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Docket No. 89006-Agenda 25-September 2000.

MILTON GUZMAN et al., Appellees, v. C.R. EPPERSON 
CONSTRUCTION, INC., Appellee (MJE Construction, Inc., et
al., Appellants).

Opinion filed June 21, 2001.

JUSTICE FREEMAN delivered the opinion of the court:

We granted leave to appeal in this case (177 Ill. 2d R. 315(a))in order to determine whether the third-party complaint in thisaction was filed within the time prescribed by law. The circuitcourt concluded that it was not and dismissed the third-partyaction. The appellate court reversed. 309 Ill. App. 3d 655. For thereasons that follow, we vacate the judgment of the appellate court,reverse the judgment of the circuit court, and remand the matter tothe circuit court.

BACKGROUND

On September 25, 1992, plaintiffs in the underlying action,Milton and Donna Guzman (the Guzmans) filed their originalcomplaint which named C.R. Epperson Construction, Inc.(Epperson), as the defendant. The Guzmans alleged that, in 1988,they entered into a contract with Epperson for the construction ofa house in Bloomington, Illinois. They further alleged thatEpperson breached the contract by constructing a home thatcontained numerous design and construction defects. TheGuzmans voluntarily dismissed the suit on March 28, 1996, andrefiled a new action on April 12, 1996. In the refiled pleading, theGuzmans alleged both breach of contract and breach of impliedwarranty of habitability stemming from damages caused by, interalia, defects in the installation of the house's windows, roof,plumbing, flooring, and walls.

On September 4, 1996, Epperson filed its third-partycomplaint against MJE Construction, Inc. (MJE), MichaelHadden, then doing business as Hadden Concrete, HollandBrothers, Inc., Hardesty Heating and Ventilating, Inc. (Hardesty),and Robert Georgi, doing business as G&G Roofing (Georgi).⁽¹⁾Epperson alleged that it entered into subcontracts with each of thethird-party defendants under which the third-party defendantsagreed to perform various aspects of the construction of theGuzman home. The third-party complaint sounded in breach ofcontract and detailed the construction defects for which eachsubcontractor was allegedly responsible, alleging that theresidence had flooded and leaked repeatedly in 1989, 1990, andsubsequent years during periods of heavy rainfall.

On February 10, 1997, Epperson amended its complaint toinclude express and implied indemnity claims against each third-party defendant. Epperson demanded a jury trial on all counts.Thereafter, third-party defendant Georgi sought dismissal on thegrounds that the third-party action was time-barred under section13-214 of the Code of the Civil Procedure. In support of themotion, Georgi attached a letter, dated August 15, 1996, thatEpperson wrote to Georgi. The letter reads, in pertinent part, asfollows:

"It is with great regret that this letter is written. In 1988,Epperson Construction built a house for Milton andDonna Guzman ***. Since that time, the owners havealleged that some of the work on the house was notquality work or done in a workman like manner. Theyhave also alleged that some of the materials used in theconstruction were not 'new' materials. Many of thealleged 'defects' are nothing more than homeownermaintenance items.

We have tried to resolve these issues since 1990, butthe owners refuse to cooperate. We have offered to do anyand all work to take care of issues that relate to buildingthe house (not maintenance) or a monetary settlement.These efforts were to no avail. The Guzman's [sic] havesued our company.

Some of the issues in the lawsuit relate to work done byyour company. We have no alternative but to involve yourcompany in the resolution of this matter. Hopefully, youunderstand that this was the last resort. We hope that allof the parties involved will combine forces to worktogether to dispel this frivolous lawsuit."

According to Georgi, the letter established that Epperson hadknown about the various problems at the Guzman home at least by1990. Georgi contended that section 13-214 provides a four-yearstatute of limitations for such actions and that Epperson's claimhad expired in 1994, some two years before Epperson filed suit.

In response, Epperson argued that it had not suffered an"injury" until the Guzmans filed suit against it in April 1996 or, atthe earliest, when the Guzmans originally sued Epperson inSeptember 1992. Epperson also noted that section 13-204 of theCode applied to its indemnity claims. Section 13-204, which wasamended in 1994 and took effect on January 1, 1995, provides thatno action for contribution or indemnity "may be commenced morethan 2 years after the party seeking contribution or indemnity hasbeen served with process in the underlying action or more than 2years from the time the party *** knew or should reasonably haveknown of an act or omission giving rise to the action forcontribution or indemnity, whichever period expires later."(Emphasis added.) 735 ILCS 5/13-204(b) (West 1996).

The circuit court granted Georgi's motion, finding that theEpperson letter established that Epperson knew of the Guzmans'complaints of construction defects by no later than 1990. The courtruled that the four-year statute of limitations contained in section13-214, therefore, began to run in 1990 and expired in 1994.Because Epperson did not file its third-party action until 1996, thecourt concluded that the action was time-barred. The circuit courtfurther found that section 13-204, as amended, did not apply to theaction because section 13-214 had previously applied to the actionand that section 13-214's four-year limitation period for theseclaims had expired prior to the effective date of the amendment.

