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Eric Malaker, Individually and As Assignee of John Helfrich v. the Cincinnati Insurance Company

April 7, 2011


The opinion of the court was delivered by: Hon. Amy J. St. Eve


AMY J. ST. EVE, District Court Judge:

The present case arises from an incident that occurred on November 6, 2000, between Plaintiff Eric Malaker and Defendant Cincinnati Insurance Company's insured John Helfrich. In March 2001, Defendant denied coverage to Helfrich because it determined that its insured had acted intentionally, such that Malaker's injury was not the result of an "accident." (R. 57 at 7.) It did not credit Helfrich's representation that, in seeking money that Malaker owed him, he inadvertently hit Malaker after he "slipped on a piece of white pipe on the floor." (Id. at 6-7.) The denial-of-coverage letter provided that, "should a lawsuit be filed in connection with this incident, please notify us of the suit immediately, so that we may review the wording of the suit for any possible coverage under your policy." ( 7.)

In October 2002, Malaker sued Helfrich in Ogle County, Illinois. (R. 57 at 8.) John Lowry, who was Helfrich's counsel, "did not tender the tort lawsuit to [Defendant] because of the defendant's letter of March 13, 2001 to Helfrich that denied coverage." (Id.) In his answer, Helfrich admitted that, "on November 6, 2000, he grabbed Plaintiff's shirt and jacket with his hand and pushed Plaintiff," and denied that Malaker "was injured to the extent claimed." (R. 98-1 at 1.)

On July 18, 2003, Malaker filed a second amended complaint against Helfrich, alleging assault and battery, as well as false imprisonment. (R. 57 at 8.) The state-court complaint alleged that Helfrich had grabbed Malaker by the chest, had thrown him against a door jam, and had then thrown him against a steel stud wall. (R. 1-6 at 2.) It further alleged that Helfrich stated words to the effect that "I'm going to take it out of your hide or you're going to pay, your [sic] gonna [sic] pay me you mother __, you're gonna [sic] pay." (Id.) Once more, Lowry did not tender the case to Defendant. (Id. at 9.) In his answer, Helfrich again admitted that, "on November 6, 2000, he grabbed Plaintiff's shirt and jacket with his hand and pushed Plaintiff" and denied that Malaker "was injured to the extent claimed." (R. 98-5 at 3.) He also admitted that "he was in the physical presence of the [p]laintiff" and that "he desired that the plaintiff pay him the disputed funds." (Id. at 4.)

Only on September 28, 2004, did Helfrich's attorneys allegedly notify Defendant of the lawsuit, stating in the relevant letter: "please advise as to your decision regarding coverage at your earliest convenience as the case now is in a posture to continue with discovery, including the depositions of the parties." (R. 57 at 9.) Defendant denies having a record of this letter and two others that Helfrich's attorneys supposedly sent subsequent to September 28, 2004. (Id.) Four years later, Malaker and Helfrich reached a settlement of the lawsuit, agreeing that $5.1 million was a reasonable sum to compensate Malaker. (Id. at 10.) The circuit court then entered an "agreed judgment order" in that amount, pursuant to which Helfrich made a partial payment of $100,000. (Id.) Helfrich has assigned his rights against Defendant to Malaker. (R. 65 at 1.)

Helfrich and Malaker agreed that the former would pursue the remaining $5,000,000 against Defendant. (Id. at 2.)

In the instant case, Malaker in his Complaint ("the operative Complaint") brings, individually and as Helfrich's assignee, claims of breach of contract, bad faith under Section 115 of the Illinois Insurance Code, and breach of fiduciary duty. (R. 57.) Defendant's motion to dismiss Malaker's breach-of-fiduciary-duty claim (R. 63) is currently before the Court.*fn1 For reasons explained below, the Court grants the motion.


"A motion under Rule 12(b)(6) challenges the sufficiency of the complaint to state a claim upon which relief may be granted." Hallinan v. Fraternal Order of Police of Chi. Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). Pursuant to Rule 8(a)(2), a complaint must include "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). As the Seventh Circuit recently explained, this "[r]ule reflects a liberal notice pleading regime, which is intended to 'focus litigation on the merits of a claim' rather than on technicalities that might keep plaintiffs out of court." Brooks v. Ross, 578F.3d 574, 580 (7th Cir. 2009) (quoting Swierkiewicz v. Sorema N.A., 534 U.S. 506, 514 (2002)). This short and plain statement must "give the defendant fair notice of what the claim is and the grounds upon which it rests." Bell Atl. v. Twombly, 550 U.S. 544, 555 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)). Under federal notice-pleading standards, a plaintiff's "factual allegations must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555.

Put differently, a "complaint must contain sufficient factual matter, accepted as true, to 'state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 570); see also Cooney v. Rossiter, 583 F.3d 967, 971 (7th Cir. 2009) (explaining that the amount of factual allegations required to state a plausible claim for relief depends on the complexity of the relevant legal theory). "[W]hen ruling on a defendant's motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint." Erickson v. Pardus, 551 U.S. 89, 94 (2007); Justice v. Town of Cicero, 577 F.3d 768, 771 (7th Cir. 2009) (holding that the court must construe the complaint in the light most favorable to the plaintiff, drawing all reasonable inferences in the plaintiff's favor).

Beyond the requirements of Rule 12(b)(6), Rule 9(b) requires that a plaintiff plead all allegations of fraud "with particularity," although "[m]alice, intent, knowledge, and other conditions of a person's mind may be alleged generally." Fed. R. Civ. P. 9(b). "The rule requires the plaintiff to state the identity of the person who made the misrepresentation, the time, place, and content of the misrepresentation, and the method by which the misrepresentation was communicated to the plaintiff." Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d 771, 777 (7th Cir. 1994) (internal quotations omitted). The Seventh Circuit recently reaffirmed its longstanding principle that a plaintiff subject to Rule 9(b) "ordinarily must describe the 'who, what, when, where, and how' of the fraud." Pirelli Armstrong Tire Corp. Retiree Md. Benefits Trust v. Walgreen Co., 631 F.3d 436, 441-42 (7th Cir. 2011).


The Complaint Fails to State a Claim for Breach of Fiduciary Duty Defendant moves to dismiss Plaintiff's breach-of-fiduciary-duty claim in Count II of the operative Complaint. Cincinnati claims that the alleged facts do not support a reasonable inference that a fiduciary relationship existed between Defendant and Helfrich. (R. 65 at 3-7.) As a result, Defendant argues, the Court should dismiss Count II. (Id. at passim.)

A. The Notice-Pleading Standards of Rule 8 Apply

As an initial matter, Defendant contends-and Plaintiff does not dispute-that breach-offiduciary-duty claims must meet the heightened pleading requirements of Rule 9(b). (R. 65 at 6-7; R. 72 at 7.) The Court disagrees. The underlying claim does not sound in fraud, but instead asserts Defendant's alleged failure to defend. (R. 57.) As such, Plaintiff need not meet the heightened-pleading requirements of Rule (9)(b). See, e.g., Jackson v. N'Genuity Enters., No. 09-CV-6010, 2010 WL 4628668, at *2 (N.D. Ill. Nov. 8, 2010) (observing that "claims of fiduciary duty are subject to the pleading requirements of Rule 9(b) only where the facts underlying the breach involve fraudulent conduct") (citing Robison v. Caster, 356 F.2d 924, 925 (7th Cir. 1966)); Nat'l Council on Comp. Ins., Inc. v. Am. Int'l Grp., Inc., No. 07-CV-2898, 2009 WL 466802, at *17 (N.D. ...

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