United States District Court, Northern District of Illinois, E.D
May 3, 1985
INTAMIN, INC., PLAINTIFF,
FIGLEY-WRIGHT CONTRACTORS, INC., ET AL., DEFENDANTS.
The opinion of the court was delivered by: Shadur, District Judge.
MEMORANDUM OPINION AND ORDER
Intamin, Inc. ("Intamin") has asserted several claims — breach
of contract, breach of express and implied warranties and
breach of contractual indemnity — against Figley-Wright
Contractors, Inc. ("Figley-Wright") and related parties,
stemming from construction of a roller coaster at Marriott's
Great America Theme Park ("Great America") in Gurnee, Illinois.
Figley-Wright has in turn filed a Third Party Complaint against
Curtis D. Summers, Inc. ("Summers"), seeking recovery via
contractual indemnity. In response Summers has counterclaimed,
charging Figley-Wright with negligence.
Figley-Wright now moves under Fed.R. Civ.P. ("Rule") 12(b)(6)
to dismiss Summers' counterclaim. For the reasons stated in
this memorandum opinion and order, the motion is granted.
On June 2, 1980 Intamin contracted with Marriott Corporation
("Marriott") to provide a roller coaster for Marriott at Great
America (Complaint Ex. A). Intamin in turn contracted with
Summers to provide most of the professional engineering design
services (Complaint Ex. C, Art. 2)*fn1 and with
Figley-Wright to construct the roller coaster (Complaint Ex. B,
Art. 2). No contractual relationship existed between
Figley-Wright and Summers.
After the roller coaster had been built and put into operation,
Marriott discovered design and construction defects and
required Intamin to make repairs under the warranty terms of
the Marriott-Intamin contract. Intamin in turn sought
compensation from Summers and Figley-Wright. On July 10, 1984
Intamin entered into a settlement agreement with Summers by
which Intamin released all present and future claims against
Summers in return for Summers' payment of $203,820.49.
In the meantime Figley-Wright has engaged in battle with both
Intamin and Summers. In August 1984 Figley-Wright filed its
Third Party Complaint seeking both contribution and indemnity
from Summers for any liability of Figley-Wright to Intamin as
determined in this action. On February 12, 1985 (in the
"Opinion") this Court (1) dismissed Figley-Wright's
contribution claim but (2) held its indemnity claim stated a
cause of action for any liability of Figley-Wright to Intamin
resulting from Summers' negligence. 605 F. Supp. 707 (N.D. Ill.
Summers' counterclaim against Figley-Wright asserts Summers'
settlement payment to Intamin covered damages caused by
Figley-Wright's negligence. Summers seeks to recover that
payment — or at least the portion that represents damages
attributable to Figley-Wright's negligence.
Figley-Wright advances three independent grounds for dismissal:
1. Moorman Manufacturing Co. v. National Tank Co.,
91 Ill.2d 69, 61 Ill. Dec. 746, 435 N.E.2d 443 (1982) prohibits
recovery in tort for purely economic losses of the type
claimed by Summers.
2. Figley-Wright owed no duty of care to Summers.
3. Summers' counterclaim is an attempt to obtain
indemnification for its own negligent acts.
Only the second of those has any possible merit, and it will be
dealt with last. Though the last of the three is so empty as to
require no real discussion at all,*fn2
first reflects such a total disregard of this Court's prior
ruling and the case law as to call for extended treatment at
the outset. Maybe Figley-Wright will get the message this time.
Recovery of Economic Losses under Moorman
Just three months ago Figley-Wright urged a distorted reading
of the Moorman line of cases in an effort to save its
contribution claim against Summers. Opinion, 605 F. Supp. at 710
explained how Figley-Wright's analysis went off the track.
Oblivious to that explanation, Figley-Wright now invokes the
same incorrect reading of Moorman to attack Summers' third
Figley-Wright Mem. 3-10 argues Moorman and its progeny erect
a flat bar to the recovery of economic losses in tort, with the
sole exception of professional malpractice suits against
architects and engineers. That contention focuses on the nature
of the claim and the identity of the defendant, to the
exclusion of other relevant factors. But Opinion, 605 F. Supp.
at 710 explained the Moorman analysis turns on both the
nature of the claim and the total relationship among the
parties. Ferentchak v. Village of Frankfort, 121 Ill. App.3d 599,
607-08, 76 Ill.Dec. 950, 956-57, 459 N.E.2d 1085, 1091-92
(3d Dist. 1984) teaches Moorman bars the recovery of purely
economic losses in tort only when the plaintiff has recourse
to contractual remedies.
Moorman itself involved claims sounding in both contract and
tort against a manufacturer that had sold plaintiff a defective
storage tank. As the Illinois Supreme Court put it, the claims
involved nothing more than "a purchaser's disappointed
expectations" remediable in the realm of contract (91 Ill.2d at
86, 61 Ill.Dec. at 753, 435 N.E.2d at 450):
Plaintiff suffered a commercial loss of the type that the law
of warranty is designed to protect.
