                                                                     First Division
                                                                     June 18, 2007

No. 1-06-1864

CLARENDON AMERICA INSURANCE COMPANY, a                           )   Appeal from the Circuit Court
New Jersey Corporation,                                          )   of Cook County
                                                                 )
       Plaintiff-Appellant,                                      )
                                                                 )
                v.                                               )
                                                                 )
69 WEST WASHINGTON MANAGEMENT LLC, an                            )
Illinois Limited Liability Corporation, and COUNTY OF            )
COOK, a Body Politic and Corporation,                            )
                                                                 )
       Defendants-Appellees                                      )   04 CH 10575
                                                                 )
                                                                 )
(Scottsdale Insurance Company,                                   )
       Intervenor-Appellant;                                     )
                                                                 )
B.G.K. Security Services, Inc., an Illinois Corporation, and     )   Honorable
Aargus Security Systems, Inc., an Illinois Corporation           )   Julia Nowicki ,
       Defendants).                                              )   Judge Presiding.

       PRESIDING JUSTICE McBRIDE delivered the opinion of the court:

       Plaintiff Clarendon America Insurance Company (Clarendon) filed a declaratory

judgment action seeking a determination that it owed no duty to defend or indemnify defendants

69 West Washington Management, LLC (69 West), and County of Cook (Cook) in several

underlying lawsuits arising out of the October 17, 2003, fire that occurred at a building owned by

Cook and managed by 69 West, located at 69 West Washington Street in Chicago. Clarendon

issued a commercial general liability policy to defendant B.G.K. Security Services, Inc. (BGK),

to which 69 West and Cook sought coverage as “additional insureds.” Clarendon filed a motion

for summary judgment and 69 West and Cook filed cross-motions for summary judgment in the
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trial court. Intervenor Scottsdale Insurance Company (Scottsdale) issued an excess insurance

policy to BGK and intervened in this action also seeking a declaration that it had no duty to

defend 69 West and Cook. The court denied Clarendon’s motion and granted 69 West and

Cook’s motions.1

       Clarendon and Scottsdale appeal, arguing that: (1) the trial court erred in holding that 69

West and Cook qualify as “additional insureds” under BGK’s policy with Clarendon; and (2) 69

West and Cook are not “additional insureds” because the blanket additional insured endorsement

in the Clarendon policy applies only to liability “arising solely out of” BGK’s services.

       On April 1, 2002, Aargus entered into a contract with 69 West, acting as the manager and

agent of Cook, to provide security guard service to the commercial high-rise building located at

69 West Washington Street in Chicago. That contract, entitled “Agreement with Service

Contractor” (hereafter, 69 West/Aargus Contract), provided that Aargus “shall be required to

satisfy such insurance requirements as are set forth in Exhibit D.” Exhibit D provided that

Aargus was to purchase and maintain specific types of insurance, including a commercial general

liability insurance in the amount of at least $1 million and excess liability insurance in the

amount of at least $5 million. Aargus was required to name 69 West and Cook as additional

insureds in those policies. Finally, Exhibit D of the 69 West/Aargus Contract required Aargus to

“cause each subcontractor of any tier to purchase and maintain insurance as required from

[Aargus] including the Additional Insureds.”


       1
         In the same written order, the trial court granted summary judgment in favor of
Clarendon against defendant Aargus Security Systems, Inc (Aargus). Aargus appealed that order
in case No. 1-06-2121.

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       On June 17, 2002, Aargus and BGK entered into a contract entitled “Joint Venture

Agreement, 69 West Washington Management Company, L.L.C., 69 West Washington, Chicago,

IL 60602” (hereafter, Aargus/BGK Agreement) in which the parties agreed to jointly provide

security guard service at the 69 West Washington building. The Aargus/BGK Agreement stated:

              “They hereby constitute themselves as Joint Ventures for the

              purpose of performing and completing the Contract, but not for any

              other purpose. It is expressly understood that this Agreement

              contemplates only the furnishing and performance of the work

              necessary for the completion of the Contract, and that by entering

              this Agreement, the parties are not making any partnership

              agreement or permanent joint venture agreement to bid or

              undertake any contract(s) other than the aforementioned Contract.

