APPEAL from the Circuit Court of Cook County; the Hon. ALLEN
HARTMAN, Judge, presiding.
MR. JUSTICE O'CONNOR DELIVERED THE OPINION OF THE COURT:
Plaintiffs, Bertha Tobolt and Vance Tobolt, to whom defendant, Allstate Insurance Co. (Allstate), had issued a homeowners' policy, filed suit against Allstate. Count I was for the failure by defendant to pay the proper amounts for a fire loss suffered by plaintiffs; count II, for the intentional infliction of severe emotional distress; and count III, for failure to act in good faith in dealing with plaintiffs. Defendant moved to strike and dismiss counts II and III on the ground that both counts failed to allege facts sufficient to state causes of action. The trial court dismissed both counts with prejudice and denied plaintiffs' motion to vacate the dismissal order. Plaintiffs appeal. Count I is not before us.
Plaintiffs' home was insured up to $40,000 by Allstate under a Homeowners' Policy. Coverage was also provided for the loss of personal property up to $20,000 and for additional living expenses up to $8,000. On March 17, 1976, while the policy was in effect, plaintiffs' home was extensively damaged by fire, personal property was destroyed and plaintiffs were forced to obtain temporary living quarters. Allstate refused to pay the amounts plaintiffs claimed were due under the policy and plaintiffs filed suit.
Count II for damages for intentional infliction of severe emotional distress alleged:
Allstate was obligated under its policy to pay more than $20,000 for repairs to plaintiffs' home, more than $11,000 for clothing and personal property lost, and more than $4,000 for additional living expenses, a total of more than $35,000, but that Allstate had paid less than $20,000 and refused to make any further payments.
At the time of the loss, plaintiffs owned no assets or property of any appreciable value, with the exception of their home and personal belongings consumed by the fire. Their home was encumbered by a mortgage with a final "balloon note" payment of over $5,000 due on July 5, 1977. To meet this note, plaintiffs had to maintain a good credit rating and to maintain their home in a satisfactory condition to seek refinancing. As a result of the fire loss, plaintiffs were indigent and in great financial distress and were unable to pay off the note because of bills incurred due to the fire; they were without funds to pay bills for living expenses, particularly for temporary living quarters; and they were unable to purchase needed items of clothing and personal property and to pay for additional repairs to their home.
As a direct result of the refusal of Allstate to honor the repeated demands of plaintiffs and in spite of their attempt to have the Department of Insurance intervene in their behalf, plaintiffs continued to become more heavily in debt and in deeper financial distress. The motels where they had made their temporary residence were dunning them for payment and threatening suit. Plaintiffs were compelled to borrow money, accept gifts and depend on the help of relatives in order to privide the necessities of life. Plaintiffs had to seek the assistance of the American Red Cross to pay one of the motels. Plaintiffs' credit has been severely damaged because of late payment and nonpayment of bills. Plaintiff Bertha Tobolt has become extremely nervous, has had to seek medical attention for her nerves, is required to take pills and has lost time from her employment. Plaintiff Vance Tobolt has a previously incurred physical disability requiring him to sleep on a certain type of bedding in his home. His temporary lodging in motels was unduly long, greatly inconvenienced him and caused him physical and mental distress. Plaintiffs' home has depreciated in value because of its state of disrepair. Plaintiffs have had to plead with the mortgage holder to forego insistence on the lump sum payment.
Allstate had notice and knew, or had reason to know full well, that its deliberate and unwarranted refusal to honor numerous demands during a time when plaintiffs were in dire need of the insurance proceeds would be and was in reckless disregard of and harmful to the interest of plaintiffs and would impair their ability to provide the necessities of life for themselves and their son. Allstate has persisted in the use of dilatory tactics in the settlement of plaintiffs' claim and has also delayed in even giving its approval to commence repairs for a period in excess of two months. Allstate has repeatedly sought to minimize the payment of a just claim and has not provided sufficient funds to properly repair plaintiffs' home and has otherwise persisted in its refusal to pay the claim in full. Allstate has paid the claim on a piecemeal basis and only after constant prodding by plaintiffs. Allstate last made a partial payment on July 27, 1977, when it issued its draft in the amount of $3308.28 and has since failed and refused to make any further payment on the claim, although numerous requests have been made upon defendant to honor its obligation.
