Ambrosia Land Investments, LLC v. Peabody Coal Co. ( 2008 )

In the
United States Court of Appeals
For the Seventh Circuit
____________
No. 07-1945
AMBROSIA LAND INVESTMENTS, LLC,
Plaintiff-Appellant,
and
ILLINOIS MINE SUBSIDENCE INSURANCE FUND,
Intervening Plaintiff-Appellant,
v.
PEABODY COAL COMPANY,
Defendant-Appellee.
____________
Appeal from the United States District Court
for the Southern District of Illinois.
No. 05 C 371—David R. Herndon, Chief Judge.
____________
ARGUED OCTOBER 23, 2007—DECIDED APRIL 9, 2008
____________
Before BAUER, CUDAHY and SYKES, Circuit Judges.
BAUER, Circuit Judge. Plaintiff-Appellant Ambrosia Land
Investments, LLC1 (“Ambrosia”) and Intervening Plaintiff-
Appellant Illinois Mine Subsidence Insurance Fund (“the
1
Ambrosia Land Investments, LLC was substituted as the
plaintiff-appellant for Wilke Window & Door Company, Inc.,
on September 5, 2007.
2 No. 07-1945
Fund”) (collectively “the Plaintiffs”) appeal the district
court’s conclusion that their claims are barred by the
Illinois Construction Statute of Repose, 735 ILCS 5/13-
214(b). For the following reasons, we reverse.
I. Background
In 1995, Ambrosia constructed a warehouse on its
property in St. Clair County, Illinois, which happened to
be located above St. Ellen Mine (“the Mine”), an under-
ground coal mine originally built in the early 1900s that
spans over 3,800 acres. Peabody, who had acquired the
rights to the Mine in 1957 from Perry Coal Company,
operated the Mine until 1960, when it closed the Mine. The
Mine was designed using a widely-recognized method
of mining called the “room and pillar,” in which shafts
are driven down into the earth, creating passageways
for the movement of coal and personnel. Coal is removed,
leaving empty areas or “rooms.” “Pillars” are then formed
from the remaining coal and rock, providing structure
and support for the rooms and for the surface above
the mine during the time the mine is in operation and
permanently thereafter. While pillars are usually rein-
forced with secondary support by installing bolts or
timber, because of the passage of time, the exact type
of secondary support used in the Mine is unknown. As
time passes, the surface above a mine sinks or shifts as a
result of mine subsidence, which is the deterioration of
the pillars, design defects, or geological occurrences.
In order to insure that property owners have the finan-
cial resources to repair damage to property caused by
mine subsidence, the Illinois legislature established the
Fund to provide reinsurance for mine subsidence losses
No. 07-1945 3
to Illinois property. 215 ILCS 5/801.1, 5/803.1. The Fund
is required to enter into reinsurance agreements with
all Illinois property insurers, whereby premiums are
collected by the insurer and paid to the Fund under
the agreement. Once the insurer receives a claim of poten-
tial mine subsidence from the property owner, it for-
wards the claim to the Fund. The Fund hires geologists to
investigate the claim and eventually determine whether
the damage was caused by mine subsidence or other
earth movement. If the Fund determines that the dam-
age was caused by mine subsidence, it notifies the insurer,
who in turn fulfills its contractual duties by paying the
insured for the losses claimed, and then requests reinsur-
ance reimbursement from the Fund. The Fund reimburses
the property insurer for the amount it paid to its insured,
and the Fund is then subrogated to the rights of both
the insured and the property insurer. See 215 ILCS
5/815.1(b).
In late November 2000, forty years after Peabody closed
the Mine, Ambrosia noticed that its warehouse had struc-
tural damage. Suspecting that the damage was the result
of mine subsidence, Ambrosia filed a claim with its insur-
ance company, Federated Mutual, on its insurance policy
for mine subsidence loss coverage. Federated, in turn,
forwarded the claim to the Fund. The Fund received
Federated’s claim and hired geologist Stephen Danner to
investigate. On March 14, 2002, Danner concluded that
mine subsidence from the Mine caused damage to the
warehouse on the Ambrosia property. Federated paid
Ambrosia the maximum amount of its mine subsidence
loss coverage policy—$350,000—and then requested
reimbursement of that amount from the Fund. The
Fund paid Federated the full amount of the claim.
