United States District Court, N.D. Illinois, Eastern Division
SHO RESTAURANT INC. d/b/a SAKURA RESTAURANT, Plaintiff,
HARLEYSVILLE PREFERRED INSURANCE COMPANY, Defendant.
MEMORANDUM OPINION AND ORDER
DARRAH, United States District Court Judge
January 14, 2016, Plaintiff Sho Restaurant, Inc. filed a
Complaint against Defendant Harleysville Preferred Insurance
Company, alleging breach of contract and violations of 215
ILCS 5/155 for unreasonable and vexatious behavior. Defendant
subsequently filed a counterclaim for declaratory judgment
pursuant to 28 U.S.C. §§ 2201 and 2202 and
Fed.R.Civ.P. 13. Both parties filed motions to dismiss
pursuant to Fed.R.Civ.P. 12(b)(6). For the reasons discussed
below, Plaintiff's Motion  and Defendant's Motion
 are both granted.
is an Illinois corporation with its principal place of
business in Cook County, Illinois. (Dkt. 38 ¶ 4.)
Defendant is a Pennsylvania corporation that is authorized to
do business in Illinois. (Id. ¶ 3.) In January
2011, Plaintiff purchased Sakura Restaurant, which operated
in a commercial building located at 105 Main Street in Mount
Prospect, Illinois (“105 Main”). (Dkt. 23 ¶
6.) Plaintiff leased the building from the Nakamishi Family
Trust. (Id. ¶ 9.) Plaintiff purchased Sakura
Restaurant for $320, 000.00. This purchase price included the
transfer of equipment, a cash register, telephone, credit
card processing machine, furniture, fixtures, supplies,
utensils, business license, liquor license, good will and the
business name. (Id. ¶¶ 8, 9.) Defendant
issued a policy of insurance to Plaintiff with a term of
March 17, 2013 to March 17, 2014 (the “Policy”).
(Dkt. 38 ¶ 9.) In December of 2013, Plaintiff renovated
Sakura Restaurant at a cost of $76, 943. (Dkt. 23 ¶ 11.)
Plaintiff also made $20, 108 in repairs to 105 Main.
(Id. ¶ 12.)
February 9, 2014, a fire occurred at 105 Main, damaging both
the building and Sakura Restaurant. (Id. ¶ 21.)
Plaintiff filed a property loss claim under the Policy for
damage arising from the fire. (Id. ¶ 23.)
Defendant acknowledged Plaintiff's claim in a letter
dated February 11, 2014. On February 20, 2014, Defendant
advised Plaintiff that it would conduct an investigation of
the fire loss subject to a reservation of rights to deny
coverage under the terms of the Policy. (Id. ¶
24.) On or about May 16, 2014, Plaintiff hired a public
adjuster, Kevin Jones & Associates (the “Public
Adjuster”), to assist in the adjustment and handling of
its claim. (Dkt. 38 ¶ 11.) On or about July 10, 2015,
the Public Adjuster submitted a “Business Personal
Property Inventory” to Defendant. (Dkt. 38 ¶ 12.)
Defendant retained CEIPS, LLC to conduct a valuation of
Plaintiff's “Business Personal Property
Inventory”. (Id. ¶ 13.) CEIPS, LLC
concluded that the actual cash value of Plaintiff's
“Business Personal Property” loss was $115,
136.13. (Id. ¶ 14.) Plaintiff later amended its
“Business Personal Property Inventory” to include
a list of consumable products allegedly damaged in the fire.
CEIPS, LLC calculated that the actual cash value of the
consumable products was $15, 535.08. (Id.
¶¶ 16, 17.)
submitted additional claims for loss of its right to use the
“Improvements and Betterments” at 105 Main and
for “Business Income” loss. (Id.
¶¶ 19, 22.) Defendant and the Public Adjuster
agreed that Plaintiff was entitled to a payment of $71,
500.00 for the cost to construct the “Improvements and
Betterments”. The Public Adjuster calculated that the
“Business Income” owed to Plaintiff was $291,
606.00 based on a six-month “Period of
Restoration”. (Id. ¶¶ 20, 23-25.)
