Illinois Court Rules Insurer Had Contractual Right to Subrogation

Zurich American Insurance Co. may pursue a subrogation lawsuit against a subcontractor that it says forced it to pay a nearly $3 million builder’s risk claim by designing a defective stormwater detention system during construction of an academic building at a Chicago community college campus.

A panel with the Illinois 1st District Appellate Court on Tuesday reversed a trial court decision and found that the contract between City Colleges of Chicago and its design contractor, Moody Nolan, required the college system to be a third-party beneficiary. The court said it didn’t matter that a subcontract between Moody Nolan and Infrastructure Engineering attempted to shield the engineering company from any liability to third parties.