4 No. 07-1945
On April 21, 2005, Ambrosia filed suit against Peabody
in Illinois state court, claiming that it sustained actual
damages that substantially exceeded the $350,000 amount
that it received from Federated. The complaint alleged
that (1) Peabody, as owner and operator of the Mine,
was negligent in failing to provide adequate support for
the surface above the Mine, and (2) Peabody violated
its duty to prevent mine subsidence under the Illinois
Surface Coal Mining Land Conservation and Reclama-
tion Act (“SCMLCRA”), 225 ILCS 720/4.02. Peabody
removed the case to federal court on the basis of diver-
sity jurisdiction. In October, 2005, the Fund moved to
intervene as an additional plaintiff under 215 ILCS 5/815.1,
claiming Peabody was strictly liable for failing to pro-
vide sufficient support for the surface of the Ambrosia
property, and asserting its subrogation rights to recover
the $350,000 it paid pursuant to its reinsurance agreement
with Federated in 2002.
Peabody moved for summary judgment, asserting in
part that Plaintiffs’s sought to hold Peabody liable for
their acts or omissions that occurred over forty-five years
ago, and that a coal mine constituted an improvement to
real property, thus Plaintiffs’s claims were barred under
the Illinois Construction Statute of Repose, 735 ILCS 5/13-
214(b).
Plaintiffs also filed a summary judgment motion, claim-
ing that it was undisputed that the warehouse was under-
mined by Peabody during the period it operated the Mine
(1957 to 1960), and because a surface owner had an abso-
lute right to subjacent support, Peabody was strictly
liable for failing to provide subjacent support under Illi-
nois law. Plaintiffs also argued that § 13-214(b) did not
bar their claims because the removal of coal was not
construction of an “improvement to real property.”
No. 07-1945 5
On March 27, 2007, the district court granted Peabody’s
motion for summary judgment, finding that § 13-214(b)
barred Plaintiffs’s claims because a coal mine con-
stituted “construction of an improvement to real property.”
Accordingly, the district court denied Plaintiffs’s motion
for summary judgment as moot. This timely appeal
followed.
II. Discussion
We begin by determining whether the district court erred
in granting summary judgment in favor of Peabody. We
review a district court’s grant of summary judgment
de novo, drawing all inferences in favor of the nonmoving
parties. Breneisen v. Motorola, Inc., 512 F.3d 972, 977 (7th
Cir. 2008). Summary judgment is appropriate where there
are no genuine issues of material fact and the moving
party (Peabody) is entitled to judgment as a matter of
law. Fed.R.Civ.P. 56(c). Our task is to determine whether,
as a matter of law based on undisputed facts, the Illinois
statute of repose bars the Plaintiffs’s claims. Hausman v.
Monarch Mach. Tool Co., 997 F.2d 351, 353 (7th Cir. 1993).
The Illinois Construction Statute of Repose, entitled
“Construction—Design management and supervision,”
provides that:
No action based upon tort, contract or otherwise
may be brought against any person for an act or
omission of such person in the design, planning,
supervision, observation or management of construc-
tion, or construction of an improvement to real prop-
erty after 10 years have elapsed from the time of
6 No. 07-1945
such act or omission.2
735 ILCS 5/13-214(b). Application of § 13-214(b) involves
a two-step analysis: (1) whether a coal mine is an “im-
provement to real property,” and (2) whether Peabody
engaged in activities that fall within the ambit of § 13-
214(b). Garrison v. Gould, 36 F.3d 588, 591 (7th Cir. 1994).
A. Improvement to Real Property
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 de-
fense 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 “improve-
ment 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 § 13-
214 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 improve-
ment); Herriott v. Allied Signal Inc., 998 F.2d 487, 490 (7th
Cir. 1993) (larry-cars used to transfer coal are improve-
ments); 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 improve-
ment).
