Metropolitan Water Reclamation District of Greater Chicago v. Terra Foundation for American Art
13 N.E.3d 44
Ill. App. Ct.2014Background
- The Metropolitan Water Reclamation District of Greater Chicago (District) owns an alley separating its HQ from three parcels (664, 666, 670 N. Michigan). The parcels (later owned/controlled by Project Company) relied on recorded easements over the Alley for access.
- From 2005 onward the District opposed a planned 40‑story development and took steps (locking a gate, parking to block ingress/egress) that the Project Company says interfered with easement use, delaying demolition, financing, construction, and pre‑sales.
- The District sued for declarations about easement scope in 2006; Project Company counterclaimed (2008) for injunctive relief, damages for intentional interference with the easement, and trespass. A preliminary and later permanent injunction prohibited District interference.
- Project Company presented expert damages testimony (LoGuidice) quantifying delays: an 18‑month construction delay and a 31‑month marketing delay, producing damages in the mid‑tens of millions. The District challenged the evidence and raised the economic‑loss doctrine late in the proceedings.
- The trial court found intentional interference beginning in 2005, awarded ~ $36.4M on the interference claim plus nominal trespass damages, and denied the District’s late economic‑loss defense. On appeal the judgment was affirmed as modified (reduction of $670,000).
Issues
| Issue | Plaintiff's Argument (Project Company) | Defendant's Argument (District) | Held |
|---|---|---|---|
| Applicability/forfeiture of the economic‑loss doctrine | District forfeited the defense by raising it post‑trial; economic‑loss does not bar intentional‑tort recovery | Economic‑loss bars recovery of purely commercial losses in tort (Moorman) | District forfeited; on the merits Moorman does not bar damages for intentional interference with an easement |
| Awarding damages for conduct predating pleading timeframe / unpled allegations | Evidence and prior proceedings put District on notice; District introduced pre‑2008 evidence; pleadings were sufficiently vague — amend to conform to proofs | Judgment is void/impermissible because it relies on conduct/cause of action not pled and predating April 30, 2008 | District forfeited objection; court grants motion to amend pleading to conform to proofs re: pre‑2008 conduct but denies adding a new cause of action (interference with prospective economic advantage) |
| Standing to recover for pre‑closing (pre‑April 30, 2008) interference | As Terra’s assignee/licensee and successor in interest under the option/purchase assignments, Project Company had rights and could enforce easement claims pre‑closing | Project Company lacked standing to claim pre‑closing interference | Forfeited on appeal; on merits Project Company had license/assignment rights and standing to assert pre‑closing interference |
| Sufficiency / manifest weight & speculative nature of damages | Expert used critical‑path analysis and historical data to quantify realized and consequential losses; delays were proximately caused by District’s intentional interference | Damages speculative, caused by Project Company business choices, or not proximately caused by District | Trial court’s factual findings (18‑month construction and 31‑month marketing delays) are supported by evidence; damages not speculative; award affirmed as modified |
Key Cases Cited
- Moorman Mfg. Co. v. Nat’l Tank Co., 91 Ill.2d 69 (Ill. 1982) (economic‑loss rule bars recovery in tort for purely commercial losses in negligence/strict liability contexts)
- In re Chicago Flood Litigation, 176 Ill.2d 179 (Ill. 1997) (economic‑loss policy considerations; nuisance recovery limited for solely economic losses)
- 2314 Lincoln Park W. Condominium Ass’n v. Mann, Gin, Ebel & Frazier, Ltd., 136 Ill.2d 302 (Ill. 1990) (Moorman exceptions recognized where defendant owed a tort duty to prevent the precise harm; intentional interference torts survive economic‑loss rule)
- Fellhauer v. City of Geneva, 142 Ill.2d 495 (Ill. 1991) (elements and standards for tortious interference with prospective economic advantage)
- Santucci Constr. Co. v. Baxter & Woodman, 151 Ill. App.3d 547 (Ill. App. Ct. 1986) (recognizing intentional interference with contract as exception to Moorman)