NBD Bank v. Krueger Ringier, Inc.
Annotate this Case
Sixth Division
September 30, 1997
No. 1-95-2897
NBD BANK, as Trustee under Trust ) Appeal from the Circuit
No. 4172-HP, Successor in Interest ) Court of Cook County
to NBD Trust Company of Illinois, )
as Trustee under Trust No. 4172-HP, )
Successor in Interest to First )
National Bank of Highland Park, )
under Trust No. 4172, and )
KLAIRMONT ENTERPRISES, INC., )
Beneficiary of NBD Bank Trust )
No. 4172-HP, Successor in )
Interest to NBD Trust Company of ) No. 93 L 09530
Illinois, as Trustee under Trust )
No. 4172-HP, Successor in Interest )
to First National Bank of Highland )
Park, under Trust No. 4172, )
)
Plaintiffs-Appellants, )
)
v. )
)
KRUEGER RINGIER, INC., ) Honorable
) David Lichtenstein,
Defendant-Appellee. ) Judge Presiding.
JUSTICE ZWICK delivered the opinion of the court:
Plaintiffs brought this action in tort to recover their
costs incurred investigating, cleaning, removing and restoring
petroleum contaminated soil on a parcel of land purchased from
defendant, Krueger Ringier, Inc., (Krueger). Defendant filed a
motion to dismiss plaintiffs' claims pursuant to section 2-615 of
the Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West
1996)). The trial court dismissed plaintiffs' action with
prejudice, ruling, inter alia, that the tort-based recovery
sought by plaintiffs consisted of damages for "economic loss" and
was precluded by the supreme court's decision in Moorman
Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69, 435 N.E.2d 443 (1982). Plaintiffs have appealed the dismissal of their
claims, asserting that (1) the doctrine enunciated in Moorman
does not bar their recovery and (2) liability should be imposed
upon defendant as a matter of public policy.
On or about August 19, 1986, plaintiffs entered into a real
estate sales contract with defendant for the purchase of certain
real property, consisting of approximately 1,000,000 square feet,
which was then commonly known as the Hall Printing Plant, on
which defendant had conducted a commercial printing business.
The subject property consisted of two distinct parcels of land,
one of which was located north of Diversey Avenue at
approximately 4600 West and was improved with various industrial
buildings which contained certain items of printing equipment.
The second parcel consisted of an unimproved lot situated
immediately south of Diversey Avenue, also at approximately 4600
West.
Defendant had ceased its printing operation and vacated the
premises sometime before August 19, 1986. Prior to the execution
of the real estate sales agreement, the owner of the beneficial
interest of plaintiffs' land trust walked through the property
and conducted a visual inspection. The parties closed the real
estate transaction on December 22, 1986.
In late 1990, plaintiffs discovered the existence of
contamination to the underground soil on the unimproved lot
located on the south side of Diversey Avenue. Waste water was
removed from the subsurface of the lot in December 1990, and a
sludge mixture was reclaimed from the subsurface in late 1991.
Plaintiffs thereafter learned that the contamination possibly
resulted from a petroleum-based substance which had leaked from
ruptured underground storage tanks on the unimproved lot. In
July 1993, plaintiffs discovered that a petroleum-based substance
from the underground storage tanks had contaminated the soil
beneath surface.
Plaintiffs filed suit in August 1993, claiming that
defendant was liable to them based upon the contaminated
condition of this unimproved lot. Plaintiffs' complaint, as
finally amended, consisted of three counts and sought damages in
excess of $30,000 as recovery for costs incurred "in the
inspection and testing of subsoil, reclamation, removal of the
tanks and in attempting to reach a corrective measure so as to
return the soil[,] both the subsurface and surface[,] to a safe
condition." In Count I of the complaint, plaintiffs alleged that
defendants were liable under section 353 of the Restatement
(Second) of Torts, "Undisclosed Dangerous Conditions Known to
Vendor." Restatement (Second) of Torts 353 (1965). Count II
merely incorporated by reference the substantive allegations in
Count I and alleged that plaintiffs' "injuries and damages [were]
a direct and proximate result of [d]efendant's *** actions." In
Count III, plaintiffs again incorporated by reference the
substantive allegations in Count I and asserted that, as a matter
of public policy, defendant should be held liable for the cost of
removing the underground storage tanks, abatement of the
resulting contamination and reclamation of the soil. The trial
court dismissed plaintiffs' complaint with prejudice, and
plaintiffs have appealed.