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 improve-
ment); 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 improve-
ment 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 judg-
ment, 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 improve-
ment 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 enjoy-
ment 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 argu-
ment 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 im-
provement to real property—whether or not the under-
ground 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 improve-
ment to real property under § 13-214. Using the rele-
vant 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 func-
tion of the residential townhomes and does not enhance
the overall value. The court further held that the sub-
way system, unlike a sewer system or construction work
on a traffic intersection, does not have any actual rela-
tion 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 inter-
preted by any other Illinois appellate court, therefore
we are inclined to follow the vast majority of other Ill-
inois courts’ interpretations of what constitutes “improve-
ment” 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 con-
struct a sewer system, which ultimately caused damage
to the plaintiffs’s building above the surface of the con-
struction. In holding that the creation and the construc-
tion of a sophisticated sewer distribution system con-
stitutes an “improvement to real property” under § 13-
214, the court found that the construction was an addi-
tion, rather then a repair and replacement, which sub-
stantially 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 in-
tended 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 construc-
tion 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 con-
structed 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.
B. Activities Protected by the Statute
Our next inquiry is whether Peabody falls within the
protected class of activities under § 13-214(b). The first
clause of the statute places the protected activities in a
certain context: “No action based upon tort . . . may be
brought against any person for an act or omission of
such a person in the design, planning, supervision, ob-
servation, or management of construction.” § 13-214(b)
(emphasis added); see Garrison, 36 F.3d at 592. The con-
cluding phrase, “of construction,” modifies each of the
enumerated activities and not merely the final one. Garri-
son, 36 F.3d at 592. The statute of repose was originally
enacted to protect “the architect, the engineer, the con-
12 No. 07-1945
tractor, anyone who is involved in the planning, super-
vision, operation or management of construction, or the
construction of the improvement to real property.” 81st
Ill. Gen. Assem., House Proceedings, May 25, 1979,
at 31. It was to provide relief for “professionals who are
trying to exercise their sound judgment” in the design and
construction of improvements to real property. Id. at 35.
The Illinois Supreme Court invalidated the original
version of the statute as “special legislation,” because it
excluded from its protection owners or occupiers of the
property on which the building was being built or the
improvement was being made. State Farm, 24 F.3d at 957
(citing Skinner v. Anderson, 38 Ill.2d 455, 231 N.E.2d
588 (1967)). The statute was amended by the Illinois
legislature to eliminate the exclusion, and the revised
statute was upheld in People ex. rel. Skinner v. Hellmuth,
Obata & Kassabaum, Inc., 114 Ill.2d 252, 261, 102 Ill.Dec. 412,
500 N.E.2d 34 (1986), where the court found that § 13-214
protects anyone who engages in the enumerated activities,
regardless of their status. Id.; see also Hausman, 997 F.2d
at 354 (under § 13-214, mere labels are not dispositive).
Because the statute was enacted for the express purpose
of insulating all participants in the construction process
from the onerous task of defending against stale claims,
Wright v. Bd. of Educ., 335 Ill.App.3d 948, 269 Ill.Dec. 589,
781 N.E.2d 386, 391 (2002), the plain language of § 13-214(b)
reflects that purpose and bars only those claims regard-
ing construction of an improvement to real property. MBA
Enterprises, Inc. v. Northern Illinois Gas Co., 307 Ill.App.3d
285, 240 Ill.Dec. 500, 717 N.E.2d 849, 852 (1999). Thus,
Illinois courts have held that for a defendant to benefit
from § 13-214, the legal claims against it must arise out of
construction-related activity. Prate Installations, Inc. v.
No. 07-1945 13
Thomas, 363 Ill.App.3d 216, 299 Ill.Dec. 853, 842 N.E.2d
1205, 1208 (2006); Morietta, 283 Ill.Dec. 758, 808 N.E.2d
at 1049. Where a defendant is not sued for its act or omis-
sion in a construction-related activity, § 13-214 does not
apply. Prate Installations Inc., 299 Ill.Dec. 853, 842 N.E.2d
at 1208; Krueger v. A.P. Green Refractories Co., 283
Ill.App.3d 300, 218 Ill.Dec. 626, 669 N.E.2d 947, 950 (1996);
see also State Farm, 24 F.3d at 957 (negligent acts or omis-
sions, being remote from building construction, were not
the sort of activities that § 13-214 was intended to shield).