              Nothing in this Agreement shall be construed as a limitation of the

              powers or rights of either party hereto to carry on its separate

              business for its sole benefit. Nor shall anything in this Agreement

              limit or prohibit the formation of additional joint ventures between

              the parties for the purpose of performing and completing any

              separate, unrelated contract(s).”

       The Aargus/BGK Agreement also provides that the obligations under “the Contract shall

be joint and several, unless otherwise agreed herein.” The Aargus/BGK Agreement stated that

“B.G.K. Security Services, Inc. shall serve as Aargus’ exclusive subcontractor under the


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Contract.” The Aargus/BGK Agreement does not define to what the term “Contract” is

referring. The only mention of insurance is in paragraph 16, which state: “All insurance that may

from time to time be required shall be obtained in such manner as the parties hereto agree.”

       BGK obtained a commercial general liability policy from Clarendon, effective January

21, 2003, to January 21, 2004. The Clarendon policy provided $1 million of liability coverage

per occurrence with a $5 million general aggregate limit. The Clarendon policy contains a

“Blanket Additional Insured Endorsement” (additional insured endorsement), which states, in

relevant part:

                 “WHO IS AN INSURED (Section II) provision of the Policy is

                 amended to include as an insured any person or organization

                 (called ‘additional insured’) to whom you are obligated by valid

                 written contract to provide such coverage, but only with respect to

                 liability for ‘bodily injury’ or ‘property damage’ arising solely out

                 of ‘your work’ on behalf of said additional insured for which

                 coverage is provided by this policy.”

“Your work” is defined in the Clarendon policy as “work or operations performed by you or on

your behalf” and includes “warranties or representations made at any time with respect to the

fitness, quality, durability, performance or use of ‘your work’ ” and “the providing of or failure to

provide warnings or instructions.”

       Scottsdale issued an excess liability policy to BGK, effective August 1, 2003, to January

21, 2004. The Scottsdale policy “is excess of and follows form to the Clarendon policy.”


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       On October 17, 2003, a fire occurred at the building located at 69 West Washington,

owned by Cook and managed by 69 West. As a result of the deaths and injuries that occurred in

the fire, 22 lawsuits were filed in the circuit court of Cook County and were consolidated under

case No. 03 L 12520 (underlying lawsuits). 69 West, Cook, Aargus and BGK were named as

defendants, third-party defendants, and/or counterdefendants in the underlying lawsuits.

       69 West, Cook, Aargus, and BGK tendered the defense in the underlying lawsuits to

Clarendon. In July 2004, Clarendon filed the instant suit seeking a declaration that the Clarendon

policy issued to BGK did not include 69 West and Cook as additional insureds. Scottsdale was

granted leave to intervene in the circuit court and filed its own complaint for declaratory

judgment. In January 2006, Clarendon filed a motion for summary judgment, and in February

2006, 69 West and Cook filed cross-motions for summary judgment. 69 West and Cook also

filed an affidavit from Aargus’ chief executive officer (CEO), Janet Joyce. In her affidavit, Joyce

stated that she was CEO in 2002 and entered into both the 69 West/Aargus Contract and the

Aargus/BGK Agreement on Aargus’ behalf. Joyce also said that in the Aargus/BGK Agreement,

the references to “Contract” meant the 69 West/Aargus Contract. Scottsdale filed a brief in

support of Clarendon’s motion. Clarendon moved to strike the Joyce affidavit. In April 2006,

the trial court granted 69 West’s and Cook’s cross-motions for summary judgment and denied

Clarendon’s motion. In its ruling, the trial court found that it was unnecessary to consider the

motion to strike because the Aargus/BGK Agreement was unambiguous. In June 2006, the trial

court found that pursuant to Supreme Court Rule 304(a) (155 Ill. 2d R. 304(a)), there was no just

reason to delay enforcement or appeal of the April 2006 order. This appeal followed.


