Opinion ID: 3001537
Heading Depth: 2
Heading Rank: 1

Heading: Improvement to Real Property

Text: Whether a coal mine constitutes an “improvement” under the Illinois Statute of Repose is a question of law, although resolution of the question is grounded in fact. Garner v. Kinnear Mfg. Co., 37 F.3d 263, 266 (7th Cir. 1994); St. Louis v. Rockwell Graphic Sys. Inc., 153 Ill.2d 1, 178 Ill.Dec. 761, 605 N.E.2d 555 (1992). Because we sit in diversity, we apply Illinois substantive law. Ass’n Benefit Servs., Inc. v. Caremark RX, Inc., 493 F.3d 841, 849 (7th Cir. 2007). We use a common sense approach, focusing on the ordinary meaning of the statutory language when interpreting the phrase “improvement to real property.” Hillard v. Lummus Co., 834 F.2d 1352, 1355 (7th Cir. 1987). Although Illinois courts have not yet addressed the issue of whether a coal mine constitutes an “improvement to real property” under § 13-214(b), Illinois case law provides us with strong guidance. In St. Louis v. Rockwell Graphic Systems Inc., the Illinois Supreme Court defined “improvement” as “a valuable addition made to property (usually real estate) or an amelioration in its condition, 2 There is no dispute that ten years had passed since the conduct upon which Peabody bases its statute of repose defense occurred. No. 07-1945 7 amounting to more than mere repairs or replacement, costing labor or capital, and intended to enhance its value, beauty, or utility or to adapt it for new or further purposes.” 178 Ill.Dec. 761, 605 N.E.2d at 556 (citing Black Law’s Dictionary 682 (5th ed. 1979)); see also Hausman, 997 F.2d at 354 (discussing “improvement to real property” as defined in St. Louis). Although the St. Louis court held that there was an insufficient factual record to determine whether a printing press was “an improvement to real property,” it set forth “relevant criteria” for determining what constitutes an “improvement to real property,” such as whether the addition was meant to be permanent or temporary, whether it became an integral component of the overall system, whether the value of the property was increased, and whether the use of the property was enhanced. 178 Ill.Dec. 761, 605 N.E.2d at 556; see also State Farm Mut. Auto. Ins. Co. v. W.R. Grace & Co., 24 F.3d 955, 958 (7th Cir. 1994); Morietta v. Reese Constr. Co., 347 Ill.App.3d 1077, 283 Ill.Dec. 758, 808 N.E.2d 1046, 1050 (2004). The application of § 13-214(b) should focus on the entire construction project and not merely on a single component of the system. Garrison, 36 F.3d at 592. This Court and Illinois courts have addressed whether various products constitute “improvements” under § 13214 in actions involving personal injury. See id. (electrical switch installed as part of electrical switching station is an improvement); Garner, 37 F.3d at 267-68 (overhead garage door system was an improvement); Hausman, 997 F.2d at 354-55 (anneal line for metal coils is an improvement); Herriott v. Allied Signal Inc., 998 F.2d 487, 490 (7th Cir. 1993) (larry-cars used to transfer coal are improvements); Hilliard, 834 F.2d at 1355-56 (screw conveyor is 8 No. 07-1945 an improvement); Morietta, 283 Ill.Dec. 758, 808 N.E.2d at 1050 (removal and repavement of an existing road is not an improvement); Billman v. Crown-Trygg Corp., 205 Ill.App.3d 916, 150 Ill.Dec. 776, 563 N.E.2d 903, 907 (1990) (construction work at a traffic intersection is an improvement). Illinois courts have also addressed what constitutes “construction of an improvement to real property” under § 13-214 in actions involving damage to real property. See Bank of Ravenswood v. City of Chicago, 307 Ill.App.3d 161, 240 Ill.Dec. 385, 717 N.E.2d 478, 483 (1999) (a subway system is not an improvement); Zimmer v. Vill. of Willowbrook, 242 Ill.App.3d 437, 182 Ill.Dec. 840, 610 N.E.2d 709, 716 (1993) (a pond and culvert is an improvement); Cont’l Ins. Co. v. Walsh Constr. Co. of Illinois, 171 Ill.App.3d 135, 121 Ill.Dec. 83, 524 N.E.2d 1131, 1135 (1988) (underground sewer system is an improvement). In a case involving the same mine we discuss here, a federal district court held that a coal mine is an improvement to real property under Illinois law. Illinois Mine Subsidence Ins. Fund v. Peabody Coal Co., 383 F.Supp.2d 1078, 1096 (C.D. Ill. 2005). There, the Fund brought suit as a subrogee of multiple insurance companies (Federated was not one of those companies), and sought dam- ages from Peabody for reinsurance reimbursements it paid for mine subsidence damage claims caused by the Mine. In granting Peabody’s motion for summary judgment, the district court found that a “room and pillar” coal mine was an “improvement to real property,” and held that the Fund’s claims were barred by § 13-214(b). Id. at 1096-97. On