an intention to induce the other party to act; an action in reliance on the false statement; and
resulting damages. First Midwest Bank N.A. v. Stewart Title Guar. Co., 843 N.E.2d 327, 332
(il. 2006). A duty to communicate accurate information is implied in situations where one is in
the business of supplying information for the guidance of others in their business transactions.
Greycas, Inc. v. Proud, 826 F.2d 1560, 1565 (7th Cir. 1987); First Midwest Bank, 843 N.E.2d at
332.

ATC argues the contract terms, not common law duties to communicate accurate
information and use reasonable care, govern Grand Pier’s claims. See Ferentchak v. Vill. of
Frankfort, 475 N.E.2d 822, 825-26 (Ill. 1985). This argument ignores ATC’s overlapping
obligations under the contracts to evaluate contamination potential and historical conditions at
the site and surrounding area, identify hazardous wastes at the site and nearby facilities, and
evaluate the property’s subsurface conditions to assess any soil or groundwater impact from
previous use, Resolution of Grand Pier’s claims, therefore, does not hinge on whether the duty is
labeled common law or contractual.

In the phase I report, ATC identified Lindsay Light II as a CERCLIS site but reported
remediation was completed the prior year. This was false, as the parties later discovered.
Viewing the evidence in the light most favorable to Grand Pier, the purported completed
remediation was material. Indeed, ATC was hired to assess the property’s environmental
condition, and Chin testified he would have requested additional investigation had he known the
remediation was not completed. Chin Dep. Tr. at 360-62.

ATC argues it relied on a third-party provider’s report for this information, as the

American Society for Testing and Materials (“ASTM”) Standards entitle it to do. ATC Ex. 16,


Pier. See Wojdyla y. City of Park Ridge, 592 N.E.2d 1098, 1100 (Ill. 1992) (defining elements of
a negligence action). As discussed, there are genuine issues of material fact as to whether ATC
falsely stated or omitted material facts in the phase I and phase II reports.

ATC argues it did not owe Grand Pier a duty with respect to the updated phase I report
because Grand Pier was not a foreseeable user of the report. It is undisputed that only RMC
could rely on the updated phase I report, unless ATC consented; Grand Pier did not obtain
permission to view or use the report, unlike the phase [I report. Grand Pier presents no genuine
issues of material fact that it was a foreseeable user of the updated phase I report. Accordingly,
as a matter of law, ATC did not owe Grand Pier a duty with respect to the updated phase I report.

CONCLUSION
ATC’s motion for summary judgment on the negligent misrepresentation and
negligence counts is denied with respect to the phase I and phase II reports because there are
genuine issues of material fact as to ATC’s false statement or omission of material facts. ATC’s
motion for summary judgment on the negligent misrepresentation and negligence counts is
granted with respect to the updated phase I report. Grand Pier presents no genuine issue of
material fact that it justifiably relied on the updated phase | report, or that it was a foreseeable

user of that report.
ENTER:

Susp) BOrbrm

Suzan#e B. Conlon
November 14, 2008 United States District Judge



contends its development project failed because of the thorium contamination and ATC’s failure
to investigate and disclose this condition.
DISCUSSION

L Summary Judgment Standard

Summary judgment is proper when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to judgment as a matter
of law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “The moving
party has the initial burden of demonstrating that it is entitled to summary judgment.” Kramer v.
Vill. of N. Fond du Lac, 384 F.3d 856, 861 (7th Cir. 2004) (citing Celotex Corp., 477 U.S. at
323). Once a moving party has met its burden, the nonmoving party must go beyond the
pleadings and set forth specific facts showing there is a genuine issue for trial. Fed. R. Civ. P.
56(e); Silk v. City of Chicago, 194 F.3d 788, 798 (7th Cir. 1999), The court considers the record
as a whole and draws all reasonable inferences in the light most favorable to the nonmoving
party. See Franzoni v. Hartmarx Corp., 300 F.3d 767, 771 (7th Cir. 2002). A genuine issue of
material fact exists when the evidence is sufficient to support a reasonable jury verdict in favor of
the nonmoving party. Anderson vy. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
I. Negligent Misrepresentation

ATC argues the phase I and phase II reports do not contain any false statements of
material fact or omissions of material fact. The elements of a negligent misrepresentation claim
are a duty to communicate accurate information; a false statement of material fact or an omission

of material fact; carelessness or negligence in ascertaining the truth or falsity of the statement;