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       Clarendon and Scottsdale argue on appeal that the trial court erred in reading the 69

West/Aargus Contract and the Aargus/BGK Agreement together to find a valid written contract

and that 69 West and Cook were additional insureds under the Clarendon policy.

       “The construction of an insurance policy and a determination of the rights and obligations

thereunder are questions of law for the court which are appropriate subjects for disposition by

way of summary judgment.” Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill.

2d 384, 391 (1993). Summary judgment is appropriate where the pleadings, depositions, and

admissions on file, together with any affidavits and exhibits, when viewed in the light most

favorable to the nonmoving party, indicate that there is no genuine issue of material fact and the

moving party is entitled to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2004). We

review cases involving summary judgment de novo. Ragan v. Columbia Mutual Insurance Co.,

183 Ill. 2d 342, 349 (1998). “As in this case, where the parties file cross-motions for summary

judgment, they invite the court to decide the issues presented as a matter of law.” Liberty Mutual

Fire Insurance Co. v. St. Paul Fire & Marine Insurance Co., 363 Ill. App. 3d 335, 339 (2005).

         Clarendon and Scottsdale contend that the Aargus/BGK Agreement, standing alone,

does not trigger coverage for 69 West and Cook under the additional insured endorsement. They

maintain that the Aargus/BGK Agreement “is devoid of any express reference” to the 69

West/Aargus Contract and the trial court erred in reading the Aargus/BGK Agreement with the

69 West/Aargus Contract.

       “When construing the language of an insurance policy, a court's primary objective is to

ascertain and give effect to the intentions of the parties as expressed by the words of the policy.”


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Central Illinois Light Co. v. Home Insurance Co., 213 Ill. 2d 141, 153 (2004). An insurance

contract is to be construed as a whole, giving effect to every provision because it must be

assumed that every provision was intended to serve a purpose. Central Illinois Light Co., 213 Ill.

2d at 153. “ If the words used in the policy are clear and unambiguous, they must be given their

plain, ordinary, and popular meaning.” Central Illinois Light Co., 213 Ill. 2d at 153. “A contract

term is ambiguous if it can reasonably be interpreted in more than one way due to the

indefiniteness of the language or due to it having a double or multiple meaning.” William Blair

& Co., LLC v. FI Liquidation Corp., 358 Ill. App. 3d 324, 334 (2005). “A contract is not

ambiguous, however, if a court can ascertain its meaning from the general contract language.”

William Blair, 358 Ill. App. 3d at 334. “The mere fact that the parties disagree as to the meaning

of a term does not make that term ambiguous.” William Blair, 358 Ill. App. 3d at 334.

       Here, the additional insured endorsement in Clarendon’s policy extends coverage to those

that BGK, as the named insured, is obligated by valid written contract to provide coverage. The

parties do not contend that BGK was a party to the 69 West/Aargus Contract; rather, the only

contract BGK is a party to is the Aargus/BGK Agreement. Yet, 69 West and Cook assert that

this court should read the two documents together even though the named insured, BGK, is only

a party to one document. There is nothing within the four corners of the Aargus/BGK Agreement

regarding an obligation undertaken by BGK to provide additional insured coverage for 69 West

and Cook. Instead, paragraph 16 leaves insurance requirements open for a future agreement.

       “It is well settled that a court, when construing a contract, should ascertain the intent of

the parties and give effect to that intent.” Eichengreen v. Rollins, Inc., 325 Ill. App. 3d 517, 521


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(2001). Illinois follows the “four corners rule” for contract interpretation, in that, “ ‘[a]n

agreement, when reduced to writing, must be presumed to speak the intention of the parties who

signed it. It speaks for itself, and the intention with which it was executed must be determined

from the language used. It is not to be changed by extrinsic evidence.’ ” Air Safety, Inc. v.

Teachers Realty Corp., 185 Ill. 2d 457, 462 (1999), quoting Western Illinois Oil Co. v.

Thompson, 26 Ill. 2d 287, 291 (1962).

