inappropriate for the judiciary to supplement this statutory
In Ledingham v. Blue Cross Plan for Hospital Care,
29 Ill. App.3d 339, 330 N.E.2d 540 (5th Dist. 1975), the Fifth
District found for the first time that the insurer-insured
relationship gives rise to an implied duty of good faith and fair
dealing, the breach of which creates both contract and tort
liability. Presumably, this is the case upon which plaintiffs
rely for their Count III. See also Robertson v. Travelers
Insurance Company, 100 Ill.App.3d 845, 56 Ill.Dec. 222,
427 N.E.2d 302 (5th Dist. 1981). That ruling has been vigorously
attacked by other districts.
The Court in Debolt v. Mutual of Omaha, 56 Ill.App.3d 111, 13
Ill.Dec. 656, 371 N.E.2d 373 (3rd Dist. 1978), affirmed the
dismissal of the plaintiff's count requesting punitive damages
for the breach of the duty of good faith and fair dealing. In so
ruling, the Court reasoned that the Illinois legislature created
the remedy for an insured who encounters an unreasonable and
vexatious insurance company. Ill.Rev.Stat. ch. 73, Section 767.
Consequently, the Court stated that "[w]here the legislature has
provided a remedy on a subject matter we are not only loath but
in addition harbor serious doubts as to the desirability and
wisdom of implementing or expanding the legislative remedy by
judicial decree." Debolt, supra, 371 N.E.2d at 377. The Court
relied on two Illinois Supreme Court cases finding that a
legislatively fashioned remedy could not be supplemented or
altered by judicial fiat. Cunningham v. Brown, 22 Ill.2d 23,
174 N.E.2d 153 (1961) (Common law theory against tavern owners was
not recognized because the Illinois Dram Shop Act provided the
sole remedy); Hall v. Gillins, 13 Ill.2d 26, 147 N.E.2d 352
(1958) (The $25,000 limitation of recovery in a wrongful death
action is not unconstitutional because of the right of recovery
itself was created by the legislature in the first instance).
In addition, the Debolt Court recognized flaws in the reasoning
used in Ledingham. First, the reliance in Ledingham on Nevin v.
Pullman Palace Car Co., 106 Ill. 222 (1883) was misplaced. In
Nevin, the plaintiff and his family was denied use of a berth in
a sleeping car without justification. The Supreme Court allowed
a tort remedy against the defendant as a supplement to the
contractual remedy. The Debolt Court was not persuaded that the
Nevin decision supported the fashioning of a tort against an
insurance carrier who refuses to pay policy benefits. In Nevin,
the contractual remedy would be the price of the train tickets;
against the insurance company, the contractual remedy would be
the amount expected under the terms of the policy. The factors
warranting a supplemental remedy in Nevin simply are not present
in the context of an unreasonable or vexatious insurance company.
Debolt, supra, 371 N.E.2d at 376-77.
Second, the Ledingham decision improperly relied upon several
California cases as authority for an award of punitive damages
for a breach of good faith and fair dealing on the part of an
insurer. California has no provision comparable with
Ill.Rev.Stat. ch. 73, Section 767. "It could well be argued that
the rationale the California courts is that absent a statutory
remedy punitive damages will be allowed to an aggrieved party who
has been mistreated by an insurer." Debolt, supra, 371 N.E.2d at
Finally, the reasoning in Ledingham is particularly suspect
because it fails to acknowledge the existence of Ill.Rev.Stat.
ch. 73 Section 767, a statute specifically tailored to remedy
unreasonable and vexatious conduct. This Court agrees with Debolt
that Section 767 "is highly significant in that it provides a
remedy for an insured and thereby attempts to keep him harmless
resulting from misconduct of his insurer. It may well be that the
statutory remedy should provide greater relief but we hold that
to be a matter for legislative determination." Debolt, supra, 371
N.E.2d at 378.
Other districts have joined in the criticism of Ledingham.
Hoffman v. Allstate Insurance Company, 85 Ill.App.3d 631, 40
Ill.Dec. 925, 407 N.E.2d 156 (2d Dist. 1980);
Tobolt v. Allstate Insurance Co., 75 Ill.App.3d 37, 30 Ill.Dec.
824, 393 N.E.2d 1171 (1st Dist. 1979); Urfer v. Country Mutual
Insurance Co., 60 Ill.App.3d 469, 17 Ill. Dec. 744,
376 N.E.2d 1073 (4th Dist. 1978) (concurring opinion). The only difficulty
is in determining the scope of preemptive impact of Section 767.
Citing Tobolt, Urfer, and Debolt, the Court in Hoffman found
that Section 767 indeed preempted recovery of punitive damages
for unreasonable and vexatious conduct by an insurer. However,
the Court found that the statute "on its face, does not preempt
a plaintiff's right to claim compensatory damages for a breach of
good faith and fair dealing." Hoffman, supra, 407 N.E.2d at 159.
However, the reasoning behind the Tobolt and Debolt decisions and
the concurrence in Urfer is that Section 767 preempts an
independent tort altogether, regardless of whether punitive and
compensatory damages are demanded. In fact, the Tobolt Court
applied the preemption analysis and dismissed a count demanding
punitive and compensatory damages. The rationale behind the
Tobolt, Debolt, and Urfer is that Section 767 preempts the
judicial fashioning of an independent tort action for breach of
the duty of good faith and fair dealing. Allowing compensatory
but not punitive damages is inconsistent with this rationale. The
Court agrees with the statement in Hamilton v. Safeway Insurance
Company, 104 Ill.App.3d 353, 60 Ill.Dec. 97, 432 N.E.2d 996, 999
(1st Dist. 1982) that by "enacting section  the legislature
preempted the field of remedies available to an insured who has
difficulty with an unreasonable and vexatious insurance company."
Finally, this Court's conclusion that Section 767 preempts
plaintiff's theory in Count III is supported by the decision in
Strader v. Union Hall, Inc., 486 F. Supp. 159 (N.D.Ill. 1980).
Weighing the Ledingham, Tobolt, and Debolt decisions, the Court
found preemption of an independent tort action and stated: "[T]he
Court does not believe the Illinois Supreme Court would recognize
an independent tort action for breach of the duty of good faith
and fair dealing." Strader, supra, 486 F. Supp. at 162. The Court
Accordingly, defendant's Motion to Dismiss or in the
Alternative Strike Count III is hereby GRANTED. Count III is
IT IS SO ORDERED.
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