In affirming dismissal of the tort claims, the Supreme Court
stressed the parties' relationship of contractual privity and
the availability of contract remedies. Indeed, a principal
basis of the court's decision was its stated desire not to
interfere with the system of warranty remedies established by
the Uniform Commercial Code (91 Ill.2d at 88, 61 Ill.Dec. at
755, 435 N.E.2d at 452):
As discussed above, the UCC provides the proper framework for a
purchaser's recovery of economic losses. Allowing an aggrieved
party to recover under a negligence theory for solely economic
loss would constitute an unwarranted infringement upon the
scheme provided by the UCC.
Moorman is not the last word from the Illinois Supreme Court.
Twice since then that Court has barred recovery of purely
economic losses in tort, and in each case the Court held
plaintiff should have invoked warranty rather than tort
remedies. Redarowicz v. Ohlendorf, 92 Ill.2d 171
, 65 Ill.Dec.
411, 441 N.E.2d 324
(1982) affirmed dismissal of the plaintiff
homeowner's tort claim against the builder for construction
defects but left intact plaintiff's warranty claim (92 Ill.2d
at 178, 65 Ill.Dec. at 414, 441 N.E.2d at 327) (quoting
Crowder v. Vandendeale, 564 S.W.2d 879 (Mo. 1978), emphasis
[W]here mere deterioration or loss of bargain is claimed, the
concern is with a failure to meet some standard of quality.
This standard of quality must be defined by reference to that
which the parties have agreed upon.
Similarly Foxcroft Townhome Owners Association v. Hoffman
Rosner Corp., 96 Ill.2d 150
, 70 Ill.Dec. 251, 449 N.E.2d 125
(1983) barred a condominium owners' association's
tort claim against the condominium builder for construction
defects, where the owners could have invoked warranty remedies
had they not waived those remedies through a procedural
Neither in Moorman nor in the later cases has the Supreme
Court considered a tort claim for purely economic loss by a
plaintiff whose lack of interrelationship with the defendant
precludes contract or warranty remedies. But the Illinois
Appellate Court faced just such a claim in Ferentchak and
concluded it was not barred by Moorman (121 Ill.App.3d at
606, 76 Ill.Dec. at 955-56, 459 N.E.2d at 1090-91):
We read Moorman and subsequent cases to establish that
economic losses are not recoverable in tort against a defendant
where the injuries caused by that defendant relate directly to
plaintiff's reasonable commercial expectations respecting the
defendant's actions and where plaintiff has or had
appropriate and adequate contract or warranty actions as
against the defendant for such harm. In such circumstances, and
where the injury is to the item supplied or produced by that
defendant, contractual benefit-of-bargain expectations damages
are the appropriate measure of recovery. However, the same
economic losses are recoverable in tort, as against defendants
who by their own negligence, as measured by traditional tort
analysis, have caused the injuries and against whom no contract
or warranty remedy is available. As to these defendants, when
unconnected with the contract-warranty defendant, the harm
caused by them is not related to the plaintiff's commercial
expectations, but to traditional societal expectations and
All relevant post-Ferentchak Appellate Court cases have cited
it with approval and adopted its rule that tort claims for
economic loss may be pursued when no contract or warranty
remedy is available. Scott and Fetzer Co. v. Montgomery Ward &
Co., 129 Ill. App.3d 1011, 1017, 85 Ill.Dec. 53, 58-59,
473 N.E.2d 421
, 426-27 (1st Dist. 1984) ("economic loss doctrine
also does not bar recovery here because there were no
commercial dealings between [defendant] and the [plaintiff]
adjacent tenants [quoting at length the same Ferentchak
language quoted in this opinion] . . . and thus there are no
contractual nor warranty remedies available to the tenants");
Reeder v. Old Oak Town Center, 124 Ill. App.3d 1045, 1048-49,
80 Ill.Dec. 322, 325-26, 465 N.E.2d 113
, 116-17 (3d Dist. 1984)
(also quoting and following the same Ferentchak rationale);
Rosos Litho Supply Corp. v. Hansen, 123 Ill. App.3d 290,
295-96, 78 Ill.Dec. 447, 452-453, 462 N.E.2d 566
, 571-72 (1st
Bates & Rogers Construction Corp. v. North Shore Sanitary
District, 128 Ill. App.3d 962, 84 Ill.Dec. 149, 471 N.E.2d 915
(2d Dist. 1984) is not — as Figley-Wright would have it — to
the contrary. Bates & Rogers outlawed a contractor's tort
claim against an architect with whom the contractor was not in
privity, but the court emphasized the contractor could seek
warranty relief against the project owner who hired the
architect (128 Ill.App.3d at 972-73, 84 Ill.Dec. at 156, 471
N.E.2d at 922).