In deliberately and unjustifiably refusing to honor plaintiffs' repeated demands for payment of the insurance proceeds, Allstate engaged in an unwarranted and unconscionable course of conduct, wholly devoid of social utility and calculated to cause great anguish and severe distress and disturbance of plaintiffs' mental tranquility.
Allstate had notice and knew, or had reason to know, of the existence of each and every circumstance and fact alleged. As a direct and proximate result of the foregoing wrongful acts, plaintiffs were caused to suffer and have suffered severe emotional distress, and plaintiffs were deeply disturbed and harmed by defendant's unwarranted refusal to pay them or the parties who furnished services to plaintiffs.
Attached to and incorporated in count II are several letters. One was from Allstate to the Department of Insurance of the State of Illinois, dated May 5, 1977. It stated:
"In response to Mr. Tobolt's inquiry, we have again reviewed our file.
Regarding the loss in general, I refer you to our letter of March 23, 1977, a copy of which is attached.
As you are now aware, Mr. Tobolt assigned `Worldwide Public Adjusters' to represent his interest in this loss. This firm was also contracted with by Mr. Tobolt to repair his home and handle his contents loss, which they did.
The home in question was made liveable on or before June 20, 1976. At that time, Mr. Tobolt was informed by both Mr. Simon, his Public Adjuster, and the Allstate Insurance Co. that the home was liveable. Mr. Tobolt refused to take up residency and was advised by Worldwide Adjusters, as well as Allstate Insurance, that no additional living expenses would be paid beyond June 20, 1976.
Repairs to Mr. Tobolt's dwelling were made by Worldwide Construction Co. They are actually a part of Worldwide Public Adjusting and has been engaged by Mr. Tobolt rather than Allstate. This firm was paid by Allstate Insurance Co. on June 4, 1976, and they have returned to us notarized Proofs of Loss for the loss and damage. Any repairs which were not completed or which were completed improperly would appear to be the responsibility of Mr. Simon and the Worldwide Construction Co.
Relative to the contents items, I again refer you to my letter of March 23, 1977. Mr. Tobolt's Public Adjuster contracted to have cleaned the items that Mr. Tobolt refers to. Ruby Cleaners picked up these items under instructions and directions from Mr. Simon and Mr. Tobolt, and they eventually billed Allstate accordingly. Duplicates are attached. Please note pages 1 and 2 concerning the coats, sheets and pillow cases. We believe that Mr. Tobolt should contact his Public Adjuster concerning these items as we have already paid these bills.
Mr. Tobolt contracted with an assigned Worldwide Adjusters to represent his interests in this matter, for which he paid them a fee. We have had repeated contacts with Mr. Tobolt and Mr. Simon and feel that we have satisfied our obligation under the policy. It would appear that the proper recourse for Mr. Tobolt would be to contact Mr. Simon and resolve with him any problems that he is having with Worldwide Adjusters or Worldwide Construction.
I trust the above will be sufficient to close your file on this matter."
Another was a letter from the Department of Insurance to plaintiff Vance Tobolt, dated May 20, 1977. It stated:
"Enclosed please find the most recent correspondence we have received from the above captioned company. The company is continuing to maintain that you directed your public adjuster to remove the clothing and other articles. If this is in fact true, then Allstate has no responsibility whatsoever for any items that were lost by the cleaners or by your public adjuster. Also, your contract does not provide for additional living expense beyond whatever reasonable time it would take to put the property back in order. The fact that someone who is repairing your home did not make it liveable due to their mistakes, there is not coverage under the policy for mistakes of contractors hired by you and your public adjuster. Therefore, they are offering no more than additional living expense up to June 20. If you do not agee with this settlement Allstate has made, your only recourse would be through the courts> for their determination as to value of your loss. We regret we are unable to assist you any further in this matter."
A third was a letter from Allstate to plaintiff Vance Tobolt, dated May 25, 1976. It stated:
"I have just received a complete report on your recent inquiry to our Home Office from Mr. Simons, Manager of our Arlington Heights Claim Office.
First of all, please accept my apologies for any misunderstanding or delay which may have been caused by our handling of your loss. It is our intention to give fast, fair claim service to all our customers. We are very sorry if we did not do so in this instance.
Mr. Simons has informed me that his office has met with your representative, World Wide Adjusters, on May 20, 1976. At that meeting, the Public Adjuster was advised to take the necessary steps to clean up the premises and begin ...