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Combs v. Insurance Co. of Illinois

OPINION FILED AUGUST 22, 1986.

ROBERT COMBS, PLAINTIFF-APPELLANT,

v.

INSURANCE COMPANY OF ILLINOIS ET AL., DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County; the Hon. John J. Hogan, Judge, presiding.

JUSTICE LORENZ DELIVERED THE OPINION OF THE COURT:

An action was brought by plaintiff against his insurer and its adjuster to recover proceeds allegedly due under a homeowners insurance policy. The three-count complaint charged defendants with breach of contract and violation of section 155 of the Illinois Insurance Code; wilful violation of section 155; and intentional infliction of emotional distress. Besides requesting payment of the monies allegedly due under the policy and the remedies provided under section 155, plaintiff sought to recover punitive damages for unfair claims practices and vexatious delay and $150,000 as damages for emotional distress. Defendants moved to dismiss the counts for wilful violation of section 155 (count II) and intentional infliction of emotional distress (count III) on the ground that plaintiff's entire remedy was limited and preempted by section 155. Defendants also argued in their motion that count III, even as amended, was insufficient to state a cause of action under Public Finance Corp. v. Davis (1976), 66 Ill.2d 85, 360 N.E.2d 765. After conducting a hearing on defendant's motion to reconsider, the trial court dismissed counts II and III of the complaint and further held that section 155 was plaintiff's exclusive remedy for extracontractual damages. On appeal, plaintiff contends that the trial court erred in dismissing counts II and III of his amended complaint and in ruling that section 155 of the Insurance Code preempted an action for intentional infliction of emotional distress and for punitive damages. Plaintiff additionally argues that public policy favors the imposition of liability against insurance carriers who engage in outrageous, unethical and unfair practices in the adjustment of claims.

We affirm.

Plaintiff's home was insured by defendant insurance company, Insurance Company of Illinois (hereinafter ICI), under a homeowners' policy. Coverage under this policy included any living expenses incurred during the time required to repair the residence. On January 16, 1979, while said policy was in effect, plaintiff's residence was damaged by the severe winter weather, causing water to accumulate and part of the roof to collapse. After being informed of the damage, ICI retained the services of defendant Ronald Rozak, a principal in the adjusting firm of R.S. Rozak & Company, to assist in the adjusting of losses. A dispute soon arose between the parties as to the monies due under the policy, and plaintiff filed suit.

The original two-count complaint stated as relief actual and punitive damages for alleged breach of contract and violation of section 155 of the Illinois Insurance Code (Ill. Rev. Stat. 1977, ch. 73, par. 767). An amended complaint was subsequently filed by plaintiff after the court, on defendants' motion, struck count I for pleading deficiencies, and dismissed count II for exceeding the remedies provided by the aforementioned section. Amended count I, still sounding in breach of contract, this time claimed that ICI vexatiously withheld the monies due plaintiff under the policy. Amended count II, again brought pursuant to section 155, added Ronald S. Rozak individually as a defendant. Moreover, this wilful violation count specifically claimed that defendants (a) asserted noncoverage of certain items claimed by plaintiff; (b) offered to settle the claim for a lesser amount than that sought by plaintiff; and (c) requested that plaintiff undertake certain repairs at his own expense. Punitive damages continued to be included as part of plaintiff's relief in both counts.

In their motion to strike and dismiss counts I and II, respectively, of the amended complaint, defendants argued that punitive damages are not only nonrecoverable in an action for breach of contract, but also are preempted by statutory remedies. Agreeing with defendants, the trial court struck the claim for punitive damages in count I and dismissed count II with leave to amend.

Plaintiff thereafter filed his second amended two-count complaint. Count I was amended to reflect a partial settlement reached by the parties which resulted in a reduction of plaintiff's claim. It also included a request for attorney fees in accordance with the provisions of section 155. Count II remained essentially the same with the exception that exhibits were attached to it and the requested relief included attorney fees and punitive damages.

At the same time that defendants filed an answer to count I of the second amended complaint, they moved to dismiss count II for both failing to state a cause of action and seeking damages preempted by section 155. Following a denial of their motion, defendants proceeded to file an answer to count II denying any wrongful conduct and opposing plaintiff's claim for punitive damages.

Plaintiff next filed an amendment to the second amended complaint to include a count for intentional infliction of emotional distress. This count was added when plaintiff sustained a second loss occasioned by a fire in his home. As a result of rendering the structure uninhabitable for a period of time, plaintiff was forced to reside in a motel while the house was being repaired. Disputes with defendant insurance company arose regarding payment of these living expenses. After some negotiations between the parties, said living expenses were tendered. However, because of the delay in payment, plaintiff's financial condition allegedly deteriorated, causing him to experience great mental anguish and stress. As with plaintiff's prior counts, the count for intentional infliction of emotional distress included a request for punitive damages.

Defendants moved to dismiss count III on the basis of insufficiency. They additionally argued that punitive damages under the stated cause of action were not recoverable and that, in any event, plaintiff's remedy was limited and preempted by section 155. Defendants subsequently amended their motion to seek to dismiss both counts II and III of the complaint. The motion was denied and defendants moved to have their motion reconsidered.

Instead of filing a response to defendants' motion, plaintiff elected to obtain leave to amend count III. As amended, count III omitted the prior claim for punitive damages. After conducting a hearing on the matter, the trial court dismissed counts II and III of the complaint, finding that the causes of action set forth in those counts were preempted by section 155 of the Insurance Code.

OPINION

• 1 The question of whether punitive damages in tort are available as remedy to an insured for a wilful refusal by an insurance company to pay under a contract is not a novel one. A review of Illinois decisions reveals that the appellate court has been presented with that question on numerous occasions. In each of these instances, we have uniformly and consistently held that malicious conduct by an insurer in breaching a contract may not give rise to an independent wilful tort and the recovery of punitive damages. Kinney v. St. Paul Mercury Insurance Co. (1983), 120 Ill. App.3d 294, 458 N.E.2d 79; Tobolt v. Allstate Insurance Co. (1979), 75 Ill. App.3d 57, 393 N.E.2d 1171; Debolt v. Mutual of Omaha (1978), 56 Ill. App.3d 111, 371 N.E.2d 373; Urfer v. Country Mutual Insurance Co. (1978), 60 Ill. App.3d 469, 376 N.E.2d 1073.

• 2 The basis for our refusal to award punitive damages for breach of good faith and fair dealing lies in the statutory provisions of section 155 of the Illinois Insurance Code. (Ill. Rev. Stat. 1977, ch. 73, par. 767.) Enacted by the State legislature to assist policyholders as against an ...


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