Felsenthal et al v. Travelers Property Casualty Insurance Company

Filing 34

WRITTEN Opinion entered by the Honorable Amy J. St. Eve on 2/7/2013: The Court denies Defendant's Motion for Judgment on the Pleadings pursuant to Rule 12(c) 17 . The Court hereby lifts the stay of discovery. Mailed notice(kef, )

Order Form (01/2005)

United States District Court, Northern District of Illinois
Name of Assigned Judge
or Magistrate Judge

Amy J. St. Eve

CASE NUMBER

12 C 7402

CASE
TITLE

Sitting Judge if Other
than Assigned Judge

DATE

2/7/2013

Felsenthal et al vs. Travelers Property Casualty Ins Co

DOCKET ENTRY TEXT

The Court denies Defendant’s Motion for Judgment on the Pleadings pursuant to Rule 12(c) [17]. The Court
hereby lifts the stay of discovery.

O[ For further details see text below.]

Notices mailed by Judicial staff.

STATEMENT
Before the Court is Defendant Travelers Property Casualty Insurance Company’s Motion for
Judgment on the Pleadings pursuant to Federal Rule of Civil Procedure 12(c). For the following reasons, the
Court denies the Motion.
BACKGROUND
On May 27, 2009, Travelers Property Casualty Insurance Company (“Travelers”) issued an insurance
policy allegedly covering losses “on or about Plaintiffs’ residence at 9850 Wild Cherry Lane, Palos Park,
Illinois.” (Am. Compl. ¶ 3.) (“The Policy”) The Policy contained a provision stating that “[n]o action can be
brought unless the policy provisions have been complied with and the action is started within one year after
the date of loss.” (R. 1-1, Not. of Removal, Ex. A at 21.) (“The Suit Limitation Provision”) An endorsement
to the Policy further stated that “this one year period is extended by the number of days between the date
proof of loss is submitted and the date the claim is denied in whole or in part.” (Not. of Removal, Ex. A. at
46.) Under a section of the Policy entitled “Your Duties After Loss,” the Policy provided that “[i]n case of a
loss to covered property, you must see that the following are done . . . [s]end to us, within 60 days after our
request, your signed, sworn proof of loss.” (Id. at 19.)

Courtroom Deputy
Initials:

