would be of greater significance than a personal injury or mere property damage" is to confuse the nature of VIP's lawsuit. Response, p. 3. The simple fact is that VIP is not suing for personal injury or property damage resulting from the accident; VIP's employees and their estates have already sued Union Oil in a separate action. Rather, VIP is suing to recover profits lost as a result of its association with an accident in which the employees were killed. Bi-Petro's exception to Moorman, premised on the tort-like nature of a violent occurrence, does not extend to claims as remote from the occurrence as VIP's.
Seeking another loophole in the Moorman doctrine, VIP fixes on language in 2314 Lincoln Park West Condominium Assn. v. Mann, 136 Ill. 2d 302, 144 Ill. Dec. 227, 555 N.E.2d 346 (1990). Following a discussion of cases allowing recovery of economic losses despite Moorman, the Lincoln Park court explained, "the principle common to those decisions is that the defendant owes a duty in tort to prevent precisely the type of harm, economic or not, that occurred." Lincoln Park, 136 Ill. 2d 302, 144 Ill. Dec. 227, 233, 555 N.E.2d 346. VIP argues that the Illinois Premises Liability Act "creates an express statutory duty on an owner or occupier of land to use reasonable care under the circumstances to invitees such as VIP. This clearly takes the instant case out of the Moorman doctrine and creates an independent duty under tort law . . ." Supp. Memo. p. 2.
In the cases discussed in Lincoln Park, the plaintiffs sought recovery for injuries flowing directly from tortious behavior specifically alleged in the complaint. In one case, the plaintiff sought damages for harm to his truck after its brakes failed; in another, the plaintiff alleged intentional interference with prospective economic advantage; in another, intentional interference with contract. Lincoln Park, at 233. These cases involved damages that arose directly from defendants' alleged breach of a duty in tort, complained of by plaintiffs, unrelated to the contract at issue. Here, by contrast, neither the original nor amended complaint contains any mention of the Illinois Premises Liability Act. VIP's claims derive from Union Oil's alleged failure to abide by the terms of its contract with VIP, and the economic damages VIP seeks are remote. Moorman therefore prohibits their recovery in tort.
VIP's amended complaint includes a claim for negligent misrepresentation. Am. Complaint para. 19. Citing Board of Educ. v. A. C. and S., supra, 546 N.E.2d at 591, VIP argues that it has alleged all the required elements. They are, according to VIP, "a false statement of material fact, intention to induce the other party to act, action by the other party in reliance on the truth of the statement made, a duty owed by the defendant to plaintiff to communicate accurate information, negligence of the defendant, and damage to the Plaintiff resulting from the reliance." Response, p. 4.
When recovery is sought only for economic losses, however, Illinois law permits a claim for negligent misrepresentation only "when two elements are present: First, the defendant must be in the business of supplying information, and second, the defendant must provide the information for the guidance of others in their business relationships with third parties." Gerdes v. John Hancock Mut. Life Ins. Co., 712 F. Supp. 692, 696 (N.D. Ill. 1989). VIP does not allege that Union Oil meets this description, which it clearly does not. VIP cites A.C. and S. to suggest that these two elements need not be satisfied, but that case explicitly distinguished "those cases [in which] the plaintiffs suffered economic losses as a result of the defendant's alleged misrepresentation." In A.C. and S., "the plaintiffs have alleged physical injury." A.C. and S., at 647.
Finally, VIP argues that "it is only if the Court finds that VIP's contract action is fully adequate in the circumstances that the Moorman doctrine could conceivably apply to the instant case." Response, p.6. It is well-established, however, that the Moorman rule applies even in the absence of an alternative remedy in contract. Lincoln Park, at 231; Anderson Electric, Inc. v. Ledbetter Erection Corp., 115 Ill. 2d 146, 104 Ill. Dec. 689, 503 N.E.2d 246 (1986). VIP's tort claim against Union Oil is barred by the Moorman doctrine. Because its contract claim also fails for the reasons stated above, Union Oil's motion to dismiss is granted.
II. National Union Motion to Dismiss
Count III of the amended complaint charges National Union with breaching its duty of good faith by failing to investigate whether insurance coverage should have been provided to Union Oil; failing to ascertain a conflict of interest between VIP and Union Oil; retaining attorneys who obtained confidential reports and information which they later used against VIP; failing to offer VIP an opportunity to obtain independent counsel; and retaining counsel who had formerly been employed with the firm selected by National Union to represent Union Oil, and who failed to consult with VIP or to appear at the trial where VIP witnesses were extensively questioned "in a hostile manner." Am. Complaint, para. 29.
