2022 IL App (1st) 191804-U No. 1-19-1804 Order filed June 9, 2022 Fourth Division
NOTICE: This order was filed under Supreme Court Rule 23 and is not precedent except in the limited circumstances allowed under Rule 23(e)(1). ______________________________________________________________________________ IN THE APPELLATE COURT OF ILLINOIS FIRST DISTRICT ______________________________________________________________________________ WESTFIELD INSURANCE COMPANY, ) Appeal from the ) Circuit Court of Plaintiff and Counterdefendant-Appellant, ) Cook County. ) v. ) No. 15 CH 10596 ) DYNACOM MANAGEMENT, INC., NAVIGATORS ) SPECIALTY INSURANCE COMPANY, as Assignee of ) Dynacom Consulting, Services, Inc., KINGERY STEEL ) FABICATORS, INC., and JEFF THULIN, ) ) Defendants ) ) (Navigators Specialty Insurance Company, as Assignee of ) Dynacom Consulting Services, Inc., Defendant-Appellee, ) Kingery Steel Fabricators, Inc., Defendant and ) Honorable Counterplaintiff-Appellee and Cross-Appellant, and ) Raymond W. Mitchell, Schmidt Steel, Inc., Counterdefendant-Cross-Appellee). ) Judge, presiding.
JUSTICE LAMPKIN delivered the judgment of the court. Presiding Justice Reyes and Justice Martin concurred in the judgment. No. 1-19-1804
ORDER
¶1 Held: Where the insurer sought a declaration that it did not owe a duty to defend or indemnify the construction site general contractor and steel fabricator for an underlying bodily injury lawsuit, the appellate court affirms the trial court’s judgment, which held that (1) the evidence established that the insured had agreed to the written terms that required the insured to add the general contractor and steel fabricator as additional insureds to the insurance policy, and (2) the terms of the additional insured provision of the policy required merely a written agreement, not an executed contract, to add a third party as an additional insured.
¶2 When a steel worker injured at a construction site sued the general contractor and steel
fabricator for negligence, the general contractor and steel fabricator then tendered the defense and
indemnification of the lawsuit to the insurer of the subcontractor steel erector. However, the insurer
rejected the tender and sought a declaration that it had no duty to defend or indemnify the general
contractor and steel fabricator because the subcontractor steel erector had not agreed to any of the
terms of the unsigned written subcontract.
¶3 The steel fabricator counterclaimed against the insurer for a declaration of coverage and
breach of the policy. The steel fabricator also asserted an alternative count against the
subcontractor steel erector for breach of an oral contract to add the general contractor and steel
fabricator as additional insureds to the subcontractor’s liability policy.
¶4 The circuit court concluded that (1) the evidence established that the subcontractor steel
erector had agreed to the terms of the unsigned written subcontract that required it to add the
general contractor and steel fabricator as additional insureds to the subcontractor’s liability policy,
and (2) the subcontractor’s assent to the terms of the unsigned written subcontract entitled the
general contractor and steel fabricator to status as additional insureds under the policy because the
insurance terms of the parties’ agreement were in writing.
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¶5 On appeal, the insurer argues that the circuit court’s factual finding that the subcontractor
steel erector agreed to the terms, other than price, of the steel fabricator’s unsigned written
subcontract was against the manifest weight of the evidence. The insurer also argues that the circuit
court erroneously determined that the general contractor and steel fabricator were entitled to
additional insured status under the subcontractor’s liability policy.
¶6 The steel fabricator cross-appeals, in the alternative, that if it and the general contractor are
not additional insureds under the subcontractor’s policy, then the circuit court erroneously
dismissed as moot the steel fabricator’s claim against the subcontractor for breach of an oral
contract.
¶7 For the reasons that follow, we affirm the judgment of the circuit court. 1
¶8 I. BACKGROUND
¶9 This case involves a dispute over insurance coverage for an underlying lawsuit brought by
a steel worker who was injured at a construction site. Specifically, Westfield Insurance Company
(Westfield) sought a declaratory judgment that it had no duty to defend or indemnify Dynacom
Consulting Services, Inc. (Dynacom Consulting) and Kingery Steel Fabricators, Inc. (Kingery).
Specifically, Westfield argued that its insured, Schmidt Steel, Inc. (Schmidt Steel), had not agreed
to any of the terms of Kingery’s unsigned written subcontract form.
¶ 10 Dynacom Management, Inc. (Dynacom Management) was an owner of the construction
site project in Naperville, Illinois, and Dynacom Consulting was the project’s general contractor.
1 In adherence with the requirements of Illinois Supreme Court Rule 352(a) (eff. July 1, 2018), this appeal has been resolved without oral argument upon the entry of a separate written order. Although this case was fully briefed in December 2020 and this court had ruled in January 2021 that a motion to strike cross-appellant’s reply brief would be taken with the case, this case was not designated as ready for disposition until April 2022.
