Court Opinion

ID: 4101237
Source: CourtListenerOpinion
Date Created: 2016-11-22 20:08:21.813656+00
Date Added: 2024-06-11T09:20:25.362944
License: Public Domain

Digitally signed by
                               Illinois Official Reports                        Reporter of Decisions
                                                                                Reason: I attest to the
                                                                                accuracy and integrity
                                                                                of this document
                                       Appellate Court                          Date: 2016.11.21
                                                                                10:05:26 -06'00'

                  Pekin Insurance Co. v. Designed Equipment Acquisition Corp.,
                                   2016 IL App (1st) 151689

Appellate Court           PEKIN INSURANCE COMPANY, Plaintiff-Appellee, v.
Caption                   DESIGNED EQUIPMENT ACQUISITION CORPORATION, an
                          Illinois Corporation, d/b/a Designed Equipment Corporation, and
                          HERON SALGADO, Defendants (Designed Equipment Acquisition
                          Corporation, an Illinois Corporation, d/b/a Designed Equipment
                          Corporation, Defendant-Appellant).

District & No.            First District, First Division
                          Docket No. 1-15-1689

Filed                     September 12, 2016

Decision Under            Appeal from the Circuit Court of Cook County, No. 14-CH-10908; the
Review                    Hon. Peter Flynn, Judge, presiding.

Judgment                  Affirmed.

Counsel on                Gregory R. Spelson, of Daniel G. Suber & Associates, of Chicago, for
Appeal                    appellant.

                          Robert Marc Chemers and Peter G. Syregelas, both of Pretzel &
                          Stouffer Chtrd., of Chicago, for appellee.
     Panel                    PRESIDING JUSTICE CONNORS delivered the judgment of the
                              court, with opinion.
                              Justice Cunningham and Justice Harris concurred in the judgment and
                              opinion.

                                               OPINION

¶1          This case involves a declaratory action that was brought as a result of an insurance policy
       coverage dispute. Both parties to the litigation filed cross-motions for summary judgment. The
       trial court granted plaintiff’s motion and denied defendant’s motion, effectively denying
       coverage for defendant. Defendant now appeals, arguing that the policy at issue contains an
       ambiguity that the court below should have construed in favor of defendant and that the lease
       constituted an “insured contract,” which would provide defendant with insurance coverage.
       For the reasons set forth below, we affirm.

¶2                                         I. BACKGROUND
¶3         On May 20, 2010, Abel Building & Restoration (Abel) entered into a rental agreement with
       defendant, Designed Equipment Acquisition Corporation (Designed), whereby Designed
       leased Abel scaffolding materials. The lease agreement was signed by representatives from
       Abel and Designed. The lease agreement stated that the rented materials would be delivered to
       Abel’s jobsite at 500 East 51st Street, Chicago, Illinois. The lease agreement also contained
       various clauses and provisions, including, inter alia, an indemnification provision that read:
                  “15.INDEMNIFICATION: LESSEE SHALL INDEMNIFY AND DEFEND
              LESSOR AGAINST AND HOLD LESSOR HARMLESS FROM ANY AND ALL
              CLAIMS, ACTIONS, SUITS, PROCEEDINGS, COSTS, EXPENSES, DAMAGES
              AND LIABILITIES, INCLUDING REASONABLE ATTORNEY’S FEES, WHICH:
              (A) RELATE TO INJURY OR TO DESTRUCTION OF PROPERTY, OR BODILY
              INJURY, ILLNESS, SICKNESS, DISEASE OR DEATH OF ANY PERSON
              (INCLUDING EMPLOYEES OF LESSEE); AND (B) ARE CAUSED OR CLAIMED
              TO BE CAUSED, IN WHOLE OR IN PART BY THE EQUIPMENT LEASED
              HEREIN OR BY THE LIABILITY OR CONDUCT (INCLUDING ACTIVE,
              PASSIVE, PRIMARY OR SECONDARY) OF LESSOR, ITS AGENTS OR
              EMPLOYEES, OR ANYONE FROM WHOSE ACTS ANY OF THEM MAY BE
              LIABLE. THE PARTIES AGREE THAT LESSOR SHALL ONLY BE LIABLE OR
              RESPONSIBLE FOR ACTIONS OF WILFUL MISCONDUCT. LESSEE SHALL
              AT ITS OWN COST AND EXPENSE, DEFEND LESSOR AGAINST ALL SUITS
              OR PROCEEDINGS COMMENCED BY ANYONE IN WHICH LESSOR IS A
              NAMED PARTY FOR WHICH LESSOR IS ALLEGED TO BE LIABLE OR
              RESPONSIBLE AS A RESULT OF OR ARISING OUT OF THE EQUIPMENT, OR
              ANY ALLEDGED [sic] ACT OR OMISSION BY LESSOR AND LESSEE SHALL
              BE LIABLE AND RESPONSIBLE FOR ALL COSTS, EXPENSES AND
              REASONABLE ATTORNEY’S FEES INCURRED IN SUCH DEFENSE AND/OR
              SETTLEMENT, JUDGMENT OR OTHER RESOLUTION OF THE CLAIM IN THE

