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Gore v. Indiana Insurance Co.

September 5, 2007

JACK GORE, BENEFICIARY OF BANK OF RAVENSWOOD (N/K/A LASALLE NATIONAL BANK) TRUST NO. 25-7597, AND JACK GORE D/B/A JMC REALTY, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF-APPELLANT,
v.
INDIANA INSURANCE COMPANY, AN INDIANA CORPORATION, AND OLD REPUBLIC INSURANCE COMPANY, A PENNSYLVANIA CORPORATION, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County No. 05 CH 3204 Honorable Martin S. Agran, Judge Presiding.

The opinion of the court was delivered by: Presiding Justice Theis

Published opinion

Plaintiff Jack Gore (Gore) appeals from the order of the circuit court dismissing his third amended complaint, pursuant to section 2-615 of the Code of Civil Procedure (Code) (735 ILCS 5/2-615 (West 2004)), in which he claimed that Indiana Insurance Company (Indiana) and Old Republic Insurance Company (Old Republic) (collectively, defendants) breached their insurance contracts with him by violating the implied duty of good faith and fair dealing. Additionally, he sought a declaration that defendants were obligated to refund to him that portion of the unearned insurance premiums attributable to an unconstitutional tax levy. On appeal, Gore contends that the circuit court erred in dismissing his complaint because (1) he stated a valid claim for breach of contract based on the implied duty of good faith and fair dealing; and (2) he has sufficiently pled several legal theories to support a declaratory judgment action. For the following reasons, we affirm.

BACKGROUND

Gore purchased a series of annual property insurance policies from defendants covering the period from August 1993 to August 1998. Defendants are insurance companies incorporated in other states doing business in Illinois. During the relevant time period of August 1993 to August 1997, defendants, as foreign insurance companies, paid a tax equal to 2% of their net income from insurance premiums for the privilege of doing business in Illinois (privilege tax) pursuant to section 409 of the Illinois Insurance Code (Insurance Code) (215 ILCS 5/409 (West 1996)).

In 1997, the supreme court held that the privilege tax, as then written, was an unconstitutional violation of the uniformity of taxation clause of the Illinois Constitution (Ill. Const. 1970, art. IX, §2). Milwaukee Safeguard Insurance Co. v. Selcke, 179 Ill. 2d 94, 104-05, 688 N.E.2d 68, 73 (1997). Following the supreme court's holding in Selcke, section 409 was amended and defendants were required to pay the privilege tax at a reduced rate of 0.5% of their net premium income. 215 ILCS 5/409 (West 1998).

Gore, and a proposed class of similarly situated insureds, sued defendants to recover the amount of the excess privilege tax they claim to have paid in the form of higher insurance premiums. Specifically, Gore alleged that defendants passed the privilege tax on to them as an "undisclosed pass-through charge" included in the insurance premiums they paid. Gore pursued various causes of action in law and equity in the original complaint and the first and second amended complaints based upon the same set of alleged facts. The circuit court dismissed all of Gore's prior complaints.

Gore then filed a third amended complaint (complaint), in which he asserted a claim for breach of contract based on defendants' alleged breach of the implied covenant of good faith and fair dealing. The complaint also included a declaratory judgment count in which Gore sought a declaration of the "parties' relevant rights and obligations under Illinois law."

Gore attached to his complaint two "exemplary" insurance contracts, one from each defendant. The representative Indiana contract covered the period from August 29, 1993, to August 29, 1994, and listed the address of the premises covered, the type of coverage provided, the coverage limits of the policy, and a composite premium price. The Old Republic contract covered the period from August 29, 1997, to August 29, 1998, and contained the same information as the Indiana contract. Additionally, both contracts contained the same statement: "In return for the payment of the premium, and subject to all the terms of this policy, we agree with you to provide the insurance as stated in this policy." Neither contract itemized the charges included in the premium price. Gore did not attach any additional contracts or terms of the insurance coverage to the complaint.

On defendants' motions, the circuit court dismissed the complaint with prejudice and without addressing the issue of class certification. Gore then filed this timely appeal. ANALYSIS

Our standard of review of a motion to dismiss under section 2-615 is de novo. Mid-West Energy Consultants, Inc. v. Covenant Home, Inc., 352 Ill. App. 3d 160, 161, 815 N.E.2d 911, 913 (2004). The question we must address is whether the allegations of the complaint, when viewed in the light most favorable to plaintiff, sufficiently stated a cause of action upon which relief may be granted. Mid-West Energy Consultants, 352 Ill. App. 3d at 161, 815 N.E.2d at 913. The complaint must allege facts in support of the essential elements of a cause of action; however, plaintiff cannot rely on conclusions of fact or law unsupported by factual allegations. Mid-West Energy Consultants, 352 Ill. App. 3d at 161, 815 N.E.2d at 913. Furthermore, 'an actionable wrong cannot be made out merely by characterizing acts as having been wrongfully done.' Unterschuetz v. City of Chicago, 346 Ill. App. 3d 65, 69, 803 N.E.2d 988, 991 (2004), quoting Weidner v. Midcon Corp., 328 Ill. App. 3d 1056, 1059, 767 N.E.2d 815, 819 (2002).

In order to state a claim for breach of contract, a plaintiff must establish: (1) the existence of a valid, enforceable contract; (2) performance of the contract by the plaintiff; (3) a breach by the defendant; and (4) damages resulting from the breach. Unterschuetz, 346 Ill. App. 3d at 69, 803 N.E.2d at 991.

Gore contends that defendants breached the insurance contracts by violating the duty of good faith and fair dealing implied therein. Specifically, he alleged that "by collecting portions of premiums including the unconstitutional [privilege tax]--including for portions collected at pre-1998 levels for policy periods inclusive of 1998 and/or after 1998--[defendants] breached their respective duties of good faith and fair dealing."

It is well established that the duty of good faith and fair dealing is implied in every contract. Dayan v. McDonald's Corp., 125 Ill. App. 3d ...


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