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In early 2013, Schmidt Steel submitted a subcontract bid to Kingery to perform the steel erection
work for $112,000. Kingery used Schmidt Steel’s bid to calculate Kingery’s own bid for the steel
fabrication and erection work at the project. Dynacom Consulting then awarded Kingery the
contract as memorialized in their September 2013 contract for structural steel fabrication and
erection work at the project. That contract required Kingery to make its subcontractors add
Dynacom Consulting as an additional insured to the subcontractors’ liability policies. Schmidt
Steel began work on the construction project on January 3, 2014.
¶ 11 Kingery has subcontracted steel erection work to Schmidt Steel on at least 80 occasions.
On prior projects, Schmidt Steel agreed to abide by the terms of Kingery’s standard form
subcontract, which required Schmidt Steel to include Kingery and the respective project’s general
contractor as additional insureds under Schmidt Steel’s commercial general liability (CGL) policy.
Schmidt Steel was the named insured of a CGL insurance policy issued by Westfield. This policy
contained a blanket additional insured provision, which provided additional insured coverage for
qualifying third-party claims. The policy provision defined an additional insured as “all persons or
organizations when [Schmidt Steel has] agreed in writing in a contract or agreement that such
persons or organization be added as an additional insured.”
¶ 12 On January 13, 2014, Kingery emailed Schmidt Steel a written subcontract for $102,000
on Kingery’s standard form subcontract. The contract price was based on Schmidt Steel’s
$112,000 bid minus a $10,000 discount. The written subcontract contained a requirement that
Schmidt Steel add Kingery and Dynacom Consulting as additional insureds to Schmidt Steel’s
CGL policy and was accompanied by a request for a certificate of insurance that identified Kingery
and Dynacom Consulting as additional insureds at the project.
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¶ 13 At some point, Schmidt Steel’s owner, Max Schmidt, realized that he had significantly
underbid the work and informed Kingery’s president, David Ash, that the price term contained in
Schmidt Steel’s initial bid was unacceptable. They ultimately agreed that, instead of a fixed price
covering Schmidt Steel’s work, the work would be performed on a time and materials basis (i.e.,
billing Kingery for labor on an hourly basis and the cost of materials). Their testimony, however,
differed regarding the timing and other content of their conversation.
¶ 14 According to Ash’s deposition and trial testimony, after Kingery sent Schmidt Steel the
subcontract for $102,000 on January 13, 2014, Max called and advised Ash that Max had misread
the project drawings and erroneously bid on a two-story instead of a four-story building. Based on
their history, Ash agreed to accommodate Schmidt Steel by paying it on a time and materials basis.
Ash did not believe that this accommodation changed any other terms of the parties’ deal. Ash also
testified that Kingery and Schmidt Steel, over the course of their dealings, also had entered into a
handful of agreements without a written signed contract. In those cases, Schmidt Steel still agreed
to provide Kingery with additional insured coverage as evidenced by Schmidt Steel’s provision to
Kingery of certificates of insurance in those matters. Ash testified that, according to his general
practice, he obtained evidence of insurance coverage, e.g., a certificate of insurance, before
permitting a subcontractor to engage in major work at a project site, which in this case was
scheduled to begin January 14, 2014, when the structural steel arrived at the worksite. Thereafter,
Schmidt Steel (1) erected the structural steel at the site according to the drawings identified in
section 1 of the unsigned written subcontract, (2) enforced an OSHA-compliant safety policy as
required by section 6.1 of the unsigned written subcontract, and (3) requested all work changes be
in writing as required by section 4 of the unsigned written subcontract. Schmidt Steel began
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invoicing Kingery for Schmidt Steel’s time and materials on February 28, 2014. Although Schmidt
Steel’s invoices totaled $226,298.14, it agreed to accept $200,638.14.
¶ 15 According to Max Schmidt’s trial testimony, he and Ash reached an agreement regarding
pricing before January 3, 2014, i.e., before Kingery sent Schmidt Steel the subcontract for
$102,000. Max testified that he had walked the jobsite with Ash and discussed the project before
work began on January 3, 2014. That evening, Max reviewed his bid price, realized that he had
bid on a two-story instead of a four-story building, and then called Ash to tell him Schmidt Steel
could not perform the work for the bid price. However, according to Max’s deposition testimony,
he did not recall a conversation with Ash at the jobsite about price. Rather, Max recalled a single
telephone conversation with Ash about price but did not recall when that conversation occurred.
¶ 16 The unsigned form subcontract Kingery emailed to Schmidt Steel on January 13, 2014,
contained the following provision requiring Schmidt Steel to obtain insurance on behalf of Kingery
and Dynacom Consulting:
“6.2 INSURANCE - The Sub-contractor shall maintain during the progress of the
Work, and if required to return during the warranty period: Insurance written by insurance
companies acceptable to the General Contractor with the minimum limits and coverage[s]
as shown below or, if higher, the requirements set forth in the Contract Documents.
