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Tolan and Son, Inc. v. KLLM Architects

September 30, 1999

TOLAN AND SON, INC., AN ILLINOIS CORPORATION, PLAINTIFF-APPELLANT,
V.
KLLM ARCHITECTS, INC., LOUIS K. WALTER, JR. D/B/A LOUIS K. WALTER, JR. AND ASSOCIATES, AND LAWRENCE W. REISS, D/B/A REISS AND ASSOCIATES, DEFENDANTS-APPELLEES
(TOTAL CONCEPT LAND DESIGN, INC., AND TERRA TESTING, INC., DEFENDANTS).



The opinion of the court was delivered by: Justice Rakowski

Appeal from the Circuit Court of Cook County Honorable Richard E. Neville, Judge Presiding.

In Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69 (1982), the Illinois Supreme Court held that a plaintiff cannot recover in tort for solely economic loss, loss that is not accompanied by either personal injury or property damage. This rule is known as the economic loss doctrine. The supreme court then discussed two exceptions to the rule: where defendant commits fraud or intentional misrepresentation and where defendant, who is in the business of supplying information for the guidance of others, makes a negligent misrepresentation. In 2314 Lincoln Park West Condominium Ass'n v. Mann, Gin, Ebel & Frazier, Ltd., 136 Ill. 2d 302 (1990), and Fireman's Fund Insurance Co. v. SEC Donohue, Inc., 176 Ill. 2d 160 (1997), the supreme court held that because the focus of an engineer's or architect's work is usually tangible -- a building, a structure, or a product -- it is not in the business of providing information. The court held that any information provided is merely incidental to the finished product. Thus, the negligent misrepresentation exception to the economic loss doctrine does not generally apply to engineers and architects. In this opinion, we consider whether the rule concerning architects and engineers is absolute or whether there are situations, such as when an architect or engineer is hired solely to provide information rather than construct a building or structure, where the negligent misrepresentation exception may apply? Because we conclude that neither 2314 Lincoln Park West nor Fireman's Fund Insurance sets forth an absolute bar, there may well be situations where a plaintiff may maintain a cause of action against an architect or engineer based on the negligent misrepresentation exception to the Moorman doctrine. However, based on the facts present in the instant case, we find that the exception is not applicable to KLLM and Walter because they were not retained to provide information but, rather were retained to build a structure. With regard to defendant Reiss, we remand to the circuit court to further determine his role in the construction project.

BACKGROUND

Plaintiff, Tolan & Son, Inc. (Tolan), is a residential contractor which developed and constructed a 13-building townhome complex called Meadow Mews in Tinley Park, Illinois. In October of 1989, Tolan entered into an oral agreement with KLLM Architects, Inc. (KLLM) for the preparation of plans and designs for the complex. KLLM is an architectural firm in the business of providing plans and specifications for residential and commercial developments. At the same time, Tolan entered into an oral agreement with Total Concept Land Design (Total Concept). Total Concept was responsible for land planning services and preparing proposed layout designs, site plans, and landscaping plans. These designs were purportedly submitted to Intercon Engineering Corporation (Intercon), a civil engineer, which had provided Tolan with engineering drawings of the property. Intercon was responsible for setting the final grades for the site to accommodate KLLM's architectural designs.

In April of 1990, Tolan entered into an oral agreement with Terra Testing, Inc. (Terra), for soil engineering services, including an analysis of soil conditions for the purpose of confirming Total Concept's proposed placement of each building. In May, a Terra representative indicated that the proposed sites for several of the buildings were over peat, which was highly compressible and not suitable for supporting the buildings' foundations. Despite this information, the site plans were not revised and construction began. During July Tolan asked KLLM to recommend a geotechnical engineer to review excavation at one site. KLLM recommended Louis K. Walter, Jr. (Walter) whose business involved soil engineering and subsurface investigation services.

In the spring of 1991, Tolan, KLLM, and Total Concept discussed the idea of relocating buildings 10, 11, and 12 farther south. KLLM and Total Concept were aware that the new locations were over peat but redesigned the site plans notwithstanding. Neither KLLM nor Total Concept advised Tolan that relocation would create problems. Around the same time, Intercon had numerous contacts with KLLM and Total Concept concerning the movement of the buildings, indicating that relocation was not advisable because of the peat below. Apparently these concerns went unheeded and the plans were not revised to accommodate or eliminate them.