Defendant retained an accountant, Michael Webster, to
calculate Plaintiff's “Business Income” loss
resulting from the fire. (Id. ¶ 26.) Webster
calculated a “Business Income” loss of $20,
802.00. (Id. ¶ 27.) Defendant then issued
payments to Plaintiff as follows: $20, 802.00 for
“Business Income” loss; $131, 671.21, less a $1,
000.00 deductible, for loss of “Business Personal
Property”; and $71, 500.00 for loss of use interest in
the “Improvements and Betterments” at 105 Main.
(Id. ¶¶ 15, 16-18, 29.)
14, 2016, Plaintiff filed its First Amended Complaint against
Defendant alleging: (I) Breach of Contract; (II) Unreasonable
and Vexatious Dispute about the Scope of Loss; and (III)
Unreasonable and Vexatious Delay. (FAC.) On July 21, 2016,
Defendant filed a counterclaim for declaratory judgment.
12(b)(6) permits a defendant to move to dismiss a complaint
for “failure to state a claim upon which relief can be
granted.” Fed.R.Civ.P. 12(b)(6). To survive a motion to
dismiss, a complaint must allege “enough facts to state
a claim to relief that is plausible on its face.”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570
(2007). “Threadbare recitals of the elements of a cause
of action, supported by mere conclusory statements, do not
suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678
(2009) (citing Twombly, 550 U.S. at 555). However,
plaintiffs are not required to “plead the elements of a
cause of action along with facts supporting each
element.” Runnion ex rel. Runnion v. Girl Scouts of
Greater Chicago & Nw. Indiana, 786 F.3d 510, 517
(7th Cir. 2015). Rather, the complaint must provide a
defendant “with ‘fair notice' of the claim
and its basis.” Tamayo v. Blagojevich, 526
F.3d 1074, 1081 (7th Cir. 2008) (quoting Fed.R.Civ.P. 8(a)(2)
and Twombly, 550 U.S. at 555). When evaluating a
Rule 12(b)(6) motion, the court accepts the complaint's
well-pleaded factual allegations as true and draws all
reasonable inferences in the plaintiff's favor.
Twombly, 550 U.S. at 555-56.
reviewing a motion to dismiss a counterclaim, the Court must
assume the truth of the facts alleged in the counterclaim,
construe allegations liberally, and view them in the light
most favorable to the counterclaim plaintiff.” See
Centers v. Centennial Mortg., Inc., 398 F.3d 930, 933
(7th Cir. 2005).
Motion to Dismiss
argues that Plaintiff failed to allege any facts to support
its allegations that Defendant engaged in unreasonable and
vexatious behavior while handling Plaintiff's claim.
Section 155 provides that an award of attorney's fees and
costs is appropriate if insurers' actions are
“vexatious and unreasonable.” 215 Ill. Comp.
Stat. 5/155. Attorney's fees and costs may only be
awarded where the evidence shows that the insurer's
behavior was willful and without reasonable cause.
Citizens First Nat. Bank of Princeton v. Cincinnati Ins.
Co., 200 F.3d 1102, 1110 (7th Cir. 2000). The
insurer's conduct is not vexatious and unreasonable if:
“(1) there is a bona fide dispute concerning
the scope and application of insurance coverage; (2) the
insurer asserts a legitimate policy defense; (3) the claim
presents a genuine legal or factual issue regarding coverage;
or (4) the insurer takes a reasonable legal position on an
unsettled issue of law.” Id.
alleges that Defendant unreasonably and vexatiously disputed
the scope of its loss by failing to pay the limits of the
Policy and failing to properly adjust or evaluate its claim.
Plaintiff does not plead any facts to support its
allegations. The Complaint provides no details as how
Defendant allegedly failed to investigate Plaintiff's
claim. Plaintiff alleges that Defendant failed to pay the
limits of the Policy, but makes no allegations as to how this
failure was willful and without reasonable cause. While it is
possible that Defendant did engage in behavior giving ...