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04/17/97 FIREMAN'S FUND INSURANCE COMPANY v. SEC

April 17, 1997

FIREMAN'S FUND INSURANCE COMPANY, AS SUBROGEE OF NEPTUNE CONSTRUCTION COMPANY, INC., APPELLANT,
v.
SEC DONOHUE, INC., F/K/A DONOHUE & ASSOCIATES, INC., APPELLEE.



The Honorable Justice Freeman delivered the opinion of the court. Chief Justice Heiple, dissenting. Justices Harrison and Nickels join in this dissent.

The opinion of the court was delivered by: Freeman

The Honorable Justice FREEMAN delivered the opinion of the court:

The question presented for review is whether the economic loss doctrine, as enunciated by this court in Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69, 61 Ill. Dec. 746, 435 N.E.2d 443 (1982), bars a tort action against an engineer for purely economic losses. We hold that it does.

BACKGROUND

This cause is before us following a motion to dismiss pursuant to section 2-619(a)(9) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(9) (West 1994)). The motion admits all well-pled allegations in the complaint and reasonable inferences to be drawn from the facts. Mayfield v. ACME Barrel Co., 258 Ill. App. 3d 32, 34, 196 Ill. Dec. 145, 629 N.E.2d 690 (1994); Chicago Title & Trust Co. v. Weiss, 238 Ill. App. 3d 921, 924, 179 Ill. Dec. 78, 605 N.E.2d 1092 (1992).

The complaint alleges as follows. Plaintiff, Fireman's Fund Insurance Company (Fireman's), is the subrogee of Neptune Construction Company (Neptune). Neptune is a contractor in the business of constructing underground water service. Defendant, SEC Donohue, Inc., formerly known as Donohue and Associates, Inc. (Donohue), is a professional engineering firm.

In April 1989, Neptune entered into a subcontract agreement with Artfield Builders to install underground water service for an apartment complex located on East River Road between Golf and Central Roads in Des Plaines. Neptune was to tunnel horizontally from the complex, under a state tollway, and connect with water supply lines on the opposite side of the tollway. Neptune was to perform its work "in accordance with the engineering plans, specifications and general conditions prepared by: DONOHUE & ASSOCIATES, INC."

Donohue was the project engineer. Under Donohue's contract with Artfield, Donohue was to provide engineering plans for improvements that included water supply lines. In anticipation of Neptune's work, Donohue supplied drawings and plans that specified where Neptune should dig the tunnel and use an auger to bore into the water supply lines.

Donohue's drawings and plans erroneously located the site for digging and boring at a spot approximately 73 yards south of the correct location. Relying on Donohue's plans, Neptune worked at the wrong location, thereby damaging the shoulder of the tollway. The Illinois State Toll Highway Authority required Neptune to repair the tollway at a cost of $57,754.02. Neptune made a claim to its insurer, Fireman's, for this amount. Fireman's paid the claim, becoming subrogated to Neptune's claim against Donohue.

Fireman's brought a negligence action against Donohue in the circuit court of Cook County. The complaint alleged that Donohue had the duty to provide accurate information to those who would rely on it, such as Neptune; that Donohue breached that duty by "carelessly and mistakenly" locating the site for digging and boring 73 yards south of the correct location; and that Neptune's damages were proximately caused by its reliance on Donohue's erroneous work.

The trial court denied defendant's motion to dismiss pursuant to section 2-619(a)(9) of the Code of Civil Procedure (735 ILCS 5/2-619(a)(9) (West 1994)). The trial court subsequently certified the following question for interlocutory review (see 134 Ill. 2d R. 308):

"Is a professional engineer who prepares plans and specifications for a construction project in the business of supplying information to others for the guidance of the recipient in its business dealings with third parties and liable in tort for negligent misrepresentations under Moorman Manufacturing Co. v. National Tank Co., [citation][?]"

The appellate court answered the question in the negative, reversing the trial court. 281 Ill. App. 3d 789, 666 N.E.2d 881, 217 Ill. Dec. 212. The appellate court concluded that the economic loss doctrine applies to engineers in general. 281 Ill. App. 3d at 796. The appellate court also concluded that Moorman 's negligent misrepresentation exception to the economic loss doctrine ( Moorman, 91 Ill. 2d at 89) did not apply in this case. 281 Ill. App. 3d at 798. We allowed Fireman's petition for leave to appeal (155 Ill. 2d R. 315), and now affirm the appellate court.

ARGUMENT(S)

The question certified for interlocutory review presents two issues. The first issue regards the form of the question itself; the second issue regards an exception to the economic loss doctrine. Before addressing these issues, some background is in order.

At common law, purely economic losses are generally not recoverable in tort actions. In re Illinois Bell Switching Station Litigation, 161 Ill. 2d 233, 240, 204 Ill. Dec. 216, 641 N.E.2d 440 (1994). In Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69, 61 Ill. Dec. 746, 435 N.E.2d 443 (1982), this court enunciated the economic loss rule, and held that a products liability plaintiff cannot recover purely economic loss ...


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