In July of 1991, Walter examined the soil and fill at building 9. He made certain recommendations pertaining to the fill and grade to be used in setting the foundations and the necessary support system. It was at this time that Walter first mentioned the use of caissons. KLLM revised the plans according to Walter's recommendations but did not incorporate the caissons. Walter examined the soil beneath buildings 10, 11, and 12 in March of 1992, making the same recommendations he made with respect to building 9.

During construction in the spring of 1992, Tolan discovered cracks in some of the foundations and contacted KLLM. In May, an employee from KLLM visited building 10. Following this visit, KLLM forwarded a letter to Tolan stating that a structural engineer on its behalf, Lawrence Reiss (Reiss), recommended additional reinforcement bars in the foundation walls of buildings 11 and 12. In June KLLM, Reiss, and Walter inspected building 11 to observe cracks in its foundation. At this time, according to Tolan's complaint, all three defendants stated the cracks were due to concrete being poured too wet and high stress areas in the intersections of the foundation walls. According to them, the cracks did not affect the structural integrity of the building. In July, Walter conducted soil boring tests at the proposed site of building 12 for the purpose of making recommendations regarding the design and construction of its foundation. Although Walter recommended the use of caissons, he did state that, alternatively, building 12 could be completed in the same manner as buildings 9, 10, and 11. The foundation in building 12 was not altered and caissons were not added. In December, Walter inspected cracks in building 12. He stated that some of the cracks were due to high stress areas and were typical. Other cracks were due to normal shrinkage. He stated these cracks did not impair the structural integrity. In March of 1993, Walter again inspected building 11. He stated that the cracks were due to insufficient frost protection.

According to Tolan, at no time did KLLM, Walter, or Reiss advise it that any of the cracks were the result of instability in the soil structure, although each of them knew of the peat underneath.

In April of 1993, Tolan contacted Dave Pate & Sons Construction, a concrete repair company, to evaluate the cracks. According to Pate, the cracks were the result of inadequate bearing capacity of the soil below the foundations. Frank A. Guisinder, Jr., a structural engineer, confirmed this causation opinion, opining that the cracks were due to instability of the supporting soil stratum. Thereafter, Tolan remediated the property at a cost in excess of $725,000.

Tolan then filed the instant suit. Counts I though IV are breach of contract claims against KLLM, Total Concept, Walter, and Terra Testing, respectively. These counts are not before this court. Counts V through VIII are negligent misrepresentation claims against Reiss, KLLM, KLLM as principal of Reiss, and Walter, alleging negligent misrepresentations in the evaluation and supplying of information regarding the foundational cracks. In these counts, Tolan seeks solely economic loss damages for remediation of the foundations. Defendants filed motions to dismiss pursuant to section 2-619 of the Code of Civil Procedure (735 ILCS 5/2-619 (West 1996)), which the trial court granted. We have jurisdictions pursuant to Supreme Court Rule 304(a) (155. Ill. 2d. R. 304(a)).

ISSUE

The sole question on appeal is whether the trial court erred in granting each of the defendants' motion to dismiss. The trial court granted the motions on the basis that Tolan seeks purely economic losses and, thus, the Moorman doctrine (Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69 (1982)), bars its claims against each defendant. Further, it concluded that the negligent misrepresentation exception to the Moorman doctrine did not apply because defendants are architects and engineers and are not in the business of supplying information for the guidance of others.

STANDARD OF REVIEW

"The purpose of a motion to dismiss under section 2-619 *** is to afford litigants a means to dispose of issues of law and easily proved issues of fact at the outset of a case, reserving disputed questions of fact for a jury trial." Zedella v. Gibson, 165 Ill. 2d 181, 185 (1995). All well-pleaded facts in the complaint are admitted, but Conclusions of law and fact unsupported by specific allegations are not. Draper v. Frontier Insurance Co., 265 Ill. App. 3d 739, 742 (1994). The trial court must construe the motion and supporting documents in the light most favorable to the non-movant. Draper, 265 Ill. App. 3d at 742. "Section 2-619(a)(9) allows dismissal when 'the claim asserted *** is barred by other affirmative matter avoiding the legal effect of or defeating the claim.' " Zedella, 165 Ill. 2d at 185, quoting Ill. Rev. Stat. 1991, ch. 110, para. 2-619(a). "The question on appeal is 'whether the existence of a genuine issue of material fact should have precluded the dismissal or, absent such an issue of fact, whether dismissal is proper as a matter of law.' " Zedella, 165 Ill. 2d at 185-86, quoting Kedzie & 103rd Currency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116-17 (1993). In reviewing a section 2-619 dismissal on ...


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