                                                                                 Digitally signed by
                                                                                 Reporter of Decisions
                               Illinois Official Reports                         Reason: I attest to the
                                                                                 accuracy and integrity
                                                                                 of this document
                                      Appellate Court                            Date: 2017.02.15
                                                                                 12:17:52 -06'00'




                  Empress Casino Joliet Corp. v. W.E. O’Neil Construction Co.,
                                  2016 IL App (1st) 151166



Appellate Court           EMPRESS CASINO JOLIET CORPORATION, Plaintiff-Appellant,
Caption                   v. W.E. O’NEIL CONSTRUCTION COMPANY, an Illinois
                          Corporation, LINDEN GROUP, INC., an Illinois Corporation, R.L.
                          MILLIES & ASSOCIATES, INC., an Indiana Corporation, GLOBAL
                          FIRE PROTECTION COMPANY, an Illinois Corporation,
                          JAMESON SHEET METAL, INC., an Illinois Corporation, and
                          AVERUS, INC., f/k/a FACILITEC CENTRAL, INC., a Wisconsin
                          Corporation,    Defendants-Appellees.—NATIONAL FIRE AND
                          MARINE INSURANCE COMPANY, a Nebraska Corporation,
                          LLOYD’S SYNDICATE 1414 (Ascot), a British Underwriting
                          Syndicate, and AXIS INSURANCE COMPANY, an Illinois
                          Corporation, as Subrogees of Empress Casino Joliet Corporation, an
                          Illinois Corporation, Plaintiffs-Appellants, v. W.E. O’NEIL
                          CONSTRUCTION COMPANY, an Illinois Corporation, LINDEN
                          GROUP, INC., an Illinois Corporation, R.L. MILLIES &
                          ASSOCIATES, INC., an Indiana Corporation, GLOBAL FIRE
                          PROTECTION COMPANY, an Illinois Corporation, JAMESON
                          SHEET METAL, INC., an Illinois Corporation, and AVERUS, INC.,
                          f/k/a FACILITEC CENTRAL, INC., a Wisconsin Corporation,
                          Defendants-Appellees.



District & No.            First District, Third Division
                          Docket Nos. 1-15-1166, 1-15-1184



Filed                     November 16, 2016
Rehearing denied          December 21, 2016


Decision Under            Appeal from the Circuit Court of Cook County, Nos. 2012-L-012077,
Review                    2014-L-003223; the Hon. John P. Callahan, Jr., Judge, presiding.
Judgment     Affirmed in part; reversed and remanded in part.



Counsel on   Mark A. Rabinowitz and Kevin P. Caraher, of Cozen O’Connor, PC,
Appeal       and David E. Walker and Douglas Walker, of Walker Wilcox
             Matousek LLP, both of Chicago, for appellants Empress Casino Joliet
             Corp., National Fire and Marine Insurance Co., and Lloyd’s Syndicate
             1414 (Ascot).

             Randy Green, of Dugan Brinkmann, Maginnis & Pace, and Thomas
             A. McDonald, of McDonald Law Firm, both of Chicago, for appellant
             Axis Insurance Co.

             Robert J. Franco and Christopher M. Cano, of Franco & Moroney,
             LLC, of Chicago, for appellee W.E. O’Neil Construction Co.

             Robert Marc Chemers, Richard M. Waris, and Donald Patrick Eckler,
             of Pretzel & Stouffer, Chtrd., of Chicago, for appellee Jameson Sheet
             Metal, Inc.

             William P. Pistorious and Mark J. Sobczak, of Clausen Miller, of
             Chicago, for appellee Global Fire Protection Co.

             Ryan T. Johnson and Clare J. Quish, of Schuyler, Roche & Crisham,
             P.C., of Chicago, for appellee Linden Group, Inc.

             Dan L. Boho and Steven R. Swofford, both of Hinshaw & Culbertson,
             LLP, of Chicago, for appellee Averus, Inc.

             James W. Ozog and David J. O’Connell, of Golberg Segalla LLP, of
             Chicago, for appellee R.L. Millies & Associates, Inc.




Panel        PRESIDING JUSTICE FITZGERALD SMITH delivered the
             judgment of the court, with opinion.
             Justices Lavin and Cobbs concurred in the judgment and opinion.




                                -2-
                                              OPINION

¶1        This cause of action arises from a fire that occurred during an extensive renovation project,
     at Empress Casino Joliet (hereinafter the casino) on March 20, 2009. As a result of the fire, the
     casino, which is owned by the insured plaintiff, Empress Casino Joliet Corporation
     (hereinafter Empress), sustained extensive damages. Empress received $81,150,000 in
     insurance payments from three separate insurers—Axis Insurance Company (hereinafter
     Axis), National Fire and Marine Insurance Company (hereinafter National Fire), and Lloyd’s
     Syndicate 1414 (Ascot) (hereinafter Lloyd’s)—under three separate insurance policies. The
     Axis policy was a “builder’s risk” policy specific to the renovation project, while the National
     Fire and Lloyd’s policies provided general property coverage for the casino. At issue in this
     appeal are the subrogation rights of the three insurers.
¶2        Specifically, in this appeal Empress and the three insurers appeal the trial court’s grant of
     summary judgment against them in two underlying consolidated actions against numerous
     defendants that they claim were responsible for the fire. The first cause of action (case No.
     2012 L 012077) was filed by Empress against W.E. O’Neil Construction Co. (hereinafter W.E.
     O’Neil), Global Fire Protection Company (hereinafter Global), Jameson Sheet Metal Inc.
     (hereinafter Jameson), the Linden Group, Inc. (hereinafter Linden), R. L. Millies & Associates,
     Inc. (hereinafter Millies), and Averus, Inc. (hereinafter Averus), and asserted claims for
     $83,700,000 in damages to cover: (1) the $2,550,000 deductibles that Empress incurred as a
     result of the fire and (2) the $81,150,000 in payments that the three insurers made for
     Empress’s covered losses and for which they should have been subrogated. The second action
     (case No. 2014 L 003223) was filed by the three insurers (Axis, National Fire, and Lloyd’s)
     against the same defendants and asserted their subrogation claims. Both actions alleged claims
     of negligence and willful and wanton misconduct against all of the defendants, and claims for
     breach of contract against all of the defendants, except for Averus.
¶3        After the two cases were consolidated, the circuit court granted summary judgment in
     favor of all the defendants, on all claims, holding that a waiver of subrogation clause contained
     in the construction contract for the casino renovation project prevented all the plaintiffs from
     asserting their respective subrogation claims. The plaintiffs now appeal.
¶4        On appeal, all of the plaintiffs (Empress, Axis, National Fire, and Lloyd’s) argue that the
     trial court erred when it found that the waiver of subrogation clause in the renovation
     construction contract applied to the defendant, Averus, since Averus operated under a separate
     pre-existing oral contract and was not involved in the renovation project. All of the plaintiffs
     also assert that the trial court erred when it found that the waiver of subrogation clause
     prevented them from proceeding with their willful and wanton misconduct claims because
     public policy should bar enforcement of such exculpatory clauses where heighted misconduct
     is alleged.
¶5        In addition, Empress, National Fire, and Lloyd’s argue that the waiver of subrogation
     clause is limited to Axis’s builders risk policy and does not apply to Empress’s general
     property insurance policies with National Fire and Lloyd’s. In the alternative, Empress,
     National Fire, and Lloyd’s argue that to the extent that waiver of subrogation might apply, it is
     limited to those losses related to the work (i.e., the renovation project), as it is defined in the
     construction contract. In addition, Empress, National Fire, and Lloyd’s argue that the
     defendants’ material breaches of the construction contract should bar enforcement of the

                                                  -3-
       waiver of subrogation clause. Finally, Empress asserts that it never waived its right to recover
       its deductibles under its general property insurance policies with National Fire and Lloyd’s.
       For the reasons that follow, we affirm in part and reverse in part.

¶6                                        I. BACKGROUND
¶7         The record below us is voluminous. For purposes of clarity, we will set forth only those
       facts and procedural history relevant for this appeal.

¶8                                            A. The Parties
¶9         In 2008, Empress, which owned and operated the casino complex located in Joliet, Illinois,
       began performing extensive renovations to its property. For this purpose, Empress entered into
       a construction contract with O’Neil as the general contractor. O’Neil then hired, inter alia,
       subcontractors Jameson (for HVAC and sheet metal work) and Global (for sprinkler
       installment). Linden was the architect and Millies the mechanical, electrical, and plumbing
       engineer (responsible for inter alia, the fire sprinkler and mechanical systems) for the
       renovation project. The parties do not dispute that prior to the renovation project, Empress had
       entered into a separate contract with Averus for Averus periodically to perform cleaning and
       maintenance services at the casino, including the cleaning and removal of cooking grease and
       other combustible residue from ductwork in and above the kitchen. Averus continued to
       perform these services for Empress during the renovation project.