       We find the analysis in Liberty Mutual Fire Insurance Co. v. St Paul Fire & Marine

Insurance Co., 363 Ill. App. 3d 335 (2005), to be helpful. In that case, the Central Illinois Public

Service Company (CIPS) and Dover Elevator Company (Dover) entered into two service

contracts for Dover’s work to modernize and upgrade two elevators in a CIPS facility. Dover

obtained a CGL insurance policy through Liberty Mutual Fire Insurance Company (Liberty). An

elevator accident occurred at the CIPS facility and a personal injury lawsuit followed. Liberty

filed a declaratory judgment action seeking a determination that it did not have to defend CIPS

under Dover’s policies, and CIPS’ insurer, St. Paul Fire and Marine Insurance Co., filed a

counterclaim requesting the trial court to find that Liberty had a duty to defend CIPS. On

summary judgment, the trial court ruled in favor of Liberty. Liberty Mutual Fire Insurance Co.,

363 Ill. App. 3d at 337-38.

       On appeal, the reviewing court considered a similar blanket additional insured

endorsement that included “ ‘any person, organization, state or other political subdivision, trustee

or estate for whom you have agreed in writing to provide liability insurance’ ” alongside the

service contracts between Dover and CIPS. Liberty Mutual Fire Insurance Co., 363 Ill. App. 3d


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at 341. The service contracts did not outline the insurance requirements, but instead incorporated

the attached insurance specifications. Liberty Mutual Fire Insurance Co., 363 Ill. App. 3d at 341.

The insurance specifications provided that “contractors such as Dover ‘will secure, maintain and

provide evidence’ of ‘Comprehensive General Liability insurance for all claims for personal

injury, bodily injury, including death, and property damage which may arise from the operations

under this contract.’ ” Liberty Mutual Fire Insurance Co., 363 Ill. App. 3d at 341. The court

found that the contracts did not satisfy the endorsement because “there was no language in the

insurance provision or insurance specifications section that obligated Dover to add CIPS as an

additional insured on the CGL policy.” Liberty Mutual Fire Insurance Co., 363 Ill. App. 3d at

342. Rather, the insurance specifications only required Dover to provide for its own insurance.

Liberty Mutual Fire Insurance Co., 363 Ill. App. 3d at 342.

       Under the Aargus/BGK Agreement, the parties agreed in paragraph 16 that “all insurance

that may from time to time be required shall be obtained in such manner as the parties hereto

agree.” Nothing in that statement obligates BGK to obtain coverage for anyone. 69 West and

Cook contend that this court should read the 69 West/Aargus Contract in conjunction with the

Aargus/BGK Agreement to find such an obligation on BGK’s part. The problem with that

contention is that the Aargus/BGK Agreement does not explicitly incorporate the parties’

intention to be bound by the terms of the 69 West/Aargus Contract. “In order for a contract to

incorporate all or part of another document by reference, the reference must show an intention to

incorporate the document and make it part of the contract.” Board of Managers of Chestnut Hills

Condominium Ass'n v. Pasquinelli, Inc., 354 Ill. App. 3d 749, 755 (2004). In that case, the


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reviewing court declined to enforce an arbitration clause contained in a warranty agreement for a

dispute arising from a purchase agreement that mentioned the existence of the warranty

agreement, but did not incorporate the warranty agreement. Pasquinelli, Inc., 354 Ill. App. 3d at

755.

       Although we recognize that Illinois courts have read two contracts together when the

“two instruments were executed by the same contracting parties in the course of the same

transaction and [they] must be considered together and construed with reference to one another

because they are one contract” (Bank of Chicago v. Park National Bank, 266 Ill. App. 3d 890,

898-99 (1994)), that general principle is not applicable to the instant case. Here, the two

agreements were not entered into by the same parties nor were they executed in the course of the

same transaction. Since the Aargus/BGK Agreement does not show a clear intention to

incorporate the 69 West/Aargus Contract, the court cannot read the Aargus/BGK Agreement in

conjunction with the 69 West/Aargus Contract.