                                                  -2-
            EVENT THAT SUCH ACTION IS COMMENCED NAMING LESSOR AS A
            PARTY, LESSOR MAY ELECT TO DEFEND SAID ACTION ON ITS OWN
            BEHALF AND LESSEE AGREES THAT IT SHALL BE LIABLE FOR ALL
            COSTS, EXPENSES AND REASONABLE ATTORNEY’S FEES INCURRED BY
            LESSOR IN SUCH DEFENSE.
                PURPOSE OF THIS CLAUSE: IT IS THE PURPOSE OF THIS CLAUSE TO
            SHIFT THE RISK OF ALL CLAIMS RELATING TO THE LEASED PROPERTY
            TO THE LESSEE DURING THE ENTIRE TERM OF THIS LEASE.
                                                 ***
                23. INSURANCE: Lessee shall keep the equipment insured against all risks of loss
            or damage from every cause whatsoever for not less than the full replacement value
            thereof and shall carry commercial general public liability and property damage
            insurance with full contractual liability to cover this lease. Lessee’s failure to have such
            insurance shall be a breach hereof and subject to termination as provided in Paragraph
            10.
                Lessee shall also designate Lessor, its agents, employees, officers, and directors as
            additional insured parties under all policies of insurance by Lessee as their interests
            may appear and shall furnish evidence thereof to Lessor. See Exhibit A.”
¶4      In September 2010, Abel procured a commercial lines insurance policy from plaintiff,
     Pekin Insurance Company (Pekin), for the period of September 22, 2010, to September 22,
     2011. The policy provided for commercial general liability coverage protection and listed Abel
     as the named insured. The policy contained an additional insured endorsement titled
     “Contractors Additional Insured/ Waiver of Rights of Recovery Extension Endorsement”
     (contractors endorsement). In relevant part, the contractors endorsement stated:
                “1. Additional Insured - When Required By Written Construction Contract For
            Ongoing Operations Performed By You For An Additional Insured and/or Your
            Completed Operations
                    A. With respect to coverage afforded under this section of the endorsement,
                Section II - Who Is An Insured is amended to include as an insured any person or
                organization for whom you are performing operations, when you and such person
                or organization have agreed in a written contract effective during the policy period
                stated on the Declarations Page (hereinafter referred to as the ‘Policy Period’) and
                executed prior to the ‘bodily injury’ or ‘property damage’ for which coverage is
                sought, that you must add that person or organization as an additional insured on a
                policy of liability insurance (hereinafter referred to as the ‘Additional Insured’).
                    The Additional Insured is covered only with respect to vicarious liability for
                ‘bodily injury’ or ‘property damage’ imputed from You to the Additional Insured
                as a proximate result of:
                        (1) Your ongoing operations performed for that Additional Insured during
                    the Policy Period; or
                        (2) ‘Your work’ performed for the Additional Insured during the Policy
                    Period, but only for ‘bodily injury’ or ‘property damage’ within the ‘products -
                    completed operations hazard.’

                                                  -3-
                     B. It is further understood that the designation of any person or organization as
                an Additional Insured:
                         (1) does not increase the scope or limits of coverage afforded by this policy;
                     and
                         (2) does not apply if the person or organization is specifically named as an
                     additional insured under any other provision of this policy.
                     C. With respect to the coverage afforded to the Additional Insured, the
                following additional exclusions apply:
                     This insurance does not apply to:
                         (1) Liability for ‘bodily injury’ or ‘property damage’ arising out of the
                     rendering of, or the failure to render, any professional services, including, but
                     not limited to:
                              (a) The preparing, approving, or failing to prepare or approve, maps,
                         shop drawings, opinions, reports, surveys, field orders, change orders or
                         drawings and specifications, or
                              (b) Supervisory, inspection, architectural or engineering activities.
                         (2) Liability for ‘bodily injury’ or ‘property damage’ arising out of or in any
                     way attributable to the claimed negligence or statutory violation of the
                     Additional Insured, other than vicarious liability which is imputed to the
                     Additional Insured solely by virtue of the acts or omissions of the Named
                     Insured.”
¶5      The policy contained another endorsement titled “Additional Insured-Lessor of Leased
     Equipment” (lessors endorsement), that contained a “schedule” that listed a company called
     “PAC VANS” as the only additional insured in that endorsement. In its entirety, the lessors
     endorsement read:
                “A. Section II - Who Is An Insured is amended to include as an additional insured
            the person(s) or organization(s) shown in the Schedule. [B]ut only with respect to
            liability for ‘bodily injury’, ‘property damage’ or ‘personal and advertising injury’
            caused, in whole or in part, by your maintenance, operation or use of equipment leased
            to you by such person(s) or organization(s).
                B. With respect to the insurance afforded to these additional insureds, this
            insurance does not apply to any ‘occurrence’ which takes places after the equipment
            lease expires.”
¶6      The policy also contained a contractual liability exclusion that read:
                “2. Exclusions
                This insurance does not apply to:
                ***
                b. Contractual Liability
                ‘Bodily injury’ or ‘property damage’ for which the insured is obligated to pay
            damages by reason of the assumption of liability in a contract or agreement. This
            exclusion does not apply to liability for damages:
                     (1) That the insured would have in the absence of the contract or agreement; or

