{ "id": 1083776, "name": "CHATHAM CORPORATION, Plaintiff-Appellant, v. DANN INSURANCE, f/k/a Dann Brothers, Inc., Defendant (Zurich American Insurance Company, Defendant-Appellee)", "name_abbreviation": "Chatham Corp. v. Dann Insurance", "decision_date": "2004-06-21", "docket_number": "No. 1\u201403\u20140167", "first_page": "353", "last_page": "367", "citations": [ { "type": "official", "cite": "351 Ill. App. 3d 353" } ], "court": { "name_abbreviation": "Ill. App. Ct.", "id": 8837, "name": "Illinois Appellate Court" }, "jurisdiction": { "id": 29, "name_long": "Illinois", "name": "Ill." }, "cites_to": [ { "cite": "425 N.E.2d 429", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1981, "opinion_index": 0 }, { "cite": "99 Ill. App. 3d 433", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3102978 ], "year": 1981, "opinion_index": 0, "case_paths": [ "/ill-app-3d/99/0433-01" ] }, { "cite": "377 N.E.2d 296", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1978, "opinion_index": 0 }, { "cite": "60 Ill. App. 3d 957", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3351305 ], "year": 1978, "opinion_index": 0, "case_paths": [ "/ill-app-3d/60/0957-01" ] }, { "cite": "682 N.E.2d 382", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1997, "pin_cites": [ { "page": "386" } ], "opinion_index": 0 }, { "cite": "289 Ill. App. 3d 264", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 351013 ], "year": 1997, "pin_cites": [ { "page": "269" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/289/0264-01" ] }, { "cite": "606 N.E.2d 230", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "year": 1992, "pin_cites": [ { "page": "233-34" }, { "page": "233-34" } ], "opinion_index": 0 }, { "cite": "238 Ill. App. 3d 208", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5154756 ], "weight": 2, "year": 1992, "pin_cites": [ { "page": "213" }, { "page": "213" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/238/0208-01" ] }, { "cite": "406 N.E.2d 222", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "year": 1980, "pin_cites": [ { "page": "224" }, { "page": "224" } ], "opinion_index": 0 }, { "cite": "85 Ill. App. 3d 203", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 3194411 ], "weight": 2, "year": 1980, "pin_cites": [ { "page": "204" }, { "page": "204-05" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/85/0203-01" ] }, { "cite": "534 N.W.2d 565", "category": "reporters:state_regional", "reporter": "N.W.2d", "case_ids": [ 6128465 ], "weight": 4, "year": 1995, "pin_cites": [ { "page": "567" }, { "page": "567" }, { "page": "567" }, { "page": "567" } ], "opinion_index": 0, "case_paths": [ "/nw2d/534/0565-01" ] }, { "cite": "91 P.2d 1087", "category": "reporters:state_regional", "reporter": "P.2d", "weight": 4, "year": 1939, "pin_cites": [ { "page": "1088" }, { "page": "1087" }, { "page": "1088" }, { "page": "1090", "parenthetical": "Gibson, J., dissenting, joined by Riley, Osborn, and Hurst, JJ." } ], "opinion_index": 0 }, { "cite": "185 Okla. 327", "category": "reporters:state", "reporter": "Okla.", "case_ids": [ 8893368 ], "weight": 4, "year": 1939, "pin_cites": [ { "page": "328" }, { "page": "327" }, { "page": "328" }, { "page": "330" } ], "opinion_index": 0, "case_paths": [ "/okla/185/0327-01" ] }, { "cite": "234 N.E.2d 394", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1968, "pin_cites": [ { "page": "399" } ], "opinion_index": 0 }, { "cite": "91 Ill. App. 2d 156", "category": "reporters:state", "reporter": "Ill. App. 2d", "case_ids": [ 2819005 ], "year": 1968, "pin_cites": [ { "page": "164" } ], "opinion_index": 0, "case_paths": [ "/ill-app-2d/91/0156-01" ] }, { "cite": "475 N.E.2d 872", "category": "reporters:state_regional", "reporter": "N.E.2d", "year": 1985, "pin_cites": [ { "page": "876" } ], "opinion_index": 0 }, { "cite": "105 Ill. 2d 486", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 3141899 ], "year": 1985, "pin_cites": [ { "page": "495" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/105/0486-01" ] }, { "cite": "607 N.E.2d 1204", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 3, "year": 1992, "pin_cites": [ { "page": "1212" }, { "page": "1212" } ], "opinion_index": 0 }, { "cite": "154 Ill. 2d 90", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 4820940 ], "weight": 3, "year": 1992, "pin_cites": [ { "page": "108" }, { "page": "108" }, { "page": "108" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/154/0090-01" ] }, { "cite": "655 N.E.2d 842", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 5, "year": 1995, "pin_cites": [ { "page": "846" }, { "page": "846" }, { "page": "846" }, { "page": "846" }, { "page": "846" } ], "opinion_index": 0 }, { "cite": "166 Ill. 2d 520", "category": "reporters:state", "reporter": "Ill. 2d", "case_ids": [ 198897 ], "weight": 5, "year": 1995, "pin_cites": [ { "page": "529" }, { "page": "529" }, { "page": "529" }, { "page": "529" }, { "page": "530" } ], "opinion_index": 0, "case_paths": [ "/ill-2d/166/0520-01" ] }, { "cite": "747 N.E.2d 495", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "year": 2001, "pin_cites": [ { "page": "502" }, { "page": "502" } ], "opinion_index": 0 }, { "cite": "321 Ill. App. 3d 330", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 132439 ], "weight": 2, "year": 2001, "pin_cites": [ { "page": "338" }, { "page": "338" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/321/0330-01" ] }, { "cite": "628 N.E.2d 280", "category": "reporters:state_regional", "reporter": "N.E.2d", "weight": 2, "year": 1993, "pin_cites": [ { "page": "282" }, { "page": "282" } ], "opinion_index": 0 }, { "cite": "256 Ill. App. 3d 62", "category": "reporters:state", "reporter": "Ill. App. 3d", "case_ids": [ 5382711 ], "weight": 2, "year": 1993, "pin_cites": [ { "page": "64" }, { "page": "64" } ], "opinion_index": 0, "case_paths": [ "/ill-app-3d/256/0062-01" ] } ], "analysis": { "cardinality": 1234, "char_count": 36042, "ocr_confidence": 0.762, "pagerank": { "raw": 1.5495343297896977e-07, "percentile": 0.6743825605276601 }, "sha256": "1787eb380f0890de6fb32613f37207c1b00402ec485d4f5a3489870304859025", "simhash": "1:fad659b5cf8db4c2", "word_count": 5811 }, "last_updated": "2023-07-14T15:22:07.473803+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "O\u2019MALLEY, EJ., and McNULTY, J., concur." ], "parties": [ "CHATHAM CORPORATION, Plaintiff-Appellant, v. DANN INSURANCE, f/k/a Dann Brothers, Inc., Defendant (Zurich American Insurance Company, Defendant-Appellee)." ], "opinions": [ { "text": "JUSTICE McBRIDE\ndelivered the opinion of the court:\nPlaintiff-appellant Chatham Corporation (Chatham) appeals from orders of the circuit court of Cook County granting summary judgment to defendant-appellee Zurich American Insurance Company (Zurich) as to Chatham\u2019s claims of breach of an insurance contract, waiver, and estoppel, and dismissing with prejudice Chatham\u2019s claim seeking a declaratory judgment of breach of contract.\nChatham, a company based in Chicago Heights, Illinois, was in the business of sterilizing medical products in Richmond, Virginia, through a subsidiary corporation known as Sterilization Services of Virginia, Inc. (SSV). SSV was an additional insured on a commercial property insurance package Chatham obtained from Zurich in 1996 with the assistance of Chatham\u2019s insurance broker, defendant Dann Insurance (Dann). Zurich and Dann were also located in Illinois. The Zurich policy covered loss of or damage to the SSV sterilization facility in Virginia and provided additional coverage for \u201cExtra Expense,\u201d which was defined in the written contract as \u201cnecessary expenses you incur during the \u2018period of restoration\u2019 that you would not have incurred if there had been no direct physical loss or damage to [covered] property.\u201d The policy indicated \u201cyou\u201d was a reference to the named insured, Chatham, and its subsidiaries, including SSV as additional insureds. The policy did not include definitions of the words \u201cincur\u201d or \u201cnecessary.\u201d\nAn equipment explosion on June 13, 1997, shut down the SSV facility for seven months. Zurich was immediately notified of the explosion and paid for the facility\u2019s reconstruction and about $1 million in \u201cextra expenses\u201d claimed by the insured, but it rejected about $1 million in additional \u201cextra expenses.\u201d More specifically, during the restoration period, SSV could not sterilize the products of its main customer, a corporation now known as Maxxim Medical, Inc. (Maxxim). SSV\u2019s contract with Maxxim required SSV to find alternate sterilization facilities and to pay the cost of shipping Maxxim\u2019s unsterilized goods from SSV to the alternate facilities (Maxxim\u2019s \u201cinbound freight\u201d). SSV performed these contractual obligations, and Zurich reimbursed SSV for the resulting extra expenses. However, SSV was not contractually obligated to pay and never paid the costs of shipping Maxxim\u2019s sterilized products from the alternate facilities (Maxxim\u2019s \u201coutbound freight\u201d) to Maxxim\u2019s customers. Zurich concluded that because SSV was not contractually required to pay Maxxim\u2019s outbound freight costs, those costs were not \u201cnecessary,\u201d and, therefore, not covered extra expenses. In addition, when SSV and Maxxim sued each other in federal district court in Richmond, Virginia, regarding their obligations under their product sterilization contract, the judge presiding over their dispute also concluded that SSV was not contractually obligated to pay Maxxim\u2019s outbound freight expenses and rejected Maxxim\u2019s claim for those expenses. Sterilization Services of Virginia v. Maxxim Medical, Inc., No. 3:01CV787, slip order at 18 (E.D. Va. June 24, 2002). The federal judge reasoned that the sterilization contract specified \u201cthat SSV\u2019s obligation [was] to pay the \u2018difference between the cost of shipping to [SSV\u2019s] Virginia Facility and the cost of shipping to any alternate facility,\u2019 \u201d and that it would be improper to \u201cread into that clause the phrase \u2018and from\u2019 because that is not the language the parties chose and that is not the obligation imposed on SSV by this contract.\u201d Sterilization Services of Virginia, slip order at 15. Further, a court \u201ccannot make a new contract for the parties, but must construe the language as written.\u201d Sterilization Services of Virginia, slip order at 15. The federal judge pointed out that if SSV was actually required to reimburse Maxxim for all expenses incurred when SSV could not process product at its own facility, there would have been no reason to detail the specific expenses that SSV was obligated to pay under those circumstances. Sterilization Services of Virginia, slip order at 17. The judge also considered whether SSV was equitably estopped from raising its contractual defenses to Maxxim\u2019s suit, and determined there was \u201cno evidence of any representation or misrepresentations made to Maxxim. Maxxim was merely advised to keep track of its costs.