Court Opinion

ID: 770150
Source: CourtListenerOpinion
Date Created: 2012-04-18 10:31:05+00
Date Added: 2024-06-11T17:55:48.191453
License: Public Domain

224 F.3d 582 (7th Cir. 2000)
McWane, Inc., Plaintiff-Appellant,v.Crow Chicago Industrial, Inc.,  and Halff Associates, Inc., Defendants-Appellees.
No. 99-3819
In the  United States Court of Appeals  For the Seventh Circuit
Argued May 31, 2000Decided August 9, 2000Rehearing Denied September 12, 2000

Appeal from the United States District Court  for the Northern District of Illinois, Eastern Division.  No. 98 C 84--Harry D. Leinenweber, Judge.
Before Flaum, Chief Judge, and Bauer and  Harlington Wood, Jr., Circuit Judges.
Bauer, Circuit Judge.

1
In 1988, Crow Chicago  Industrial, Inc. and McWane, Inc. entered into a  limited partnership agreement to redevelop  property located in Carol Stream, Illinois. The  agreement included a Letter of Understanding  regarding a due diligence investigation of the  property. Crow hired Halff Associates, Inc., an  environmental consulting firm, to conduct an  environmental audit. On January 7, 1998, McWane  filed suit against Crow and Halff to recover the cost of remediating the contamination of its  property caused by the defendants' breach of  contract and negligent and willful acts and  omissions. On May 27, 1998, the district court  dismissed McWane's claim against Crow for breach  of an express written contract and for willful  and wanton misconduct for failure to state a  claim pursuant to Fed.R.Civ.P. 12 (b)(6). On  October 1, 1999, the district court granted  summary judgment in favor of Crow and Halff on  McWane's remaining claims because the statute of  limitations had run. McWane now appeals.

2
First, McWane argues that the district court  improperly dismissed his complaint for breach of  the Letter of Understanding. He contends that the  Letter of Understanding imposed a duty on Crow to  conduct an environmental investigation and a duty  to remediate contamination. McWane contends that  Crow breached the Letter of Understanding by  creating "new and additional contamination by  contaminating previously uncontaminated soils."  The district court found that the Letter of  Understanding did not impose a duty on Crow to  remediate and found that no breach occurred.

3
We review 12(b)(6) dismissals de novo. Looper  Maintenance Service Inc. v. City of Indianapolis,  197 F.3d 908, 911 (7th Cir. 1999). In a claim for  breach of contract, the meaning of the contract  "must be determined from the words or language  used, and a court cannot place a construction on  the contract which is contrary to the plain and  obvious meaning of the language." Johnstowne  Centre Partnership v. Chin, 99 Ill.2d 284, 287,  458 N.E.2d 480, 481 (1983). If the district court  determines that the contract is unambiguous, it  may determine its meaning as a matter of law.  Meladax Corp. v. Uniden Corp., 863 F.2d 1331,  1333 (7th Cir. 1988). The unambiguous contract  controls over contrary allegations in the  plaintiff's complaint. Charles Hester Enter.,  Inc. v. Illinois Founders Ins. Co., 114 Ill.2d  278, 287, 499 N.E.2d 1319, 1323 (1986).

4
The Letter of Understanding provided that Crow  shall have the right to conduct a due diligence  investigation of the property involving any  matters, "which in the sole discretion of Crow  affect the development of the Land, including  removal of underground storage tanks." The Letter  further provided

5
If the environmental investigation/audit reveals  that any one or more of the Tanks has been or is  leaking, or reveals any other environmental  contamination of the land, McWane shall have the  option to remediate the contamination at its cost  to the satisfaction of Crow, which remediation  shall include any additional engineering expense  which results from the contamination, but not the  expense for removal of the Tanks, which shall be  the Partnership's expense; or McWane may elect  not to remediate such contamination, in which  event it shall reimburse Crow for costs and  expenses incurred by Crow in the environmental  portion of the investigation.

6
The duty to remediate the contamination is  clearly and unambiguously allocated to McWane,  not Crow. The only option afforded McWane is how  to handle the responsibility of the remediation,  not whether McWane has the responsibility. At no  point, does the Letter of Understanding impose a  duty on Crow to conduct a due diligence  investigation; it is only provided with the right  to conduct such an investigation. Crow owes no  duty under the contract regarding the due  diligence investigation. The district court  stated that while tortious conduct might have  occurred, such conduct does not constitute a  breach of the Letter of Understanding. We agree;  the Letter of Understanding is unambiguous and  the district court correctly dismissed the claim.

