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Kinney v. St. Paul Mercury Insurance Co.

OPINION FILED DECEMBER 12, 1983.

JOHN D. KINNEY ET AL., PLAINTIFFS-APPELLANTS,

v.

ST. PAUL MERCURY INSURANCE COMPANY, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County; the Hon. William R. Quinlan, Judge, presiding. JUSTICE GOLDBERG DELIVERED THE OPINION OF THE COURT:

John D. Kinney and Teresa B. Kinney (plaintiffs) brought this action against their insurer, St. Paul Mercury Insurance Company (defendant). Plaintiffs' second amended complaint consists of three counts. Count I seeks compensatory damages of $20,000 based on an alleged breach of contract. Count II seeks $20,000 as compensatory damages and $5,000 as a penalty based on an alleged breach of an implied covenant of duty of good faith and fair dealing. Count III seeks $20,000 in compensatory damages and $50,000 in punitive damages based on alleged fraud.

Defendant moved for judgment on the pleadings, or alternatively to strike plaintiffs' second amended complaint. The trial court denied defendant's motion as to count I. However, the trial court dismissed counts II and III of the second amended complaint with prejudice on the theory that the prayer for relief in count II exceeded the remedies provided in the insurance code. (Ill. Rev. Stat. 1981, ch. 73, par. 767.) Plaintiffs appeal.

A motion to dismiss admits all well-pleaded facts. (Knox College v. Celotex Corp. (1981), 88 Ill.2d 407, 426, 430 N.E.2d 976.) However, conclusions and inferences not specifically supported by facts are not so admitted. (Knox College v. Celotex Corp. (1981), 88 Ill.2d 407, 426.) In determining the sufficiency of a complaint, this court must strip the complaint of unsupported conclusions and inferences, and then determine whether it alleges sufficient facts to sustain a cause of action. Knox College v. Celotex Corp. (1981), 88 Ill.2d 407, 426.

Basically, plaintiffs' second amended complaint alleged their home suffered snow damage on January 14, 1979. They were insured by defendant. "Shortly after the damage," plaintiffs "filed a timely notice" with defendant. On or about July 18, 1979, "following the instructions of defendant," plaintiffs obtained an estimate of $10,914 for repair of the damage to their home. The estimate was "promptly" communicated to defendant.

Plaintiffs further alleged that in October of 1979, a claim representative and adjuster employed by defendant inspected plaintiffs' residence, accompanied by plaintiffs' contractor. Without plaintiffs' knowledge, the adjuster wrote an estimate for repairs of $3,950.70. At the same time, the adjuster surreptitiously informed plaintiffs' contractor his actual estimate of repairs was $9,500. The adjuster asked plaintiffs' contractor whether he could reduce his original estimate. Shortly thereafter, the contractor estimated the repairs would cost $9,468. Defendant refused to accept or reject the new estimate.

Plaintiffs also alleged the written estimate supplied by the adjuster was "fraudulent and totally inadequate * * * which was wilfully made unrealistically low as a ploy and negotiating tactic to cause [plaintiffs] to settle their claim" for a figure much lower than that to which plaintiffs were entitled. Finally, on June 6, 1980, defendant offered plaintiffs $5,000 as a final and complete settlement of their claim, an offer which plaintiffs rejected.

Section 155 of the Illinois Insurance Code provides in pertinent part (Ill. Rev. Stat. 1981, ch. 73, par. 767):

"In any action by or against a company wherein there is in issue the liability of a company on a policy or policies of insurance or the amount of the loss payable thereunder, or for an unreasonable delay in settling a claim, and it appears to the court that such action or delay is vexatious and unreasonable, the court may allow as part of the taxable costs in the action reasonable attorney fees, other costs, plus an amount not to exceed any one of the following amounts:

(a) 25% of the amount which the court or jury finds such party is entitled to recover against the company, exclusive of all costs;

(b) $5,000;

(c) the excess of the amount which the court or jury finds such party is entitled to recover, exclusive of costs, over the amount, if any, which the company offered to pay in settlement of the claim prior to the action."

Our examination of the law of Illinois shows a solid series of five opinions by the Appellate Court of Illinois, all uniform in approving the cause of action predicated upon the above quoted section of the Illinois Insurance Code. These are the pertinent cases:

Hamilton v. Safeway Insurance Co. (1982), 104 Ill. App.3d 353, 432 N.E.2d 996, appeal ...


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