¶ 10                         B. The Renovation Project Construction Contract
¶ 11       The parties agree that on September 15, 2008, Empress entered into a construction contract
       with O’Neil for the renovation project. That contract was comprised of, inter alia: (1) the
       American Institute of Architects (AIA) Standard Form of Agreement Between Owner and
       Contractor (AIA Document A111-1997) and (2) the General Conditions of the Contract for
       Construction (AIA A21-1997) (hereinafter the construction contract). Relevant to the issues in
       this appeal, as to insurance coverage, the construction contract required Empress as the
       “Owner” to maintain both liability (section 11.2) and property (section 11.4) insurance. With
       respect to property insurance section 11.4 provides in pertinent part:
                   “§ 11.4.1 Unless otherwise provided, the Owner shall purchase and maintain, in a
               company or companies lawfully authorized to do business in the jurisdiction in which
               the Project is located, property insurance written on a builder’s risk ‘all-risk’ or
               equivalent policy form in the amount of the initial GMP, plus value of subsequent
               Contract modifications and cost of material supplied or installed by others, comprising
               total value for the entire Project at the site on a replacement cost basis without optional
               deductibles. Such property insurance shall be maintained, unless otherwise provided in
               the Contract Documents or otherwise agreed in writing by all persons and entities who
               are beneficiaries of such insurance, until final payment has been made as provided in
               Section 9.10 or until no person or entity other than the Owner has an insurable interest
               in the property required by this Section 11.4 to be covered, whichever is later. This
               insurance shall include interest of the Owner, the Contractor, Subcontractors, and
               Sub-subcontractors in the Project.”



                                                    -4-
¶ 12       Section 11.4.1.1 further provides that the property insurance shall be on “an ‘all risk’ or
       equivalent policy form and must include, “without limitation, insurance against the perils of
       fire (with extended coverage) and physical loss or damage, including *** [inter alia], theft,
       vandalism, malicious mischief, collapse, earthquake, flood, windstorm, falsework, testing and
       startup.” The property insurance also must cover “reasonable compensation” for services and
       expenses incurred by the architect and contractor “as a result of such insured loss.”
¶ 13       Section 11.4.1.2 further explicitly provides that if the owner chooses not to purchase
       property insurance, the owner must inform the contractor in writing of such a decision before
       the work begins so that the contractor may obtain such insurance and protect its interest (as
       well as the interests of the subcontractors and sub-subcontractors) in the work, as well as
       increase the price tag on the renovation project, to cover the cost of having to obtaining such
       insurance itself.
¶ 14       The contract also allocates who will be responsible for payment of deductibles after the
       property insurance is obtained. Section 11.4.1.3 explicitly states that “If the property insurance
       requires deductibles, the Owner shall pay costs not covered because of such deductibles.”
¶ 15       In addition, the contract contains an explicit waiver of subrogation clause. Specifically,
       sections 11.4.5 and 11.4.7 state in pertinent part:
                   “§ 11.4.5 If during the Project construction period the Owner insures properties,
               real or personal or both, at or adjacent to the site by property insurance under policies
               separate from those insuring the Project, or if after final payment property insurance is
               to be provided on the completed Project through a policy or policies other than those
               insuring the Project during the construction period, Owner shall waive all rights in
               accordance with the terms of Section 11.4.7 for damages caused by fire or other causes
               of loss covered by this separate property insurance. All separate policies shall provide
               this waiver of subrogation by endorsement or otherwise.
                                                    ***
                   § 11.4.7 Waiver of Subrogation. The Owner and Contractor waive all rights against
               (1) each other and any of their subcontractors, sub-subcontractors, agents and
               employees, each of the other, and (2) the Architect, Architect’s consultants, separate
               contractors described in Article 6, if any and any of their subcontractors,
               sub-subcontractors, agents and employees, for damages caused by fire or other causes
               of loss to the extent covered by property insurance obtained pursuant to this Section
               11.4 or other property insurance applicable to the Work, except such rights as they have
               to proceeds of such insurance held by the Owner as fiduciary. The Owner or
               Contractor, as appropriate, shall require of the Architect, Architect’s consultants,
               separate contractors described in Article 6, if any, and the subcontractors,
               sub-contractors, agents and employees of any of them, by appropriate agreements,
               written where legally required for validity, similar waivers each in favor of other
               parties enumerated herein. The policies shall provide such waivers of subrogation by
               endorsement or otherwise. A waiver of subrogation shall be effective as to a person or
               entity even though that person or entity would otherwise have a duty of
               indemnification, contractual or otherwise, did not pay the insurance premium directly
               or indirectly, and whether or not the person or entity had an insurable interest in the
               property damage.”


                                                   -5-
¶ 16       Article 6 referenced above is titled “Construction By Owner or by Separate Contractors.”
       Section 6.1 of that article, states in pertinent part:
               “[T]he Owner reserves the right to perform construction or operations related to the
               Project with the Owner’s own forces, and award separate contracts in connection with
               other portions of the Project or other construction or operations on the site under
               Conditions of the Contract identical or substantially similar to these including those
               portions related to insurance and waiver of subrogation.”
       In addition, section 6.1.2 of that article provides that “[w]hen separate contracts are awarded
       for different portions of the Project or other construction or operations on the site, the term
       ‘Contractor’ in the Contract Documents in each case shall mean the Contractor who executes
       each separate Owner-Contractor Agreement.” Finally, section 6.1.4 states that:
               “when the Owner performs *** operations related to the Project with the Owner’s own
               forces, the Owner shall be deemed to be subject to the same obligations and to have the
               same rights which apply to the Contractor under the Conditions of the Contract,
               including without excluding others, those stated in [inter alia] Article[ ] *** 11 ***.”

¶ 17                                  C. Empress’s Insurance Policies
¶ 18       At the time of the fire, Empress had in place three insurance policies. Specifically, for
       purposes of the renovation project, Empress purchased a “builder’s risk policy” from Axis.
       This policy was in effect from December 22, 2008, to December 22, 2009. The Axis policy
       provided coverage for “direct physical ‘loss’ to Covered Property caused by or resulting from
       any of the Covered Causes of Loss.” Under the policy “Covered Property” was defined as,
       inter alia, “[b]uildings or structures (including foundations, underground flues, pipes or
       drains) while under construction, erection or fabrication at the project site shown in the
       Coverage Form Declarations.” The Axis policy contained explicit language indicating that
       Axis (as the insurer) “may waive [its] rights against another party in writing” prior to a loss to
       covered property.
¶ 19       In addition to the Axis policy, at the time of the incident, Empress also had in place two
       general “all-risk” property insurance policies for the casino with National Fire and Lloyd’s.
       Both policies were in effect for the period between August 8, 2007, and December 31, 2010.
       National Fire was responsible for 90% of the property coverage, and Lloyd’s for 10%. The
       parties do not dispute that Lloyd’s policy incorporates by reference the wording of the National
       Fire policy so that the language of the two policies is essentially the same. Specifically, the
       policies “insure[ ] against all risk of direct physical loss or damage to property insured by this
       policy occurring during the policy period except as hereinafter excluded.” The policies define
       “property” as “real or personal property,” including,” inter alia, “improvements and
       betterments”; “property in the care, custody or control of the Insured or for which the Insured is
       legally liable to insure”; “property of the Insured in the care, custody or control of others”;
       “property while in the incidental course of construction, installation, erection or assembly”;
       “demolition and increased cost of construction”; and “debris removal.”
¶ 20       The policies further provided that “[u]nder no circumstances shall insurer be liable for
       cover, nor drop down in the event of erosion of aggregate for the following,” inter alia,
       “Property in the Course of Construction (except for incidental Course of Construction) being
       property in due course of construction, renovation, erection, installation, or assembly.”


                                                   -6-
       “Incidental Course of Construction” is separately defined in National Fire’s policy as “total
       contracted works costs of $10,000,000 or lower.”
¶ 21       In addition, both National Fire and Lloyd’s policies contain a “Subrogation” provision,
       which states in relevant part that they as “[t]he Insurer[s] will not acquire any rights of
       recovery that the Insured has expressly waived prior to loss, nor will such waiver affect the
       Insured’s rights under the Policy.”

¶ 22                                  D. The Fire and the Complaints
¶ 23       On March 20, 2009, during the first phase of the renovation project, large portions of the
       casino were destroyed by a fire. After Empress received $81,150,000 in insurance proceeds
       from Axis, National Fire, and Lloyd’s,1 on October 23, 2012, it filed a complaint against the
       defendants to recoup damages for itself and for its insurers, resulting from the fire (case No.
       2012 L 012077).
¶ 24       According to Empress’s complaint, the fire was started when a Jameson employee, Mike
       Haberzetle, was welding ductwork in the kitchen area. Haberzetle was attaching new ductwork
       to the existing duct for the kitchen hood exhaust and started welding the existing ductwork
       even though the duct was coated with grease and other residue from cooking. During the
       welding the existing duct ignited on the inside, causing extensive damage to the casino
       complex. In a written statement, which is part of the record on appeal, Haberzetle described the
       incident as follows:
               “I was welding in the new kitchen area attaching new duct to the existing [duct] for the
               kitchen hood exhaust. The existing duct started on fire on the inside. I took the lift
               down to the ground, went for the fire extinguisher, [but] it was not on the pole for it. So
               I went to get another and tell Lance [the foreman] about it. When I got back to put it
               out, it was out of control and we called the fire department.”
¶ 25       In its complaint, Empress further alleged that during the welding operations, O’Neil and
       Jameson both failed to provide the necessary fire watch required as protection during hot work.
       Specifically, Empress complained that O’Neil and Jameson did not have a fire extinguisher
       near Haberzetle and permitted or participated in the decision to allow the welding to occur
       when fire sprinklers in other areas of the casino were out of operation. In addition, Empress
       alleged that O’Neil and Jameson failed to maintain the required clearance between the welding
       operations and combustibles.
¶ 26       Empress also alleged that the architect, Linden, and the mechanical engineer, Millies,
       failed to provide for sprinklers in the concealed attic/truss spaces above the kitchen as required
       by the building code. Similarly, Empress alleged that the sprinkler subcontractor, Global, had
       installed the non-compliant sprinkler system.
¶ 27       As to Averus, Empress alleged that four months prior to the incident, Averus purportedly
       spent five hours performing cleaning services at the casino and submitted a written report to
       Empress stating that it had spent this time cleaning the “kitchen hot line” and certifying that the
       “ductwork [was] clean.” Nonetheless, according to the complaint, the ductwork in the kitchen
       was coated with grease.