                                                  -4-
                     (2) Assumed in contract or agreement that is an ‘insured contract’, provided the
                 ‘bodily injury’ or ‘property damage’ occurs subsequent to the execution of the
                 contract or agreement. Solely for the purposes of liability assumed in an ‘insured
                 contract’, reasonable attorney fees and necessary litigation expenses incurred by or
                 for a party other than an insured are deemed to be damages because of ‘bodily
                 injury’ or ‘property damage’, provided:
                          (a) Liability to such party for, or for the cost of, that party’s defense has also
                     been assumed in the same ‘insured contract’; and
                          (b) Such attorney fees and litigation expenses are for defense of that party
                     against a civil or alternative dispute resolution proceeding in which damages to
                     which this insurance applies are alleged.”
     The policy’s definition for “insured contract” that is relevant in this case is:
                 “f. That part of any other contract or agreement pertaining to your business
             (including an indemnification of a municipality in connection with work performed for
             a municipality) under which you assume the tort liability of another party to pay for
             ‘bodily injury’ or ‘property damage’ to a third person or organization. Tort liability
             means a liability that would be imposed by law in the absence of any contract or
             agreement.”
¶7       Subsequent to Abel beginning work at the jobsite on 51st Street, one of its employees who
     was working at the jobsite, Heron Salgado, was injured. Salgado was injured on two occasions:
     January 17, 2011, when a heavy bucket allegedly fell on him, and January 19, 2011, when he
     allegedly fell into an opening in the scaffolding. In December 2012, he filed two separate
     lawsuits for his personal injuries against Designed, which were thereafter consolidated.
     Salgado’s complaints alleged that Designed was contracted by Abel to “design, build, erect,
     operate[,] and maintain a certain scaffold [Salgado] was required to use in order to perform his
     work.” Salgado’s complaints further alleged that Designed negligently caused his injuries in
     the following ways: failed to properly design the scaffold; failed to properly construct and
     erect the scaffold; failed to maintain proper safety measures for persons in and about the
     scaffold; failed to properly monitor, inspect, and review the design, construction, and erection
     of the scaffold; allowed a defective scaffold to be erected while knowing that its condition was
     dangerous to persons working on the scaffold; failed to take necessary precautions and
     implement safeguards for the safety of those working on the scaffold; provided an unsafe
     scaffold; and was otherwise guilty of negligence.
¶8       As a result of Salgado’s complaints, Designed tendered its defense to its own insurance
     company and then to Pekin, Abel’s insurance company, in a letter dated May 23, 2014. Pekin
     responded to Designed’s letter on June 19, 2014, and rejected the tender of defense, stating that
     although the policy issued to Abel was endorsed with an additional insured endorsement,
     Designed was not an additional insured under the policy. Pointing to the language of the
     contractors endorsement, Pekin asserted that the endorsement “amends to the who is an
     insured definition to include ‘any organization for whom you [Abel] are performing operations
     ***’ and we point out that Abel was not performing operations for Designed at the time of
     either alleged accident, but was leasing or renting a scaffold and related appurtenant parts from
     Designed.” Pekin further explained that, in the alternative, if Designed were an additional
     insured, its defense would still be rejected because Abel’s policy excluded coverage for the
     negligence of the additional insured. Pekin also suggested, inter alia, that it would not provide

