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08/30/88 Tower Construction Company v. Tower Construction Company

August 30, 1988

APPELLATE COURT OF ILLINOIS, FIRST DISTRICT, SECOND DIVISION INLAND REAL ESTATE CORPORATION, PLAINTIFF-APPELLANT

v.

TOWER CONSTRUCTION COMPANY ET AL., DEFENDANTS (RABIN-LENOBLE ASSOCIATES ET AL., DEFENDANTS-APPELLEES)



528 N.E.2d 421, 174 Ill. App. 3d 421, 123 Ill. Dec. 876 1988.IL.1323

Appeal from the Circuit Court of Cook County; the Hon. Edwin H. Berman, Judge, presiding.

APPELLATE Judges:

JUSTICE SCARIANO delivered the opinion of the court. STAMOS* and BILANDIC, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE SCARIANO

Inland Real Estate Corporation (Inland), engaged in the business of real estate development, syndications, sand property management, brought this action against the architects, builders and sellers of three apartment buildings which Inland purchased in the course of its business. It appeals from the circuit court's award in favor of the defendants-appellees (architects) of a section 2-615 of the Code of Civil Procedure motion to dismiss its suit (Ill. Rev. Stat. 1985, ch. 110, par. 2-615), the court having held that Inland had no standing to sue either in its own right or as subrogee.

In April 1971, La Salle National Bank of Chicago (La Salle), as trustee on behalf of its beneficiary, Century Towers Co. (Century), entered into a contract with Tower Construction Company (Tower) for the construction of the three buildings forming the subject matter of this action. During the same month La Salle, again as trustee, entered into an owner-architect agreement with the two architectural firms which are the appellees here, Rabin-LeNoble Associates and Weinper and Balaban, Inc., whereby they would provide architectural, engineering and consulting services in connection with the construction of the three buildings, designated A, B and C.

Tower commenced construction in May 1971. When building B began to experience settlement problems shortly after construction began, Tower and the architects discovered that the footings, foundations, and soil under the building could not support the structure; accordingly, they undertook measures to correct the problem. Although the buildings were certified by the architects in 1973 as substantially complete, building B continued to settle due to the nature of the underlying soil and inadequacy of the corrective measures.

In August 1975, Inland purchased Century's entire beneficial interest in the land trust. *fn1 There is some dispute as to the substance of the Discussions which took place between Inland and Century prior to the sale of the buildings. That dispute forms the basis of several other counts of Inland's suit against Century and Tower, which remain pending in the circuit court and are therefore not a part of this appeal.

Shortly after purchasing the property from Century, Inland formed two limited partnerships, Interlude I and Interlude II, in which it sold interest to public investors. Buildings B and C were sold to Interlude II on September 1, 1975, while building A was sold to Interlude I on

In early 1977, Inland discovered settlement problems with respect to building B and paid in excess of $400,000 to investigate the problem and for necessary repairs. By September 1, 1977, settlement had progressed to the extent that an entire wing of the building had to be evacuated. In addition to the direct costs of correcting the settlement problem, Inland paid Interlude II approximately $270,000 to compensate for lost rents.

During January 1982, buildings A, B and C each suffered severe vertical cracking in their exterior masonry as well as rupturing of the internal structure of the buildings. Here again, Inland paid the cost of the repair work, which amounted to approximately $45,000.

After Inland filed its complaint on January 18, 1979, this case underwent a long an involved procedural odyssey in the trial court, a detailed history of which is not really germane to our resolution of the issues herein.

Until and including the filing of its seventh amended complaint on July 26, 1982, *fn2 Inland pleaded that it was the beneficial owner of the properties. On October 26, 1986, after its answers to certain interrogatories revealed that Inland had transferred its beneficial interest in the properties to Interlude I and Interlude II during the year 1975, the architects filed motions pursuant to section 2-619 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-619) to dismiss the tort actions against them contained in Inland's seventh amended complaint on the ground that it did not have legal capacity to sue for and recover the damages prayed for in the complaint. The court granted the motions and gave leave once more to Inland to amend its complaint.

In its eighth amended complaint, filed on January 6, 1987, Inland asserted, as it had in all of its previous complaints, that La Salle as trustee held legal title to the properties involved in this suit, but on this occasion it abandoned the pleading of any ownership claim in itself. In this latest and last complaint Inland also advanced for the first time a theory of recovery based on subrogation. The architects filed a motion pursuant to section 2-615 of the Code of Civil Procedure (Ill. Rev. Stat. 1985, ch. 110, par. 2-615) to strike and dismiss based on the grounds that Inland had no standing to sue inasmuch as it was not the owner of the buildings when the damage occurred and that Inland had no right of subrogation under the facts alleged.

On April 15, 1987, the trial court ruled that Inland had no standing to sue the architects either in its own right or as subrogee. The order and resultant appeal apply to the counts of the eighth amended complaint that pertain only to the architects.

This timely appeal followed. I

It is uncontested that Inland paid out approximately $700,000 as a result of the settlement and masonry damage to the apartment buildings. Accordingly, the first issue we consider is whether the trial court erred in ruling that Inland lacked standing in its own right to sue to the architects for negligence.

A well-accepted definition of the standing concept is to be found in Lynch v. Devine (1977), 45 Ill. ...


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