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Commercial Union v. City of Chicago

September 30, 1999

IN RE CHICAGO FLOOD LITIGATION (COMMERCIAL UNION ET AL.,
PLAINTIFFS-APPELLANTS,
V.
CITY OF CHICAGO,
DEFENDANT-APPELLEE).



The opinion of the court was delivered by: Justice Rakowski

Appeal from the Circuit Court of Cook County. Honorable Donald J. O'Brien, Jr. Judge Presiding.

This appeal involves the liability of defendant, the City of Chicago (City), for damages sustained by various business and building owners as well as individuals as the result of what has been called "the Great Chicago Flood." The plaintiffs-appellants are Commercial Union Assurance Company and other insurers of Great Lakes Dredge & Dock Co. (collectively Commercial Union"), which assert claims as assignees, certain plaintiffs who suffered property damage (class plaintiffs), and Mary Sims, who suffered personal injuries.

Pursuant to a series of motions, the trial court determined that plaintiffs failed to allege causes of actions that would invoke application of admiralty law. The trial court held that admiralty law could not apply because the City's alleged negligence as well as the resulting damages occurred on land, not on navigable water, and because the City's alleged tortious activity was not sufficiently related to traditional maritime activity. The trial court also held that, even if Commercial Union had alleged a cause of action sounding in admiralty law, it would not be able to maintain its action against the City as an assignee of some of the original plaintiffs' claims. The trial court reasoned that, because Commercial Union was an insurer of Great Lakes, the City's co-tortfeasor, an action by Commercial Union against the City would be the equivalent to a contribution action. The trial court concluded that this would offend the policy in admiralty law of holding each tortfeasor to a proportionate share of liability. *fn1 Thus, the effect of the trial court's decision was that, if plaintiffs were to sue the City, they would have to do so under Illinois law.

We disagree with the trial court's Conclusions of law. First, we believe the fact that the City's alleged negligent acts and resulting damage occurred on land does not prevent application of admiralty law where a vessel caused the damage on land and the City's alleged negligence took effect on navigable water. We also believe the activity the City was engaged in at the time of the incident was substantially connected to traditional maritime activity. As such, we conclude that the alleged causes of actions are governed by admiralty law. Accordingly, any state law that would interfere with the uniform application of admiralty law is preempted. Further, we find that Commercial Union may sue the City as an assignee of the original plaintiffs' claims. We conclude that, by allowing Commercial Union to sue the City and recover damages in accordance with longstanding admiralty principles, Commercial Union and the City will only be responsible for their own proportionate share of liability. Therefore, we reverse and remand.

I. PLAINTIFFS' ADMIRALTY TORT ALLEGATIONS

The following summary of facts and allegations was gleaned from Commercial Union's and class plaintiffs' complaints. Additionally, class plaintiffs' brief, to which Sims subscribes, joins and adopts all issues regarding admiralty jurisdiction that are discussed in Commercial Union's brief. Further, collective reference to Commercial Union, class plaintiffs, and Sims will be as "plaintiffs."

At the beginning of the twentieth century, Chicago constructed a subterranean freight tunnel system throughout the downtown area of the City. This tunnel system was mainly used for delivering coal to the sub-basements of various buildings. Although this system was decommissioned in the 1950s, in more recent years, the City has allowed various utilities to use the system. Specifically, the City has leased access to entities such as cable television, fiber-optic, and telecommunication companies. This allows the companies to provide various buildings with their services through the convenient access provided by the tunnel system. Such leases provide the City with an estimated $1 million in annual revenue.

About May of 1991, the City contracted with Great Lakes Dredge & Dock Company (Great Lakes) to replace timber pilings clustered around the piers of several bridges spanning the Chicago River, a navigable waterway. These pilings, or "dolphins," are designed to prevent ships from running into the piers. Because the dolphins are City property, it is the City's responsibility to maintain, repair, and replace them.

The contract between the City and Great Lakes required Great Lakes to furnish the necessary equipment for the job, including barges and tugs. The contract specifications included drawings by the City's engineers showing the location of the new dolphin locations at each bridge site. The contract warned Great Lakes that if even slight changes were made in the positioning of the pilings, underground structures could be damaged. Plaintiffs allege the contract for the replacement of the dolphins along the Chicago River was maritime in nature and one of its principal aims was the continued safe and uninterrupted navigational passage of vessels on the river.

A portion of the underground tunnel system ran below the Chicago River under the Kinzie Street bridge. Plaintiffs allege that the City knew of its existence, as it maintained maps showing the location of the tunnel as well as the other tunnels. The City also knew that the same tunnel was connected to the basements and sub-basements of a number of downtown office buildings.

