Appeal from the Appellate Court for the Fifth District; heard
in that court on appeal from the Circuit Court of Madison County,
the Hon. Howard Lee White, Judge, presiding.
JUSTICE MORAN DELIVERED THE OPINION OF THE COURT:
Rehearing denied December 1, 1986.
Plaintiffs, purchasers of dramshop liability insurance, brought this class action suit in the circuit court of Madison County against eight insurance companies (defendants). Plaintiffs essentially allege that defendants sold dramshop liability insurance which provided coverage in excess of the amount that plaintiffs could become liable for under section 14 of article VI (now section 6-21) of the Liquor Control Act of 1934 (Dramshop Act) (Ill. Rev. Stat. 1983, ch. 43, par. 135), and that defendants collected premiums for the excess coverage.
In their third amended complaint, plaintiffs seek recovery from each of the eight defendants under four separate theories: (1) that defendants committed fraud in selling coverage in excess of the maximum statutory limits of liability; (2) that defendants violated section 2 of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 262); (3) that a constructive trust should be imposed on the premiums paid for coverage in excess of the statutory limits of liability because defendants were unjustly enriched by collecting premiums for coverage beyond their liability exposure; and (4) that defendants assumed no risk in providing coverage beyond the statutory limit, and as a result, defendants did not give any "consideration" for the premiums paid by plaintiffs for such coverage. In addition to requesting a constructive trust, plaintiffs seek actual and punitive damages, interest, attorney fees, court costs, and an injunction against future sales by defendants of dramshop insurance coverage in excess of the limits set forth in the Dramshop Act.
Defendants moved to strike and dismiss the complaint pursuant to section 2-615 of the Code of Civil Procedure (Ill. Rev. Stat. 1983, ch. 110, par. 2-615), contending that none of the allegations in the various counts are sufficient to state a cause of action. The trial court granted defendants' motion and dismissed the entire complaint with prejudice. The trial court also denied plaintiffs' motion for class certification. The appellate court affirmed (137 Ill. App.3d 84), and we granted plaintiffs leave to appeal (94 Ill.2d R. 315).
At issue is whether the trial court erred in dismissing plaintiffs' third amended complaint with prejudice for failure to state a cause of action. In addition, we are asked to consider whether the trial court erred in denying plaintiffs' motion for class certification. We address those issues relating to the sufficiency of the complaint first, since we need not consider the class certification question if we find that the complaint does not state a cause of action. Schlessinger v. Olsen (1981), 86 Ill.2d 314, 318.
In order to properly judge the sufficiency of plaintiffs' third amended complaint, it is necessary to present a more detailed summary of its allegations. Plaintiffs purchased dramshop liability insurance from one or more of the defendants in various amounts and at various times between October 18, 1970, and February 23, 1981. The policies sold by defendants insured plaintiffs against liability imposed by the Dramshop Act and "all laws amendatory thereof" up to the amount of insurance coverage purchased by the individual plaintiffs. The insurance policies, which are attached to the complaint as exhibits, contain four separate liability limits: bodily injury to one person; bodily injuries for one occurrence; property damage; and loss of means of support. Plaintiffs' complaint only concerns the insurance coverage provided for "bodily injury to one person." During the relevant time period, the Dramshop Act limited the liability it imposes for bodily injury to one person to $15,000. (This limit was increased to $30,000 effective September 12, 1985 (see Ill. Rev. Stat. 1985, ch. 43, par. 135).) The gravamen of plaintiffs' complaint is that they purchased dramshop insurance from defendants which insured against liability for personal injury to one person in amounts greater than $15,000, even though the statute limited liability to that amount. They further allege that defendants charged an additional premium for the excess coverage.
