Burns Philp Food, Inc. v. Cavalea Continental Freight, Inc.
28 Envtl. L. Rep. (Envtl. Law Inst.) 21038, 48 Fed. R. Serv. 1069, 135 F.3d 526 (1998)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Under Illinois law, a claim for unjust enrichment seeking only monetary damages is considered an action at law, not in equity, and is therefore subject to the five-year statute of limitations. Additionally, trespass is a strict liability tort, and a landowner is not required to notify the trespasser of an encroachment before being entitled to recover damages.
Facts:
- Nabisco sold adjacent industrial parcels in Chicago to Cavalea Continental Freight and Burns Philp Food.
- In 1986, an error in real estate records caused tax officials to bill Burns Philp for two parcels of land that Cavalea had actually purchased.
- From 1987 until mid-1993, Burns Philp mistakenly paid almost $125,000 in property taxes on Cavalea's land without inquiry.
- During this period, Burns Philp constructed a 205-foot-long fence that it believed was on the property line but which encroached up to 20 feet onto Cavalea's land, occupying about 2,000 square feet.
- In mid-1993, a newly appointed manager at Burns Philp ordered an audit, which revealed the erroneous tax payments.
- Burns Philp requested reimbursement for the taxes from Cavalea, but Cavalea refused to pay.
- In 1995, a survey conducted for a third party revealed that Burns Philp's fence was on Cavalea's land.
- Cavalea maintained a 1974 tanker-trailer on its property as a diesel refueling station, from which fuel sometimes spilled.
Procedural Posture:
- Burns Philp Food sued Cavalea Continental Freight in federal district court, alleging unjust enrichment for the mistaken tax payments.
- Cavalea filed a counterclaim against Burns Philp for trespass, based on the encroaching fence.
- Burns Philp filed an additional claim against Cavalea, alleging pollution from diesel fuel spills.
- Following a bench trial, the district court judge found for Burns Philp on the unjust enrichment claim and refused to apply the five-year statute of limitations.
- The district court judge ruled against Cavalea on its trespass claim, holding that damages were barred because Cavalea had not notified Burns Philp of the encroachment.
- The district court judge found for Cavalea on the pollution claim, deeming Burns Philp's expert evidence unreliable.
- Both Burns Philp (appellee/cross-appellant) and Cavalea (appellant/cross-appellee) appealed the adverse decisions to the U.S. Court of Appeals for the Seventh Circuit.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Under Illinois law, does the five-year statute of limitations for actions on unwritten contracts apply to a claim for unjust enrichment seeking monetary restitution, and must a landowner first notify a trespasser of an unintentional encroachment before seeking damages?
Opinions:
Majority - Easterbrook, Circuit Judge.
Yes, as to the statute of limitations; No, as to the notice requirement. A claim for unjust enrichment seeking monetary damages is an action at law subject to the Illinois five-year statute of limitations, and a landowner need not notify a trespasser of an encroachment before recovering damages. Regarding the unjust enrichment claim, the court rejected the district judge's view that such claims are purely equitable and thus immune from statutes of limitations. Citing Illinois precedent, including Board of Highway Commissioners v. Bloomington, the court reasoned that while restitution is 'governed by principles of equity,' the action itself is 'at law' when only money is sought and no fiduciary relationship exists. The discovery rule does not toll the statute indefinitely; the limitations period began when Burns Philp, through the exercise of appropriate diligence like a routine audit of its invoices, could have discovered the mistaken payments. Therefore, Burns Philp's recovery must be limited to payments made within the five years preceding its lawsuit. Regarding the trespass claim, the court held that the district judge erred by imposing a notice requirement based on 'elemental justice' rather than Illinois law. Trespass is a strict liability tort. The cases requiring notice for trespass only apply where the landowner initially consented to the entry and later revoked that consent. Here, Cavalea never consented to the fence's construction. Therefore, Cavalea is entitled to damages for the trespass without having first notified Burns Philp of the encroachment.
Analysis:
This decision clarifies for federal courts applying Illinois law that unjust enrichment claims for money are treated as legal actions subject to statutes of limitations, not as timeless equitable claims. It reinforces the objective nature of the discovery rule, emphasizing that the limitations period can begin when a party should have known of an injury, imposing a duty of reasonable diligence on potential plaintiffs. The opinion also serves as a strong reminder that in diversity jurisdiction cases, federal judges must strictly apply state substantive law as interpreted by state courts, rather than substituting their own notions of fairness or 'elemental justice.'