We initially address plaintiffs' claim that the trial court
erred in applying the Moorman doctrine so as to preclude recovery
under section 353 of the Restatement (Second) of Torts.
Restatement (Second) of Torts 353 (1965).
In general, a vendor of land is not subject to liability for
physical harm caused to his vendee or others while upon the land
after the vendee has taken possession by any dangerous condition,
whether natural or artificial, which existed at the time that the
vendee took possession. See Restatement (Second) of Torts 352
(1965). This principle reflects the doctrine of caveat emptor,
which mandates that, in a real estate transaction, the deed of
conveyance represents the full agreement of the parties and
excludes all other terms and liabilities. See Heider v. Leewards
Creative Crafts, Inc., 245 Ill. App. 3d 258, 275, 613 N.E.2d 805
(1993).
However, this general rule of nonliability is subject to the
following exception set forth in section 353:
"(1) A vendor of land who conceals or fails to disclose
to his vendee any condition, whether natural or
artificial, which involves unreasonable risk to persons
on the land, is subject to liability to the vendee and
others upon the land with the consent of the vendee or
his subvendee for physical harm caused by the condition
after the vendee has taken possession, if
(a) the vendee does not know or have reason
to know of the condition or the risk
involved, and
(b) the vendor knows or has reason to know of
the condition, and realizes or should realize
the risk involved, and has reason to believe
that the vendee will not discover the
condition or realize the risk." Restatement
(Second) of Torts 353 (1965).
Sections 352 and 353 of the Restatement have both been
adopted as the law in Illinois. See Rowe v. State Bank, 125 Ill. 2d 203, 215, 531 N.E.2d 1358 (1988); Century Display
Manufacturing Corp. v. D. R. Wager Construction Co., 71 Ill. 2d 428, 433, 376 N.E.2d 993 (1978); Sparling v. Peabody Coal Co. 59 Ill. 2d 491, 494, 322 N.E.2d 5 (1974).
In order to recover under section 353, the plaintiff must
establish that the defendant concealed or failed to disclose a
condition which, prior to the sale, created an unreasonable risk
to persons on the land; the defendant knew or had reason to know
of the condition and realized or should have realized the risk
involved; the defendant had reason to believe that the plaintiff
would not discover the condition; the condition caused physical
harm, after plaintiff took possession but before plaintiff knew
or had reason to know of the condition and the risk involved and
before plaintiff had an opportunity to take precautions to
prevent the injury. Restatement (Second) of Torts 353 (1965).
Prosecution of a claim under section 353 constitutes an
action sounding in tort. Accordingly, any claim brought pursuant
to this section is subject to the "economic loss doctrine"
enunciated in Moorman.
At common law, purely economic losses are generally not
recoverable in tort actions, except (1) where the plaintiff has
sustained personal injury or property damage resulting from a
sudden or dangerous occurrence (Moorman, 91 Ill. 2d at 86), (2)
where the plaintiff's damages are the proximate result of a
defendant's intentional, false representation (fraud) (Moorman,
91 Ill. 2d at 88-89), or (3) where the plaintiff's damages are a
proximate result of a negligent misrepresentation by a defendant
in the business of supplying information for the guidance of
others in their business transactions (Moorman, 91 Ill. 2d at
89). See Trans State Airlines v. Pratt & Whitney Canada, Inc.,
177 Ill. 2d 21, 26-27, 682 N.E.2d 45 (1997); In re Chicago Flood
Litigation, 176 Ill. 2d 179, 199, 680 N.E.2d 265 (1997). We find
that none of these exceptions apply in the case at bar.
"`Economic loss' has been defined as inadequate value, costs
of repair and replacement of the defective product, and
consequent loss of profits, without any claim for personal injury
or damage to other property *** [citation] as well as `the
diminution in the value of the product because it is inferior in
quality and does not work for the general purposes for which it
was manufactured and sold.' [citation]." Moorman, 91 Ill. 2d at
82.