Eight counts of plaintiffs' 32-count complaint allege that defendants committed fraud by selling plaintiffs, and others similarly situated, dramshop coverage in excess of the $15,000 statutory limit for personal injury to one person. Plaintiffs allege that defendants, through their agents, "knowingly marketed, sold and accepted premiums for dram shop insurance coverage in excess of the statutory limit * * * for injury to one person knowing that, thereby, they had assumed no risk in excess of the aforesaid statutory limit." They further allege that each defendant, "knowingly and with the intent to deceive," deprived plaintiffs of "excessive premiums" and that plaintiffs "justifiably relied" to their detriment upon defendants' "representations * * * concerning said excessive coverage." Plaintiffs request punitive damages and an injunction against future sales of dramshop insurance coverage "in excess of the statutory limits * * * for injury to one person."
Plaintiffs also seek a refund of premiums based on allegations in eight counts of the complaint that defendants did not provide "consideration" for premiums paid by plaintiffs for coverage in excess of the statutory limit of liability for injury to one person. They allege that the "portion of [each] insurance contract which purports to insure for liability in excess of the statutory limit fails for lack of consideration" because defendants, in providing "coverages purporting to be in excess of the statutory limit," assumed "no risk for said excessive coverages."
Additionally, plaintiffs allege that defendants violated section 2 of the Consumer Fraud and Deceptive Business Practices Act (Ill. Rev. Stat. 1983, ch. 121 1/2, par. 262). They complain that the "acceptance of premiums for excessive coverage without assuming any insurable risk beyond the statutory limit constitutes fraud, deception, false pretense, false promise and misrepresentation" by defendants. It is further alleged that each defendant "did not in its policy disclose the statutory limit of liability thereby concealing, suppressing or omitting a material fact" from plaintiffs, intending plaintiffs to rely on the concealment, suppression or omission. Plaintiffs pray for a partial refund of premiums plus interest, injunctive relief, and punitive damages.
Finally, in eight counts, plaintiffs seek the imposition of a constructive trust on premiums paid for coverage in excess of the $15,000 statutory limit for bodily injury. In support of their request for a constructive trust, they allege that defendants sold them policies of insurance for coverage in excess of the $15,000 limit for bodily injury to one person; that defendants collected premiums for the excess coverage; that defendants assumed no risk beyond the statutory limit of $15,000; and that plaintiffs are "entitled to restitution" for all premiums "for coverage purporting to be in excess of the statutory limit."
Since all four theories of recovery hinge on the allegation that defendant sold valueless insurance coverage, it is appropriate to consider first those counts alleging a "lack of consideration." In those counts, plaintiffs allege that defendants "assumed no risk" in providing coverage in excess of the statutory limit of liability, and that, accordingly, defendants did not give any consideration for premiums paid by plaintiffs for any coverage over the $15,000 limit. Defendants maintain that these counts fail to state a cause of action. They argue that the insurance policies themselves, which were attached to the complaint as exhibits, show that consideration was given for the premiums paid for any coverage in excess of $15,000. Defendants note that the insurance policies provide that defendants would indemnify the plaintiff insureds for liability under the Dramshop Act "in force February 1, 1934, and all laws amendatory thereof." They construe the phrase "and all laws amendatory thereof" as a promise to insure the plaintiff insureds for the amounts of "excess" coverage purchased in the event that the General Assembly increased the limits of liability under the statute. Defendants contend, and the appellate court held, that a promise to insure against possible increases in statutory liability, referred to by defendants as "sleep safe" insurance, constituted consideration for the premiums charged for such coverage.
A cause of action will not be dismissed on the pleadings unless it clearly appears that no set of facts can be proved which will entitle plaintiffs to recover. (Fitzgerald v. Chicago Title & Trust Co. (1978), 72 Ill.2d 179, 187; Fechtner v. Lake County Savings & Loan Association (1977), 66 Ill.2d 128, 133.) Additionally, well-pleaded facts must be taken as true for judging the sufficiency of the complaint (Bio-Medical Laboratories, Inc. v. Trainor (1977), 68 Ill.2d 540, 545), including facts contained in exhibits ...