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U.S. HOME CORP. v. GEORGE W. KENNEDY CONST.
June 7, 1983
U.S. HOME CORPORATION, PLAINTIFF, GEORGE W. KENNEDY CONSTRUCTION COMPANY, INC., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
U.S. Home Corporation ("U.S. Home") filed this diversity action against
several individuals and corporations that furnished services or products
in connection with a sewer construction project for which U.S. Home was
general contractor. Two of the defendants moved under Fed.R.Civ.P.
("Rule" 12(b)(6) for their dismissal from this lawsuit:
1. George W. Kennedy Construction Company, Inc.
("Kennedy"), the subcontractor that constructed and
installed some of the sanitary and storm sewers and
water mains in the project; and
2. Armco, Inc. ("Armco"), the manufacturer of water
mains and sewer components used by Kennedy.
Kennedy's motion scarcely merited discussion and has been denied for
reasons announced orally from the bench May 6, 1983. Because Armco's
motion requires analysis, it is dealt with in this' memorandum opinion
Count VIII, the only claim directed against Armco, sounds in strict
12. The truss pipe, its parts and components, were
manufactured by Defendant, ARMCO, INC. in an
inherently defective condition, and were in that
condition at the time the pipe left the possession and
control of that Defendant.
13. The defective condition of the pipe rendered the
sewer system inoperative because of extensive water
infiltration, the partial and total collapse of
portions of the system and the truss pipe's total
failure to operate as required. These failures were
all the direct and proximate result of inherent
defects in the truss pipe.
Under Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487,
496-97, 61 S.Ct. 1020, 1021-22, 85 L, Ed. 1477 (1941) Illinois choice of
law doctrine defines the source of substantive principles to test the
legal sufficiency of Count VIII. At the May 6 hearing this Court asked
both counsel to address the choice of law question neither had considered
in its memoranda. Both have since answered that Illinois also provides
the substantive rule of decision, and though neither's analysis is more
than superficial*fn1 this
Court will treat those answers as a binding agreement to look to Illinois
Both parties claim to invoke the recent and authoritative Illinois
Supreme Court decision in Moorman Manufacturing Co. v. National Tank
Co., 91 Ill.2d 69, 61 Ill.Dec. 746, 435 N.E.2d 443 (1982). As is so often
the case under those circumstances, each is partly right and partly
Armco contends U.S. Home's claimed damages are "economic losses" that
Moorman renders non-recoverable under a strict liability theory.
Specifically Armco says two types of economic loss are involved:
1. the costs of repairing (or replacing) the
allegedly inferior truss pipe and
2. consequential losses arising from the pipe's
U.S. Home counters that Count VIII escapes Moorman's strict liability
limitation by seeking redress for both economic loss and property ...
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