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ARKWRIGHT MUT. INS. CO. v. GARRETT & WEST

March 31, 1992

ARKWRIGHT MUTUAL INSURANCE COMPANY, as subrogee of ILLINOIS BELL TELEPHONE COMPANY, and ILLINOIS BELL TELEPHONE COMPANY, Plaintiffs,
v.
GARRETT & WEST, INC. Defendant; GARRETT & WEST, INC., Third-Party Plaintiff, v. NORTHERN TELECOM INC., a Subsidiary of NORTHERN TELECOM LTD., Third-Party Defendant.



The opinion of the court was delivered by: BRIAN BARNETT DUFF

 Background

 Northern Telecom, pursuant to an extensive and detailed contract with Illinois Bell, supplied and installed certain equipment at the HCO. G&W claims that the equipment was defective and that Northern Telecom is therefore strictly liable in tort to Arkwright under Illinois product liability law. Furthermore, G&W claims that Northern Telecom was negligent in its provision and maintenance of the equipment. For purposes of this motion, Northern Telecom is not contesting the facts alleged by G&W, rather it claims that its contract with Illinois Bell precludes any tort liability to Illinois Bell, and thus, any third-party liability to G&W.

 The contract between Illinois Bell and Northern Telecom sets forth explicit technical specifications for the equipment provided by Northern Telecom. It also sets forth the specific warranties Northern Telecom made regarding the equipment. In addition, the contract provided that before beginning any installation project, Northern Telecom would prepare a detailed "Method of Procedure" (MOP). A MOP is "written step-by-step procedures outlining the detailed work operations for a specific portion of the job." In preparing each MOP the parties were required to reach agreement on, among other things, installation methods, testing, experience levels of the personnel involved in the project, and possible service impairment hazards. Illinois Bell reviewed and approved all MOPs before Northern Telecom began any work, and no changes could be made to the MOPs without Illinois Bell's approval.

 Discussion

 The Illinois Contribution Act, Ill.Rev.Stat. ch. 70, par. 302 provides in part:

 
(a) Except as otherwise provided in this Act, where 2 or more persons are subject to liability in tort arising out of the same injury to person or property, . . . there is a right of contribution among them. . . . (Emphasis added).

 Northern Telecom maintains that, because of the contract, it is not liable in tort to Illinois Bell (or its subrogee, Arkwright) and thus cannot be liable for contribution to G&W.

 G&W alleges in its third-party complaint that Northern Telecom is strictly liable for introducing a defective product into the stream of commerce, and is also liable for negligently designing, manufacturing, selling and servicing that product. G&W seeks contribution from Northern Telecom in the event G&W is found liable for the damages sustained at the HCO in 1988. G&W's claims against Northern Telecom are tort claims. They are therefore subject to the requirements of the Contribution Act -- that is, they are not viable unless Northern Telecom would have been liable to Bell in tort. As the Illinois Appellate Court recently stated:

 
Contribution is predicated upon tort, not contract, liability. (See Coney v. J.L.G. Industries, Inc. (1983), 97 Ill. 2d 104, 73 Ill. Dec. 337, 454 N.E.2d 197 . . . .) Contribution is a statutory remedy which involves a sharing of payment of damage awards and is available to all parties who are subject to liability in tort arising out of the same injury. ( Hennepin Drainage & Levee District v. Klingner (1989), 187 Ill. App. 3d 710, 711, 135 Ill. Dec. 399, 543 N.E.2d 967 . . . .)

  Cosey v. Metro East Sanitary Dist., 221 Ill. App. 3d 205, 163 Ill. Dec. 760, 581 N.E.2d 914 (5th Dist. 1991). The first question this court must resolve, then, is whether Northern Telecom is "subject to liability in tort" to Bell. The answer hinges upon the import of the contract between those two entities.

 The fire at the HCO caused property damage. That is, it caused the type of injury which is generally redressed according to tort law principles. See Moorman Mfg. Co. v. National Tank Co., 91 Ill. 2d 69, 86, 61 Ill. Dec. 746, 435 N.E.2d 443 (1982) ("Tort theory is appropriately suited for personal injury or property damage resulting from a sudden or dangerous occurrence.") G&W has cited Moorman for the proposition that because Illinois has held that tort theory can be appropriate for suits arising from occurrences such as that in issue here, Northern Telecom may not argue that its contract with Illinois Bell bars G&W's third-party suit. That proposition, however, is clearly unsupported by the Moorman holding.

 In Moorman, the Illinois Supreme Court held that parties could not seek a tort remedy for a purely economic loss. Rather, they were limited to the remedies provided by contract law. G&W would like to use that holding to support the converse proposition -- that parties who have suffered losses which are not purely economic are always entitled to seek a tort law remedy. Neither Moorman nor any other Illinois case discovered by this court supports that proposition. Rather, as discussed below, Illinois courts permit parties to limit or negate their tort duties by contract.

 Generally, Illinois courts construe exculpatory clauses strictly against the benefitting party, particularly if that party is also the one who drafted the release. Scott & Fetzer Co. v. Montgomery Ward & Co., 112 Ill. 2d 378, 395, 98, 98 Ill. Dec. 1, 493 N.E.2d 1022 Ill. Dec. 1, 493 N.E.2d 1022 (1986). Here, the clauses in issue are entitled to some weight since the parties do not dispute that they were fully bargained for by two sophisticated commercial entities. The court thus ...


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