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MARSEILLES HYDRO POWER LLC v. MARSEILLES LAND & WATER CO.

December 16, 2005.

MARSEILLES HYDRO POWER, LLC, Plaintiffs,
v.
MARSEILLES LAND AND WATER COMPANY, Defendants and Third-Party Plaintiffs, v. ILLINOIS POWER COMPANY, et al., Third-Party Defendants.



The opinion of the court was delivered by: HARRY LEINENWEBER, District Judge

MEMORANDUM OPINION AND ORDER

Third-Party Defendants (collectively, the "Defendants") Illinois Power Company ("Illinois Power") and Field Container Company, L.P. ("Field Container"), have moved jointly for summary judgment against Marseilles Land and Water Company ("MLWC") based on the applicable statute of limitations. For the reasons below, Defendants' motion is granted.

I. FACTUAL BACKGROUND

  This case has a long and complex procedural history, but the salient facts for purposes of the present motion are relatively straightforward. In February of 2000, Marseilles Hydro Power, LLC ("MHP"), owner-operator of a hydroelectric plant, filed suit to compel MLWC, owner of a waterpower canal in Marseilles, Illinois, to repair sections of the canal that supplied water used by the plant to generate electric power. MHP's claims were based upon contracts between the parties predecessors (indentures) that required MLWC to keep the canal in good repair and MHP to pay rent for water access privileges.

  MHP initially sought relief in the form of a preliminary injunction ordering MLWC to repair the deteriorating canal so that MHP could resume operations at its newly-acquired hydroelectric plant. However, shortly after the complaint was filed, a section of the canal collapsed in April of 2000. On June 15, 2000, MLWC filed a motion for leave to file counterclaims against MHP seeking damages for the collapsed canal wall (the "Retaining Wall"), which according to MLWC, was caused in part by MHP's de-watering of a section of the canal known as the North Race in March of 2000. MHP also sought leave to file third-party claims against Illinois Power, Field Container, and others, who allegedly contributed to the collapse of the Retaining Wall and were liable to MLWC. The present motion for summary judgment pertains only to MLWC's claims against third-party defendants Illinois Power and Field Container. MLWC's third-party complaint against Illinois Power consists of claims for negligence (Count III), trespass (Count IV), and nuisance (Count V). Illinois Power is engaged in the production and distribution of electrical energy by means of installed transmission power lines and poles. MLWC contends that Illinois Power's injurious conduct stems from its installation and maintenance of utility poles along the perimeter of the North Race, which contributed to the collapse of the Retaining Wall over time. Sometime prior to 1990, Illinois Power installed a series of utility poles along the northern edge of the North Race, which were tethered to secured points along the southern edge of the canal via a system of downguys and tension cables (the "Downguys"). The Downguys exerted additional pressure on the Retaining Wall, thereby weakening it. In 1994, Illinois Power installed another series of utility poles along the southern edge of the North Race. This installation process required Illinois Power to drill holes in the ground immediately adjacent to the edge of the canal, which permitted rain water periodically to seep through and caused further damage to the Retaining Wall. These acts contributed to the collapse of the Retaining Wall in April of 2000.

  MLWC's claims against Field Container consist of separate counts for negligence (Count VI) and nuisance (Count VII). Field Container owns a factory and surrounding property located along the southern edge of the North Race, in the immediate vicinity of the collapsed Retaining Wall. Part of MLWC's claims against Field Container stems from Field Container's request and authorization of Illinois Power to conduct the utility pole installation work in 1994. In addition, Field Container maintained a parking lot adjacent to the Retaining Wall and allowed vehicles to park in the area of the lot next to the edge of the Retaining Wall. Over time, the excess weight contributed to the eventual collapse of the Retaining Wall.

  On June 22, 2000, the district court presiding over this action at the time granted MLWC's motion allowing MLWC to file its counterclaims against MHP, but denied leave to file the third-party claims, and MLWC appealed. The Seventh Circuit reversed on August 27, 2002, permitting MLWC to file its third-party complaint, which it subsequently filed on March 12, 2003. Prior to the Seventh Circuit's decision, MLWC also filed a complaint against Illinois Power in Illinois state court on May 2, 2002, which MLWC then voluntarily dismissed on October 3, 2002. The basis for the present motion, which was filed by Illinois Power and joined by Field Container, is that the claims asserted against them in the third-party complaint are untimely and therefore barred by the statute of limitations.

  II. LEGAL STANDARD

  Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). A fact is "material" if it could affect the outcome of the suit under the governing law; a dispute is "genuine" where the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

  III. DISCUSSION

  Defendants assert that any purported claims against them are barred by the statute of limitations because MLWC had knowledge of the deteriorating condition of the Retaining Wall (and likely causes) at least since 1996, if not decades earlier. To that end, Defendants contend that MLWC's claims are governed by a four-year statute of limitations period, which applies to tortious conduct in the construction of improvements to real property. According to Defendants, MLWC was cognizant of the Retaining Wall damage for well-over four years prior to the filing of the third-party complaint, as evidenced by numerous letters exchanged between MLWC, Illinois Power, and Field Container (and its predecessor-in-interest) regarding the condition of the Retaining Wall. The Court must therefore determine (a) whether the four-year limitations period applies; (b) at what point in time MLWC's claims against Defendants accrued; and (c) whether MLWC brought its claims against Defendants outside the applicable limitations period.

  A. Applicable Limitations Period

  Defendants assert that the appropriate statute of limitations period for claims asserted against them is four years, as prescribed by 735 ILCS 5/13-214. That Section provides, in pertinent part:
(a) Actions based upon tort, contract or otherwise against any person for an act or omission of such person in the design, planning, supervision, observation or management of construction, or construction of an improvement to real property shall be commenced within 4 years from the time the person bringing an action, or his or her privity, knew or should reasonably have known of such act or omission.
  Illinois Power contends that the events alleged in the third-party complaint resulted from the construction of improvements to real property, namely, the installation of utility poles and guywires to support an electric power distribution system along the perimeter of the North Race.

  MLWC does not directly dispute that the installation work conducted by Illinois Power constituted an improvement. Instead, MLWC contends that Defendants' tortious acts caused a wrongful diversion of water onto its property, creating a continuing nuisance that renews with each successive injury for statute of limitations purposes. More specifically, MLWC maintains that Illinois Power's utility pole work and Field Container's parking lot operations damaged a drainage pipe, causing a "continuing ...


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