considered in evaluating the motion to dismiss.
First Chicago argues in both of its briefs factors that must
be alleged to sustain a breach of contract claim. However, First
Chicago overlooks the nature of the federal courts and notice
pleading. Specifically, the Supreme Court in Leatherman v.
Tarrant County Narcotics Intelligence & Coordination Unit
rejected an imposition of heightened pleading standards except
as required by Federal Rule of Civil Procedure 9(b) for
averments of fraud or mistake. 507 U.S. 163, 168, 113 S.Ct.
1160, 122 L.Ed.2d 517 (1993). This ruling reaffirmed the Supreme
Court's holding in Conley v. Gibson, that allegations
contained in a complaint should be liberally construed, and the
"complaint should not be dismissed for failure to state a claim
unless it appears beyond doubt that the plaintiff can prove no
set of facts in support of his claim which would entitle him to
relief." 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957).
Accordingly, a plaintiff "receives the benefit of imagination,
so long as the hypotheses are consistent with the complaint."
Sanjuan v. Am. Bd. of Psychiatry & Neurology, Inc.,
40 F.3d 247, 251 (7th Cir. 1994). Further, the only two prerequisites
for maintaining a contract action are the existence of a
contract and its breach. Patton v. Univ. of Chicago Hosps.,
706 F. Supp. 627, 631 (N.D.Ill. 1989).
Determining whether Ploog has stated a cause of action for
breach of contract must recognize this very liberal standard in
pleading a cause of action. Ploog has clearly alleged that there
was a contract between her and First Chicago. The only question
is whether First Chicago breached this contract. Ploog alleges
that First Chicago breached its duty of good faith and fair
dealing in paying taxes from her escrow account on property that
she did not own. "A covenant of good faith and fair dealing is
implied in every contract absent a provision that specifically
states otherwise." Kipnis v. Mandel Metals, Inc.,
318 Ill. App.3d 498, 505, 251 Ill.Dec. 855, 741 N.E.2d 1033, 1038
(1st Dist. 2000). "[T]he doctrine of good faith performance
imposes a limitation on the exercise of discretion vested in one
of the parties to a contract." Dayan v. McDonald's Corp.,
125 Ill. App.3d 972, 990-91, 81 Ill.Dec. 156, 466 N.E.2d 958, 972
(1st Dist. 1984). In determining what constitutes a good faith
performance, "a party vested with contractual discretion must
exercise that discretion reasonably and with proper motive, and
may not do so arbitrarily, capriciously, or in a manner
inconsistent with the reasonable expectations of the parties."
In this case, the question is whether First Chicago had
discretion in their decision to pay property taxes on the
properties listed in the contract, and, if so, if they exercised
that discretion in a reasonable way or in an arbitrary,
capricious, or other manner inconsistent with the expectations
of the parties. Ploog has alleged in her complaint that First
Chicago breached its duty of good faith and fair dealing. It is
not obvious from the Bixby — Ploog Mortgage whether First
Chicago breached its obligation or not. Ploog is entitled to
further discovery to support her claim. Thus, First Chicago's
motion to dismiss Count II is denied.
E. Breach of Fiduciary Duty
First Chicago first argues that Ploog's claim for breach of
fiduciary duty is barred by the Moorman doctrine, which stands
for the notion that "[w]hen only economic loss is incurred, the
plaintiff may only raise contract theories even if the
defendant's alleged conduct constituted a tort as well as a
breach of contract." Valenti v. Qualex, Inc., 970 F.2d 363,
Cir. 1992). However, Moorman is inapplicable to contract and
agency theories. Ill. Constr. Corp. v. Morency & Assocs.,
Inc., 802 F. Supp. 185, 188 (N.D.Ill. 1992). "Where a duty
arises outside of the contract, the economic loss doctrine does
not prohibit recovery in tort for the negligent breach of that
duty." Congregation of the Passion, Holy Cross Province v.
Touche Ross & Co., 159 Ill.2d 137, 162, 201 Ill.Dec. 71,
636 N.E.2d 503, 514 (1994). "Although fiduciary duties may coexist
with contractual duties, the two are distinct and impose
separate, independent obligations." Fed'l Deposit Ins. Corp. v.
Miller, 781 F. Supp. 1271, 1277 (N.D.Ill. 1991).
The question, then, is whether the relationship between First
Chicago and Ploog gave rise to a fiduciary duty. The existence
of a fiduciary relationship would arise outside of the contract
and would constitute an exception to the Moorman doctrine.
Congregation, 159 Ill.2d at 162-63, 201 Ill.Dec. 71, 636
N.E.2d at 514-15. "[M]ismanagement of an escrow may give rise to
a cause of action for a breach of fiduciary duty." Choi v.
Chase Manhattan Mortgage Co., 63 F. Supp.2d 874, 885 (N.D.Ill.
1999). Mortgage contracts carry with them an implied duty of
professional competence "analogous to the way the duty of good
faith and fair dealing is imputed as a term of the contract."
Id. This implied duty is similar to the duties of attorneys
and accountants to use their own knowledge and expertise and
therefore makes the duty arise outside of the contract.
Congregation, 159 Ill.2d at 162-63, 201 Ill.Dec. 71, 636
N.E.2d at 514-15. The Illinois Supreme Court has been clear that
there is an exception to the Moorman doctrine when the duty in
question arises independently of a contract. Id. at 164, 201
Ill.Dec. 71, 636 N.E.2d at 515 (holding that accountants, like
attorneys, have an intangible duty independent from a contract
to use reasonable professional competence.) Thus, the mortgage
contract gave rise to a fiduciary relationship between First
Chicago and Ploog, which makes the Moorman doctrine
Next, First Chicago argues that Ploog has failed to allege any
breach of fiduciary duty by First Chicago. (First Chicago Mem.
Supp. Mot. Dismiss at 11.) Ploog alleges in her Second Amended
Complaint that First Chicago was her agent for the purpose of
paying taxes from funds made available to it by Ploog and that
First Chicago breached this duty by paying incorrect taxes.
(Second Am. Compl. ¶ 60-61.) As discussed above, the Supreme
Court in Leatherman rejected an imposition of heightened
pleading standards except as required by Rule 9(b).
507 U.S. 163, 168, 113 S.Ct. 1160 (1993). This case does not involve
allegations falling within the ambit of Rule 9(b), and
therefore, no heightened pleading standard applies. Because
Ploog has alleged a breach of fiduciary duty based on an agency
relationship, this is sufficient to withstand a motion to
dismiss, and thus First Chicago's motion to dismiss Count III is
For the reasons set forth above, the Court denies HomeSide's
motion to dismiss [doc. no. 117-1] and denies First Chicago's
motion to dismiss [doc. no. 53-1].