Lead Opinion
Plaintiff-Appellant Ambrosia Land Investments, LLC
I. Background
In 1995, Ambrosia constructed a warehouse on its property in St. Clair County, Illinois, which happened to be located above St. Ellen Mine (“the Mine”), an underground coal mine originally built in the early 1900s that spans over 3,800 acres. Peabody, who had acquired the rights to the Mine in 1957 from Perry Coal Company, operated the Mine until 1960, when it closed the Mine. The Mine was designed using a widely-recognized method оf mining called the “room and pillar,” in which shafts are driven down into the earth, creating passageways for the movement of coal and personnel. Coal is removed, leaving empty areas or “rooms.” “Pillars” are then formed from the remaining coal and rock, providing structure and support for the rooms and for the surface above the mine during the time the mine is in operation and permanently thereafter. While pillars are usually reinforced with secondary support by installing bolts or timber, because of the passage of time, the exact type of secondary support used in the
In order to insure that property owners have the financial resources to repair damage to property caused by mine subsidence, the Illinois legislature established the Fund to provide reinsurance for mine subsidence losses to Illinois property. 215 ILCS 5/801.1, 5/803.1. The Fund is required to enter into reinsurance agreements with all Illinois property insurers, whereby premiums are collected by the insurer and paid to the Fund under the agreement. Once the insurer receives a claim of potential minе subsidence from the property owner, it forwards the claim to the Fund. The Fund hires geologists to investigate the claim and eventually determine whether the damage was caused by mine subsidence or other earth movement. If the Fund determines that the damage was caused by mine subsidence, it notifies the insurer, who in turn fulfills its contractual duties by paying the insured for the losses claimed, and then requests reinsurance reimbursement from the Fund. The Fund reimburses the property insurer for the amount it paid to its insured, and the Fund is then subrogated to the rights of both the insured and the property insurer. See 215 ILCS 5/815.1(b).
In late November 2000, forty years after Peabody closed the Mine, Ambrosia noticed that its warehouse had structural damage. Suspecting that the damage was the result of mine subsidence, Ambrosia filed a claim with its insurance company, Federated Mutual, on its insurance policy for mine subsidence loss coverage. Federated, in turn, forwarded the claim to the Fund. The Fund received Federated’s claim and hired geologist Stephen Danner to investigate. On March 14, 2002, Danner concluded that mine subsidence from the Mine caused damage to the warehouse on the Ambrosia property. Federated paid Ambrosia the maximum amount of its mine subsidence loss coverage policy— $350,000 — and then requested reimbursement of that amount from thе Fund. The Fund paid Federated the full amount of the claim.
On April 21, 2005, Ambrosia filed suit against Peabody in Illinois state court, claiming that it sustained actual damages that substantially exceeded the $350,000 amount that it received from Federated. The complaint alleged that (1) Peabody, as owner and operator of the Mine, was negligent in failing to provide adequate support for the surface above the Mine, and (2) Peabody violated its duty to prevent mine subsidence under the Illinois Surface Coal Mining Land Conservation and Reclamation Act (“SCMLCRA”), 225 ILCS 720/4.02. Peabody removed the case to federal court on the basis of diversity jurisdiction. In October, 2005, the Fund movеd to intervene as an additional plaintiff under 215 ILCS 5/815.1, claiming Peabody was strictly liable for failing to provide sufficient support for the surface of the Ambrosia property, and asserting its subrogation rights to recover the $350,000 it paid pursuant to its reinsurance agreement with Federated in 2002.
Peabody moved for summary judgment, asserting in part that Plaintiffs’s sought to hold Peabody liable for their acts or omissions that occurred over forty-five years ago, and that a coal mine constituted an improvement to real property, thus Plaintiffs’s claims were barred under the Illinois Construction Statute of Repose, 735 ILCS 5/13 — 214(b).
Plaintiffs also filed a summary judgment motion, claiming that it was undisputed that the warehouse was undermined by Peabody during the period it operated the Mine (1957 to 1960), and because a surface
On March 27, 2007, the district court granted Peabody’s motion for summary judgment, finding that § 13—214(b) barred Plaintiffs’s claims because a coal mine constituted “construction of an improvement to real property.” Accordingly, the district court denied Plaintiffs’s mоtion for summary judgment as moot. This timely appeal followed.
