Illinois Bell Telephone Co. v. Plote, Inc.

Case Date: 10/21/2002
Court: 1st District Appellate
Docket No: 1-00-3743 Rel

FIRST DIVISION
October 21, 2002


No. 1-00-3743
 
ILLINOIS BELL TELEPHONE COMPANY, 
d/b/a Ameritech Illinois, 
an Illinois Corporation,

       Plaintiff and Counterdefendant-Appellee,

               v.

PLOTE, INC., 
an Illinois Corporation,

       Defendant

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Appeal from the
Circuit Court of
Cook County,


Nos. 98 L 2870



Honorable
James F. Henry,
Judge Presiding.

(Plote, Inc., an Illinois Corporation,
Allied Asphalt Paving Company, an
Illinois Corporation, and Milburn
Brothers, Inc., an Illinois
Corporation, an Illinois Joint
Venture,

       Counterplaintiffs-Appellants).

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PRESIDING JUSTICE GORDON delivered the opinion of the court:


Counterplaintiffs, Plote, Inc., Allied Asphalt PavingCompany and Milburn Brothers, Inc. (collectively Plote orplaintiff), appeal from the judgement of the circuit court ofCook County granting a motion pursuant to section 2-615 of theCode of Civil Procedure (735 ILCS 5/2-615 (West 2000)) in favorof counterdefendant Illinois Bell Telephone Company, d/b/aAmeritech Illinois (Bell or defendant), dismissing counts II,III, IV and V of Plote's lawsuit against Bell. On appeal, Plotecontends that its suit is not barred by the Moorman doctrine(Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69,435 N.E. 2d 443 (1982)); that it has a cause of action under boththe Illinois Underground Utility Facilities Damage Prevention Act(220 ILCS 50/1 et seq. (West 1996)) and the Illinois Highway Code(605 ILCS 5/1-101 et seq.; and that it properly stated a cause ofaction for tortious interference with a contract. We affirm inpart, reverse in part and remand for further proceedings.

BACKGROUND

Plote's first amended counterclaim makes the followinggeneral allegations. Plote entered into a contract with theIllinois Department of Transportation (IDOT) to make improvementsto Arlington Heights Road in the city of Arlington Heights,Illinois. Prior to accepting bids for the above-describedcontract, IDOT submitted the proposed plans for the constructionproject to Bell so that Bell could locate conflicts between theproject and Bell's underground telephone facilities. Bell,however, did not respond to IDOT's request that it identify theanticipated conflicts. Alternatively, Plote alleges that Belldid not fully respond to IDOT's requests to identify anticipatedconflicts. On August 8, 1995, a preconstruction conference washeld at IDOT's offices. At this conference a representative ofBell was informed of the date on which the construction projectwas expected to start.

Beginning on December 13, 1995, a series of "utilitymeetings" was held at which various conflicts relating to Bell'sfacilities were identified. As a result of Bell's failure toidentify the location of its facilities, or alternatively as aresult of Bell's failure to adequately identify those facilities,the construction project was delayed. Pursuant to the contract,Plote was to complete the project by October 31, 1996; however,due to the delays, it was not completed until May 31, 1997. Plote sustained increased expenses as a result of these delays.

The first amended counterclaim alleges three countspertinent to this appeal. Count II purports to state a claim fora violation by Bell of the Illinois Underground UtilityFacilities Damage Prevention Act (Underground Facilities Act)(220 ILCS 50/9 (West 1996)). Count III purports to state a claimfor common law negligence. Count IV purports to state a claimfor a violation by Bell of the Illinois Highway Code (605 ILCS5/9-113(f) (West 1996)). Count V purports to state a claim fortortious interference with contract.(1)

On June 16, 1999, Bell filed a motion to dismiss Plote'sfirst amended counterclaim in its entirety pursuant to section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615 (West2000)). Bell argued that counts II, III and IV were barred underthe Moorman doctrine. Bell further argued that count V failed tostate a cause of action because it failed to allege that Bellintended to interfere with Plote's contract with IDOT. The trialcourt subsequently granted Bell's section 2-615 motion anddismissed counts I, II, III, IV and V.

