Illinois Appellate Court Determines Unsigned Agreement Can Still Constitute a Written Contract and Trigger Additional Insured Coverage

In West Bend Mutual Insurance Co. v. DJW-Ridgeway Building Consultants, Inc., 2015 IL App (2d) 140441 (May 19, 2015), the Illinois Appellate Court, Second District affirmed a trial court decision and held that West Bend Mutual Insurance Co. had the duty to defend DJW-Ridgeway Building Consultants, Inc. (Ridgeway) as an additional insured.

The underlying dispute arose out of any injury suffered by a construction worker at a worksite where Ridgeway was the general contractor. Ridgeway subcontracted with Jason the Mason, Inc. to provide masonry work. After the injured worker filed suit against Jason the Mason, Ridgeway, and the developer, Ridgeway tendered its defense to West Bend on the basis of the additional insured provision present in the liability policy issued to Jason the Mason by West Bend. West Bend denied the tender and filed a declaratory judgment seeking a ruling that it did not have the duty to defend Ridgeway.

On appeal, West Bend first contended that Ridgeway was not afforded coverage because the written contract between Jason the Mason and Ridgeway was not signed by Ridgeway or West Bend. Importantly, the additional insured provision in the West Bend policy requires an “executed” written contract between the putative additional insured and the named insured. At issue was whether the written contract had been executed, because while a proposal between Ridgeway and Jason the Mason was signed, the latter prepared agreement was not signed by either party. Notably, the president of Ridgeway had attached the agreement to the proposal when he handed the documents to the president of Jason the Mason. West Bend relied on the agreement not containing any signatures and arguing that this rendered the documents unenforceable as a contract. The Appellate Court disagreed, stating that a contract does not need to be single piece of paper but could instead constitute several documents. Since the agreement denominated itself as part of the proposal and the two documents were physically connected, the court reasoned the documents, taken together, constituted a written contract. In addition, the later actions taken by the parties further indicated that the parties manifested assent to the terms of the agreement.

West Bend also argued that even if Ridgeway was an additional insured, West Bend still would not have the duty to defend because the additional insured coverage was excess over unidentified insurance (presumably Ridgeway’s own insurance). Specifically, West Bend pointed to language in the policy that said the additional insured coverage was excess over other valid insurance available to the additional insured “unless a written contract specifically requires that this insurance be either primary or primary and noncontributing.” The Appellate Court found the agreement between Ridgeway and Jason the Mason to sufficiently indicate that additional insured coverage was to be primary. The Appellate Court determined that since the agreement specifically stated that umbrella coverage was to be provided on an excess basis, the lack of similar language with respect to primary coverage necessarily meant the commercial general liability coverage was intended to be primary.