AMBROSIA LAND INVESTMENTS, LLC, Plaintiff-Appellant, and Illinois Mine Subsidence Insurance Fund, Intervening Plaintiff-Appellant, v. PEABODY COAL COMPANY, Defendant-Appellee.
No. 07-1945.
United States Court of Appeals, Seventh Circuit.
Argued Oct. 23, 2007. Decided April 9, 2008.
Rehearing and Suggestion for Rehearing En Banc Denied May 12, 2008.*
521 F.3d 778
* Judge Ilana Diamond Rovner took no part in the consideration of this case.
William A. Schmitt (argued), Greensfelder, Hemker & Gale, Swansea, IL, for Defendant-Appellee.
Before BAUER, CUDAHY and SYKES, Circuit Judges.
BAUER, Circuit Judge.
Plaintiff-Appellant Ambrosia Land Investments, LLC1 (“Ambrosia“) and Intervening Plaintiff-Appellant Illinois Mine Subsidence Insurance Fund (“the Fund“) (collectively “the Plaintiffs“) appeal the district court‘s conclusion that their claims are barred by the Illinois Construction Statute of Repose,
I. Background
In 1995, Ambrosia constructed a warehouse on its property in St. Clair County, Illinois, which happened to be locаted 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 of 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 lоsses to Illinois property.
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 concludеd 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 the 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 abovе the Mine, and (2) Peabody violated its duty to prevent mine subsidence under the Illinois Surface Coal Mining Land Conservation and Reclamation Act (“SCMLCRA“),
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,
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
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., 512 F.3d 972, 977 (7th Cir. 2008). Summary judgment is appropriate where there are no genuine issues of material fact and the moving party (Peabody) is entitled to judgment as a matter of law.
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
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 fact. Garner v. Kinnear Mfg. Co., 37 F.3d 263, 266 (7th Cir. 1994); St. Louis v. Rockwell Graphic Sys. Inc., 153 Ill. 2d 1, 178 Ill. Dec. 761, 605 N.E.2d 555 (1992). Because we sit in diversity, we apply Illinois substantive law. Ass‘n Benefit Servs., Inc. v. Caremark RX, Inc., 493 F.3d 841, 849 (7th Cir. 2007). We use a common sense approach, focusing on the ordinary meaning of the statutory language when interpreting the phrase “improvement to real property.” Hilliard v. Lummus Co., 834 F.2d 1352, 1355 (7th Cir. 1987).
Although Illinois courts have not yet addressed the issue of whether a coal mine constitutes an “improvement to real property” under
This Court and Illinois courts have addressed whether various products constitute “improvements” under
Illinois courts have also addressed what constitutes “сonstruction of an improvement to real property” under
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., 383 F. Supp. 2d 1078, 1096 (C.D. Ill. 2005). There, the Fund brought suit as a subrogee of multiple insurance companies (Federated was not one of those companies), and sought damages from Peabody for reinsurance reimbursements it paid for mine subsidence damage claims caused by the Mine. In granting Peabody‘s motion for summary judgment, the district court found that a “room and pillar” coal mine was an “improvement to reаl property,” and held that the Fund‘s claims were barred by
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
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
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, found that Ravenswood offers no authoritative support for the addition of this requirement of “relation to the use and enjoyment” of the surface property. We tend to agree—the Ravenswood analysis of an improvement to real property has not been interpreted by any other Illinois appellate court, therefore we arе inclined to follow the vast majority of other Illinois courts’ interpretations of what constitutes “improvement” to real property under
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 constitutes an “improvement to real property” under
After a review of Illinois law within the context of improvements to real property under
B. Activities Protected by the Statute
Our next inquiry is whether Peabody falls within the protected class of activities under
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, 24 F.3d at 957 (citing Skinner v. Anderson, 38 Ill. 2d 455, 231 N.E.2d 588 (1967)). The statute was amended by the Illinois legislature to eliminate the exclusion, and the revised statute was upheld in People ex rel. Skinner v. Hellmuth, Obata & Kassabaum, Inc., 114 Ill. 2d 252, 261, 102 Ill. Dec. 412, 500 N.E.2d 34 (1986), where the court found that
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., 335 Ill. App. 3d 948, 269 Ill. Dec. 589, 781 N.E.2d 386, 391 (2002), the plain language of
This rule carries much weight in the case at bar, for Ambrosia sued Peabody under the theory that Peabody was negligent in failing to provide adequate subjacent support for the surface, and the Fund sued Peabody under the theory that a surface property owner is entitled to subjacent support, and that right is absolute and without condition. Under Illinois law, these claims are appropriate, for subsidence claims are merely actions for the withdrawal of subjacent support. See Lloyd v. Catlin Coal Co., 210 Ill. 460, 468, 71 N.E. 335 (1904). It is a general rule that the owner of thе surface of land has a right to subjacent support for his land. Mason v. Peabody Coal Co., 320 Ill. App. 350, 51 N.E.2d 285, 286 (1943); see Wilms v. Jess, 94 Ill. 464 (1880) (a coal company‘s liability depends not on fault but arises from its absolute duty to provide the surface with support). Where there has been no release or waiver, this right is absolute and does not depend upon whether the mining is done with the greatest degree of care or in accordance with the most approved system of mining. Mason, 320 Ill. App. 350, 51 N.E.2d at 286; see Tankersley v. Peabody Coal Co., 31 Ill. 2d 496, 202 N.E.2d 498 (1964) (coal company is liable only for subsidences and the resultant damages due to its own mining operations); Buis v. Peabody Coal Co., 41 Ill. App. 2d 317, 190 N.E.2d 507 (1963) (same).
