Denying a Municipality's Immunity and Interpreting the Statute of Repose

In Trtanj v. The City of Granit City (Ill. App. Ct., 5th District, No. 5-07-0002), the plaintiffs owned a house that was filled with sewage after a thunderstorm.  During the thunderstorm, three sewage lift stations that normally operated to transport sewage through the city's system were left without power.  The city took two to three hours in getting the sewage systems back online.  As a result of the rainfall and issues with a clay pipe connecting the plaintiffs' property to the city's system, water and sewage backed up into the plaintiff's home.  Prior to the motion for summary judgment brought by the city, the city's superintendent of water testified that it should only take 15 minutes to set up a temporary lift system and 15 minutes to get it operational.

The plaintiffs brought an action in 2002 and later amended their complaint in 2005 alleging negligence in the design, construction, operation and maintenance of the sewer system, that the backup was a temporary nuisance, and also brought an action in trespass against the city.  The city responded in a motion for summary judgment that the claims were barred under the statue of repose (735 ILCS 5/13-214), that the tort immunity act applied (745 ILCS 10/2-201) to protect the city from suit, and that it was not liable because the backup occurred during an extraordinary rainstorm.

The trial court granted the motion for summary judgment and the plaintiffs appealed.

The appellate court found that material issues of fact existed where the city had known about the outside water infiltration into the sewer system through the plaintiff's clay pipe; and where the city's own superintendent of streets had testified that it should only take 15 minutes to set up the temporary pumps, not the two to three hours that it did take.

In adjudicating the repose claim, the court said that the statute of repose applied only to the construction and improvements of real property.  Because the plaintiff had alleged that the design installation and construction of the sewer station was at fault, the court found that these allegations were barred by the statute of repose when the design, construction and installation had occurred more than ten years prior to the filing of the lawsuit. 

The court went on to find that the statute did not protect the city from the claims that the maintenance and operation of the sewer system and the lift stations that occurred after their installation and within the ten year period were negligent.

The court cited a previous case, Prochnow v. Elpaso Golf Clib, Inc., 253 Ill. App. 3d 387, finding that while those claims that involved the design, construction, supervision, observation or management of the construction were exempt if the acts were outside of the ten year period, the persons responsible for possession or control and suppliers of the materials used in the maintenance and operation were subject to liability for reason of construction defects.

The court then went on to address the city's claim of immunity.  Holding that the statute protects only those acts of a municipality that are shown to be both an exercise of discretion and a policy determination, the court stated that acts which are ministerial are not protected.  After a discussion of the differences between policy determinations, acts of discretion, and ministerial acts, the court found that because the city's operation of the sewage system was subject to statutory and regulatory guidelines the actions were ministerial, and that there were material issues of fact concerning whether or not the city complied with those guidelines.  "Once a municipality decides to perform pubic work, the municipality must perform the public work with reasonable care and in a nonnegligent manner" (Slip Op. at 13).

The court also found that the determination of what might amount to an extraordinary sum of rainfall was not before the court and presented a question of fact for the jury.

The appellate court reversed the trial court's grant of summary judgment to the extent it was inconsistent with the appellate opinion.

Of note to design professionals and construction companies is the application of the ten year statute of repose.  Getting done with the work and getting out will start the clock running on the ten year period.  However, if follow up maintainance work is performed, that work is still potentially the subject of litigation. More importantly for many claimants is the willingness of the court to interpret the immunity statute and discern between policy, discretion, and ministerial acts.  It should not be overlooked that too often courts are willing to apply the immunity statute without adherence to the guidelines or undertaking the analysis to determine the exact nature of the act, perhaps inspections, construction, and maintenance can all be pled correctly to make certain the municipality has to explain its actions rather than simply pleading immunity.

Make Sure There's Relief to Be Had

Here's a reminder from the Northern District of Illinois Bankruptcy Court.  In Vancil v. Tres Amigos (docket #06-71254) the owner of a property, Tres Amigos, was looking to extinguish liens filed by two subcontractors of Vancil.  Tres Amigos brought the action to extinguish the liens where the two subs had not properly served Tres Amigos with their 90 day notices under the Illinois Mechanic's Lien Act.

