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Cincinnati Insurance Co. v. Tri-State Fire Protection, Inc.

United States District Court, S.D. Illinois

July 23, 2014

CINCINNATI INSURANCE CO., as subrogee of Richland Memorial Hospital, Inc. Plaintiff,


J. PHIL GILBERT, District Judge.

This matter comes before the Court on the motion to dismiss filed by defendant Tri-State Fire Protection, Inc. ("Tri-State"). (Doc. 14). Plaintiff Cincinnati Insurance Co. has responded to the motion. (Doc. 19). For the following reasons, the Court will deny Defendant's motion to dismiss.

I. Standard for Dismissal

When determining whether a complaint is sufficiently pled to survive a Rule 12(b)(6) motion to dismiss, the court must "construe it in the light most favorable to the nonmoving party, accept well-pleaded facts as true, and draw all inferences in [the non-movants favor]." Reger Dev., LLC v. National City Bank , 592 F.3d 759, 763 (7th Cir. 2010). A well-pleaded complaint "must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(citing Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570 (2007)). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. at 556. Such a standard does not require a demonstration that the alleged action probably occurred, but it does require more than a "sheer possibility" that the defendant acted unlawfully. Ashcroft , 556 U.S. at 678. A plaintiff must provide "only enough detail to give the defendant notice of what the claim is and the grounds upon which it rests, and through his allegations show that it is plausible, rather than merely speculative, that he is entitled to relief." Reger , 592 F.3d at 764 (citing Tamayo v. Blagojevich , 526 F.3d 1074, 1083 (7th Cir. 2008).

II. Facts and Procedural History

The facts, taken from Cincinnati's complaint, and the reasonable inferences that can be drawn from them are as follows. Cincinnati is the insurer and subrogee of Richland Memorial Hospital, Inc., based in Olney, Illinois. (Doc. 2). On March 13, 2009, Richland entered into a written contract with Tri-State to repair and modify the fire suppression system at the hospital. (Doc. 2-1). The agreement required Tri-State complete the work in accordance with National Fire Protection Association 13 ( Standard for the Installation of Sprinkler Systems (2013)), state and local codes, and all specifications required by Richland. Id. The contract itself called for an extension of the existing fire sprinkler system. (Doc. 2-1). The existing system was also to be disconnected and reconnected to the new sprinkler piping areas. Id. Further, the system was to include black steel pipes for the exposed areas, along with pendent sprinklers for areas with finished ceilings and brass upright sprinklers for all exposed areas. Id. In sum, the new sprinkler system was to cover a single floor consisting of 38, 376 square feet. Id.

The repairs and modifications began on October 20, 2009. (Doc. 2). During Tri-State's repairs and modifications one evening, "a fitting on the system failed, causing gallons of water to escape into the subject building and damage the structure, and personal property kept therein." Id. Initially, Richland did not discover the cause of the damage. Id . Indeed, it was only after an investigation that Cincinnati discovered that the pipe fitting failed due to Tri-State's work. Id . After paying for the damage, Cincinnati seeks judgment for $293, 246.35 it paid for repairs or replacements of the damaged or destroyed property, along with a deductible loss suffered by Richland for $2, 500. Id.

Plaintiff filed this case against Tri-State in federal court alleging: negligence (Count I), breach of contract (Count II), and breach of express warranty (Count III). (Doc. 2). Plaintiff asserts diversity jurisdiction under 28 U.S.C. ยง 1332 (a). (Doc. 2). Thereafter, Defendant filed the instant motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). (Doc. 15). Tri-state claims that the negligence, breach of contract, and breach of express warranty claims fail to state a claim for which relief can be granted because the claims are barred by the statute of limitations. (Doc. 15).

III. Analysis

In their motion to dismiss, Tri-State argues the Cincinnati claims are barred because the initial agreement between them constituted an "improvement to real property." (Doc. 15). If Tri-State's work was an improvement to real property 735 ILCS 5/13-214(a) governs, and Cincinnati's claims are barred. On the other hand, Cincinnati argues that Tri-State's work was merely repair and replacement of the previous system and governed by a five-year period for negligence and breaches of an implied warranty (735 ILCS 5/13-205) or a 10-year period for breaches of written contracts (735 ILCS 5/13-206) allowing for a later filing deadline. (Doc. 19).

a. For the purposes of this motion the agreement entered into between Richland Memorial Hospital and Tri-State did not constitute an "improvement to real property" as understood in 735 ILCS 5/13-214(a).

The language of 735 ILCS 5/13-214 (a) prescribes an "action based upon tort, contract or otherwise against any person for an act or omission of such person in the... construction of an improvement to real property shall be commenced within 4 years from the time the person bringing an action knew or should reasonably have known of such act or admission." "Whether an item constitutes an improvement to real property is a question of law. Its resolution, however, is grounded in fact." Ambrosia Land Investments, LLC v. Peabody Coal Co., 521 F.2d 778, 781 (7th Cir. 2008) (citing St. Louis v. Rockwell Graphic Sys., Inc., 605 N.E.2d 555 (Ill. 1992)).

An "improvement" is "a valuable addition made to property (usually real estate) or an amelioration in its condition, amounting to more than mere repairs or replacement, costing labor or capital, and intended to enhance its value, beauty or utility or to adapt it for new or further purposes. Generally, buildings." Ambroasia , 521 F.2d at 781-82 (citing Black's Law Dictionary 682 (5th ed. 1979)).

In St. Louis, the Supreme Court of Illinois utilized four factors to determine what constitutes an "improvement to real property." Known as the St. Louis factors, these factors included (1) whether the addition was meant to be permanent or temporary; (2) whether it became an integral component of the overall system; (3) whether the value of the property was ...

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