This doctrine is premised upon the theory that tort law
affords a remedy for losses occasioned by personal injuries or
damage to one's property, but contract law and the Uniform
Commercial Code offer the appropriate remedy for economic losses
occasioned by diminished commercial expectations not coupled with
injury to person or property. In re Chicago Flood Litigation,
176 Ill. 2d at 200, quoting In re Illinois Bell Switching Station
Litigation, 161 Ill. 2d 233, 241, 641 N.E.2d 440 (1994), citing
Moorman, 91 Ill. 2d at 86. The proper test for distinguishing
between recovery in tort and contract damages (economic losses)
depends upon the nature of the defect and the manner in which the
damage occurred. Trans State Airlines, 177 Ill. 2d at 34-35;
Moorman, 91 Ill. 2d at 82.
The economic loss doctrine is applicable to litigation
predicated upon a real estate transaction. Redarowicz v.
Ohlendorf, 92 Ill. 2d 171, 176, 441 N.E.2d 324 (1982). To
recover in tort, there must be a showing of harm above and beyond
disappointed expectations. Redarowicz, 92 Ill. 2d at 177. A
purchaser's desire to enjoy the benefit of his bargain is not an
interest that tort law traditionally protects. Redarowicz, 92 Ill. 2d at 177. The remedy for economic loss, relating to a
purchaser's disappointed expectations due to deterioration,
internal breakdown or nonaccidental cause, lies in contract.
Moorman, 91 Ill. 2d at 86. Thus, the economic loss doctrine bars
recovery in tort under such circumstances (In re Chicago Flood
Litigation, 176 Ill. 2d at 200-201, citing Redarowicz v.
Ohlendorf, 92 Ill. 2d 171, 177-78, 441 N.E.2d 324 (1982) (and
authorities cited therein)), regardless of the plaintiff's
inability to recover under an action in contract (Anderson
Electric, Inc. v. Ledbetter Erection Corp., 115 Ill. 2d 146, 153,
503 N.E.2d 246 (1986)).
In the instant case, the damage alleged by plaintiffs was
certainly caused by gradual deterioration, internal breakage, or
other nonaccidental causes, rather than a sudden or dangerous
event. See In re Chicago Flood Litigation, 176 Ill. 2d at 200-
201, citing Redarowicz, 92 Ill. 2d at 177-78. In addition, the
complaint requested damages in excess of $30,000 as compensation
for the costs incurred in removal of the underground storage
tanks and abatement of the contamination. Thus, the recovery
sought by plaintiffs was their "disappointed commercial
expectations" based upon the expense they incurred in restoring
the property to the condition they expected when they entered
into the transaction. These damages unmistakably constituted
economic losses. Accordingly, we hold that the trial court
correctly determined that the Moorman doctrine barred plaintiffs'
recovery in tort.
In addition, we hold that the trial court properly dismissed
Counts II and III of the complaint pursuant to section 2-615(a)
of the Illinois Code of Civil Procedure. 735 ILCS 5/2-615(a)
(West 1996).
Count II of plaintiffs' complaint alleged only that
plaintiffs' "injuries and damages [were] a direct and proximate
result of [d]efendant's *** actions." This allegation is
insufficient to assert a claim for negligence. See Kirk v.
Michael Reese Hospital & Medical Center, 117 Ill. 2d 507, 525,
513 N.E.2d 387 (1987) (a legally sufficient complaint for
negligence must plead facts that establish the existence of a
duty owed by defendant to plaintiff, breach of the duty, and an
injury proximately caused by the breach). Moreover, even if
plaintiffs had sufficiently alleged a negligence claim, recovery
would be barred by the Moorman doctrine in accordance with the
reasoning articulated above.
