United States District Court, N.D. Illinois
April 12, 2004.
KEYSTONE CONSOLIDATED INDUSTRIES, Plaintiff,
CONSECO MEDICAL INSURANCE COMPANY and EMPLOYEE BENEFITS CORPORATION, Defendants
The opinion of the court was delivered by: AMY J. ST. EVE, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff Keystone Consolidated Industries ("Keystone") filed a five
count First Amended Complaint ("FAC") against defendants Conseco. Medical
Insurance Company ("Conseco") and Employee Benefits Corporation ("EBC"),
alleging breach of contract against Conseco. (Count I) and EBC (Count IV),
negligent misrepresentation against Conseco. (Count III) and EBC (Count
V), and estoppel against Conseco. (Count II).
EBC moved for summary judgment on Counts IV and V. For the reasons
stated herein, EBC's motion is granted.
I. Summary Judgment
Summary judgment is proper when "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with affidavits, if
any, show that there is no genuine issue of material fact, and that the
moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The party seeking summary judgment has the
burden of establishing the lack of any genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 So. Ct. 2548, 2552
(1986). A genuine issue of triable fact exists only if "the evidence is
such that a reasonable jury could return a verdict for the nonmoving
party," Pugh v. City of Attica, 259. F.3d 619, 625 (7th Cir. 2001)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505,
2510 (1986)). A party will successfully oppose summary judgment only if
it presents "definite, competent evidence to rebut the motion." Equal
Opportunity Comm'n v. Roebuck & Co., 233 F.3d 432, 437 (7th Cir. 2000).
The Court "considers the evidentiary record in the light most favorable
to the nonmoving party, and draws all reasonable inferences in his
favor." Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7th Cir.
II. Local Rule 56.1
The Court first addresses Keystone's failure to comply with Local Rule
56.1, which governs summary judgment briefing in the Northern District of
Illinois. L.R. 56.1. Local Rule 56.1(a)(3) requires the moving party to
provide a "statement of material facts as to which the moving party
contends there is no genuine issue and that entitle the moving party to a
judgment as a matter of law." L.R. 56. 1(a)(3). The opposing party must
then file "a concise response to the movant's statement," in which the
nonmoving party must "admit or deny each factual statement proffered by
the defendant . . ., and designate with specificity and particularity
those material facts believed to establish a genuine dispute for trial."
Greer v. Board of Educ. of the City of Chicago, 267 F.3d 723, 727 (7th
Cir. 2001). The nonmoving party may also file a statement of additional
facts that require the denial of a summary judgment. L.R. 56.1(b)(3)(B).
The moving party must submit a reply addressing each additional fact. In
its Rule 56.1 response, Keystone consistently fails to include "specific references to the affidavits,
parts of the record, and other supporting materials" as required by Local
Rule 56.1. The consequences of Keystone's failure to adhere to Local Rule
56.1 are discussed below.
Keystone is an employer that provides its employees with medical
coverage via a self-funded plan (the "Plan"). (R. 43-1, FAC ¶¶ 1, 7.) EBC
is an insurance broker that administered the Plan for Keystone. (Id. ¶¶
2, 8.) Keystone sought to obtain stop-loss coverage for the Plan, (Id. ¶¶
2, 8.) On October 19, 1999 EBC submitted a bid package on behalf of
Keystone to the entire market of insurers who write stop-loss policies
for self-funded medical plans. (Id. ¶¶ 2, 9; R. 51-1, Def.'s Statement of
Undisputed Material Facts ("Def.'s Rule 56.1 Statement") ¶ 3(a); R.
54-1, Pl.'s Response Statement of Undisputed Material Facts ("Pl.'s Rule
56.1 Response") ¶ 3(a).) Conseco. responded to EBC's bid request with
bids on December 14 and 17, 1999. (Id. ¶ 3(f).) Conseco unambiguously
stated that it based its bids on the information that Keystone provided
to Conseco. (Id.) Keystone verbally committed to award its business to
Conseco. on December 28, 1999. (Id. ¶ 30).)
