658 F.3d 802
7th Cir.2011Background
- Wilder sold 6600 acres to The Nature Conservancy; land became Emiquon Refuge under restoration efforts.
- The sale included a warranty that there was no petroleum contamination, which Wilder allegedly breached.
- The Conservancy sued Wilder in state court for breach of warranty and Wilder removed to federal court, where Conservancy obtained about $800,000 in damages.
- Wilder then filed a companion federal suit against the local drainage district seeking indemnity for the Conservancy damages.
- The drainage district stored petroleum on Wilder’s land and operated a pump house that affected drainage; Wilder argues district negligence caused the contamination.
- Illinois law foreclose noncontractual indemnity here due to the economic-loss doctrine and other procedural/subrogation constraints, leading to affirmance of dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Wilder may recover noncontractual indemnity from the district for Conservancy damages. | Wilder contends district negligence caused contamination; indemnity is appropriate. | Indemnity for contract breach is not allowed; economic-loss doctrine applies; foreseeability and least-cost avoider concerns. | No; not permitted under Illinois law and the economic-loss doctrine. |
Key Cases Cited
- Edwards v. Honeywell, Inc., 50 F.3d 484 (7th Cir. 1995) (unforeseeability limits tort-based indemnity and related defenses)
- Wausau Underwriters Ins. Co. v. United Plastics Group, Inc., 512 F.3d 953 (7th Cir. 2008) (Illinois foreseeability and economic-loss rationale applied)
- Schulson v. D'Ancona & Pflaum LLC, 821 N.E.2d 643 (Ill. 2004) (limits on noncontractual indemnity in Illinois)
- Talandis Construction Corp. v. Illinois Building Authority, 321 N.E.2d 154 (Ill. App. 1974) (examples of limits on indemnity and related doctrines)
- Cutting v. Jerome Foods, Inc., 993 F.2d 1293 (7th Cir. 1993) (subrogation concepts and limits in contract contexts)
- Krueger Int'l, Inc. v. Royal Indemnity Co., 481 F.3d 993 (7th Cir. 2007) (economic considerations in indemnity and insurance contexts)