Split Over Construction Statute of Repose

Recently, one panel of the 1st District Appellate Court disagreed with the holding of another 1st District panel as to the scope of the so-called construction statute of repose found in section 13-214(b) of the Code of Civil Procedure, Compare Ryan v. Commonwealth Edison Co., 2008 WL 901199 (1st Dist. March 28, 2008), with CITGO Petroleum Corp. v. McDermott Int’l Inc., 368 Ill.App.3d 603 (2006).

The relevant portion of section 130214(b) states as follows:

“No action based upon tort, contract or otherwise may be brought against any person for an act or omission of such person in the design, planning, supervision, observation, or management, or construction of an improvement to real property after 10 years have elapsed from the time of such act or omission.”  735 ILCS 13-214(b) (West 2002).

“Statutes of repose ‘stem from a basic equity concept that a time should arrive, at some point, that a party is no longer responsible for a past act.’”  Ryan at 4, quoting W. Prosser et al. Torts ch. 12, at 607 (8th ed. 1988).  Thus, like all statues of repose, section 130214(b) “represents a legislative balancing act between the rights of persons harmed by allegedly faulty construction and the rights of those responsible for such construction.”

The construction statte of repose seeks to insulate all participants in the construction process from the onerous tasks of defending against stale claims.  CITGO, 368 Ill.App.3d at 607.  Moreover, the statute protects anyone, regardless of status, if that party’s engagement in an enumerated construction-related activity is the sole basis of a particular claim.  MBA Enterprises Inc. v. Northern Illinois Gas Co., 307 Ill.App.3d 285, 287 (1999), citing People ex rel. Skinner v. Hellmuth, Obata & Kassabaum Inc., 114 Ill.2d 252 (1986).

Illinois courts have generally limited the application of the statute to claims of construction or improvements to real property.  Wright v. Board of Education of the City of Chicago, 335 Ill.App.3d 948, 955 (2002).  The first step in analyzing the applicability of this statute is to determine whether the item at issue is an improvement to property.  Wright, 335 Ill.App.3d at 955.  If the item qualifies, the next step is to determine whether the party claiming the protection of the statute of repose engaged in one of the listed activities, i.e., design, planning, supervision, observation, or management, or construction, in that statute.  Wright, 335 Ill.App.3d at 955.

In Ryan, the plaintiff was injured when a circuit breaker exploded while he was working on a power system at O’Hare International Airport.  He sued ComEd, alleging that it had negligent maintained and repaired the circuit breaker.  Because the power system was more than 20 years old, ComEd argued that the plaintiff’s claims were barred by the construction statute of repose.  The plaintiff did not dispute that the power system was an improvement to property or that the circuit breaker was designed and installed over 10 years prior to the explosion.  Instead, he argued that the basis for his claim against ComEd was its negligent maintenance of that system, an activity that he argued is not protected by the statute.  The circuit court disagreed and granted ComEd’s motion for summary judgment.

On appeal, the issue for the Ryan court was whether the fact that ComEd had set up the power system more than 10 years before the explosion meant that the plaintiff’s claims of negligent maintenance of that system were barred.  The Ryan court noted that “[w]hether ComEd [could] invoke the protection of the statute of repose to shield itself from [the plaintiff’s] claims of negligent maintenance is currently in dispute among the appellate districts of this state.”

Some courts have found that a claim is time-barred if it is traceable to a defect in the design, construction, or installation of an over-10-year-old improvement regardless of how the plaintiff characterizes that claim.  See O’Brien v. City of Chicago, 285 Ill.App.3d 864 (1996) (finding that the plaintiff’s allegations that the city negligently “operated, maintained, repaired, and altered” a road where barred because the “crux” of the plaintiff’s complaint was the “dangerousness of the existing median” and was, therefore, a “claim for defective design in a different form”);  Wright, 335 Ill.App.3d 948 (2002) (the plaintiff’s slip-and-fall claim was barred because the stair on which the plaintiff fell was built more than thirty years before his injury); CITGO, 368 Ill.App.3d 603 (2006) (finding that the defendant-seller’s claims were barred by the statute because the allegations were based upon “defective pipefitting, which was alleged to have been installed when the refinery was constructed” and rejecting the defendant-seller’s argument that its claims were “premised only upon [the former owner]’s ‘negligent inspection, maintenance, and operation of the property’”); MBA Enterprises, 307 Ill.App.3d at 290 (Koehler, J., specially concurring in part and dissenting in part) (believing the plaintiffs’ allegations were “directed exclusively to the construction, installation, fabrication, and design of the piping system” and, therefore, time-barred).  In other words, these courts have found that a plaintiff cannot avoid the scope of the statute by dressing up time-barred negligent install/design claims as allegations of negligent maintenance/inspection.

