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Restoration Specialists, LLC v. Hartford Fire Insurance Co. and Napco

January 31, 2011

RESTORATION SPECIALISTS, LLC, PLAINTIFF,
v.
HARTFORD FIRE INSURANCE CO. AND NAPCO, LLC, DEFENDANTS.
NAPCO, LLC,
THIRD-PARTY PLAINTIFF,
v.
MICHAEL A. KOGEN, INDIVIDUALLY AND AS AN AGENT OF MCHENRY INSURANCE SERVICES, INC., THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Hon. Robert M. Dow

MEMORANDUM OPINION AND ORDER

Before the Court are motions to dismiss filed by third-party defendant Michael A. Kogen ("Kogen") [89] and by third-party defendant McHenry Insurance Services, Inc. ("McHenry"). Both motions seek to dismiss a third-party complaint filed against them by third party plaintiff NAPCO, LLC ("NAPCO"). For the reasons stated below, each motion [89, 91] is granted and in part and denied in part.

Background*fn1

Few facts are needed to resolve the instant motions; accordingly the Court will keep this section very brief.*fn2 This matter arises out of an insurance coverage dispute between Plaintiff Restoration Specialists, LLC ("Restoration") and its insurer, Hartford Fire Insurance Co. ("Hartford"), over Hartford's refusal to pay an insurance claim stemming from a porch collapse that occurred on June 29, 2003. The insurance policy at issue was procured from Defendant Hartford Fire Insurance Co. ("Hartford") with the assistance of Kogen, a licensed insurance agent working for McHenry, and NAPCO, an insurance broker. Restoration, through its Second Amended Complaint [71], seeks money damages from Hartford for unreasonable and vexatious delay in denying insurance benefits and seeks reformation of the Hartford policy to clarify that Restoration is an insured. On December 8, 2008, Restoration added NAPCO as a defendant. Restoration alleges that NAPCO, as its insurance broker, was negligent, breached its fiduciary duty, and breached its contract with Restoration in failing to ensure that the Hartford policy clearly listed Restoration as a named insured. On November 10, 2009, following a denial of its motion to dismiss, NAPCO answered Restoration's complaint and asserted affirmative defenses.

On March 1, 2010, NAPCO filed a two-count third-party complaint asserting claims against Kogen and McHenry [69]. NAPCO seeks contribution from Kogen and McHenry based upon alleged breaches of fiduciary duty to Restoration (Count I) and negligence (Count II) in, inter alia,failing to acquire insurance that clearly listed Restoration as an insured under the policy, failing to instruct NAPCO on how to structure the policy, failing to communicate with NAPCO on the particulars of the required policy, and failing to ensure that NAPCO made certain that Restoration was a named insured. It is to this complaint that the instant motions to dismiss are directed.

The two motions to dismiss raise two identical arguments, so the Court will address them together. First, Kogen and McHenry argue that NAPCO's complaint is time barred by the two-year statute of limitations for actions against insurance providers found in 735 ILCS 5/13-214.4. Second, Kogen and McHenry argue that NAPCO's breach of fiduciary duty claim is barred by the Illinois Insurance Placement Liability Act ("IIPLA"), 735 ILCS 5/2-2201(b).

II. Legal Standard for Rule 12(b)(6) Motions to Dismiss

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." 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 Servs., Inc., 496 F. 3d 773, 776 (7th Cir. 2007) (quoting Twombly, 550 U.S. at 555, 569 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 562. The Court accepts as true all of the well-pleaded facts alleged by the plaintiff and all reasonable inferences that can be drawn therefrom. See Barnes v. Briley, 420 F. 3d 673, 677 (7th Cir. 2005).

III. Analysis

A. Statute of Limitations

Kogen and McHenry argue that NAPCO's complaint is time barred by the two-year statute of limitations for actions against insurance providers found in 735 ILCS 5/13-214.4.

NAPCO responds (in part) that its claims are timely because they are governed instead by the statute of limitations for actions for contribution and indemnity, 735 ILCS 5/13-204. The Court must therefore decide which statute of limitations applies to NAPCO's claims.*fn3

Actions against insurance producers, limited insurance representatives, and registered insurance firms are governed by 735 ILCS 5/13-214.4, which provides:

All causes of action brought by any person or entity under any statute or any legal or equitable theory against an insurance producer, registered firm, or limited insurance representative concerning the sale, placement, procurement, renewal, cancellation of, or failure to procure any policy of ...


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