a time and materials basis was an acceptance of Max’s counteroffer and/or a

modified offer that Schmidt Steel subsequently accepted through performance. Kropp Forge Co.

v. Jawitz, 37 Ill. App. 2d 475, 482-83 (1962) (declining to decide whether a party’s purported

acceptance conformed to the offer because the parties’ conduct established that even if the

purported acceptance did not conform, it was a counteroffer that was subsequently accepted, thus

forming a contract).

¶ 63   We conclude based on the language of Schmidt Steel’s CGL policy that Kingery and

Dynacom Consulting qualified as additional insureds under the policy.

¶ 64                                D. Kingery’s Cross-Appeal

¶ 65   Based on our conclusion that Kingery and Dynacom Management qualify as additional

insureds under Schmidt Steel’s CGL policy, we conclude that the trial court properly dismissed as

moot Kingery’s cross-appeal against Schmidt Steel for breach of an oral contract that required

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No. 1-19-1804

Schmidt Steel to add Kingery and Dynacom Consulting as additional insureds to Schmidt Steel’s

CGL policy.

¶ 66                                  III. CONCLUSION

¶ 67   For the foregoing reasons, we affirm the judgment of the circuit court.

¶ 68   Affirmed.

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