In Count III, plaintiffs sought to impose tort liability
upon defendant as a matter of public policy. Plaintiffs rely
principally on People v. Brockman, 148 Ill. 2d 260, 592 N.E.2d 1026 (1992), and People v. Fiorini, 143 Ill. 2d 318, 574 N.E.2d 612 (1991), in support of their claim that the trial court erred
in failing to recognize their right to recover in tort from
defendant. We note, however, that the decisions in Brockman and
Fiorini are readily distinguishable. Neither of these cases
centered upon claims brought against the seller by the purchaser
in a real estate transaction. Rather, both cases involved
contribution claims by a defendant/third-party plaintiff being
prosecuted by the State for violations of the Illinois
Environmental Protection Act (the Act) (415 ILCS 5/1 et seq.
(West 1996)). Although the supreme court recognized the right to
assert a claim for contribution based upon the contamination of
real property, the court specifically acknowledged that "it is
conceivable that a party could bring a third-party claim where no
private cause of action would be permitted." See People v.
Brockman, 143 Ill. 2d 351, 367, 574 N.E.2d 626 (1991). Such is
the case here.
A private right of action exists where (1) the alleged
violation of the statute contravenes public policy, (2) the
plaintiff is a member of the class the statute is designed to
protect, (3) the injury is one the statute was designed to
prevent, (4) the need for civil actions under the statute is
clear, and (5) there is no indication that the remedies
articulated in the statute are the only remedies available.
Sawyer Realty Group, Inc. v. Jarvis Corp., 89 Ill. 2d 379, 388,
432 N.E.2d 849 (1982).
It is readily apparent that the tort claim which plaintiffs'
seek to pursue fails to satisfy several of these criteria. The
Illinois Environmental Protection Act and companion regulations
were not designed to protect the purchasers of real estate who
discover after the conveyance that remedial action is necessary
to remove contaminants from the property, nor was the Act
designed to protect against economic losses resulting from the
obligation to remove contaminants. In addition, there is no
clear need for civil actions under the statute; the existing
legislative scheme which provides for prosecution by the State of
Illinois and allows contribution claims against third-party
violators more than adequately serves the purpose of the statute,
which is to protect the environment and minimize environmental
damage (415 ILCS 5/20(b) (West 1996)).
As noted above, the recovery sought by plaintiffs consisted
of purely economic losses based upon disappointed commercial
expectations. Under these facts, we hold that a private right of
action under the Illinois Environmental Protection Act does not
exist, and the public policy concerns which governed the
decisions in Brockman and Fiorini are not present here.
Moreover, plaintiffs' argument is in direct conflict with
the public policy which supports the free and unhindered sale of
real estate. Heider, 245 Ill. App. 3d at 275. The public policy
promoting the free alienation of real property would be severely
undermined if vendors were to be held liable in tort for economic
losses resulting after they sold their interest to another party.
Heider, 245 Ill. App. 3d at 275.
Finally, we reject plaintiffs' contention that the Illinois
Constitution supports the establishment of a private right of
action in tort against a seller of contaminated property.
Section 1 of article XI of the Illinois Constitution states that
"the duty of each person is to provide and maintain a healthful
environment for the benefit of this and future generations."
Ill. Const. 1970, art. XI, 1. Article XI, section 2, gives
private citizens the right to "enforce this right against any
party, governmental or private." Ill. Const. 1970, art. XI, 2.
However, the Illinois Supreme Court has decisively held that
section 2 of article XI does not create any hew causes of action,
but merely eliminates the "special injury" requirement typically
mandated in environmental nuisance cases. City of Elgin v.
County of Cook, 169 Ill. 2d 53, 85, 660 N.E.2d 875 (1995).
Consequently, although a plaintiff need not allege a special
injury to bring an environmental claim, there must exist a
cognizable cause of action; allegations of damage, even if true,
are not actionable absent a cognizable cause of action. City of
Elgin, 169 Ill. 2d at 85-86. We have already determined that
plaintiffs are precluded from asserting a claim in tort for the
economic loss incurred, and their complaint does not advance any
other theory of recovery or viable cause of action. Accordingly,
we hold that the language of article XI of the Illinois
Constitution does not create a mechanism by which plaintiffs can
recover against defendant for the damages sought in the
complaint.
For the foregoing reasons, the judgment of the circuit court
of Cook County is affirmed.
AFFIRMED.
GREIMAN, P.J., and THEIS, J., concur.
