need to consider defendant's derivative arguments regarding the dismissal of Count Eight, which seeks a declaratory judgment as to liability pursuant to CERCLA.
State Law Claims
The court now turns to plaintiff's state law claims. Tang argues that all of plaintiff's state law claims are barred by the applicable statutes of limitations and, further, that each fails to state a claim. The court will consider each of plaintiff's state claims in turn.
Counts I & II: Breach of Contract and Indemnification
Under Illinois law, plaintiff's breach of contract and indemnification claims are subject to the ten-year statute of limitations on written instruments. 735 ILCS § 5/13-206 (West 1982). Illinois follows the "discovery rule" to determine when a period of limitations begins. Hermitage Corp. v. Contractors Adjustment Co., 166 Ill. 2d 72, 651 N.E.2d 1132, 1139, 209 Ill. Dec. 684, 691 (Ill. 1995); Vogt v. Bartelsmeyer, 264 Ill. App. 3d 165, 636 N.E.2d 1185, 1189, 201 Ill. Dec. 753, 757 (Ill. App Ct. 1994). Under the discovery rule, the cause of action accrues when plaintiff "became possessed of sufficient information concerning its injury to put a reasonable person on inquiry to determine whether actionable conduct is involved." Vector-Springfield Properties, LTD v. Central Illinois Light Co., 108 F.3d 806, 809 (7th Cir. 1997). Thus, the limitations period commences when plaintiff knew or should have known of the defective condition of the property and that it resulted from wrongful conduct. G.J. Leasing, 825 F. Supp. at 1369. Further, where only one conclusion can be drawn from undisputed facts, it is for the court to decide when the plaintiff knew or reasonably should have known about his injury. Witherell v. Weimer, 85 Ill. 2d 146, 421 N.E.2d 869, 874, 52 Ill. Dec. 6, 11 (Ill. 1981).
This suit was filed on January 31, 1997. Defendant, however, argues that the amended complaint "flat out admits that plaintiff was aware of the conditions giving rise to its state law claims" more than ten years prior to this date. Def.'s Resp. at 9. On October 23, 1986, Soo Line sent a letter to Cometco requesting it to cleanup the "contaminated media associated with and caused by the scrap yard operations" pursuant to its lease obligations. Compl., P 15. The letter, which is attached to the complaint, and, therefore, can be considered on a motion to dismiss, Venture Assoc. Corp. v. Zenith Data Sys. Corp., 987 F.2d 429, 431-32 (7th Cir. 1993), further notes "that these kinds of things attract the unfavorable attention of local, state, and federal government authorities." Defendant argues that this letter demonstrates that plaintiff had notice that the property was wrongfully polluted prior to January 31, 1987.
In its response, plaintiff does not dispute the fact that it was aware that the property was polluted when it wrote the letter to Cometco. Instead, plaintiff argues that Tang's dumping of toxic substances created continuous injury to its property, thereby postponing the commencement of the statutes of limitations. Where a tort involves continuing or repeated conduct, "the limitation period does not begin until the date of the last injury or when the tortious acts cease." Johnson v. Tipton, 103 Ill. App. 3d 291, 431 N.E.2d 464, 473, 59 Ill. Dec. 179, 188 (Ill. App. Ct. 1982). Thus, the issue is whether the continuing tort rule should be applied to toll the statute of limitations on plaintiff's claims.
A continuing tort "is occasioned by continuing unlawful acts and conduct." Hyon Waste Management Serv., Inc. v. City of Chicago, 214 Ill. App. 3d 757, 574 N.E.2d 129, 132, 158 Ill. Dec. 335, 338 (Ill. App. Ct. 1991). Illinois courts generally apply the continuing tort rule to nuisance and trespass cases. See e.g., Meyers v. Kissner, 149 Ill. 2d 1, 594 N.E.2d 336, 171 Ill. Dec. 484 (Ill. 1992) (uninterrupted flooding of downstream landowner by upstream landowner); Gass v. Metro East Sanitary District, 186 Ill. App. 3d 1077, 542 N.E.2d 1229, 134 Ill. Dec. 722 (Ill. App. Ct. 1989) (recurrent flooding of plaintiff's land). However, a continuing tort is distinguished from a continuing injury, or "continuing ill effects from an initial violation." Hyon Waste Management, 574 N.E.2d at 132, 158 Ill. Dec. at 338. In the case of a continuing injury, plaintiff's cause of action accrues when the effects of the injury first become known to the property owner, notwithstanding the fact that these effects are continuing. Powell v. City of Danville, 253 Ill. App. 3d 667, 625 N.E.2d 830, 831, 192 Ill. Dec. 675, 676 (Ill. App. Ct. 1993); see also Austin v. House of Vision, 243 N.E.2d 297, 101 Ill. App. 2d 251, 255 (Ill. App. Ct. 1968) ("where there is but one overt act from which subsequent damages may flow, it is held that the statute begins to run on the date the defendant invaded the plaintiff's interest and inflicted injury, and this is so despite the continuing nature" of the injury).