\u201d Sterilization Services of Virginia, slip order at 19.\nIn May 2000, Chatham filed a multicount complaint against Zurich in the circuit court of Cook County based on Zurich\u2019s refusal to pay SSV for the outbound freight costs incurred by Maxxim. One of the counts in this initial pleading sought a declaration that Zurich\u2019s refusal was a breach of the insurance contract. Judge Richard A. Siebel sua sponte dismissed the declaratory judgment claim with prejudice, stating that it was actually a breach of contract claim, and gave Chatham leave to amend. Chatham\u2019s second amended complaint included two breach of contract counts (counts I and VI), waiver (count II) and estoppel allegations (count III), and the previously dismissed declaratory judgment count (count IV). The parties filed cross-motions for summary judgment as to one of the breach of contract counts and the waiver and estoppel counts (counts I, II, and III), and after briefing and oral argument, Judge Paddy H. McNamara resolved the cross-motions in Zurich\u2019s favor, indicating that she agreed with the federal district court\u2019s analysis and conclusion that SSV was not contractually obligated to pay Maxxim\u2019s outbound freight costs. At a later date, Judge McNamara dismissed the declaratory judgment count as previously dismissed by Judge Siebel (count IV) and granted Zurich\u2019s oral motion for summary judgment as to the additional breach of contract count (count VI). Chatham then voluntarily withdrew the remaining counts of its second amended complaint (counts V and VII). We also note that Chatham filed suit against Dann in the circuit court of Cook County, asserting insurance broker malpractice and negligence, and that the action was consolidated with the Zurich suit, but is still pending.\nIn this appeal from the disposition of its action against Zurich, Chatham first argues the sterilization contract is not relevant to the question of extra expense coverage, and that if Zurich wanted to incorporate the terms of the sterilization contract into the insurance contract, Zurich should have done so at drafting. In contradiction to Chatham\u2019s prior contention that there were no material facts in dispute and that cross-motions for summary judgment could be resolved in Chatham\u2019s favor, Chatham now contends \u201cnecessary\u201d is an ambiguous term in the insurance contract which should be construed against Zurich, as the drafting party. Chatham asserts it may recover Maxxim\u2019s outbound freight costs as expenses \u201cnecessary\u201d to facilitate ongoing customer service to Maxxim, even though Maxxim alone bore the expenses. Chatham concludes that Zurich breached its contractual obligation to pay the extra expenses and that the trial judge erred in granting summary judgment to Zurich on the breach of contract claim asserted as count I of Chatham\u2019s second amended complaint. Zurich responds that the facts surrounding Chatham\u2019s insurance claim are pertinent to the question of coverage and that the insurance contract\u2019s unambiguous requirements that extra expenses be both \u201cnecessary\u201d and \u201cincur[red]\u201d by the insured were never met.\nWe note that count VI of the second amended complaint, entitled \u201cbreach of contract,\u201d was a variation on count I and that it is undisputed the trial judge granted Zurich\u2019s oral motion for summary judgment as to count VI \u201cfor the same reasons\u201d the trial judge granted Zurich\u2019s written motion for summary judgment as to count I. Further, Chatham acknowledges it is relying on the \u201csame reasons\u201d and \u201csame authorities\u201d in defense of both counts. Accordingly, we will resolve the counts together, rather than engaging in subsequent, repetitive discussion of count VI.\nThe standard of review of an order granting summary judgment is de novo. Levitt v. Hammonds, 256 Ill. App. 3d 62, 64, 628 N.E.2d 280, 282 (1993). A reviewing court will reverse the entry of summary judgment if it determines that the prevailing party was not entitled to judgment as a matter of law or that a material question of fact exists. Levitt, 256 Ill. App. 3d at 64, 628 N.E.2d at 282. While the opposing party need not prove its case, it must present a factual basis that would arguably entitle it to a judgment. Lyon Metal Products, L.L.C. v. Protection Mutual Insurance Co., 321 Ill. App. 3d 330, 338, 747 N.E.2d 495, 502 (2001). If from the pleadings, depositions, affidavits, and admissions on file, the plaintiff fails to establish an element of his cause of action, summary judgment for the defendant is proper. Lyon Metal Products, 321 Ill. App. 3d at 338, 747 N.E.2d at 502.\nFurther, the construction of an insurance contract is a qu\u00e9stion of law. Lapham-Hickey Steel Corp. v. Protection Mutual Insurance Co., 166 Ill. 2d 520, 529, 655 N.E.2d 842, 846 (1995). A court must determine the intent of the parties when construing their contract. Lapham-Hickey Steel, 166 Ill. 2d at 529, 655 N.E.2d at 846. In order to determine the meaning of the policy and the intent of the parties, \u201c \u2018the court must construe the policy as a whole [citations], with due regard of the risk undertaken, the subject matter that is insured and the purposes of the entire contract.\u2019 \u201d Lapham-Hickey Steel, 166 Ill. 2d at 529, 655 N.E.2d at 846, quoting Outboard Marine Corp. v. Liberty Mutual Insurance Corp., 154 Ill. 2d 90, 108, 607 N.E.2d 1204 (1992). \u201cA policy term is not ambiguous because the term is not defined within the policy or because the parties can suggest creative possibilities for its meaning.