A problem arose when the Court noted the Tres Amigos had never made one of the subs a party to the action and that it failed to assert a claim against the other sub, which was a co-defendant.  The Court pointed out the Tres Amigos would likely have prevailed on its claim, had it not failed to properly plead actions for which relief could be granted against the subcontractors.

  • The lesson learned here:  Make sure all your ducks are in a row before time, effort and money are spent asking the Court for relief that cannot be granted.

Upholding the Contract for Indemnification

    A case from the Northern District (Smith v. The Village of Norridge), involving actions brought by an individual against the police, a landlord shopping center and its tenant, emphasizes the significance of indemnity provisions in a contract.

   At issue are cross-claims filed by the landlord of the facility arguing that the tenant is required to indemnify the landlord under a paragraph of the lease which reads that the tenant must:

"[i]ndemnify and save Landlord ... harmless from and defend against any and all demands,claims, actions, damages, costs and expenses, including [costs and attorneys' fees] arising from the conduct or management of the business conducted by Tenant."

  The lease contained a similar provision requiring the tenant to procure insurance for such acts and that the insurance was required to cover the landlord as well.  The cross-claims are pled as breach of contract actions stating the because the contract contains the indemnity provisions, the tenant's failure to indemnify (and obtain insurance in the second claim) amounts to a breach of the contract.

  The court disagreed with the tenants' argument that the Illinois Landlord-Tenant Act (765 ILCS 705/1(a)), which provides:

"(a) Except as otherwise provided in subsection (b), every covenant, agreement, or understanding in or in connection with or collateral to any lease of real property, exempting the lessor from liability for damages for injuries to person or property caused by or resulting from the negligence of the lessor, his or her agents, servants or employees, in the operation or maintenance of the demised premises or the real property containing the demised premises shall be deemed to be void as against public policy and wholly unenforceable."

would bar this action.  The Court found that the provision would apply if the claim against the tenant had been one for indemnity for the negligent acts of the landlord.  However, the landlord pled an action for breach of contract, and the acts alleged as the root of the claims were intentional, so under two separate rationales, the ILTA did not apply.

 
  Accordingly, the court denied the tenant's motion to dismiss the cross claims.

 

Experts in Construction and Lease Terms

SWPlaza III, LLC v. TSA Stores, Inc., is a Central District opinion dealing with the termination of a lease in a shopping center after a tornado damaged the tenant's commercial store.  The lease contained a provision allowing the tenant to terminate the lease if the damage reached a specific percentage of the total reconstruction cost (35%); the tenant's estimate exceeded the percentage limit and it terminated the lease.  The landlord sought to enforce the lease and claimed that the estimates provided by the tenant were made in bad faith.  The Court held that a significant issue of fact existed regarding the propriety of the estimates.

  • In what will undoubtedly become a cited case should House Bill 5293 be passed amending the requirements and standards in Illinois for expert testimony, the Court went through an extensive analysis of the qualifications of a construction contractor providing estimates and his ability to offer testimony as an expert under Daubert.
Illinois Construction Blog

Limiting the Time For Indemnification

    Here's a Seventh Circuit decision (Foskett v. Great Wolf Resorts, et al.) full of information regarding claim accrual for negligent design, indemnification, and the theory of risk allocation.  Two parties had entered into an asset purchase agreement with mutual indemnification clauses.  Buyer and Seller had agreed to a sunset provision in Seller's indemnification provision.  A claim accrued after the sunset provision and, on appeal, the court enforced the provision.

The Importance of A Proper Deed

    In an eminent domain case, Marseilles Hydro Power, LLC v. Marseilles Land and Water Co., arising under the Federal Power Act, and involving the interesting issue of deed construction and proper drafting, the Seventh Circuit has laid out some interesting points regarding deed construction premised on prior recordings and conveyances, along with an affirmation of the eminent domain standards applicable to the Federal Power Act.

