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Guzman v. C.R. Epperson Construction

June 21, 2001

MILTON GUZMAN ET AL., APPELLEES,
v.
C.R. EPPERSON CONSTRUCTION, INC., APPELLEE (MJE CONSTRUCTION, INC., ET AL., APPELLANTS).



The opinion of the court was delivered by: Justice Freeman

Docket No. 89006-Agenda 25-September 2000.

We granted leave to appeal in this case (177 Ill. 2d R. 315(a)) in order to determine whether the third-party complaint in this action was filed within the time prescribed by law. The circuit court concluded that it was not and dismissed the third-party action. The appellate court reversed. 309 Ill. App. 3d 655. For the reasons that follow, we vacate the judgment of the appellate court, reverse the judgment of the circuit court, and remand the matter to the circuit court.

BACKGROUND

On September 25, 1992, plaintiffs in the underlying action, Milton and Donna Guzman (the Guzmans) filed their original complaint which named C.R. Epperson Construction, Inc. (Epperson), as the defendant. The Guzmans alleged that, in 1988, they entered into a contract with Epperson for the construction of a house in Bloomington, Illinois. They further alleged that Epperson breached the contract by constructing a home that contained numerous design and construction defects. The Guzmans voluntarily dismissed the suit on March 28, 1996, and refiled a new action on April 12, 1996. In the refiled pleading, the Guzmans alleged both breach of contract and breach of implied warranty of habitability stemming from damages caused by, inter alia, defects in the installation of the house's windows, roof, plumbing, flooring, and walls.

On September 4, 1996, Epperson filed its third-party complaint against MJE Construction, Inc. (MJE), Michael Hadden, then doing business as Hadden Concrete, Holland Brothers, Inc., Hardesty Heating and Ventilating, Inc. (Hardesty), and Robert Georgi, doing business as G&G Roofing (Georgi). *fn1 Epperson alleged that it entered into subcontracts with each of the third-party defendants under which the third-party defendants agreed to perform various aspects of the construction of the Guzman home. The third-party complaint sounded in breach of contract and detailed the construction defects for which each subcontractor was allegedly responsible, alleging that the residence had flooded and leaked repeatedly in 1989, 1990, and subsequent years during periods of heavy rainfall.

On February 10, 1997, Epperson amended its complaint to include express and implied indemnity claims against each third-party defendant. Epperson demanded a jury trial on all counts. Thereafter, third-party defendant Georgi sought dismissal on the grounds that the third-party action was time-barred under section 13-214 of the Code of the Civil Procedure. In support of the motion, Georgi attached a letter, dated August 15, 1996, that Epperson wrote to Georgi. The letter reads, in pertinent part, as follows:

"It is with great regret that this letter is written. In 1988, Epperson Construction built a house for Milton and Donna Guzman ***. Since that time, the owners have alleged that some of the work on the house was not quality work or done in a workman like manner. They have also alleged that some of the materials used in the construction were not `new' materials. Many of the alleged `defects' are nothing more than homeowner maintenance items.

We have tried to resolve these issues since 1990, but the owners refuse to cooperate. We have offered to do any and all work to take care of issues that relate to building the house (not maintenance) or a monetary settlement. These efforts were to no avail. The Guzman's [sic] have sued our company.

Some of the issues in the lawsuit relate to work done by your company. We have no alternative but to involve your company in the resolution of this matter. Hopefully, you understand that this was the last resort. We hope that all of the parties involved will combine forces to work together to dispel this frivolous lawsuit."

According to Georgi, the letter established that Epperson had known about the various problems at the Guzman home at least by 1990. Georgi contended that section 13-214 provides a four-year statute of limitations for such actions and that Epperson's claim had expired in 1994, some two years before Epperson filed suit.

In response, Epperson argued that it had not suffered an "injury" until the Guzmans filed suit against it in April 1996 or, at the earliest, when the Guzmans originally sued Epperson in September 1992. Epperson also noted that section 13-204 of the Code applied to its indemnity claims. Section 13-204, which was amended in 1994 and took effect on January 1, 1995, provides that no action for contribution or indemnity "may be commenced more than 2 years after the party seeking contribution or indemnity has been served with process in the underlying action or more than 2 years from the time the party *** knew or should reasonably have known of an act or omission giving rise to the action for contribution or indemnity, whichever period expires later." (Emphasis added.) 735 ILCS 5/13-204(b) (West 1996).

The circuit court granted Georgi's motion, finding that the Epperson letter established that Epperson knew of the Guzmans' complaints of construction defects by no later than 1990. The court ruled that the four-year statute of limitations contained in section 13-214, therefore, began to run in 1990 and expired in 1994. Because Epperson did not file its third-party action until 1996, the court concluded that the action was time-barred. The circuit court further found that section 13-204, as amended, did not apply to the action because section 13-214 had previously applied to the action and that section 13-214's four-year limitation period for these claims had expired prior to the effective date of the amendment.

After Georgi successfully obtained dismissal of Epperson's claims on the basis of the statute of limitations, both Hardesty and Hadden moved, pursuant to section 2-619(a)(5), to dismiss Epperson's claims against them on the same grounds. Each supported its motion with a letter from Epperson that was essentially identical to that received by Georgi. MJE, thereafter, moved for summary judgment (see 735 ILCS 5/2-1005 (West 1996)) for similar reasons and, likewise, supported its motion with the same letter. Like the Georgi letter, each of these three letters is dated August 15, 1996. The circuit court dismissed Epperson's third- party claims against Hadden and Hardesty and granted summary judgment to MJE. In so ruling, the circuit court found no just cause for delaying enforcement or appeal of all of the orders (see 155 Ill. 2d R. 304(a)).

As noted previously, the appellate court reversed the dismissal orders of the circuit court. The appellate court held that section 13-214 had no applicability to Epperson's third-party action. The court, instead, found that "no particular statute of limitations specifically applied to these claims before section 13-204 was amended." 309 Ill. App. 3d 655, 660. For that reason, the court held that section 13-204 was applicable to the claims. 309 Ill. App. 3d at 660-61. As ...


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