Other courts have focused instead on the activity engaged in by the defendant that the plaintiff contends was the cause of her injury.  If the activity is not listed in section 13-214(b), the plaintiff’s claim is not barred.  See MBA Enterprises, 307 Ill.App.3d at 288-89 (finding that the plaintiffs’ property damage claim arising out of a gas explosion was not barred where the complaint contained allegations related to other activities that were not listed in the statute, i.e., the operation and maintenance of the system as well as the continued use of the system to sell and supply gas); Krueger v. A.P. Green Refractories Co., 283 Ill.App.3d 300, 304 (1996) (the plaintiffs’ claims were not barred because they related to the sale of a defective product); Risch v. Paul J. Krez Co., 287 Ill.App.3d 194, 198 (1997) (finding that because the statute “does not bar a plaintiff’s suit against a defendant for that discrete portion of the defendant’s activities not enumerated in the statute,”  the plaintiff’s claims against a contractor were not barred because the those claims were based upon the contractor’s role as a seller and not as an installer).  To find otherwise would expand the scope of the statute to activities that the legislature did not intend to protect.  See e.g., MBA Enterprises, 307 Ill.App.3d 288-89 (rejecting the defendant’s argument that the statute of repose “bars any cause of action for negligence that may arise after the construction or installation of an improvement when the underlying for negligence that may arise after the construction or installation of an improvement when the underlying claim is defective design or construction claim”).

Although it was wary that a plaintiff’s creative labeling of the allegations in her complaint might be used “as an expedient to overcome the protection of the statute of repose for defects in design and installation,” the Ryan court sided with those courts that focused upon the defendant’s activity that the plaintiff alleged was the cause of her injury, rather than the improvement itself or the fact that the defendant may have also been the installer or designer of that improvement.

Because the focus of the statute is on the activity in question and not the status of the defendant, the court found:

“[E]ven though a design professional receives the protection of the statute of repose for design and installation-related activities, it does not receive protection for other activities that are not within the purview of the statute.  Such other activities include manufacturing and sales, as well as breach of duty by the one who undertakes inspection and maintenance duties, such as those involved in MBA Enterprises as well as in the case at bar.”

In other words, “if an installer of an improvement to real property violates a duty arising from its activity as an inspector, rather than its activity as an installer, then it can be held liable for breach of that duty regardless of the statute of repose.”  Ryan at 8, citing Skinner, 114 Ill.2d at 261, and Risch, 287 Ill.App.3d at 198.  Because power suppliers like ComEd owe a duty to maintain and inspect their equipment through which its power is transmitted, the court found that the plaintiff’s claims related to those activities were not barred by the statute.  The court said:  “The theory of recovery predicated upon ComEd’s alleged failure to discovery and repair defects in its power system setup must be given its due as an activity that is not protected by the statute of repose, notwithstanding ComEd’s status as an installer of equipment.”

In support of its finding that the defendant’s activity, not its status, is the proper focus, the Ryan court noted that the supreme court had struck down an earlier version of the construction statute of repose that protected parties based upon their status as design professionals.  Ryan at 6, citing Skinner v. Anderson, 38 Ill.2d 455,459 (1967).  In Anderson, the supreme court had found the status-based distinction was arbitrary because it protected entities rather than activities performed by those entities.  See Anderson, 38 Ill.2d at 459.  In response to Anderson, the legislature enacted the statute in its current version, which the supreme court subsequently found was constitutional because id did not “exclude persons based upon their statute” but instead based upon whether they “engage[d] in the enumerated activities.”  Skinner, 114 Ill.2d at 261 (emphasis in original).

This status-activity distinction relied upon by the Ryan court appears to be in tune with the intent of the legislature.  Though the danger of creative drafting still remains, the ability to “get around” the statute still depends upon the existence of a duty owed by the defendant to do what the plaintiff claims it should have done.  For instance, while a plaintiff can escape the reach of the statute by claiming her theory is based upon the defendant’s negligent inspection of an improvement to property rather than its design or construction of the improvement, unless the defendant actually had a duty to perform those inspections, either by contract, statute, or otherwise, that escape will be short-lived.