\u201d Lapham-Hickey Steel, 166 Ill. 2d at 529, 655 N.E.2d at 846. In addition, a court may not read an ambiguity into a policy just to find in favor of the insured. Lapham-Hickey Steel, 166 Ill. 2d at 530, 655 N.E.2d at 846. A policy provision is considered ambiguous if it is subject to more than one reasonable interpretation. Outboard Marine, 154 Ill. 2d at 108, 607 N.E.2d at 1212. \u201cIf the words in the policy are unambiguous, a court must afford them their plain, ordinary, and popular meaning.\u201d (Emphasis in original.) Outboard Marine, 154 Ill. 2d at 108, 607 N.E.2d at 1212. \u201cIf the words of a policy can reasonably be given their plain, ordinary, and popular meaning, the provisions should be applied as written and the parties should be bound to the agreement they made.\u201d Western Casualty & Surety Co. v. Brochu, 105 Ill. 2d 486, 495, 475 N.E.2d 872, 876 (1985).\nWe are unable to find any ambiguity in the contract language regarding extra expenses. The coverage was limited to \u201cnecessary expenses you incur during the \u2018period of restoration.\u2019 \u201d According to the policy, \u201cyou\u201d is a reference to Chatham as named insured, and its subsidiaries as additional insureds, including SSV Although the policy does not specifically define the word \u201cnecessary,\u201d that word is not ambiguous and has a plain, ordinary, and popular meaning of \u201cbeing essential, indispensable, or requisite.\u201d Random House Webster\u2019s Unabridged Dictionary 1883-84 (1998). This commonly understood meaning encompasses expenses that the named and additional insureds to the policy, Chatham and SSy were required to incur during the reconstruction of the sterilization facilities. It does not encompass expenses that the insureds may have wanted to incur on a gratuitous or voluntary basis, which would have been the opposite of \u201cnecessary.\u201d It also does not encompass expenses that other, nonparties to the contract were required to incur during the facility reconstruction period. The only party required to pay for the cost of shipping Maxxim\u2019s sterilized products away from the alternate sterilization facilities was Maxxim itself, not Chatham or SSV In addition, Chatham has failed to address the unambiguous requirement that Chatham or SSV actually \u201cincur\u201d the expenses Chatham now seeks to \u201crecover.\u201d \u201cIncur\u201d is another term that was not defined in the contract, but it has a plain, ordinary, and popular meaning of \u201cto become liable or subject to through one\u2019s own action; [to] bring or take upon oneself.\u201d Random House Webster\u2019s Unabridged Dictionary 969 (1998). Chatham never became liable or subject to the expense of Maxxim\u2019s outbound freight. Maxxim did.\nThere is a general and well-established rule that a court \u201cwill not add terms to the contract of insurance which the parties have not included in the language of the policy.\u201d Walsh v. State Farm Mutual Automobile Insurance Co., 91 Ill. App. 2d 156, 164, 234 N.E.2d 394, 399 (1968). Accordingly, we cannot read a provision into Chatham\u2019s insurance contract with Zurich that requires Zurich to pay expenses incurred by a third party. We cannot conclude from the language of the contract that at the time of contracting Chatham intended to obtain coverage for third parties it did business with, or to undertake the expense of their coverage, or that Zurich intended to undertake the risk of extending coverage to unknown third parties. Even though Maxxim\u2019s outbound freight expenses were a consequence of the explosion at the Virginia sterilization facilities, they were not covered by the insurance contract at issue.\nOur conclusion is not swayed by Chatham\u2019s citation to Kay County Excise Board v. Atchison, T. & S.F. Ry. Co., 185 Okla. 327, 328, 91 P.2d 1087, 1088 (1939), for the proposition that the word \u201c \u2018necessary\u2019 must be considered in the connection in which it is used, as it is a word susceptible of various meanings. It may import absolute physical necessity or inevitability, or it may import that which is only convenient, useful, appropriate, suitable, proper, or conducive to the end sought.\u201d The issue in that tax protest case was whether a board of education, which was given broad powers and discretion to maintain a suitable school system and \u201cto incur all expenses, within the limitations provided by law, necessary to carry out and fulfull all powers [statutorily] granted,\u201d was authorized to buy band uniforms. Kay County, 185 Okla. at 327, 91 P.2d at 1087. We consider the Oklahoma court\u2019s determination that band uniforms were \u201cconvenient, useful, appropriate, suitable, proper, or conducive to the end\u201d sought in the teaching of band music, and therefore \u201cnecessary\u201d for instruction in band music (Kay County, 185 Okla. at 328, 91 P.2d at 1088), to be a rather strained interpretation of the word \u201cnecessary.\u201d In addition, a four-judge dissent indicated the majority\u2019s interpretation was contrary to prior decisions of Oklahoma and other states\u2019 courts. Kay County, 185 Okla. at 330, 91 P.2d at 1090 (Gibson, J., dissenting, joined by Riley, Osborn, and Hurst, JJ.). Furthermore, it cannot be seriously contended that expenses Chatham has never been willing to incur itself were \u201cconvenient, useful, appropriate, suitable, proper, or conducive to\u201d maintaining Chatham\u2019s relationship with its customer.