Wednesday, August 26, 2015


By: Ellen C. Germuska, Esquire

Boyle, Gentile & Leonard, P.A.


The Illinois court recently decided the answer to this question in the affirmative in West Bend Mut. Ins. Co. v. DJW-Ridgeway Building Consultants, Inc., -- N.E. 3d --- (Ill. App. Ct. 2015).  It is not uncommon that amongst large construction projects with a multitude of subcontractors, contracts, change orders, payment logs, etc. that certain documents are misplaced or lost.  West Bend is of importance because the Court details that just because a signed contract might not exist, that the existence of the contract can be proven with several other factors so the additional insured is still covered.

In West Bend, an elevator contractor was injured on a project site. W. Bend Mut. Ins. Co., at *1. Lake Effect Development III, LLC (Lake Effect) hired DJW-Ridgeway Building Consultants, LLC (Ridgeway) as the general contractor on a project. Id. Ridgeway then hired Jason the Mason, as a masonry subcontractor on the project. Id. West Bend Mutual Insurance Company issued a commercial general liability policy to Jason the Mason, which included an additional insured endorsement.  Id. There was no dispute that the policy was in effect at the time of the injury, which was allegedly caused by Jason the Mason’s work. Id. at *2. The relevant portion of the additional insured endorsement states:


This endorsement modifies insurance provided under the following:


A. WHO IS AN INSURED (Section II) is amended to include as an additional insured any person or organization who you are required to add as an additional insured on this policy under a written contract or agreement.

The written contract or agreement must be:

1. Currently in effect or becoming effective during the term of this policy; and

2. Executed prior to the ‘bodily injury,’ ‘property damage,’ ‘personal injury and advertising injury.’


West Bend denied Ridgeway’s tender of defense as an additional insured under Jason the Mason’s policy. Id. at *1. West Bend ultimately filed a declaratory judgment action against Ridgeway alleging West Bend did NOT owe Ridgeway a defense. Id. West Bend’s reason for denial was that no signed contract existed at the time the policy went into or effect, nor was there a signed contract prior to the injury in April 2008. Id. at *2.

Ridgeway, however, argued a contract did exist.  Id. Ridgeway submitted the Proposal and Agreement. Id. The Proposal was submitted August 2007, and it details what work will be performed, where the work will be performed, and is signed by the parties on November 8, 2007.  Id. The first paragraph of the Agreement states it was executed on November 8, 2007 between Ridgeway, the general contractor, and Jason the Mason, the subcontractor. Id. The Agreement further states it is, “supplemental to and a part of that certain signed proposal between Contractor and Sub-Contractor to which it is attached.” Id. The Agreement also contained a provision requiring the subcontractor, Jason the Mason, to list Ridgeway as an additional insured on its policies of insurance and to provide Ridgeway Certificates of Insurance for worker’s compensation, general liability, auto liability and property damage insurance prior to commencing work. Id. However, the Agreement was never signed. Id. at *3.

The President of Ridgeway, David Wardeberg, testified during his deposition the Proposal was attached to the Agreement, he did not have a signed copy of the Agreement, but he believes the terms of the Agreement were accepted by Jason the Mason because “He went and did the work”. Id.

The President of Jason the Mason, Jason Schwan, testified during his deposition he had no recollection of receiving the Agreement from Ridgeway, but that does not mean he did not receive it, and just because it was in his file does not mean he read it.  Id.

Ridgeway further submitted a fax from Ridgeway to Jason the Mason’s insurance agent dated January 2, 2008.  Id. at *4. The fax requested certificates of insurance issued to Jason the Mason for worker’s compensation and general liability insurance. Id. The insurance agency, that same day, faxed to Ridgeway certificates of insurance showing Jason the Mason as insured, and naming Ridgeway as an additional insured.  Id.

The West Bend court reasoned, “[i]t is well settled that a party named in a contract may, by his acts and conduct, indicate his assent to its terms and be bound by its provisions even though he has not signed it.” Id. at *6, citing Asset Recovery Contracting, LLC v. Walsh Construction Co. of Illinois, 2012 IL. App (1st) 101226, ¶64, 226 Ill.Dec. 615, 980 N.E. 2d 708 (quoting Landmark Properties, Inc. v. Architects International-Chicago, 172 Ill.App.3d 379, 383, 122 Ill.Dec 344, 526 N.E.2d 603 (1988)). The court further relied on prior case law outlining that a contract does not have to be a single piece of paper, and as long as the papers contain all the essential elements of a contract, and are either physically connected or reference one another with such definite terms they make up the same contract. Id. at Mid-Town Petroleum, Inc. v. Dine, 72 Ill. App. 3d 296, 202-04, 28 Ill. Dec. 261, 290 N.E. 2d 428 (1979).

The appellate court affirmed the trial court’s ruling that West Bend did owe Ridgeway a defense.  Id. at *8. The court found that the Proposal and Agreement were physically connected, and made specific reference to one another as to be considered one contract. Id. Jason the Mason’s conduct in completing the contracted for work, shows his assent to the terms of the contract.  Id. The fax from Jason the Mason’s insurance agent, further shows Jason the Mason was complying with the terms of the contract that required certificates of insurance prior to performing work and required Ridgeway to be named as an additional insured on the insurance policies. Id.  As such, the court found Ridgeway was an additional insured under Jason the Mason’s policy of insurance.  Id.

This could have implications in other states and in Florida as contracts sometimes are missing or incomplete but insurance policies require written contracts or agreements in order for an additional insured to have coverage.

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