          1
           According to the insurers’ complaint, National Fire paid $64,215,000, Lloyd’s paid $7,135,000,
       and Axis paid $9,800,000 to Empress for the fire damage.

                                                    -7-
¶ 28       Accordingly, Empress alleged that as a result of the defendants’ negligence, and willful
       and wanton misconduct, the fire resulted in $83,695,000 in damages. Accordingly, Empress
       sought $81,150,000 for the insurers and the remainder to cover Empress’s deductibles.
¶ 29       The three insurers—Axis, National Fire, and Lloyd’s—subsequently filed a direct
       subrogation suit against the defendants, seeking to recover the same damages as those in the
       Empress lawsuit (case No. 2014 L 003223). The allegations in the insurers’ complaint were
       identical to those in Empress’s complaint. These two cases were later consolidated. Empress
       subsequently amended its complaint and added breach of contract claims against all the
       defendants, except for Averus.

¶ 30                                           E. Discovery
¶ 31       The parties proceeded with discovery, during which the following relevant deposition
       testimony was obtained.
¶ 32       Norman Nelms, Empress’s vice president for design and construction, testified, inter alia,
       that the casino renovation project was budgeted at $50 million and involved both the
       renovation of the land and vessel portion of the casino. Nelms stated that Empress hired Linden
       as project architect to develop the renovation design and that Linden in turn hired Millies as
       mechanical engineer.
¶ 33       In his deposition, Nelms acknowledged that after the design was discussed but before the
       project began, he was aware of certain problems with the fire safety of the casino. Specifically,
       Nelms knew that the dry pipe system in the casino’s pavilion was unable to hold pressure
       effectively and was therefore compromised. Nelms did not know if the area above the kitchen
       duct in the pavilion was sprinklered. He stated, however, that he was aware that the pavilion
       area had a functional wet system (sprinklers) in case of fire. He explained that the wet system
       covered all of the “below ceiling” spaces in the pavilion and the dry system covered all of the
       spaces in the pavilion above the ceiling (i.e., the attic space). Nelms also testified that the
       casino engaged in fire watches but did not know details as to how these were conducted.
¶ 34       Nelms next explained that, during the renovation project, the responsibility for the safety of
       the job site fell to the general contractor, O’Neil, who had control of the job site. Nelms
       explained that this responsibility was accorded to O’Neil by way of (1) the construction project
       (2) O’Neil’s own safety program and (3) industry custom and practice. Nelms averred that
       since renovation always involved some aspects of demolition, there would necessarily be times
       when the sprinkler system would have to be out of commission. Therefore, there were special
       safety considerations for the project for which O’Neil was responsible, including anything
       related to protecting customers, the building, and the workers during the renovation. Nelms
       explained that Empress’s role in terms of safety would have been to collaborate with O’Neil.
¶ 35       During his deposition, Nelms was shown a Site Assessment Report for February 11, 2009
       (about a month before the fire), which states that if any element of the fire protection system
       has to come down due to renovation activities, Empress’s casino security guards would
       perform fire watch walks in those areas. Nelms averred that this report evidenced the
       “collaboration” that was required between O’Neil and Empress during the renovation. He
       admitted, however, that he did not know if the Empress security guards ever actually
       performed those walks.



                                                   -8-
¶ 36       Nelms acknowledged that the responsibility for the presence of fire extinguishers on site
       was shared by Empress and O’Neil, with O’Neil being responsible for the fire extinguishers
       within the construction zone, and Empress for those in the remainder of the facilities.
¶ 37       Nelms had no personal knowledge as to how the fire occurred but testified that it was his
       opinion that the “unfortunate accident” occurred by “a lapse of judgment or supervision” by
       either Jameson or O’Neil. He explained that the welder should have had better instruction, a
       fire extinguisher should have been present, or hot work permits should have been properly
       obtained.
¶ 38       Nelms was next questioned about the content of the construction contract Empress entered
       into with O’Neil. He acknowledged that the contract contained a liquidated damages provision
       and that section 4.3.10 contained a waiver of consequential damages (namely that the
       contractor and owner waive claims against each other for consequential damages arising out of
       or relating to the contract). Nelms also acknowledged that contracts of this nature usually
       involve a concept known as “flow down,” which means that whatever is contained in the
       contract is “flowed down” to the lower tier to the subcontractors, so that whatever burdens are
       placed on a general contractor and whatever benefits are given to the general contractor flow
       down to the subcontractors without creating privity of contract between the subcontractors and
       the owner.
¶ 39       With respect to the waiver of subrogation provision in the contract, Nelms admitted that it
       was his understanding that Empress provided builders risk insurance coverage for the
       renovation, but he did not understand what this type of insurance entailed or what type of
       subrogation rights were obtained or triggered thereunder. He also admitted that the casino had
       property insurance but could not speak as to what that insurance covered.
¶ 40       In his deposition, Jacques Arragon, Empress’s director of risk management, next testified,
       inter alia, that he was responsible for negotiating and drafting all of the insurance portions of
       the construction contract between Empress and O’Neil. Arragon acknowledged that for
       purposes of the renovation project, Empress ensured that it had a builder’s all-risk insurance
       policy (with Axis), which had a miscellaneous property under construction supplement with a
       threshold sublimited to $10 million.
¶ 41       Arragon stated that the waiver of subrogation clause in the construction contract was a
       modification from the original AIA form. According to Arragon, the purpose of that provision
       was to have Empress protect the interests of the owner, contractor, subcontractors and
       sub-subcontractors of the project by way of builder’s risk insurance. Arragon testified that it
       was his understanding that section 11.4.7 of the construction contract applied only to the
       builder’s risk policy because it covered only insurance relating to work—i.e., the renovation
       project. According to Arragon, the work was supposed to be covered by the builder’s risk
       insurance, while the remainder of the adjacent buildings where the renovation was not taking
       place were to be covered by Empress’s general property insurance policies. Arragon conceded,
       however, that section 11.4.5 of the construction contract applied to the two property insurance
       policies issued by Lloyd’s and National Fire and that it includes a requirement that Empress
       waive any subrogation claims as to these two policies. Arragon, however, could not remember
       whether any special endorsements for such mandatory waivers under section 11.4.5 were ever
       completed.
¶ 42       Arragon admitted that, since the fire, Empress has changed its insurance coverage template
       to have higher builder’s risk insurance and not have multiple insurers on the same loss

                                                   -9-
       covering different things. Rather, now, Empress obtains property insurance and builder’s risk
       under just one program.
¶ 43       With respect to his knowledge of any problems at the casino prior to the fire, Arragon
       testified he could not recall if he was aware of any fire safety issues. When presented with the
       February 23, 2009, site assessment report, Arragon acknowledged that he ordered that report
       be prepared but testified that, because the report was overall satisfactory, he relied on the fact
       that Empress’s security guards would perform some of the fire watches and accordingly did
       nothing further about it.
¶ 44       Arragon also explained in his deposition that a hot works permit is a document used during
       the renovation that states when there will be any type of hot works, including welding, and
       whether the area where such welding will occur is secured (i.e., if there are any combustibles
       within a specific distance, whether fire extinguishers are available, etc.). The hot works
       permits must be signed by an individual responsible for the safety of the hot works site.
       Arragon admitted that after the fire, upon his order, Empress has strengthened its hot works
       permit process.
¶ 45       In his deposition, Donald Stewart, vice president of the fire protection division of Averus,
       testified that Averus was responsible for cleaning the hoods at the casino since 2008.
       According to Stewart, there was no written contract between Averus and Empress for services.
       Instead, Averus submitted a signed proposal and received a verbal approval from Empress to
       perform the services. A copy of Averus’s proposal is included in the record below us and is a
       two-page document, which is neither in AIA format nor includes any reference to a waiver of
       subrogation. What is more, Stewart explicitly admitted in his deposition that in coming to their
       verbal agreement, there was never any discussions between Averus and Empress about any
       waiver of subrogation. In addition, no one ever asked Stewart to sign a waiver of subrogation
       form. Stewart also acknowledged that when Averus entered into the agreement with Empress,
       Averus was operating under the National Fire Protection Association (NFPA) 96 standard as to
       the frequency of the cleanings it recommended in its proposals and that under those rules it was
       required to clean any contaminated portions of the exhaust system or provide Empress with a
       written report specifying all areas that were inaccessible or not cleaned.
¶ 46       In his deposition, Stewart further admitted that at the time of the fire, Averus was working
       directly for the casino and that it was not a subcontractor to anyone relative to the ongoing
       renovation project.
¶ 47       Stewart stated that, prior to the fire, the last time Averus cleaned the buffet kitchen exhaust
       hood was on October 19, 2008. On the advice of his attorney, Stewart refused to answer
       counsels’ questions about when Averus last cleaned the horizontal main line in the pavilion
       area.
¶ 48       In his deposition John Russell, president of O’Neil, next testified, inter alia, that he was
       principally responsible for negotiating the construction contract between O’Neil and Empress,
       with some help from Nelms and Arragon. Russell testified that it was his understanding, both
       from the language of the contract and the negotiations he had with Empress’s principals, that
       during the renovation project O’Neil would have access to all of Empress’s insurance policies
       (including builder’s risk, property, use, etc.). Specifically, Russell averred that when read as a
       whole, section 11.4 of the construction contract clearly required Empress to purchase builder’s
       risk insurance and make available to O’Neil insurance for any adjacent property, as well as
       insurance for any loss of use. According to Russell, section 11.4.1 required Empress to provide

