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STATE FARM MUT. AUTO. v. W.R. GRACE

December 30, 1992

STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., PLAINTIFF,
v.
W.R. GRACE & COMPANY, DEFENDANT.



The opinion of the court was delivered by: Richard Mills, District Judge:

ORDER

This cause is before the Court on Grace's motion for summary judgment pursuant to Fed.R.Civ.P. 56(c). Because the overwhelming majority of court decisions favor the position of the State Farm, the Court denies this motion except as to Count III of State Farm's complaint (breach of express warranties).

State Farm filed its original complaint on January 30, 1989. Pursuant to Grace's motion to dismiss and State Farm's withdrawal of certain claims, State Farm filed an amended complaint on December 12, 1991. In the amended complaint, State Farm relies on five different theories of recovery, including strict liability, negligence, breach of express warranties, fraud and misrepresentation, and willful and wanton misconduct. All claims seek compensation for property damage allegedly caused by the incorporation of asbestos-containing fireproofing in State Farm's corporate headquarters in Bloomington, Illinois, and its regional office buildings in Austin, Texas, and Tempe, Arizona. [hereinafter "Buildings"].

I. Standard for Summary Judgment

Under Fed.R.Civ.P. 56(c), summary judgment shall be granted if the record shows that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Black v. Henry Pratt Co., 778 F.2d 1278, 1281 (7th Cir. 1985). The moving party has the burden of providing proper documentary evidence to show the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists when "there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Unquestionably, in determining whether a genuine issue of material fact exists, the evidence is to be taken in the light most favorable to the non-moving party. Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598 (1970). Once the moving party has met its burden, the opposing party must come forward with specific evidence, not mere allegations or denials of the pleadings, which demonstrates that there is a genuine issue for trial. Howland v. Kilquist, 833 F.2d 639 (7th Cir. 1987).

II. Analysis

Grace argues that State Farm's claim is time barred because of various Illinois statutes of limitation.

(a).  Personal Injury Statute of Limitation

Grace has asserted correctly that Illinois statute of limitations apply to State Farms' claims. A federal court sitting in diversity follows the choice of law rules of the forum state. Klaxon v. Stentor, 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Grace first argues that Ill.Rev.Stat., ch. 110, ¶ 13-205 (1989), establishes a five year limit on actions "to recover damages for an injury done to property, real or personal. . . ." This period began to run as soon as the alleged asbestos product was installed in the buildings in 1970-73. Because State Farm did not file this action until 1989, Grace argues that the five year statute of limitation precludes this action.

Defendant also argues that this limitation period should not be tolled because of any "fraudulent concealment." A statute of limitation may be tolled pursuant to Ill.Rev.Stat., ch. 110, ¶ 13-215 (1989), if a person liable for the action fraudulently conceals the cause of the action. However, in this case, the architect of the buildings knew the composition of the fireproofing material that was installed in the buildings as early as 1971. Because the architect was an agent of State Farm, and because an agent's knowledge is imputed to its principal, Defendant argues that there is no fraudulent concealment because State Farm had knowledge through its architect of the alleged asbestos materials.

Grace's argument has not withstood judicial scrutiny. First, as State Farm points out, the mere presence or knowledge of asbestos is insufficient to trigger the personal injury statute of limitation. Rather, the statute of limitation did not begin to run until State Farm had sufficient knowledge of asbestos contamination. AFM Insurance Co. v. Board of Education, No. 90 C 6040, Slip op. at 37, 39, 1992 WL 409442 (N.D.Ill., October 5, 1992); Heider v. W.R. Grace & Co., No. 89 C 9067, 1992 WL 189254 (N.D.Ill., July 15, 1992); In re: School Asbestos Litigation, No. 83-0268, Pre-trial Order No. 268 (E.D.Pa, April 12, 1990); Plaza 600 Corporation v. W.R. Grace & Co., No. C89-1562D (W.D.Wa. June 19, 1991); County of San Diego v. W.R. Grace & Co., No. 208188 (Cal.Super.Ct., Riverside Cty., Jan. 31, 1992); Board of Education v. AC & S, Inc., 131 Ill.2d 428, 137 Ill.Dec. 635, 546 N.E.2d 580 (1989). Therefore, the relevant factual inquiry for this Court is not whether State Farm had knowledge that asbestos was being used, but whether State Farm had knowledge that asbestos was being released from the fireproofing material and that it presented a hazard.

Drawing all reasonable inferences from the evidence presented by State Farm, as this Court must in this summary judgment proceeding, the Court finds that State Farm has met the requisite showing of a material fact to preclude summary judgment. The statute of limitation statute begins to run "when a party knows or reasonably should know that an injury has occurred and that it was wrongfully caused." Nolan v. Johns-Manville Asbestos, 85 Ill.2d 161, 52 Ill.Dec. 1, 5, 421 N.E.2d 864, 868 (1981). State Farm's evidence indicates that it was not until June of 1986 that State Farm was aware of the presence of asbestos in the buildings. (Pl's exhibit 14, Strong Aff., at ¶¶ 5-8) (Pl's exhibit 15, Aldridge Aff., at ¶¶ 2-8). It was not until December of 1988 that dust sample analysis test results were available which indicated that the buildings were contaminated with an asbestos. (Pl's Exhibit 16). Therefore, the Court finds there is sufficient evidence for a jury to find that State Farm acted reasonably in filing its claim within the statute of limitations period.

The Court makes this finding despite Grace's evidence that there was some awareness on the part of State Farm, prior to 1986, of the presence of asbestos in the buildings. Nevertheless, Defendant failed to show that State Farm was aware of an asbestos contamination problem. For example, even if Defendant's architect was aware of the usage of asbestos in the building (a fact disputed by State Farm), and if the architect was an agent of State Farm (disputed by State Farm and the holding of Blue Cross & Blue Shield v. W.R. Grace & Co., 781 F. Supp. 420, 423-24 (D.S.C. 1991)), and an agent's knowledge of the asbestos could be imputed to State Farm (again disputed by State Farm and the holding of Cheshire Medical Center v. W.R. Grace & Co., No. 85-516D, 1992 WL 544949 (D.N.H., Feb. 18, 1992)), this knowledge still does not prove that State Farm was aware of any asbestos contamination problem before 1986.

Second, the Court finds that State Farm submitted sufficient evidence to toll the five year statute of limitations provision pursuant to Ill.Rev.Stat. ch. 110, ¶ 13-215 (1989). For a plaintiff to avail itself of ¶ 13-215, it must show that "defendant . . . made representations or performed acts which were known by it to be false, with the intent to deceive the plaintiff, and upon which plaintiff detrimentally relied." Harvey v. Harris Trust & Savings Bank, 73 Ill. App.3d 280, 287, 29 Ill.Dec. 198, 391 N.E.2d 461 (1979). ...


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