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Westfield Insurance Company v. Fcl Builders

March 8, 2011


Appeal from the Circuit Court of Cook County Honorable Daniel A. Riley, Judge Presiding. No. 08 CH 47632

The opinion of the court was delivered by: Justice Connors

JUSTICE CONNORS delivered the judgment of the court, with opinion. Justices Karnezis and Harris concurred in the judgment and opinion.


Defendant FCL Builders, Inc. (FCL), appeals from the circuit court's order granting summary judgment in favor of plaintiff Westfield Insurance Company (Westfield). The circuit court found that FCL was not an additional insured under the insurance policy that Westfield had issued to a third party, JAK Iron Works, Inc. (JAK). We affirm.


FCL is a general contractor that was hired to work on a construction project. FCL subcontracted out the steel fabrication and erection for the project to Suburban Ironworks, Inc. (Suburban), which in turn further subcontracted out the steel erection to JAK. JAK employed defendant Anwar Oshana.

FCL's subcontract with Suburban required Suburban to perform all structural steel work for the project. The contract also required Suburban to obtain a certain amount of commercial general liability (CGL) insurance, which would cover not only Suburban and its employees but also FCL as the general contractor. Importantly for this case, the contract mandated that any subcontractors that Suburban might further subcontract with must also maintain the same level of CGL insurance and include FCL as an insured under the policy.

When Suburban subcontracted the steel erection work to JAK, Suburban and JAK executed a contract that incorporated by reference a previously existing Master Subcontract Agreement between the two parties. The master agreement included a provision that required JAK to obtain the same level of insurance coverage that was required by the contract between FCL and Suburban, the terms of which were also incorporated by reference into the JAK-Suburban contract. In short, JAK was contractually required to purchase an insurance policy that would cover itself, Suburban, and FCL in the event of a mishap on the steel erection job. JAK duly purchased a CGL policy from Westfield. The policy contained an endorsement that amended the definition of "insured" under the contract. The endorsement reads, in pertinent part:

"A. Section II -- Who Is an Insured is amended to include as an additional insured any person or organization for whom you are performing operations when you and such a person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy."

The policy came into effect in October 2005, and JAK began erecting steel on the job site. Unfortunately, about a month into the job, JAK's employee Oshana was severely injured when he fell off of a steel beam. Oshana later filed a tort lawsuit against FCL and Suburban, alleging the breach of various duties of care regarding job site safety that they allegedly owed to Oshana.

It is at this point that the dispute that is the subject of this appeal arose. FCL turned to Westfield for defense against Oshana's lawsuit and for indemnification in the event that it was successful. However, Westfield refused to either defend or indemnify FCL, asserting that FCL did not qualify as an additional insured under its policy with JAK. The parties were unable to resolve the matter, and Westfield filed the instant declaratory judgment action, seeking a declaration that it was not obligated to either defend or indemnify FCL in Oshana's underlying tort action.

Following discovery, the parties filed cross-motions for summary judgment. Westfield argued that the plain language of the additional insured provision of the policy only extended coverage to entities that had an agreement in writing with JAK for them to be added to the policy as additional insureds. Westfield asserted that, because JAK only had a contract with Suburban, FCL could not be an additional insured. FCL maintained that it met the requirements of the policy provision due to the fact that the JAK-Suburban contract incorporated by reference the terms of the Suburban-FCL contract, which contained the provision requiring FCL to be an additional insured on the insurance policy and thus satisfied the written-agreement requirement. Additionally, FCL pointed to deposition testimony to the effect that JAK and Suburban had understood that JAK would be required to add FCL as an additional insured under any policy that JAK later purchased. Finally, FCL noted that it had received a certificate of insurance that listed FCL as an additional insured under JAK's policy with Westfield.

After full briefing by all parties and extensive oral arguments, the circuit court held that FCL was not an additional insured under the policy. The circuit court found that the policy provision was unambiguous and required what the court termed "direct priv[i]ty in order for an entity to qualify as an additional insured." The circuit court accordingly denied FCL's motion for summary judgment and granted Westfield's motion. ...

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