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02/20/97 CHICAGO FLOOD LITIGATION.

February 20, 1997

IN RE CHICAGO FLOOD LITIGATION.


The Honorable Justice Freeman delivered the opinion of the court. Justice McMORROW, concurring in part and dissenting in part.

The opinion of the court was delivered by: Freeman

JUSTICE FREEMAN delivered the opinion of the court:

In April 1992, the underground freight tunnel system in the central business district of Chicago flooded. Numerous named plaintiffs (class plaintiffs) represent individuals and businesses that claim property damage and economic loss as a result. ITT Hartford (Hartford), the subrogee of several additional claimants, opted out of the certified class. Class plaintiffs and Hartford each brought an action in the circuit court of Cook County against defendants, the City of Chicago (City) and the Great Lakes Dredge and Dock Company (Great Lakes). Class plaintiffs and Hartford sought damages for their various alleged injuries.

The trial court granted in part and denied in part the City's and Great Lakes' motions to dismiss. 735 ILCS 5/2-615, 2-619 (West 1994). The court also certified several questions for interlocutory appeal (155 Ill. 2d R. 308), and found that there was no just cause to delay appeal of several additional issues (155 Ill. 2d R. 304(a)).

In an unpublished order (Nos. 1-93-207, 1-93-209, 1-93-318, 1-93-1570, 1-93-1602, 1-93-1848, 1-93-1902, 1-94-387, 1-94-388 cons. (unpublished order under Supreme Court Rule 23)), the appellate court upheld all but two of the trial court's rulings. We allowed class plaintiffs' and Hartford's separate petitions for leave to appeal (155 Ill. 2d R. 315) and consolidated the causes for review; the City cross-appeals (155 Ill. 2d R. 318(a)). We now affirm the appellate court in part and reverse in part.

BACKGROUND

A motion to dismiss under either section 2-615 or section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-615, 2-619 (West 1994)) admits all well-pled allegations in the complaint and reasonable inferences to be drawn from the facts. Anderson v. Anchor Organization for Health Maintenance, 274 Ill. App. 3d 1001, 1012, 211 Ill. Dec. 213, 654 N.E.2d 675 (1995); Pechan v. DynaPro, Inc., 251 Ill. App. 3d 1072, 1083-84, 190 Ill. Dec. 698, 622 N.E.2d 108 (1993); Davis v. Weiskopf, 108 Ill. App. 3d 505, 509, 64 Ill. Dec. 131, 439 N.E.2d 60 (1982). The complaints allege as follows. An old, underground freight tunnel system (tunnel) is located under the central business district of Chicago, commonly known as the Loop, and the Chicago River. Many buildings in the Loop are connected directly or indirectly to the tunnel. Before 1959, the tunnel was used to transport freight in the Loop. Since 1959, the City has owned the tunnel and, since the 1970s, has leased the tunnel to a number of utility and telecommunication companies to carry their service lines. The tunnel crosses under the Chicago River at different locations, including near the Kinzie Street bridge.

In May 1991, the City entered into a contract with Great Lakes, which provided that Great Lakes would remove and replace wood piling clusters at five Chicago River bridges, including the Kinzie Street bridge. The contract warned Great Lakes not to drive the pilings "at any other location than that specified by the City *** [because] even slight position changes may cause serious damage to various underground *** structures." The contract further provided that if Great Lakes failed to heed this warning, Great Lakes would be liable to repair such damages at its own expense.

By September 1991, Great Lakes informed the City that it had fully completed the work. However, Great Lakes had installed the pilings at the Kinzie Street bridge in a location other than originally designated in the contract. During pile driving at the bridge, Great Lakes caused a breach in the tunnel wall by physically breaking, weakening, or creating excessive pressure on the tunnel wall.

In January 1992, a television crew using the tunnel discovered the breach in the tunnel wall at the Kinzie Street bridge. By February 1992, the television crew notified the City of the tunnel damage. During March and early April 1992, City employees inspected the tunnel, photographed the damage, and recommended immediate repairs.

On or about April 13, 1992, the tunnel breach opened. In a sudden torrent and continuing flow, the Chicago River rushed into the tunnel and, ultimately, into buildings connected to the tunnel. Approximately 200,000 persons were evacuated from numerous Loop buildings. On April 14, the Governor of the State of Illinois declared the Loop and surrounding areas a state disaster area. The next day, the President of the United States declared the area a federal disaster area. Thousands of Loop building occupants were unable to return to their respective places of business for days or weeks thereafter while emergency repairs and cleaning took place. Class plaintiffs and Hartford sought damages for various alleged losses proximately caused by the flood, including: injury to their property; lost revenues, sales, profits, and good will; lost wages, tips, and commissions; lost inventory; and expenses incurred in obtaining alternate lodging.

