November 24, 2003
Howrey LLP
Plote,
Inc. contracted with the Illinois Department of Transportation to make improvements
to a road. Before the project and at utility meetings during the project, Illinois
Bell Telephone Co. was asked to provide information about the location of its
underground facilities. Plote needed this information so that it could timely
execute its work and so that it would not damage existing facilities. Because
Illinois Bell provided incomplete and inaccurate information about the location
of its underground facilities, the project was delayed by seven months. Plote
sued Illinois Bell under a variety of legal theories for damages resulting from
the delay. The trial court dismissed all of Plote's causes of action. The Appellate
Court of Illinois reversed as to one of them. Illinois Bell Telephone Co. v.
Plote, Inc., 334 Ill.App.3d 796, 778 N.E.2d 1203 (2002). Plote
argued that Illinois Bell was liable for negligently failing to provide information
about the location of its underground facilities. The court found that there was
no common law duty to provide this information to Plote and sustained dismissal
of the cause of action. However,
Illinois' Underground Utility Facilities Damage Prevention Act requires owners
of underground facilities, upon notice, to mark the approximate locations of their
facilities within 48 hours. Illinois
Bell sought to shield itself from this duty by invoking the economic loss rule,
which bars recovery in tort for damages not involving personal injury or physical
damage to property. There is an exception to the economic loss rule for information
providers. It allows recovery in tort for economic losses when the damages "are
a proximate result of a negligent misrepresentation by a defendant in the business
of supplying information for the guidance of others in their business transactions." Plote
argued that determination of whether Bell was an information provider should be
made by looking to the context of the specific transaction involved and not on
the basis of Illinois Bell's general business. Bell argued that its primary business
is not supplying information, so it should not come under the information provider
exception. The
court held that under the underground utility act, Illinois Bell's sole function
was to provide information to Plote regarding the location of its underground
facilities. Accordingly, the Appellate Court held that Plote had stated a claim
against Illinois Bell based on the underground utility act. The court held that
the statute imposed an independent duty on the utility to provide information
and that, in the context of that statute, the utility was in the business of supplying
information. Accordingly, the factual situation fell within the information-provider
exception. While Illinois Bell's general business might be providing telephone
service, it is the nature of the transaction at issue in the specific case on
an ad hoc basis that is determinative.
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For more information about the issues covered in this report, please contact Paul Berning in our San Francisco office at 415-848-4996 or at paulberning@howrey.com or contact your Howrey attorney. For more information about Howrey's Construction Practice Group, click here.
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