this appeal, we address Plaintiffs’s arguments that previous case law dictates that any underground activity No. 07-1945 9 that benefits the surface property is not an improvement under § 13-214, and under Bank of Ravenswood v. City of Chicago, 307 Ill.App.3d 161, 240 Ill.Dec. 385, 717 N.E.2d 478 (1999), a coal mine is not an improvement because it does not have any relation to the use or enjoyment of the real property located above it. Plaintiffs argue that any activity, above or below ground, which involves an addition that benefits the surface property, is an “improvement” under § 13-214, and in contrast, any underground activity that does not benefit the surface property is not an “improvement” and the statute of repose does not apply. We find this argument to be without merit. Nothing in the statute of repose indicates that the Illinois legislature intended to distinguish between above-ground activities and below-ground activities in relation to improvements to real property. Moreover, Plaintiffs interject a new “definition” of improvement to real property—whether or not the underground construction “benefits the surface property,” one that has no support under Illinois law. Plaintiffs’s reliance on Ravenswood is unavailing. In Ravenswood, an Illinois appellate court analyzed whether the construction of a subway system was an improvement to real property under § 13-214. Using the relevant criteria in St. Louis as a guide, the court focused on whether the construction of the subway system is an integral component of the overall system, and found that a subway system is not an integral part of the function of the residential townhomes and does not enhance the overall value. The court further held that the subway system, unlike a sewer system or construction work on a traffic intersection, does not have any actual relation to the use or enjoyment of the real property located 10 No. 07-1945 above it. 240 Ill.Dec. 385, 717 N.E.2d at 483. Plaintiffs therefore argue that while the underground coal mine may have enhanced the ground underneath the Mine, it did not benefit the surface property of the Mine because the Mine has no actual relation to the use or enjoyment of the real property located above it. Peabody argues that Plaintiffs’s reliance on Ravenswood is misguided, maintaining that this “renegade” decision is the only Illinois case that suggests that underground construction must relate to the use and enjoyment of the surface property, and that the district court, as well as the court in Illinois Mine Subsidence Insurance Fund, 383 F.Supp.2d at 1096-97, found that Ravenswood offers no authoritative support for the addition of this requirement of “relation to the use and enjoyment” of the surface property. We tend to agree—the Ravenswood analysis of an improvement to real property has not been interpreted by any other Illinois appellate court, therefore we are inclined to follow the vast majority of other Illinois courts’ interpretations of what constitutes “improvement” to real property under § 13-214. Peabody also points to a factually-similar Illinois decision that supports a liberal interpretation of the statute of repose. In Continental Insurance Co. v. Walsh Construction Co. of Illinois, defendants excavated the earth to construct a sewer system, which ultimately caused damage to the plaintiffs’s building above the surface of the construction. In holding that the creation and the construction of a sophisticated sewer distribution system constitutes an “improvement to real property” under § 13214, the court found that the construction was an addition, rather then a repair and replacement, which substantially enhanced the value of the property. 121 Ill.Dec. 83, 524 N.E.2d at 1135. No. 07-1945 11 After a review of Illinois law within the context of improvements to real property under § 13-214, we find that a coal mine is an improvement to real property under § 13-214(b). The Mine, particularly the pillars, was intended to be permanent support for the surface above the Mine. There is no doubt that a coal mine is a valuable addition to the real property, hiking up the real estate value of the property and awarding the owners of the property with mineral rights. At the time of the construction and operation of the Mine, it made the property more valuable than it would have been without a mine underneath it. That the Mine is more than a repair or replacement is beyond dispute—it is an addition to the property which did not previously exist. Further, the Mine cost labor and capital to construct, and was constructed to adapt the property for a further purpose—coal mining. We therefore find that a coal mine constitutes an improvement to real property for statute of repose purposes.