Plote filed its second amended counterclaim on December 1,1999. This counterclaim made changes to count I and V, and addedcounts VI and VII.(2) The second amended counterclaim reallegedthe general allegations made in the first amended counterclaim. It also realleged counts II, III and IV verbatim. Bellsubsequently filed a motion to dismiss pursuant to sections 2-619(735 ILCS 5/2-619 (West 2000)) and 2-615. Bell again argued thatcount V failed to make allegations that its interference withBell's contract was intentional. Bell's motion does not addresscounts II, III and IV, except to note in a footnote that"although not so noted in its counterclaim, the undersignedcounsel has confirmed with *** counsel for Plote, that counts II,III and IV were re-pled solely for the purpose of preservingPlote's appellate rights." The court granted Bell's motion anddismissed counts I, V, VI and VII. This appeal followed.

ANALYSIS

Plote first argues that the trial court erred in dismissingcount II of the complaint, which purports to state a claim for aviolation by Bell of the Illinois Underground Utility FacilitiesDamage Prevention Act. 220 ILCS 50/9 (West 1996). Plotecontends that it is not barred by the Moorman doctrine fromrecovering economic losses for Bell's alleged failure to properlymark the location of its underground facilities, which delayedPlote's construction project. We agree.

The Moorman doctrine, promulgated by our supreme court inMoorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69,435 N.E.2d 443 (1982), established the rule known as the economicloss doctrine as the law in Illinois. The Moorman doctrineprovides that "a plaintiff cannot recover solely economic lossesin tort." Redarowicz v. Ohlendorf, 92 Ill. 2d 171, 176, 441N.E.2d 324, 326 (1982); Moorman, 91 Ill. 2d at 86, 435 N.E.2d at451. Our supreme court, however, has defined several exceptionsto the Moorman doctrine. These exceptions include the"information provider" exception, which allows recovery in tortfor economic losses "where the plaintiff's damages are aproximate result of a negligent misrepresentation by a defendantin the business of supplying information for the guidance ofothers in their business transactions." In re Illinois BellSwitching Station Litigation, 161 Ill. 2d 233, 240-241, 641N.E.2d 440, 443-44 (1994).(3) See Moorman, 91 Ill. 2d at 89, 435N.E.2d at 452 (allowing recovery for economic losses againstthose who are "in the business of supplying information for theguidance of others," thereby upholding the right of recoveryunder Rozny v. Marnul, 43 Ill. 2d 54, 250 N.E.2d 656 (1969),which allowed recovery of economic damages against a surveyor).

Plote urges that the information provider exception appliesto Bell in this case because all Bell was required to do in thissituation was provide information about the location of itsfacilities. Plote contends that the determination of whether Bell is an information provider is made by looking to the contextof the specific transaction involved and not on the basis ofBell's general business. Bell contends that it does not fallwithin the information provider exception because its primarybusiness is to supply telephone service and not information, eventhough its function under the circumstances contemplated by theUnderground Facilities Act is solely to provide information. Weagree with Plote.

Section 10 of the Underground Facilities Act provides inrelevant part as follows:

"Upon notice by the person engaged in excavationor demolition, the person owning or operatingunderground utility facilities *** shall mark,within 48 hours (excluding Saturdays, Sundays andholidays) of receipt of notice, the approximatelocations of such facilities so as to enable theperson excavating or demolishing to establish thelocation of the underground utility facilities orCATS facilities." 220 ILCS 50/10 (West 1996).

This statute provides that the limit of Bell's obligations in thecase at bar was to provide information to Plote regarding thelocation of its underground facilities. Thus, in the context ofthe Underground Facilities Act, Bell is imposed with the duty ofbeing nothing but an information provider.

Although cited only by defendant in a footnote, the decisionof the Fifth District of this court in Followell v. CentralIllinois Public Service Co., 278 Ill. App. 3d 1103, 663 N.E.2d1122 (1996), is squarely on point. The facts in that case arevirtually identical to the facts in the case at bar. InFollowell, the plaintiff contractor was hired by the City of WestFrankfort, Illinois, to replace several water mains. Theplaintiff contacted the defendant natural gas utility company andasked that the defendant mark the locations of its lines whichconflicted with excavations which the plaintiff would need toundertake in the course of its water main work. The plaintiffalleged that the defendant negligently marked the location of itslines, and the defendant allegedly broke one of the plaintiff'sgas lines as a result. The plaintiff had to stop work until thedefendant repaired the gas line, thus incurring economic losses,for which it sued the defendant.