***
(B) COMPREHENSIVE GENERAL LIABILITY Insurance on an
occurrence basis providing limits for bodily injury and property damage including
its own employees of $2,000,000 general aggregate, $2,000,000 for occurrence and
$2,000,000 product and completed operations aggregate. The policy must include
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the General Contractor, [Kingery], the Owner, the Architect, and others if required
in the Contract Documents as ADDITIONAL INSURED, on ISO Additional Insured
Endorsement (C020-10 11/85 edition or its equivalent), and must provide Premises-
Operations, Independent Contractors, Contractual Liability, Product & Completed
Operations coverage[s] which shall be maintained in force for a period of two years
after substantial completion of the project or for such longer period of time as is
described in the Contract Documents. XCU Exclusions must be deleted when
applicable to operations performed by the Sub-contractor; Subcontractor’s
insurance will be primary/non-contributory to any insurance carried by any of the
additional insured. In addition, Sub-contractor shall maintain an umbrella policy
providing the same coverage[s] and with the same ADDITIONAL INSURED as
the basic policy with a minimum amount of $5,000,000.” (Emphasis added.)
The subcontract contained signature blocks but was never signed by either Kingery or Schmidt
Steel. Schmidt Steel forwarded the writing to its insurance broker, Assurance Agency, Ltd., which
provided a certificate of insurance to Kingery that included Kingery and Dynacom Consulting as
additional insureds under Schmidt Steel’s CGL policy.
¶ 17 The Assurance Agency Ltd. broker testified in her evidence deposition that Schmidt Steel
sent Kingery’s written subcontract and request for a certificate of insurance to her for review.
Based on her experience, she understood that Schmidt Steel was seeking a certificate of insurance
that complied with the forwarded subcontract’s requirements. Her general practice was to review
the insurance requirements of the written subcontract, including the additional insured
requirements, to ensure that Schmidt Steel had proper coverage in place. If the coverage was in
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place, she would issue a certificate of insurance—as she did here—identifying the relevant parties
as additional insureds at the project “per written contract.” If Schmidt Steel did not have the proper
coverage in place, she would have alerted Schmidt Steel and given it the opportunity to purchase
such coverage.
¶ 18 Schmidt Steel’s employee, Jeff Thulin, was working at the construction site on April 11,
2014, when he slipped, fell and sustained injuries while installing bridging between bar joists.
¶ 19 It is undisputed that Kingery and Schmidt Steel never signed the written subcontract.
However, on May 5, 2014, Kingery’s office clerk emailed Schmidt Steel and requested a copy of
the signed written subcontract and certificate of insurance. On January 14, 2015, Thulin sued
Kingery for negligence based on his April 2014 injury. On January 22, 2015, Kingery’s office
clerk again emailed Schmidt Steel and requested a copy of the signed written subcontract and
certificate of insurance.
¶ 20 Catie Schmidt, who is Max’s wife and Schmidt Steel’s office manager, testified at trial that
Max told her the contract had been “changed” to a time and materials deal, and therefore Max
would not sign the written subcontract, which listed a fixed price term of $102,000. Max put a note
dated January 30, 2015, on the unsigned subcontract form, stating: “Max said not to send since
this is a T&M job.” Accordingly, Catie did not provide a signed copy of the subcontract to Kingery.
Ash testified that he was not aware of his office clerk’s requests to Schmidt Steel for copies of a
signed subcontract. Ash thought his clerk was merely attempting to ensure that her office records
were in order.
¶ 21 In February 2015, Thulin’s amended complaint against Dynacom Management, Dynacom
Consulting and Kingery sought relief based on theories of construction negligence, premises
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liability and direct negligence. Kingery tendered its defense and indemnification of Thulin’s action
to Westfield and included a copy of the unsigned written subcontract.
¶ 22 Dynacom Consulting tendered its defense and indemnification of Thulin’s lawsuit to
Kingery and Kingery’s insurer, Navigators Specialty Insurance Company (Navigators), which
accepted Dynacom Consulting’s tender under a reservation of rights. Dynacom Consulting also
tendered its defense and indemnification to Schmidt Steel and Westfield. Dynacom Management,
which did not sign a contract with Kingery, did not tender its defense and indemnification to
Kingery and Navigators. Later, Navigators was substituted for Dynacom Consulting in April 2019
following an assignment of rights.
¶ 23 Meanwhile, Westfield disclaimed any obligation to defend Kingery and Dynacom
Consulting based on the failure of Schmidt Steel and Kingery to sign the written subcontract form.
¶ 24 In July 2015, plaintiff Westfield filed a complaint for declaratory relief against defendants
Dynacom Management, Dynacom Consulting, Kingery and Thulin, seeking a declaration that it
did not owe a duty to defend or indemnify Dynacom Management, Dynacom Consulting or
Kingery against Thulin’s underlying bodily injury lawsuit. Westfield alleged that Dynacom
Management, Dynacom Consulting and Kingery did not qualify as additional insureds on the
Westfield policy because Westfield’s insured, Schmidt Steel, performed at the project under an
oral contract and did not agree in a written contract to name Dynacom Management, Dynacom
Consulting and Kingery as additional insureds with respect to the work at issue.
