alleged that the defendants failed to maintain and allowed the roof of a building to fall into gross disrepair. Id. Plaintiffs sued defendants, including a claim for negligence. Id. Applying the Moorman doctrine, the Konig court held that the plaintiffs negligence claim could not stand because it sought recovery for purely economic losses. Id. at *5. The court reasoned that since a contract governed the parties' relationship, plaintiffs could not assert a tort cause of action. Id.
Here, Santa Fe rented land from Ruscitti and placed dormitories on that property. Like Konig, a contract governed the parties relationship regarding use and ownership of the buildings. And, like Konig, Ruscitti alleges that Santa Fe and Intermotel negligently failed to maintain and repair structural damage. This court therefore concludes that Ruscitti fails to state a claim for negligent use and repair of the dormitories because the lease agreements govern the parties relationship concerning that property.
Moorman's exceptions also fail to preserve Ruscitti's negligence claims. Throughout counts I-III, VII, and IX of Ruscitti's Third Amended Complaint, Ruscitti interjects the words "sudden," "suddenly," and "sudden occurrences." However, Ruscitti also pleads that the "sudden" occurrence happened because of Santa Fe's negligence over 15 1/2 years and Intermotel's negligence for a period of 9 1/2 years. The court cannot find that flooding occurred "suddenly" if the waterlines burst due to gradual deterioration or internal breakage over a significant period of time. See In Re Chicago Flood Litig., 680 N.E.2d at 275 (Moorman doctrine precludes tort recovery for property damage caused by gradual deterioration or other non-accidental occurrence). Therefore, since the alleged occurrence does not constitute a sudden and calamitous event, Ruscitti cannot recover damages under a tort theory.
Ruscitti attempts to escape the Moorman doctrine entirely by arguing that Moorman only applies to buyers of products. This court disagrees. The Moorman doctrine is premised on the broad theory that contract law offers the appropriate remedy for economic losses occasioned by diminished commercial expectations. In Re Chicago Flood Litig., 680 N.E.2d at 275. Here, Ruscitti's lawsuit is based solely on the diminished value of the dormitories he acquired at the end of the lease agreements. The Moorman doctrine therefore bars his negligence claims. And, contrary to Ruscitti's argument, the Moorman doctrine is not limited to buyers. See American Xronfin v. Allis-Chalmers Corp., 230 Ill. App. 3d 662, 595 N.E.2d 650, 172 Ill. Dec. 289 (Ill. App. Ct. 1992) (Moorman doctrine applied to dispute over leased equipment). Similarly, courts do not restrict Moorman's preclusive effect to products. See NBD Bank v. Krueger Ringier, Inc, 292 Ill. App. 3d 691, 1997 Ill. App. LEXIS 700, 226 Ill. Dec. 921, 686 N.E.2d 704, 1997 WL 599926, at *2-3 (Ill. App. Ct. 1997) (applying Moorman doctrine to real estate transaction). Accordingly, the court dismisses Ruscitti's negligence claims against both Santa Fe and Intermotel.
II. The Contract Claims.
In counts IV-VI, Ruscitti contends that Santa Fe breached paragraphs 2(b) and 8 of the management agreements. Basically, these two paragraphs require Santa Fe to reimburse Ruscitti for any damage to the dormitories. Santa Fe responds that Ruscitti has no standing to sue under the management agreements because Ruscitti assigned all his interests in the management agreements to Intermotel. Ruscitti insists that he has standing to sue because he is a third party beneficiary of the management agreements. Ruscitti claims that he benefits from the management agreements because he owns the dormitories. The court disagrees.
Under Illinois law, a third party may bring an action under a contract only if the third party is in privity with one of the parties to the contract, or is a direct beneficiary. Kaplan v. Shure Brothers Inc., 1996 U.S. Dist. LEXIS 10208, No. 96 C 982, 1996 WL 411448, at *5 (N.D. Ill. July 18, 1996); Altevogt v. Brinkoetter, 85 Ill. 2d 44, 421 N.E.2d 182, 186-87, 51 Ill. Dec. 674 (Ill. 1981). If the contracting parties expressed an intent to confer a benefit upon the third party, then the party is a direct beneficiary. F.W. Hempel & Co. v. Metal World, Inc., 721 F.2d 610, 613 (7th Cir. 1983); Stamp v. Inamed Corp., 777 F. Supp. 623, 625 (N.D. Ill. 1991). Express language and surrounding circumstances at the time of contracting determine whether the parties intended to directly benefit the third party. F.W. Hempel & Co., 721 F.2d at 613.
Ruscitti assigned all of his interests in the management agreements to Intermotel. (Count X, P 17.) Ruscitti memorialized this assignment not once, but twice. In the assignment contracts, all three parties expressly recognized that the management agreements only bound Santa Fe and Intermotel. The assignment contracts also state that Ruscitti assigned "all of [his] conditions and obligations in the [management agreements] including his interest to [Intermotel]." (Id.) Additionally, the agreements in which Ruscitti assigned the management agreements to Intermotel state that "[Ruscitti] agrees to sell and [Intermotel] agrees to buy all of [Ruscitti's contractual rights to operate crew [dormitories]." Based on the clear language of these two agreements, the court concludes that the parties did not intend to confer a benefit on Ruscitti. These contracts clarify that Ruscitti divested himself of any future rights under the management agreements.
The court rejects Ruscitti's argument that he is an intended beneficiary because he owned the dormitories when he assigned the management agreements to Intermotel. (Ruscitti's Resp. at 7.) The language in the lease agreements contradict this argument. The lease agreements read, in relevant part:
during any term of this lease, Lessor [Ruscitti] agrees that for all purposes said lodging [dormitories] shall be and remain personal property owned by the Lessee [Santa Fe] and shall not be considered as forming any part of the real estate comprising the Premises . . . .
During the 15 1/2 year time period, Ruscitti only owned the land that accommodated the dormitories. Accordingly, Ruscitti is not a direct third party beneficiary of the management agreements and cannot state a claim for their breach. The court therefore dismisses counts IV through VI of Ruscitti's Third Amended Complaint.
As noted, the lease agreements govern Ruscitti's contractual rights with respect to the dormitories. Although Ruscitti does not assert a cause of action for breach of the lease agreements, Santa Fe correctly points out that any such claim would also fail. (Santa Fe's Mem. at 5-6.) Santa Fe made no representation or warranties as to the condition of the dormitories at the termination of the lease agreements. The lease agreements explicitly state that:
the Lessee [Santa Fe] does not hereby make any representations or warranties to the effect that said lodging [facilities] will be placed on the Premises, nor in respect to the value, condition, or use available from said lodging modules at the time of the termination of [the leases].