After Georgi successfully obtained dismissal of Epperson'sclaims on the basis of the statute of limitations, both Hardesty andHadden moved, pursuant to section 2-619(a)(5), to dismissEpperson's claims against them on the same grounds. Eachsupported its motion with a letter from Epperson that wasessentially identical to that received by Georgi. MJE, thereafter,moved for summary judgment (see 735 ILCS 5/2-1005 (West1996)) for similar reasons and, likewise, supported its motion withthe same letter. Like the Georgi letter, each of these three letters isdated August 15, 1996. The circuit court dismissed Epperson'sthird-party claims against Hadden and Hardesty and grantedsummary judgment to MJE. In so ruling, the circuit court found nojust cause for delaying enforcement or appeal of all of the orders(see 155 Ill. 2d R. 304(a)).

As noted previously, the appellate court reversed the dismissalorders of the circuit court. The appellate court held that section13-214 had no applicability to Epperson's third-party action. Thecourt, instead, found that "no particular statute of limitationsspecifically applied to these claims before section 13-204 wasamended." 309 Ill. App. 3d 655, 660. For that reason, the courtheld that section 13-204 was applicable to the claims. 309 Ill.App. 3d at 660-61. As such, the court concluded that the third-party complaint was timely filed pursuant to section 13-204. 309Ill. App. 3d at 661.

ANALYSIS

The matter comes to this court upon the circuit court'sgranting of (i) three motions to dismiss pursuant to section2-619(a)(5) and (ii) one motion for summary judgment pursuantto section 2-1005. An appeal from a section 2-619 dismissal is thesame in nature as one following a grant of summary judgment;both are matters given to de novo review. Kedzie & 103rdCurrency Exchange, Inc. v. Hodge, 156 Ill. 2d 112, 116 (1993). Insuch cases, the reviewing court must determine whether theexistence of a genuine issue of material fact should have precludedthe dismissal or, absent such an issue of fact, whether dismissal isproper as a matter of law. Hodge, 156 Ill. 2d at 116.⁽²⁾

We begin our analysis by first noting that the appellate courterred in holding that no particular statute of limitations applied toEpperson's claims before 1995. At the time the Guzmans filedtheir original underlying complaint against Epperson in 1992,Illinois courts had held that the statute of limitations set out insection 13-214 applied to third-party actions for indemnificationwhich are filed in cases covered by that section of the Code ofCivil Procedure. See Hartford Fire Insurance Co. v. ArchitecturalManagement, Inc., 158 Ill. App. 3d 515, (1987); La Salle NationalBank v. Edward M. Cohon & Associates, Ltd., 177 Ill. App. 3d 464(1988); Board of Library Directors v. Skidmore, Owings &Merrill, 215 Ill. App. 3d 69 (1991). Section 13-214(a) states inpertinent part that

"Actions based upon tort, contract or otherwise againstany person for an act or omission of such person in thedesign, planning, supervision, observation or managementof construction, or construction of an improvement to realproperty shall be commenced within 4 years from the timethe person bringing an action, or his or her privity, knewor should reasonably have known of such act oromission." 735 ILCS 5/13-214(a) (West 1992).

Although there was a consensus of opinion as to which statute oflimitations controlled the third-party construction actions, thecourts were split as to when the four-year limitation period wastriggered. Some courts held the view that, because of the nature ofderivative liability, the trigger date had to be when the third-partyplaintiff became aware of the potentiality for liability in theunderlying action, i.e., the date of the filing of the underlyingcomplaint (see Hartford, 158 Ill. App. 3d at 520-21) or the date ofservice of the underlying complaint (see La Salle, 177 Ill. App. 3dat 471). Other courts, however, questioned whether the statute oflimitations is triggered automatically by the filing of theunderlying complaint. In Elsa Benson, Inc. v. Kalman Floor Co.,191 Ill. App. 3d 1016 (1989), the appellate court concluded thatthe running of the statute of limitations commences when theinjured person becomes " 'possessed of sufficient informationconcerning his injury and its cause to put a reasonable person oninquiry to determine whether actionable conduct is involved.' "Benson, 191 Ill. App. 3d at 1022, quoting Knox College v. CelotexCorp., 88 Ill. 2d 407, 416 (1981). Likewise, the appellate court inBoard of Library Directors v. Skidmore, Owings & Merrill, 215Ill. App. 3d 69 (1991), held that the third-party plaintiff had fouryears from the date of learning of the defects in the construction.In that case, the underlying complaint had been filed in 1984, andthe third-party complaint was filed in 1988. The appellate courtheld, however, that the third-party plaintiff knew or reasonablyshould have known as early as 1978 of the construction defectsand, therefore, pursuant to section 13-214, should have filed suitwithin four years of the discovery, i.e., 1982.

MJE, Hardesty, Hadden, and Georgi (collectively, thesubcontractors) rely on cases such as Skidmore for the propositionthat it is the date of the discovery of the wrongful act or omissionwhich triggers the statute of limitations. They note that Epperson'sletter demonstrates that Epperson knew of the defects in theconstruction of the Guzman home as early as 1990 and thatEpperson should have filed suit against them within four years ofthat discovery. Epperson counters that the result of such a rulewould be that a third-party claim can expire at or prior to the timethe underlying plaintiff files suit, thus denying a defendant anopportunity to pursue third-party claims against those who areresponsible for the plaintiff's claimed losses.

Although the subcontractors' arguments are not without someappeal, we believe that they must be rejected due to the nature ofthird-party actions. A third-party action is a procedural device bywhich a defendant may assert a cause of action against a party thatwas not joined in the original action. See 3 R. Michael, IllinoisPractice