Conseco. issued a reinsurance treaty with an effective date of January
1, 2000 that outlined Keystone's coverage. (Pearl Aff. ¶ 11.) Conseco
issued a copy of the reinsurance treaty to Keystone and EBC on September
5, 2000. (Id.) The reinsurance treaty contained an exclusion for
medical bills that resulted from a participant having been injured while
under the influence of alcohol. (R. 51-1, Def.'s Rule 56.1 Statement
¶ 3(m); R. 54-1, Pl's Rule 56.1 Response & 3(m).) Conseco. never
advised EBC or Keystone that the policy it intended to issue excluded
coverage for alcohol related injuries. (Id. ¶ 3(o).) On March 3, 2000, a Keystone employee covered by the Plan was injured
in a motor vehicle accident while under the influence of alcohol, (R
43-1, FAC ¶¶ 11-12.) On behalf of Keystone, EBC submitted the injured
employee's medical bills to Conseco. for payment. (Id. ¶ 13.) Conseco.
refused to pay the claim, citing the alcohol-related injury exclusion.
(Id. ¶ 14.) Keystone filed suit against Conseco and EBC in this Court.
I. Breach Of Contract (Count IV)
Keystone's breach of contract claim fails because Keystone cannot
establish a genuine issue of material fact as to whether a contract
existed that obligated EBC to procure stop-loss insurance for Keystone.
Under Illinois law,*fn1 a party claiming breach of contract must
establish that: (1) a valid and enforceable contract existed; (2) the
plaintiff performed according to the contract; (3) the defendant breached
the contract; and (4) the breach resulted in damages. D.S.A. Fin. Corp.
v. County of Cook, 801 N.E.2d 1075, 1078 (Ill.App. Ct. 2003) (citations
omitted). A valid contract requires the parties to agree to definite and
essential terms that enable the court to determine the parties' intent
and whether a breach occurred. Academy Chicago Publishers v. Cheever,
144 Ill.2d 24, 578 N.E.2d 981, 983-84 (Ill. 1991). Because the existence
of a contract is a question of law, Barefield v. Village of Winnetka,
81 F.3d 704, 709 (7th Cir. 1996); Corluka v. Bridgford Foods of III.,
Inc., 284 Ill. App.3d 190, 194, 671 N.E.2d 814, 818 (Ill.App. Ct 1996),
the question whether the parties agreed to the essential terms of the
contract is a question of law. Mansourou v. John Crane, Inc.,
248 Ill. App.3d 963, 968, 618 N.E.2d 689, 692 (111. App. Ct. 1993)
Keystone bears the burden of showing that a contract exists. Carpenter
v. City of Northlake, 948 F. Supp. 759, 764 (N.D. Ill. 1996). Simply
alleging that a contract existed, even if the allegations are adequate to
state a claim, is insufficient to avoid summary judgment.*fn2 Id.
Keystone must do more than merely argue the existence of a
contract-Keystone must identify deposition testimony, documentation, or
some other evidentiary support showing the existence of a contract. See
id. Keystone has failed to do so.
Keystone presents no evidence of an enforceable contract. See
Carpenter, 948 F. Supp. at 763. EBC states in its Rule 56.1 statement
that "EBC never had an oral or written agreement with Keystone that EBC
would obtain insurance coverage for Keystone as outlined in the bid
package." (R. 51-1, Def.'s Rule 56.1 Statement ¶ 3(b).) Keystone merely
responds that "Plaintiff disputes and denies the allegations set forth in
Paragraph b." (R. 54-1, Pl.'s Rule 56.1 Response ¶ 3(b).) Keystone's
response fails to include "specific references to the affidavits, parts
of the record, and other supporting materials" as required by Local Rule
56.1. Accordingly, the Court deems EBC's statement admitted.
Keystone provides no other evidence as to the existence of a contract
between EBC and Keystone that obligated EBC to procure particular
coverage for Keystone. As a result, Keystone fails to establish a genuine issue of material fact as to whether
such a contract existed, and summary judgment is granted on Count IV.
II. Negligent Misrepresentation (Count V)
Keystone's negligent misrepresentation count fails because Keystone
improperly seeks to recover damages based solely on economic losses, and
because it fails to establish a genuine issue of material fact as to
whether EBC is a "commercial information provider."
To prove negligent misrepresentation,*fn3 Keystone must show: (1) a
false statement of material fact; (2) carelessness or negligence in
ascertaining the truth of the statement by defendant; (3) an intention to
induce the other party to act; (4) action by the other party in reliance
on the truth of the statements; (5) damage to the other party resulting
from such reliance; and (6) that defendant owed a duty to plaintiff to
communicate accurate information,*fn4 Orix, 125 F.3d at 475 n.2 (citing
Board of Educ. v. A, C and S, Inc., 131 Ill.2d 428, 452, 546 N.E.2d 580
Illinois law generally prohibits a plaintiff from recovering in tort
for purely economic losses, although the prohibition is not absolute.