II. Discussion
We begin by determining whether the district court erred in granting summary judgment in favor of Peabody. We review a district court’s grant of summary judgment de novo, drawing all inferences in favor of the nonmoving parties. Breneisen v. Motorola, Inc.,
The Illinois Construction Statute of Repose, entitled “Construction—Design management and supervision,” provides that: •
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 of construction, or construction of an improvement to real property after 10 years have elapsed from the time of such act or omission.2
735 ILCS 5/13-214(b). Application of § 13-214(b) involves a two-step analysis: (1) whether a coal mine is an “improvement to real property,” and (2) whether Peabody engaged in activities that fall within the ambit of § 13—214(b). Garrison v. Gould,
A. Improvement to Real Property
Whether a coal mine constitutes an “improvement” under the Illinois Statute of Repose is a question of law, although resolution of the question is grounded in fаct. Garner v. Kinnear Mfg. Co.,
Although Illinois courts have not yet addressed the issue of whether a coal mine constitutes an “improvement to real property” under § 13-214(b), Illinois case law provides us with strong guidance. In St. Louis v. Rockwell Graphic Systems Inc., the Illinois Supreme Court defined “improvement” as “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.”
This Court and Illinois courts have addressed whether various products constitute “improvements” under § 13-214 in actions involving personal injury. See id. (electrical switch installed as part of electrical switching station is an improvement); Garner,
Illinois courts have also addressed what constitutes “construction of an imprоvement to real property” under § 13-214 in actions involving damage to real property. See Bank of Ravenswood v. City of Chicago,
In a case involving the same mine we discuss here, a federal district court held that a coal mine is an improvement to real property under Illinois law. Illinois Mine Subsidence Ins. Fund v. Peabody Coal Co.,
On this appeal, we address Plaintiffs’s arguments that previous case law dictates that any underground activity that benefits the surface property is not an improvement under § 13-214, and under Bank of Ravenswood v. City of Chicago,
Plaintiffs argue that any activity, above or below ground, which involves an addi
Plaintiffs’s reliance on Ravenswood is unavailing. In Ravenswood, an Illinois appellate court analyzed whether the construction of a subway system was an improvement to real property under § 13-214. Using the relevant criteria in St. Louis as a guide, the court focused on whether the construction of the subway system is an integral component of the overall system, and found that a subway system is not an integral part of the function of the residential townhomes and does not enhance the overall value. The court further held that the subway system, unlike a sewer system or construction work on a traffic intersection, does not have any actual relation to the use or enjoyment of the real property located above it.
Peabody argues that Plaintiffs’s reliance on Ravenswood is misguided, maintaining that this “renegade” decision is the only Illinois case that suggests that underground construction must relate to the use and enjoyment of the surface property, and that the district court, as well as the court in Illinois Mine Subsidence Insurance Fund,
Peabody also points to a factually-similar Illinois decision that supports a liberal interpretation of the statute of repose. In Continental Insurance Co. v. Walsh Construction Co. of Illinois, defendants excavated the earth to construct a sewer system, which ultimately caused damage to the plaintiffs’s building above the surface of the construction. In holding that the creation and the construction of a sophisticated sewer distribution system сonstitutes an “improvement to real property” under § 13-214, the court found that the construction was an addition, rather then a repair and replacement, which substantially enhanced the value of the property.
After a review of Illinois law within the context of improvements to real property under § 13-214, we find that a coal mine is an improvement to real property under § 13 — 214(b). The Mine, particularly the pillars, was intended to be permanent support for the surface above the Mine. There is no doubt that a coal mine is a valuable addition to the real property, hiking up the real estate value of the property and awarding the owners of the property with
B. Activities Protected by the Statute
Our next inquiry is whether Peabody falls within the protected class of activities under § 13 — 214(b). The first clause of the statute places the protected activities in a certain context: “No action based upon tort ... may be brought against any person for an act or omission of such a person in the design, planning, supervision, observation, or management of construction.” § 13-214(b) (emphasis added); see Garrison,
The Illinois Supreme Court invalidated the original version of the statute as “special legislation,” because it excluded from its protection owners or occupiers of the property on which the building was being built or the improvement was being made. State Farm,
Because the statute was enacted for the express purpose of insulating all participants in the construction process from the onerous task of defending against stale claims, Wright v. Bd. of Educ.,
Moreover, under Restatement (Seoond) ToRts § 820, such suits are also approрriate, in that one who withdraws naturally necessary subjacent support of another’s land is subject to liability. If subsidence occurs, the action is complete and the party that withdraws the support is strictly liable. See Restatement (Second) Torts § 820(1), cmt. g. In this instance, Peabody became liable as soon as it withdrew the natural support for Ambrosia’s land.
