United Air Lines, Inc. v. CEI Industries of Illinois, Inc.

• Decision Date: 03 October 1986
• Docket Number: No. 85-2213,85-2213
• Citation: 499 N.E.2d 558,148 Ill.App.3d 332,102 Ill.Dec. 1
• Parties: , 102 Ill.Dec. 1, Prod.Liab.Rep. (CCH) P 11,218 UNITED AIR LINES, INC., a corporation, Plaintiff-Appellant, Cross-Appellee, v. CEI INDUSTRIES OF ILLINOIS, INC., a corporation, Defendant-Appellee, Gates Engineering Company, Inc., Defendant-Appellee, Cross-Appellant, AGR Company, Owens-Corning Fiberglass Corporation, and Allied Roofers Supply Corporation, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 558

499 N.E.2d 558

148 Ill.App.3d 332, 102 Ill.Dec. 1,

Prod.Liab.Rep. (CCH) P 11,218

UNITED AIR LINES, INC., a corporation, Plaintiff-Appellant Cross-Appellee, v. CEI INDUSTRIES OF ILLINOIS, INC., a corporation, Defendant-Appellee Gates Engineering Company, Inc., Defendant-Appellee, Cross-Appellant AGR Company, Owens-Corning Fiberglass Corporation, and Allied Roofers Supply Corporation, Defendants-Appellees.

No. 85-2213.

Appellate Court of Illinois First District, Fifth Division.

Oct. 3, 1986.

Michael J. Koenigsknecht, Stephen P. Bedell, Thaddeus J. Nodzenski, Gardner, Carton & Douglas, Chicago, Stephen Sawyer, John Nicholson, United Air Lines, Inc., Elk Grove Village, for United Air Lines, Inc.

Robert S. Soderstrom, David W. Kash, Shaun McParland, McKenna, Storer, Rowe, White & Farrug, Chicago for CEI Industries.

James T. Ferrini, Mayer Goldberg, Michael W. Duffy, Lisa Marco Kouba, Clausen Miller Gorman Caffrey & Witous, P.C., Chicago, for Owens-Corning Fiberglas Corp.

James R. Clune, Sweeney and Riman, Ltd., Chicago, for Allied Roofers Supply Corp.

Justice MURRAY delivered the opinion of the court:

This appeal arises from the installation of a defective roof on plaintiff United Air Lines, Inc.'s (United) executive office building in Elk Grove Village. United appeals from two orders of the circuit court of Cook County dismissing the negligence and implied warranty counts of its first amended complaint seeking damages and striking and dismissing its claims for prejudgment interest and attorney fees from all counts. Defendant Gates Engineering Company, Inc. (Gates), the supplier of the roofing system, cross-appeals from that portion of the court's order denying its motion to dismiss an express warranty count filed against it by United. United has filed a motion to dismiss Gates' cross-appeal which has been taken with the case.

On October 5, 1982, United and defendant CEI Industries of Illinois, Inc. (CEI) entered into a construction contract whereby CEI was to supply all labor, material and equipment to remove an existing roof and install a new one on United's office building. Through CEI, United purchased defendant Gates' GACOFLEX roofing system. The system consists of outer roof membrane materials manufactured by defendant AGR Company (AGR), urethane roof insulation materials manufactured by defendant Owens-Corning Fiberglass Corporation (Owens) and various glues, solvents, pastes and other adhesives used in applying the system. Defendant Allied Roofers Supply Corporation (Allied) was "primarily a supplier of the GACOFLEX roofing materials."

On October 18, 1982, CEI commenced performance of the construction contract. During installation of the new roof repeated water leaks from the roof to the interior ceilings of the building were reported by United to CEI and each time CEI assured United that all problems causing the leaks had been "rectified." Following completion of the roof in February 1983, water leaks continued to occur. On December 24, 1983, the interior ceiling of an office in the building collapsed, damaging United's "furniture, furnishings, desks, chairs and other miscellaneous objects." No employees were in the office at the time.

Upon the various defendants' alleged refusal to respond to United's repeated demands to replace the roof and compensate United for damage to other property caused by the ceiling's collapse, United subsequently filed a 17-count first amended complaint (complaint) against defendants seeking damages in excess of $500,000. Counts I through VII are not involved in this appeal. Count VIII alleges a breach of an express warranty by Gates. Counts IX through XVI allege breaches of implied warranties of merchantability and fitness by Gates, AGR, Owens and Allied. Count XVII is a claim for negligence against all defendants.

In response, defendants filed various motions to dismiss. All defendants moved to dismiss United's negligence count upon the theory that a tort action is not an appropriate remedy where United's damages are solely economic losses which are not recoverable in tort pursuant to Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill.2d 69, 61 Ill.Dec. 746, 435 N.E.2d 443. Gates, AGR, Owens and Allied also moved to dismiss United's implied warranty claims on the ground that United lacked privity of contract or any direct relationship with them. Gates and AGR further moved to dismiss the warranty claims based upon their contention that they only provided services, not goods, and that their contracts therefore are not subject to the warranty provisions of the Uniform Commercial Code (Ill.Rev.Stat.1985, ch. 26, par. 2-101 et seq.). Gates also moved to dismiss count VIII of United's complaint which alleged breach of an express warranty by Gates.