This rule carries much weight in the case at bar, for
Ambrosia sued Peabody under the theory that Peabody
was negligent in failing to provide adequate subjacent
support for the surface, and the Fund sued Peabody under
the theory that a surface property owner is entitled to
subjacent support, and that right is absolute and without
condition. Under Illinois law, these claims are appro-
priate, for subsidence claims are merely actions for the
withdrawal of subjacent support. See Lloyd v. Catlin Coal
Co., 210 Ill 460, 468, 71 N.E. 335 (1904). It is a general rule
that the owner of the surface of land has a right to
subjacent support for his land. Mason v. Peabody Coal Co.,
320 Ill.App. 350, 51 N.E.2d 285, 286 (1943); see Wilms v.
Jess, 94 Ill. 464 (1880) (a coal company’s liability depends
not on fault but arises from its absolute duty to provide the
surface with support). Where there has been no release or
waiver, this right is absolute and does not depend upon
whether the mining is done with the greatest degree of
care or in accordance with the most approved system of
mining. Mason, 320 Ill.App. 350, 51 N.E.2d at 286; see
Tankersley v. Peabody, 31 Ill.2d 496 (1964) (coal company
is liable only for subsidences and the resultant damages
due to its own mining operations); Buis v. Peabody, 41
Ill.App.2d 317 (1963) (same).
14 No. 07-1945
Moreover, under RESTATEMENT (SECOND) TORTS § 820,
such suits are also appropriate, in that one who with-
draws naturally necessary subjacent support of another’s
land is subject to liability. If subsidence occurs, the action
is complete and the party that withdraws the support is
strictly liable. See RESTATEMENT (SECOND) TORTS § 820(1),
cmt. g. In this instance, Peabody became liable as soon
as it withdrew the natural support for Ambrosia’s land.
It is undisputed that Peabody was not sued for its acts
or omissions related to construction activities. Instead,
Peabody was sued in its capacity as owner of the min-
eral estate at the time of the withdrawal of support.
This garners further support for the inapplicability of § 13-
214 to the claims against Peabody, because the statute
of repose does not apply to suits against a landowner
solely as a landowner. See DeMarco v. Ecklund, 341
Ill.App.3d 225, 275 Ill.Dec. 173, 792 N.E.2d 404, 406-07
(2003) (a landowner must face suit for an act or omission
in a construction-related activity in order for § 13-214(b)
to come into play); Kamp v. Preis, 332 Ill.App.3d 1115,
266 Ill.Dec. 426, 774 N.E.2d 865, 873 (2002) (same); MBA
Enterprises, 240 Ill.Dec. 500, 717 N.E.2d at 851 (§ 13-214(b)
does not apply to an action against a landowner be-
cause action was based on landowner’s ongoing duty of
care, and not on construction-related activities); Prochnow
v. El Paso Golf Club, Inc., 253 Ill.App.3d 387, 192 Ill.Dec. 614,
625 N.E.2d 769, 773 (1993) (the allegations of the complaint
were based on the ownership of the property rather
than on any of the enumerated activities in § 13-214(b));
C.S. Johnson Co. v. Champaign Nat’l Bank, 126 Ill.App.3d 508,
81 Ill.Dec. 663, 467 N.E.2d 363, 365 (1984) (§ 13-214 does
not apply to defendants for damage to property where
action is based on the defendant’s status as a landowner,
and not one of the enumerated activities in the statute).
No. 07-1945 15
We believe the claims against Peabody have been
mischaracterized from the beginning. To the extent the
claims are for damages against Peabody for construction-
related activities enumerated by § 13-214(b), the statute
of repose would apply to bar the claim, because a coal
mine is an “improvement to real property” within the
meaning of the statute and Illinois case law interpreting
it. However, to the extent the claim is one for damages
against Peabody as a landowner (which we believe is the
case) for withdrawal of subjacent support under Illinois
law, as well as withdrawal of subjacent support that is
“naturally necessary” for the support of surface property
in another’s possession under RESTATEMENT (SECOND) OF
TORTS § 820, the statute of repose does not apply, because
a claim of this sort is not premised upon one of the acts
or omissions enumerated in the statute.3
The district court below focused on whether the coal
mine was an “improvement to real property,” in that
there was no dispute of fact that the mining affecting
the property occurred over forty years prior to the suit.
The court, however, failed to address the other require-
ment for the application of § 13-214—whether Peabody
was a party engaged in any of the enumerated activities
protected under the statute.
