Automated Summary
Transaction Type
Commercial property insurance policy renewal for Hampton Inn hotel
Key Facts
On July 28, 2023, Plaintiff Pramukhraj Huron LLC renewed a commercial insurance policy with Defendant Selective Insurance Company of America to cover a Hampton Inn hotel at 5723 Heritage Crossing Dr., Glen Carbon, Illinois, with coverage from August 9, 2023 to August 9, 2024 and monthly premiums of $3,624.00. On July 28, 2024, a water pipe ruptured causing water damage to multiple areas across two floors, including guest rooms, hallways, and common areas. Defendant paid $106,335.54 after a $5,000 deductible following a statement of loss totaling $111,335.54, while Plaintiff's adjuster estimated damages at $347,320.26. Defendant denied coverage for certain damages, claiming the pipe failed from vibrations from a booster pump, but failed to provide evidence or professional opinion to support this claim. Plaintiff filed a complaint on May 1, 2025 alleging breach of contract, common law fraud, violation of the Illinois Consumer Fraud and Deceptive Business Practice Act, and unjust enrichment. The Court granted Defendant's Motion to Dismiss Counts 2, 3, and 4 without prejudice, finding the ICFA and common law fraud claims preempted by § 155 of the Illinois Insurance Act, and unjust enrichment claim failed due to express contract allegations.
Issues
- The Court evaluated whether Plaintiff's unjust enrichment claim can proceed when it includes allegations of an express contract governing the relationship. The Court concluded that unjust enrichment is unavailable when an express contract exists, as the doctrine applies only when no adequate remedy at law exists. Since Plaintiff's unjust enrichment claim incorporated breach of contract allegations and referenced the insurance policy ten times, the Court determined that the claim fails because it cannot coexist with an express contract claim.
- The Court examined whether Plaintiff Pramukhraj Huron LLC's claim under the Illinois Consumer Fraud and Deceptive Business Practice Act (ICFA) is preempted by § 155 of the Illinois Insurance Act. The Court concluded that the ICFA claim is preempted because Plaintiff based it on Defendant's failure to pay in accordance with insurance policy obligations, which constitutes a breach of contract claim rather than an independent tort. The Court found that an action seeking compensatory damages available under the insurance policy is preempted by section 155 of the Illinois Insurance Act.
- The Court analyzed whether Plaintiff's common law fraud claim faces preemption under § 155 of the Illinois Insurance Act. Since the fraud claim mirrors the ICFA claim and seeks identical relief, the Court determined that the common law fraud claim is also preempted by § 155. The Court found that Plaintiff's fraud allegations were based on the same conduct as the ICFA claim—specifically Defendant's failure to pay under the insurance policy—and therefore sought the same damages, making the fraud claim subject to the same preemption analysis.
Holdings
The Court granted Defendant Selective Insurance Company of America's Motion to Dismiss, dismissing Counts 2 (common law fraud), 3 (Illinois Consumer Fraud and Deceptive Business Practice Act), and 4 (unjust enrichment) without prejudice. The ICFA and common law fraud claims were preempted by § 155 of the Illinois Insurance Act. The unjust enrichment claim was dismissed because it included allegations of an express contract. Plaintiff shall have until January 8, 2026, to file an amended complaint alleging sufficient facts to state a claim with respect to these counts.
Remedies
The Court GRANTS Defendant Selective Insurance Company of America's Motion to Dismiss (Doc. 17). Counts 2, 3, and 4 of Plaintiff's complaint are dismissed without prejudice. Plaintiff shall have up to and including January 8, 2026, to file an amended complaint that alleges sufficient facts to state a claim with respect to these counts.
Legal Principles
- Section 155 of the Illinois Insurance Act provides an extracontractual remedy to policyholders whose insurer's refusal to recognize liability and pay a claim under a policy is vexatious and unreasonable. An action which seeks as compensatory damages the same relief as available under the insurance policy is preempted by section 155. Claims based on an insurer's failure to pay in accordance with its obligations under the Policy, including claims alleging the insurer lied after the fact to avoid paying a claim, amount to no more than a claim for denial of benefits and breach of contract and are preempted by § 155. The ICFA claim, common law fraud claim, and unjust enrichment claim are all preempted or dismissed because they seek the same relief as available under the insurance policy or include allegations of an express contract.
- Federal Rule of Civil Procedure 9(b) requires a plaintiff alleging fraud to state with particularity the circumstances constituting fraud. This requires describing the who, what, when, where, and how of the fraud. The particularity requirement ensures plaintiffs do their homework before filing suit and protects defendants from baseless suits that tarnish reputations. For fraud claims, a more demanding standard applies than for other claims.
- When reviewing a Rule 12(b)(6) motion to dismiss, the Court accepts as true all allegations in the complaint. A complaint must contain a short and plain statement of the claim showing that the pleader is entitled to relief, describing the claim in sufficient detail to give the defendant fair notice of what the claim is and the grounds upon which it rests, and plausibly suggesting that the plaintiff has a right to relief above a speculative level.
Precedent Name
- Leona's Pizzeria, Inc. v. Nw. Nat. Cas. Co.
- Anchor Mortg. Corp. v. Certified Credit Reporting, Inc.
- Mazur v. Hunt
- Siegel v. Levy Org. Dev. Co.
- Bell Atl. Corp. v. Twombly
- Underwriters Lab 'ys, Inc. v. Solarcom LLC
- Pirelli Armstrong Tire Corp. Retiree Med. Benefits Tr. v. Walgreen Co.
- Breeze v. Bayco Products Inc.
- Young v. Allstate Ins. Co.
- Ashcroft v. Iqbal
- Cramer v. Ins. Exch. Agency
- Commonwealth Ins. Co. v. Stone Container Corp.
- EEOC v. Concentra Health Servs., Inc.
- Erickson v. Pardus
- Nesby v. Country Mut. Ins. Co.
- Guinn v. Hoskins Chevrolet
Cited Statute
Illinois Insurance Act
Judge Name
J. Phil Gilbert
Damages / Relief Type
Plaintiff sought compensatory damages totaling $240,984.72 (difference between property damage estimate of $347,320.26 and insurance payment of $106,335.54). Court dismissed claims without prejudice.
Passage Text
- Plaintiff's ICFA claim is preempted by § 155 of the Illinois Insurance Act because the alleged fraud has added nothing—the relief sought is the exact same as in the breach of contract claim, and the statute precludes extracontractual remedies when the claim seeks the same relief available under the insurance policy.
- The Court concludes that Plaintiff's unjust enrichment claim fails because it includes allegations of an express contract. The doctrine of unjust enrichment has no application when there is a specific contract governing the relationship of the parties, and Plaintiff's count makes ten references to the Policy and incorporates breach of contract allegations.
- The Court grants Defendant's Motion to Dismiss (Doc. 17). Counts 2, 3, and 4 of Plaintiff's complaint are dismissed without prejudice. Plaintiff shall have up to and including January 8, 2026, to file an amended complaint that alleges sufficient facts to state a claim with respect to these counts.