ASTM Standards for Phase I Environmental Site Assessments at § 7.1.7. Grand Pier contends
this provision merely provides that records may be obtained from third parties. Regardless, it is
undisputed that within days of the phase I report, the ATC project manager for the Grand Pier
site learned of radiation issues in the area but did not revise the phase I report. Hays Notation to
File; Hays Dep. Tr. at 74-76. The parties dispute whether ATC disclosed the information to
RMC. Chin Dep. Tr. at 363-64; Hays Dep. Tr. at 80-82. Chin testified that he would have
required additional investigation had he known of the radiation issues. Chin Dep. Tr. at 363-64.

ATC dismisses the information and argues it was entitled to rely on the third-party
provider rather than vague, unsubstantiated statements of unknown third parties. But a long-time
ATC employee, not an unknown third party, reported the information to Hays. Hays Dep. Tr. at
72-76. And Hays recorded the information in his project file. Hays Notation to File; Hays Dep.
Tr. at 74-76, Viewing the evidence in the light most favorable to Grand Pier, there is a genuine
issue of material fact whether ATC negligently misrepresented the environmental condition of
the Grand Pier site in its phase I report.

ATC issued its phase II report within a month, but failed to include information regarding
radiation. ATC argues the phase II report was limited to investigating the soil and groundwater
for the presence of volatile and semi-volatile organic compounds and priority pollutant metals.
This does not include thorium. September 4, 1997 ATC Proposal at 2. But ATC ignores its
stated objective to evaluate the property’s subsurface conditions to assess any soil or groundwater
impact from previous use. Jd, at 1. In the phase II report, ATC stated it strategically placed a soil
boring near the CERCLIS/Lindsay Light II site. September 29, 1997 Phase II Report at 1. A

reasonable inference may be drawn that this placement was to test for radiation in the soil or


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION
GRAND PIER CENTER LLC and )
AMERICAN INTERNATIONAL )
SPECIALTY LINES INSURANCE CO. )
as subrogee of Grand Pier Center LLC, ) Civil Action No.: 05 C 1156
) No.: 03 C 7767 (cons.)
Plaintiffs, )
) Suzanne B. Conlon, Judge
v. )
)
ATC GROUP SERVICES, INC., )
)
Defendant. )
)
)

MEMORANDUM OPINION AND ORDER

Grand Pier Center LLC (“Grand Pier”) and its subrogee, American International Specialty
Lines Insurance Company (collectively, “plaintiffs”) sue ATC Group Services, Inc. (“ATC”) for
negligent misrepresentation and negligence. Plaintiffs claim ATC failed to investigate and
disclose radioactive thorium contamination of property Grand Pier purchased in 1997, ATC
moves for summary judgment. For the reasons set forth below, the motion is granted in part and
denied in part.

BACKGROUND

The following facts are derived from the parties’ Local Rule 56.1 statements and exhibits,
and are undisputed unless otherwise noted. Grand Pier was formed to purchase property in the
Streeterville area of Chicago, Illinois and develop a hotel, condominiums, and retail stores.

Raymond Chin was a principal of R.M. Chin and Associates, Inc. (“RMC”), and the managing


groundwater because of information ATC possessed concerning that issue. ACT never sampled
for any radioactive waste, but the EPA later discovered over 10,000 tons. Viewing the evidence
in the light most favorable to Grand Pier, ATC misrepresented its investigation of Lindsay Light
II’s impact on the Grand Pier site.

ATC argues Grand Pier did not reasonably rely on the updated phase I report because the
report explicitly prohibited reliance by anyone but RMC, unless ATC provided written consent.
April 30, 1999 Updated Phase I Report at 8505. Grand Pier responds ATC cannot escape
liability by virtue of the limitation provision because it owed a duty to Grand Pier. Grand Pier
conflates duty and justifiable reliance. To establish negligent misrepresentation, Grand Pier must
show its reliance was justified, and that it had a right to rely on the updated phase I report. See
Gerill Corp. v. Jack L. Hargrove Builders, Inc., 538 N.E.2d 530, 536 (Ill. 1989); Kopley Group
V., L.P. v. Sheridan Edgewater Properties, Ltd., 876 N.E.2d 218, 229 (Ill. App. Ct. 2007). The
limitation provision precluded Grand Pier’s reliance. ATC gave Grand Pier permission to use
the phase [I report, But it is undisputed that Grand Pier never obtained a waiver of the updated
phase I report’s limitation provision. Grand Pier argues the updated phase I report was part and
parcel of the other reports, and permission to rely on one report constituted permission to rely on
all reports. Grand Pier provides no evidence or authority for this proposition, and the language of
the reports does not support this argument. Grand Pier presents no genuine issue of material fact
that it justifiably relied on the updated phase I report.