Class Plaintiffs' Complaint

Class plaintiffs' complaint contains 10 counts, five of which are directed against the City. Class plaintiffs alleged that the City failed to: (1) properly contract for, administer, and supervise Great Lakes' pile driving activities; (2) exercise ordinary care to maintain, repair, and protect the tunnel both before and after the breach (but only up to the time of the actual flood); and (3) warn class plaintiffs of the dangerous condition caused by the tunnel breach when the City learned of it. Class plaintiffs allege that these acts constitute willful and wanton misconduct (count III) and negligence (count IV). Class plaintiffs also alleged that the City and Great Lakes were engaged in abnormally dangerous (count VII) and ultrahazardous (count VIII) activities-pile driving and maintaining the tunnel-and were strictly liable for any resulting damages. Class plaintiffs also alleged that they were the third-party beneficiaries of the contract between the City and Great Lakes, which both parties breached (count V). Class plaintiffs subsequently voluntarily dismissed this count.

The trial court granted the City's motion to dismiss the strict tort liability counts. The court also ruled that the Moorman doctrine (see Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69, 61 Ill. Dec. 746, 435 N.E.2d 443 (1982)) barred from recovery those plaintiffs who did not allege physical property damage, but rather only economic loss. The court also ruled that the Local Governmental and Governmental Employees Tort Immunity Act (Tort Immunity Act) (745 ILCS 10/1-101 et seq. (West 1994)) immunized much of the City's alleged negligence. As part of class plaintiffs' appeal, the trial court certified the following questions for review (155 Ill. 2d R. 308): (1) whether the City's proprietary use of the tunnel precludes immunity under the Tort Immunity Act; (2) whether the Tort Immunity Act immunizes any of the City's alleged failures to adequately contract for, supervise, or monitor the river piling work; and (3) whether the Moorman doctrine bars the claims of those plaintiffs who allege only economic loss. The court also allowed class plaintiffs to appeal (155 Ill. 2d R. 304(a)) from the dismissal of the abnormally dangerous and ultrahazardous counts.

The trial court denied the City's motion to dismiss as to the failure-to-repair and the failure-to-warn theories in the negligence count, and the willful and wanton misconduct count. The court denied the motion also as to those plaintiffs seeking recovery for perishable inventory lost as a result of interrupted utility service and for unspecified property damage. As part of the City's appeal, the trial court certified the following questions for review: (1) whether the City is not liable to class plaintiffs as a matter of law for its failure to promptly repair the tunnel or to warn class plaintiffs of the tunnel damage, because either the Tort Immunity Act immunizes the City, or the City did not owe class plaintiffs a duty to perform those acts; (2) whether there is a willful and wanton exception to the discretionary act immunity granted to the City by the Tort Immunity Act; and (3) whether the Moorman doctrine bars the claims of those plaintiffs who seek tort recovery for loss of perishable inventory and unspecified property damage.

Hartford's Complaint

Hartford is the subrogee of several additional individuals and businesses that it insures. Hartford opted out of the certified class and filed a complaint, which it subsequently amended, against the City and Great Lakes. Hartford's complaint included a strict tort liability claim based on an ultrahazardous activity theory and a nuisance claim.

The trial court granted the City's and Great Lakes' motion to dismiss these claims. The court again ruled that pile driving is not an ultrahazardous activity. The court also dismissed the nuisance claim as to Hartford's subrogors who did not incur any: (1) invasion of their property by the flood waters; and (2) property damage, but rather only an economic loss (Moorman). The court allowed Hartford to appeal immediately from the dismissal of these counts (155 Ill. 2d R. 304(a)).

We note that a federal court, in an admiralty proceeding, has stayed all flood-related litigation as to Great Lakes. Claims against Great Lakes fall within federal admiralty jurisdiction and must be pursued in federal court under the Limitation of Vessel Owner's Liability Act (46 U.S.C. § 181 et seq. (1982)). See Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 130 L. Ed. 2d 1024, 115 S. Ct. 1043 (1995).

Appellate Court

The appellate court consolidated all of the certified questions and interlocutory appeals and disposed of them in an unpublished order (134 Ill. 2d R. 23). Regarding the Tort Immunity Act, the appellate court upheld the following rulings of the trial court. The Tort Immunity Act applied to class plaintiffs' and Hartford's claims regardless of whether the City's acts were "proprietary" or "governmental." Section 3-108 of the Act immunized the City for failure to supervise or monitor Great Lakes' work. Also, section 2-201 of the Act immunized the City for its decision to replace the pilings, but did not, as a matter of law, immunize the City for a failure to repair or warn. Reversing the trial court, the appellate court held that section 2-201 immunizes the City for willful and wanton misconduct.