¶ 25 Kingery filed an answer to Westfield’s complaint for declaratory relief and raised the
affirmative defenses of the parties’ written contract and the failure to join Schmidt Steel as a
necessary party. Kingery also filed a counterclaim against Westfield for a declaration of coverage
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and breach of the policy. In the alternative, Kingery filed a counterclaim against Schmidt Steel for
breach of an oral contract to add Kingery and Dynacom Consulting as additional insureds to its
CGL policy for work at the project.
¶ 26 In June 2018, Westfield and Schmidt Steel moved for summary judgment against Dynacom
Management, Dynacom Consulting and Kingery, arguing that Westfield’s policy limited
additional insured status to those parties Schmidt Steel agreed to add by a written contract and
Schmidt Steel never had a written contract adding the Dynacom entities and Kingery as additional
insureds.
¶ 27 In its response, Kingery argued that summary judgment was improper because either
(1) Kingery and Dynacom Consulting qualified as additional insureds under the CGL policy
Westfield issued to Schmidt Steel, or (2) Schmidt Steel breached its contract with Kingery to add
Kingery and Dynacom Consulting as additional insureds to Schmidt Steel’s CGL policy for
liabilities arising out of its work at the construction project. Kingery argued that Westfield’s policy
merely required an agreement “in writing,” not a signed written contract, and the written
subcontract between Kingery and Schmidt Steel was unsigned because its price term had been
changed to accommodate Schmidt Steel’s bidding error. Nevertheless, substantial evidence
showed that Schmidt Steel agreed to the remaining subcontract terms through its acts and conduct
and this agreement was in effect when Thulin was injured. These agreed-upon terms included the
requirement that Schmidt Steel add Kingery and Dynacom Consulting as additional insureds to
Schmidt Steel’s Westfield liability policy for work at the project. In the alternative, Kingery argued
that Schmidt Steel breached its agreement to provide Kingery and Dynacom Consulting with
additional insured coverage.
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¶ 28 On October 11, 2018, the circuit court denied Westfield and Schmidt Steel’s motion for
summary judgment. Specifically, the court concluded that the additional insured provision of
Schmidt Steel’s Westfield policy did not require a formally executed written contract between
Kingery and Schmidt Steel to effectuate the additional insured provision. The court also concluded
that a genuine issue of material fact existed about whether the unsigned writing at issue represented
an agreement between Schmidt Steel and Kingery for Schmidt Steel to provide additional insured
coverage to Kingery and Dynacom Consulting.
¶ 29 The circuit court held a bench trial in April 2019 to resolve whether Schmidt Steel had
agreed to the terms of the unsigned written subcontract. Based on the evidence presented at the
trial, the court concluded in a written interim order dated June 6, 2019, that, excepting price,
Schmidt Steel had agreed to the terms of the unsigned written subcontract, including the term that
required it to add Kingery and Dynacom Consulting as additional insureds to its liability policy.
The court also found that Schmidt Steel’s assent to the terms of the unsigned written subcontract
entitled Kingery and Dynacom Consulting to status as additional insureds under the policy, which
the court construed in favor of coverage. Specifically, the court ruled that the policy’s language
did not unambiguously require a formally executed written contract, but only written evidence of
an agreement to provide insurance. The court concluded that Kingery and Dynacom Consulting
qualified as additional insureds under the policy because the insurance terms of the parties’
agreement were in writing.
¶ 30 Accordingly, the court (1) entered judgment in favor of the Dynacom entities and Kingery
and against Westfield on Westfield’s complaint for declaratory relief, (2) entered judgment in
favor of Kingery and against Westfield on Kingery’s counterclaim for a declaration of coverage,
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(3) reserved ruling on Kingery’s counterclaim against Westfield for breach of contract until the
completion of the evidentiary hearing on damages, and (4) dismissed as moot Kingery’s
counterclaim against Schmidt Steel for breach of an oral contract. The court declared that
Westfield owed a duty to defend and indemnify Kingery, Dynacom Management, and Dynacom
Consulting against the underlying complaint filed by Thulin.
¶ 31 The parties entered a joint agreed stipulation that all claims and counterclaims brought by
and against Dynacom Management were resolved, waived and released; moved to vacate the
court’s June 6, 2019 order to the extent that it entered any relief in favor of Dynacom Management;
and moved to dismiss any claims and counterclaims brought by and against Dynacom
Management, with prejudice.
¶ 32 On August 7, 2019, the court issued a written final judgment order that, on the motion of
Dynacom Management, vacated the June 6, 2019 order insofar as any relief entered in favor of
Dynacom Management. But in all other respects, the court incorporated and adopted all of its prior
rulings. In addition, the court entered judgment in favor of Kingery and against Westfield on
Kingery’s counterclaim for breach of contract in the amount of $350,000. The court stayed
enforcement of the judgment pending appeal.