What Is The Nature of An Easement for Construction...

Call before you dig.jpgIn an interesting case which has applied the Illinois Supreme Court's recent Buenz decision, the appellate court found that an ordinance which included an indemnification provision would be read to apply against Nicor in favor of the Village of Wilmette where the ordinance the city passed granting a fifty year easement to Nicor to "place, maintain and operate its gas pipes under the streets of Wilmette, in consideration for which Nicor would provide gas for use by the Village."  While the court properly applied Buenz, it summarily dismissed an issue that likely should have garnered more attention:  The Illinois Construction Contract Indemnification for Negligence Act (740 ILCS 35/1 et seq.)  The court simply states that Nicor's authority for the proposition does not apply, but fails to offer any merit to the idea or state why it doesn't apply. 

By invoking Buenz, using the term "consideration" and even allowing the Village to argue that "its contract with Nicor included a provision indemnifying" the village for its own negligence...  (See page 3 of the opinion) certainly we have a contract.  Whether it's a contract for an easement or whether the contract can be said to touch on issues implicated by the anti-indemnification statute should have been explored by the court.  Or, if the court wanted to say that a contract for an easement, no matter what the activities allowed under the easement are, should not be construed as a contract or agreement for construction... then it should have done so.  Instead, we are left to wonder exactly what the rational for not applying the statute to the agreement between Nicor and Wilmette that includes maintenance of the wires was, when Section 1 of the anti-indemnification act states that it applies to contracts or agreements:

  • "With respect to contracts or agreements, either public or private, for the construction, alteration, repair or maintenance of a building, structure, highway bridge, viaducts or other work dealing with construction, or for any moving, demolition or excavation connected therewith, every covenant, promise or agreement to indemnify or hold harmless another person from that person's own negligence is void as against public policy and wholly unenforceable."



The 1st District Publishes Two New Construction Negligence Opinions

In two interesting cases involving construction negligence on the jobsite, the first district has reversed and upheld directed verdicts for third-party defendants who were subcontractors and the employers of the plaintiffs. 

  • In Oldenstedt v. Marshall Erdman and Assoc. Inc., the first district upheld a directed verdict for the third-party employer and also addressed the issue of prejudice in closing statements (finding that failure to object at the time of closing resulted in waiver.)
  • In Jones v. DHR Cambridge Homes, Inc., the court found that a directed verdict for the third-party defendant would be overturned, but because the consequence of the directed verdict had been to prevent the third party from presenting both liability and damages evidence, the third-party defendant would be allowed to address both at retrial.

An additional similarity and two interesting discussions involving the use of special interrogatories are contained in both opinions.

Amending The Mechanic's Lien Act to Include Written Notice for Contractors

In what is sure to be a contested issue, the new House Bill 5572 is a proposition to require written notice from the contractor to the owner of a single-family, owner-occupied dwelling, prior to filing a lien against any property of the owner.

  • Given that there is no time provision installed in this legislation, and that it does not include a method for serving the notice, and that the term "any" could be construed in multiple ways, it is likely that we'll see some revisions of this bill before it could be incorporated into the mechanic's lien act.

Professional Design Firms and Licensed Architects

There's certainly a difference between "registration" and "licensure"...
architect license copy.jpg

We've come across quite a few architects and engineers who seem to forget that a professional design firm needs to be registered.  It's an extra step, in addition to the professional's individual licensure and registration that's required in Illinois.  But what exactly is the impact of forgetting to register?

Here's an interesting case from the Central District of Illinois, pointing out that a contract will not be voided, and a developer's claim for restitution will not stand even if a professional forgets to register the design firm.  In Brethren v. OSM (C.D. Ill. 06-3161) the court points out that even though a firm may forget to register, the work was still done by a licensed professional and as such, there is no claim. 

Now, if the professional performing the work was unlicensed, certainly the restitution claim would be able to go forward.  The only real teeth the registration law has to compel the registration of the firm comes from the statute authorizing penalties for such a failure to register, 225 ILCS 305/21.  Work by a licensed architect is still work by a licensed architect.