The opinion of the court was delivered by: Moran, Judge.
MEMORANDUM OPINION AND ORDER
Credit Insurance Consultants, Inc. (CIC), Conley Insurance Group
(Conley) and American Financial & Automotive Services, Inc. (AFAS)
brought a consolidated complaint against Gerling Global Reinsurance
Company of America (Gerling), Insurance Administration Services, Inc.
(IAS), and American National Property and Casualty Company (ANPAC). The
ten counts of the complaint include three counts of fraud against Gerling
(counts II, VI, VIII) and three counts of interference with business
relations against the three defendants (counts III, VII, IX). Gerling
moves to dismiss the fraud claims against it under Fed.R.Civ.P. 9(b) and
12(b)(6). All three defendants move to dismiss the interference with
business relations counts against them under Rule 12(b)(6).
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.
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.
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
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
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 ...