Moorman Mfg. Co. v. Nat'l Tank Co., 91 Ill.2d 69, 88, 435 N.E.2d 443, 451 (Ill. 1982); Gerdes v. John Hancock
Mut. Life Ins. Co., 112 F. Supp. 692, 696 (N.D. Ill. 1989) (citations
omitted). One such exception is the "commercial information provider"
exception. Courts narrowly construe this exception. Gerdes, 712 F. Supp.
at 697. To qualify for this exception, the plaintiff must establish that
the defendant is "in the business of supplying information for the
guidance of others in their business dealings" by establishing that the
defendant 1) is in the business of supplying information, and 2) provides
this information for the guidance of others in its business relations
with third parties. Id. at 696, One is not in the business of "supplying
information" if the information is merely ancillary to the services
rendered or products sold. Lemont Partners v. Meijer Stores Ltd.
Partnership, No. 02 C 1799, 2002 WL 31641623, at *13 (N.D. Ill. Nov. 22,
Keystone seeks damages for purely economic losses,*fn5 but argues that
the "commercial information provider" exception applies because EBC is in
the business of supplying information. The Court disagrees. EBC argues
that, as Keystone's agent,*fn6 it merely relayed information from
Conseco. to Keystone. EBC stated in its Rule 56.1 statement that "[a]ll
representations containing the nature and the extent of the coverage to
be provided to Keystone originated with [Conseco]." (R. 51-1, Def.'s
Rule 56.1 Statement ¶ 4(c).). In response, Keystone states that:
Defendant denies the allegation set forth in Paragraph
c. There is evidence to support the allegations in
Paragraph 47 of the First Amended Complaint which is
the paragraph quoted by EBC. As stated above, the
Christina Cole fax of December 29, 1999 supports the reasonable conclusion
and/or inference that the requested coverage had been
obtained. Further, First Amended Complaint Exhibit B
shows evidence that EBC was acting as agent of record
for the procurement of the requested insurance
package. By nature of the relationship between EBC and
Keystone throughout the bid process there was an
agreement for EBC to procure a treaty with certain
provisions as requested.
(R. 54-1, Pl.'s Rule 56.1 Response ¶ 4(c).) Thus, Keystone identifies
two pieces of evidence-the "Christina Cole fax" and Exhibit B-to refute
EBC's statement that all information originated with Conseco. Neither
piece of evidence, however, supports an inference that EBC was a
commercial information provider.
The cover sheet is the only part of the fax written by EBC employee
Christina Cole. The cover sheet states in its entirety:
Kathy, Please sign the following application and fax
it back to my attention. I will need you to mail me
the original ASAP. . . . You will need to make the
first month's premium payment, the following is how it
is broken out.
(R. 54-1, Pl.'s Rule 56, 1 Response, Ex. B.) Attached to this cover
sheet is an insurance application undisputedly prepared by Conseco. On
its face, the Cole fax states that the sender is merely conveying
information to Keystone, Nothing in the Cole fax suggests that the sender
is anything but a conduit of information.
The second piece of evidence that Keystone cites also fails to support
an inference that EBC is a commercial information provider. It merely
establishes that EBC served as "agent of record" on Keystone's behalf.
But EBC does not dispute that it served as Keystone's agent. In any
event, does not suggest that EBC is a commercial information provider.
Keystone fails to dispute that EBC is in the business of administering
Keystone's self-funded insurance, not supplying information for the
guidance of others in their business dealings. If anything, EEC acted as a mere conduit of information when it relayed
information from Conseco. to Keystone. Where a party acts as "a sort of
informational conduit, and never purports to independently offer
`information' regarding the [matter] it may avoid liability in a
negligent misrepresentation action." Zahorik v. Smith, Barney, Harris,
Upham & Co., Inc., 664 F. Supp. 309, 314 (N.D. Ill 1987). The "commercial
information provider" exception does not apply.
Keystone's breach of contract claim fails because Keystone cannot
establish the existence of a contract. Keystone's negligent
misrepresentation claim fails because Keystone seeks recovery in tort for
purely economic losses and cannot establish that the "commercial
information provider" exception applies. Accordingly, summary judgment is
granted as to Counts IV and V. This resolves all claims against EBC in