Moreover, under RESTATEMENT (SECOND) TORTS § 820, such suits are also appropriate, in that one who withdraws naturally necessary subjacent support of anothеr‘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
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
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 prior to the suit. The court, however, failed to address the other requirement for the application of
Our de novo review is limited to legal issues and conclusions. West Allis Memorial Hosp., Inc. v. Bowen, 852 F.2d 251, 258 (7th Cir. 1988). We may decide the merits of legal issues which were not addressed by the district court only when the facts on which those conclusions are based are not in dispute. Id.; see also K and N Engineering, Inc. v. Bulat, 510 F.3d 1079, 1081 n. 2 (9th Cir. 2007) (a court of appeals may exercise its discretion to review issue that had not been raised before district court, where issue involves purely legal question of statutory interpretation and pertinent record has been fully developed); Norfolk Southern Ry. Co. v. Basell USA Inc., 512 F.3d 86, 97 (3d Cir. 2008) (a district court‘s failure to consider an issue below does not necessarily preclude the Court of Appeals frоm addressing it; however, it is only appropriate for it to do so when the factual record is developed and the issues present purely legal questions, upon which an appellate court exercises plenary review). Peabody was sued in its capacity as the owner of the Mine, not as a party engaging in construction-related activities. Therefore, we find that, as a matter of law,
III. Conclusion
Because we find that Peabody, sued in its status as a landowner, does not fall within the protection of
CUDAHY, Circuit Judge, 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., 31 Ill. 2d 496, 202 N.E.2d 498 (1964) (forty years); Nida v. American Rock Crusher Co., 253 Kan. 230, 855 P.2d 81 (1993) (thirty years). The application of a ten-year statute of repose would block recovery for subsidence damage in all but the rare case where collapse follows promptly upon excavation. This would be good news for coal mining companies and bad news for the neighbors of their mines.
Illinois has had a construction statute of repose since 1979. See
I.
The parties here raised at length, and the majority opinion contains an extended discussion of, the term “improvement to real property,” which although relеvant is really not central to the present issue. The extraction of the coal is the legal cause of the injury here,2 and this fact should govern our interpretation of the statute of repose. To benefit from the statute, Peabody must show that Ambrosia‘s mine subsidence claim (which results from coal removal) arises out of a con-
struction-related activity. See, e.g., King v. Paul J. Krez Co., 323 Ill. App. 3d 532, 538-39, 256 Ill. Dec. 725, 752 N.E.2d 605 (2001); MBA Enterprises, Inc. v. Northern Illinois Gas Co., 307 Ill. App. 3d 285, 288, 240 Ill. Dec. 500, 717 N.E.2d 849 (1999); Krueger v. A.P. Green Refractories Co., 283 Ill. App. 3d 300, 304, 218 Ill. Dec. 626, 669 N.E.2d 947 (1996). The requirement of a nexus between the legal claim and the construction-related activity is not simply a judicial gloss; the Illinois statute of repose applies only to an “action ... for an act or omission ... of construction.”
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 property is an issue, there must be “construction” to create it.
The rule that the legal claim must be based on construction-related activity has an important corollary, one that is dispositive in this case. Illinois courts have been clear, as is the majority opinion, that the statute does not bar claims made against a landowner solely in his or her capacity as landowner, as in subsidence claims. See Continental Ins. Co. v. Walsh Const. Co. of Illinois, 171 Ill. App. 3d 135, 139, 121 Ill. Dec. 83, 524 N.E.2d 1131 (1988); C.S. Johnson Co. v. Champaign Nat. Bank, 126 Ill. App. 3d 508, 511, 81 Ill. Dec. 663, 467 N.E.2d 363 (1984). One defining characteristic оf a suit against a landowner qua landowner is that it proceeds on a theory of strict liability as distinguished from a theory of negligence.