                                                    -5-
       coverage because Salgado sued Designed for its own negligence, not vicarious liability for the
       acts or omissions of Abel. Finally, Pekin acknowledged the indemnity provision from the lease
       agreement between Designed and Abel but argued that although the policy’s exclusion for
       bodily injuries contained an exception for an insured contract, such contracts involving
       construction were void against public policy in Illinois.
¶9         On June 30, 2014, Pekin filed the complaint for declaratory judgment from which this
       appeal stems. Designed and Salgado1 were named as defendants. Pekin’s complaint contained
       three counts, each seeking a declaration that it did not have a duty to defend Designed. Count I
       alleged that Designed was not an additional insured under the contractors endorsement
       because Abel did not perform operations for Designed and Salgado’s complaints did not allege
       Abel performed any operations for Designed. Count II, which was pled in the alternative,
       alleged that Designed was not entitled to coverage because Designed was sued for its own
       negligence and the contractors endorsement specifically excluded coverage for the negligence
       of any additional insured. Count III, also pled in the alternative, alleged that Pekin had no duty
       to defend Designed because the lease between Abel and Designed did not qualify as an
       “insured contract” pursuant to the policy, and even if it did, said agreement would be void
       under the Construction Contract Indemnification for Negligence Act (Act) (740 ILCS 35/1
       (West 2012)), which reads:
               “With respect to contracts or agreements, either public or private, for the construction,
               alteration, repair or maintenance of a building, structure, highway bridge, viaducts, or
               other work dealing with construction, or for any moving, demolition or excavation
               connected therewith, every covenant, promise or agreement to indemnify or hold
               harmless another person from that person’s own negligence is void as against public
               policy and wholly unenforceable.”
¶ 10       Designed filed its answer to Pekin’s complaint on August 26, 2014, denying the material
       allegations of the complaint. Designed did not file any affirmative defenses or motions to
       dismiss.
¶ 11       On January 5, 2015,2 Pekin filed its motion for summary judgment, essentially reiterating
       the arguments made in its letter rejecting Designed’s tender of defense. Namely, Pekin argued
       Designed was not an additional insured under Abel’s policy because Abel was not performing
       operations for Designed at the time of Salgado’s injury; even if Designed was an additional
       insured, there was no coverage where the additional insured was sued for its own negligence,
       not the negligence of the named insured; and there was no duty to defend even if the lease
       between Abel and Designed was an insured contract, because it was void under Illinois law.

           1
              Pekin’s complaint stated that Salgado was “a nominal but necessary party to this declaratory
       judgment action and who [was] joined herein solely to be bound by the judgment rendered in this cause
       although no specific relief is sought against him.” We point this out to make clear that Salgado is not a
       party to this appeal.
            2
              We note that the copy of Pekin’s motion for summary judgment that is contained in the record is
       file-stamped by the clerk of court as being filed on “January 5, 2016.” However, it is clear from the
       other documentation in the record and the timeline of this case that said date is an error and the motion
       should have been file-stamped with the year 2015, not 2016. Thus, we presume the motion was actually
       filed on January 5, 2015 for purposes of this appeal.

                                                       -6-
¶ 12       On February 20, 2015, Designed filed its cross-motion for summary judgment and
       response to Pekin’s motion for summary judgment. Designed asserted that summary judgment
       should be granted in its favor because “Abel, Pekin’s insured, became legally obligated to pay
       any damages that Salgado may recover from [Designed] because Abel assumed such liability
       when it entered into the [c]ontract to lease [Designed’s] scaffolding.” Designed further argued
       that the lease agreement between it and Abel met the policy’s definition of an insured contract
       and thus was not excluded from coverage. Designed contended that the case law cited by Pekin
       involved “a much different indemnification agreement” than the one at issue here. Further, the
       Act was not applicable and did not void the indemnification provisions in the lease between
       Abel and Designed.
¶ 13       Sometime thereafter,3 Pekin filed its response to Designed’s cross-motion for summary
       judgment and reply in support of its motion for summary judgment. Pekin began its
       response/reply by pointing out that Designed “seem[ed] to take little to no issue with the fact
       that it does not find itself within the coverage of the Pekin policy by virtue of the [contractors]
       endorsement”; thus Pekin relied on its argument in its motion for summary judgment for
       counts I and II of its complaint. As for count III, Pekin argued that Designed’s assertion that its
       agreement with Abel was an “insured contract” because it was merely a lease, not a
       construction contract, must fail. Pekin cited two cases to support this proposition, Folkers v.
       Drott Manufacturing Co., 152 Ill. App. 3d 58 (1987), and American Pecco Corp. v. Concrete
       Building Systems Co., 392 F. Supp. 789 (N.D. Ill. 1975). Pekin argued that the lease agreement
       here fell within the parameters of the Act, because the contract involved the lease of
       scaffolding to Abel, a building restoration company. Pekin pointed to the terms and conditions
       of the lease agreement that forbid the use of the scaffold in any other manner than for use at the
       jobsite.
¶ 14       Designed filed its reply in support of its cross-motion for summary judgment on March 25,
       2015. In its reply, Designed primarily reiterated its arguments from its cross-motion. Designed
       also asserted that Pekin failed to explain how count I of its complaint is somehow dispositive
       of the remaining counts. Designed argued that its lease agreement with Abel qualified as an
       insured contract but was not a construction contract and therefore not void under the Act.
       Designed stressed that its agreement with Abel was a lease, not a subcontract agreement that
       obligated either party to perform any construction, demolition, or excavation, thus rendering it
       outside the realm of a construction contract. Designed also attacked the case law cited by
       Pekin, calling the Folkers case “outdated” and “markedly different than the contract at issue
       here.” Designed argued that merely because the scaffolding that was the subject of the lease
       was later used by Abel in restoration work does not transform the lease into a construction
       contract for purposes of the Act.
¶ 15       The trial court held a hearing on both motions for summary judgment on May 6, 2015. The
       parties presented oral arguments, and the court expressed its ruling on the record. While the
       parties were arguing their positions regarding whether Designed should be considered an
       additional insured under the policy, counsel for Pekin referred to the lease agreement between
       Abel and Designed as a “subcontract.” Counsel for Designed thereafter stated, “[t]here is
       absolutely no evidence that the contract was a subcontract. Designed Equipment was never a

           The copy of Pekin’s response contained in the record is not file-stamped, thus the exact date that it
           3

       was filed is unclear.

