*1 (No. 81439. COMPANY, as FUND INSURANCE
FIREMAN’S Inc., Company, Construction Subrogee Neptune DONOHUE, INC., Dono- SEC Appellant, v. f/k/a Associates, Inc., Appellee. hue &
Opinion April 1997. filed *2 NICKELS, JJ., HEIPLE, C.J., joined by dis- HARRISON senting. Schramm, Schramm, & Esposito,
Mark A. of Heuel Chicago, appellant. for Wheaton, Conarty, appellee. Paul F. for FREEMAN opinion JUSTICE delivered court:
The whether question presented for review is doctrine, this cоurt economic as enunciated Co., Moorman Co. v. National Tank Manufacturing (1982), Ill. 2d 69 bars a tort action for economic losses. We hold that it does.
BACKGROUND following This cause is before us motion to dismiss 619(a)(9) pursuant to section of the Code of Civil Pro 2— (735 619(a)(9) (West 1994)). mo cedure ILCS 5/2 — allegations complaint tion admits all in the well-pied the fаcts. and reasonable inferences to be drawn from 32, Mayfield v. ACME Barrel 3d (1994); Weiss, Ill. Chicago Title & Trust Co. v. 921, Plaintiff, complaint alleges as follows. (Fireman’s), Company subrogee Fund Insurance is the Neptune Company (Neptune). Neptune Construction constructing ais contractor in the business of under- ground Defendant, water Donohue, Inc., serviсe. SEC (Dono- formerly Associates, known as Donohue and Inc. hue), professional engineering ais firm. April Neptune
In entered into a subcontract agreement underground with Artfield Builders to install apartment complex service for an located on East water River Road between Golf and Central Roads in Des Neptune horizоntally Plaines. complex, was to tunnel from the tollway,
under a state and connect with water supply opposite tollway. Neptune lines on the side of the perform was to its work "in accordance with the engineering plans, specifications general conditions prepared by: ASSOCIATES, DONOHUE & INC.” project engineer.
Donohue was the Under Donohuе’s provide engineer- Artfield, contract with Donohue was to ing plans improvements supply that included water *3 anticipation Neptune’s sup- work, lines. In plied drawings Donohue plans specified Neptune
and that where dig auger an should tunnel and use to bore into the supply water lines. drawings plans erroneously
Donohue’s and located digging boring spot approximately the site for at a yards Relying south of the correct location. on Dono- plans, Neptune wrong location, hue’s worked at the thereby damaging tollway. the shoulder of the The Il- Highway Authority required Neptune linois State Toll repair way Neptune $57,754.02. to the toll at a cost of insurer, Firеman’s, made a claim to its for this amount. becoming subrogated paid claim, to Fireman’s Neptune’s against claim Donohue. brought negligence
Fireman’s action Dono- County. complaint in the circuit court of Cook The hue alleged duty provide accurate that Donohue had the it, such as rely would on to those who by "cаre- that Donohue breached Neptune; digging for mistakenly” locating the site lessly and location; and that of the correct boring yards south reli- caused its damages proximately were Neptune’s work. Donohue’s erroneous ance on to dismiss denied defendant’s motion The trial court 619(a)(9) Pro the Code of Civil to section pursuant 2— 1994)). 619(a)(9) (West (735 trial The ILCS cedure 5/2 — following question certified the subsequently 308): (see R interlocutory review prepares plans and "Is a who project in the business of specifications for a construction supplying information to others for the dealings parties recipient in with third and li- its business negligent misrepresentations in under Moor- able tort for Manufacturing [citation]!?]” man Co. v. National Tank in question The court answered the appellate trial 281 Ill. 3d 789. negative, reversing App. court. appellate The court concluded that the economic loss engineers general. in applies doctrine concluded that Moor- appellate аt 796. The court also negligent exception to the eco misrepresentation man’s 89) (Moorman, nomic 91 Ill. 2d at did not 3d at 798. We allowed apply this case. Ill. (155 petition appeal for leave to Ill. 2d R 315), affirm court. and now
DISCUSSION interlocutory pre- certified for review question regards the form of the sents two issues. first issue itself; regards the second issue addressing Before these is- the economic loss doctrine. sues, background is in order. some law, gener
At
economic losses are
common
actions. In re Illinois Bell
ally not recoverable
*4
(1994).
233,
Ill. 2d
Switching
Litigation,
Station
Co.,
Tank
Manufacturing
In Moorman
Co. v. National
(1982),
of strict liability, negligence,
misrepresen
and innocent
Moorman,
tation.