Although one may think erroneously of subsidence claims as involving negligence, such suits are actually merely actions for the withdrawal of subjacent support. See Lloyd v. Catlin Coal Co., 210 Ill. 460, 468, 71 N.E. 335 (1904); RESTATEMENT (SECOND) OF TORTS, § 820(1) (1979). The degree of care used in the withdrawal of support is completely irrelevant; as soon as the owner of a mineral estate withdraws any natural support from the surface estate, it becomes subject to liability for such a withdrawal. See Standard Oil Co. v. Watts, 17 F.2d 981, 982 (7th Cir. 1927) (applying Illinois law). It is the extraction of coal to create a hole or a void (or a “rоom“) that creates the potential for subsidence and damage. When subsidence occurs, the action is complete and the owner of the mineral estate becomes liable without regard to negligence. See RESTATEMENT (SECOND) OF TORTS, § 820(1) cmt. g (1979). If the owner of the mineral estate does not wish to be subject to this ongoing liability, it has only two options: “Furnish[] artificial support sufficient to replace the natural support withdrawn” or pray that there is no subsidence. Id. This is all well settled. See Wilms v. Jess, 94 Ill. 464 (1880); Buis v. Peabody Coal Co., 41 Ill. App. 2d 317, 190 N.E.2d 507 (1963); Wanless v. Peabody Coal Co., 294 Ill. App. 401, 13 N.E.2d 996 (1938); Treece v. Southern Gem Coal Co., 245 Ill. App. 113 (1923).
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 еxtract 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, 17 F.2d at 982. When the subsidence occurred in 2000, Ambrosia sued Peabody in its capacity as the owner of the mineral estate at the time of the withdrawal of support. This is entirely appropriate under Illinois law. See Buis, 41 Ill. App. 2d at 323, 190 N.E.2d 507. Further, it is clear that this is a suit between owners solely as owners; the statute of repose, therefore, does not apply. See C.S. Johnson Co., 126 Ill. App. 3d at 511, 81 Ill. Dec. 663, 467 N.E.2d 363.
II.
A room and pillar mine is essentially a hole—an incomplete hole because pillars are 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., 136 Ill. App. 3d 610, 613, 91 Ill. Dec. 267, 483 N.E.2d 613 (1985). Peabody has argued the factors defining an improvement as set forth in St. Louis v. Rockwell Graphic Systems, Inc., 153 Ill. 2d 1, 178 Ill. Dec. 761, 605 N.E.2d 555 (1992). The application of these factors, however, assumes that аn “addition” has occurred or been found. Id. at 4, 178 Ill. Dec. 761, 605 N.E.2d 555. Peabody has stressed that the pillars served an important purpose because they supported the ceiling of the mine. But the pillars merely “replace” the support provided by the preexisting coal or, more literally, merely form a portion of the preexisting coal, the remainder of which has been removed. The pillars of unmined coal are certainly not an addition. Once the coal is removed, the pillars must support both the surface above them and the surface above the newly created rooms. The pillars are nothing more than a partial replаcement for the support that has been removed. Replacement, however, is not improvement. See Calumet, 136 Ill. App. 3d at 613, 91 Ill. Dec. 267, 483 N.E.2d 613.
III.
Applying the 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, 335 Ill. App. 3d 948, 955-56, 269 Ill. Dec. 589, 781 N.E.2d 386 (2002). Peabody argues that this case presents “the very problem the Statute of Repose seeks to avoid” because “the task of locating living witnesses and pertinent documents is virtually impossible.” Appellee Br. 11. This argument represents a fundamental misunderstanding of Illinois mine subsidence law. Ambrosia is under no obligation to show that Peabody breachеd a duty of care, and any showing by Peabody that it used due care is irrelevant. Put simply, Peabody‘s actions from 1957 to 1960 are not at issue in this case. Peabody already admits that it extracted coal during that period, thus Peabody is already subject to liability for a subsidence. Peabody‘s only available defenses are that there was, in fact, no subsidence, or that some other force caused the subsidence. See Watts, 17 F.2d at 982. Both of those inquiries are related to the here and now—that is, both relate to the subsidence event that is alleged to have occurred on Ambrosia‘s property in 2000.
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.