                                                       -7-
       subcontractor of Abel. They never provided any construction duties at this job site. It was
       merely a rental agreement or a lease agreement. It was not a subcontract agreement.” The
       following exchange then occurred regarding Designed’s counsel’s position:
                   “MR. SYREGELAS [Pekin’s attorney]: I’ll clear that up. Subcontract was a slip of
               the tongue.
                   THE COURT: What you’ve done there is put yourself—
                   MR. SYREGELAS: Out of the endorsement.
                   THE COURT: I have to find—is to put yourself out of the additional insured
               endorsement. If Abel and Designed don’t have some kind of subcontract relationship,
               then it doesn’t make sense to say either is performing work for the other. And the
               subcontractor—it would be additional insured definition requires that one be
               performing work for the other, correct?
                   MR. DEBRE [Designed’s attorney]: That is a portion of the policy, but I think our
               main arguments are to this contract being an insured contract under the policy.”
       The court then stated that it believed that if it did not get past the additional insured portion of
       the contract, then it did not have to reach the issue of whether the lease was an insured contract.
¶ 16       Ultimately, the court stated that it found in favor of Pekin for two reasons. First, the court
       agreed with Pekin that the policy in question “ha[d] an additional insured endorsement that
       would not cover the rental contract at issue here.” The court explained that the language of the
       contractors endorsement that applied to “any person or organization for whom [Abel is]
       performing operations” simply did not fit the factual scenario here. Rather, the court noted that
       such language is “intended to cover classic subcontract relations” and that it was drafted to
       cover “upstream insurance obligations.” 4 The court also found for Pekin on the issue of
       whether the lease agreement between Abel and Designed constituted an insured contract,
       determining that it did, but that it was void. The court mentioned that it found the cases cited to
       be “less than squarely on point,” but nevertheless concluded that the parties here knew the
       scaffold was for use in a construction project. Thus, the Act applied and the insured contract
       was void. The court stated that Pekin prevailed on counts I and III, and that count II was “not
       addressed separately, but it is subsumed in the analysis of Count I.” As a result, the court
       granted Pekin’s motion for summary judgment as to all three counts and denied Designed’s
       cross-motion.
¶ 17       On June 5, 2015, Designed timely filed its notice of appeal.

¶ 18                                         II. ANALYSIS
¶ 19       “The construction of an insurance policy and a determination of the rights and obligations
       thereunder are questions of law for the court and appropriate subjects for disposition by
       summary judgment.” (Internal quotation marks omitted.) Liberty Mutual Fire Insurance Co. v.
       St. Paul Fire & Marine Insurance Co., 363 Ill. App. 3d 335, 338 (2005). “When parties file
       cross-motions for summary judgment, they agree that only a question of law is involved and
       invite the trial court to decide [the] issues based on the record.” Pielet v. Pielet, 2012 IL

           4
             The court defined “upstream insurance obligations,” stating “the construction food chain has a
       liability going down and insurance liability going up. Every subcontractor is requiring the people below
       to insure him and so on up the line until we get to the owner.”