¶ 33 Westfield appealed the circuit court’s determination that Kingery and Dynacom Consulting
qualified as additional insureds under Schmidt Steel’s CGL policy. Kingery, while maintaining
that there was no basis to reverse the circuit court’s judgment, in the alternative cross-appealed the
circuit court’s dismissal as moot of Kingery’s breach of oral contract claim against Schmidt Steel.
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¶ 34 II. ANALYSIS
¶ 35 A. Motion to Strike Kingery’s Reply Brief
¶ 36 Westfield and Schmidt Steel move to strike all but section II.B of Kingery’s cross-
appellant’s reply brief pursuant to Illinois Supreme Court Rule 343(b)(1) (eff. July 1, 2008), for
allegedly failing to confine its argument to the issue of challenging the circuit court’s dismissal as
moot of Kingery’s counterclaim against Schmidt Steel for breach of an oral contract. Rule
343(b)(1) provides that “the cross-appellant may file a reply brief confined strictly to replying to
those arguments raised on the cross-appeal.” Id.
¶ 37 Kingery responds that its reply brief is properly directed to arguments relevant to its cross-
appeal, which overlap substantially with the issues in the main appeal.
¶ 38 We conclude that portions of Kingery’s reply brief are not confined to strictly replying to
its cross-appeal of the dismissal of its oral contract claim against Schmidt Steel. Accordingly, the
portions of Kingery’s cross-appellant’s reply brief that contain argument that is not confined to
Kingery’s cross-appeal are stricken and we will consider only the arguments in Kingery’s reply
brief that are confined to its cross-appeal. See Graham v. Illinois State Toll Highway Authority,
182 Ill. 2d 287, 293-94 (1998).
¶ 39 B. Manifest Weight of the Evidence
¶ 40 Westfield argues the circuit court’s factual findings were contrary to the manifest weight
of the evidence because Schmidt Steel’s performance of the steel erection according to the
drawings and Kingery’s routine request for a certificate of insurance from Schmidt Steel were not
evidence of Schmidt Steel’s assent to Kingery’s draft subcontract. Westfield contends the circuit
court inappropriately regarded Ash’s subjective beliefs about principles of contract formation as
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issues of credibility. Westfield argues that Kingery and Schmidt Steels’ practice to always
memorialize their written agreements with a signature strongly supports the conclusion that this
subcontract was oral, not “in writing.” Westfield also argues that Kingery’s post-accident conduct,
i.e., sending its January 13, 2014 subcontract form to Schmidt Steel after Thulin’s April 2014
accident and asking for copies of a signed subcontract, confirms that Kingery and Schmidt Steel
never agreed in writing to procure additional insured coverage.
¶ 41 The issues of the existence and terms of a contract present questions of fact. Trapani
Construction Co., Inc. v. Elliot Group, Inc., 2016 IL App (1st) 143734, ¶ 35. This court gives great
deference to the trial court’s factual findings made after a hearing with live witness testimony and
will reverse the trial court’s ruling based on those findings only if it is against the manifest weight
of the evidence. Apollo Heating & Air Conditioning Corp. v. American National Bank & Trust
Co., 135 Ill. App. 3d 976, 978-79 (1985). The trial court’s fact determinations are against the
manifest weight of the evidence only “when an opposite conclusion is apparent or when the
judgement appears to be unreasonable, arbitrary, or not based on evidence.” Trapani Construction
Co., Inc., 2016 IL App (1st) 143734, ¶ 37.
¶ 42 A party may assent to an agreement’s terms, not only by its words, but also by its conduct.
Midland Hotel Corp. v. Reuben H. Donnelley Corp., 118 Ill. 2d 306, 313-14 (1987); Restatement
(Second) of Contracts § 19 (1981) (“The manifestation of assent may be made wholly or partly by
written or spoken words or by other acts or by failure to act.”). “It is well settled that a party named
in a contract may, by his acts and conduct, indicate his assent to its terms and become bound by
its provisions even though he has not signed it. [Citations.] For course of conduct to act as consent
to a contract, it must be clear that the conduct relates to the specific contract in question.
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[Citation.]” Landmark Properties, Inc. v. Architects International-Chicago, 172 Ill. App. 3d 379,
383 (1988).
¶ 43 The trial court’s finding that Schmidt Steel agreed to the terms of the unsigned subcontract,
with the exception of the price, was not against the manifest weight of the evidence. Ash testified,
based on his interactions with Schmidt Steel and observations of its work at the project, that the
parties understood that the work was to be performed according to the terms of the written
subcontract other than price. The trial court found Ash’s testimony credible because it was
supported by documentary evidence including evidence of the parties’ course of dealing, Schmidt
Steel’s failure to object to any term other than price, and Schmidt Steel’s performance of the terms
of the written subcontract. The trial court was within its rights to find that Max Schmidt’s
testimony lacked credibility and reject it. Racky v. Belfor USA Group, Inc., 2017 IL App (1st)
153446, ¶ 107 (“reviewing court will not disturb the trial court’s determination of credibility
because the trial court has a superior vantage point, which cannot be reproduced from the cold
record, to observe and judge the witnesses’ demeanor and credibility”).
