Illinois Appellate Courts Disagree on Scope of Construction Statute of Repose

A recent decision by an Illinois Appellate Court continued the debate regarding the interpretation of the construction statute of repose (Illinois Code of Civil Procedure, Section 13-214(b)).

The construction statute of repose states:

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.

The statute seeks to protect construction parties from having to defend against stale claims. Since its inception the statute has been a balancing act between the rights of the injured party and the rights of the party responsible for the construction. Illinois courts generally have limited the statute to apply to claims of construction or improvement to real property. However, where some courts differ is on claims brought as to duties of maintenance and inspection.

In Ryan v. Commonwealth Edison Co., Ryan, an electrician, was injured when a circuit breaker exploded. He claimed that ComEd was responsible for the electrical current flowing into the building and that the severity of his accident was increased by ComEd’s negligence regarding its ongoing maintenance duties. ComEd argued that the claim should be barred under the statute because the injury resulted from design flaws in the power system when it was installed 20 years ago, which would place it well outside the 10 year limit imposed by the statute. ComEd’s motion for summary judgment was granted, but the 1st District Appellate Court, Sixth Division, overturned this decision stating that the injury was the result of poor maintenance and inspection rather than design flaws in the original power system and therefore the statute does not apply.

This circuit’s decision focuses on the continuing acts related to the product, rather than the date of the original design of the product. That is significant in that the court looked beyond a hard and fast date of design and instead examined the entire fact background of the power system. The ruling is fair and just and may lead to decisions based on the facts, rather on a certain date of installation, design, sale or manufacture of a product. Motions for summary judgment will be denied where genuine issues of material fact are open for a jury to decide.

The statute of repose can be applied when (1) the product at issue is an improvement to real property and (2) the defendant’s activities fall within those listed in the statute, i.e. design, planning, supervision, observation or management of construction, or construction of improvement.

In Ryan v. Commonwealth Edison Co. both parties agreed that the electrical system constituted an improvement to real property. While ComEd argued that the injury was a result of the original installment of the electrical system, Ryan argued that ComEd’s negligent activities weren’t those that fell under the umbrella of the statute, but rather the ongoing maintenance duties of ComEd as a supplier of power. The Appellate Court based its decision to overturn the lower court’s granting of ComEd’s motion for summary judgment by focusing on “the specific activity in question rather than the fact that the negligence in inspection was perpetrated by the same party that installed the system in question.” And while ComEd was the installer of the system they were also the inspector and the court held that the injury in question arose not from a design flaw in the original system, but from a failure in inspection and maintenance. Therefore, because the actions of maintenance and inspection are not covered under the statute, the statute does not apply.

However, this interpretation is not held by all Illinois Appellate Courts. In CITGO Petroleum Corp. v. McDermott Int’l Inc. the First District Appellate Court, Third Division, held that the “failure to maintain” allegations were not enough to exclude the application of the statute of repose. The case was brought by CITGO against numerous defendants after a fire at its oil refinery. One of the defendants, Babcock & Wilcox Co. (B&W) brought a third-party complaint against Union Oil Company of California (Unocal), a former owner of the refinery, for its failure to inspect and maintain the refinery’s piping equipment. During the construction of the refinery B&W determined that some of its piping might not have been up to the proper specifications. Unocal declined B&W’s offer to replace the piping, stating that they had inspected it themselves and it was up to standards. The Appellate Court ruled that the relevant “allegations were based on the defective pipefitting, which was alleged to have been installed when the refinery was constructed” almost 20 years before the complaint was brought. Thus the claim is barred under the statute of repose as being outside the 10 year time limit.

While the court in Ryan v. ComEd finds an exception to the rule, the court for CITGO v. McDermott advocates a no loophole policy. In CITGO’s ruling the court relies on the principle that the statute can be applied if there is any link between the injury and a defect in the original design. So even if improvements or modifications were made, if the original design defect in some way contributed to the accident then the statute would apply to the claim. Whereas in Ryan, the court seems more intent on making distinctions between past and current roles. So while ComEd did install the electrical system the court did not find this strong enough to apply the statute, and instead cited its current capacities and duties. So two courts within the same district can have a hugely different interpretation of law.

Kreisman Law Offices is a plaintiff-based law firm servicing Illinois and the entire Cook County area, including Rolling Meadows, Palos Hills, Winnetka, and Hastings.