The opinion of the court was delivered by: Getzendanner, District Judge:
MEMORANDUM OPINION AND ORDER
This action on a casualty insurance contract, coupled with a
claim for defamation and tortious breach of a duty to act fairly
and in good faith, is before the court on a motion to dismiss
Count IV of Plaintiff's Amended Complaint. Jurisdiction is
predicated on the basis of diversity under 28 U.S.C. § 1332.
Plaintiff Robert Scheinfeld is alleged to be a Texas resident,
and defendant American Family Mutual Insurance Company is alleged
to have been organized under Wisconsin law and to have its
principal place of business there. It is apparent from the relief
sought that the amount in controversy satisfies the
jurisdictional requirement, though this is not expressly stated.
For the reasons stated below, the court grants the motion.
For purposes of the present motion, the facts alleged in
plaintiff's complaint are taken as true. In Count I, plaintiff
alleges that on or about December 1982, American Family issued a
two-year "Businessowners Package Policy" of insurance on
Scheinfeld's business property. Plaintiff further alleges that on
December 31, 1983, Scheinfeld's business office in Chicago,
Illinois was burglarized, resulting in loss of property and
business income; that these losses were insured against by
that Scheinfeld performed all conditions precedent to performance
of American Family's policy obligations; and that American Family
breached the insurance contract by knowingly, willfully, and
intentionally failing to pay the claim despite Scheinfeld's
demands. Count I closes with a prayer for more than $17,983 in
property and income loss, plus interest, costs, and attorney's
Count II repeats the allegations of Count I, adding that
American Family's "delay in responding" and "refusal to pay"
constitutes "unreasonable and vexatious action within the meaning
of" section 155 of the Illinois Insurance Code, Ill.Rev.Stat.,
ch. 73, ¶ 767. That section reads, in pertinent part:
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
(a) 25% of the amount which the Court or jury finds
such party is entitled to recover against the
company, exclusive of all costs:
(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.
Count II closes with a prayer for $17,983 plus interest, costs,
and attorney's fees, as well as $10,000 "pursuant to" ¶ 767.
Count III repeats the allegations of the first two counts,
adding that after Scheinfeld filed his policy claim, American
Family employees, with reckless disregard for the truth, made
defamatory statements about Scheinfeld, including statements that
his community reputation was not good and that he was stealing
goods and services from others. In Count III, plaintiff further
alleges that American Family's statements damaged Scheinfeld's
community reputation, resulting in lost business, expenditures to
defend himself, and severe mental distress. Count III closes with
a prayer for special, actual, and general damages, plus punitive
damages in excess of $75,000, costs, and attorney's fees.
After being granted leave, Scheinfeld amended his complaint by
adding a fourth count to allege a tortious breach of a "duty of
good faith and fair dealing." Count IV repeats most of the
allegations of Count I, including the allegation that American
Family "knowingly, willfully and intentionally fail[ed] to pay
plaintiff's claim." Count IV then alleges that "[t]he actions of
[American Family] and its employees in its investigation and
denial of plaintiff's claim have been wilful, reckless, unfair
and in bad faith" as a direct and proximate result of which
Scheinfeld "has been injured." Count IV closes with a prayer for
$17,983 plus interest and costs, in addition to more than
$100,000 in compensatory and more than $500,000 in punitive
damages. The basis of American Family's motion to dismiss is that
Count IV fails to state a cause of action under applicable
Illinois law and that, even if such a claim is stated, Illinois
law would limit Scheinfeld's damages to those recoverable under
his contract of insurance and section 155 of the Illinois
A motion to dismiss for failure to state a claim should be
granted only if it appears "beyond doubt that the plaintiff can
prove no set of facts in support of his claim which would entitle
him to relief." Haines v. Kerner, 404 U.S. 519, 520-21, 92 S.Ct.