Our de novo review is limited to legal issues and con-
clusions. West Allis Memorial Hosp., Inc. v. Bowen, 852
F.2d 251, 258 (7th Cir. 1988). We may decide the merits
3
Reviewing Ambrosia’s complaint, the negligence claim
against Peabody may also fall under RESTATEMENT (SECOND)
OF TORTS § 821, which applies where the withdrawal of sub-
jacent support that is not “naturally necessary,” but rather, is
necessary to support the surface land and its artificial additions.
16 No. 07-1945
of legal issues which were not addressed by the district
court only when the facts on which those conclusions are
based are not in dispute. Id; see also K and N Engineering,
Inc. v. Bulat, 510 F.3d 1079, 1081 n.2 (9th Cir. 2007) (a
court of appeals may exercise its discretion to review
issue that had not been raised before district court,
where issue involves purely legal question of statutory
interpretation and pertinent record has been fully devel-
oped); Norfolk Southern Ry. Co. v. Basell USA Inc., 512
F.3d 86, 97 (3d Cir. 2008) (a district court’s failure to
consider an issue below does not necessarily preclude
the Court of Appeals from addressing it; however, it is
only appropriate for it to do so when the factual record
is developed and the issues present purely legal ques-
tions, upon which an appellate court exercises plenary
review). Peabody was sued in its capacity as the owner of
the Mine, not as a party engaging in construction-related
activities. Therefore, we find that, as a matter of law, § 13-
214(b) does not bar Plaintiffs’s claims against Peabody.
III. Conclusion
Because we find that Peabody, sued in its status as a
landowner, does not fall within the protection of § 13-
214(b) as a matter of law, summary judgment was im-
proper. Accordingly, we reverse the district court’s grant
of summary judgment and remand for further pro-
ceedings not inconsistent with this opinion.
No. 07-1945 17
CUDAHY, Circuit Judge, concurring. I am pleased to
join the excellent majority opinion and particularly its
important outcome. The issue resolved here is of more
than passing significance because, for all practical pur-
poses, an opposite result would slam the door almost
completely on claims for coal mine subsidence in Illinois.
Coal mine subsidence is usually a long-term proposition.
The subsidence alleged in this case took place forty
years after operations at the St. Ellen mine had ceased. See
also Tankersley v. Peabody Coal Co., 31 Ill. 2d 496, 202 N.E.2d
498 (1964) (forty years); Nida v. American Rock Crusher
Co., 253 Kan. 230, 855 P.2d 81 (1993) (thirty years). The
application of a ten-year statute of repose would block
recovery for subsidence damage in all but the rare case
where collapse follows promptly upon excavation. This
would be good news for coal mining companies and
bad news for the neighbors of their mines. With an oppo-
site result here, the Illinois Mine Subsidence Insurance
Fund might as well go out of business.
Illinois has had a construction statute of repose since
1979. See 735 ILCS 5/13-214(b) (2007). Nearly every state
in the nation now has a construction statute of repose;
many of these statutes contain wording that is similar
to the Illinois statute. Yet no court in the nation has ever
held that digging a coal mine was an act of “construction”
or an “improvement to real property” or anything analo-
gous to those statutory requirements.1 As far as I can
1
Actually, Peabody made the same argument in another recent
case involving subsidence damage over the St. Ellen mine. See
Illinois Mine Subsidence Fund v. Peabody Coal Co., 383 F.Supp.2d
1078 (C.D. Ill. 2005). Peabody prevailed in that case and, not
(continued...)
18 No. 07-1945
tell, no defendant has even argued that a construction
statute of repose applied to mining operations—not
even in the leading mining jurisdictions of Pennsylvania
and West Virginia. It would surely be an ill-starred in-
novation here to find that what is essentially digging a
hole in the ground is an act of “construction of an im-
provement to real property” controlled by the statute of
repose.
I.
The parties here raised at length, and the majority
opinion contains an extended discussion of, the term
“improvement to real property,” which although relevant
is really not central to the present issue. The extraction of
the coal is the legal cause of the injury here,2 and this fact
should govern our interpretation of the statute of repose.
To benefit from the statute, Peabody must show that
Ambrosia’s mine subsidence claim (which results from
coal removal) arises out of a construction-related activity.
See, e.g., King v. Paul J. Krez Co., 323 Ill. App. 3d 532, 538-
39, 256 Ill. Dec. 725, 752 N.E.2d 605 (2001); MBA Enter-
1
(...continued)
surprisingly, has asked us to apply the rule of res judicata.