Figley-Wright does not seem to understand that it is not "the
mere fortuity of contractual relief's unavailability" (Mem. 7)
that renders Moorman inapplicable. Moorman was not an
arbitrary decision by the Illinois Supreme Court to wipe out a
remedy — one allowing tort recovery for economic losses — for
the sheer sake of doing so. Rather Moorman reflected a
judgment that parties who have shaped an economic transaction
in contractual terms should not be permitted to shift their
voluntarily-assumed risks by imposing an overlay of tort law
concepts (with their quite different allocations of risk).
Post-Moorman cases have equated the availability of warranty
remedies with contract rights for that purpose. And the several
Appellate Court decisions discussed in this opinion have
sensibly allowed tort recovery where that critical ingredient
of contractual or warranty remedies was lacking.
In this diversity action, this Court is controlled by the
accurate reading of Moorman
reflected in Ferentchak and those succeeding Illinois
Appellate Court decisions.*fn3 Under those readings
Moorman clearly poses no bar to Summers' counterclaim.
Summers and Figley-Wright have no direct contractual
relationship, and no system of warranties is available to
Summers by virtue of Summers' and Figley-Wright's independent
relationships with Intamin. That asserted basis for
Figley-Wright's motion is no better now than it was when first
rejected by the Opinion.
Existence (or Lack) of Elements of a Negligence Claim
Summers has not, however, dodged Figley-Wright's third bullet.
Though the counterclaim asserts (in the most conclusory terms)
a Figley-Wright duty of care running to Summers in connection
with Figley-Wright's performance of its contract with Intamin,
it has not identified just how that duty would arise. Moreover
it has also not identified just how (even assuming such a duty
of care) Figley-Wright's negligence could be a proximate cause
of Summers' claimed injury.
Summers cites Normoyle-Berg & Associates, Inc. v. Village of
Deer Creek, 39 Ill. App.3d 744, 350 N.E.2d 559 (3d Dist. 1976)
for the proposition that Figley-Wright owed Summers a duty of
care. In Normoyle-Berg the court held a supervising engineer
on a construction project owes a duty to the general contractor
to avoid causing the contractor extra expenses in the
completion of the project. That duty exists because of the
foreseeability of harm to the contractor from the engineer's
negligence (39 Ill.App.3d at 746, 350 N.E.2d at 561):
A supervising engineer must be held to know that a general
contractor will be involved in a project and will be directly
affected by the conduct of the engineer. This relationship of
supervising engineer and general contractor gives rise to a
duty of care on the part of each party to the other.
While that language could support the existence of a duty owed
by Summers to Figley-Wright, it does not necessarily run the
other way (as it did in the Normoyle-Berg situation).
It is axiomatic that no legal duty can arise unless harm to the
plaintiff resulting from defendant's actions is reasonably
foreseeable. Renslow v. Mennonite Hospital, 67 Ill.2d 348,
354-55, 10 Ill.Dec. 484, 487, 367 N.E.2d 1250, 1253 (1977).
Normoyle-Berg recognizes it is not only foreseeable but
likely that a contractor's performance will be detrimentally
affected when an architect or engineer errs in drafting plans
or supervising construction.
But Summers must establish the converse, and it has not essayed
to do so either in its counterclaim or in its supporting
memorandum. Ordinarily the performance (and hence the exposure
to liability) of an architect responsible only for design (and
not ongoing supervision), or a design engineer (as contrasted
with the supervising engineer dealt with in Normoyle-Berg),
depends on no one else. They represent the first links in the
construction chain. Others implement their plans, but if the
plans are properly prepared no negligence in their execution by
the contractor can reflect back and impose liability on the
professional who generated the plans.
It is true (or at least Summers' counterclaim, which must be
accepted as true, says) part of the design responsibility here
was undertaken by Figley-Wright. But Summers has offered no
hint of how Figley-Wright's flawed performance could have
impacted Summers. In conventional tort-law duty-of-care terms,
it has not indicated how Figley-Wright could have foreseen any
economic harm to Summers from Figley-Wright's negligence.
Relatedly, Summers has also not suggested how Figley-Wright's
negligence could be a proximate cause of Summers'
damages, as represented by Summers' settlement payment to
Intamin covering the cost of repairs. Neither Intamin nor
Figley-Wright could force Summers to pay for Figley-Wright's
negligence (except of course to the extent, if any, such
negligence caused Summers to breach its duty to Intamin).
Certainly Summers cannot recover from Figley-Wright to the
extent Summers may have voluntarily undertaken to pay damages
to Intamin in excess of Summers' own share. In that event
Summers' opting to shoulder more than its share of damages,
rather than to assert its defense in a court of law, would
appear to be a self-inflicted wound — again in conventional
tort-law terms, would be an intervening cause of Summers' own
injury sufficient to cut off Figley-Wright's liability for
That issue need not however be resolved here. Because Summers
has not demonstrated some rational basis for its conclusionary
duty-of-care allegations, its counterclaim cannot survive in
its present form.
Although Summers' negligence counterclaim is clearly not barred
by Moorman, it is rendered defective by the absence of any
showing of a duty of care owed by Figley-Wright to Summers.
Summers' counterclaim is therefore dismissed.