¶ 44 The evidence at trial established that Schmidt Steel signed Kingery’s standard subcontract
form on at least 85 other projects, so Max Schmidt was familiar with the form’s terms and knew
that he was expected to comply with them. Schmidt Steel’s agreement to operate according to the
same terms in all the other instances was evidence that Max agreed to the same terms in this case.
See Gaslite Illinois, Inc. v. Northern Illinois Gas Co., 46 Ill. App. 3d 917, 922-24 (1977) (prior
dealings were evidence of contract’s terms).
¶ 45 Furthermore, Max did not object to any term in the written subcontract other than the price.
Both Max and Ash testified that the only dispute Max raised about the written subcontract was the
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$102,000 price, and that dispute was resolved when they agreed that Kingery would pay Schmidt
Steel on a time and materials basis. Schmidt Steel’s failure to object to any term other than price
is evidence of assent to the remaining terms. See Landmark Properties, Inc., 172 Ill. App. 3d at
383-84 (plaintiff’s failure to object to written agreement was evidence of assent to same); see also
Construction Aggregates Corp. v. Hewitt-Robins, Inc., 404 F.2d 505, 510 (7th Cir. 1968)
(plaintiff’s request for a change to the payment terms of the defendant’s offer, without objection
to the offer’s other terms, constituted a counteroffer that included the remaining terms).
¶ 46 The evidence also established that Schmidt Steel performed the tasks required of it by the
written subcontract, including the scope of the work to unload and erect the steel, obtaining work
change orders in writing, implementing OSHA-compliant safety procedures at the site, and
maintaining $500,000 in workers’ compensation insurance and $7 million combined in CGL and
umbrella insurance. Schmidt Steel also complied with the subcontract requirement to add Kingery
and Dynacom Consulting as additional insureds to its liability policy and give Kingery a certificate
of insurance before starting major work at the project. Schmidt Steel’s performance of the
obligations listed in the written subcontract, particularly Schmidt Steel’s provision of a certificate
of insurance that identified Kingery and Dynacom Consulting as additional insureds for the project
at issue, is evidence that Schmidt Steel assented to the other written terms on the unsigned
subcontract except for the price. West Bend Mutual Insurance Co. v DJW-Ridgeway Building
Consultants, Inc., 2015 IL App (2d) 140441, ¶¶ 25-26, 30 (provision of a certificate of insurance
was evidence that the named insured assented to the terms of the unsigned written contract that
required the insured to name the defendant as an additional insured).
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¶ 47 Westfield cites West Bend Mutual Insurance Co. v. Athens Construction Co., 2015 IL App
(1st) 140006 (2015), to support its argument that a certificate of insurance does not serve as
evidence of an insured’s intent to name a party as an additional insured. Westfield’s reliance on
Athens Construction Co. is misplaced. In Athens, the issue was not whether the named insured had
assented to the terms of a written contract, but whether the actual, plain language of the parties’
written contract required the named insured to add defendant Athens as an additional insured to its
policy. Id. at ¶ 28. Here, there is no dispute that the unsigned written subcontract unambiguously
required Schmidt Steel to add Kingery and Dynacom Consulting as additional insureds to its
policy.
¶ 48 Similarly misplaced is Westfield’s reliance on United Stationers Supply Co. v. Zurich
American Insurance Co., 386 Ill. App. 3d 88, 92 (2008), where the court determined that there was
no written contract that required the named insured to add United Stationers Supply Company to
the insured’s policy. The court also held that a certificate of insurance, without more, did not trump
the insurance policy’s language and confer coverage. Id. at 104. Here, Kingery and Dynacom
Consulting do not contend that the certificate of insurance entitled them to coverage. Rather, they
contend that the written agreement, which was absent in United Stationers Supply Co., entitled
them to coverage and the certificate is evidence that Schmidt Steel assented to the written
agreement.
¶ 49 Finally, Westfield argues that Kingery’s post-accident conduct confirms that Kingery and
Schmidt Steel never agreed in writing to procure additional insured coverage. Specifically,
Westfield contends that when Kingery sent its January 13, 2014 subcontract form to Schmidt Steel
after Thulin’s April 2014 accident and asked for copies of a signed subcontract, Kingery confirmed
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that it and Schmidt Steel never agreed in writing to procure additional insured coverage.
We disagree. “[A] judgment is not against the manifest weight of the evidence merely because
there is sufficient evidence to support a contrary conclusion.” Apollo Heating & Air Conditioning
Corp., 135 Ill. App. 3d at 978-79. Furthermore, Ash testified that, unknown to him, his office clerk
had contacted Catie Schmidt to obtain signed copies of the subcontract, and Ash thought his clerk
was simply trying to ensure that her office records were in order.
¶ 50 We conclude that the trial court’s determination that Schmidt Steel assented to the terms
of the unsigned written subcontract, except for the price term, was not against the manifest weight
of the evidence.