12C7402 Felsenthal et al vs. Travelers Property Casualty Ins Co

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Plaintiffs Alan Felsenthal and Angelique McGlashan allege that “on or about May 1, 2010, an unknown
individual(s) broke into the residence of Plaintiffs and committed various acts of vandalism which included
plugging the bathtubs in the two . . . bathrooms, turning on the faucets and allowing water to drain under the
floors and ceilings of the residence which resulted in substantial damage to the Premises and personal property.”
(Am. Compl. ¶ 4.) In addition, Plaintiffs allege that the unknown individual or individuals “committed acts of
burglary and stole various items of jewelry and other personal property.” (Id. ¶ 5.) Subsequently, Plaintiffs
notified Travelers of the occurrence and made the premises available for inspection. (Id. ¶ 6.) On August 20,
2012, Plaintiffs received from their attorney a copy of a letter dated August 17, 2012 from Travelers to the
Plaintiffs denying coverage for Plaintiffs’ claims. (Am. Compl., Ex. B.)
On August 21, 2012, Plaintiffs filed suit in the Circuit Court of Cook County, Illinois against Defendant
alleging breach of the insurance contract. (Am. Compl. ¶ 10.) On September 17, 2012, Defendant removed the
case from the Circuit Court of Cook County, Illinois on the basis of diversity jurisdiction. (R. 1, Not. Removal.)
Plaintiffs then filed an Amended Complaint on October 5, 2012. (R. 12, Am. Compl.) On December 10, 2012,
Defendant moved for judgment on the pleadings pursuant to Rule 12(c). (R. 17.)
LEGAL STANDARD
Rule 12(c) provides that after “the pleadings are closed—but early enough not to delay trial—a party may
move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). “A motion for judgment on the pleadings under
Federal Rule of Civil Procedure 12(c) ‘is designed to provide a means of disposing of cases when the material
facts are not in dispute and a judgment on the merits can be achieved by focusing on the content of the pleadings
and any facts of which the court may take judicial notice.’” Archer Daniels Midland Co. v. Burlington Ins. Co.
Grp., No. 10-CV-1533, 2011 WL 1196894, at *2 (N.D. Ill. Mar. 29, 2011) (quoting Cin. Ins. Co. v.
Contemporary Distrib., Inc., No. 09-CV-2250, 2010 WL 338943, at *2 (N.D. Ill. Jan. 26, 2010)). The same legal
standard that applies to motions to dismiss under Federal Rule of Civil Procedure 12(b)(6) applies to motions
under Rule 12(c). See Buchanan–Moore v. Cnty. of Milwaukee, 570 F.3d 824, 827 (7th Cir. 2009). To survive a
Rule 12(c) motion, therefore, the factual allegations in the complaint must be sufficient to raise the possibility of
relief above the speculative level, assuming that all well-pleaded allegations in the complaint are true. See Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007); Wozniak v. Argonne Nat’l
Lab., No. 09–CV–7702, 2010 WL 3958426, at *3 (N.D. Ill. Oct.1, 2010). The Seventh Circuit has clarified,
however, that when a party seeks to use a 12(c) motion “to dispose of the case on the basis of the underlying
substantive merits,” then the “appropriate standard is that applicable to the summary judgment, except that the
court may consider only the contents of the pleadings.” Alexander v. City of Chicago, 994 F.2d 333, 336 (7th Cir.
1993). In that case, the court, “take[s] all well-pleaded allegations in the plaintiffs’ pleadings to be true, and . . .
view[s] the facts and inferences to be drawn from those allegations in the light most favorable to the plaintiffs.”
Id. The moving party, therefore, bears the burden of showing that “no genuine issues of material fact remain to
be resolved and . . . the moving party is entitled to judgment as a matter of law.” Id.
For the purposes of a 12(c) motion, “[t]he pleadings include the complaint, the answer, and any written
instruments attached as exhibits.” N. Ind. Gun & Outdoor Shows, Inc. v. City of S. Bend, 163 F.3d 449, 452 (7th
Cir. 1998). In the Seventh Circuit, a “written instrument” includes “documents such as affidavits . . .[,]letters,
and loan documentation.” Id. at 453 (internal citations omitted).
ANALYSIS
Defendant moves for judgment on the pleadings on the basis that Plaintiffs’ claim is time-barred. (R. 18,
Def.’s Mem. 4.) According to Defendants, because Plaintiffs filed suit on August 12, 2012, and the date of loss
was May 1, 2010, the one-year Suit Limitation provision forecloses Plaintiffs’ claim. (Def.’s Mem. 4.)
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Defendants also contend that because Plaintiffs failed to submit the proof of loss form within the 60-day time
period as mandated by the Policy–and the insured must file a proof of loss that follows the requirements of the
Policy–the one-year Suit Limitation provision was not tolled and expired on May 1, 2011. (Def.’s Mem. 4-5.)
In response, Plaintiffs argue that whether the Suit Limitation was tolled involves factual determinations
that the Court cannot make on a motion for judgment on the pleadings and require discovery to resolve. (Pls.’
Resp. 5.) Among these potential factual issues, Plaintiffs argue that Defendant has waived or is estopped from
asserting strict compliance with the 60-day proof of loss requirement. Plaintiffs offer two grounds for estoppel or
waiver:1 (1) Travelers’ denial letter “lists many reasons for its decision, but never states that the basis for its
denial was that the Plaintiffs did not file their proof of loss within one year of the actual loss”; (2) “Defendant’s
own conduct in investigating the claim, directing the Plaintiffs concerning filing the proof of loss and paying part
of the claim for pumping out the water in the basement are all indicia of waiver [or estoppel].” (Pls.’ Resp. 5.)
Under Illinois law, an estoppel against an insurer may lie “[w]here an adversary lulls an opponent into a
‘false sense of security’ that a claim may be settled without resort to litigation.” Koclanakis v. Merrimack Mut.
Fire Ins. Co., 899 F.2d 673, 676 (7th Cir. 1990) (citing Beynon Bldg. Corp. v. National Guardian Life Ins. Co.,
118 Ill. App. 3d 754, 763, 455 N.E. 2d 246, 252, 74 Ill. Dec. 216, 222 (1983)). If the insurer’s conduct did not go
“beyond mere investigation and negotiation,” the estoppel argument fails as a matter of law. Id. (citing D’Urso v.
Wildheim, 37 Ill. App. 3d 835, 839, 347 N.E.2d 463, 466 (1976)). A valid basis for estoppel may lie, however, “if
an insurer conceded liability, advanced payments to its insured, or made statements encouraging its insured to
delay filing suit.” Id. at 676. “[I]t is not necessary that the insurer intentionally mislead or deceive the insured,
or even intend by its conduct to induce delay; rather, all that is necessary is that the insured reasonably relies on
the insurer’s conduct in foregoing filing a suit.” Burress-Taylor v. Am. Sec. Ins. Co., 2012 IL App (1st) 110554,
980 N.E.2d 679, 687 (Ill. App. Ct. Oct. 26, 2012); Florsheim v. Travelers Indem. Co. of Illinois, 75 Ill. App. 3d
298, 304, 393 N.E.2d 1223, 1229 (Ill. App. Ct. 1979) (“An estoppel may be found even though the insurer neither
intended to mislead, nor to relinquish its own rights.”)
Defendant has failed to satisfy its burden at this stage that Plaintiffs’ estoppel argument fails as a matter of
law. Here, Plaintiffs assert that Defendant’s “own conduct in investigating the claim, directing the Plaintiffs
concerning filing the proof of loss and paying part of the claim for pumping out the water” give rise to either a
valid basis for estoppel or waiver.2 (Pls.’ Mem. 5.) At this early stage, the Court cannot conclude that under no