The case of Powell v. City of Danville is particularly instructive. In that case, the operator of a municipal landfill allegedly dumped toxic waste into a landfill. 625 N.E.2d at 830, 192 Ill. Dec. at 675. However, such tortious activity ceased when the landfill was returned to the municipality's control. Id. Since the tortious activity ceased on a specific date, the court did not apply the continuing tort theory. To do so, the court reasoned, would be "to confuse the concept of a continuing tort with that of a continuing injury." 625 N.E.2d at 831, 192 Ill. Dec. at 670.
Similarly, plaintiff's allegations describe continuing injury, not a continuing pattern of tortious activity. Tang vacated the property when its lease ended on November 3, 1982. Consequently, although the effects from Tang's violations may be persisting, any tortious activities by Tang ended in 1982. Therefore, the continuing tort theory is inapplicable here, and the cause of action accrues when plaintiff knew or should have known of its injuries and that actionable conduct was involved. Id.
Applying the discovery rule, it is apparent that Soo Line was aware of its injuries and that they were wrongfully caused more than ten years ago. First, as previously mentioned, plaintiff does not dispute, in its response brief, that it was on notice that the property was polluted and that such pollution was wrongfully caused when it demanded that Cometco cleanup the Site on October 23, 1986. The October 23 letter disclosed plaintiff's knowledge of pollution on the Site and that it was wrongfully caused.
The only reasonable inference that can be drawn from these facts is that plaintiff possessed enough information about its injury at this point, even if it did not actually know the extent of the contamination on the Site, to investigate whether there was actionable conduct involved and, thereby, trigger the limitations period. As the Illinois Supreme Court pointed out, "once it reasonably appears that an injury was wrongfully caused, the party may not slumber on his rights." Nolan v. Johns-Manville Asbestos et. al., 85 Ill. 2d 161, 421 N.E.2d 864, 868, 52 Ill. Dec. 1, 5 (Ill. 1981); see also Knox College v. Celotex Corp., 88 Ill. 2d 407, 430 N.E.2d 976, 980, 58 Ill. Dec. 725, 729 (Ill. 1982) ("At some point the injured person becomes possessed of sufficient information concerning his injury and its cause to put a reasonable person on inquiry to determine whether actionable conduct is involved."); Axia Inc. v. I.C. Harbour Constr. Co., 150 Ill. App. 3d 645, 501 N.E.2d 1339, 1342, 103 Ill. Dec. 801, 804 (Ill. App. Ct. 1986) (holding that the statute of limitations began to run when owner notified contractor of water leakage problem, indicating that it possessed requisite amount of information necessary to make further inquiry as to whether conduct was actionable). Therefore, plaintiff's breach of contract and indemnification claims are barred by the statute of limitations.
Count IX: Negligence & Negligence Per Se
Plaintiff's negligence claim similarly runs afoul of the statute of limitations. Under Illinois law, actions to recover damage to real property must commence within five years from when the cause of action accrues. 735 ILCS § 5/13-205 (West 1982). Applying the discovery rule to determine when the cause of action accrued, it is clear that plaintiff knew of the injury to its property more than five years before filing suit. In fact, in 1987, Soo Line retained an engineering firm to analyze the contamination of the Site and demanded that Cometco indemnify it for the costs of the cleanup. Thus, Count IX of the Complaint is dismissed.
Count X: Illinois Joint Contribution Tortfeaser Act
In Count X, plaintiff asserts a claim for contribution under the Illinois Joint Tortfeaser Contribution Act ("Contribution Act"), 740 ILCS 100/0.01 et seq. The right of contribution exists under the Act "where two or more persons are subject to liability in tort arising out of the same injury" and one tortfeasor "has paid more than his pro rata share of liability." Id. at § 100/2(a).
The court first turns to defendant's argument that plaintiff's contribution claim is barred by the statute of limitations. The statute of limitations for claims under the Contribution Act is two years. 735 ILCS § 5/13-204 (West 1996). Although the right of contribution arises in inchoate form at the time of plaintiff's injury, the cause of action accrues for purposes of the statute of limitations when payment is made or suit is brought. Hahn v. Norfolk and Western Ry. Co., et. al., 241 Ill. App. 3d 97, 608 N.E.2d 683, 686, 181 Ill. Dec. 610, 613 (Ill. App. Ct. 1993); Caballero v. Rockford Punch Press & Mfg. Co., Inc., 244 Ill. App. 3d 333, 614 N.E.2d 362, 365, 185 Ill. Dec. 228, 231 (Ill. App. Ct. 1993).
Here, the complaint alleges that Soo Line has made two different payments. First, from Spring, 1987 to August 10, 1996, Soo Line paid $ 200,000 to environmental engineering firms to perform response action activities. Compl. P 21. Second, on August 10, 1996, Soo Line deposited $ 2.1 million in an environmental escrow for cleanup of the Site. Compl. P 24. Since this action was commenced on January 31, 1997, the payments made by Soo Line after January 31, 1995 are not time-barred. Consequently, although some of the payments Soo Line has alleged in the complaint are stale, such as portions of the $ 200,000 paid to environmental engineering firms, Soo Line's payments to Metra survive. Thus, Soo Line's claim for contribution of payments made after January 31, 1995 is not barred by the statute of limitations.