       69 West and Cook assert that the Aargus/BGK Agreement includes typographical errors

that should have referred to the 69 West/Aargus Contract. The Aargus/BGK Agreement makes

numerous references to a “Contract,” but does not define the term. Clarendon and Scottsdale

assert in their reply brief that the term “Contract” means the “Security Guard Contract” that is

mentioned in paragraph 2. That paragraph states, in relevant part:

                       “2. Joint Venture Business. The written Security Guard

               Contract entered into the (Date) June 17, 2002 between Aargus

               Security Systems, Inc. and B.G.K. Security Services, Inc. relating


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               to the provisions of the security guard services at 69 West

               Washington shall be entered into by Aargus on behalf of the Joint

               Venture.” (Emphasis in original.)

       As written, this sentence in paragraph two refers to the Aargus/BGK Agreement only.

None of the parties assert that a second agreement exists between Aargus and BGK to which

paragraph 2 is referring. The Aargus/BGK Agreement defines references to “Agreement” as

meaning that specific contract. 69 West and Cook respond that paragraph 2 was incorrectly

completed and should have referred to the 69 West/Aargus Contract. 69 West and Cook urge

this court to unilaterally correct these alleged mistakes and recognize an intention for BGK to be

held accountable for the insurance provisions in the 69 West/Aargus Contract. 69 West and

Cook deny that this argument requires reformation of the Aargus/BGK Agreement. We disagree.

       A written contract may be reformed to reflect the intention of the parties and the

agreement between them. Suburban Bank of Hoffman-Schaumburg v. Bousis, 144 Ill. 2d 51, 58

(1991). “ ‘An action to reform a written agreement rests upon a theory that the parties came to an

understanding, but in reducing it to writing, through mutual mistake, or through mistake of one

side and fraud on the other, some provision agreed upon was omitted, and the action is to so

change the instrument as written as to conform it to the contract agreed upon, by inserting the

provisions omitted or striking out the one inserted by mutual mistake.’ ” Suburban Bank, 144 Ill.

2d at 58-59, quoting Harley v. Magnolia Petroleum Co., 378 Ill. 19, 28 (1941). “It is assumed

that the parties' written agreement expresses their mutual intentions, and this conclusion will not

yield to any other unless the contrary evidence is clear and convincing.” Suburban Bank, 144 Ill.


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2d at 59.

       Here, neither party to the Aargus/BGK Agreement is involved in this appeal. Instead, a

third party is seeking reformation to bind another third party to the contract. In Gatton v. Page,

44 Ill. App. 3d 559 (1976), the Fifth District refused to reform a document to the detriment of an

innocent third party. There, the purchaser sought specific performance of a sales contract for

property in a subdivision. Gatton, 44 Ill. App. 3d at 560. The contract was subject to the

subdivision’s association rules and one of the rules required the seller of any property in the

subdivision to give written notice of the sale to certain individuals, including the adjacent

landowners, 10 days prior to the date of the sale. Gatton, 44 Ill. App. 3d at 560. The rule also

allowed for a right to purchase the property within that 10-day period, but there was a

typographical error which excluded the right to purchase from the adjacent landowners. Gatton,

44 Ill. App. 3d at 561. The reviewing court declined to reform the rules because it would

negatively affect the purchaser when no evidence was introduced that the purchaser was aware of

the right to purchase by adjacent landowners. Gatton, 44 Ill. App. 3d at 562. The Gatton court

held that “[e]ven if we were to find that awkward language might give notice of the existence of

a mistake, the instrument itself gives no indication that adjoining lot owners are intended to have

any rights not specifically enumerated.” Gatton, 44 Ill. App. 3d at 562. “[I]t is generally

recognized that while mistakes will be corrected or relieved against as between parties to the

original transaction and those claiming under them with notice, the courts will not grant relief

against mistakes so as to affect the intervening rights of third parties ***.” Gatton, 44 Ill. App.

3d at 561.


