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05/05/94 LASALLE NATIONAL BANK v. SKIDMORE

May 5, 1994

LASALLE NATIONAL BANK, AS TRUSTEE UNDER TRUST NUMBER 36223, PLAINTIFF-APPELLANT,
v.
SKIDMORE, OWINGS & MERRILL TISHMAN CONSTRUCTION COMPANY, TISHMAN LIQUIDATING CORPORATION, TISHMAN CONSTRUCTION CORPORATION OF ILLINOIS, JAMES MCHUGH CONSTRUCTION CO., CROUCH WALKER CORPORATION, DESSENT ROOFING CO., INC., ECONOMY MECHANICAL INDUSTRIES, INC., COMMERCIAL LIGHT CO., FLOOD TESTING LABORATORIES, INC., CST CONSTRUCTION CO., TEECO PROPERTIES, L.P. AND TISHMAN REALTY CORPORATION, DEFENDANTS, AND MCNULTY BROTHERS COMPANY, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County. Honorable Stephen A. Schiller, Judge Presiding.

Petition for Leave to Appeal Denied October 6, 1994.

Cahill, Johnson, Theis

The opinion of the court was delivered by: Cahill

PRESIDING JUSTICE CAHILL delivered the opinion of the court:

We reverse a summary judgment where the trial court found, as a matter of law, that the owners of the Apparel Center in Chicago (Center) knew or should have known not later than 1977 that the heating problems that plagued their building were wrongfully caused. Suit was not filed until 1986, outside the four year statute of limitations if the date fixed by the trial court is correct. We disagree, finding that the facts before us do not lead to the Conclusion, as a matter of law, that the statute was triggered no later than 1977. To so hold imposes upon laymen a legal Conclusion that virtually requires a prudent businessman involved in complex, multi-year construction to keep a lawyer at his elbow from the day ground is broken. That may be, in fact, what prudent businessmen do in this era. But the law is not so stern an arbiter. What may or may not be wrongfully caused, as our supreme court has read the discovery rule, is rooted in common sense. If a roof collapses half way through construction, a court can fix the date, as a matter of law, when the injury is known to be wrongfully caused. Some construction defects lend themselves to such a precise finding, as a matter of law. Many do not. For these, fixing a date an injury is known to be wrongfully caused is a question of fact. We believe what happened at the Apparel Center from 1976 through 1986 is such a case.

LaSalle National Bank, (Bank), entered into a construction management contract with Tishman Construction Corporation of Illinois, (Tishman), to build the Apparel Center. In May of 1974, Tishman contracted with McNulty Brothers Company (McNulty). McNulty purchased and installed the insulation and firesafing materials in the Center. The Center was designed with a unique heating system which relied significantly on the heat generated by the lights within the Center. Heat generated by the lights was circulated by electric fans. McNulty substantially completed its work on the Apparel Center by September of 1976, but did not finish work under the contract until May of 1977.

Tenants began to occupy the Center in late 1976. Almost immediately, in the winter of 1976-77, the Bank received complaints from the tenants that the Center was too cold. The Bank investigated to determine the cause of these temperature problems. The investigation was ongoing from 1976 to 1978. The Bank received advice or information about the problem from at least five separate sources: (1) investigations by their own employees which included cutting holes in some of the interior walls to examine the insulation; (2) consultations with the Center's architects, Skidmore, Owings and Merrill (Skidmore); (3) consultations with McNulty, the defendant in this appeal; (4) a 1977 report issued by U.S. Gypsum, the manufacturer of the insulation used in the Center; and (5) a study by an independent engineering consultant, Environmental Systems Design, Inc., (ESD), issued in March of 1978.

These sources gave the Bank numerous and in some cases contradictory reasons for the temperature problems in the Apparel Center. In response, the Bank undertook numerous repairs, including repairs to the insulation in selected locations throughout the Center. These repairs alleviated the temperature problem somewhat, but tenant complaints continued. In 1980 and 1981, the temperature problems persisted.

There is no evidence in the record on the status of the temperature problem in 1982, 1983 and 1984. In 1985, however, in response to an increase in utility rates, the Bank commissioned an independent consulting agency to study the entire heating and cooling system in the Center. Based on the consultant's report, the Bank hired an engineering firm, Wiss, Janney, to investigate further. Wiss, Janney opened holes in the interior and exterior walls of the Center and discovered, among other things, that the insulation did not conform to specifications in the building plans and that the insulation had been improperly installed.

The Bank filed suit on August 25, 1986, against several defendants. The defendants moved for summary judgment based on the statute of limitations, arguing that the Bank had sufficient information of faulty construction more than four years before the filing of the complaint. Without setting a specific date, the trial Judge found that the statute was triggered some time in 1976-77 and entered summary judgment for the defendants. The trial Judge denied a motion for reconsideration, and the Bank appealed.

The Bank contends that summary judgment was improper for two reasons: first, none of the evidence presented by defendant at the hearing addressed the Bank's allegations of defective flashing on the exterior wall of the Center; second, there were disputed questions of fact relating to the Bank's knowledge of defects in the building. The Bank contends that the information gathered from 1976-78 led it to believe that the temperature problems were caused by minor defects commonly discovered in the first several years of a new building. The Bank argues that the statute of limitations did not begin to run until it received the information from the study and investigation conducted in 1985. McNulty responds that the information available in 1976-78 was enough to trigger the statute of limitations, and that the later studies found nothing different from or in addition to the earlier investigation.

We do not agree with the Bank's second argument that there are disputed questions of material fact relating to the Bank's knowledge of the alleged faults. We do find, however, that more than one Conclusion can be drawn from these undisputed facts. The trier of fact should therefore determine if the Bank's knowledge triggered the statute of limitations. This Conclusion makes consideration of the Bank's first argument unnecessary.

Section 13-214 of the Illinois Code of Civil Procedure provides: "Actions based upon tort, contract or otherwise against any person for an act or omission of such person in the design, planning, supervision, observation or management of construction, or construction of an improvement to real property shall be commenced within 4 years from the time the person bringing an action, or his or her privity, knew or should reasonably have known of such act or omission. " (Emphasis added.) Ill. Rev. Stat. (1991), ch. 110, par. 13-214(a), now 735 ILCS 5/13-214(a) (West 1992).

The Illinois Supreme Court has interpreted the knowledge requirement or "discovery period" in the statute of limitations in construction cases to begin when a person knows or reasonably should know of his injury and when a person knows or reasonably should know that it was wrongfully caused. ( County of Du Page v. Graham (1985), 109 Ill. 2d 143, 153-54, 485 N.E.2d 1076, 1080, 92 Ill. Dec. 833; Knox College v. Celotex Corp. (1981), 88 Ill. 2d 407, 415, 430 N.E.2d 976, 980, 58 Ill. Dec. 725.) Persons have knowledge that an injury is wrongfully caused when they possess enough information about the injury to alert a reasonable person to the need for further inquiries to determine if the cause of the injury is actionable at law. Knox College, 88 Ill. 2d at 415-16; AXIA Inc. v. I.C. Harbour Construction Co. (1986), 150 Ill. App. 3d 645, 501 N.E.2d 1339, 103 Ill. Dec. 801; see also Nolan v. Johns-Manville Asbestos (1981), 85 Ill. 2d 161, 421 N.E.2d 864, 52 Ill. Dec. 1; ...


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