September 30, 1997
No. 1-95-2897
NBD BANK, as Trustee under Trust ) Appeal from the Circuit
No. 4172-HP, Successor in Interest ) Court of Cook County
to NBD Trust Company of Illinois, )
as Trustee under Trust No. 4172-HP, )
Successor in Interest to First )
National Bank of Highland Park, )
under Trust No. 4172, and )
KLAIRMONT ENTERPRISES, INC., )
Beneficiary of NBD Bank Trust )
No. 4172-HP, Successor in )
Interest to NBD Trust Company of ) No. 93 L 09530
Illinois, as Trustee under Trust )
No. 4172-HP, Successor in Interest )
to First National Bank of Highland )
Park, under Trust No. 4172, )
)
Plaintiffs-Appellants, )
)
v. )
)
KRUEGER RINGIER, INC., ) Honorable
) David Lichtenstein,
Defendant-Appellee. ) Judge Presiding.
JUSTICE ZWICK delivered the opinion of the court:
Plaintiffs brought this action in tort to recover their
costs incurred investigating, cleaning, removing and restoring
petroleum contaminated soil on a parcel of land purchased from
defendant, Krueger Ringier, Inc., (Krueger). Defendant filed a
motion to dismiss plaintiffs' claims pursuant to section 2-615 of
the Illinois Code of Civil Procedure (735 ILCS 5/2-615 (West
1996)). The trial court dismissed plaintiffs' action with
prejudice, ruling, inter alia, that the tort-based recovery
sought by plaintiffs consisted of damages for "economic loss" and
was precluded by the supreme court's decision in Moorman
Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69, 435 N.E.2d 443 (1982). Plaintiffs have appealed the dismissal of their
claims, asserting that (1) the doctrine enunciated in Moorman
does not bar their recovery and (2) liability should be imposed
upon defendant as a matter of public policy.
On or about August 19, 1986, plaintiffs entered into a real
estate sales contract with defendant for the purchase of certain
real property, consisting of approximately 1,000,000 square feet,
which was then commonly known as the Hall Printing Plant, on
which defendant had conducted a commercial printing business.
The subject property consisted of two distinct parcels of land,
one of which was located north of Diversey Avenue at
approximately 4600 West and was improved with various industrial
buildings which contained certain items of printing equipment.
The second parcel consisted of an unimproved lot situated
immediately south of Diversey Avenue, also at approximately 4600
West.
Defendant had ceased its printing operation and vacated the
premises sometime before August 19, 1986. Prior to the execution
of the real estate sales agreement, the owner of the beneficial
interest of plaintiffs' land trust walked through the property
and conducted a visual inspection. The parties closed the real
estate transaction on December 22, 1986.
In late 1990, plaintiffs discovered the existence of
contamination to the underground soil on the unimproved lot
located on the south side of Diversey Avenue. Waste water was
removed from the subsurface of the lot in December 1990, and a
sludge mixture was reclaimed from the subsurface in late 1991.
Plaintiffs thereafter learned that the contamination possibly
resulted from a petroleum-based substance which had leaked from
ruptured underground storage tanks on the unimproved lot. In
July 1993, plaintiffs discovered that a petroleum-based substance
from the underground storage tanks had contaminated the soil
beneath surface.
Plaintiffs filed suit in August 1993, claiming that
defendant was liable to them based upon the contaminated
condition of this unimproved lot. Plaintiffs' complaint, as
finally amended, consisted of three counts and sought damages in
excess of $30,000 as recovery for costs incurred "in the
inspection and testing of subsoil, reclamation, removal of the
tanks and in attempting to reach a corrective measure so as to
return the soil[,] both the subsurface and surface[,] to a safe
condition." In Count I of the complaint, plaintiffs alleged that
defendants were liable under section 353 of the Restatement
(Second) of Torts, "Undisclosed Dangerous Conditions Known to
Vendor." Restatement (Second) of Torts 353 (1965). Count II
merely incorporated by reference the substantive allegations in
Count I and alleged that plaintiffs' "injuries and damages [were]
a direct and proximate result of [d]efendant's *** actions." In
Count III, plaintiffs again incorporated by reference the
substantive allegations in Count I and asserted that, as a matter
of public policy, defendant should be held liable for the cost of
removing the underground storage tanks, abatement of the
resulting contamination and reclamation of the soil. The trial
court dismissed plaintiffs' complaint with prejudice, and
plaintiffs have appealed.