The appellate court upheld the trial court's rulings that the Moorman doctrine barred the claims of those plaintiffs who alleged only an economic loss, but did not bar the claims of those plaintiffs who suffered damage in the form of inventory lost due to interrupted utility service. Regarding Hartford's nuisance claim, the appellate court upheld the trial court's denial of recovery for those plaintiffs who did not suffer a physical invasion of their property by the flood waters. However, reversing the trial court, the appellate court held that the Moorman doctrine did not bar an otherwise proper nuisance claim. The appellate court also upheld the dismissal of class plaintiffs' and Hartford's abnormally dangerous or ultrahazardous activities claims. Class plaintiffs, Hartford, and the City all appeal.

ARGUMENT(S)

When ruling on a motion to dismiss, either for failure to state a cause of action (735 ILCS 5/2-615 (West 1994)) or because the claims are barred by other affirmative matter that avoids the legal effect of or defeats the claim (735 ILCS 5/2-619(a)(9) (West 1994)), the trial court must interpret all pleadings and supporting documents in the light most favorable to the nonmoving party. The court should grant the motion only if the plaintiff can prove no set of facts that would support a cause of action. On appeal, review is de novo. See Pechan, 251 Ill. App. 3d at 1083; Toombs v. City of Champaign, 245 Ill. App. 3d 580, 583, 185 Ill. Dec. 755, 615 N.E.2d 50 (1993). In the present case, the parties' contentions fall under four main headings: (1) Tort Immunity Act, (2) Moorman Doctrine, (3) Nuisance, and (4) Abnormally Dangerous or Ultrahazardous Activity.

Tort Immunity Act

Class plaintiffs contend that the appellate court erred in holding that: (1) the City's proprietary use of the tunnel does not preclude immunity under the Tort Immunity Act; (2) the Act immunizes the City from liability for its alleged failure to supervise and monitor the river piling work performed by Great Lakes; and (3) there is no willful and wanton exception to the discretionary immunity granted to the City by the Act. On cross-appeal, the City contends that the appellate court erred in holding that the Act does not immunize the City from liability for allegedly failing to promptly repair the tunnel or warn class plaintiffs of the tunnel damage.

Governmental/Proprietary Function

Class plaintiffs allege that the City was engaged in a proprietary function, as opposed to a governmental function, by leasing the tunnel to utility and telecommunication companies. Thus, according to class plaintiffs, the Tort Immunity Act does not apply to this case, and the City is not immune from liability as a matter of law.

The trial court rejected this contention, reasoning that the Act did away with the governmental/proprietary function distinction. The appellate court affirmed, relying on its decision in Corral v. Chicago Park District, 277 Ill. App. 3d 357, 213 Ill. Dec. 832, 660 N.E.2d 89 (1995). We agree with the trial and appellate courts.

Under the doctrine of sovereign or governmental immunity, a governmental unit is immune from tort liability. The doctrine originates in the common law principle that "the King can do no wrong," and the more logical and practical principle that there can be no legal right against the authority that makes the law on which the right depends. Burdinie v. Village of Glendale Heights, 139 Ill. 2d 501, 506, 152 Ill. Dec. 121, 565 N.E.2d 654 (1990) (and authorities cited therein). The doctrine of sovereign immunity runs counter to the basic concept of tort law that liability follows negligence. Molitor v. Kaneland Community Unit District No. 302, 18 Ill. 2d 11, 20, 163 N.E.2d 89 (1959); accord 18 McQuillen on Municipal Corporations § 53.02.10, at 131-32 (3d rev. ed. 1993); C. Rhyne, The Law of Local Government Operations § 32.2, at 1042 (1980).

To mitigate the harshness and injustice of the sovereign immunity doctrine, courts and state legislatures developed exceptions to the rule. A major exception that was engrafted onto the common law doctrine of sovereign immunity was the governmental/proprietary function distinction. 18 McQuillen on Municipal Corporations § 53.02.10, at 132 (3d rev. ed. 1993); C. Rhyne, The Law of Local Government Operations § 32.2, at 1042 (1980).