                                                      -8-
       112064, ¶ 28. However, the mere filing of cross-motions for summary judgment does not
       establish that there is no issue of material fact, nor does it obligate the court to render summary
       judgment. Id. Summary judgment is appropriate only where “the pleadings, depositions, and
       admissions on file, together with the affidavits, if any, show that there is no genuine issue [of]
       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). We review de novo a ruling on a motion for summary judgment.
       Clark Investments, Inc. v. Airstream, Inc., 399 Ill. App. 3d 209, 213 (2010).
¶ 20        Designed makes two arguments on appeal: (1) the Pekin insurance policy contained an
       ambiguity given the presence of its two additional insured endorsements with differing terms
       and provisions, which the trial court should have construed in favor of Designed and found that
       Pekin had a duty to defend, and (2) the lease agreement between Abel and Designed
       constituted an insured contract within the meaning of the policy thereby allowing coverage,
       and no legal precedent exists to hold the contract void under the Act. We address each of these
       arguments and Pekin’s responses thereto below.
¶ 21        Designed’s argument that Abel’s insurance policy contained an ambiguity due to the
       purportedly conflicting language of the contractors endorsement and the lessors endorsement
       was not raised, or even mentioned, in the court below and thus is forfeited on appeal. Designed
       contends that an ambiguity exists because the lessors endorsement and the contractors
       endorsement contain differing terms and provisions. Pekin responds that such an argument was
       never brought up in the court below and is therefore waived on appeal. In its reply, Designed
       asserts that waiver does not apply because “Count I and the purported underlying theory for it
       [the contractors endorsement] were directly addressed by [Designed] in the underlying
       litigation.” Designed further argues that “[e]ven assuming that a party makes an argument not
       previously perfected at some previous point in the record, the ‘waiver’ rule does not limit a
       court’s powers of review.”
¶ 22        “It is well settled that issues not raised in the trial court are deemed waived and may not be
       raised for the first time on appeal.” Haudrich v. Howmedica, Inc., 169 Ill. 2d 525, 536 (1996).
       However, “waiver is an admonition to the parties, not a limitation upon the powers of [the]
       courts of review.” (Internal quotation marks omitted.) Northwestern Memorial Hospital v.
       Sharif, 2014 IL App (1st) 133008, ¶ 21. This court has the discretion to review the merits of a
       party’s argument in the interest of judicial economy and where the necessary facts to
       understand the argument are simple. Zadrozny v. City Colleges of Chicago, 220 Ill. App. 3d
       290, 292-93 (1991).
¶ 23        After a review of the May 6, 2016, hearing transcript, the parties’ cross-motions for
       summary judgment, responses, and replies, it is clear that the lessors endorsement was never
       addressed by the parties or the court. Similarly, the policy’s alleged ambiguity that Designed
       raises in its appellate brief was also never examined by the trial court. Designed attempts to
       make it seem as though the trial court, in fact, addressed its argument regarding the lessors
       endorsement and the policy’s alleged ambiguity by asserting that the trial court thoroughly
       examined count I and the theories underlying it. However, Designed never pointed out the
       existence of the lessors endorsement or argued that the policy contained an ambiguity.
       Although Designed blames Pekin for solely focusing on the contractors endorsement,
       Designed could have argued the relevance of the lessors endorsement and any purported
       ambiguity in its own motion for summary judgment or in its response to Pekin’s motion for
       summary judgment, but it never did. Likewise, Designed did not file a counterclaim, a motion

                                                    -9-
       to dismiss, or an affirmative defense, any of which could have acted as a vehicle to address the
       lessors endorsement or alleged ambiguity. The trial court never examined the issue of the
       lessors endorsement or any alleged ambiguity at the hearing on the cross-motions, because
       these issues were never raised by either party. Thus, Designed is essentially asking this court to
       undertake a policy interpretation that was not performed by the circuit court. We do not agree
       with Designed’s categorization of the facts here as being “remarkably simple,” and we
       exercise our discretion not to address Designed’s argument for the first time on appeal. See
       Zadrozny, 220 Ill. App. 3d at 292-93. We now turn to Designed’s remaining argument.
¶ 24        Designed next argues that the lease agreement between Abel and Designed constituted an
       insured contract within the meaning of the policy thereby allowing coverage and asserts that no
       legal precedent exists to hold the contract void under the Act. Pekin responds that the court’s
       findings regarding the lease agreement as an insured contract and the resultant application of
       the Act to void the agreement were correct. Specifically, Pekin contends that the parties did not
       enter into an insured contract, and even if they had, the Act applies to void such a contract. The
       trial court determined that the Act applies and voids the agreement here, stating “[i]t’s very
       hard for me not to conclude that both sides to this transaction knew that the purpose of the
       scaffold was for use in a construction project ***. To take any other view would encourage the
       artful drafting of what are really construction contracts to pretend they’re something else, and
       it seems to me that neither sound public policy nor a sensible reading of the statute would
       warrant such an approach.”
¶ 25        An indemnity agreement is a contract subject to contract interpretation rules. Buenz v.
       Frontline Transportation Co., 227 Ill. 2d 302, 308 (2008). “It is well settled that indemnity
       contracts are [to be] strictly construed and will not be construed as indemnifying against a
       party’s own negligence unless such a construction is required by the clear and explicit
       language of the contract.” Bituminous Casualty Corp. v. Plano Molding Co., 2015 IL App (2d)
       140292, ¶ 8. We review the interpretation of a contract de novo. Id.
¶ 26        Designed argues that Abel became legally obligated to pay for damages that Salgado may
       recover from Designed. Paragraph 15 of the lease agreement between Abel and Designed
       contained an indemnification clause that stated, inter alia:
                “[Abel] shall indemnify and defend [Designed] against and hold [Designed] harmless
                from any and all claims *** which relate to *** bodily injury *** and are caused or
                claimed to be caused, in whole or in part by the equipment leased herein or by the
                liability or conduct *** of [Designed]. *** [Abel] shall *** defend [Designed] against
                all suits or proceedings commenced by anyone in which [Designed] is a named party
                for which [Designed] is alleged to be liable or responsible as a result of or arising out of
                the equipment, or any alledged [sic] act or omission by [Designed].”
       See supra ¶ 4. Abel’s policy from Pekin contains an exclusions section that excluded
       contractual liability for bodily injury or property damage that Abel would be required to pay by
       reason of assumption of liability in a contract or agreement. See supra ¶ 7. The policy’s
       exclusions section also stated that the contractual liability exclusion does not apply to liability
       that is assumed in an insured contract. Id.
¶ 27        The parties disagree as to whether the indemnity provision from the lease constitutes an
       insured contract. Designed argues that it is an insured contract and thus the exclusion does not
       apply, requiring Pekin to provide coverage. Pekin responds that the lease agreement is not an
       insured contract because the indemnity provision does not clearly and explicitly express the