It is undisputed that Peabody was not sued for its acts or omissions related to construction activities. Instead, Peabody was sued in its capacity as owner of the mineral estate at the time of the withdrawal of support. This garners further support for the inapplicability of § 13-214 to the claims against Peabody, because the statute of repose does not apply to suits against a landowner solely as a landowner. See DeMarco v. Ecklund,
We believe the claims against Peabody have been mischaracterized from the beginning. To the extent the claims are for damages against Peabody for construction-related activities enumerated by § 13-214(b), the statute of repose would apply to bar the claim, because a coal mine is an “improvement to real property” within the meaning of the statute and Illinois case law interpreting it. However, to the extent the claim is one for damages against Peabody as a landowner (which we beliеve is the case) for withdrawal of subjacent
The district court below focused on whether the coal mine was an “improvement to real property,” in that there was no dispute of fact that the mining affecting the property occurred over forty years priоr to the suit. The court, however, failed to address the other requirement for the application of § 13-214 — whether Peabody was a party engaged in any of the enumerated activities protected under the statute.
Our de novo review is limited to legal issues and conclusions. West Allis Memorial Hosp., Inc. v. Bowen,
III. Conclusion
Because we find that Peabody, sued in its status as a landowner, does not fall within thе protection of § 13-214(b) as a matter of law, summary judgment was improper. Accordingly, we reverse the district court’s grant of summary judgment and remand for further proceedings not inconsistent with this opinion.
Notes
. Ambrosia Land Investments, LLC was substituted as the plaintiff-appellant for Wilke Window & Door Company, Inc., on September 5, 2007.
. There is no dispute that ten years had passed since the conduct upon which Peabody bases its statute of repose defense occurred.
. Reviewing Ambrosia’s complaint, the negligence claim against Peabody may also fall under Restatement (Second) of Torts § 821, which applies where the withdrawal of subjacent support that is not "naturally necessary,” but rather, is necessary to support the surface land and its artificial additions.
Concurrence Opinion
concurring.
I am pleased to join the excellent majority opinion and particularly its important outcome. The issue resolved here is of more than passing significance because, for all practical purposes, an opposite result would slam the door almost completely on claims for coal mine subsidence in Illinois. Coal mine subsidence is usually a long-term proposition. The subsidence alleged in this case took place forty years after operations at the St. Ellen mine had ceased. See also Tankersley v. Peabody Coal Co.,
Illinois has had a construction statute of repose since 1979. See 735 ILCS 5/13— 214(b) (2007). Nearly every state in the nation now has a construction statute of repose; many of these statutes contain wording that is similar to the Illinois statute. Yet no court in the nation has ever held that digging a coal mine was an act of “constructiоn” or an “improvement to real property” or anything analogous to those statutory requirements.
I.
The parties here raised at length, and the majority opinion contains an extended discussion of, the term “improvement to real property,” which although relevant is really not central tо the present issue. The extraction of the coal is the legal cause of the injury here,
The purpose of the “improvement to real property” language in the statute is to limit the type of “construction” that the statute contemplates. Thus “construction” is anterior to “improvement”; there must be “construction” before its object, “improvement to real property,” is in issue. By referring to “improvement to real property,” the statute distinguishes between construction involving personal property (not covered) and construction of an improvement to real property (covered). But, before the nature of an improvement to real prоperty is an issue, there must be “construction” to create it.
Although one may think erroneously of subsidence claims as involving negligence, suсh suits are actually merely actions for the withdrawal of subjacent support. See Lloyd v. Catlin Coal Co.,
With this proper backdrop in place, it becomes clear that Ambrosia’s mine subsidence claim is based on something other than activity related to construction. Peabody decided to extract coal from below the Ambrosia property. It does not claim that it secured a waiver of Ambrosia’s right to subjacent support. Under Illinois law, Peabody becomes subject to liability as soon as any natural support for Ambrosia’s land is removed. Thus, when Peabody removed its first shovelful of coal, it became subject to liability in the event of a mine subsidence. See Watts,
II.
A room and pillar mine is essentially a hole — an incomplete hole because pillars arе left in place to prevent subsidence. One could not argue that the hole (or the “room”) has been “constructed”; it is simply the void left after the coal is removed. The pillars are not constructed either; they are simply coal that has been left behind. Even if we were to consider the overall design of the mine, it is simply the absence of the coal that caused the damage, and the effectuation of its removal is not construction. Thus, Peabody has no
Although the matter is not central, Peabody has also not shown that there was an “improvement to real property” here. An improvement implies some kind of addition. See Calumet Country Club v. Roberts Environmental Control Corp.,
III.
Applying thе statute of repose in this case does nothing to further its purpose. Statutes of repose are intended to protect against stale claims. See Wright v. Board of Educ. of City of Chicago,
IV.
I therefore agree with the conclusion reached by the majority and, in general, with its analysis, with emphasis on the matters I have discussed. And I would reiterate my belief in the importance of this issue and its proper resolution.
. Actually, Peabody made the same argument in another recent case involving subsidence damage over the St. Ellen mine. See Illinois Mine Subsidence Fund v. Peabody Coal Co.,
. Installing lights and other equipment incidental to mining does not cause subsidence.