¶ 51 C. Agreement in Writing
¶ 52 Based on its factual finding that Schmidt Steel assented to the terms of the written
subcontract other than price, the trial court concluded based on the language of Schmidt Steel’s
CGL policy that Kingery and Dynacom Consulting qualified as additional insureds.
¶ 53 On appeal, Westfield urges this court to correct the clear legal error of the trial court and
reverse. Westfield argues that an agreement in writing was an indispensable condition to additional
insured coverage under the Westfield policy language and Kingery failed to prove that it had
anything more than an oral agreement with Schmidt Steel to add Kingery and Dynacom Consulting
as additional insureds on Schmidt Steel’s CGL policy before Thulin’s accident. According to
Westfield, even though Kingery’s unsigned form subcontract was written, it was merely an
attachment to a clerical request for a certificate of insurance and did not constitute a contract or
agreement between Kingery and Schmidt Steel.
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¶ 54 We review de novo the trial court’s ruling that Schmidt Steel’s assent to the terms of the
written subcontract other than price entitled Kingery and Dynacom to additional insured status
under Schmidt Steel’s CGL policy. The interpretation of the provisions of an insurance policy
presents a question of law and is subject to de novo review. Travelers Insurance Co. v. Eljer
Manufacturing, Inc., 197 Ill. 2d 278, 292 (2001); see also Bituminous Casualty Corp. v. Iles, 2013
IL App (5th) 120485, ¶ 19 (under de novo review, the reviewing court performs the same analysis
a trial judge would perform and gives no deference to the judge’s conclusions or specific rationale).
“In construing the language of the policy, the court’s primary objective is to ascertain and
give effect to the intent of the parties to the contract. [Citations.] In order to ascertain the
meaning of the policy’s language and the parties’ intent, the court must construe the policy
as a whole and ‘take into account the type of insurance purchased, the nature of the risks
involved, and the overall purpose of the contract.’ [Citations.] If the words of a policy are
clear and unambiguous, ‘a court must afford them their plain, ordinary, and popular
meaning.’ (Emphasis in original.) [Citation.] Conversely, if the language of the policy is
susceptible to more than one meaning, it is considered ambiguous and will be construed
strictly against the insurer who drafted the policy and in favor of the insured. [Citations.]
However, this court ‘will not strain to find ambiguity in an insurance policy where none
exists.’ [Citations.]” Travelers Insurance Co., 197 Ill. 2d at 292-93.
¶ 55 The plain language of the policy requires only that Schmidt Steel’s agreement to provide
additional insured coverage be in writing. Schmidt Steel’s CGL policy confers additional insured
status on persons or organizations when Schmidt Steel “agrees in writing in a contract or
agreement that such person or organizations be added as additional insureds.” (Emphasis added.)
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The plain meaning of this provision requires only that Schmidt Steel’s agreement to provide
additional insured coverage be in writing. It does not require that all the terms of the parties’
agreement be in writing, nor does it require that those terms be encompassed in a formally executed
written contract. If Westfield had wanted to require its insured to enter into a written contract,
Westfield could have simply said so.
¶ 56 We conclude that Kingery and Schmidt Steel’s agreement satisfies the requirements of
Westfield’s CGL policy because the policy’s language can be reasonably interpreted to require
only that the insurance portion of the parties’ agreement be in writing, as opposed to the entire
agreement. Even if Westfield’s interpretation, i.e., that the policy’s language required an executed
written contract of the parties’ entire agreement, were also reasonable, then the policy language
would be deemed ambiguous and Illinois law requires that an ambiguity must be construed in favor
of coverage. See Pekin Insurance Co. v. Miller, 367 Ill. App. 3d 263, 270-72 (2006).
¶ 57 Westfield also argues that Kingery failed to prove the allegation raised in its amended
counterclaim (i.e., the chronological fact that Max Schmidt telephoned Ash about the bidding error
after Max reviewed the January 13, 2014 subcontract form and then they reached a time and
materials agreement), and therefore is not entitled to judgment on the basis articulated by the trial
court because it was never pled. Specifically, Westfield claims that Kingery pled the theory of
incorporation of a document at the time of contract formation, but the trial court ruled in favor of
Kingery based on the distinct theory of modification of an existing contract. Westfield urges this
court to reverse the trial court because Kingery pled that its January 13, 2014 subcontract form
was incorporated into the parties’ contract at the time of formation, but Kingery failed to introduce
any evidence that the subcontract form was even in existence at the time of formation.
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¶ 58 Westfield argues that, even setting aside Kingery’s failure to plead modification, Kingery
failed to prove that the parties’ oral time-and-materials agreement was modified by the subsequent
email from Kingery to Catie Schmidt on January 13, 2014, attaching a draft subcontract for
$102,000, because there was no fresh consideration for the modification and Schmidt never
accepted the proposed modification. Westfield asserts that even if negotiations were still open as
of January 13, 2014, the terms of Kingery’s standard form subcontract were not incorporated into
the oral contract.
