A Chicago appeals panel ruled the former Empress Casino
Joliet and its insurers can try to recoup $84 million in deductibles and claims
from a kitchen grease removal service, but not from construction contractors,
in connection with the 2009 blaze that gutted the casino during renovation
The Nov. 16 ruling was authored by Justice James Fitzgerald
Smith, of the First District Appellate Court of Illinois, with concurrence from
Justices Cynthia Cobbs and Terrence Lavin.
A fire wrecked the Empress Casino Joliet during remodeling
in March 2009. The blaze was set off by a welder’s torch igniting grease in
kitchen ductwork. Empress paid $2.6 million in deductibles, receiving $81
million in coverage payments from Axis Insurance, National Fire and Marine Insurance
and Lloyd’s Syndicate. The lion’s share came from National Fire – $64 million.
Empress and the insurers filed suit in Cook County Circuit
Court against companies involved in the renovation project, which they blamed
for the fire and the extent of damage. The companies were general contractor
W.E. O’Neil Construction and subcontractors Global Fire Protection, Jameson
Sheet Metal, the Linden Group and R.L. Millies & Associates. Empress
alleged the companies did not implement proper safety measures, such as having
fire extinguishers at hand and sprinklers in ductwork. Plaintiffs wanted
defendants to make good their losses.
Empress and the insurers also sued Averus Inc., which had
been working directly for Empress to periodically clean and remove grease and
other residue from ductwork. The suit alleged Averus fell down on the job,
leaving ductwork coated with grease.
The suit alleged the companies were negligent and committed
willful and wanton misconduct. The suit also alleged breach of contract, except
against Averus. Empress sought reimbursement for its deductibles and the
insurers sought reimbursement for their payments to Empress.
The contractor companies moved for summary judgment,
contending the construction contract with Empress waived any future subrogation
claims, leaving the insurance policies as the sole sources of recovery for
Empress. Cook County Circuit Judge John Callahan Jr. agreed, dismissing the
suit, causing Empress and the insurers to appeal.
Appellate Justice Smith noted subrogation waivers are
included in construction contracts to “facilitate timely completion” of
projects and avoid litigation, by requiring insurance to cover any loss,
regardless of fault.
Smith concluded the waiver did not apply to Averus, because
the waiver pertained to Empress, the general contractor, W.E. O’Neil
Construction, and O’Neil’s subcontractors. Averus was not subcontracted to
O’Neil or any subcontractor, but rather was contracted to Empress. As a
consequence, Smith reversed the lower court order regarding Averus, reinstating
the case against the cleaning company.
However, Smith affirmed the dismissal of the suit against
the other defendants, pointing out the waiver was clear and encompassing. In
Smith’s view, the “waiver will trump any indemnification obligations.”
Smith further said given the “plain language” of the
contract, it “makes no sense” to let Empress avoid responsibility for the
The Empress Casino Joliet reopened three months after the
fire, renamed Hollywood Casino Joliet. The complex is owned by Penn National
Gaming, of Wyomissing, Penn.
According to Cook County court records, Empress was represented by the firm of Cozen O'Connor, of Chicago.
W.E. O'Neil was defended by the firm of Franco & Moroney, of Chicago. And Averus was represented by the firm of Querrey Harrow, of Chicago.