Next, defendant argues that plaintiff's contribution claim is deficient because plaintiff fails to allege that it is jointly liable in tort. However, in Illinois, "there need not be actual tort liability in order to state a cause of action for contribution." People v. Brockman, 143 Ill. 2d 351, 574 N.E.2d 626, 634, 158 Ill. Dec. 513, 521 (Ill. 1991). In order for persons to be "subject to liability" under the Contribution Act, the party seeking contribution must "potentially [be] capable of being held liable in a court of law or equity." Id.; see also Warner/Elektra/Atlantic Corp. v. County of Dupage, 771 F. Supp. 911, 922-23 (N.D. Ill. 1991) (only potential, not actual liability is required for claim under Contribution Act); Doyle v. Rhodes, 101 Ill. 2d 1, 461 N.E.2d 382, 387, 77 Ill. Dec. 759 (Ill. 1984) (even where defendant is immune from tort liability, potential tort liability is present for the purposes of the Contribution Act until that defense is established). Soo Line's ownership of the polluted Site creates the potential for liability in tort, and, thus, is the proper predicate for a contribution claim.
Defendant further contends that plaintiff's claim is barred by the Illinois economic loss doctrine enunciated in Moorman Mfg. Co. v. National Tank Co., 435 N.E.2d 443, 449-450, 91 Ill. 2d 69, 84-85, 61 Ill. Dec. 746 (Ill. 1982). Under the Moorman doctrine, plaintiff may not recover in tort for pure economic losses, injury to person or property is required. In Moorman, the court defined "economic loss" as "damages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits--without any claim of personal injury or damage to other property." Id. The doctrine is "premised upon the theory that tort law affords a remedy for losses occasioned by personal injuries or damage to one's property, but contract law offers the appropriate remedy for economic losses occasioned by diminished commercial expectations." Ruscitti v. Atchison, Topeka, & Santa Fe Ry. Co., 987 F. Supp. 1039, 1997 U.S. Dist. LEXIS 19201, 1997 WL 776346, at *4 (N.D. Ill. 1997).
First, it does not appear that Moorman is applicable to the present case. Although the recovery of solely economic losses "due to defeated expectations of a commercial action" are precluded in a tort action, a tort action is proper when "harm above and beyond disappointed expectations" of a contract are shown. City of Oakbrook Terrace v. Hinsdale Sanitary Dist., 172 Ill. App. 3d 653, 527 N.E.2d 70, 74, 122 Ill. Dec. 698, 702 (Ill. App. Ct. 1988). Viewing the allegations of the complaint in the light most favorable to plaintiff, the harm Soo Line has suffered is above and beyond the expectations of its lease contract with Tang.
Moreover, the pleadings sufficiently allege damage to property to overcome the Moorman doctrine. Although it appears that the bulk of Soo Line's damages are in the nature of economic losses, the complaint does allege damage to the Site and properties adjacent to the railroad yard. In paragraph 22, Soo Line pleads that "the hazardous substances were also found in the soils and groundwater located on properties adjacent to the Site, with the Site as the probable and likely source." These allegations are sufficient to withstand a motion to dismiss. See In re Chicago Flood Litigation, 1993 U.S. Dist. LEXIS 9872, No. 93 C 1214, 1993 WL 278553, at *12 (N.D. Ill. July 20, 1993).
Finally, defendant urges the court to dismiss plaintiff's claim because plaintiff fails to allege costs in excess of its own equitable share of liability. In the complaint, Soo Line alleges that it could pay out response costs is excess of $ 2.5 million. Compl. PP 57. Further, Soo Line pleads that it has "advanced more than its equitable share" of the costs related to the cleanup. These allegations are sufficient to state a claim under the Contribution Act. See Victory Mem'l. Hosp. Assoc. v. Schmidt, Garden & Erickson, 158 Ill. App. 3d 931, 511 N.E.2d 953, 956-57, 110 Ill. Dec. 776, 778-780 (party must allege and demonstrate at trial the specific dollar amount paid in excess of equitable share of joint liability to establish a right of contribution). Contrary to defendant's contentions, whether the amounts paid by plaintiff were necessary to satisfy its liability and whether plaintiff paid more than its fair share of the joint liability are questions to be decided by the trier of fact. Therefore, the court concludes that plaintiff's Contribution Act claim is sufficient to survive a motion to dismiss.
In conclusion, defendant's motion to dismiss is granted in part and dismissed in part. Defendant's motion is denied as to Counts VII, VIII and X. Count VI is dismissed without prejudice. Plaintiff has until March 27, 1998 to amend Count VI. Counts I, II, and IX of the amended complaint are dismissed.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Dated: March 13, 1998
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