¶ 59 Westfield has forfeited review of its contract modification argument because Westfield
argues for the first time on appeal that the undisputed evidence established that an oral contract
was formed between Kingery and Schmidt Steel before Kingery sent the written subcontract to
Schmidt Steel on January 13, 2014. Staes & Scallan, P.C. v. Orlich, 2012 IL App (1st) 112974,
¶ 36 (appellant failed to preserve an argument for appeal by not raising it below). Nor did Westfield
argue that, because the alleged oral agreement predated Kingery’s transmission of the written
subcontract, the written subcontract was at most a modification to the prior oral agreement. To the
contrary, Westfield asserted exactly the opposite, stating in its posttrial brief that there was “no
evidence that the parties reached any kind of agreement prior to January 13, 2014, or that Kingery’s
counter-proposal as of that date represented or memorialized any kind of agreement at all.”
¶ 60 Furthermore, Westfield’s modification argument relies on its erroneous assertion that it is
an undisputed fact that Ash agreed to pay Schmidt Steel on a time and materials basis before
Kingery sent the subcontract form to Schmidt Steel on January 13, 2014. To the contrary, Ash
testified that the time and materials telephone conversation happened in response to Kingery
emailing the written subcontract to Schmidt Steel.
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¶ 61 Next, Westfield argues that the circuit court erred in applying the Uniform Commercial
Code (UCC) (810 ILCS 5/1-101 et seq. (West 2020)), which applies to contracts for the sale of
goods, not to contracts for services, instead of the Illinois common law mirror image rule.
According to Westfield, even assuming that contract formation had not yet occurred before
Kingery sent its January 13, 2014 email, Max still did not accept any of the terms of Kingery’s
subcontract form, but instead rejected it, in accordance with the common law mirror image rule.
Westfield cites Finnin v. Bob Lindsay, Inc., 366 Ill. App. 3d 546, 548 (2006), for the proposition
that the mirror image rule provides that “an acceptance requiring any modification or change in
terms constitutes a rejection of the original offer and becomes a counteroffer that must be accepted
by the original offeror before a valid contract is formed.” Westfield asserts that Max implicitly
rejected any fixed-price subcontract for $102,000 when he stated that his $112,000 bid was too
low and therefore was not bound to any of the other terms in the subcontract form regardless of
the fact that the parties went on to reach an agreement. Westfield argues that even if Max’s only
objection to the deal was price, the parties went back to the status quo on their telephone call under
the mirror image rule and then proceeded to execute a freestanding oral contract for time and
materials. Westfield asserts that, even under the UCC standard, the disparity in Kingery’s and
Schmidt Steel’s positions was so great on the fundamental issue of price that Max’s position was
tantamount to a rejection, and, thus, the oral subcontract did not incorporate any of the terms of
Kingery’s rejected form subcontract.
¶ 62 Westfield’s argument regarding the UCC misconstrues the trial court’s ruling and the
mirror image rule. The trial court did not apply the UCC here. Rather, the trial court determined
that the mirror image rule was not applicable because it is used to determine whether a contract is
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formed; once formed, the parties’ conduct is the best evidence of its terms. The issue here was not
whether a contract was formed but rather what terms the contract included. The trial court properly
determined that the party’s conduct, not the mirror image rule, was the best evidence of their
contract terms. See Restatement (Second) of Contracts § 18 (1981) (“Where a bargain has been
fully performed on one side, there is commonly no need to determine the moment of making of
the contract or whether the performing party made a promise before he performed.”). Max’s
objection to only the price term was effectively a conditional acceptance to perform under the
written subcontract for a different price. This conditional acceptance operated as a rejection of the
entire contract and as a counteroffer that included the non-objectional terms. Kingery’s subsequent
offer to pay on a time and materials basis was an acceptance of Max’s counteroffer and/or a
modified offer that Schmidt Steel subsequently accepted through performance. Kropp Forge Co.
v. Jawitz, 37 Ill. App. 2d 475, 482-83 (1962) (declining to decide whether a party’s purported
acceptance conformed to the offer because the parties’ conduct established that even if the
purported acceptance did not conform, it was a counteroffer that was subsequently accepted, thus
forming a contract).
¶ 63 We conclude based on the language of Schmidt Steel’s CGL policy that Kingery and
Dynacom Consulting qualified as additional insureds under the policy.
¶ 64 D. Kingery’s Cross-Appeal
¶ 65 Based on our conclusion that Kingery and Dynacom Management qualify as additional
insureds under Schmidt Steel’s CGL policy, we conclude that the trial court properly dismissed as
moot Kingery’s cross-appeal against Schmidt Steel for breach of an oral contract that required
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Schmidt Steel to add Kingery and Dynacom Consulting as additional insureds to Schmidt Steel’s
CGL policy.
¶ 66 III. CONCLUSION
¶ 67 For the foregoing reasons, we affirm the judgment of the circuit court.
¶ 68 Affirmed.
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