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Knox College v. Celotex Corp.

OPINION FILED NOVEMBER 13, 1981.

KNOX COLLEGE, APPELLEE,

v.

CELOTEX CORPORATION ET AL., APPELLANTS.



Appeal from the Appellate Court for the Third District; heard there on appeal from the Circuit Court of Knox County, the Hon. Scott I. Klukos, Judge, presiding.

JUSTICE RYAN DELIVERED THE OPINION OF THE COURT:

Rehearing denied January 29, 1982.

Knox College, plaintiff, filed suit in the circuit court of Knox County against the defendants, Celotex Corporation (supplier of materials), Perkins and Will (architects), C. Iber and Sons (general contractor), and the Travelers Indemnity Company (surety on the performance bond of Iber). Motions were filed by all defendants to dismiss the various counts of the second amended complaint. The court allowed the motion as to Celotex on the ground that the allegations against that defendant reflected that the statute of limitations had run. The motions filed by the other defendants contended that the contents of those counts violated the provisions of the Civil Practice Act as to pleading. The court allowed the motions to dismiss, and the plaintiff elected to stand on its pleadings as to each count and did not ask leave or attempt to amend. On appeal, the appellate court reversed the dismissal as to all defendants. As to Celotex, the appellate court held that according to its construction of the discovery rule, the statute of limitations had not run on the plaintiff's cause of action against that defendant. As to the other defendants, the appellate court held that by construing the provisions of the Civil Practice Act liberally, the counts against the other defendants were not defective and should not have been dismissed. (85 Ill. App.3d 714.) We granted leave to appeal.

In 1964, Knox College entered into a contract with the architectural firm of Perkins and Will to design and supervise the construction of a math-science building on the college's Galesburg campus. The general contractor for this project was C. Iber and Sons, which provided a performance bond with the Travelers Indemnity Company as surety. C. Iber and Sons subsequently subcontracted the roofing work to White's Roofing and Insulation, Inc. Perkins and Will's original roofing specifications called for a built-up, bituminous membrane roofing of 4-ply, 20-year bondable organic felt and bitumen system. The specifications were later changed, with the knowledge of Knox College, to 2-ply roofing. It was argued that this change was authorized as a result of representations by the Celotex Corporation that the 2-ply system was the functional equivalent of the 4-ply system. Pursuant to the specifications change, White installed Celotex's 2-ply roofing in September 1970.

Soon after the roof was installed, it began to leak. From September 1970 until October 1973, White repaired the roof at its own expense, under the terms of its 5-year guarantee. In October of 1973, at White's request, the college began to share the expenses of roof repair with White. The roof continued to require occasional care. As of May 1976 the college had expended approximately $13,000 for roofing repairs.

In July 1976, the college was informed that the entire roofing membrane and insulation would have to be replaced. However, it was not until November of that year that the college was informed by an independent roofing consultant that the roofing problems might have been caused by deficiencies in the Celotex 2-ply roofing system. In the fall of 1977 and the spring of 1978, the entire roof was replaced at a cost to Knox College of $135,000. On June 9, 1978, Knox College filed suit against the defendants for $175,000 in compensatory damages, plus punitive damages.

In the second amended complaint counts I through III alleged tortious misrepresentation and fraud on the part of Celotex in the promotion of the 2-ply roofing system and in the sale of "Celo-therm" insulation to plaintiff. Specifically, it was alleged that Celotex knew that its product was not suitable for the climate in locales similar to that of Knox College. Despite this knowledge, Celotex did not inform Knox of the situation or withdraw its product from the market. Count IV alleged that Perkins and Will, the architectural firm, breached certain duties it owed, which we will discuss in greater detail later. Counts V and VI alleged, respectively, breach of contract and breach of written guarantee by C. Iber and Sons. Finally, in counts VII and VIII, the plaintiff sought recovery against Traveler's Indemnity as surety on C. Iber's performance bond. The circuit court of Knox County, in granting the defendants' motions to dismiss the second amended complaint, found that counts I through III (against Celotex) were barred by the statute of limitations, count IV (against Perkins and Will) was to be stricken "as sounding both in tort and in contract, and possibly indemnity, the cause of action not being set out as required by Chapter 110, Section 33(2), Illinois Revised Statutes, 1977" (section 33(2) of the Civil Practice Act), and counts V through VIII were "insufficient within themselves to sustain a cause of action."

The appellate court, in reversing the decision as to counts I through III, concluded that Knox could not have been expected to know of the right to sue until November of 1976, when an independent expert informed Knox that the failure was or might have been caused by the deficiencies in the 2-ply roofing system. The appellate court further held that the statute of limitations on the cause of action was 5 years and that the complaint was timely filed. The court continued that count IV was not defective because the allegations were sufficiently definite to inform the defendant of the claim which he had to meet. Likewise, counts V through VIII were not defective because they reasonably apprised the parties of the claim.

These same issues are now raised in this court. We will first consider counts I through III against Celotex, which involve solely the question of the statute of limitations. The limitations period applicable to fraud and tortious misrepresentation alleged in counts I through III is 5 years, as provided in section 15 of the Limitations Act (Ill. Rev. Stat. 1977, ch. 83, par. 16).

