Donovan v. County of Lake
2011 IL App (2d) 100390
Ill. App. Ct.2011Background
- Plaintiffs seek to enjoin issuance of revenue bonds by County payable solely from HWG water-system customers for a new code-compliant public water system.
- HWG water system is old (over 50 years) and not originally built to public-water-system standards; IEPA violations prompted plans for replacement.
- County contracted with Village (1975) to operate/maintain the system and fund improvements; 2009 contract supplemented the 1975 contract.
- 1999–2009 sequence involved Village requiring a surcharge on HWG customers’ bills to retire subordinate bonds; 144 customers prepaid; 83 were issued subordinate bonds to fund remaining costs.
- Trial court dismissed count I (negligence) as Moorman/economic-loss and granted summary judgment for County on counts III–IV based on statutory authority to issue bonds payable by system customers.
- On appeal, the issue centers on whether the County had statutory authority (55 ILCS 5/5–15017) to issue bonds payable solely from water-system revenues and whether the 2009 contract altered or did not alter that authority.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Moorman applicability to negligence claim | Moorman does not bar damages here | Damages are economic losses barred by Moorman | Moorman barred the negligence claim |
| Tort Immunity Act applicability | Duties to provide safe water are non-discretionary | County’s decisions on how to correct violations were discretionary | Section 2–201 shields County; immunity applies |
| Contract claim viability | plaintiffs are third-party beneficiaries of 1975 contract requiring proper operation/improvements | Modified by 2009 contract; must plead under modified contract | Forfeiture and modification doctrine bars the claim; plead under 2009 contract if at all |
| Authority to issue bonds payable solely by water customers | County lacks authority to fund solely by customer surcharges; bonds improper | 55 ILCS 5/5–15017 authorizes bonds payable solely from waterworks revenues; 2009 contract/1975 contract support this | County had statutory authority to issue bonds payable solely by HWG customers |
Key Cases Cited
- Moorman Mfg. Co. v. National Tank Co., 91 Ill.2d 69 (1982) (economic-loss rule bars pure economic damages in tort)
- Anderson Elec., Inc. v. Ledbetter Erection Corp., 115 Ill.2d 146 (1986) (economic losses from defective services not recoverable in tort)
- In re Chicago Flood Litig., 176 Ill.2d 179 (1997) (requires harm beyond disappointed commercial expectations for tort recovery)
- Village of Deerfield v. Commonwealth Edison Co., 399 Ill.App.3d 84 (2009) (perishable inventory losses allowed; not applying to analogous water case)
- City of Oakbrook Terrace v. Hinsdale Sanitary Dist., 172 Ill.App.3d 653 (1988) (damages to property (streets) not purely economic; distinguishable from water)
- Schwinder v. Austin Bank of Chicago, 348 Ill.App.3d 461 (2004) (contract modification requires suit under modified contract)