1

In their Response, Plaintiffs do not distinguish clearly between which allegations
support their estoppel and waiver arguments. As Illinois courts have noted, though “‘waiver’
and ‘estoppel’ are sometimes conflated, particularly in the insurance context, they are . . .
distinct legal doctrines.” Lumbermen’s Mut. Cas. Co. v. Sykes, 384 Ill. App. 3d 207, 218, 890
N.E.2d 1086, 1097 (Ill. App. Ct. 2008) (“Waiver focuses exclusively on the conduct of the
insurer, while estoppel focuses on the conduct of the insured in response to representations made
by the insurer.”). Because at this procedural posture, the Court must view the inferences in favor
of the non-moving party, the Court will consider both sets of allegations in determining whether
Plaintiffs’ reliance on the estoppel or waiver doctrine is barred as a matter of law.
2

Plaintiffs make these allegations only in their Response opposing the Motion, and not
their Amended Complaint. Although courts must decide motions for judgment on the pleadings
only on the pleadings and any written instruments they incorporate, a plaintiff need not “plead
around defenses” in a complaint. United States v. N. Trust Co., 372 F.3d 886, 888 (7th Cir.
2004); Xechem, Inc. v. Bristol-Myers Squibb Co., 372 F.3d 899, 901 (7th Cir. 2004) (“[P]laintiffs
need not anticipate and attempt to plead around all potential defenses.”) Given that the Motion
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set of facts did Defendant’s actions cross the line between mere investigation into conduct or “statements
encouraging its insured to delay filing suit.” Indeed, Defendant’s exhibits to its Answer include a series of emails
between Plaintiff Felsenthal and a Travelers Claim Professional. (Ans. Exs. B, C.) These emails reflect
communication between Travelers and Plaintiff Felsenthal during May and April of 2011. Given these
communications, discovery is necessary to clarify this factual issue regarding the parties’ respective claims and
defenses. Granting judgment on the pleadings, therefore, would be improper. See Brownmark Films, LLC v.
Comedy Partners, 682 F.3d 687, 690 (7th Cir. 2012) (noting that judgment on the pleadings is appropriate “when
all relevant facts are presented”); Alexander v. City of Chicago, 994 F.2d 333, 345 (7th Cir. 1993) (“The issue at
this stage, however, is whether additional factual development is essential to a proper decision.”).3
Defendant’s reliance on Koclanakis v. Merrimack Mut. Fire Ins. Co., 899 F.2d 673, 676 (7th Cir. 1990) in
this procedural posture is misplaced. In Koclanakis, the Seventh Circuit held that the plaintiff’s estoppel
argument failed as a matter of law on summary judgment where the asserted basis for estoppel was that the
defendant “manifested assurances that it would reconsider [the plaintiff’s] claim” by its “willingness to schedule
an examination under oath,” notwithstanding “eleven months of repeated requests for more evidence.” 899 F.2d
at 676. Here, however, the record is not sufficiently developed for the Court to make such a determination at this
stage.
As Defendant has failed to meet its burden on the estoppel issue, the Court will not reach the other
potential issues that Plaintiffs argue preclude judgment on the pleadings.
CONCLUSION
For the foregoing reasons, the Court denies Defendant’s Motion for Judgment on the Pleadings pursuant
to Rule 12(c).

is the first opportunity for Plaintiffs to challenge Defendant’s time-bar defense, the Court will
consider these allegations for the limited purpose of determining whether factual issues preclude
judgment on the pleadings.
3

Although Defendant argues that Plaintiffs’ estoppel argument is barred because it
allegedly agreed to share the costs to pump out the water after May 1, 2011, and thus subsequent
to the expiration of the one-year limitations period, the Court cannot rely on this assertion at this
stage to conclude that Plaintiffs’ estoppel defense fails as a matter of law.
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