594, 596, 30 L.Ed.2d 652 (1972) (quoting Conley v. Gibson,
355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957). In
deciding the motion, the court must presume all factual
allegations of the complaint to be true and make all reasonable
inferences in favor of the non-movant. 2A J. Moore, Moore's
Federal Practice, ¶ 12.07[2.-5] (2d ed. 1985). Nonetheless,
unsupported by any factual assertions will not withstand a motion
to dismiss." Briscoe v. LaHue, 663 F.2d 713, 723 (7th Cir. 1981),
aff'd, 460 U.S. 325, 103 S.Ct. 1108, 75 L.Ed.2d 96 (1983).
Because jurisdiction in this case rests solely on diversity of
citizenship, the rule of Erie Railroad v. Tompkins, 304 U.S. 64,
58 S.Ct. 817, 82 L.Ed. 1188 (1938) requires the court to apply
state substantive law, which in this case is the law of Illinois.
American Family has argued that any recovery by Scheinfeld
under a duty of good faith and fair dealing is limited to that
allowed by section 155 of the Illinois Insurance Code,
Ill.Rev.Stat., ch. 73, ¶ 767. In an earlier case, this court
found the statutory remedies under section 155 to preempt any
common-law recovery for an alleged breach of the duty of good
faith and fair dealing in an insurer's conduct towards its
insured. Shaw v. Equitable Life Assurance Society, No. 82 C 1421
(N.D.Ill. Oct. 29, 1982). Since then, two other judges of this
district who had similarly held reconsidered the issue and have
held that section 155 preempts punitive but not compensatory
damages for cases alleging such a tort. UNR Industries, Inc. v.
Continental Insurance Co., 607 F. Supp. 855 (N.D.Ill. 1984) (Hart,
J.); Barr Co. v. Safeco Insurance Co., 583 F. Supp. 248 (N.D.Ill.
1984) (Moran, J.). Two other judges apparently adhere to the view
that section 155 preempts all tort claims against an insurer
predicated on a tortious refusal to pay. Aabye v.
Security-Connecticut Life Insurance Co., 586 F. Supp. 5 (N.D.Ill.
1984) (Aspen, J.); Abbott Laboratories v. Granite State Insurance
Co., 573 F. Supp. 193 (N.D.Ill. 1983) (Shadur, J.). One judge has
declined to find that section 155 preempts any common-law
remedies in tort at all. Roberts v. Western-Southern Life
Insurance Co., 568 F. Supp. 536 (N.D.Ill. 1983) (Marshall, J.).
As noted by Judge Hart in UNR, 607 F. Supp. at 865, every
Illinois Appellate Court addressing the issue has agreed that §
155 of the Illinois Insurance Code preempts a punitive damage
award for an insurer's bad faith and unfair dealing in refusing
to settle a claim. Fisher v. Fidelity & Deposit Co. of Maryland,
125 Ill.App.3d 632, 80 Ill.Dec. 880, 466 N.E.2d 332 (5th Dist.
1984); Kinney v. St. Paul Mercury Insurance Co., 120 Ill. App.3d 294,
75 Ill.Dec. 911, 458 N.E.2d 79 (1st Dist. 1983); McCall v.
Health Care Service Corp., 117 Ill.App.3d 107, 72 Ill.Dec. 640,
452 N.E.2d 893 (4th Dist. 1983); Hoffman v. Allstate Insurance
Co., 85 Ill.App.3d 631, 40 Ill.Dec. 925, 407 N.E.2d 156 (2d Dist.
1980); Debolt v. Mutual of Omaha, 56 Ill.App.3d 111, 13 Ill.Dec.
656, 371 N.E.2d 373 (3d Dist. 1978). Under this court's Erie
obligations, the uniform result adopted by these decision cannot
be disregarded absent "persuasive data that the highest court of
the state would decide otherwise." West v. AT & T, 311 U.S. 223,
237, 61 S.Ct. 179, 183, 85 L.Ed. 139 (1940), quoted in ...