We initially address plaintiffs' claim that the trial court
erred in applying the Moorman doctrine so as to preclude recovery
under section 353 of the Restatement (Second) of Torts.
Restatement (Second) of Torts 353 (1965).
In general, a vendor of land is not subject to liability for
physical harm caused to his vendee or others while upon the land
after the vendee has taken possession by any dangerous condition,
whether natural or artificial, which existed at the time that the
vendee took possession. See Restatement (Second) of Torts 352
(1965). This principle reflects the doctrine of caveat emptor,
which mandates that, in a real estate transaction, the deed of
conveyance represents the full agreement of the parties and
excludes all other terms and liabilities. See Heider v. Leewards
Creative Crafts, Inc., 245 Ill. App. 3d 258, 275, 613 N.E.2d 805
(1993).
However, this general rule of nonliability is subject to the
following exception set forth in section 353:
"(1) A vendor of land who conceals or fails to disclose
to his vendee any condition, whether natural or
artificial, which involves unreasonable risk to persons
on the land, is subject to liability to the vendee and
others upon the land with the consent of the vendee or
his subvendee for physical harm caused by the condition
after the vendee has taken possession, if
(a) the vendee does not know or have reason
to know of the condition or the risk
involved, and
(b) the vendor knows or has reason to know of
the condition, and realizes or should realize
the risk involved, and has reason to believe
that the vendee will not discover the
condition or realize the risk." Restatement
(Second) of Torts 353 (1965).
Sections 352 and 353 of the Restatement have both been
adopted as the law in Illinois. See Rowe v. State Bank, 125 Ill. 2d 203, 215, 531 N.E.2d 1358 (1988); Century Display
Manufacturing Corp. v. D. R. Wager Construction Co., 71 Ill. 2d 428, 433, 376 N.E.2d 993 (1978); Sparling v. Peabody Coal Co. 59 Ill. 2d 491, 494, 322 N.E.2d 5 (1974).
In order to recover under section 353, the plaintiff must
establish that the defendant concealed or failed to disclose a
condition which, prior to the sale, created an unreasonable risk
to persons on the land; the defendant knew or had reason to know
of the condition and realized or should have realized the risk
involved; the defendant had reason to believe that the plaintiff
would not discover the condition; the condition caused physical
harm, after plaintiff took possession but before plaintiff knew
or had reason to know of the condition and the risk involved and
before plaintiff had an opportunity to take precautions to
prevent the injury. Restatement (Second) of Torts 353 (1965).
Prosecution of a claim under section 353 constitutes an
action sounding in tort. Accordingly, any claim brought pursuant
to this section is subject to the "economic loss doctrine"
enunciated in Moorman.
At common law, purely economic losses are generally not
recoverable in tort actions, except (1) where the plaintiff has
sustained personal injury or property damage resulting from a
sudden or dangerous occurrence (Moorman, 91 Ill. 2d at 86), (2)
where the plaintiff's damages are the proximate result of a
defendant's intentional, false representation (fraud) (Moorman,
91 Ill. 2d at 88-89), or (3) where the plaintiff's damages are a
proximate result of a negligent misrepresentation by a defendant
in the business of supplying information for the guidance of
others in their business transactions (Moorman, 91 Ill. 2d at
89). See Trans State Airlines v. Pratt & Whitney Canada, Inc.,
177 Ill. 2d 21, 26-27, 682 N.E.2d 45 (1997); In re Chicago Flood
Litigation, 176 Ill. 2d 179, 199, 680 N.E.2d 265 (1997). We find
that none of these exceptions apply in the case at bar.
"`Economic loss' has been defined as inadequate value, costs
of repair and replacement of the defective product, and
consequent loss of profits, without any claim for personal injury
or damage to other property *** [citation] as well as `the
diminution in the value of the product because it is inferior in
quality and does not work for the general purposes for which it
was manufactured and sold.' [citation]." Moorman, 91 Ill. 2d at
82.
