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11/29/94 FARLEY METALS v. BARBER COLMAN COMPANY

November 29, 1994

FARLEY METALS, INC., A DELAWARE CORPORATION N/K/A FARLEY, INC., A DELAWARE CORPORATION, PLAINTIFF-APPELLANT
v.
BARBER COLMAN COMPANY, A DELAWARE CORPORATION, HYRE ELECTRIC COMPANY, A DELAWARE CORPORATION, WESTRONICS, INC., A TEXAS CORPORATION A/K/A TRACOR INC., A DELAWARE CORPORATION A/K/A TRACOR, INC., WESTRONICS OF TEXAS, INC., WESTRONICS, A DIVISION OF BAKER HUGHES PROCESS TECHNOLOGIES, AND WESTRONICS, A DIVISION OF ENVIROTECH, DEFENDANTS-APPELLEES -- BARBER COLMAN COMPANY, A DELAWARE CORPORATION, THIRD-PARTY PLAINTIFF V. NATIONAL CASH REGISTER COMPANY, A MARYLAND CORPORATION, AND NCR CORPORATION, A MARYLAND CORPORATION, THIRD-PARTY DEFENDANTS-APPELLEES



APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. THE HONORABLE MICHAEL J. GALLAGHER, JUDGE PRESIDING.

Justice Scariano delivered the opinion of the court: DiVITO, P.j., and McCORMICK, J., concur.

The opinion of the court was delivered by: Scariano

JUSTICE SCARIANO delivered the opinion of the court:

On April 26, 1985, an explosion occurred at Tool & Engineering Company, a metal automobile component manufacturer in the City of Chicago. Tool & Engineering is a wholly owned division of plaintiff Farley Metals, Inc. The explosion resulted in the deaths of three employees, injured others, and caused extensive property damage. During the summer after the explosion, plaintiff's reconstruction manager removed certain artifacts *fn1 from the explosion and stored them with Industrial Storage Warehouse (Industrial) in Chicago.

Nearly two years later, on April 24, 1987, plaintiff sued numerous defendants, alleging negligence and strict liability. Plaintiff alleged that an exothermic *fn2 explosion occurred in one of its salt bath furnaces and that the explosion was caused by a mixture of potassium nitrate and sodium nitrate overheating and interacting with aluminum rods. Salt bath furnaces are utilized in the heat treatment of metals; aluminum stock is submerged in the salt bath furnace, heated to temperatures of up to 950 degrees Fahrenheit, and then placed in a "quench tank." Plaintiff alleged that the overheating resulted from defects in the defendants' manufacturing, installation and/or servicing of various products used in the treatment process.

In April 1987, plaintiff's law firm, Clausen, Miller, Gorman, Caffrey & Witous, P.C. (Clausen), entered into a contract with Industrial under which it was obligated to pay Industrial $383.99 per month for storing the artifacts from the explosion. On May 13, 1987, Circuit Court Judge Thomas E. Hoffman entered a protective order in which he ordered that no party could engage in destructive testing, relocation, or alteration of the artifacts from the explosion and that all parties receive timely notice and an opportunity to attend any inspections or testing of the artifacts. He also denied defendant Barber Colman's motion to have the artifacts placed with an independent entity.

By court order, management of the litigation was vested in three committees, the plaintiffs' committee (representing personal injury plaintiffs), the defendants' committee, and the Farley committee. (Farley was both a plaintiff and a defendant.) The court directed these committees to divide the cost of storing the artifacts equally between defendants and plaintiffs, with individual defendants and plaintiffs contributing on a pro rata basis. Although storage costs were shared, Clausen directed the preservation of the artifacts and was the only party with a key to the warehouse gate. Parties wishing to inspect the artifacts would contact Clausen which then informed the other parties and authorized the visit with the warehouse. Clausen remained obligated to pay fees under the contract and advanced payments to Industrial.

In October 1989, one of the attorneys for the personal injury plaintiffs relocated various artifacts from Industrial to Record Copy Services, apparently because of the need for a heated warehouse. According to the affidavits of George Zelcs, a Clausen attorney, and Kevin McQuillan and Tomas Petkus, personal injury plaintiffs' attorneys, Zelcs informed Circuit Court Judge Myron T. Gomberg at a status call that Clausen was having difficulty collecting storage fees from the other parties. Upon questioning by the Judge, only Zelcs, McQuillan, and Petkus indicated that they had an interest in further preservation of the artifacts left at Industrial. The Judge then ordered that only the interested parties, i.e., plaintiffs, were required to share in the cost of storing those artifacts. However, that ruling was not put in writing and the earlier order that costs be divided among the parties was not amended to reflect it. *fn3

Defendants later denied stating that they were uninterested in preserving the artifacts remaining at Industrial. Clinton Feil, an attorney for defendant Hyre Electric Company, filed an affidavit dated September 16, 1992, stating that he objected to paying warehouse fees because Clausen had exclusive control over access to the warehouse and that he never "agreed or consented to the violation of the Court Order protecting the artifacts stored in the warehouse or to their destruction." Patrick Ruberry, an attorney for Westronics also filed an affidavit, dated September 28, 1992, asserting that defense attorneys did not state in open court that they were uninterested in preserving the artifacts at Industrial and that he did not consent to the destruction of the artifacts, having discussed with other defense attorneys the possibility that a defect in the salt bath itself caused the explosion. In its reply brief supporting its motion to dismiss, defendant Barber Colman similarly denied ever expressing a lack of interest in preserving the artifacts.

Between 1987 and June 1991, Clausen was in arrears on the Industrial account several times and received six dunning letters and four notices of public auction. In each case, Clausen avoided foreclosure by paying the amount in arrears.

On August 19, 1991, defendant Barber Colman filed a third party action against National Cash Register Company and NCR Corporation (NCR) for contribution. After encountering delays setting up an examination of artifacts at Industrial, NCR, in July 1992, deposed Michael Swade, the president of Industrial, and learned that the artifacts stored at his warehouse had been destroyed. Swade produced past-due invoices on the Clausen account and recalled that on July 2, 1991, Industrial's "lien foreclosure had been perfected" and a public auction was held in an attempt to sell the artifacts. No bids were made and Industrial subsequently sold the goods for scrap. Swade contended that Industrial complied with the Uniform Commercial Code's notice provisions before holding the auction. Plaintiff denied that it received notice of the public auction. The record contains a certificate of publication indicating that Industrial ran an ad regarding the auction in the Lincoln-Belmont Booster on June 12, 1991 and on June 19, 1991. A letter of notice of public sale also appears in the record, but it is unclear whether it was sent to Clausen. *fn4

On December 12, 1991, Industrial sued Clausen for $13,427.60, monies it claimed were past due for storage fees. Clausen eventually paid Industrial $9,000 in settlement of its claim.

Upon learning that the artifacts stored at Industrial were destroyed, defendants filed motions for dismissal pursuant to Supreme Court Rule 219(c). (134 Ill. 2d R. 219(c).) Defendant Barber Colman attached to its motion the affidavit of its expert, Q.D. Mehrkam. Mehrkam opined that the explosion may have occurred outside of the salt bath and that "a true understanding of the explosion could only be explained and understood by examining the equipment that was allegedly involved in the occurrence."

Following the hearing, the Judge granted defendants' motions to dismiss. *fn5 Plaintiff filed a motion for reconsideration, but the court denied it on ...


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