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       parties’ intent that Abel would indemnify Designed for Designed’s own negligence. Rather,
       Pekin contends, the indemnity provision only requires Abel to indemnify Designed to the
       extent of Abel’s own negligence and cites the case of Hankins v. Pekin Insurance Co., 305 Ill.
       App. 3d 1088 (1999), as support for its position.
¶ 28       The Hankins case involved a declaratory action brought by Hankins, a cartage company
       that operated a trucking terminal, against its insurer. Id. at 1089. At issue was the language of
       an agreement Hankins entered into with Rudolf, a motor freight carrier, and whether their
       agreement constituted an insured contract. Id. The hold-harmless provision in Hankins and
       Rudolf’s agreement stated that Hankins agreed to indemnify and hold Rudolf harmless from
       claims, damages, losses, and expenses which might arise out of work performed by Hankins
       and caused by Hankins’ negligence. Id. at 1089-90. The court determined that the language of
       the hold-harmless provision did not clearly and explicitly express the parties’ intent that
       Hankins would indemnify Rudolf against Rudolf’s own negligence but instead found that the
       agreement provided that Hankins would indemnify Rudolf against liability caused by Hankins
       negligence. Id. at 1093. Thus, the court held that the hold-harmless provision was not an
       insured contract within the meaning of the policy. Id.
¶ 29       Looking to the language of the indemnity provision of the lease between Abel and
       Designed, it is clear to this court that the language constitutes an insured contract, thus we
       disagree with Pekin’s argument and find this case to be factually distinct from Hankins.
       According to the policy here, an insured contract is defined as “[t]hat part of any contract or
       agreement pertaining to [Abel’s] business *** under which [Abel] assume[s] the tort liability
       of another party to pay for ‘bodily injury’ or ‘property damage’ to a third person or
       organization. Tort liability means a liability that would be imposed by law in the absence of
       any contract or agreement.” The indemnity provision in the lease between Abel and Designed
       states that “[Abel] shall indemnify and defend [Designed] against and hold [Designed]
       harmless from any and all claims, actions, suits, proceedings, costs, expenses, damages, and
       liabilities ***, which: (A) relate to *** bodily injury ***, and (B) are caused by ***
       [Designed].” Unlike the language of the hold-harmless provision in Hankins, the language of
       the indemnity provision in the lease requires Abel to indemnify Designed for Designed’s own
       negligence. Therefore, we find that an insured contract exists because the language of the
       indemnity provision clearly and explicitly evidences the parties’ intent that Abel agreed to
       indemnify Designed against Designed’s own negligence.
¶ 30       Having found that the lease agreement was an insured contract, we turn to Pekin’s
       argument that even if it was an insured contract, the Act applies to void the agreement. The Act
       provides:
                “With respect to contracts or agreements, either public or private, for the construction,
                alteration, repair or maintenance of a building, structure, highway bridge, viaducts, or
                other work dealing with construction, or for any moving, demolition or excavation
                connected therewith, every covenant, promise or agreement to indemnify or hold
                harmless another person from that person’s own negligence is void as against public
                policy and wholly unenforceable.” 740 ILCS 35/1 (West 2012).
¶ 31       Designed contends that the Act should not apply to void the insured contract because the
       contract at issue is a simple, straightforward agreement for the rental of equipment, not a
       construction contract within the meaning of the Act. Pekin asserts that the agreement is void
       under the Act because it involved the lease of scaffolding to a building restoration company