I would decline to do so, as the majority apparently has,
since the application of res judicata in this case would fore-
close an important opportunity to reconsider a legal rule of
great general concern. See Chicago Truck Drivers, Helpers and
Warehouse Union (Independent) Pension Fund v. Century Motor
Freight, Inc., 125 F.3d 526, 531 (7th Cir. 1997).
2
Installing lights and other equipment incidental to mining
does not cause subsidence.
No. 07-1945 19
prises, Inc. v. Northern Illinois Gas Co., 307 Ill. App. 3d 285,
288, 240 Ill. Dec. 500, 717 N.E.2d 849 (1999); Krueger v. A.P.
Green Refractories Co., 283 Ill. App. 3d 300, 304, 218 Ill. Dec.
626, 669 N.E.2d 947 (1996). The requirement of a nexus
between the legal claim and the construction-related
activity is not simply a judicial gloss; the Illinois statute of
repose applies only to an “action . . . for an act or
omission . . . of construction.” 735 ILCS 5/13-214(b)
(emphasis added). If the construction-related activity is the
sole basis of the legal claim, the statute bars the claim. See
MBA Enterprises, 307 Ill. App. 3d at 288. If, however, the
legal claim is, as here, based on activities unrelated to the
construction, the statute does not apply. Id.The purpose of the “improvement to real property”
language in the statute is to limit the type of “construction”
that the statute contemplates. Thus “construction” is
anterior to “improvement”; there must be “construction”
before its object, “improvement to real property,” is in
issue. By referring to “improvement to real property,” the
statute distinguishes between construction involving
personal property (not covered) and construction of an
improvement to real property (covered). But, before the
nature of an improvement to real property is an issue,
there must be “construction” to create it.
The rule that the legal claim must be based on
construction-related activity has an important corollary,
one that is dispositive in this case. Illinois courts have
been clear, as is the majority opinion, that the statute
does not bar claims made against a landowner solely in
his or her capacity as landowner, as in subsidence
claims. See Continental Ins. Co. v. Walsh Const. Co. of Illinois,
171 Ill. App. 3d 135, 139, 121 Ill. Dec. 83, 524 N.E.2d 1131(1988); C.S. Johnson Co. v. Champaign Nat. Bank, 126 Ill. App.
20 No. 07-1945
3d 508, 511, 81 Ill. Dec. 663, 467 N.E.2d 363 (1984). One
defining characteristic of a suit against a landowner qua
landowner is that it proceeds on a theory of strict liabil-
ity as distinguished from a theory of negligence.
Although one may think erroneously of subsidence
claims as involving negligence, such suits are actually
merely actions for the withdrawal of subjacent support. See
Lloyd v. Caitlin Coal Co., 210 Ill. 460, 468, 71 N.E. 335 (1904);
RESTATEMENT (SECOND) OF TORTS, § 820(1) (1979). The
degree of care used in the withdrawal of support is com-
pletely irrelevant; as soon as the owner of a mineral
estate withdraws any natural support from the surface
estate, it becomes subject to liability for such a with-
drawal. See Standard Oil Co. v. Watts, 17 F.2d 981, 982 (7th
Cir. 1927) (applying Illinois law). It is the extraction of
coal to create a hole or a void (or a “room”) that creates
the potential for subsidence and damage. When sub-
sidence occurs, the action is complete and the owner of
the mineral estate becomes liable without regard to negli-
gence. See RESTATEMENT (SECOND) OF TORTS, § 820(1) cmt.
g (1979). If the owner of the mineral estate does not wish
to be subject to this ongoing liability, it has only two
options: “Furnish[ ] artificial support sufficient to replace
the natural support withdrawn” or pray that there is no
subsidence. Id. This is all well settled. See Wilms v. Jess, 94
Ill. 464 (1880); Buis v. Peabody Coal Co., 41 Ill. App. 2d 317,
190 N.E.2d 507 (1963); Wanless v. Peabody Coal Co., 294 Ill.
App. 401, 13 N.E.2d 996 (1938); Treece v. Southern Gem
Coal Co., 245 Ill. App. 113 (1927).
