The opinion of the court was delivered by: Grady, Chief Judge.
This case is before us on the motion of defendant Aetna
Casualty and Surety Company (`Aetna') to dismiss Counts III, IV
and V of plaintiff's complaint. For the reasons given below,
Aetna's motion is granted in part and denied in part.
Pursuant to this contractual agreement and communications made
among Impex, Channelwise and Aetna, Aetna issued an insurance
policy for the shrimp in the amount of $97,190.00, payable to
Impex. Impex claims that under this policy Aetna was to pay for
any loss of the shrimp, including rejection by the FDA.
Impex claims that prior to shipment of the shrimp from Taiwan,
Aetna's agent inspected this shrimp and issued a Survey Report
stating that Channelwise had frozen 1055 cases of shrimp of the
type and weight specified in the contract. The shrimp were then
shipped to Impex. At Impex's Illinois place of business, the
shrimp were inspected and eventually rejected by the FDA because
they apparently had not been frozen properly. Impex had paid
Channelwise the contract price, but Aetna has refused to pay
Impex under the insurance policy.
Aetna admits that Impex contracted with Channelwise, that it
issued an insurance policy covering the shrimp specified in the
contract, and that the FDA rejected the shrimp. It has refused to
pay because it claims that the shrimp covered by the policy are
not the shrimp rejected by the FDA. Aetna also claims that Impex
violated various terms and conditions of the insurance policy,
thus barring Impex from recovering.
The three counts of Impex's complaint which Aetna seeks to
dismiss are Count III, in which Impex seeks compensatory and
punitive damages for Aetna's misconduct under Ill.Rev.Stat. ch.
73, ¶ 766.6; Count IV, a claim under the Illinois Consumer Fraud
and Deceptive Business Practices Act (`Consumer Fraud Act'),
Ill.Rev.Stat. ch. 121 1/2, ¶¶ 261 et seq.; and Count V, based
upon equitable estoppel.
Count III — Tortious Refusal to Pay Under ¶ 766.6
Aetna claims that Ill.Rev.Stat. ch. 73, ¶ 767 preempts all tort
claims based upon an insurance company's bad faith refusal to pay
a claim. Aetna also argues that ¶ 766.6 does not give rise to a
private cause of action. Since Impex claims damages under ¶ 767
in Count II of its complaint, Aetna argues that Count II
encompasses Impex's total possible relief for any refusal to pay
(aside from the amount specified in the insurance policy).
Aetna is correct that ¶ 766.6 does not give rise to a private
cause of action. Van Vleck v. Ohio Casualty Insurance Co.,
471 N.E.2d 925, 128 Ill.App.3d 959, 84 Ill.Dec. 159 (3d Dist. 1984);
Hoffman v. Allstate Insurance Co., 85 Ill.App.3d 631, 40 Ill.Dec.
925, 407 N.E.2d 156 (2d Dist. 1980). The only method by which an
insured can obtain damages caused by an insurer's bad faith
refusal to pay is to sue under ¶ 767, which plaintiff has done in
Count II. Because there is no statutory or common law cause of
action for an insurer's bad faith refusal to pay outside of ¶
767, Count III fails to state a claim and must be dismissed.
We have held that ¶ 767 preempts common law causes of action on
four previous occasions: Zakarian v. The Prudential Insurance Co.
of America, 626 F. Supp. 420 (N.D.Ill. 1984) (Grady, J.); Tramm
Investment Corp. v. Great Southwest Insurance Co., No. 81 C 1851,
Memorandum Op. (N.D.Ill. Feb. 15, 1983) (Grady, J.) [available on
WESTLAW, 1983 WL 1568]; Bank of Naperville v. Merrimack Mutual
Fire Insurance Co., No. 81 C 774, Memorandum Op. (N.D.Ill. Oct.
28, 1983) (Grady, J.) [available on WESTLAW, 1982 WL 1581]; Hyler
v. Prudential Insurance Co. of America, No. 79 C 2507, Memorandum
Op. (N.D.Ill. Aug. 3, 1982) (Grady, J.) [available on WESTLAW,
1982 WL 1582]. Recent case law supports our ruling on this issue.
e.g., Anderson v. Mutual of Omaha Insurance Co., 594 F. Supp. 726
Even if ¶ 767 did not preempt common law causes of action, or
only preempted punitive and not compensatory damages, see UNR
Industries, Inc. v. Continental Insurance Co., 46 B.R. 430
(N.D.Ill. 1984), Count III still fails to state a claim because
Illinois common law does not provide for a cause of action for
bad faith refusal to pay under the circumstances of this case.
The Illinois case cited for recognition of a common law action
for had faith refusal to pay is Ledingham v. Blue Cross Plan
Hospital Care, 29 Ill.App.3d 339, 330 N.E.2d 540 (5th Dist.
1975).*fn1 See, e.g., Bart Co. v. Safeco Insurance Co. of America,
583 F. Supp. 248, 256 (N.D.Ill. 1984). In Ledingham, the court
found a cause of action because `[i]n the life and health
insurer-insured relationship there is a duty upon both parties to
act in good faith.' Ledingham, 29 Ill.App.3d at 350, 330 N.E.2d
at 548. Nothing in Ledingham supports an expansion of its holding
to business insurance relationships such as the one here. As ...