This doctrine is premised upon the theory that tort law
affords a remedy for losses occasioned by personal injuries or
damage to one's property, but contract law and the Uniform
Commercial Code offer the appropriate remedy for economic losses
occasioned by diminished commercial expectations not coupled with
injury to person or property. In re Chicago Flood Litigation,
176 Ill. 2d at 200, quoting In re Illinois Bell Switching Station
Litigation, 161 Ill. 2d 233, 241, 641 N.E.2d 440 (1994), citing
Moorman, 91 Ill. 2d at 86. The proper test for distinguishing
between recovery in tort and contract damages (economic losses)
depends upon the nature of the defect and the manner in which the
damage occurred. Trans State Airlines, 177 Ill. 2d at 34-35;
Moorman, 91 Ill. 2d at 82.
The economic loss doctrine is applicable to litigation
predicated upon a real estate transaction. Redarowicz v.
Ohlendorf, 92 Ill. 2d 171, 176, 441 N.E.2d 324 (1982). To
recover in tort, there must be a showing of harm above and beyond
disappointed expectations. Redarowicz, 92 Ill. 2d at 177. A
purchaser's desire to enjoy the benefit of his bargain is not an
interest that tort law traditionally protects. Redarowicz, 92 Ill. 2d at 177. The remedy for economic loss, relating to a
purchaser's disappointed expectations due to deterioration,
internal breakdown or nonaccidental cause, lies in contract.
Moorman, 91 Ill. 2d at 86. Thus, the economic loss doctrine bars
recovery in tort under such circumstances (In re Chicago Flood
Litigation, 176 Ill. 2d at 200-201, citing Redarowicz v.
Ohlendorf, 92 Ill. 2d 171, 177-78, 441 N.E.2d 324 (1982) (and
authorities cited therein)), regardless of the plaintiff's
inability to recover under an action in contract (Anderson
Electric, Inc. v. Ledbetter Erection Corp., 115 Ill. 2d 146, 153,
503 N.E.2d 246 (1986)).
In the instant case, the damage alleged by plaintiffs was
certainly caused by gradual deterioration, internal breakage, or
other nonaccidental causes, rather than a sudden or dangerous
event. See In re Chicago Flood Litigation, 176 Ill. 2d at 200-
201, citing Redarowicz, 92 Ill. 2d at 177-78. In addition, the
complaint requested damages in excess of $30,000 as compensation
for the costs incurred in removal of the underground storage
tanks and abatement of the contamination. Thus, the recovery
sought by plaintiffs was their "disappointed commercial
expectations" based upon the expense they incurred in restoring
the property to the condition they expected when they entered
into the transaction. These damages unmistakably constituted
economic losses. Accordingly, we hold that the trial court
correctly determined that the Moorman doctrine barred plaintiffs'
recovery in tort.
In addition, we hold that the trial court properly dismissed
Counts II and III of the complaint pursuant to section 2-615(a)
of the Illinois Code of Civil Procedure. 735 ILCS 5/2-615(a)
(West 1996).
Count II of plaintiffs' complaint alleged only that
plaintiffs' "injuries and damages [were] a direct and proximate
result of [d]efendant's *** actions." This allegation is
insufficient to assert a claim for negligence. See Kirk v.
Michael Reese Hospital & Medical Center, 117 Ill. 2d 507, 525,
513 N.E.2d 387 (1987) (a legally sufficient complaint for
negligence must plead facts that establish the existence of a
duty owed by defendant to plaintiff, breach of the duty, and an
injury proximately caused by the breach). Moreover, even if
plaintiffs had sufficiently alleged a negligence claim, recovery
would be barred by the Moorman doctrine in accordance with the
reasoning articulated above.