With this proper backdrop in place, it becomes clear
that Ambrosia’s mine subsidence claim is based on some-
thing other than activity related to construction. Peabody
decided to extract coal from below the Ambrosia prop-
No. 07-1945 21
erty. It does not claim that it secured a waiver of Ambro-
sia’s right to subjacent support. Under Illinois law, Pea-
body becomes subject to liability as soon as any natural
support for Ambrosia’s land is removed. Thus, when
Peabody removed its first shovelful of coal, it became
subject to liability in the event of a mine subsidence. See
Watts, 17 F.2d at 982. When the subsidence occurred in
2000, Ambrosia sued Peabody in its capacity as the owner
of the mineral estate at the time of the withdrawal of
support. This is entirely appropriate under Illinois law. See
Buis, 41 Ill. App. 2d at 323. Further, it is clear that this is
a suit between owners solely as owners; the statute of
repose, therefore, does not apply. See C.S. Johnson Co., 126
Ill. App. 3d at 511.
II.
A room and pillar mine is essentially a hole—an incom-
plete hole because pillars are left in place to prevent
subsidence. One could not argue that the hole (or the
“room”) has been “constructed”; it is simply the void
left after the coal is removed. The pillars are not con-
structed either; they are simply coal that has been left
behind. Even if we were to consider the overall design
of the mine, it is simply the absence of the coal that caused
the damage, and the effectuation of its removal is not
construction. Thus, Peabody has no evidence that it
“constructed” anything that caused the subsidence. Even
the creation of the pillars, if that were considered “con-
struction,” is not relevant since that is certainly not the
cause of the subsidence. As has been noted, it is the
legal cause of the injury which must meet the require-
ments of the statute of repose.
22 No. 07-1945
Although the matter is not central, Peabody has also
not shown that there was an “improvement to real prop-
erty” here. An improvement implies some kind of addition.
See Calumet Country Club v. Roberts Environmental Con-
trol Corp., 136 Ill. App. 3d 610, 613, 91 Ill. Dec. 267,
483 N.E.2d 613 (1985). Peabody has argued the factors
defining an improvement as set forth in St. Louis v. Rockwell
Graphic Systems, Inc., 153 Ill. 2d 1, 178 Ill. Dec. 761, 605
N.E.2d 555 (1992). The application of these factors, how-
ever, assumes that an “addition” has occurred or been
found. Id. at 4. Peabody has stressed that the pillars
served an important purpose because they supported the
ceiling of the mine. But the pillars merely “replace”
the support provided by the preexisting coal or, more
literally, merely form a portion of the preexisting coal,
the remainder of which has been removed. The pillars
of unmined coal are certainly not an addition. Once
the coal is removed, the pillars must support both the
surface above them and the surface above the newly
created rooms. The pillars are nothing more than a partial
replacement for the support that has been removed.
Replacement, however, is not improvement. See Calumet,
136 Ill. App. 3d at 613.
III.
Applying the statute of repose in this case does nothing
to further its purpose. Statutes of repose are intended
to protect against stale claims. See Wright v. Board of Educ.
of City of Chicago, 335 Ill. App. 3d 948, 955-56, 269 Ill. Dec.
589, 781 N.E.2d 386 (2002). Peabody argues that this
case presents “the very problem the Statute of Repose
seeks to avoid” because “the task of locating living wit-
nesses and pertinent documents is virtually impossible.”
Appellee Br.11. This argument represents a funda-
No. 07-1945 23
mental misunderstanding of Illinois mine subsidence
law. Ambrosia is under no obligation to show that Pea-
body breached a duty of care, and any showing by Pea-
body that it used due care is irrelevant. Put simply, Pea-
body’s actions from 1957 to 1960 are not at issue in this
case. Peabody already admits that it extracted coal during
that period, thus Peabody is already subject to liability
for a subsidence. Peabody’s only available defenses are
that there was, in fact, no subsidence, or that some other
force caused the subsidence. See Watts, 17 F.2d at 982. Both
of those inquiries are related to the here and now—that
is, both relate to the subsidence event that is alleged to
have occurred on Ambrosia’s property in 2000.
IV.
I therefore agree with the conclusion reached by the
majority and, in general, with its analysis, with emphasis
on the matters I have discussed. And I would reiterate
my belief in the importance of this issue and its proper
resolution.
USCA-02-C-0072—4-9-08