Empress Casino Joliet Corp v. W. E. O'Neil Construction Co.

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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.

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 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

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 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:
Ҥ 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.”

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¶ 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:
Ҥ 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.”

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¶ 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.”

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 “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.

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¶ 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.

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¶ 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

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 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

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 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).

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 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,

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 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:
Ҥ 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

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 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

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 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

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 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

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 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

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 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

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 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

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 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

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 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.

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¶ 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.

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 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

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 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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