United States District Court, N.D. Illinois, Eastern Division
PITTSFIELD DEVELOPMENT, LLC, PITTSFIELD RESIDENTIAL II, LLC, and PITTSFIELD HOTEL HOLDINGS, LLC, Plaintiffs,
THE TRAVELERS INDEMNITY COMPANY, Defendant.
MEMORANDUM OPINION AND ORDER
Z. Lee, United States District Judge.
Pittsfield Development, LLC (“Pittsfield
Development”), Pittsfield Residential II, LLC
(“Pittsfield Residential”), and Pittsfield Hotel
Holdings, LLC (“Pittsfield Hotel”), have filed
this lawsuit against Defendant, The Travelers Indemnity
Company (“Travelers”), for breach of contract
and, in the alternative, reformation of contract. Travelers
has moved to dismiss certain of Plaintiffs' claims
pursuant to Federal Rules of Civil Procedure 9(b), 12(b)(1),
and 12(b)(6). For the following reasons, Travelers's
motion  is granted in part and denied in part.
Development purchased the Pittsfield Building (“the
Building”), located at 55 East Washington Street in
Chicago, Illinois, in 2000. Am. Compl. ¶¶ 1, 12,
ECF No. 25. The Building has since been divided into four
separately deeded subdivisions, three of which are owned by
Plaintiffs: Pittsfield Development owns and operates the
ground floor, the basement, the subbasement, a portion of
floor 22, and all of floors 23-40; Pittsfield Residential
owns floors 10- 12; and Pittsfield Hotel owns and operates
floors 2-9. Id. ¶¶ 1-5, 8-9.
has been Pittsfield Development's insurance carrier since
the purchase of the Building in 2000. Id. ¶ 14.
Pittsfield Development obtained insurance for the Building
through insurance brokers Carbone & Malloy, Inc.
(“Carbone”). Id. ¶ 15. According to
Plaintiffs, Carbone acted as Travelers's agent-not
Plaintiffs'-in the course of these transactions.
Id. ¶ 16.
Development's insurance policy from Travelers provides
that any affiliated companies in which the first named
insured maintains more than 50% ownership interest and has
active management are additional named insureds, provided
that the first named insured notifies Travelers within 90
days from when the affiliate or subsidiary company was
acquired or formed. Id. ¶ 13. Plaintiffs
allege, however, that while preparing insurance applications
for Pittsfield Development, Carbone erroneously listed
“Pittsfield Building, LLC” as the first named
insured on the policy--but that entity does not exist and did
not exist at the time the policy was first issued.
Id. ¶¶ 18-19. Plaintiffs state that they
repeatedly asked Travelers to correct this error, but it was
never fixed. Id. ¶ 20.
2-9 of the Building were conveyed to Pittsfield Hotel in
2015, and Plaintiffs allege that Pittsfield Development
timely notified Carbone of the change. Id. ¶
22. Subsequently, in June 2016, Carbone prepared another
application for insurance coverage (the
“Application”) for the Building. Id.
¶ 23. The Application again incorrectly listed
Pittsfield Building, LLC as the first insured, and listed
Pittsfield Development and Pittsfield Residential as
additional insureds. See id., Ex. 2
(“Application”) at 2, ECF No. 25-2. Pittsfield
Hotel was not listed on the Application, but the building
description included “offices 2-8th flr's”
and “9-12th apts, ” id. at 3, and
Pittsfield Hotel owns floors 2-9. Am. Compl. ¶ 4. After
receiving the Application, Travelers issued an insurance
policy (the “Policy”) covering the Building
through July 2017. Id. ¶ 24. The Policy
provided coverage for physical loss or damage to the
Building, including floors 2-9. Id. ¶¶ 25-
28. In accordance with the Application, the first named
insured on the Policy was Pittsfield Building, LLC. See
id., Ex. 1 (“Policy”) at 2, ECF No. 25-1.
pipes burst on the tenth floor of the Building on December
17, 2016, causing water damage to floors 1-10. Am. Compl.
¶¶ 33-34. Plaintiffs notified Travelers of the
damage on the day it occurred. Id. ¶ 35.
Travelers's claims adjuster inspected the property on
January 23, 2017. Id. ¶ 38. In July 2017,
Plaintiffs sent Travelers an estimate of their damages, in
the amount of $8, 592, 961.40. Id. ¶ 41. The
next month, Travelers sent Plaintiffs checks for $147, 589.04
and $43, 212.74, for partial payment of the damages.
Id. ¶¶ 43, 45. It then sent a final check
and estimate of damages to Plaintiffs in January 2018.
Id. ¶ 46. Travelers estimated the total amount
of damages at $401, 537.95. Id. ¶ 46.
Plaintiffs attribute the discrepancy between the two
estimates to the fact that Travelers reportedly found that
floors 2-9 were vacant when the damage occurred, and thus
replacement costs could not be claimed for those floors.
Id. ¶¶ 47-48. According to Plaintiffs, the
floors were under construction, not vacant. Id.
filed this action, bringing claims for breach of contract
(Count I) and, in the alternative, reformation of contract
based on mutual mistake (Count II).
Federal Rule of Civil Procedure 12(b)(1)
motion to dismiss under Rule 12(b)(1) tests the
jurisdictional sufficiency of the complaint. “When
ruling on a motion to dismiss for lack of subject-matter
jurisdiction under [Rule] 12(b)(1), the district court must
accept as true all well-pleaded factual allegations, and draw
reasonable inferences in favor of the plaintiff.”
Ezekiel v. Michel, 66 F.3d 894, 897 (7th Cir. 1995).
But the court “may properly look beyond the
jurisdictional allegations of the complaint and view whatever
evidence has been submitted on the issue to determine whether
in fact subject matter jurisdiction exists.”
Capitol Leasing Co. v. F.D.I.C., 999 F.2d 188, 191
(7th Cir. 1993) (quoting Grafon Corp. v. Hauserman,
602 F.2d 781, 783 (7th Cir. 1979)).
the complaint is formally sufficient but the contention is
that there is in fact no subject matter
jurisdiction, the movant may use affidavits and other
material to support the motion.” United Phosphorus,
Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir.
2003) (emphasis in original), overruled on other grounds
by Minn-Chem, Inc. v. Agrium, Inc., 683 F.3d 845, 848
(7th Cir. 2012). “The burden of proof on a 12(b)(1)
issue is on the party asserting jurisdiction.”
Federal Rules of Civil ...