                                                   - 10 -
       the builder’s risk insurance. Section 11.4.1.3 confirmed that Empress was responsible for all
       deductibles associated with its policies and required Empress to purchase insurance for loss of
       use and make it available to O’Neil. This section also included a waiver of subrogation.
       According to Russell, section 11.4.5 further required Empress to provide O’Neil with
       insurance for adjacent properties and included a waiver of subrogation. Under section 11.4.7,
       Empress waived subrogation for any damage caused by fire. Finally, section 11.4.1.2 provided
       that if Empress did not provide any of those coverages, it would have an obligation to notify
       O’Neil so that it could purchase the insurance and change the order to increase the price of the
       renovation project.
¶ 49        Russell also testified in his deposition that it was his understanding that Empress would
       waive any rights to subrogation under the contract. He testified that his objective in negotiating
       is to make sure, if at all possible, that his company transfers all of the risk that is available to the
       owner’s policies. Otherwise, O’Neil needs to purchase additional polices and burden the
       project with additional costs. Accordingly, Russell expected that the standard text of the AIA
       would be in play.
¶ 50        Russell further testified that the renovation project was not limited to any particular area of
       the casino complex and that O’Neil’s work encompassed the whole property.
¶ 51        In his deposition Joseph Cassacio, an officer of National Fire, testified, inter alia, that the
       sublimit of $10 million contained in National Fire’s property insurance policy for Empress was
       intended to delineate between minor and large construction projects. Specifically, if a
       construction project involved costs of up to $10 million, then those costs would be covered
       under the National Fire policy. Cassacio admitted, however, that National Fire paid Empress
       insurance proceeds after the fire for the “loss of the property that was next door” and caused by
       that fire.
¶ 52        In addition, Cassacio testified that it was his opinion that National Fire had not waived any
       subrogation rights under the construction contract. While Cassacio acknowledged that the
       National Fire policy states that if the insured (Empress) has waived its rights to recover prior to
       a loss then the insured cannot pursue subrogation, he testified that such a waiver must be
       express (by naming the additional insured and by way of endorsement of the existing insurance
       policy). According to Cassacio any waiver of subrogation in the construction contract applies
       only to the builder’s risk policy. Specifically, Cassacio asserted that section 11.4.5 of the
       construction contract does not pertain to National Fire because National Fire’s policy was not
       obtained during the renovation project and there was no endorsement of any such waiver by
       National Fire.

¶ 53                                    F. Summary Judgment
¶ 54       After discovery, the defendants moved for summary judgment, arguing that the plaintiffs’
       claims were barred by the waivers of subrogation in the construction contract.2 In support of
       their motion for summary judgment the defendants attached the following exhibits: (1) their

           2
            Although the defendants initially filed their motion for summary judgment only against Empress
       in case No. 12 L 12077, all the parties agreed, and the trial court subsequently ordered, that the
       defendants’ motion for summary judgment (as well as the parties’ briefs with respect to that motion) be
       considered as a motion for summary judgment brought by all defendants against all plaintiffs in both
       cases (Nos. 12 L 12077 and 14 L 3223).

                                                     - 11 -
       two complaints; (2) the construction contract; (3) Empress’s three insurance policies; (4)
       Empress’s discovery responses (admitting to having received the insurance proceeds from the
       insurers); and (5) the depositions of Nelms, Arragon, and Cassacio.
¶ 55       The plaintiffs filed their response to the motion for summary judgment, arguing, inter alia,
       that under the plain language of the construction contract (1) the waiver of subrogation clause
       did not apply to the two property insurers (National Fire and Lloyd’s) or to Averus and (2)
       Empress did not waive its right to recover its deductibles. In support they attached, inter alia,
       (1) the depositions of Stewart and Russell, (2) a subcontract with Jameson, (3) the AIA official
       guide, and (4) Haberzetle’s statement.
¶ 56       After reviewing the extensive briefs filed by the parties, and having heard oral arguments
       on the issues raised, on March 30, 2010, the trial court granted summary judgment in favor of
       the defendants. In doing so, the court held that the plain language of the construction contract
       reveals the parties’ intent that Empress assume the risk of loss for any fire loss and look to its
       different insurance policies as the single source of recovery. Accordingly, the court concluded
       that Empress had agreed to waive all rights to subrogation against all possible at-fault parties.
       In addition, the court found that pursuant to the plain language of the construction contract,
       Empress was responsible for its own insurance deductibles. The plaintiffs now appeal.

¶ 57                                           II. ANALYSIS
¶ 58        Before addressing the merits, we begin by noting the well-established principles regarding
       grants of summary judgment. “Summary judgment is a drastic measure of disposing of
       litigation” (Bruns v. City of Centralia, 2014 IL 116998, ¶ 12) and should only be granted “if
       the movant’s right to judgment is clear and free from doubt” (Outboard Marine Corp. v.
       Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102 (1992)). See also Schade v. Clausius, 2016
       IL App (1st) 143162, ¶ 18. Summary judgment is proper where “the pleadings, depositions,
       and admissions on file, together with the affidavits, if any, show that there is no genuine issue
       as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
       735 ILCS 5/2-1005(c) (West 2012); see also Carlson v. Chicago Transit Authority, 2014 IL
       App (1st) 122463, ¶ 21; Fidelity National Title Insurance Co. of New York v. West Haven
       Properties Partnership, 386 Ill. App. 3d 201, 212 (2007) (citing Home Insurance Co. v.
       Cincinnati Insurance Co., 213 Ill. 2d 307, 315 (2004)); Virginia Surety Co. v. Northern
       Insurance Co. of New York, 224 Ill. 2d 550, 556 (2007). In determining whether the moving
       party is entitled to summary judgment, the court must construe the pleadings and evidentiary
       material in the record in the light most favorable to the nonmoving party and strictly against the
       moving party. Schade, 2016 IL App (1st) 143162, ¶ 17; see also Happel v. Wal-Mart Stores,
       Inc., 199 Ill. 2d 179, 186 (2002). “Although the burden is on the moving party to establish that
       summary judgment is appropriate, the nonmoving party must present a bona fide factual issue
       and not merely general conclusions of law.” Morissey v. Arlington Park Racecourse, LLC, 404
       Ill. App. 3d 711, 724 (2010). “A genuine issue of material fact exists where the facts are in
       dispute or where reasonable minds could draw different inferences from the undisputed facts.”
       Morrissey, 404 Ill. App. 3d at 724; see also Espinoza v. Elgin, Joliet & Eastern Ry. Co., 165 Ill.
       2d 107, 114 (1995) (“[W]here reasonable persons could draw divergent inferences from the
       undisputed material facts or where there is a dispute as to [the] material fact, summary
       judgment should be denied and the issue decided by the trier of fact.”). Our review of the trial
       court’s entry of summary judgment is de novo. See Village of Palatine v. Palatine Associates,

                                                   - 12 -
       L.L.C., 2012 IL App (1st) 102707, ¶ 43; see also Ragan v. Columbia Mutual Insurance Co.,
       183 Ill. 2d 342, 349 (1998); Outboard Marine, 154 Ill. 2d at 102.
¶ 59       On appeal, the plaintiffs make numerous contentions of error, in some instances pertaining
       to all of them and in others only to some. For purposes of clarity, we begin by addressing those
       arguments raised by all of the plaintiffs.

¶ 60                                             A. Averus
¶ 61       First, all of the plaintiffs (Empress, Axis, National Fire, and Lloyd’s) argue that the trial
       court erred when it granted summary judgment in favor of Averus, on the basis of the waiver of
       subrogation clause in section 11.4.7 of the construction contract, where that clause could not
       have applied to Averus, since Averus operated under a separate pre-existing oral agreement
       with Empress and its work in the casino was not related to the renovation project. The
       defendants, on the other hand, assert that pursuant to article 6 of the construction contract,
       Averus, who was hired by Empress to perform “other operations on site,” became a
       “contractor” for purposes of the waiver of subrogation in section 11.4.7. For the reasons that
       follow, we disagree with the defendants.
¶ 62       In interpreting a contract, our primary objective is to effectuate the intent of the parties.
       Thompson v. Gordon, 241 Ill. 2d 428, 441 (2011); see also Gallagher v. Lenart, 226 Ill. 2d 208,
       232 (2007). In doing so, we first look to the plain language of the contract to determine the
       parties’ intent. Thompson, 241 Ill. 2d at 441; see also Gallagher, 226 Ill. 2d at 233. If the words
       in the contract are clear and unambiguous, we must give them their plain, ordinary and popular
       meaning. Thompson, 241 Ill. 2d at 441 (citing Central Illinois Light Co. v. Home Insurance
       Co., 213 Ill. 2d 141, 153 (2004)). However, if the language of the contract is ambiguous, we
       may look to extrinsic evidence to determine the parties’ intent. Thompson, 241 Ill. 2d at 441;
       Gallagher, 226 Ill. 2d at 233. Language in a contract is ambiguous if it is “susceptible to more
       than one meaning.” Thompson, 241 Ill. 2d at 441. However, mere disagreement between the
       parties concerning a provision’s meaning will not automatically render such language
       ambiguous. Thompson, 241 Ill. 2d at 443. Rather, instead of focusing on one clause or
       provision in isolation, we, as the reviewing court, must read the entire contract in context and
       construe it as a whole, viewing each provision in light of the other ones. See Gallagher, 226 Ill.
       2d at 233; see also Thompson, 241 Ill. 2d at 441. In doing so, we will not add language or
       matters to a contract about which the instrument is silent, nor add words or terms to the
       agreement to change the plain meaning, as expressed by the parties. Sheehy v. Sheehy, 299 Ill.
       App. 3d 996, 1001 (1998).
¶ 63       In the present case, section 11.4.7 of the construction contract provides in pertinent part:
                “Waivers of Subrogation. The Owner and Contractor waive all rights against (1) each
                other and any of their subcontractors, sub-subcontractors, agents, and employees, each
                of the other *** and separate contractors described in Article 6 *** for damages caused
                by fire or other causes of loss to the extent covered by property insurance obtained
                pursuant to this Section 11.4 or other property insurance applicable to the Work ***.”
¶ 64       Further, article 6, which is titled “Construction by Owner or by Separate Contractors,”
       states in relevant part:
                    “§ 6.1.1 The Owner reserves the right to perform construction or operations related
                to the Project with the Owner’s own forces, and to award separate contracts in