On July 20, 1985, the trial court dismissed United's negligence count with prejudice on the ground that its damages were solely economic losses precluded from recovery in tort pursuant to Moorman. The court also struck and dismissed United's claims for prejudgment interest and attorney fees with prejudice from all counts. On July 16, 1985, the court dismissed United's implied warranty counts without prejudice on the ground that United failed to allege facts sufficient to support a contract action against defendants based upon a "third- party beneficiary theory, direct relationship theory, * * * [or]knowledge of [a] purchaser's intended use theory." In the same order the court denied Gates' motion to dismiss United's express warranty count against it, stating that a question of fact existed as to this claim. In both orders the trial court found there was no just reason for delaying enforcement or appeal pursuant to Supreme Court Rule 304(a) (87 Ill.2d R. 304(a)).

I.

We first address United's argument that the trial court erred in dismissing its negligence count for failure to state an injury recoverable in tort. We agree. For purposes of ruling on a motion to dismiss, all well-pleaded facts contained in a complaint must be taken as true and all inferences therefrom must be drawn in favor of the nonmovant. (Palatine National Bank v. Charles W. Greengard Associates, Inc. (1983), 119 Ill.App.3d 376, 74 Ill.Dec. 914, 456 N.E.2d 635.) A complaint should not be dismissed for failure to state a cause of action unless it clearly appears that no set of facts could be proved under the pleadings entitling a plaintiff to relief. (119 Ill.App.3d 376, 378, 74 Ill.Dec. 914, 456 N.E.2d 635.) A complaint which alleges a sudden and calamitous occurrence caused by a defect in a product, which results in personal injury or damage to property other than the defective product, states a cause of action in tort. Vaughn v. General Motors Corp. (1984), 102 Ill.2d 431, 80 Ill.Dec. 743, 466 N.E.2d 195.

On appeal, it is undisputed that the cause of the collapse of United's ceiling resulted from water leaks in the defective roof. On the other hand, although both United and defendants rely upon Moorman Manufacturing Co. v. National Tank Co. (1982), 91 Ill.2d 69, 61 Ill.Dec. 746, 435 N.E.2d 443, as dispositive of United's negligence count, they disagree concerning its application. United argues that its property damages resulted from "sudden and substantial" water leaks occurring after completion of the defective roof which caused the "sudden and violent collapse" of its ceiling and that these damages, therefore, are not barred by the economic loss doctrine of Moorman. Defendants counter that United's damages were caused by a qualitative defect in the roof, the water leaks, resulting in a "gradual" accumulation of water entering through the defective roof prior to and after completion, and thus are economic losses precluded from recovery in tort pursuant to Moorman.

In Moorman, the plaintiff sought recovery of damages for the cost of repairs and loss of use of a grain storage tank after a crack in it was discovered while emptying its contents approximately 10 years after its purchase. The plaintiff did not seek damages for personal injury or other property damages, nor were there any. In determining that the plaintiff's damages were solely economic losses not recoverable in tort, the court recognized that when a defect in a product is "of a qualitative nature and the harm relates to the consumer's expectation that a product is of a particular quality, * * * contract, rather than tort, law provides the appropriate set of rules for recovery [and this rule applies whether the tort theory involved is strict liability or negligence]." (91 Ill.2d 69, 86, 88, 61 Ill.Dec. 746, 435 N.E.2d 443.) The court further noted that economic losses are "damages for inadequate value, costs of repair and replacement of the defective product, or consequential loss of profits--without any claim of personal injury or damage to other property." (Emphasis added.) 91 Ill.2d 69, 82, 61 Ill.Dec. 746, 435 N.E.2d 443.

With respect to damages for personal injury or other property damages, however, the court went on to point out that

"when a product is sold in a defective condition that is unreasonably dangerous to the user or consumer or to his property, strict liability in tort is applicable to physical injury to plaintiff's property, as well as to personal injury. When an unreasonably dangerous defect is present, * * * [such as a truck's nonfunctioning brakes], and physical injury does, in fact, result, then '[p]hysical injury to property is so akin to personal injury that there is no reason to distinguish them.' [Citations omitted.] This comports with the notion that the essence of a product liability tort case is not that the plaintiff failed to receive the quality of product he expected, but that the plaintiff has been exposed, through a hazardous product, to an unreasonable risk of injury to his person or property. * * *." (Emphasis added.) (91 Ill.2d 69, 81, 61 Ill.Dec. 746, 435 N.E.2d 443.)

In focusing on the element of causation to...