Count IV, which alleges breach of contract, adds to this list of wrongs National Union's failure "to pay all sums for which VIP became legally obligated to pay, particularly for an independent attorney of VIP's choice when a conflict of interest was finally admitted by National Union." Am. Complaint, para. 33. National Union "further breached its contract of insurance by failing to meet its duty of providing a defense to VIP in the lawsuits filed by the families of VIP's deceased workers . . . sacrific[ing] the interests of VIP so it could obtain the cheapest settlement possible." Am. Complaint, para. 34.
Because of these alleged wrongs, VIP claims it "has had to pay at least $ 300,000 in extra premiums for insurance coverage from 1985 through 1988, and has lost at least one major contract for work in the amount of approximately $ 50,000 because of its inability to obtain rated insurance coverage." Am. Complaint, para. 31. National Union moves to dismiss on the grounds that VIP has failed to allege any breach of duty or policy obligation owed by National Union, sought damages not proximately caused by National Union, and pleaded a cause of action that is preempted by the Illinois Insurance Code. The court need not reach the latter contention, because the first two require dismissal of VIP's action.
The gist of VIP's complaint is not that National Union failed to settle a claim under its policy, or refused to defend VIP in an action brought against it. Rather, VIP argues that National Union permitted VIP to be "wrongfully blamed" in the course of a lawsuit brought by VIP's employees against Union Oil. It is well-settled in Illinois, however, that "two requirements . . . must be satisfied before an insurer's duty to defend arises. First, the action must be brought against an insured. Second, the allegations must disclose the potential of policy coverage." Murphy v. Peterson, 129 Ill. App. 3d 952, 85 Ill. Dec. 112, 116, 473 N.E.2d 480, 484 (1 Dist. 1984); see also MFA Mutual Insurance Co. v. Crowther, Inc., 120 Ill. App. 3d 387, 390, 458 N.E.2d 71, 75 Ill. Dec. 903 (1 Dist.1983). Nothing in the law or VIP's policy requires National Union to defend VIP when VIP has not been sued.
VIP insists that National Union had an obligation to provide VIP with independent counsel once a conflict of interest became apparent. Again, however, no actual conflict materialized because VIP was never made a party to the lawsuit between VIP's employees and Union Oil. National Union identifies two critical features in every case cited by VIP to support its claim that National Union should have allowed VIP to choose independent counsel: the insured was sued, and a conflict existed between the insurer and the insured. See, e.g., Murphy v. Urso, 88 Ill. 2d 444, 430 N.E.2d 1079, 58 Ill. Dec. 828 (1981); Nandorf, Inc. v. CNA Ins. Cos., 134 Ill. App. 3d 134, 88 Ill. Dec. 968, 479 N.E.2d 988 (1985); Pekin Ins. Co. v. Home Insurance Company, 134 Ill. App. 3d 31, 479 N.E.2d 1078, 89 Ill. Dec. 72 (1985); Pepper Construction Co. v. Casualty Insurance Co., 145 Ill. App. 3d 516, 495 N.E.2d 1183, 1184, 99 Ill. Dec. 448 (1986); Maryland Casualty Co. v. Peppers, 64 Ill. 2d 187, 355 N.E.2d 24 (1976).
National Union offers an apt description of VIP's argument: that an insured should be permitted "to trigger the insurer's defense obligation when the insured merely feels threatened by the possibility of litigation." Reply, p.4. That is not the law. Neither is it the law, as VIP asserts, that National Union has waived the right to contest its duty to defend VIP by failing to seek a declaratory judgment action or to provide a defense under a reservation of right. Response, p.3. National Union could not possibly have sought a declaratory judgment action or provided a defense when no live controversy involving VIP existed. A party cannot waive the right to contest a duty it never had. See, e.g., Eichelkraut and Sons, Inc. v. Bituminous Cas. Corp., 166 Ill. App. 3d 550, 519 N.E.2d 1180, 1182 117 Ill. Dec. 13 (1988) (absent duty to defend, there can be no estoppel).
VIP is seeking to hold National Union liable for failing to protect its image in a lawsuit filed against Union Oil in which VIP was neither sued nor impleaded. There is no such cause of action. Even if it were actionable, there is no conceivable connection between National Union's alleged "sacrifice" of VIP's reputation and the extra premiums later demanded by National Union. VIP describes the causal link as follows:
National Union's failure to provide [VIP] with independent counsel contributed to it being made the scapegoat for the fatal accident in question, although even initial investigation showed that Union Oil bore much greater responsibility. Being made the scapegoat for the accident resulted in VIP's liability coverage effectively being cancelled by National Union, despite an otherwise excellent risk history, and an inability to obtain rated coverage at any price, which resulted in at least the loss of one major contract.