This explained court has the rationale of the eco- nomic doctrine as follows: Moorman, would,
"In
this court [reasoned] thаt tort law
if
develop unchecked,
allowed to
eventually
envelop
contract
law. Contract law serves a vital commercial func
by providing
buyers
tion
ability
sellers and
with the
agreements
define the terms of their
certainty prior
with
to transaction. Where the
of a seller has tradition
ally
contract, therefore,
been defined
Moorman dictates
theory
recovery
that
should be limited to contract
although
recovery in tort would be available
under
Passion,
Congregation
traditional
theories.”
Holy
Cross Province v. Touche Ross &
159-60
Electric,
In Anderson
Inc. v. Ledbetter
Corp.,
Erection
(1986),
I. Certified Both Fireman’s urged and Donohue modify appeal. certified on certified question, previously quoted, asks whether a professional engineer prepares plans specifica- who tions project construction is "in the business of supplying information to others for the *5 recipient dealings in its business with third parties negligent misrepresentations liable in tort under added.) (Emphasis parties Moorman.” contend that parties” agree the reference to "third is erroneous. We court that "with or without a third- appellate with party requirement, question our answer to the certified However, App. would be the same.” 281 Ill. 3d at 798. pursuant responsibility to our to maintain a sound and (Hux Raben, 223, body uniform v. 38 Ill. 2d precedent (1967)), 224-25 we will address this issue. See 134 Ill. 2d 366(a)(5); Shoemaker, 533, R. Schrock v. 159 Ill. 2d Moorman,
In this court articulated three exceрtions (1) to the economic loss rule: where plaintiff sus tained personal injury property damage, or resulting event, i.e., a from tortious dangerous sudden or occur (2) (Moorman, 86); rence 91 Ill. 2d at plaintiffs where the damages are proximately by caused a defendant’s intentional, i.e., false representation, (Moorman, frаud (3) 88-89); 91 Ill. 2d at where the plaintiffs damages proximately are by negligent caused misrepresenta tion aby defendant in the business of supplying infor guidance mation for the of others in their business 89). (Moorman, transactions 91 Ill. 2d at In See re Chicago Litigation, 179, Flood (1997); 176 Ill. 2d 202-03 In re Illinois Bell Station Switching Litigation, 161 Ill. 2d at 240-41. In situations, each of these three plaintiff may recover in tort the defendant.
In
subsequent
decisions,
several
this court has
discussed the Moorman
negligent misrep-
resentation
a defendant
supplying
the business of
for the
of others in their business
transactions.
This court has never
included an ad-
ditional
requirement
those business transactions
See,
must be made specifically with third parties.
e.g.,
Mann,
2314 Lincoln Park West Condominium Ass’n v.
Gin,
Frazier, Ltd.,
302,
(1990);
&
Ebel
Anderson,
However, several court refer to decisions Rifkind, requirement. an additional See N. third-party Negligent Misrepresentation Party in Illinois: The Third (1994). Appellate 82 Ill. B.J. 668 (Non)requirement, third-party require decisions that refer to an additional Homann, 874, 130 Ill. 3d 878-79 ie.g., ment Grass v. (1984); Black, Brokerage, Jackson & Simmons Insurance Corp., Inc. v. International Business Machines (1982)) point. 134-36 are overruled on this modify by deleting the certified the refer We *6 modified, third The as is as fol parties. question, ence to lows: prepares plans who and
"Is specifications project for a construction in the business of supplying information to others for the of the reсipient dealings in liable in tort for its business and negligent misrepresentation ***[?]” under Moorman
II. Economic Loss Doctrine suggestion that we We first address Fireman’s application this of the economic loss abandon court’s services, it furnishing replace of doctrine to the the duty analysis.” We decline "with traditional explained: As court has invitation. important an provider
"A and his client have of services their rela- being in to establish the terms of interest able agreement. tionship prior entering into a final to comprehensively policy supporting ability the to interest parallels relationship in a contract the define a service comprеhensively policy supporting ability to interest the goods. It relationship in a contract for the sale of define therefore, apply to appropriate, that Moorman should is industry. as a seller’s duties are defined the service Just provider buyer, of a of by with a the duties his contract he enters into may by the contract services be defined case, the economic his client. When this is the with applies prevent recovery purely eco- doctrine the in nomic loss tort.