\nIn addition, another court interpreting insurance policy language nearly identical to the language at issue also determined that \u201cnecessary\u201d is not an ambiguous term and that it limited coverage to extra expenses that were incurred by the insured as \u201c \u2018[absolutely essential *** needed to achieve a certain result or effect; requisite,\u2019 \u201d due to the suspension of the insured\u2019s operations. Butwin Sportswear Co. v. St. Paul Fire & Marine Insurance Co., 534 N.W.2d 565, 567 (Minn. App. 1995). In that case, the insured manufacturer proved $521,103 in losses after an equipment fire, and then sought $72,797 in fees charged by a service it had hired to assist with presenting the claim to the insurer. Butwin Sportswear, 534 N.W.2d at 567. The insurer rejected the third-party fees, and the court agreed the service\u2019s fees were not an essential expense. Butwin Sportswear, 534 N.W.2d at 567. The court reasoned that the insurer might well have paid all the covered losses without the service\u2019s involvement in the claim, and that the insured \u201cengaged [the service] primarily in anticipation of conflict and to assure itself a maximum recovery, not out of necessity.\u201d Butwin Sportswear, 534 N.W.2d at 567. This additional analysis further supports our interpretation of the language involved here. Chatham contends this case stands for the proposition that expenses which necessarily result from a suspension of the insured\u2019s operations are covered, and Maxxim\u2019s outbound freight expenses are covered because they \u201cwould not have been incurred but for the explosion on June 13, 1997.\u201d Chatham\u2019s argument is ineffective because it fails to address the policy language requiring that the expenses were necessarily incurred by the insured, not by some third party.\nWe conclude that Chatham failed to establish any material facts which would arguably entitle it to judgment on its claims that Zurich breached the insurance contract by refusing to pay SSV or Chatham for Maxxim\u2019s outbound freight expenses under the extra expense portion of the policy. Zurich was entitled to judgment as a matter of law on those claims (counts I and VI). Accordingly, the cross-motions for summary judgment were properly resolved in Zurich\u2019s favor.\nChatham is also arguing that waiver and estoppel occurred (1) about two weeks after the equipment explosion when Bill Lee of Zurich agreed with Chatham\u2019s insurance brokers, Charles Dann and Anna Lively of Dann, that all the freight charges were extra expenses and that it was allowable if Maxxim rather than SSV kept track of them, and (2) when Zurich issued three checks to Chatham between December 4, 1997, and August 20, 1998, in partial payment of the extra expenses, without specifying which particular expenses it was paying. Chatham contends the circuit court erred in granting summary judgment to Zurich on Chatham\u2019s waiver and estoppel claims, and that we should reverse and remand with instructions to grant Chatham\u2019s cross-motion for summary judgment. Zurich responds that Chatham has mischaracterized an initial conversation between Zurich and Dann regarding nothing more than how the claim would be presented, that the three partial payments were made after Zurich issued a reservation of rights letter on November 5, 1997, and that the record shows Zurich continually questioned its coverage of Maxxim\u2019s outbound freight expenses for at least two years before Chatham filed suit in Cook County.\nThe following additional facts are pertinent to the waiver and estoppel arguments.\nWe disregard Chatham\u2019s assertion of \u201cfact\u201d that Zurich conceded that it would have covered all inbound and outbound freight charges as SSV\u2019s \u201cextra expenses\u201d if Maxxim had delivered its unsterilized products to SSV\u2019s facility for SSV\u2019s shipment to and from the alternate sterilization facilities. Chatham supported this assertion only by citing paragraph 13 of its second amended complaint, yet in its answer to the pleading, Zurich denied that particular allegation. The assertion is actually an argument, and therefore it should not have been included in the statement of facts section of Chatham\u2019s brief. See 188 Ill. 2d R. 341(e)(6).\nWhen Anna Lively of Dann was deposed on December 18, 2001, she indicated she had been working in the insurance industry since 1973, and had been a Dann account executive responsible for Chatham\u2019s account since 1985. Dann and Zurich were immediately notified of the equipment explosion on Friday, June 13, 1997, and the following week, she and Chatham\u2019s representative, Thomas Morthorst, discussed the fact that SSV was contractually required to continue processing for some customers, including Maxxim. The next day, Lively and Charles Dann of Dann spoke with Bill Lee at Zurich and informed him that it was extremely important that SSV continue to process product for its biggest customer, Maxxim. Lively did not have a copy of SSV\u2019s contract with Maxxim, and neither did Lee, and she was relying on what Morthorst had said. According to Lively, \u201c[0]ur question to [Lee] was, did we have to actually put all of the bills and process everything through [SSV] or could we let Maxxim keep track of all the extra expenses and then present the claim.\u201d In response, \u201c[Lee] told us that we \u2014 he agreed that he felt that that was an extra expense, but that we really needed to talk to Jack Healy, that Jack was the adjustor and that everything needed to be run through Jack, and he gave us Jack\u2019s phone number.