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Labella Winnetka, Inc. v. General Casualty Insurance Co.

August 19, 2009

LABELLA WINNETKA, INC., PLAINTIFF,
v.
GENERAL CASUALTY INSURANCE COMPANY, DEFENDANT.



The opinion of the court was delivered by: Robert M. Dow, Jr. United States District Judge

Judge Robert M. Dow, Jr.

MEMORANDUM OPINION AND ORDER

This case arises out of a five-count complaint filed by Plaintiff, LaBella Winnetka, Inc., against Defendant, General Casualty Insurance Company, for violations of state contract and tort law. The Court has jurisdiction based on diversity of citizenship. 28 U.S.C. § 1332.

Before the Court are Defendant' s motion to dismiss Count III of Plaintiff's complaint [22], as well as Defendant' s motion to dismiss Counts IV and V of Plaintiff's complaint [20].

For the reasons stated below both motions are denied.

I. Background*fn1

Plaintiff operates an Italian restaurant in Winnetka, Illinois. (Compl. ¶ 1.) Plaintiff had leased the same premises for its operations since 1993. (Id. ¶ 5.) In September 2006, Plaintiff obtained an insurance policy ("the Policy") from William Riordan, an agent of Defendant. The Policy provided one year' s coverage for, among other things, loss of business property, loss of improvements made by the tenant to the property, and loss of business income. (Id. ¶¶ 9-10.)

The complaint alleges that while the Policy was in force, a third-party roofing company's employee negligently started a fire above Plaintiff's premises, causing fire, smoke, and water damage. (Compl. ¶ 12.) Plaintiff had to close its restaurant on that day and cease its operations. (Id.) Plaintiff notified Defendant of the fire and made claims for coverage up to the policy limits, which Plaintiff claims are owed under the terms of the policy. (Id. ¶¶ 21-22.) Defendant has refused to pay the full amount that it owes. (Id. ¶ 37.)

The complaint further alleges that in order to avoid full payment to Plaintiff, Defendant purposely obstructed Plaintiff's attempts to move back into the premises and reopen its restaurant, and it refused to assist Plaintiff in attempting to move to a new location to reopen its restaurant. (Compl. ¶ 42.) More specifically, after the fire, Defendant learned through its adjustor, William Jensen, that Plaintiff's landlord did not intend to replace the roof and, pursuant to the lease agreement, planned to terminate the lease because of the damage caused by the fire. (Id. ¶ 39.) Defendant took no action to inform Plaintiff of the landlord's plans, nor did Defendant fulfill its duty to file an injunction against the landlord. (Id. ¶¶ 40, 42(D).) Plaintiff alleges that Defendant had the "intent and purpose that [Plaintiff] would rely on the representations and public statements of [Defendant] and William Jensen and be lulled into inaction by the intentional failure to provide the information [Plaintiff] required in order to protect itself."(Id. ¶ 48.)

According to Plaintiff, after making partial payment to Plaintiff, Defendant filed a subrogation lawsuit against the third party roofing company that caused the fire above Plaintiff's premises. Defendant filed the suit without Plaintiff's consent, approval, or knowledge. (Compl. ¶¶ 29-30.) Plaintiff alleges that Defendant knew that the roofing company had minimal insurance coverage and filed the lawsuit in order to minimize its own liability to Plaintiff. (Id. ¶ 31.)

Plaintiff's complaint contains five counts: (I) breach of contract for failure to provide coverage; (II) unreasonable and vexatious delay under 215 ILCS 5/155; (III) breach of contract for filing subrogation lawsuit; (IV) fraud; and (V) consumer fraud pursuant to Illinois' Consumer Fraud Act, 815 ILCS 505/2. Before the Court are Defendant' s motions to dismiss the third [22], fourth, and fifth counts [20].

II. Legal Standard on a Rule 12(b)(6) Motion

A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the sufficiency of the complaint, not the merits of the case. See Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). To survive a Rule 12(b)(6) motion to dismiss, the complaint first must comply with Rule 8(a) by providing "a short and plain statement of the claim showing that the pleader is entitled to relief" (Fed. R. Civ. P. 8(a)(2)), such that the defendant is given "fair notice of what the * * * claim is and the grounds upon which it rests."

*fn2 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Second, the factual allegations in the complaint must be sufficient to raise the possibility of relief above the "speculative level," assuming that all of the allegations in the complaint are true. E.E.O.C. v. Concentra Health Svcs., Inc., 496 F.3d 773, 776 (7th Cir. 2007) (quoting Twombly, 127 S.Ct. at 1965, 1973 n.14). "[O]nce a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint." Twombly, 550 U.S. at 563. The Court accepts as true all of the ...


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