Appeal from the United States District Court for the Northern District of Illinois, Eastern Division, No. 82 C 5226--Marvin E. Aspen, Judge.
Before COFFEY, EASTERBROOK, and RIPPLE, Circuit Judges.
The appellants brought this diversity action seeking compensation for property damage to two of their apartment buildings. They claimed that this damage arose out of their use of Trocal, an allegedly defective roofing material which was manufactured and installed by the appellees. In a series of five memorandum opinions, the district court dismissed six of the appellants' eight counts; judgment on the pleadings was granted in favor of the appellees on the remaining two counts. This appeal followed. After considering the arguments advanced by the appellants, we affirm.
Chicago Heights Venture, the principal appellant,*fn1 is a limited partnership with real estate holdings in suburban Chicago, Illinois. During 1974 and 1985, the partnership hired one of the appellees, Brown & Kerr, Inc. (B&K), to install a roof on each of two Chicago Heights apartment buildings -- the Thornwood Apartments. According to the agreement, iB&K was required to install Trocal roofing material.
Trocal is a plastic membrane which was designed, manufactured, sold, and distributed by Dynamit Nobel of America, Inc. (DNA), the second appellee. Unlike many other roofing materials, Trocal is "loosely laid." The plastic sheeting is affixed to the building only at the edges; it does not bind with the roof in the same way that a substance like tar binds with a roof.
The appellants' alleged damages arose out of two separate occurrences. The first incident occurred in August 1978 when Trocal tore away from the roof of each apartment building. The second incident occurred less than a year later, on April 5, 1979, when Trocal again malfunctioned. This time, instead of merely ripping apart from each building, Trocal entirely separated from the roof and fell to the ground during a windstorm. As a result of both incidents, water leaked into the buildings and damaged the ceilings and walls of the lower floors. The appellants also alleged that, during the first incident, Trocal's ripping force was sufficient to loosen bricks on each building.
The appellants filed a five count diversity action on August 24, 1982. This complaint was later displaced by an eight count amended complaint which was filed on May 4, 1983. While the complaint consisted of a number of allegations -- counts charging negligence, breach of warranty, fraud, and breach of contract -- only four of the counts are at issue in this appeal.*fn2 The appellants ask us to review the district court's disposition of each:
1) Count I asserts an action for strict products liability with respect to both defendants, DNA and B&K. The district court dismissed these claims; it concluded that "Illinois law required the conclusion that the Trocal roof is an integral part of the building structure and not a product for purposes of products liability." Chicago Heights Venture v. Dynamit Nobel of America, 575 F.Supp 214, Memorandum Opinion and Order at 3-4 (N.D. Ill. 1983) [hereinafter cited as Order]. The district judge noted that the Illinois courts had recognized that "many of the policy considerations embodied by strict liability focus upon the protection of consumers, with their unequal bargaining power and lack of access to information, from accidental injuries."*fn3 Id. at 3 (footnote omitted). Since the plaintiffs-appellants were "a commercial enterprise, in the business of managing apartments," id. at 4, these policy concerns were, in the view of the district court, inapplicable. Additionally, noted the court, "the existence of other judicial remedies such as breach of warranty further supports our conclusion that roofing material is not a product within the ambit of the products liability doctrine." Id. (citing Lowrie v. City of Evanston, 50 Ill. App. 3d 376, 384, 365 N.E.2d 923, 929, 8 Ill. Dec. 537 (1977)).
2) Count II is an action against both defendants for negligent damage to property. The district court dismissed this count on the ground that it alleged economic rather than tortious property loss. Consequently, since Illinois law prohibits recovery of economic losses in tort, the claim had to be dismissed. Order at 5. (The court also noted that this conclusion provided an additional justification for the dismissal of Count I.)
3) Count III is an action for willful and wanton damage to property against DNA only. The district judge dismissed the claim because it sought punitive damages for activities arising out of Counts I, II, and VI. (The latter count was also dismissed and is not part of this appeal.)
4) Count VIII asserts a claim for breach of contract against B&K only. The district court held that the applicable statute of limitations barred this ...