\u201d When asked whether the focus of the June 25 conversation with Bill Lee was \u201chow SSV should process the paperwork that was going to be coming because of Maxxim\u2019s claim,\u201d Lively responded: \u201cThe focus was whether SSV should handle it or if we could let Maxxim keep track of their own expenses and then just give us an accounting of the extra expense over and above their normal operating expenses.\u201d Further:\n\u201cQ. So rather than have them bill SSV and SSV pays it and then submits it to Zurich, could Maxxim just go ahead and keep track of it and submit it to Zuric[h] themselves?\nA. Well, that\u2019s correct.\nQ. Okay. At that point did you believe that everything that Maxxim submitted with regard to their claim would be covered under the Zurich policy?\nA. I had no way of knowing, since I didn\u2019t know what they would submit.\n* * *\nQ. So [Zurich] couldn\u2019t have made any determinations with regard to what was and what wasn\u2019t covered at that point?\nA. That\u2019s correct.\n* * *\nQ. Okay. So you still had an expectation that Zurich would adjust this loss, whether it\u2019s put through Maxxim or SSV according to its policies, terms and conditions, correct?\nA. That\u2019s correct.\u201d\nLively and Dann called Jack Healy at Zurich that same day:\n\u201cWe explained that we had talked to Bill Lee, who had told us to contact Jack, because he was the main clearing person for the claim. And that Bill \u2014 we explained the situation with [SSV]. We told him that Bill felt that it was extra expenses and that he didn\u2019t have any objection to us having Maxxim keep track of the expenses as long as Jack agreed.\nJack said that he needed to contact Shore & Asimov [a firm that would help Zurich process the claim] and talk to Keith Strohecker, and as long as he had no objections, it would be fine. And we left it\nthat he would get back to us if Keith had objections, otherwise that would be the way that the claim would be run, and that that would be communicated to Tom [Morthorst.]\u201d\nNeither Strohecker nor Healy subsequently contacted Dann to indicate there was an objection to how the claim would be handled. Lively thought Zurich \u201cactually liked handling it this way better, because they could independently audit the numbers.\u201d When asked whether Healy had given any indication that there would be extra expense coverage, Lively responded:\n\u201cHe didn\u2019t really say that there was coverage, he just said that\u2014 I\u2019m trying to remember. That it would be handled as an extra expense, and that we could put it through and that Maxxim could keep track of the expenses.\u201d\nLively also indicated that as an experienced insurance broker, she knew when she spoke with Healy that Zurich would \u201cdo an adjustment of any claim that was submitted by either Maxxim or SSV with regard to the business interruption and extra expense claim.\u201d She also knew that Zurich \u201cwould have to wait to receive the actual claim before they would be able to make these determinations.\u201d When Lively was asked, \u201c[Wjould any expense that the insured covers to keep [a] customer happy in the event of a loss be an extra expense[?]\u201d she responded, \u201cI think that it would be subject to adjustment just as the Ghent\u2019s claim would be adjusted.\u201d\nLively relayed her conversation with Healy to Morthorst. When she \u201cinformed [Morthorst] that Zurich had agreed to let Maxxim keep track of the expenses,\u201d she did not \u201cprovide any other direction or instruction\u201d to him. She worked for Chatham, not Zurich, and she had no authority to make coverage decisions for Zurich. She had experience with many business interruption extra expense claims, although she had never been involved in a claim of this size. Dann or SSV had numerous conversations with Healy with regard to the outbound freight charges \u201cand about whether it was going to be covered or not or what portions of it they were going to cover. It was [Dann\u2019s] contention that as long as it was necessary, that it should be covered. But we all [a]greed not to dwell too much on the coverage issues until the numbers could be finalized.\u201d\nDuring the claims process, Zurich did not take a \u201chard fine position\u201d that there was no coverage for outbound freight, but Healy did bring it up in several conversations and indicated coverage might be denied because SSV was not contractually obligated to Maxxim for those charges. Morthorst gave Lively a copy of a Maxxim letter indicating that Zurich met with Maxxim on August 11, 1998, and that Maxxim was displeased with Zurich\u2019s interpretation of the outbound freight coverage. Further, Healy wanted Maxxim to make a claim with its own insurance company and then let that insurer subgrogate against Zurich. During a meeting with Healy, Lively called Maxxim\u2019s insurance broker, who indicated that he did not want to make a claim on Maxxim\u2019s insurance coverage because Maxxim was not responsible for the explosion. At that point, Healy \u201cbacked down.\u201d Lively thought the issue may have come up again later and that Maxxim had again refused to file a claim with its own insurer. Healy also wanted to arbitrate the outbound freight question, but Lively thought Maxxim was unwilling to participate.