7
McWane next argues that the district court  erred in granting Superior's motion for summary  judgment on the remaining claims because the  statute of limitations had run. Under Illinois  law, "actions on unwritten contracts, expressed  or implied, or on awards of arbitration, or to  recover damages for an injury done to property,  real or personal, or to recover the possession of  personal property or damages for the detention or  conversion thereof, and all civil actions not  otherwise provided for, shall be commenced within  5 years next after the cause of action accrued."  735 ILCS 5/13-205. The district court found that  in 1989 McWane knew of the contaminated soil and  that it had been moved to another site on its  property. By 1991, McWane knew for certain that  the Illinois Environmental Protection Agency  disputed the test results conducted by Halff and  had requested resampling. McWane was put on  notice no later than 1991 of possible  contamination. Therefore, the five year statute  of limitations would have run in 1996. McWane did  not file suit until 1998. The district court  correctly granted summary judgment in favor of  Superior.

8
We review de novo the district courts order  granting summary judgment. Vector-Springfield  Properties, Ltd. v. Central Illinois Light Co.,  Inc., 108 F.3d 806 (7th Cir. 1997). In Illinois,  the Discovery Rule is used to determine the  commencement of the statute of limitations.  Hermitage Corp. v. Contractors Adjustment Co.,  166 Ill.2d 72, 77 (1995). The statute begins to  run when the plaintiff knows or reasonably should  know of his injury and knows that it was  wrongfully caused. Id. The period begins when the  injury could have been discovered through the  exercise of appropriate diligence, not discovery  of the actual injury. Burns Philip Food, Inc. v.  Cavalea Continental Freight, Inc., 135 F.3d 526  (7th Cir. 1998). When it becomes apparent from  the undisputed facts that only one conclusion can  be drawn, it is a question for the court.  Witherall v. Weimer, 85 Ill.2d 146, 155 (1981).

9
As part of its due diligence investigation,  Crow hired Halff to conduct an environmental  audit of the property and to remove four  underground storage tanks, which had been used to  store gasoline. Ruth Stear was Halff's  representative on site. Bob Phelps', McWane's  vice president, was present as the tanks were  removed on May 26, 1989. His notes establish that  he was aware at that time of a small amount of  soil contamination. It was to be tested and Stear  was to notify the IEPA. In a June 27, 1989,  letter from Stear to the IEPA, which was also  sent to Phelps, Stear states that the gasoline  contaminated soil was removed from the excavation  and moved to an on-site location for aerating.  Further, the June 1989, Environmental Audit--  Phase II Report indicated that the UST No. 2  contained lead.

10
In 1990, the agreement between McWane and Crow  ended and Crow no longer had any involvement in  the property. In 1991, the IEPA sent a letter to  Phelps stating that the analytical data was  incomplete. Phelps apprized Barry Robison, an  environmental expert hired by McWane, of the  contaminated soil and forwarded the letter from  the IEPA to him. Phelps stated the need to  resample the contaminated soil because the IEPA  found the sampling detection level used  unacceptable. On October 7, 1991, Halff advised  Phelps and Robison of the cost to resample and  presented them with three alternatives: resample  the soil, write the IEPA to "try to get it do  something," or wait until the IEPA did something.  Phelps notes reflect these three possibilities.  McWane did nothing. Not until 1994 did McWane  hire another environmental consultant and  discover that extensive remedial work was needed.

11
While the district court's oral ruling contains  a few factual errors, its analysis is nonetheless  correct. From the facts above, it is clear that  McWane possessed sufficient information to put it  on notice of a possible injury. In 1989, McWane  knew the soil had been contaminated and moved to  another site. In 1991, it knew that the IEPA was  concerned and disputed the test results. The  burden was on McWane to inquire further as to  whether an actionable wrong had occurred. Vector-  Springfield at 810. McWane was clearly on inquiry  notice and knew that it was ultimately  responsible for the remediation. McWane chose not  to do anything, hoping the IEPA would take over.  Because the suit was not filed until 1998, it  falls outside the bounds of the statute of  limitations. Summary judgment was appropriate.

12
For the foregoing reasons the judgment of  district court is Affirmed.