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       and delivered to a construction site. Also, Pekin points to the language of the lease that stated
       that the scaffolding “equipment will not be removed from the job address unless approved by
       [Designed] in writing prior thereto.” The trial court found the agreement to be “a contract for a
       scaffold and a site for delivery of the materials that are going to make the scaffold—in other
       words, [Designed is] going to assemble the scaffold—which the parties have told me here is a
       construction site. It’s very hard for me not to conclude that both sides to this transaction knew
       that the purpose of the scaffold was for use in a construction project, and if this is so, then in my
       view, construing the anti-indemnification act, the statute should apply.” The trial court also
       noted that although “the cases don’t fit comfortably,” Pekin still should prevail.
¶ 32        We agree with the trial court’s conclusion that the Act should apply here and also recognize
       as accurate its statement that the existing cases are not exactly on point. In Folkers v. Drott
       Manufacturing Co., 152 Ill. App. 3d 58, 66 (1987), which was cited by Pekin in support of its
       assertions, the court found that the indemnity provision of a rental contract for a crane fell
       squarely within parameters of the Act and was therefore void where the agreement stated that
       the crane’s purpose was “for use in construction operations.” Unlike Folkers, the agreement
       here does not expressly state the purpose of the lease as being for construction operations, thus
       it is not directly on point. The remainder of the cases cited by both parties are from the federal
       courts. We note that the federal cases are not binding on this court. SK Handtool Corp. v.
       Dresser Industries, Inc., 246 Ill. App. 3d 979, 986 (1993). However, even looking at those
       cases, we do not find them to be parallel to the case at bar. See Avalos v. Pulte Home Corp., No.
       04 C 7092, 2006 WL 3813735 (N.D. Ill. Dec. 22, 2006) (finding that the agreement at issue
       was not a construction contract where the primary duty under the contract was to deliver
       building materials rather than perform actual acts of construction), Winston Network, Inc. v.
       Indiana Harbor Belt R.R. Co., 944 F.2d 1351 (7th Cir. 1991) (holding that the Act did not
       apply where a painter was injured while painting advertisement on a railroad bridge because
       the advertising agreement at issue did not involve construction), Gama v. Central
       Rent-a-Crane, Inc., No. 88 C 9590, 1989 WL 121275 (N.D. Ill. Sept. 28, 1989) (applying
       Indiana law, the court ordered that a motion for judgment on the pleadings be denied where
       further factual development was necessary to determine if the contract at issue affected
       nonhighway construction), and American Pecco Corp. v. Concrete Building Systems Co., 392
       F. Supp. 789 (E.D. Ill. 1975) (determining that where a lessor not only provided a crane but
       also the operator for the crane, lessor became a subcontractor in the construction of a building
       and the lease’s indemnity provision was voided by the Act).
¶ 33        The Act expressly states that it applies to “contracts or agreements, either public or private,
       for the construction, alteration, repair or maintenance of a building, structure, highway bridge,
       viaducts, or other work dealing with construction.” 740 ILCS 35/1 (West 2012). Here, the
       contract at issue between Abel and Designed is a lease or rental agreement for scaffolding
       equipment. Both parties admit that the lease does not contain the word “construction.”
       However, we have not found any case that states that there is a magic word that must be used in
       an agreement in order to bring it within the purview of the Act.
¶ 34        Using a common sense approach when looking to the language of the lease and the facts of
       this case, as was done by the trial court, we believe it is evident that the lease agreement here
       involves, at least, “other work dealing with construction.” 740 ILCS 35/1 (West 2012). First,
       the lessee of the equipment is listed in the lease as “Abel Building Restoration,” which
       evidences the type of company Designed was leasing the equipment to. Additionally, the “bill

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       to” and “ship to” addresses are different, which reasonably would lead one to believe that the
       scaffolding equipment was to be shipped to the jobsite where it would be used, rather than
       Abel’s corporate or office address from which the bills are paid. The lease also states that the
       equipment was not to be removed from the jobsite unless approved by Designed in writing.
       Thus, Abel was not free to use the scaffolding anywhere but the location to which it was
       delivered. The parties agree that the lease required Designed to deliver and assemble the
       scaffolding. Thus, it could also be inferred that Designed knew what type of jobsite was at
       issue because its employees went to the site to deliver and assemble the scaffolding. However,
       even looking past the assumption that Designed knew the type of site based on its employees
       actually going to the site, we believe that the language of the lease and the type of equipment
       involved, on its own, renders the agreement as one that involves “other work dealing with
       construction.” The lease required Designed to deliver and assemble scaffolding, which is
       certainly a type of work that deals with construction, and if not construction specifically, then
       “alteration, repair or maintenance of a building.” Either way, the lease here falls under the Act,
       rendering the insured contract void. We, like the trial court, cannot imagine that a lease of
       scaffolding equipment by a building restoration company can be reasonably interpreted as not
       being for the “construction, alteration, repair or maintenance” of a building or structure or
       “other work dealing with construction.” Designed is asking this court to render an
       interpretation of the lease that runs contrary to common sense, and we refuse to do so.

¶ 35                                   III. CONCLUSION
¶ 36      Based on the foregoing, we affirm the trial court’s decision to grant Pekin’s motion for
       summary judgment on all three counts and deny Designed’s cross-motion for summary
       judgment.

¶ 37      Affirmed.

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