The discovery rule relating to the statute of limitations has been applied across a broad spectrum of litigation to alleviate what has been viewed as harsh results resulting from the literal application of the statute. The effect of the discovery rule is to postpone the starting of the period of limitations until the injured party knows or should have known of his injury. (See Scott, For Whom The Time Tolls — Time of Discovery and the Statute of Limitations, 64 Ill. B.J. 326 (1976); Notes and Comments, The Evolution of Illinois Tort Statutes of Limitation: Where Are We Going And Why?, 53 Chi.-Kent L. Rev. 673 (1977).) The difficulty in applying the discovery rule has been in giving meaning to the term commonly used stating the rule, "knows or should have known of his injury." If this phrase is construed to mean knows of one's physical injury, the period commences to run at an earlier time than if it is construed to mean knows that one has a cause of action against a particular person. There has been much uncertainty in this area. We need not detail the history of the development of the discovery rule in this State or discuss the various cases that have given different interpretations to the meaning of the word "injury" used in stating the rule. This court has recently considered the discovery rule in depth in two cases, and has adopted a construction of the rule which can be termed neither narrow nor expansive. That is, we have held that the event which triggers the running of the statutory period is not the first knowledge the injured person has of his injury, and, at the other extreme, we have also held that it is not the acquisition of knowledge that one has a cause of action against another for an injury he has suffered. Rather, we have held in Witherell v. Weimer (1981), 85 Ill.2d 146, 156, and Nolan v. Johns-Manville Asbestos (1981), 85 Ill.2d 161, 171, that the statute starts to run when a person knows or reasonably should know of his injury and also knows or reasonably should know that it was wrongfully caused. In those cases it was made clear that the term "wrongfully caused" does not mean that the plaintiff must have knowledge of the defendant's negligent conduct before the statute is triggered. In Nolan we stated:

"We wish to emphasize that the rule we announce is not the same as a rule which states that a cause of action accrues when a person knows or should know of both the injury and the defendants' negligent conduct. Not only is such a standard beyond the comprehension of the ordinary lay person to recognize, but it assumes a conclusion which must properly await legal determination. (United States v. Kubrick (1979), 444 U.S. 111, 124, 62 L.Ed.2d 259, 271, 100 S.Ct. 352, 360-61.) Moreover, if knowledge of negligent conduct were the standard, a party could wait to bring an action far beyond a reasonable time when sufficient notice has been received of a possible invasion of one's legally protected interests." (Nolan v. Johns-Manville Asbestos (1981), 85 Ill.2d 161, 170-71.)

Also, it was made clear in those decisions that a plaintiff need not have knowledge that an actionable wrong was committed before the period begins to run. In Nolan we stated:

"We hold, therefore, that when a party knows or reasonably should know both that an injury has occurred and that it was wrongfully caused, the statute begins to run and the party is under an obligation to inquire further to determine whether an actionable wrong was committed." (Emphasis added.) (Nolan v. Johns-Manville Asbestos (1981), 85 Ill.2d 161, 171.)

Also, in Witherell we stated the rule and obligation of the person to make diligent inquiry in this matter:

"The statute starts to run when a person knows or reasonably should know of his injury and also knows or reasonably should know that it was wrongfully caused. At that point the burden is upon the injured person to inquire further as to the existence of a cause of action." (Emphasis added.) Witherell v. Weimer (1981), 85 Ill.2d 146, 156.

The holdings in these cases are in accord with United States v. Kubrick (1979), 444 U.S. 111, 62 L.Ed.2d 259, 100 S.Ct. 352, which held that the accrual of a cause of action does not await the awareness by a plaintiff that an injury was negligently inflicted, nor does it await the acquisition of knowledge of facts which would alert a reasonable person to suspect that a legal duty to him had been breached. Under the facts of that case, in which the plaintiff knew the cause of his injury, the court held, as this court did in Nolan and Witherell, that the plaintiff had the obligation to inquire whether a legal duty to him had been breached.

The term "wrongfully caused," as we have used that term in stating the rule, must be viewed as a general or generic term, and not a term of art. This is apparent from the holdings of Nolan and Witherell that the use of the term does not connote knowledge of negligent conduct or knowledge of the existence of a cause of action.

At some point the injured person becomes possessed of sufficient information concerning his injury and its cause to put a reasonable person on inquiry to determine whether actionable conduct is involved. At that point, under the discovery rule, the running of the limitations period commences. As we held in Witherell and Nolan, this is usually a question of fact, and as we view the facts before us, it is a question of fact in this case.

It is true that Knox knew that the roof leaked almost as soon as it was completed. The trial court found this sufficient to alert Knox to the fact that something was wrong. We cannot say, as a matter of law, however, that that event started the running of the limitation period. Evidence may disclose that built-up roofs of this type often leak following installation due to some minor defects in the application of the material, which are usually easily corrected. It may be that the nature of the leak and the fact that the subcontractor undertook at once to remedy it were facts which would not cause a reasonable person to investigate further. However, if not the first leak, at some point along the line, Knox had sufficient information to put a reasonable person on inquiry as to the nature of the defect in the roof and whether a cause of action existed in favor of Knox. That point must be determined by the trier of fact, and it must determine whether that information was acquired more than 5 years prior to the time that Knox filed suit. Ill. Rev. Stat. 1977, ch. 83, par. 16.

As to count IV of the complaint, which charges the architectural firm of Perkins and Will with certain conduct, we find that the trial court correctly struck this count. In entering his order, the judge stated:

"Count IV as to Perkins and Will is stricken as sounding both in tort and in contract, and possibly indemnity, the cause of action not being set out as required by Chapter 110, Section 33(2), Illinois Revised Statutes 1977."

Count IV of the complaint, in relevant ...


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