WILDER CORPORATION OF DELAWARE v. THOMPSON DRAINAGE AND LEVEE DISTRICT (September 27, 2011)
Wilder Corporation owned several thousand acres of farmland on the Illinois River in Fulton County, Illinois. It sold the land in 2002 to The Nature Conservancy, which intended to restore it to an ecologically functional floodplain. Wilder warranted that the land was not contaminated by petroleum. Unfortunately, Wilder was wrong and the property was contaminated, apparently as a result of the local drainage district’s use and storage of petroleum on the property. The Conservancy sued Wilder for breach of contract and obtained a judgment for several hundred thousand dollars. Wilder brought suit against the drainage district, seeking indemnification for the damages it was ordered to pay the Conservancy. Judge Mihm (C.D. Ill.) granted summary judgment to the Conservancy. Wilder appeals.
In their opinion, Seventh Circuit Judges Posner, Flaum, and Hamilton affirmed. The Court briefly explored the common law of indemnity. It noted that the most common form of indemnity is contractual, as in an insurance policy. There is also non-contractual indemnity, as in where tort liability is shifted from a blameless person to a blameworthy one. Here, however, Wilder wants to shift its contractual liability on the theory that it was blameless and that the drainage district was blameworthy for the petroleum contamination. But the doctrine of indemnity simply does not apply in a situation like this. The district had no control over what warranties Wilder gave to the Conservancy. Furthermore, Wilder could have insisted on a subrogation clause, in which case he could have stepped into the Conservancy's shoes in a nuisance claim against the district. Having failed to do so, it cannot shift the liability to the district. The Court noted that the suit was also barred by the economic-loss doctrine.