Guillermo and Maria Medina's son gave his old truck cab to his mother. Although she could not drive it, Guillermo had a commercial license and experience. With Maria's authorization, Guillermo got a job with Town Trucking. Federal law requires interstate truckers like Town to either own their equipment or enter into a lease with the owner. Guillermo and Town entered into a operating agreement in which Guillermo purported to lease Maria's cab to Town. Although Maria never signed the agreement and was not familiar with its contents, she did know that Guillermo entered into a contract with Town and that he did it with her permission. Town had $1 million in insurance coverage for its drivers, including Guillermo, that provides coverage when they are using equipment on Town business. Guillermo also obtained a $750,000 policy to cover him while using the equipment not on Town business. In late November 2006 Guillermo delivered a load of shingles to a store in McHenry, Illinois and was returning with an empty trailer to pick up a second load for delivery. It was during this return trip that Guillermo lost control of his vehicle and struck a small truck, killing its driver. Town’s insurer settled the lawsuit brought by the driver's parents for the policy limits. Guillermo's insurer, Clarendon National, denied coverage. It relied on the policy’s exclusion for accidents that happen when the vehicle is in the business of anyone to whom it is rented. Clarendon filed suit, seeking a declaration of its obligations. The defendants claimed that the exclusion did not apply because the vehicle was actually never rented to Town by Maria, its lawful owner. Judge Kendall (N.D. Ill.) granted summary judgment to Clarendon, concluding that Guillermo entered into the agreement with Town with Maria's knowledge and permission. Defendants appeal.

In their opinion, Judges Rovner, Wood, and Tinder affirmed. In Illinois, the Court stated, an insurance agreement is a contract and the general rules of contract construction apply. If the language of the policy is unambiguous, it should be applied as written. The Court found no ambiguity in the Clarendon policy. The only question is whether the truck was rented to Town at the time of the accident. The Court recognized that the lawful owner of the truck did not sign the agreement. The Court nevertheless found that the truck was rented to Town, the exclusion applied, and Clarendon had no coverage obligation. First, federal regulations define "owner" as including someone who does not have title but has the exclusive use of the equipment. Second, Maria and Guillermo had an agency relationship and Illinois law allows an agent to act on behalf of an undisclosed principal. Third, the agreement between Guillermo and Town satisfied all the requirements for a written contract.