\nThomas Morthorst, the chief financial officer and a vice president of a Chatham subsidiary responsible for handling the insurance claim, indicated during his deposition on December 20, 2001, that \u201c[t]he outbound freight has been a point of contention for years.\u201d No one ever told Morthorst that if SSV rather than Maxxim shipped and paid for Maxxim\u2019s freight and submitted the records to Zurich that Zurich would pay the charges. The issue was not about who would keep the records, but whether there was coverage for outbound freight. He had known as early as the summer of 1998 that Zurich had not determined whether the outbound freight was covered. He knew that Shore & Asimov had been \u201cbacking out\u201d the outbound freight numbers from the schedules they submitted to Zurich for payment under the policy, although he did not realize this when Chatham received the first partial payments from Zurich.\nThe record includes a letter from Healy to Morthorst dated November 5, 1997, and a letter from Healy to Maxxim dated November 19, 1997, regarding the claimed expenses. In both letters, Zurich reserved its rights and defenses with respect to the ongoing expense claim. During his deposition, Morthorst acknowledged that on or about November 6, 1997, he received the reservation of rights letter addressed to him. He asked Healy to withdraw it, but Healy refused. With Morthorst\u2019s agreement, Lively sent a written objection to Healy on or about November 7, 1997. Healy\u2019s letter to Maxxim indicated that Zurich would be undertaking \u201ca thorough investigation of Maxxim\u2019s claim.\u201d Zurich offered to submit the outbound freight issue to binding arbitration proceedings, at Zurich\u2019s expense, but Maxxim said no.\nThe record also includes a letter from Healy to Maxxim dated December 16, 1997, indicating that Zurich \u201cmust confirm that the extra expenses submitted meet the terms and conditions of the policy.\u201d Healy concluded the letter by indicating that Zurich was reserving all of its rights and defenses with regard to Maxxim\u2019s ongoing expenses, and he sent a copy of the letter to Lively.\nIn a letter to Maxxim dated February 28, 1998, which Healy copied to Lively and Morthorst, Healy acknowledged Zurich\u2019s receipt of Maxxim\u2019s claim submission for the period from June 13, 1997, to January 18, 1998, which was in excess of $3.3 million. Healy indicated that Zurich\u2019s analysis and review of the claim was \u201ccontinuing,\u201d but \u201cbased on our preliminary review of the Submission, it appears that various items may not be covered under the Zurich Insurance policy with SSV The amount of these items may be significant.\u201d Healy suggested \u201cthese non-covered items\u201d might be covered under Maxxim\u2019s own business income and extra expense coverage with the Indemnity Insurance Company of North America (IINA), and he offered to meet with an IINA adjustor in order to expedite resolution of the issue. He concluded the letter with reservation of rights language.\nMorthorst also indicated during his deposition that he told Maxxim that Chatham would attempt to get Zurich to pay the outbound freight, but he never represented that if Zurich did not pay the charges, SSV or Chatham would pay them. There was no agreement between Chatham and Maxxim with regard to the outcome of Chatham\u2019s suit against Zurich.\nMorthorst was again deposed on May 15, 2002, in conjunction with the SSV and Maxxim contract dispute in federal district court. Morthorst acknowledged that SSV had never paid any of Maxxim\u2019s outbound freight charges, and then the following exchange occurred:\n\u201cQ. So you want your insurance company to pay you money for something you did not incur, right?\nA. Yes, because that\u2019s covered under my policy.\nQ. And then you don\u2019t want to give the money to the people who incurred the expense?\nA. That is not covered under the contract.\nQ. So in your analysis, you think it would be fair and *** permissible for SSV *** just to keep the money?\n^ ^ ^\nA. There\u2019s nothing in my policy that says what I must do with the money that I\u2019m entitled to under my insurance policy.\nQ. Do you think that\u2019s fair?\nA. Yes, I think that\u2019s fair.\u201d\nWaiver consists of either an express or implied voluntary and intentional relinquishment of a known right. Ames v. Crown Life Insurance Co. of Toronto, Canada, 85 Ill. App. 3d 203, 204, 406 N.E.2d 222, 224 (1980). \u201cIt is essentially unilateral in character, focusing on an insurer\u2019s conduct, and requiring no prejudice to, nor detrimental reliance by, an insured. [Citation.] To constitute a waiver, the words or conduct of an insurer must be inconsistent with the intention to rely on the requirements of the policy.\u201d Ames, 85 Ill. App. 3d at 204-05, 406 N.E.2d at 224.