70th Court Industrial Condominium #2 v. Travelers Casualty Insurance Company of America
Filing
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MEMORANDUM Opinion and Order. Defendant's motion to dismiss 9 is granted. Plaintiff is given leave to amend its complaint to state a Section 155 claim, if it can do so consistent with Rule 11, by May 9, 2017. Status hearing remains set for May 9, 2017 at 9:30 a.m. Signed by the Honorable Jorge L. Alonso on 4/18/2017. Notice mailed by judge's staff (ntf, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
70th COURT INDUSTRIAL
CONDOMINIUM #2, also known as
70th CT. CONDOMINIUM
ASSOCIATION #2,
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Plaintiff,
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v.
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TRAVELERS CASUALTY INSURANCE )
COMPANY OF AMERICA,
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Defendant.
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Case No. 16 C 6483
Judge Jorge L. Alonso
MEMORANDUM OPINION AND ORDER
Plaintiff, 70th Court Industrial Condominium #2, filed a two-count complaint against
Travelers Casualty Insurance Company of America for breach of contract and for costs and
attorneys’ fees pursuant to Section 155 of the Illinois Insurance Code (215 ILCS 5/155). Before
the Court is defendant’s motion to dismiss the Section 155 claim [9]. For the reasons set out
below, the motion is granted.
BACKGROUND
Plaintiff purchased an insurance policy from defendant effective February 12, 2014
through February 12, 2015 that provided coverage for a commercial building he owned in Orland
Park. (Compl. ¶¶ 1-3.) On May 20, 2014, a hail storm damaged the building’s roof and airconditioning units. (Id. ¶¶ 4, 8.) Plaintiff filed a claim seeking coverage from defendant for the
damage. (Id. ¶ 4.) Carroll Structure Investigations, LLC (“CSI”) inspected samples of the
building’s roof, observed hail-impact damage on the roof, cracked plexiglass skylight covers,
and dents on air-conditioner fins and roof-vent covers. (Id. ¶¶ 9-12.) The damage to the roof
and air-conditioning units is covered under the insurance policy. (Id. ¶ 14.) Plaintiff contends
that defendant has refused to pay plaintiff for the amounts it is entitled to under the policy. (Id.
¶¶ 16, 23.) Plaintiff asserts that defendant’s actions were unreasonable and vexatious because it
refused to “adequately explain the basis upon which it has failed to pay the loss” and “the
investigators employed by defendant engaged in bad faith by taking photo(s) of damaged areas in
such a manner as to purposefully lessen the impact appearance by taking photo(s) at an oblique
and distant angle.” (Id. ¶¶ 23, 30.) Plaintiff seeks attorneys’ fees, costs, and additional damages
“in an amount to be proven in accordance with Section 155 of the Illinois Insurance Code.” (Id.
at 4.)
STANDARD
“A motion under Rule 12(b)(6) tests whether the complaint states a claim on which relief
may be granted.” Richards v. Mitcheff, 696 F.3d 635, 637 (7th Cir. 2012). Under Rule 8(a)(2), a
complaint must include “a short and plain statement of the claim showing that the pleader is
entitled to relief.” Fed. R. Civ. P. 8(a)(2). The short and plain statement under Rule 8(a)(2) must
“give the defendant fair notice of what the claim is and the grounds upon which it rests.” Bell
Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (ellipsis omitted). Under federal noticepleading standards, a plaintiff’s “[f]actual allegations must be enough to raise a right to relief
above the speculative level.” Id. Stated differently, “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v.
Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly, 550 U.S. at 570). “A claim has facial
plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable
inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S.
at 556). “In reviewing the sufficiency of a complaint under the plausibility standard, [courts
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must] accept the well-pleaded facts in the complaint as true, but [they] ‘need[ ] not accept as true
legal conclusions, or threadbare recitals of the elements of a cause of action, supported by mere
conclusory statements.’” Alam v. Miller Brewing Co., 709 F.3d 662, 665–66 (7th Cir. 2013)
(quoting Brooks v. Ross, 578 F.3d 574, 581 (7th Cir. 2009)).
DISCUSSION
Defendant asserts that plaintiff’s Section 155 claim lacks factual support and that merely
“copying and pasting improper claim handling practices” is not a substitute for alleging actual
vexatious and unreasonable conduct.
(Def.’s Mot. at 3.)
Defendant further contends that
plaintiff’s only attempt at factual pleading is in paragraph 30 of the complaint, where plaintiff
asserts that defendant’s investigators took certain pictures of the damage at an oblique and
distant angle. (Id.) Defendant argues that it is unclear why this fact matters and the complaint
lacks sufficient detail to explain why such conduct is vexatious or unreasonable. (Id.) Plaintiff
counters that paragraphs 28 and 29 of the complaint contradict defendant’s argument. (Pl.’s
Resp. at 2-3.)1 Defendant contends that these two paragraphs contain conclusory allegations that
it failed to comply with provisions of the Illinois Insurance and Administrative Code and that
this is insufficient to state a claim. (Def.’s Reply at 1-2, 4.) Defendant further asserts that the
complaint contains no allegations about the who, what, when, and where of the conduct plaintiff
Paragraph 28 of the complaint states: “Defendant engaged in improper claim’s [sic] practice by: (a)
Knowingly misrepresenting to plaintiff relevant facts or policy provisions relating to coverages at issue;
(b) Failing to acknowledge with reasonable promptness pertinent communications with respect to the hail
claim; (c) Not attempting in good faith to effectuate prompt, fair and equitable settlement of plaintiff’s
hail claim; (d) Compelling plaintiff to institute the suit to recover amounts due under the policy by
offering substantially less than the amounts ultimately due; (e) Refusing to pay the claim without
conducting a reasonable investigation based on all available information; (f) Attempting to settle the
claim for less than the amount to which a reasonable person would believe plaintiff was entitled; (g)
Failing in the case of the denial of plaintiff’s claim to promptly provide a reasonable an accurate
explanation of the basis in the insurance policy or applicable law for such denial or compromise
settlement.” Paragraph 29 alleges: “The defendant disputed the amount of the loss payable on plaintiff’s
claim, delayed settling the claim, or refused to provide coverage when coverage was not fairly debatable.”
