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

2016 IL App (1st) 151166 (Ill. App., 2016)

Words & Phrases

Subrogation: In General

Trial Judge

John P. Callahan, Jr.

Appellate Judge

Fitzgerald Smith

Holding

Waiver of subrogation clause contained in the construction contract for the casino renovation project prevented all insurers from asserting their respective subrogation claims.

Fact Summary

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.

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.

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 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.

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