\nWe reject Chatham\u2019s contention that waiver occurred during the conversation between Bill Lee of Zurich and Anna Lively and Charles Dann of Dann shortly after the equipment explosion shut down SSV\u2019s processing capabilities. Lively\u2019s deposition testimony makes clear that Lee never indicated that Zurich would cover Maxxim\u2019s outbound freight expenses. Lee indicated that he would not be adjusting the claim and that the Dann representatives would have to contact the Zurich representative charged with adjusting responsibility, Jack Healy. Lively, an insurance professional with experience in processing business interruption claims, acknowledged at her deposition that she \u201chad no way of knowing\u201d when she talked with Lee whether all of Maxxim\u2019s claimed expenses would be covered by Zurich. She knew that Zurich would have to have the actual claim before Zurich could determine what would or would not be covered. Healy also never indicated that Zurich would cover Maxxim\u2019s outbound freight expenses. At most, Lee and Healy\u2019s statements regarding extra expenses were indications that Maxxim\u2019s freight costs could be categorized as extra expenses in the eventual claim, and Zurich would not deny coverage simply because SSV was not directly involved in the shipments. Nothing that Lee or even Healy said during those initial conversations with Lee and Dann was \u201cinconsistent with the intention to rely on the requirements of the policy,\u201d and so waiver did not occur.\nSimilarly, Zurich\u2019s partial payments during the claims processing period do not constitute waiver of the outbound freight claim. Zurich\u2019s payments were consistent with its determination that Maxxim\u2019s inbound freight expenses were necessarily incurred by SSV or Chatham, and therefore covered under the Zurich policy. Zurich\u2019s payment of covered expenses cannot constitute waiver of payment of non-covered expenses. In addition, the record reflects the payments were made after Zurich issued reservation of rights letters. The record also reflects that Zurich repeatedly indicated to the Chatham, Dann, and Maxxim representatives, through letters, meetings, and telephone conversations, throughout the claims processing period in 1997 and 1998 that Zurich was questioning outbound freight coverage. The record also reflects that Zurich encouraged Maxxim to make a claim with its own insurer, where Zurich believed Maxxim would receive a favorable response. In short, Zurich\u2019s conduct was not \u201cinconsistent with the intention to rely on the requirements of the policy,\u201d and did not amount to waiver.\n\u201cTo establish estoppel in an insurance context, the insured must show: (1) that he was misled by the acts or statements of the insurer or its agent; (2) reliance by the insured on those representations; (3) that such reliance was reasonable; and (4) detriment or prejudice suffered by the insured based on the reliance.\u201d Dumenric v. Union Oil Co. of California, 238 Ill. App. 3d 208, 213, 606 N.E.2d 230, 233-34 (1992). It is not necessary that the insurer intended to mislead the insured in order for estoppel to apply. Dumenric, 238 Ill. App. 3d at 213, 606 N.E.2d at 233-34. \u201cThe burden of establishing prejudice rests with the insured and must be proved by clear, concise, and unequivocal evidence.\u201d Laycock v. American Family Mutual Insurance Co., 289 Ill. App. 3d 264, 269, 682 N.E.2d 382, 386 (1997).\nOur earlier analysis of Lee and Healy\u2019s conversation with Dann and Lively is apphcable to Chatham\u2019s estoppel argument. The record in this case raises no question of material fact that Chatham was misled by any of Zurich\u2019s statements. Analysis of the remaining elements of estoppel is not necessary, but we also point out that Chatham fails to indicate how SSV changed its position as a result of Zurich\u2019s agreement to allow Maxxim to keep track of its expenses for the purposes of the eventual claim submission.\nThe record discloses that Chatham failed to raise any material facts which would arguably entitle it to judgment on its claims of waiver and estoppel (counts II and III). Instead, Zurich was entitled to judgment on those claims as a matter of law. For these reasons, we affirm the circuit court\u2019s resolution of those claims.\nChatham\u2019s final contention is that the first trial judge erred in sua sponte dismissing with prejudice Chatham\u2019s original declaratory judgment count, and the second trial judge erred in dismissing the repled count as previously dismissed. Chatham cites authority regarding declaratory judgment actions and their disposition. See, e.g., Aetna Insurance Co. v. Janson, 60 Ill. App. 3d 957, 377 N.E.2d 296 (1978); Chicago & Eastern R.R. Co. v. Reserve Insurance Co., 99 Ill. App. 3d 433, 425 N.E.2d 429 (1981). However, because the count sought a declaration that Zurich was liable for Maxxim\u2019s outbound freight under the extra expense coverage yet had refused to pay the expenses as claimed, we conclude the count was essentially a breach of contract claim. Our earlier determination that the unambiguous contract did not require Zurich to pay Maxxim\u2019s outbound freight expenses sufficiently resolves Chatham\u2019s final contention.\nFor these reasons, the orders appealed from are affirmed.\nAffirmed.\nO\u2019MALLEY, EJ., and McNULTY, J., concur.", "type": "majority", "author": "JUSTICE McBRIDE" } ], "attorneys": [ "George B. Collins and Christopher Bargione, both of Collins & Bargione, of Chicago, for appellant.", "Edward M. Kay, James M. Hoey, Margaret Hupp-Fahey, and Melissa A. Murphy-Petros, all of Clausen Miller, PC., of Chicago, for appellee." ], "corrections": "", "head_matter": "CHATHAM CORPORATION, Plaintiff-Appellant, v. DANN INSURANCE, f/k/a Dann Brothers, Inc., Defendant (Zurich American Insurance Company, Defendant-Appellee).\nFirst District (1st Division)\nNo. 1\u201403\u20140167\nOpinion filed June 21, 2004.\nGeorge B. Collins and Christopher Bargione, both of Collins & Bargione, of Chicago, for appellant.\nEdward M. Kay, James M. Hoey, Margaret Hupp-Fahey, and Melissa A. Murphy-Petros, all of Clausen Miller, PC., of Chicago, for appellee." }, "file_name": "0353-01", "first_page_order": 371, "last_page_order": 385 }