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believes is in violation of the code. (Id. at 3.) Finally, defendant argues that by ignoring its
argument about paragraph 30 of the complaint, plaintiff has conceded that those allegations are
insufficient to state a claim. (Id. at 4.)
Section 155 of the Illinois Insurance Code “provides an ‘extracontractual remedy to
policy-holders whose insurer’s refusal to recognize liability and pay a claim under a policy is
vexatious and unreasonable.’” Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1023 (7th
Cir. 2013) (quoting Cramer v. Ins. Exch. Agency, 174 Ill. 2d 513, 519 (1996)). “[A]n insurer’s
conduct is not vexatious and unreasonable if: (1) there is a bona fide dispute concerning the
scope and application of insurance coverage; (2) the insurer asserts a legitimate policy defense;
(3) the claim presents a genuine legal or factual issue regarding coverage; or (4) the insurer takes
a reasonable legal position on an unsettled issue of law.” Citizens First Nat’l Bank of Princeton
v. Cincinnati Ins. Co., 200 F.3d 1102, 1110 (7th Cir. 2000) (internal citations omitted).
The Court agrees that plaintiff has failed to allege facts sufficient to state a Section 155
claim.
Paragraphs 28 and 29 of the complaint fail to state a factual basis for plaintiff’s
conclusion that defendant acted unreasonably and vexatiously and thus fail to put defendant on
notice of what is claimed. See 9557, LLC & River W. Meeting Assocs., Inc. v. Travelers Indem.
Co. of Conn., No. 15-cv-10822, 2016 WL 464276, at *4 (N.D. Ill. Feb. 8, 2016) (granting
defendant’s motion to dismiss a Section 155 claim on the ground that plaintiff’s allegations
“amount[ed] to little more than simple recitations of the various codes [plaintiff] alleges
Travelers violated”); see also Scottsdale Ins. Co. v. City of Waukegan, No 07 C 64, 2007 WL
2740521, at *2 (N.D. Ill. Sept. 10, 2007) (“Simply pleading that [defendant] knowingly and
intentionally refused to provide insurance coverage and that [defendant’s] refusal was and
continues to be vexatious and unreasonable, without some modicum of factual support, is
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insufficient to plausibly suggest that [plaintiff] is entitled to relief under the statute.”). These two
paragraphs of plaintiff’s complaint merely recite the acts that constitute improper claims practice
under 215 ILCS 5/154.6.
To state a claim, plaintiff must provide more than a formulaic
recitation of a cause of action, labels, and conclusions. Twombly, 550 U.S. at 555.
Additionally, paragraph 30, without more, is not enough to state a claim that defendant
engaged in vexatious and unreasonable conduct.
Plaintiff does not allege that the photos
defendant’s investigators took served as the basis for denying plaintiff’s claim or that the photos
played any role in defendant’s management of plaintiff’s insurance claim.
See Smith v.
Equitable Life Assurance Soc’y of the United States, 67 F.3d 611, 618 (7th Cir. 1995) (affirming
the district court’s finding that defendant engaged in unreasonable conduct when it refused to
investigate plaintiff’s claims until after benefits had been denied and a lawsuit had been filed);
see also Buais v. Safeway Ins. Co., 275 Ill. App. 3d 587, 592-93 (1995) (finding that plaintiff had
stated a claim under Section 155 when she alleged that the insurance company refused to
evaluate, investigate, or even talk about an insurance claim). Further, plaintiff’s silence on this
point in its response to defendant’s motion to dismiss precludes plaintiff from proceeding on this
allegation. See Green v. Charter One Bank, N.A., 640 F. Supp. 2d 998, 1005 (N.D. Ill. 2009)
(“[Plaintiff’s] failure to respond permits an inference of acquiescence and ‘acquiescence operates
as a waiver.’”) (citing Wojtas v. Capital Guardian Trust Co., 477 F.3d 924, 926 (7th Cir. 2007)).
Absent factual allegations that allow the Court to draw a reasonable inference that
defendant’s conduct was vexatious and unreasonable, plaintiff’s claim fails. Accordingly, the
Court grants defendant’s motion to dismiss.
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CONCLUSION
For the reasons set forth above, defendant’s motion to dismiss [9] is granted. Plaintiff is
given leave to amend its complaint to state a Section 155 claim, if it can do so consistent with
Rule 11, by May 9, 2017. Status hearing remains set for May 9, 2017 at 9:30 a.m.
SO ORDERED.
ENTERED: April 18, 2017
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JORGE L. ALONSO
United States District Judge
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