                                                   - 13 -
                connection with other portions of the Project or other construction or operations on the
                site under Conditions of the Contract identical or substantially similar to these
                including those portions related to insurance and waiver of subrogation.”
¶ 65        In addition, section 6.1.2 provides that “[w]hen separate contracts are awarded for different
       portions of the Project or other construction or operations on the site, the term ‘Contractor’ in
       the Contract Documents in each case shall mean the Contractor who executes each separate
       Owner-Contractor Agreement.” Finally, section 6.1.4 states that “when the Owner performs
       *** operations related to the Project with the Owner’s own forces, the Owner shall be deemed
       to be subject to the same obligations and to have the same rights which apply to the Contractor
       under the Conditions of the Contract, including without excluding others, those stated in
       [inter alia] Article[ ] *** 11.”
¶ 66        Construing these sections of the contract as a whole, we find that under the plain language
       of the construction contract, Averus does not fall into the category of entities to which the
       waiver of subrogation applies. The plain language of section 11.4.7 makes clear that the waiver
       is limited to a class of defined participants, including (1) the owner, (2) the contractor, (3) the
       subcontractor, (4) the sub-subcontractors, and (5) their respective agents and employees, as
       well as “separate contractors described in Article 6.” The construction contract clearly
       identifies Empress as the owner and O’Neil as the contractor. In addition, the contract defines a
       “subcontractor” as an “entity who has a direct contract with the Contractor to perform a portion
       of the Work at the site” and a “sub-subcontractor” as an “entity who has a direct or indirect
       contract with the Contractor to perform a portion of the Work at the site.” As such, since
       Averus admittedly had no direct contract with either O’Neil or any of O’Neil’s subcontractors,
       Averus does not fall into the category of either subcontractor or a sub-subcontractor. Similarly,
       because Averus admitted that it had a separate and preexisting contract with Empress to
       periodically clean ductwork in the casino, it was neither Empress’s employee nor agent.
       Accordingly, aside from the class defined by article 6, Averus does not fall into any of the
       defined categories to which the waiver would apply.
¶ 67        The defendants nonetheless argue that because section 6.1.1 of the contract permits
       Empress to “award separate contracts” in connection with “other *** operations on the site,”
       Averus is a “separate contractor” within the meaning of article 6 so as to fall within the
       purview of the waiver of subrogation clause. The defendants, however, conveniently forget to
       mention that section 6.1.1 conditions Empress’s award of separate contracts for the
       performance of “other construction or operations on the site” to those operations “under
       Conditions of the Contract identical or substantially similar to these including those portions
       related to insurance and waiver of subrogation.” “Conditions of the Contract” are explicitly
       defined in the construction contract, and include General, Supplementary and Other
       Conditions. The “General Conditions” are defined as the AIA Document A201-1997, as
       modified, and the “Supplementary and Other Conditions” are defined as those issued and
       incorporated via Change Orders. Accordingly, it is clear from the plain language of section
       6.1.1 that separate contracts for “other operations on site” do not include just any operations
       conducted at the casino but, rather, must be made under a contract identical or similar to AIA
       Document A201-1997, i.e., they must be related to construction. This is further evidenced by
       the very title of article 6, which indicates that it applies to “Construction by Owner or by
       Separate Contractors.” (Emphasis added.) For that same reason, section 6.1.4 confers on
       Empress obligations to its separate contractors “under the Conditions of the Contract,” and

                                                   - 14 -
       including waiver of subrogation, only where Empress “performs *** operations related to the
       Project with [its] own forces.” (Emphasis added.) Since, in the present case, Averus’s vice
       president Stewart admitted that it operated under a completely separate, pre-existing, oral,
       non-AIA contract with Empress to clean the casino ductwork, Averus cannot now avail itself
       of the waiver of subrogation provision in section 11.4.7. In addition, Stewart admitted in his
       deposition that in negotiating Averus’s contract with Empress, the parties never discussed or
       contemplated any waiver of subrogation.
¶ 68       Accordingly, under these circumstances, the trial court erred when it granted summary
       judgment in favor of the defendant Averus.

¶ 69                  B. Waiver of Subrogation for Willful and Wanton Misconduct
¶ 70       With respect to the remaining defendants, the plaintiffs (Empress, Axis, National Fire, and
       Lloyd’s) all collectively assert that the trial court erred in granting summary judgment pursuant
       to the waiver of subrogation clause because public policy in Illinois bars the enforcement of
       exculpatory clauses where heighted misconduct is alleged. The plaintiffs assert that because
       they proceeded with claims for willful and wanton misconduct, the court should have found the
       waiver of subrogation provision unenforceable. For the reasons that follow, we disagree.
¶ 71       The general purpose of a waiver of subrogation provision is to permit parties to a
       construction contract to exculpate each other from personal liability in the event of property
       loss or damage to the work occurring during construction, relying instead on the insurance
       purchased by one of the parties to provide recovery for that loss. Intergovernmental Risk
       Management v. O’Donnell, Wicklund, Pigozzi & Peterson Architects, Inc., 295 Ill. App. 3d
       784, 791 (1998); see also Village of Rosemont v. Lentin Lumber Co., 144 Ill. App. 3d 651
       (1986). Such provisions shift the risk of loss to the insurance company to facilitate timely
       completion of the project and avoid the prospect of time-consuming and expensive litigation,
       regardless of which party is at fault. See Intergovernmental Risk, 295 Ill. App. 3d at 793; see
       also Village of Rosemont, 144 Ill. App. 3d at 660 (“ ‘The insurance clause shifts the risk of loss
       to the insurance company regardless of which party is at fault.’ [Citation.]” ); Ralph Korte
       Construction Co. v. Springfield Mechanical Co., 54 Ill. App. 3d 445 (1977).
¶ 72       In Intergovernmental Risk, this court had an opportunity to address an argument similar to
       the one raised here by the plaintiffs. In that case, the plaintiffs argued that an AIA construction
       contract, with a waiver of subrogation clause identical to the one here, could not apply to
       damages caused by either “negligent” or “wrongful acts” of the defendant. Intergovernmental
       Risk, 295 Ill. App. 3d at 792. This court disagreed, finding that the waiver of subrogation
       provision was contingent upon the types of perils that could result in property damage and loss
       and not on what caused those perils (i.e., the manner by which the perils were caused).
       Intergovernmental Risk, 295 Ill. App. 3d at 795-96. As the court explained:
               “[The waiver of subrogation clause] identifies the types of perils that could cause
               property damage and loss. It identifies fire as a distinct peril. It does not differentiate
               between the manner in which that peril arises, that is, whether by acts of God or by the
               intentional or unintentional, negligent or reckless acts of human beings. In point of fact,
               fire loss could result from any of these acts, although as noted in one case it ‘nearly
               always [is] caused by negligence.’ [Citation.] To the extent that this provision does
               purport to enumerate different types of human conduct that could cause losses of
               property, it does so with respect to nonfire-related physical loss or damage; and, even