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       We find the reasoning behind Gatton to be applicable in the instant case. The

Aargus/BGK Agreement fails to incorporate or refer to the 69 West/Aargus Contract. While the

language of paragraph 2 implies possible drafting errors, neither party on appeal was a party to

the Aargus/BGK Agreement. Even if we were to consider the Joyce affidavit, the affidavit fails

to correct the typographical errors. It only clarifies that the term “Contract” used in the

Aargus/BGK Agreement means the 69 West/Aargus Contract, but 69 West and Cook assert there

are additional typographical errors in the agreement. Further, these alleged errors by Aargus and

BGK would not affect either of their rights, but instead would negatively affect Clarendon and

Scottsdale by requiring them to defend 69 West and Cook. Since the Aargus/BGK Agreement

does not contain an obligation by BGK to confer insurance coverage to 69 West and Cook,

Clarendon and Scottsdale have no duty to defend 69 West and Cook as additional insureds.

       Moreover, the plain language of the Aargus/BGK Agreement shows an intention by the

parties not to define the insurance requirements. The Aargus/BGK Agreement contained a

provision that their obligations “shall be joint and several, unless otherwise agreed herein.”

Within that agreement, paragraph 16 stated that “all insurance that may from time to time be

required shall be obtained in such manner as the parties hereto agree.” “When interpreting the

provisions of a contract, the court must ascertain and give effect to the intent of the parties; and

the language of the contract is the best indication of the parties' intent.” Liberty Mutual Fire

Insurance Co., 363 Ill. App. 3d at 341. Paragraph 16 indicates the parties’ intent was to leave

open the subject of insurance for a future agreement. Nothing in paragraph 16 obligates BGK to

procure insurance for 69 West and Cook, and therefore, they do not qualify as additional insureds


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under BGK’s policies with Clarendon and Scottsdale. Moreover, we will not insert language into

the agreement that Aargus and BGK could easily have included. “ ‘There is a strong

presumption against provisions that easily could have been included in the contract but were not.’

” Miner v. Fashion Enterprises, Inc., 342 Ill. App. 3d 405, 417 (2003), quoting Wright v.

Chicago Title Insurance Co., 196 Ill. App. 3d 920, 925 (1990). Since Aargus and BGK could

have included language in their contract indicating BGK’s undertaking of the insurance

requirements in the 69 West/Aargus Contract, but declined to do so, this court will not add such

language to the contract.

       We also decline to consider the Joyce affidavit because the Aargus/BGK Agreement

contains an integration clause. Paragraph 21 provides: “This Agreement represents the entire

agreement and understanding of the parties hereto, and all prior or concurrent agreements,

understanding, representations, and warranties in regard to the subject matter hereof are and have

been merged herein.”

       “ ‘When parties sign a memorandum expressing all the terms essential to a complete

agreement they are to be protected against the doubtful veracity of the interested witnesses and

the uncertain memory of disinterested witnesses concerning the terms of their agreement, and the

only way in which they can be so protected is by holding each of them conclusively bound by the

terms of the agreement as expressed in the writing.’ ” Air Safety, 185 Ill. 2d at 464, quoting

Armstrong Paint & Varnish Works v. Continental Can Co., 301 Ill. 102, 106 (1921). Therefore,

“where parties formally include an integration clause in their contract, they are explicitly

manifesting their intention to protect themselves against misinterpretations which might arise


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from extrinsic evidence.” Air Safety, 185 Ill. 2d at 464.

       Here, the integration clause established that Aargus and BGK, as the contracting parties,

intended to be bound only by the terms of the contract as written. If we were to consider the

Joyce affidavit to explain the Aargus/BGK Agreement, then we would be ignoring the integration

clause and its purpose. We decline to do so. The Aargus/BGK Agreement fails to demonstrate

that BGK undertook an obligation to provide insurance coverage to 69 West and Cook.

       Because we have reversed the order of summary judgment in favor of 69 West and Cook,

we need not decide the issue of the exclusion raised by Clarendon and Scottsdale.

       Based on the foregoing reasons, we reverse the grant of summary judgment in favor of 69

West and Cook and enter summary judgment for Clarendon and Scottsdale, pursuant to Supreme

Court Rule 366. 155 Ill. 2d R. 366.

       Reversed.

       CAHILL and R. GORDON, JJ., concur.




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