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CREDIT INS. CONSULTANTS v. GERLING GLOBAL REINSUR.

February 6, 2002

CREDIT INSURANCE CONSULTANTS, INC., D/B/A CIC AUTOMOTIVE CORP., CONLEY INSURANCE GROUP, AND AMERICAN FINANCIAL & AUTOMOTIVE SERVICES, INC., PLAINTIFFS,
V.
GERLING GLOBAL REINSURANCE CORPORATION OF AMERICA, INSURANCE ADMINISTRATION SERVICES, INC., AND AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY, DEFENDANTS.



The opinion of the court was delivered by: Moran, Judge.

MEMORANDUM OPINION AND ORDER

Gerling has brought counterclaims against the plaintiffs and claims against a third party defendant, Arden D. Hetland (Hetland). The third party and counterclaim defendants move to dismiss two of the counts against them under Rule 12(b)(6): Count III, alleging violation of the Illinois Consumer Fraud Act (ICFA), and count IV, alleging civil conspiracy. For the following reasons, Gerling's motion to dismiss the fraud claims is granted; defendants' motion to dismiss the Interference with business claims is granted in part and denied in part; and the third party and counterclaim defendants' motion to dismiss counts III and IV of the counterclaims is denied.

BACKGROUND

Plaintiffs market extended warranty programs available to purchasers of automobiles, and Gerling has insured the programs marketed by plaintiffs. At the end of February 2000, IAS became responsible for administering certain extended warranty programs insured by Gerling, and ANPAC acted as the issuing insurance company for a portion of the Gerling extended warranty program.

According to plaintiffs, Gerling learned that its claims reserves were inadequate and it decided to get out of the business. However, since premiums for the extended warranty are paid up-front, a withdrawal from the business meant that nothing would be coming in but that claims would have to be paid for several years thereafter. Plaintiffs assert that Gerling concealed its plan to terminate its program and misrepresented its Intentions during meetings and telephone calls with plaintiffs.

Plaintiffs contend that Gerling caused IAS to be substantially unavailable for prior approval, necessary for performance of repairs; to wrongfully deny claims submitted after. sixty days from the authorization date; to refuse to pay commissions due and payable; and to act wrongfully in other respects. These actions or inactions, they claim, interfered with their business relations with auto dealers. Further, plaintiffs assert that ANPAC is responsible for the alleged wrongful claims practices to the extent that it was the issuing insurer for part of the Gerling extended warranty program.

In its counterclaims and third party claims, Gerling alleges that the warranty marketers and auto dealers acted together to overwhelm the claims administrator by filing or causing to be filed identical complaints to state departments, and for tying up claims administration phone lines by filing illegitimate claims directly with the administrator. The alleged purpose of these actions was to cause Gerling to pay unwarranted claims to the parties and auto dealers. Gerling asserts that this alleged campaign was a ploy by the marketers to show loyalty to the dealers and to divert attention away from the marketers' prior misrepresentations to the dealers.

DISCUSSION

In deciding a Rule 12(b)(6) motion to dismiss, we accept as true all well-pleaded factual allegations of the complaint, drawing all reasonable inferences in plaintiff's favor. Midwest grinding Co. v. Spitz, 976 F.2d 1016, 1019 (7th Cir. 1992). A claim survives if relief could be granted under any set of facts that can be proved consistent with the allegations. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984) citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957). While a complaint does not need to specify the correct legal theory to withstand a 12(b)(6) motion, it must allege all elements of a cause of action necessary for recovery. Ellsworth v. City of Racine, 774 F.2d 182, 184 (7th Cir. 1985) cert. denied 475 U.S. 1047 (1986).

Complaint Counts II, III, VI-IX

Gerling's first ground for dismissal of the fraud claims is failure to plead with the particularity required. Rule 9(b) requires that the circumstances constituting an alleged fraud or mistake be stated with particularity. The circumstances of an alleged wrongdoing include the identity of the person making the misrepresentation, the time, place and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff. Bankers Trust Co. v. Old Republic Ins. Co., 959 F.2d 677, 683 (7th Cir. 1990). A claim must give us the who, what, when, where and how — "the first paragraph of any newspaper story." DiLeo v. Ernst & Young, 901 F.2d 624, 628 (7th Cir. 1990).

Plaintiffs assert that Gerling committed fraud when it allegedly represented that it was committed to continuing its extended warranty program, knowing that these representations were false. The specifics that plaintiffs offer are that beginning in the spring of 1999, and continuing through February 2000, officers and managers of Gerling, in the course of personal meetings and telephone calls with plaintiffs, misrepresented that Gerling intended to correct the problems of its inadequate claims reserves and continue its extended warranty program. Plaintiffs have provided the what and the how of the fraud, but the who, when and where are unclear.

Plaintiffs assert that their claim is sufficient since they are alleging a fraudulent scheme. Rule 9(b) may be satisfied if a plaintiff provides an outline of a fraudulent scheme such that a defendant is reasonably notified of his alleged role. Fujisawa Pharmaceutical Co., Ltd. v. Kapoor, 814 F. Supp. 720, 731 (N.D.Ill. 1993). We agree that plaintiffs do not have to plead each and every act of fraud within an alleged scheme, but, since they are alleging a scheme of promissory fraud, they need to plead at least one specific manifestation of the fraudulent scheme. Advent Electronics, Inc. v. Buckman, 918 ...


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