The 2023 baseball season was all but abysmal for the Chicago White Sox, and their state of affairs off the field has not been any better this off-season, as a recent court decision demonstrates. The plight the White Sox found themselves began in 2011, when White Sox fan Raymond Myles was injured while walking down a ramp at U.S. Cellular Field (since renamed Guaranteed Rate Field).
Mr. Myles later filed suit in the Circuit Court of Cook County, Illinois, against the Chicago White Sox, Ltd. and other parties (“the Myles lawsuit”). He alleged that they negligently caused his injuries by their failure to inspect the premises for excessive garbage. At the time of Mr. Myles’s injury, the White Sox had a contract with We Clean Maintenance and Supplies, Inc. (“We Clean”) to perform cleaning services at the ballpark. The White Sox later tendered the defense of the Myles lawsuit to State Automobile Mutual Insurance Company (“State Auto”) as additional insureds on We Clean’s commercial general liability policy. State Auto denied the tender, and the White Sox and AXIS Insurance Company (“AXIS”), their commercial general liability insurer and subrogee, ultimately incurred the costs of defending and settling the Myles lawsuit.
So how did we get here? Unfortunately, it may come down to poor record-keeping by the White Sox. The White Sox entered into several “Contract[s] for Services” with We Clean between 2008 and 2012 (the “service contracts”). The service contracts all contained the following language: “Vendor will comply with all insurance requirements set forth by the Chicago White Sox (“CWS”) and will provide certification of such insurance.” In 2008, 2009, and 2012, the service contracts also included a separate document titled “Indemnification and Insurance Agreement” (the “Agreement”).
The document stated that We Clean “[s]hall procure, at its sole cost and expense, the insurance coverages set forth below, and shall maintain such coverages in full force and effect as specified in this Agreement. The Contractor shall include the Indemnified Parties and such other parties as CWS may designate as additional insureds to the insurance policies described below.”
The Agreement further provided that We Clean “shall promptly furnish CWS with certificates of insurance evidencing the coverages hereunder, and shall not commence any services until such insurance is obtained.” The “insurance policies described below” in the Agreement consisted of four different types of insurance, including a commercial general liability insurance policy (the “CGL policy”).
We Clean’s CGL policy contained an endorsement adding as an additional insured, “[a]ny person or organization for whom you are performing operations when you and such person or organization have agreed in a written contract or written agreement that such person or organization be added as an additional insured on your policy.” (Emphasis added.)
We Clean issued certificates of insurance to the White Sox in 2010 and 2011, listing the White Sox as additional insureds. But as well known, certificates include disclaimers stating that the certificate is issued as a matter of information only and that if the certificate holder is an additional insured, the policies must be endorsed. We Clean’s additional insured endorsement required a written agreement between the parties, and unfortunately, the White Sox were unable to locate the Indemnification and Insurance Agreements for either 2010 or 2011, and We Clean took the position that they did not sign such a document for the years 2010 and 2011.
While Raymond Myles’ lawsuit was still pending against the White Sox, the White Sox and AXIS filed a complaint for declaratory judgment against State Auto. A declaratory judgment is a decision from a court that determines the rights of the parties but does not award damages.
The White Sox and AXIS alleged in their complaint that We Clean’s 2010-2011 State Auto CGL policy does afford additional insured coverage to the White Sox, specifically a defense and indemnity for the White Sox in the Myles lawsuit because of the reference to insurance requirements in the 2011 service contract, despite the absence of a written agreement requiring such insurance. AXIS’ reason for filing the declaratory judgment complaint against State Auto was to avoid paying out a settlement on the Myles lawsuit and force State Auto to do so instead.
Both AXIS and the White Sox eventually filed motions for summary judgment in the declaratory judgment action. A motion for summary judgment (an “MSJ”) argues that there is no real dispute about material facts and that the party filing the motion is entitled to win the case as a matter of law. Here, both parties, MSJs, are primarily concerned with the question of whether the 2011 service contract constituted a written agreement between We Clean and the White Sox that directed State Auto to add the White Sox as additional insureds on We Clean’s policy.
AXIS’s MSJ argument was that just the service contract, which required We Clean to comply with the White Sox plaintiffs’ “insurance requirements,” was adequate despite the absence of a 2011 Indemnification and Insurance Agreement. AXIS also took the position that the court should look to extrinsic evidence (related evidence that is not included in a document) and infer that the “insurance requirements” of the 2011 service contract included the requirement that the White Sox be added as additional insureds.
State Auto, by contrast, maintained in its MSJ that the absence of an Indemnification and Insurance Agreement in 2011 meant that We Clean and the White Sox plaintiffs never expressly agreed to add the White Sox plaintiffs as additional insureds under We Clean’s policy. The additional insured endorsement afforded coverage to “[a]ny person or organization for whom you are performing operations when you and such person or organization have agreed in a written contract or written agreement that such person or organization be added as an additional insured on your policy” and State Auto strictly interpreted the language of this endorsement.
On December 15, 2022, the circuit court granted State Auto’s motion for summary judgment and found that since there was no written agreement between We Clean and the White Sox requiring the White Sox to be named as additional insureds under We Clean’s policy, the White Sox were not entitled to a defense and indemnity by State Auto. We can only speculate as to why the White Sox’s back office did not attach the Indemnification and Insurance Agreement to We Clean’s 2011 service contract. However, this White Sox loss off the field can provide a valuable lesson as to the importance of careful record keeping. Insurance carriers and courts will interpret policy and contractual language very stringently. To avoid a loss of coverage like we have seen here, clients should verify that all documents that are meant to be attached to a contract or agreement, such as exhibits and addendums, are present when sent to other parties for signature.
Please reach out to Melanie Fitzgibbons for assistance with your client’s risk transfer program.
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