                                                   - 15 -
               there, it purports only to be inclusive, not preclusive. Moreover, strong argument can
               be made that even with respect to those property losses the focus is not upon the
               differing human motivations behind the conduct causing the damage but upon the
               different types of hazards resulting from categories of human conduct conventionally
               treated as separate underwriting coverages.” Intergovernmental Risk, 295 Ill. App. 3d
               at 795-96.
       Accordingly, the court in that case concluded that under the express language of the contract,
       the owner was required to obtain “property insurance that insured against damage to property
       caused by fire regardless of the fire’s origin or cause” (emphasis added), and as such, the
       waiver of subrogation extended to the fire loss, regardless of how the fire had been started.
       Intergovernmental Risk, 295 Ill. App. 3d at 796.
¶ 73       We agree with the rationale in Intergovernmental Risk and find it directly applicable to the
       cause at bar. Just as in Intergovernmental Risk, the parties here negotiated the construction
       contract using the AIA form. In doing so, they obligated Empress, as the owner, to purchase
       insurance covering “without limitation, insurance against the perils of fire (with extended
       coverage) and physical loss or damage, including *** [inter alia], theft, vandalism, malicious
       mischief, collapse, earthquake, flood, windstorm, falsework, testing and startup.” In addition,
       the parties explicitly negotiated a waiver of subrogation for damages caused by fire.
       Specifically, pursuant to section 11.4.5 they agreed that, “if during the Project construction
       period” Empress insured its properties, it would “waive all rights in accordance with the terms
       of Section 11.4.7 for damages caused by fire or other causes of loss.” Section 11.4.7 further
       explicitly provided that Empress and O’Neil would waive all rights against “(1) each other and
       any of their subcontractors, sub-subcontractors, agents and employees, each of the other, and
       (2) the Architect, Architect’s consultants, separate contractors described in Article 6, if any
       and any of their subcontractors, sub-subcontractors, agents and employees, for damages
       caused by fire or other causes of loss to the extent covered by property insurance obtained
       pursuant to this Section 11.4.” In addition, the parties agreed that the waiver of subrogation
       would “be effective as to a person or entity even though that person or entity would otherwise
       have a duty of indemnification, contractual or otherwise, did not pay the insurance premium
       directly or indirectly, and whether or not the person or entity had an insurable interest in the
       property damage.”
¶ 74       Just as in Intergovernmental Risk, we hold that the parties here expressly foresaw the
       potential of property loss occurring due to fire and chose to impose on Empress the duty to
       insure against any such loss (regardless of fault), expressly waiving all rights against each
       other for damages caused by such perils. See Intergovernmental Risk, 295 Ill. App. 3d at 796;
       see also Village of Rosemont, 144 Ill. App. 3d at 661 (construing similar waiver of subrogation
       provision to hold that “the parties expressly waived all rights against each other for damages
       caused by perils covered under the policy” and “intended to allocate property loss to an insurer
       and to limit the recourse of the plaintiff, the party acquiring the policy, solely to the insurance
       proceeds”); Ralph Korte, 54 Ill. App. 3d at 447 (interpreting waiver of subrogation provision to
       mean that “the parties had agreed, in effect, to assume the risk of loss as between themselves
       due to fire or other perils, to the extent each party was covered by insurance”). Nothing in the
       language of the waiver of subrogation clause indicates that the parties intended there to be an
       exception for fires caused by willful and wanton conduct. Since “[t]he law and the public
       policy of Illinois permit and require that competent parties be free to contract with one


                                                   - 16 -
       another,” we conclude that the trial court properly applied the waiver of subrogation clause to
       bar the plaintiffs’ claims attempting to recoup losses they incurred as a result of the fire.
       Liccardi v. Stotl Terminals, Inc., 178 Ill. 2d 540, 549 (1997); see also Saba Software, Inc. v.
       Deere & Co., 2014 IL App (1st) 132381, ¶ 60 (“Illinois’s public policy strongly favors
       freedom to contract [citation] and broadly allows parties to determine their contractual
       obligations. [Citation.] Hussein v. L.A. Fitness International, L.L.C., 2013 IL App (1st)
       121426, ¶ 11. As a result, we exercise sparingly the power to declare a private contract void as
       against public policy.” (Internal quotation marks omitted.)).
¶ 75        In coming to this conclusion, we further find that in making their public policy argument,
       the plaintiffs confuse waivers of subrogation with exculpatory clauses. The law in Illinois is
       well settled that a waiver of subrogation is not an exculpatory clause. See, e.g., Allstate
       Indemnity Co. v. ADT LLC, 110 F. Supp. 3d 856, 862 (N.D. Ill. 2015) (“[S]ubrogation waivers
       are not true exculpatory provisions. They merely allocate risk of loss; they do not immunize
       the wrongdoer from all liability, nor do they require the injured parties to give up all their
       claims or leave them uncompensated.”); see also Hartford v. Burns International Security
       Services, Inc., 172 Ill. App. 3d 184 (1988); Bastian v. Wausau Homes, Inc., 635 F. Supp. 201
       (N.D. Ill. 1986).
¶ 76        Similar to the present case, in Hartford, 172 Ill. App. 3d 184, the plaintiff insurer argued
       that a waiver of subrogation in a contract for security services for the Board of Trade Building
       was an exculpatory clause that should be deemed void (as against public policy) both under
       New York and Illinois law. This appellate court disagreed, holding:
                “Here, we are dealing with two corporations which voluntarily entered into a contract
                at arm’s length, with full freedom to do so. The waiver provision in question here is not
                a true exculpatory clause. It is merely an agreement between the parties to shift most of
                the risk of loss to a third party, namely: the [insured Building’s] insurance company,
                i.e., [the plaintiff insurer]. The clause did not immunize [the Building] from all liability
                nor did it require [the insured Building] to give up all claims against [the defendant].
                The [insured Building] gave up only its rights against the [defendant] to the extent that
                it was insured. Thus, the waiver provision *** does not violate Illinois public policy
                ***.” Hartford, 172 Ill. App. 3d at 190.
¶ 77        In coming to this decision, the court in Hartford relied in part on the decision in Bastian,
       635 F. Supp. 201. In that case the plaintiff home purchasers alleged that a waiver of
       subrogation clause in a sales contact was an unenforceable exculpatory clause because it was
       unconscionable and violated Illinois public policy. See Bastian, 635 F. Supp. at 202. Applying
       Illinois law, the federal court in that case disagreed, explaining the distinction between a
       waiver of subrogation and an exculpatory clause:
                     “The clause in question here is not even a true exculpatory clause. With it the
                parties agree to shift most of the risk of property loss to a third party, namely the
                Bastians’s insurance company; or, worded another way, by the clause Wausau became
                an additional beneficiary of the Bastians’s insurance policy. [Citation.] Such a clause
                does not leave the injured party uncompensated. Indeed, the Bastians have already
                been largely compensated for their loss, albeit from their own insurance rather than by
                Wausau.” Bastian, 635 F. Supp. at 203.
¶ 78        In making their argument, the plaintiffs here fail to cite to any Illinois decision in which the
       court refused to enforce an insurance subrogation waiver on the basis that willful and wanton

                                                    - 17 -
       misconduct was alleged. Rather, the majority of the decisions they cite discuss contractual
       exculpatory provisions. See, e.g., Oelze v. Score Sports Venture, LLC, 401 Ill. App. 3d 110
       (2010) (exculpatory clause in membership agreement signed by a member who tripped on a
       rope ladder during a tennis match); Garrison v. Combined Fitness Centre, Ltd., 201 Ill. App.
       3d 581 (1990) (exculpatory clause in a health club membership agreement signed by a member
       who was injured while lifting weights); Downing v. United Auto Racing Ass’n, 211 Ill. App. 3d
       877 (1991) (release signed by a pit crew member who was struck by a car during a race);
       Falkner v. Hinckley Parachute Center, Inc., 178 Ill. App. 3d 597 (1989) (exculpatory clause
       within a release signed by a parachutist who died when his parachute became entangled).
¶ 79       The only Illinois case the plaintiffs offer in support of their argument is Third Swansea
       Properties, Inc. v. Ockerlund Construction Co., 41 Ill. App. 3d 894 (1976). Although at first
       blush that decision appears factually similar, a thorough reading reveals that it is not a waiver
       of subrogation case. In Third Swansea, the plaintiffs, owners (and lessor-occupants) of a
       property on which a bakery addition was being erected and that was damaged by fire during the
       construction, sued, inter alia, a subcontractor involved in the project. Third Swansea, 41 Ill.
       App. 3d at 895. While the contract at issue contained a waiver of liability clause, it also
       obligated the plaintiffs to obtain insurance, which they apparently failed to do so, leaving them
       uncompensated for their loss. See Third Swansea, 41 Ill. App. 3d at 896-97. Although the court
       in Third Swansea concluded that the plaintiffs could proceed against the subcontractor with
       their willful and wanton claims, it found that it was unable to determine from the record
       presented whether the insurance, if it had been obtained by the plaintiffs, would have been so
       comprehensive so as to bar the plaintiffs’ subrogation action or whether it would have covered
       only the subcontractor’s interest in the project and thus allowed the action for damages directly
       against the subcontractor. Since the parties here do not dispute that Empress had three
       insurance policies in place at the time of the renovation project, and that the three insurers
       collectively reimbursed Empress for its fire losses, Third Swansea is inapplicable.
¶ 80       Therefore, we conclude that nothing in our State’s law or public policy prevents competent
       parties to a construction contract to negotiate a full waiver of subrogation rights (regardless of
       fault) among themselves, so as to require one of them to obtain insurance and have the insurer
       provide the sole recovery for the identified loss. Accordingly, we conclude that the waiver of
       subrogation clause in the construction contract was applicable to bar the plaintiffs’ willful and
       wanton claims and permit the trial court to enter summary judgment. As such, we must next
       determine whether that clause applies to all three insurers, and if so to what extent.

