The opinion of the court was delivered by: Grady, District Judge.
This action is before the court on defendants' motion to
dismiss certain counts of plaintiffs' complaint, pursuant to
Fed.R.Civ.P. 12(b)(6). The basic allegation of each of the
disputed counts is that the defendant insurers ("the insurers")
breached their duty to deal fairly and in good faith with
plaintiffs, thereby causing plaintiffs emotional and physical
injury. Plaintiffs seek both compensatory and punitive damages.
In ruling on motions to dismiss, we accept as true the
allegations of the complaint. Parr v. Great Lakes Express
Company, 484 F.2d 767, 769-70 (7th Cir. 1973). Plaintiffs allege
that they were the beneficiaries of certain insurance policies
written on the life of their decedent, Zare Zakarian ("Mr.
Zakarian").*fn1 After Mr. Zakarian died, plaintiffs asserted claims
against the insurers under the policies. When the insurers
refused to pay the claims,*fn2 plaintiffs brought this action for
breach of contract and in tort.
Defendants argue that those counts of the complaint seeking
compensatory and punitive damages for the alleged breach of an
implied covenant of good faith, and for wrongful, vexatious and
unreasonable actions, are preempted by Section 155 of the
Illinois Insurance Code, Ill.Rev.Stat. ch. 73, ¶ 767.*fn3 Section
155 permits certain extraordinary costs to be taxed against an
insurer that vexatiously or unreasonably refused to pay a claim.
The Illinois Supreme Court has not yet addressed the issue of
the preemptive effect, vel non, of Section 155. There is a split
in the state appellate courts and indeed in this district over
this question. Judge Marshall, for example, has held that if
confronted with this issue, the Illinois Supreme Court would rule
that Section 155 has no preemptive effect. Roberts v.
Western-Southern Life Ins. Co., 568 F. Supp. 536 (N.D.Ill. 1983);
Kelly v. Stratton, 552 F. Supp. 641 (N.D.Ill. 1982). Judge Aspen,
on the other hand, believes that the Illinois Supreme Court would
decide that Section 155 precludes all extracontractual common law
actions, including both claims for compensatory and punitive
damages. Aabye v. Security-Connecticut Life Ins. Co., 586 F. Supp. 5,
8 (N.D.Ill. 1984) (Aspen, J.); Strader v. Union Hall, Inc.,
486 F. Supp. 159 (N.D.Ill. 1980). Although Judge Shadur believes
that the duty of a district judge is to apply the law prevailing
in the state appellate district in which the federal court sits,
rather than to attempt to predict what the state supreme court
would do if presented with the question, he believes that the
controlling precedent supports Judge Aspen's position, i.e.,
punitive damage claims have been preempted. Abbott Laboratories
v. Granite State Ins. Co., 573 F. Supp. 193 (N.D.Ill. 1983).
Finally, in a more recent decision, Judge Moran takes a middle
road, ruling that while Section 155 preempts claims for punitive
damages, it does not bar suits for compensatory damages. Barr Co.
v. Safeco Ins. Co. of America, 583 F. Supp. 248 (N.D.Ill. 1984)
On the three occasions that we have interpreted the state law,
we have held that when the Illinois legislature enacted Section
155 it preempted the field, foreclosing common law actions
seeking compensatory and punitive damages for breach of the duty
of good faith and fair dealing. Tramm Investment Corp. v. Great
Southwest Insurance Company, et al., No. 81 C. 1851 (N.D.Ill.
Feb. 15, 1983) (Grady, J.); Bank of Naperville v. Merrimack
Mutual Fire Insurance Company, No. 81 C 774 (N.D.Ill. Oct. 28,
1982) (Grady, J.); Hyler v. Prudential Insurance Company of
America, et al., No. 79 C 2507 (N.D.Ill. Aug. 3, 1982) (Grady,
Although there is state decisional authority supporting each of
the variant positions, we adhere to our prior rulings and hold
that if faced with this question, the Illinois Supreme Court
would decide that both compensatory and punitive damage actions
are preempted by the Illinois Insurance Code. We note
additionally that the Illinois Appellate Court, First Division,
recently held that Section 155 preempts both punitive and
compensatory damage actions. Kinney v. St. Paul Mercury Ins. Co.,
120 Ill.App.3d 294, 75 Ill.Dec. 911, 458 N.E.2d 79 (1st Dist.
Thus, the Illinois Insurance Code provides the sole remedy for
Illinois plaintiffs claiming denial of benefits under insurance
policies due to the vexatious and unreasonable conduct of an
insurer; no independent tort action exists.*fn4
Accordingly, we grant defendants' motion to dismiss Counts II,
IV and ...