The complaint further alleged that the City failed to follow prescribed methods and procedures requiring the City to disclose the location of the tunnel to Great Lakes. Specifically, plaintiffs charge that the City failed to comply with, inter alia, the Illinois Underground Utility Facilities Damage Prevention Act (220 ILCS 50/10 (West 1998)), the City's own printed form entitled "Check List for Field Engineer's Review of New Projects," various sections of the Municipal Code of Chicago, prescribed procedures provided by the City's Board of Underground, as well as the City's "Administrative Procedure for Resident Architects/Engineers." Adherence to these procedural safeguards allegedly would have led to the discovery of the tunnel under the Kinzie bridge and the necessary disclosure of that information to Great Lakes. Plaintiffs further allege the City admitted that it did not investigate the presence and location of the tunnel and the effect of its presence on the project prior to or during Great Lake's execution of the contract; nor did the City apprise Great Lakes of the Kinzie tunnel's existence either in the plans, specifications, drawings, or otherwise.

Great Lakes used two barges and a tug to perform the work. One barge carried pilings while the other carried a crane that pulled out the old pilings and drove the new pilings into the river bottom. During the course of the project, Great Lakes requested permission to change the location of the new pile clusters on the south side of the Kinzie Street bridge. Evidently, Great Lakes made the request to ensure that the bridge house would not be damaged during installation of the pilings and to ensure that the pilings would not be located inside the Chicago River's channel.

Although the City approved the modification to the plans and specifications for the location of that particular dolphin, plaintiffs allege that the City failed to follow the contract's provisions requiring any deviations from the specifications to be approved in writing. Instead, both the City's project manager and resident engineer orally approved the requested variance. The City also failed to prepare revised drawings pursuant to the Administrative Procedures for Resident Architects/Engineers and failed to have them reviewed by the resident engineer and approved by the project manager. It is alleged that, had these procedures been followed, a survey would have been performed of the underground structures near the new dolphin location thereby revealing the tunnel. Moreover, plaintiffs allege that the City admittedly failed to follow prescribed methods for inspecting and monitoring the work on the dolphin project, which were in place "to insure contract compliance."

Following the completion of Great Lakes' work and the City's discovery of the tunnel's breach, the City allegedly failed to follow prescribed methods of repairing the tunnel. Plaintiffs contend that, even after 12 inches of water had been discovered in the tunnel and investigation of the damage revealed a disaster waiting to happen, the City failed to follow statutory as well as City procedures for addressing emergency situations. These provisions would have authorized the City and its officials to circumvent typical public bidding processes in order to secure immediate repair work on the tunnel. However, the City failed to follow these emergency procedures and failed to repair the breach immediately, even though the City had a predesigned, standard bulkhead which it used for such circumstances. On April 13, approximately two months after the City was placed on notice of the tunnel's condition and need for repair, the tunnel wall collapsed, causing river water to rush into many sub-basements in downtown Chicago without any warning from the City.

II. PROCEDURAL HISTORY

On January 13, 1998, the circuit court denied with prejudice Commercial Union's motion for leave to file an amended complaint seeking to hold the City liable in admiralty for its alleged role in causing the flood. On June 16, 1998, the court dismissed Commercial Union's original complaint with prejudice, thus eliminating all of Commercial Union's claims against the City. On June 17, 1998, the circuit court dismissed with prejudice all of the admiralty claims asserted by class plaintiffs in their second amended consolidated class action complaint as well as Sims' admiralty claims contained in a separate complaint. We have jurisdiction pursuant to Supreme Court Rule 304(a). *fn2 155 Ill. 2d R. 304(a).

III. STANDARD OF REVIEW

When considering a motion to dismiss pursuant to section 2-615 of the Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West 1998)) or a denial of a motion for leave to file an amended complaint, the court must interpret all well-pled allegations and supporting documents in the light most favorable to the nonmoving party. In re Chicago Flood Litigation, 176 Ill. 2d 179, 189 (1997). Only where the plaintiffs fail to allege facts supporting a cause of action should the court grant the motion to dismiss. In re Chicago Flood Litigation, 176 Ill. 2d at 189. Our review of the trial court's determination of a motion to dismiss is de novo. In re Chicago Flood Litigation, 176 Ill. 2d at 189. Likewise, we review de novo the trial court's determination of whether substantive admiralty law applies to the instant case. Alderman v. Pacific Northern Victor, Inc., 95 F.3d 1061, 1063 (1996).

IV. RELATED PRECEDENT FROM THE UNITED STATES SUPREME COURT

Certain claims arising from the Great Chicago Flood in 1992 have been reviewed by the Illinois Supreme Court in In re Chicago Flood Litigation, 176 Ill. 2d 179, and the United States Supreme Court in Jerome B. Grubart, Inc. v. Great Lakes Dredge & Dock Co., 513 U.S. 527, 130 L. Ed. 2d 1024, 115 S. Ct. 1043 (1995). Grubart involved determination of whether claims against the City's co-tortfeasor, ...


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