and Deceptive Acts and Practices Act, Ill. Rev. Stat. ch. 73, paras. 1028-1041 (1987) (underlying objective of scheme is to regulate insurance industry) (incorporating Ill. Rev. Stat. ch. 73, para. 761 (1987) (prohibiting misrepresentation and defamation in connection with insurance transactions)). This argument, however, ignores the fact that a plaintiff can recover economic losses under a negligent misrepresentation theory only when the defendant is in the business of supplying information for the guidance of others in their business relationships with third parties.
The Deceptive Practices Act would be relevant if it imposed upon Jones an affirmative duty to disclose information. Normally mere silence or a passive failure to disclose does not constitute a misrepresentation; instead, defendants are liable only for affirmative falsehoods or misstatements. W. Keeton, Prosser and Keeton on Torts § 106 (5th ed. 1984). If, however, the defendant has a duty to speak (such as when he stands in some confidential or fiduciary relationship to the plaintiff), then a failure to speak may be actionable. See, e.g., Zimmerman, 156 Ill. App. 3d at 161, 510 N.E.2d at 413; W. Keeton, supra, at § 106. The Deceptive Practices Act, therefore, does not create liability for negligent misrepresentation when the defendant is not in the business of supplying information for the guidance of others in their business transactions with third persons; rather, it may be relevant in determining whether a defendant who is in the business of supplying information breached his duty by failing to inform the plaintiff of material facts. Cf. Zimmerman, 156 Ill. App. 3d at 161-62, 510 N.E.2d at 413 (holding that real estate brokers had duty under Real Estate Broker and Salesman License Act, Ill. Rev. Stat. ch. 111, paras. 5701-5743 (1981) (repealed by P.A. 83-191, § 38, eff. Jan. 1, 1984), to disclose relevant information and, therefore, plaintiff stated cause of action for common law fraud; brokers also liable for economic losses under negligent misrepresentation theory because they were in the business of supplying information).
Second, the plaintiffs assert that this court should follow the literal language of the Restatement (Second) of Torts § 552 (1965), which imposes liability for a negligent misrepresentation made merely "in the course of [one's] business,"
when the parties are not in privity of contract. The plaintiffs reason that the courts in Moorman and its progeny were reluctant to allow tort remedies for economic loss only when the parties were in privity of contract, since contract law was "appropriate and sufficient to govern the economic relations between suppliers and consumers of goods." Richmond v. Blair, 142 Ill. App. 3d 251, 257, 488 N.E.2d 563, 567, 94 Ill. Dec. 564 (1985). In this case, the plaintiffs claim that they did not have a direct contractual relationship with Jones, Clegg, or Sekara and, therefore, are without contract remedies. Accordingly, the plaintiffs argue that when persons have no contractual remedies, courts should follow the more liberal standard of the Restatement and allow negligent misrepresentation claims against defendants who supply information in the course of their business -- and not only when the defendants are in the business of supplying information.
This argument is foreclosed, however, by the Illinois Supreme Court's decision that the Moorman doctrine can bar recovery of solely economic losses in tort even when the plaintiff has no other remedy against the defendant. See Anderson Elec. v. Ledbetter Erection Corp., 115 Ill. 2d 146, 152-53, 503 N.E.2d 246, 249, 104 Ill. Dec. 689 (1986); see also Zimmerman, 156 Ill. App. 3d at 164, 510 N.E.2d at 415; cf. East River, 476 U.S. at 874-75 (denying recovery in tort for economic loss notwithstanding fact that warranty not available to plaintiffs). In sum, although the plaintiffs allege in conclusory fashion that Jones "was in the business of providing information to be used by people in purchasing insurance policies to be issued by a third party," the facts alleged in the amended complaint do not support that legal conclusion and, at times, even contradict it. Accordingly, the court dismisses the negligent misrepresentation counts and grants the plaintiffs leave to file a second amended complaint that sufficiently delineates the relationships among the parties and rectifies the foregoing deficiencies.
B. Failure to Plead Fraud with Particularity
Clegg also argues that Counts IV and V, alleging consumer fraud and common law fraud, respectively, should be dismissed pursuant to Rule 9(b) for failure to plead fraud with particularity. Rule 9(b) provides that "in all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." The objectives underlying this exception to the liberal notice pleading of the Federal Rules are to protect the reputations of potential defendants and to ensure adequate notice to the defendants of the critical facts. Gross v. Diversified Mortgage Investors, 431 F. Supp. 1080, 1087 (S.D.N.Y. 1977), aff'd, 636 F.2d 1201 (2d Cir. 1980). Since the same stigma applies to the perpetration of statutory fraud as to the commission of common law fraud, Count IV, which alleges violations of the Illinois Consumer Fraud and Deceptive Business Practices Act, likewise is subject to Rule 9(b). Barr Co. v. Safeco Ins. Co. of Am., 583 F. Supp. 248, 258 (N.D. Ill. 1984). The requirements of Rule 9(b), however, must be read in conjunction with Rule 8, which requires a short and plain statement of the claim. Tomera v. Galt, 511 F.2d 504, 508 (7th Cir. 1975). Thus, in order to allege fraud sufficiently, a plaintiff must delineate the "time, place and particular contents of the false representations, as well as the identity of the party making the misrepresentation, and what was obtained or given up thereby." Bennett v. Berg, 685 F.2d 1053, 1062 (8th Cir. 1982), cert. denied sub nom. Prudential Ins. Co. v. Bennett, 464 U.S. 1008, 78 L. Ed. 2d 710, 104 S. Ct. 527 (1983).
In this case the court concludes that Counts IV and V comply with the particularity requirement of Rule 9(b). The plaintiffs have alleged details regarding when Jones made the representations, the context in which the representations were made, and the specific details and written evidence of the representations. These averments are sufficient to meet the requirements of Rule 9(b). Discovery can provide further details. Therefore, this court denies the defendant's motion to dismiss Counts IV and V.
In summary, for the above reasons the court grants the defendants' motions to dismiss Counts VI, IX, and VII for failure to state a claim of negligent misrepresentation and grants the plaintiffs leave to file a second amended complaint by May 30, 1989. The court denies Clegg's motion to dismiss Counts IV and V for failure to plead fraud with particularity. All the defendants must answer or otherwise plead by June 19, 1989.
DATED: May 8, 1989