The opinion of the court was delivered by: Foreman, Chief Judge:
This matter is before the Court on plaintiff's Motion to
Dismiss (Document No. 13). The Motion urges the Court to
dismiss the five counterclaims asserted by the defendants in
their Answer on the basis of limitations and failure to state
a claim on which relief can be granted.
It appears from the record that on March 25, 1977,
defendant, the Austin Company (Austin), contracted with
plaintiff, Venture, Inc. (Venturi), to construct certain silos
and other facilities for an entity known as Dixie Portland
Flour Mills, Inc. (Dixie) at that firm's Milner, Georgia
site.*fn1 Under this agreement, Venturi performed their work
as a subcontractor of Austin. Venturi's work was apparently
substantially completed around December 7, 1978. Almost seven
years later, in August of 1985,*fn2 cracks began appearing in
the walls of the silos which resulted in Dixie making a demand
on Austin to repair them. Austin thereafter made substantial
repairs to the silos, incurring expenses allegedly in excess
of $574,000.00 for which it made a claim on its insurer for
the project, General Accident Insurance Company (General).
Apparently, General, pursuant to its policy in favor of
Austin, at least partially reimbursed Austin for its expenses
in repairing the silos. Thereafter, in August of 1987, General
demanded reimbursement from Venturi for the funds it had paid
Austin to repair the silos.
On October 9, 1987, Venturi filed a Complaint for
Declaratory Judgment pursuant to § 2-701, Ill.Code of Civil
Procedure, SHA ch. 110, ¶ 2-701, in the Circuit Court of Wayne
County, Illinois, seeking a declaration of its rights and
responsibilities to Austin and General under its contract with
Austin. On November 30, 1987, Austin and General removed that
case to this Court in accordance with 28 U.S.C. § 1446
asserting diversity of citizenship under 28 U.S.C. § 1332 as
the basis for this Court's jurisdiction of the matter.
Concurrently, Austin and General filed their Answer and
asserted five counterclaims: 1) breach of contract, 2)
negligence, 3) statutory fraud, 4) express indemnity, and 5)
implied indemnity. These counterclaims are the subject of
Venturi's Motion to Dismiss.
As a threshold matter, the Court notes that since its
jurisdiction is derived from diversity of citizenship, the
substantive law of Illinois, as well as its applicable
conflicts of laws decisions, are controlling. Hartford Accident
and Indemnity Co. v. Crider, 392 F. Supp. 162, 167 (N.D.Ill.
1974) (citing Klaxon Co. v. Stentor Elec. Mfg. Co.,
313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941).) Illinois, in choice
of laws questions, follows the "most significant contacts"
approach of the Restatement (Second) of Conflict of Laws § 145.
Ingersoll v. Klein, 46 Ill.2d 42, 262 N.E.2d 593 (1970); see
also, Edwardsville Nat. Bank v. Marion Laboratories, Inc.,
808 F.2d 648, 651 (7th Cir. 1987).
Another preliminary consideration is the plaintiff's
invocation of the Illinois Borrowing Statute, S.H.A. ch. 110,
¶ 13-210. That statute states
When a cause of action has arisen in a state or
territory out of this State, or in a foreign
country, and, by the laws thereof, an action
thereon cannot be maintained by reason of the
lapse of time, an action thereon shall not be
maintained in this State.
As the defendants correctly note, the statute is not
applicable where one of the parties is a resident of Illinois.
Coan v. Cessna Aircraft, 53 Ill.2d 526, 293 N.E.2d 588 (1973);
see also Nutty v. Universal Engineering Corp., 564 F. Supp. 1459,
1461-62 (S.D.Ill. 1983), Miller v. Lockett, 75 Ill.Dec.
224, 457 N.E.2d 14 (1983). However, defendant incorrectly
asserts that a "resident" for the statute's purpose is the same
as a "resident" for diversity purposes. Such is not the case.
There appears to be no state court decision defining
corporate residency for borrowing act purposes but the
Northern District of Illinois courts have held that in the
absence of a statutory or court-supplied definition, we, as
federal courts, must apply — as would the state courts — the
general common law approach to corporate residency. See,
Hollins v. Yellow Freight System, Inc., 590 F. Supp. 1023 at
1026 (N.D.Ill. 1984). This Court agrees. That being the case,
the Court holds that for borrowing act purposes, a corporation
is a resident only of the state(s) in which it is incorporated.
Id. See also, Edward Hines Lumber Co. v. Vulcan Materials Co.,
669 F. Supp. 854, 857 n. 4 (N.D.Ill. 1987). Thus, since it is
undisputed that Venturi is a Delaware corporation, it is not an
Illinois resident for borrowing act purposes and the statute
applies. The impact of the statute on Austin's and General's
counterclaims will be discussed infra.
Having reached the point where the Court begins its analysis
of plaintiff's Motion, it deems it useful to summarily outline
the sequence of events leading to this lawsuit, especially in
light of the fact that numerous limitations questions exist.
March 25, 1977 ...... Date of Contract between
Venturi and Austin.
December 7, 1978 Work "substantially"
completed by Venturi.
August 16, 1985 Cracks discovered by Dixie.
October 1, 1985*fn3 Demand made by Dixie on Austin.
September 4, 1987 Demand made by Austin on ...