Ill. Negligence
ATC argues the phase I and phase II reports do not contain any false statements of

material fact or omissions of material fact, and therefore ATC did not breach its duty to Grand


member of Grand Pier. In August 1997, RMC hired ATC to conduct a phase I environmental
site assessment. ATC Ex. 3, August 8, 1997 Smith Technology Corporation (ATC’s
predecessor) Proposal. The scope of the work included identifying adjacent properties and their
potential for causing adverse environmental conditions. Jd. ATC’s focus was to identify
hazardous materials, wastes, or activities at the site and nearby facilities. ATC Ex. 7, September
3, 1997 Phase I Report at 1.

ATC reported that neighboring property called “Lindsay Light I” was reflected in the
Comprehensive Environmental Response, Compensation, and Liability Information System
(*CERCLIS”). Jd. at 2. But ATC stated information from the United States Environmental
Protection Agency (“EPA”) indicated that removal action was completed March 13, 1996, Jd. at
2. ATC recommended soil and groudwater sampling. Jd. at 3.

In September 1997, RMC extended ATC’s engagement to include a phase II subsurface
investigation of the Grand Pier site. ATC Ex. 4, September 4, 1997 ATC Proposal. The
objective was to evaluate the property’s subsurface conditions to assess any soil or groundwater
impact from previous use. Jd, at 1. On or about September 10, 1997, ATC employee Michael
Widera reported to Michael Hays, ATC project manager for the Grand Pier site, that there were
“radiation issues in that area” and a question about “uranium processing in that area in the past.”
Grand Pier Ex. 20, Hays Notation to File; Grand Pier Ex. 21, Hays Dep. Tr. at 74-76. Chin
testified no one at ATC disclosed this information to RMC. Grand Pier Ex. 22, Chin Dep. Tr. at
363-64. Hays, in contrast, testified he believes he told Chin the information, but could not “for

sure, say that I did.” Hays Dep. Tr. at 80-82.


In the phase II report, ATC noted the presence of volatile and semi-volatile organic
compounds in the soil, and stated they did not pose an environmental or health threat. ATC Ex.
11, September 29, 1997 Phase II Report at 5. ATC reported it chose the location of one soil
boring in an effort to evaluate the conditions on site in proximity to the CERCLIS/Lindsay Light
Il site previously identified. Jd, at 1. On September 30, 1997, ATC granted Grand Pier
permission to review and use the information provided in the phase II report. ATC Ex. 17,
September 30, 1997 Hays/Chin Correspondence. Grand Pier purchased the property in October
1997.

A year and a half later, RMC retained ATC to update the phase I report. ATC Ex. 5,
April 26, 1999 ATC Proposal at 1-2. The scope of services was designed to evaluate
contamination potential from on-site or off-site sources and evaluate current and historical
conditions at the site and surrounding area. Jd. ATC reported that a gaslight mantle
manufacturer that used radioactive thorium formerly occupied the neighboring Lindsay Light II
site. ATC Ex. 13, April 30, 1999 Updated Phase I Report at 3. ATC reported elevated radiation
levels were found at the Lindsay Light II site, and remediation occurred in 1994 and 1996. Id.
ATC stated that regulatory agencies were monitoring the Lindsay Light II site and, therefore, it
was a low potential environmental concern warranting no further investigation. Id. at 3-4, 8.
The updated phase I report stated it was intended for the sole use of RMC and could not be used
or relied upon by another party without ATC’s written consent, Jd. at 8505.

The EPA later discovered thorium contamination at the Grand Pier site in levels posing
an imminent and substantial endangerment to public health and the environment. Over 10,000

tons of radioactive contaminated soil had to be removed from the Grand Pier site. Grand Pier