The opinion of the court was delivered by: Bauer, District Judge.
This cause comes on the defendant's motion to dismiss Count V
of the Amended Complaint.
The plaintiff is Advance Labor Services, Inc. ("Advance"), an
Illinois corporation engaged in the business of providing
temporary employees to various employers throughout Illinois. The
defendant is Hartford Accident and Indemnity Company
("Hartford"), a Connecticut corporation having its principal
place of business in a state other than the State of Illinois.
The amount in controversy exceeds $10,000, exclusive of interest
and costs. Jurisdiction is thus properly based upon diversity of
citizenship, 28 U.S.C. § 1332.
The following facts are relevant to the proper disposition of
the instant motion. In early 1969, Advance having been refused
workmen's compensation and occupational disease insurance by at
least three different insurance carriers, went into Illinois'
"assigned risk pool". Pursuant to Ill.Rev.Stat. ch. 73 § 1083,
the Illinois Industrial Commission selected Hartford as Advance's
carrier for such insurance. Under § 1083 Hartford was obligated
to offer Advance a "standard policy" containing "only the usual
and customary provisions found in such policies" and covering:
Under the Illinois Workmen's Compensation Act, where an
employer loans the services of his employee to another, both the
loaning employer and the borrowing employer are liable for
injuries sustained by a loaned employee, Ill.Rev.Stat. ch. 48 §
138.1(a)(4). Thus, if an Advance employee sustains a compensable
injury while working for a customer of Advance, both Advance and
the customer would be jointly and severally liable for benefits
under the Act. However, § 138.1(a)(4) further provides that:
From Advance's viewpoint, a desirable feature of any Workmen's
Compensation Insurance policy would be a waiver of subrogation by
the carrier against borrowing employers for compensable injuries
sustained by borrowed employees. With such a waiver Advance could
assure its customers that they would not be held liable for any
injuries sustained by a borrowed employee. Allegedly such a "hold
harmless clause" was contained in the certificates issued by
Advance's previous carrier which were used to indicate the type
of certificates Advance wanted Hartford to issue.
Prior to the time that Hartford's master policy was sent to
Advance but subsequent to the payment of the premium, Hartford
issued to certain Advance customers certificates of insurance
containing the following typed language which had been added to
the printed form:
"The Company hereby agrees to indemnify and hold
harmless any individual, partnership or corporation
who contracts to use the services of Advance Labor
Services, Inc. and their Workmen's Compensation and
Occupational Disease Insurors against any and all
losses, costs and expenses arising out of claims
brought under the provisions of the Workmen's
Compensation Act or the Workmen's Occupational
Diseases Act of the State of Illinois by employees
who, at the time of an alleged accident or exposure
to disease, were carried on the payroll of Advance
Labor Services, Inc." (See Exhibit "B" of the
Certificates containing such language were issued during the
entire first policy year, February 15, 1969 to February 15, 1970.
The policy actually issued to Advance by Hartford, a standard
printed policy used for all employers regardless of the business
they are engaged in, contained the following clause:
"12. Subrogation: In the event of any payment under
this policy, the Company shall be subrogated to all
rights of recovery therefor of the insured and any
person entitled to the benefits of this policy
against any person or organization, and the insured
shall execute and deliver instruments and papers and
do whatever else is necessary to secure such rights.
The insured shall do nothing after loss to prejudice
such rights. (See Exhibit "A" attached to the
In early November, 1969, Hartford offered to insure Advance for a
new policy year beginning February 15, 1970. Advance accepted the
offer in December, 1969 by tendering $17,440.00 to Hartford.
In mid-January, 1970, Hartford sent letters to two Advance
customers stating that the insurance company would no longer
indemnify or hold them or their insurors harmless from workmen's
compensation or occupational disease claims. From that date,
Hartford has refused to issue certificates of insurance to
Advance customers containing the previously-quoted
Counts I, III, and IV of the Complaint allege a breach by
Hartford of the insurance agreement and Illinois insurance law,
in that Hartford failed to issue a "standard policy" as required
Alternatively, Count V of the Amended Complaint alleges wilful
misrepresentation and deceptive trade practices by the defendant.
In Count V the Plaintiff alleges that Hartford violated the
following Illinois statutory provisions:
1. Ill.Rev.Stat. ch. 73 § 1030 which deals with
unfair methods of competition and deceptive
2. Ill.Rev.Stat. ch. 73 § 1065.1 and 1065.3 which
mandate that insurance rates shall not be
excessive, inadequate, or unfairly discriminate;
3. Ill.Rev.Stat. ch. 73 § 761 which deals with
prohibited misrepresentation and defamation in the
issuing of insurance policies; and
4. Ill.Rev.Stat. ch. 121½ § 312 and § 313 which
prohibit acts constituting deceptive trade
Although federal courts are liberal in their pleading
practices, it is still the rule that general conclusionary
allegations unsupported by facts are insufficient to constitute a
cause of action. See Jewell v. City of Covington,
(5th Cir. 1970), cert. den.
(1970); Hoffman v. Halden, 268 F.2d 280 (9th Cir. 1959). Count V
of the Complaint does not allege any facts showing that defendant
violated any Illinois statute by wilfully engaging in unfair or
deceptive trade practices.
The plaintiff has failed to cite the factual basis for the
alleged violation of ch. 121½ § 312. While it is doubtful that
this section is applicable to the purchase of insurance per
se,*fn1 the basic and incontrovertible fact that Advance was
assigned to Hartford by the State Industrial Commission which was
pleaded previously is in direct opposition to any allegation that
Advance was unfairly lured into doing business with Hartford.
The plaintiff has not alleged any factual basis to support its
allegation that the defendant violated Ill.Rev.Stat. ch. 73 §
1065.1 and § 1065.3 in setting rates which were excessive,
inadequate, or unfairly discriminatory. In fact, Hartford has
submitted an affidavit to this Court for the purpose of
demonstrating that it was losing money by insuring Advance.
The plaintiff has not set forth any facts in support of the
allegation that defendant used unfair methods of competition or
deceptive acts or practices, misrepresentations or defamations in
violation of Ill.Rev.Stat. ch. 73 § 761 and § 1030. Again the
basic underlying fact that the plaintiff was in the "assigned
risk pool" and that it was assigned to Hartford by the Illinois
Industrial Commission is in direct contradiction to the
allegation that the defendant used unfair practices to entice the
plaintiff into doing business with it.
The plaintiff has failed to plead a factual basis for the
conclusory allegations of Count V, the thrust of which is that
the plaintiff has wilfully used unfair and deceptive trade
It is the opinion of this Court that the conclusory allegations
in Count V of the complaint, unsupported by facts, are
insufficient to constitute a cause of action.
Accordingly, it is hereby ordered that Count V of the
Plaintiff's Complaint is dismissed.