* * *
that
The evolution of the economic loss doctrine shows
industry only
applicable
is
to the service
duty
party performing
where the
the service is
defined
the сontract
that he executes with his client.
contract,
Where a
arises outside of the
the economic
prohibit
recovery
loss doctrine does not
in tort for the
negligent
duty.” Congregation
breach of that
the Pas
sion,
A. Application Engineers appellate court held as follows: think "We holding 2314 Lincoln Park requires West us to a plaintiff may purely find that not recover economic engineer.” losses in a tort action 281 Ill. App. at assigns holding 796. Fireman’s error to this and to appellate court’s reliance on 2314 Lincoln Park West. agree that, with
We
based on
West,
2314 Lincoln Park
ap
the economic loss doctrine
engineers.
plies
West,
In 2314 Lincoln Park
this court
held that
applied
economic loss doctrine
to archi
tects, preventing the recovery
economic losses
in tort. This court
reasoned that
"[t]he architect’s
responsibility originated in
origi
its contract with the
owner,
nal
these
[purely
circumstances
economic
its duties
accordingly.”
loss]
should bе measured
*7
West,
Lincoln Park
2314 Lincoln Park West involved a claim several parties, including an architectural firm. How- ever, the question certified in that case was: " exception 'Should there be an to the rule set forth in permit seeking
Moorman which would
Plaintiffs
to re
purely
expectations
cover
economic losses due to defеated
bargain
of a commercial
to recover from an architect or
”
added.)
(Emphasis
in tort?’
2314 Lincoln Park
West,
168
that,
This court concluded
with Moorman
"Consistent
progeny,
and its
we answer the certified
in the
negative
today
and hold
that a tort action will not lie in
the circumstances described.” 2314 Lincoln Park
West,
Further, court сould not find engineers substantive difference between architects and (281 purposes App. for of the economic loss rule Ill. 3d (and therein)), at 796 cases cited nor can we. In 2314 this court likewise did not distin West, Lincoln Park guish engineers. architects from 2314 Lincoln Park 2d at West, 136 Ill. 311. We hold that the economic loss recovery against enginеers in tort bars losses. economic B. Negligent Misrepresentation Exception Again guided by appel- West, 2314 Lincoln Park negligent misrepresenta- late court also held that the tion to the economic loss doctrine found in assigns apply Moorman did not in this case. Fireman’s holding. this error to negligent misrepresentation
The fоcus of Moorman's
exception to the economic loss doctrine is whether the
supplying
defendant is
the business of
others,
the information
for the
or whether
merely ancillary
supplied
to the sale or in con
that is
is
or other matter.
nection with the sale of merchandise
quoting
at
281 Ill.
3d
Rosenstein v. Standard
818, In dicta
Corp.,
& Poor’s
al
this court reasoned that
West,
Park
2314 Lincoln
though
supplies information, that informa
an architect
tangible product, i.e.,
structure,
tion is incidental to
usually
and is
transformed into the structure itself.
"In сontrast to the client, relationship between and their accountant something tangible, produces such his client architect and characteristics in a plan as a that results structure. ascertainable, they readily tangible object are of a par- and studied in a contract can be memorialized ties.” drawings рlans incidental to were Donohue’s supply system. tangible product, The ac- water i.e., curacy plans in contract memorialized of such can be negligent misrepresen- hold that Moorman’s terms. We does not economic loss doctrine tation to the apply in this case.
CONCLUSION Fireman’s attempts to recover economic loss from resulting product Donohue’s that did not meet com- expectations. mercial This interest meant was to be *9 protected by contract law rather than law. reasons,
For foregoing judgment the ap- pellate modified, is affirmed as cause is to the County. remanded circuit court of Cook as modified;
Affirmed cause remanded. HEIPLE, CHIEF JUSTICE dissenting: I majority opinion dissent from the I bеcause believe longer the Moorman doctrine apply should no to professional take malpractice cases. We should this op to portunity application reevaluate the of Moorman and protection services, remove its rather than engage case-by-case continue determination a given profession of whether owes some undefinable ex- tracontractual to clients. See Congregation of Passion, Holy v. Cross Province Touche Ross & (1994) J., (Heiple, dissenting, joined Ill. 2d 186-92 J.). Harrison, by however, majority, has seen fit to a piecemeal approach applying continue Moor- man professional malpractice architects engineers attorneys and now but or not accountants. doing, coherently so this court failed to differenti has In thereby ate these professional groups, placing between judges litigants position trial the unenviable will guessing professionals which additional receive protection under Moorman’s economic loss doctrine.
Accordingly, I dissent. respectfully join in and NICKELS JUSTICES HARRISON dissent.