¶ 81                C. Application of Waiver to the Two Property Insurance Policies
¶ 82       Axis concedes that under the plain language of the construction contract, the waiver of
       subrogation provision applies to it as the builder’s risk insurer. Empress, National Fire, and
       Lloyd’s agree and further contend that the waiver provision is limited to Axis’s builder’s risk
       insurance policy and therefore does not apply to either of Empress’s property insurance
       policies with National Fire and Lloyd’s. We disagree.
¶ 83       The plain language of the construction contract is clear and contemplates that the waiver of
       subrogation applies both to the specific renovation builder’s risk insurance and the general
       property insurers.
¶ 84       Under section 11.4.1 of the contract, Empress was obligated to purchase and maintain until
       final payment (i.e., the completion of the project) “property insurance written on a builder’s

                                                   - 18 -
       risk ‘all-risk’ or equivalent policy form.” Section 11.4.1.1 enumerated the types of coverage
       that must be included “without limitation” in such a builder’s risk policy and included perils
       like fire. Section 11.4.7 further set forth the waiver of subrogation, obligating the parties to
       waive all rights against each other for “damages caused by fire or other causes of loss to the
       extent covered by property insurance obtained pursuant to this Section 11.4 of other property
       insurance applicable to the Work.” Section 11.4.5 contains an additional waiver of subrogation
       provision and further obligates Empress to waive all rights in accordance with the terms of
       section 11.4.7 “for damages caused by fire or other causes of loss covered by” any “separate
       property insurance,” if “during the Project construction period [it] insures properties, *** at or
       adjacent to the site by property insurance under policies separate from those insuring the
       Project, or if after final payment property insurance is to be provided on the completed project
       through a policy or policies other than those insuring the Project during the construction
       period.”
¶ 85       Reading the aforementioned language of the construction contract as a whole, for the
       reasons that shall be more fully articulated below, we hold that pursuant to both section 11.4.7
       and 11.4.5, Empress unambiguously agreed to waive any and all of National Fire’s and Lloyd’s
       subrogation rights.
¶ 86       With respect to the waiver contained in section 11.4.7, the contract here is identical to the
       one at issue in Intergovernmental Risk. In that case, just as here, the plaintiffs argued that the
       section 11.4.7 waiver of subrogation did not apply to the all-risk insurance policies because
       they were not “builder’s all-risk policies” purchased specifically for the construction project
       but rather were policies that had been purchased by the Village more than 10 years before the
       renovation construction project began. Intergovernmental Risk, 295 Ill. App. 3d at 796. In
       rejecting the plaintiffs’ argument, the court in Intergovernmental Risk first noted that the
       plaintiffs’ interpretation of the waiver of subrogation would have the effect of rendering the
       phrase in section 11.4.7 “or other property insurance applicable to the Work” redundant and
       meaningless since it would not allow for any alternative form of insurance implied by the word
       “or.” Intergovernmental Risk, 295 Ill. App. 3d at 796-97.
¶ 87       The court then relied on the interpretation of similar provisions by courts of other
       jurisdictions, which also found that general all-risk policies obtained prior to execution of the
       construction contract constituted “other property insurance applicable to the Work” (internal
       quotation marks omitted) triggering the waiver of subrogation contained in section 11.4.7. See
       Intergovernmental Risk, 295 Ill. App. 3d at 797 (quoting Lloyd’s Underwriters v. Craig &
       Rush, Inc., 32 Cal. Rptr. 2d 144, 146 (Ct. App. 1994), and citing E.C. Long, Inc. v. Brennan’s
       of Atlanta, Inc., 252 S.E.2d 642 (Ga. Ct. App. 1979), and Haemonetics Corp. v. Brophy &
       Phillips Co., 501 N.E.2d 524 (Mass. Ct. App. 1986)).
¶ 88       The court in Intergovernmental Risk further recognized that the issue was not “whether the
       policies [we]re called ‘all-risk’ or ‘general liability’ ” but rather “whether those policies
       cover[ed] the risk and losses delineated in the construction agreement between the [parties].”
       Intergovernmental Risk, 295 Ill. App. 3d at 797-98.
¶ 89       We agree with the rationale of Intergovernmental Risk and see no reason to depart from it
       in this case.
¶ 90       Empress, National Fire, and Lloyd's nonetheless argue that Intergovernmental Risk is
       inapplicable to the cause at bar because, unlike in that case, the National Fire and Lloyd’s


                                                   - 19 -
       policy explicitly contained language excluding coverage for construction projects in excess of
       $10 million. We disagree.
¶ 91       While it is true that the two policies contain language limiting insurance coverage for
       property in the course of construction to incidental course of construction (defined as projects
       of $10,000 million or less), the term “property” in those policies is very broadly defined and
       also includes, without limitation, “property in the care, custody or control of the Insured or for
       which the Insured is legally liable to insure” and “property of the Insured in the care, custody
       or control of others.” Since Empress’s vice president for design and construction, Nelms,
       admitted that during the construction, Empress placed the casino in the care and control of
       O’Neil and, under the construction contract, was legally liable to insure its property during the
       renovation, we are unpersuaded by National Fire and Lloyd’s argument attempting to limit the
       policy’s coverage. What is more, National Fire and Lloyd's ignore the fact that the language of
       their policies’ own subrogation clause explicitly provides that they “will not acquire any rights
       of recovery that the Insured has expressly waived prior to a loss.” Since Empress agreed to
       waive any subrogation rights against the defendants prior to the fire, by way of the construction
       contract and by the express terms of their own policies, National Fire and Lloyd’s are also
       bound by that waiver.
¶ 92       Accordingly, applying the rationale of Intergovernmental Risk to the facts of this case, we
       conclude that the waiver of subrogation clause in section 11.4.7 applied equally to National
       Fire’s and Lloyd’s policies. See Intergovernmental Risk, 295 Ill. App. 3d at 798; see also
       Haemonetics Corp., 501 N.E.2d at 525-26.
¶ 93       However, even if we were to ignore the holding in Intergovernmental Risk and were to
       construe “other property insurance applicable to the Work” in section 11.4.7 as excluding
       National Fire’s and Lloyd’s policies, the two property insurers would nonetheless be bound by
       the waiver of subrogation prescribed in section 11.4.5. That section provides that a section
       11.4.7 waiver of subrogation is triggered “if during the Project construction period [Empress,
       as] the Owner insures properties, real or personal or both, at or adjacent to the site by property
       insurance under policies separate from those insuring the Project.” (Emphases added.)
¶ 94       Contrary to National Fire and Lloyd’s position, this provision has no temporal
       requirement. The owner is not required to purchase the separate insurance policy after the
       project has already begun. The key word of this section is “insures.” The plain language of
       section 11.4.5 does not state that the waiver applies if the owner procures policies during the
       construction period. Rather, the paragraph’s present tense use of “insures” suggests only that
       the separate policy is in existence during the project, not that it was procured during the
       project. See Hunt Construction Group, Inc. v. Hun School of Princeton, No. 08-3550, 2010
       WL 3724279, at *13 (D.N.J. Sept. 16, 2010).
¶ 95       In the present case, there is no dispute that Empress had in existence separate property
       “all-risk” insurance policies with National Fire and Lloyd during the renovation project. What
       is more, National Fire’s designated representative, Cassacio, admitted in his deposition that
       National Fire “paid for the loss to [Empress’s] property that was next door [to the casino]” (i.e.,
       adjacent to the site). Accordingly, given this concession, Empress and National Fire cannot
       contest that the plain language of section 11.4.5 contemplated their policies and triggered the
       waiver of subrogation clause in section 11.4.7.
¶ 96       Empress, National Fire, and Lloyd’s nevertheless contend that we should not focus on the
       language of the subrogation waivers but rather begin our analysis with the language of section

                                                   - 20 -
       11.4, requiring Empress to obtain insurance. They contend that because both the waiver of
       subrogation (section 11.4.7) and the separate property insurance (section 11.4.5) clauses are
       included in section 11.4, and that section requires Empress to procure “builder’s risk all-risk”
       only for the work and not Empress’s entire property (i.e., buildings adjacent to the casino), the
       scope of the waiver should be just as narrow and apply (1) only to the work and (2) only to the
       damages related to the work (i.e., the value of the materials, tools, and labor incorporated into
       the renovation project and not the extra expenses, such as business interruption). We disagree.
¶ 97       In that respect, we note that the majority of jurisdictions that have had the opportunity to
       address this issue have rejected the “work or non-work” distinction proposed here by the
       plaintiffs. See Board of Commissioners v. Teton Corp., 30 N.E.3d 711, 716 (Ind. 2015);
       Lexington Insurance Co. v. Entrex Communication Services, Inc., 749 N.W.2d 124, 135 (Neb.
       2008); Federal Insurance Co. v. Woodruff Construction, No. 12-0821, 2012 WL 5954588
       (Iowa Ct. App. Nov. 29, 2012); ASIC II Ltd. v. Stonhard, Inc., 63 F. Supp. 2d 85 (D. Me.
       1999); Lloyd’s Underwriters, 32 Cal. Rptr. 2d 144; Housing Investment Corp. v. Carris, 389
       So. 2d 689 (Fla. Dist. Ct. App. 1980); E.C. Long, Inc. v. Brennan’s of Atlanta, Inc., 252 S.E.2d
       642 (Ga. Ct. App. 1979); Willis Realty Associates v. Cimino Construction Co., 623 A.2d 1287
       (Me. 1993); Haemonetics, 501 N.E.2d 524; Employers Mutual Casualty Co. v. A.C.C.T., Inc.,
       580 N.W.2d 490 (Minn. 1998); Chadwick v. CSI, Ltd., 629 A.2d 820 (N.H. 1993); Westfield
       Insurance Group v. Affinia Development, LLC, 2012-Ohio-5348, 982 N.E.2d 132; Trinity
       Universal Insurance Co. v. Bill Cox Construction, Inc., 75 S.W.3d 6 (Tex. App. 2001). The
       rationale has been that if the waiver extended only to damages to the work, there would be no
       need to include the waiver in section 11.4.5 for damages to property adjacent to the site
       covered by policies separate from those described in section 11.4.7. See Federal Insurance,
       2012 WL 5954588, at *4 (holding that “[s]ection 11.4.5 clearly provides for waiver of all
       rights for damages covered by any property insurance policies ‘separate from those insuring
       the project’ that cover the ‘properties, real or personal or both, at or adjacent to the site,’ ” and
       rejecting any work-non-work distinction, noting that it would “render section 11.4.5 of no
       effect to the construction project because the policies described in section 11.4.5 are ‘separate
       from those insuring the project’ and include ‘property *** adjacent to the site’ ”); see also
       Teton, 30 N.E.3d at 717 (holding that “the AIA contract provides that even when the Owner
       has both builders-risk coverage for the work and separate property insurance for ‘adjoining or
       adjacent’ property, its subrogation waiver *** extends to ‘fire or other perils covered by this
       separate property insurance policy’ ” because the separate provision would be “an anomaly
       within the AIA contractual scheme” if the parties already expected the liability insurance to
       cover “non-work damages”); see also Lexington, 749 N.W.2d at 134-35 (“We understand ***
       [section 11.4.5] to mean that if the owner acquires a separate property insurance policy to
       cover non-Project property—a policy that did not cover the Project or Work property—and the
       non-Project property is damaged, the owner waives subrogation rights for the insurer as to
       those damages. So even though the damage occurred to non-Work property, the owner waived
       subrogation rights because the damages were insured.”).
¶ 98       We agree with the rationale of these decisions and see no reason to depart from it here.
       Accordingly, we conclude that the waiver of subrogation clause in section 11.4.5 applied to
       National Fire’s and Lloyd’s policies.