The court reasoned that section 9 of the Act created aprivate cause of action for a violation of section 10. Followell, 278 Ill. App. 3d at 1107, 663 N.E.2d at 1125; 220 ILCS50/9 (West 1994). The court finally noted that "the plainlanguage of the Act does not restrict the damages a plaintiff mayrecover under the Act to 'actual' or 'physical' damages." Followell, 278 Ill. App. 3d at 1107, 663 N.E.2d at 1125. Thecourt then held "that in this instance, where a person sufferspurely economic damages as a result of an owner's breach of itsduty under section 10 of the Act, that person may bring an actionunder section 9 for purely economic damages." Followell, 278Ill. App. 3d at 1107, 663 N.E.2d at 1125. The court thus heldthat the plaintiff could recover for its economic losses. Followell, 278 Ill. App. 3d at 1107, 663 N.E.2d at 1125; accord A&L Underground, Inc. v. City of Port Richey, 732 So. 2d 480, 481(Fla. App. 1999).

The Followell court held that the defendant had anindependent duty to supply information to the plaintiff regardingthe location of its underground facilities. The court reasoned:

"This statute imposes a duty on the defendant as theowner or operator of underground facilities to supplyinformation about the location of the undergroundfacilities to the plaintiff or any other personproperly giving notice of an intention to excavate ordemolish. The defendant is clearly engaged in thebusiness of supplying information concerning thelocation of its underground facilities to persons likethe plaintiff who must rely on the information in orderto engage in excavations." Followell, 278 Ill. App. 3dat 1107, 663 N.E.2d at 1125.

Thus, the court held that the statute created an independent dutyupon the defendant to provide information and thus, in thecontext of that statute defendant was deemed to be in thebusiness of supplying information. Followell, 278 Ill. App. 3dat 1107, 663 N.E.2d at 1125.

Accordingly, as in Followell, the factual situation in thecase at bar falls within the information-provider exception tothe Moorman doctrine. In this particular case, Bell has the sameduty that the utility company had in Followell to provideinformation to Plote, which originates in a statute, section 10of the Underground Facilities Act. As in Followell, thetransaction between Bell and Plote created by the provisions ofthe Underground Facilities Act does not extend beyond theprovision of information. While Bell's general business may beproviding telephone service, as in Followell, it is the nature ofthe transaction at issue in the specific case on an ad hoc basisthat is determinative. Cf. Tolan & Son, Inc. v. KLLM Architects,Inc., 308 Ill. App. 3d 18, 719 N.E.2d 288 (1999). We thus findthat the trial court erred in dismissing count II of Plote'scomplaint.

Bell argues the applicability of Fireman's Fund InsuranceCo. v. SEC Donohue, Inc., 176 Ill. 2d 160, 679 N.E.2d 1197(1997), to the instant case. However, we find severalsignificant distinctions between the facts presented there andthose presented to us here. In Fireman's Fund, our supreme courtaddressed the question:

"'Is a professional engineer who prepares plans andspecifications for a construction project in thebusiness of supplying information to others for theguidance of the recipient in its business dealings andliable in tort for negligent misrepresentation underMoorman ***[?]'" Fireman's Fund, 176 Ill. 2d at 166,679 N.E.2d at 1200.

The court answered the question in the negative, holding that theeconomic loss doctrine barred a contractor's tort suit againstthe project engineer whose drawings allegedly miscalculated thesite for a water supply system. Fireman's Fund, 176 Ill. 2d at169, 679 N.E.2d at 1201. The court reached this answer throughthe application of a two-pronged analysis, and both prongs revealthe distinctions between the facts presented in Fireman's Fundand those presented in this case.

The first prong of the court's analysis centered on theapplicability of the economic loss doctrine to service providerswho distribute information as part of their services. The courtnoted that sound policy dictates that a service provider, such asan engineer, generally should be protected by the doctrinebecause the duties of a service provider may well be defined byits contract with a client as may the duties of any other seller. The economic loss doctrine seeks to protect the integrity ofcontract law and to force plaintiffs whose damages, in essence,equal their commercial expectations to sue on their bargained-foragreement. Thus, the court concluded, the doctrine should beapplied to contractual relationships between service providersand clients. Fireman's Fund, 176 Ill. 2d at 166-68, 679 N.E.2dat 1200-01.