In Count III, plaintiffs sought to impose tort liability
upon defendant as a matter of public policy. Plaintiffs rely
principally on People v. Brockman, 148 Ill. 2d 260, 592 N.E.2d 1026 (1992), and People v. Fiorini, 143 Ill. 2d 318, 574 N.E.2d 612 (1991), in support of their claim that the trial court erred
in failing to recognize their right to recover in tort from
defendant. We note, however, that the decisions in Brockman and
Fiorini are readily distinguishable. Neither of these cases
centered upon claims brought against the seller by the purchaser
in a real estate transaction. Rather, both cases involved
contribution claims by a defendant/third-party plaintiff being
prosecuted by the State for violations of the Illinois
Environmental Protection Act (the Act) (415 ILCS 5/1 et seq.
(West 1996)). Although the supreme court recognized the right to
assert a claim for contribution based upon the contamination of
real property, the court specifically acknowledged that "it is
conceivable that a party could bring a third-party claim where no
private cause of action would be permitted." See People v.
Brockman, 143 Ill. 2d 351, 367, 574 N.E.2d 626 (1991). Such is
the case here.
A private right of action exists where (1) the alleged
violation of the statute contravenes public policy, (2) the
plaintiff is a member of the class the statute is designed to
protect, (3) the injury is one the statute was designed to
prevent, (4) the need for civil actions under the statute is
clear, and (5) there is no indication that the remedies
articulated in the statute are the only remedies available.
Sawyer Realty Group, Inc. v. Jarvis Corp., 89 Ill. 2d 379, 388,
432 N.E.2d 849 (1982).
It is readily apparent that the tort claim which plaintiffs'
seek to pursue fails to satisfy several of these criteria. The
Illinois Environmental Protection Act and companion regulations
were not designed to protect the purchasers of real estate who
discover after the conveyance that remedial action is necessary
to remove contaminants from the property, nor was the Act
designed to protect against economic losses resulting from the
obligation to remove contaminants. In addition, there is no
clear need for civil actions under the statute; the existing
legislative scheme which provides for prosecution by the State of
Illinois and allows contribution claims against third-party
violators more than adequately serves the purpose of the statute,
which is to protect the environment and minimize environmental
damage (415 ILCS 5/20(b) (West 1996)).
As noted above, the recovery sought by plaintiffs consisted
of purely economic losses based upon disappointed commercial
expectations. Under these facts, we hold that a private right of
action under the Illinois Environmental Protection Act does not
exist, and the public policy concerns which governed the
decisions in Brockman and Fiorini are not present here.
Moreover, plaintiffs' argument is in direct conflict with
the public policy which supports the free and unhindered sale of
real estate. Heider, 245 Ill. App. 3d at 275. The public policy
promoting the free alienation of real property would be severely
undermined if vendors were to be held liable in tort for economic
losses resulting after they sold their interest to another party.
Heider, 245 Ill. App. 3d at 275.
Finally, we reject plaintiffs' contention that the Illinois
Constitution supports the establishment of a private right of
action in tort against a seller of contaminated property.
Section 1 of article XI of the Illinois Constitution states that
"the duty of each person is to provide and maintain a healthful
environment for the benefit of this and future generations."
Ill. Const. 1970, art. XI, 1. Article XI, section 2, gives
private citizens the right to "enforce this right against any
party, governmental or private." Ill. Const. 1970, art. XI, 2.
However, the Illinois Supreme Court has decisively held that
section 2 of article XI does not create any hew causes of action,
but merely eliminates the "special injury" requirement typically
mandated in environmental nuisance cases. City of Elgin v.
County of Cook, 169 Ill. 2d 53, 85, 660 N.E.2d 875 (1995).
Consequently, although a plaintiff need not allege a special
injury to bring an environmental claim, there must exist a
cognizable cause of action; allegations of damage, even if true,
are not actionable absent a cognizable cause of action. City of
Elgin, 169 Ill. 2d at 85-86. We have already determined that
plaintiffs are precluded from asserting a claim in tort for the
economic loss incurred, and their complaint does not advance any
other theory of recovery or viable cause of action. Accordingly,
we hold that the language of article XI of the Illinois
Constitution does not create a mechanism by which plaintiffs can
recover against defendant for the damages sought in the
complaint.
For the foregoing reasons, the judgment of the circuit court
of Cook County is affirmed.
AFFIRMED.
GREIMAN, P.J., and THEIS, J., concur.
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