                                                    - 21 -
¶ 99                                        D. Breach of Contract
¶ 100       Empress, National Fire, and Lloyd’s next contend that the defendants’3 multiple breaches
        of the construction contract should bar enforcement of the waiver of subrogation clause.
        Specifically, citing to the “time is of the essence clause,” the three plaintiffs first argue that
        because completion of the renovation project on “time” was a material provision of the
        construction contract, and was never fulfilled as a result of the fire, the plaintiffs should not be
        forced to fulfill their waiver of subrogation obligations under the agreement. Furthermore, the
        three plaintiffs assert that because the construction contract required the contractor to obtain
        liability insurance and to indemnify the owner for claims arising out of the performance of the
        work, it conflicted with the waiver of subrogation clause, and therefore the waiver is not
        enforceable. For the reasons that follow, we disagree.
¶ 101       At the outset, we note that contrary to the plaintiffs’ assertion, the waiver of subrogation
        provision is not limited to negligence actions but can apply with equal force to contract claims.
        See Village of Rosemont, 144 Ill. App. 3d at 665-66 (holding that a waiver of subrogation
        provision applied to bar breach of contract, implied warranty, and strict liability claims). As
        already explained above in more detail, the parties here agreed that any casualty loss resulting
        from a fire would be borne solely by Empress’s property insurance and that accordingly
        Empress expressly waived all claims against the defendants arising from such a loss covered
        by such insurance. The fire was related to performance on the contract and therefore the loss
        and damage from the fire were all covered under the property insurance policies Empress was
        required to maintain. As such, the waiver of subrogation bars the breach of contract claims as
        well. See Village of Rosemont, 144 Ill. App. 3d at 665-66.
¶ 102       Turning specifically to the plaintiffs’ arguments, with respect to the “time is of the
        essence” clause, we find that the plaintiffs have failed to present any facts establishing that this
        provision was material to the contract or, for that matter, any rationale to support the position
        that the defendants’ failure to complete the project within the contemplated time frame would
        or should somehow negate the waiver of subrogation provision. It is well-settled that the mere
        fact that the parties include a “time is of the essence” provision in a contract does not
        automatically make the provision material. See Asset Recovery Contracting, LLC v. Walsh
        Construction Co. of Illinois, 2012 IL App (1st) 101226, ¶ 73 (holding that “even where the
        contract contains an express clause stipulating that ‘time is of the essence,’ Illinois courts will
        inquire into the situation of the parties and the underlying circumstances to determine whether
        a delay in performance resulted in a ‘material breach’ ” (internal quotation marks omitted)).
¶ 103       We similarly reject the plaintiffs’ contention that the provisions of the construction
        contract requiring the contractor to obtain liability insurance and to indemnify Empress for
        claims arising out of the performance of the work conflicted with the waiver of subrogation
        clause, so as to render those provisions an exception to the waiver. This same argument was
        raised and rejected by the plaintiffs in Village of Rosemont, 144 Ill. App. 3d at 663. In that case,
        the appellate court held that the waiver of subrogation clause was part of the owner’s property
        insurance obligations while the insurance and indemnity provision were tied to the contractors’
        liability insurance obligations. Village of Rosemont, 144 Ill. App. 3d at 663. The court

            3
             The allegations in Empress’s complaint for breach of contract were made against all the
        defendants, except for Averus. The breach of contract issues raised on appeal accordingly also exclude
        Averus.

                                                     - 22 -
        explained that it was apparent that the liability insurance and the indemnification provisions
        were “entirely consistent with the explicit waiver of claims” in the waiver of subrogation
        clause, since they were intended to provide a different type of coverage (i.e., contractor’s
        liability insurance versus property insurance due to fire loss). Village of Rosemont, 144 Ill.
        App. 3d at 663. The same is true here, where the type of insurance the defendant contractor was
        required to obtain under the construction contract, and to which the three plaintiffs cite,
        included liability insurance (such as workers’ compensation and employers’ liability,
        commercial auto, umbrella, and contractor’s equipment), while the property insurance and
        waivers of subrogation required Empress to maintain coverage for property loss in the event of,
        inter alia, fire damage to the renovation project and to waive its subrogation rights. Moreover,
        the express language of the waiver of subrogation makes clear that the waiver will trump any
        indemnification obligations. See supra ¶ 15 (“ ‘A waiver of subrogation shall be effective as to
        a person or entity even though that person or entity would otherwise have a duty of
        indemnification, contractual or otherwise, *** and whether or not the person or entity had an
        insurable interest in the property damage.’ ”). To accept the plaintiffs’ interpretation, in
        contravention of the already established rule in Village of Rosemont, so as to create an
        exception to the waiver of subrogation for contractor’s liability insurance, would render the
        waiver of subrogation, which was intended to shift the risk of loss to the owner’s insurance
        company, meaningless.
¶ 104       The plaintiffs do not cite to any Illinois authority to the contrary. Instead they rely on
        Liberty Mutual Insurance Co. v. Perfect Knowledge, Inc., 752 N.Y.S.2d 677 (App. Div. 2002),
        a case decided by the New York appellate court. In light of already existing Illinois precedent
        to the contrary discussed above, we need not, however, consider that decision as it is not
        binding upon this court. See, e.g., In re M.H., 2011 IL App (1st) 110196, ¶ 58 (“this court is not
        bound by decisions from other jurisdictions”).

¶ 105                                      E. Empress’s Deductibles
¶ 106       Lastly, on appeal, Empress alone asserts that it never waived its right to recover its
        deductibles under its general property insurance policies with National Fire and Lloyd’s.
        Specifically, Empress asserts that the language of the construction contract requiring it to pay
        deductibles only applies to its builder’s risk policy with Axis. In that respect, Empress
        concedes that the language of section 11.4.1.3 states that “if the property insurance requires
        deductibles,” Empress will pay “costs not covered because of such deductibles.” Nonetheless,
        Empress contends that because section 11.4.1.3 is part and parcel of section 11.4, requiring
        Empress to obtain the builder’s risk insurance, this section does not apply to Empress’s
        policies with National Fire and Lloyd’s, which were obtained long before the parties entered
        into the construction contract. We disagree.
¶ 107       While it is true that section 11.4.1.3 is part of section 11.4 of the construction contract, the
        plain language of that section does not limit the deductible requirement to the builder’s
        insurance but rather speaks of “property insurance” in general. Contrary to Empress’s
        interpretation, the term “property insurance” is used interchangeably in the entirety of section
        11.4, obligating Empress to maintain “property insurance,” and at different times connotes
        both builder’s risk and general property insurance. See supra ¶ 15. At those instances where
        the parties intended to differentiate between the types of property insurance used, they clearly
        do so. As already discussed above, section 11.4.5 of the construction contract explicitly

                                                     - 23 -
        permits Empress to use its general “property insurance” to insure its property (at or adjacent to
        the construction site) for losses resulting from a fire and obligates Empress to waive its
        subrogation rights with respect to those policies. Under such a requirement, it makes no sense
        to permit Empress to avoid its deductibles on such property insurance. Accordingly, since
        nothing in the plain language of section 11.4.1.3 indicates a limitation of the deductible
        requirement to the builder’s risk policy, we conclude that Empress is responsible for its
        deductibles to National Fire and Lloyd’s.

¶ 108                                     III. CONCLUSION
¶ 109       For the reasons that follow, we affirm in part the judgment of the circuit court granting
        summary judgment to all of the defendants on all claims, except for those involving the
        defendant, Averus. We reverse in part that portion of the trial court order with respect to
        Averus and remand for further proceedings against that defendant.

¶ 110      Affirmed in part; reversed and remanded in part.




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