In the instant case, however, Bell's duties and obligationsto Plote are not defined by a contract because there is nocontract between the parties. The nature of the duty is whollycreated and defined by statute under the provisions of theUnderground Facilities Act. As the Fireman's Fund court noted:

"'The evolution of the economic loss doctrine showsthat the doctrine is applicable to the service industryonly where the duty of the party performing the serviceis defined by the contract that he executes with hisclient. Where a duty arises outside the contract, theeconomic loss doctrine does not prohibit recovery intort for the negligent breach of that duty.'" Fireman's Fund, 176 Ill. 2d at 167, 679 N.E.2d at 1200,quoting Congregation of the Passion, Holy CrossProvince v. Touche Ross & Co., 159 Ill. 2d 137, 161-62,636 N.E.2d 503 (1994).

Because Bell's duty to Plote is not the result of any contract,but only defined by statute, the policy concerns underlying theapplication of the economic loss rule are not triggered in thiscase. Plote is not seeking the benefit of its bargain via a tortsuit rather than through more appropriate contract remedies.

The second prong of the Fireman's Fund court's analysis waspremised upon its conclusion that the applicability of theeconomic loss doctrine depends upon whether the informationprovider is supplying information that is incidental to atangible product. The court reasoned that if the "ultimateresult" of the information is a tangible product, then thedoctrine should apply. Fireman's Fund, 176 Ill. 2d at 168-69,679 N.E.2d at 1201. As this court has recently reiterated, "[i]nshort, if the intended end result of the plaintiff-defendantrelationship is for the defendant to create a product, a tangiblething, then the defendant will not fit into the 'business ofsupplying information' negligent misrepresentation exception." Tolan, 308 Ill. App. 3d at 28, 719 N.E.2d at 296, quoting MWManufacturers, Inc. v. Friedman Corp., slip op. at ____ No. 97 C8319, N.D. Ill. July 21, 1998). Because the defendantengineering firm in Fireman's Fund provided plans for building awater supply system, the court concluded that it was hired tocreate a tangible thing and did not fit into the informationprovider exception. Fireman's Fund, 176 Ill. 2d at 169, 679N.E.2d at 1201.

In the case sub judice, Bell was not hired to "create aproduct, a tangible thing" but was instead statutorily obligatedsimply to provide information to Plote about the location of itsfacilities so as to avoid damage to those facilities duringPlote's road construction project. Bell's information was not tobe incorporated into a product or structure but was merely to beused to avoid causing the public any harm from utilitydisruption. The only "product" that Bell had a duty tocontribute was information and the "ultimate result" wasavoidance of damage to Bell's facilities, not the creation of astructure or tangible object itself.

Finally we note that Bell's reliance on Northern IllinoisGas Co. v. Vincent DiVito Construction, 214 Ill. App. 3d 203, 573N.E.2d 243 (1991), is misplaced. Northern Illinois Gas does notaddress the information provider exception, which we have foundapplicable herein, nor does it address a situation to which thatexception is applicable. In Northern Illinois Gas, the plaintiffcontractor sued the defendant gas company for economic losses itsuffered when it damaged one of the defendant's gas lines therebydelaying plaintiff's construction project. Plaintiff contendedthat defendant was negligent because the gas line was not buriedsufficiently far beneath the surface. There is nothing inNorthern Illinois Gas that would pertain to any breach of dutyinvolving the supply of information.

Plote next contends that the trial court erred in dismissingcount III, which purported to state a claim against Bell based oncommon law negligence. Plote contends that this count is notbarred by the Moorman doctrine. We disagree.

The same reasons that compel us to reverse the dismissal ofcount II compel us also to affirm the dismissal of count III. Unlike court II, where a statute is pled so as to provide Bellwith an obligation to provide information to Plote, count III ispled as a common law cause of action and is not based on theUnderground Facilities Act or any other statute. Count III thuscontends that Bell owed Plote a duty at common law to mark thelocation of its underground facilities.

Plote, however, has not argued or cited any authority forthe proposition that Bell has a common law duty to mark thelocation of its facilities in order to avoid causing Ploteeconomic losses. Furthermore, our research has indicated that nosuch common law duty exists. Coastal Conduit & Ditching, Inc. v.Noram Energy Corp., 29 S.W.3d 282, 289 (Tx. Ct. App. 2000) (noduty exists for a utility to avoid economic losses by marking thelocation of its facilities under Texas common law); cf. W.Keeton, Prosser & Keeton on Torts