Under this exception to governmental immunity, when a municipality performs a governmental function, the municipality is acting as the arm or agent of the state and, thus, is immune from liability for the torts committed by its officers and employees. When the municipality performs a proprietary or corporate function, the municipality is liable for the tortious conduct of its officers and employees. Whether a governmental function exists is determined from the nature of the duty to be discharged or the act to be done. If the duty or act involves the general public benefit, rather than a corporate or business undertaking for the municipality's corporate benefit, then the function is governmental whether the duty be directly imposed on the municipality or is voluntarily assumed. Merrill v. City of Wheaton, 379 Ill. 504, 507-08, 41 N.E.2d 508 (1942); Gebhardt v. Village of LaGrange Park, 354 Ill. 234, 236, 238, 188 N.E. 372 (1933); accord 18 McQuillen on Municipal Corporations §§ 53.23, 53.29 et seq. (3d rev. ed. 1993); C. Rhyne, The Law of Local Government Operations § 32.2, at 1042 (1980).

This court conceded long ago that the governmental/proprietary function distinction is vague and difficult to apply. It is not often easy to determine in a particular case whether the activity is governmental or proprietary. Roumbos v. City of Chicago, 332 Ill. 70, 74-75, 163 N.E. 361 (1928). Further, a study of cases from other states reveals a wide, unreconcilable divergence as to what functions or activities are governmental and what are proprietary. Many states have abandoned the distinction. 18 McQuillen on Municipal Corporations § 53.24.10 (3d rev. ed. 1993); C. Rhyne, The Law of Local Government Operations § 32.2, at 1042-44 (1980).

However, as we have repeatedly noted, this court abolished sovereign immunity in 1959. Molitor, 18 Ill. 2d at 21-22. In response to Molitor, the legislature in 1965 enacted the Tort Immunity Act. Also, the 1970 Illinois Constitution abolishes the doctrine of sovereign immunity, except as the legislature may provide by statute. Ill. Const. 1970, art. XIII, § 4. The Tort Immunity Act adopted the general principle that local governmental units are liable in tort, but limited this liability with an extensive list of immunities based on specific government functions. Based on these developments, governmental units are liable in tort on the same basis as private tortfeasors unless a tort immunity statute imposes conditions upon that liability. Barnett v. Zion Park District, 171 Ill. 2d 378, 386, 216 Ill. Dec. 550, 665 N.E.2d 808 (1996); Burdinie, 139 Ill. 2d at 506-07.

We have explained that the governmental/proprietary function distinction was developed as an exception to and engrafted onto the sovereign immunity doctrine. We have noted that the sovereign immunity doctrine has been abolished and that a governmental unit is liable in tort on the same basis as a private tortfeasor absent an immunity statute. Accordingly, we hold that the governmental/proprietary function distinction does not preclude the application of the Tort Immunity Act. See Barnett, 171 Ill. 2d at 387-88; List v. O'Connor, 19 Ill. 2d 337, 340, 167 N.E.2d 188 (1960); Corral v. Chicago Park District, 277 Ill. App. 3d 357, 361-64, 213 Ill. Dec. 832, 660 N.E.2d 89 (1995); Smith v. Godin, 61 Ill. App. 3d 480, 481, 18 Ill. Dec. 754, 378 N.E.2d 218 (1978).

Failure to Supervise

Class plaintiffs contend that the City negligently failed to supervise Great Lakes' pile driving. In granting the City's motion to dismiss, the trial court reasoned that it need not determine whether the City's alleged negligence was "discretionary" or "ministerial" because the City's acts were immunized by section 3-108(a) of the Tort Immunity Act (745 ILCS 10/3-108(a) (West 1994)).

The appellate court affirmed the dismissal. In addition to relying on the plain language of section 3-108(a), the court additionally concluded that the City's supervision of Great Lakes' pile driving constituted a discretionary activity that immunized the City from liability. We agree with the appellate court.

Tort Immunity Act section 3-108(a) provides in pertinent part:

" § 3-108. (a) Except as otherwise provided by this Act *** neither a local public entity nor a public employee is liable for an injury caused by a failure to supervise an activity on or the use of any public property." 745 ILCS 10/3-108(a) (West 1994).

In interpreting this and every other section of the Act, our primary goal is to ascertain and give effect to the intent of the legislature. We seek the legislative intent primarily from the language used in the Tort Immunity Act. We evaluate the Act as a whole; we construe each provision in connection with every other section. If we can ascertain the legislative intent from the plain language of the Act itself, that intent must prevail, and we will give it effect without resort to other interpretive aids. We must not depart from the plain language of the Act by reading into it exceptions, limitations, or conditions that conflict with the express legislative intent. Barnett, 171 Ill. 2d at 388-89.

The language of section 3-108(a) is unambiguous. Therefore, as the appellate court reasoned, to override the immunity under that section, class plaintiffs must identify some other provision of the ...


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