70th Court Industrial Condominium 2 v. Travelers Casualty Insurance Company of America, 1:16-cv-06483

Plaintiff 70th Court Industrial Condominium #2 owned a commercial building insured by Travelers for policy period Feb 12, 2014–Feb 12, 2015.
On May 20, 2014, hail damaged the building’s roof and HVAC units; an inspection reported hail impacts, cracked skylight covers, and dents on units.
Plaintiff submitted a claim asserting the damage was covered; Travelers declined to pay the amount plaintiff sought.
Plaintiff sued for breach of contract and for extra-contractual relief under Section 155 of the Illinois Insurance Code, alleging Travelers’ claim handling was vexatious and unreasonable.
Complaint alleged statutory claim-practice violations (paragraphs 28–29) and that defendant’s investigators took oblique/distant photos that minimized damage (paragraph 30).
Travelers moved to dismiss the Section 155 count for failure to plead factual allegations showing vexatious or unreasonable conduct; the Court granted the motion but gave leave to amend.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether plaintiff pleaded sufficient facts to state a Section 155 claim	Plaintiff says Travelers acted vexatiously and unreasonably by misrepresenting coverage, delaying/undervaluing the claim, failing reasonable investigation, and taking minimizing photos	Travelers argues the complaint is conclusory (statutory recitations) and paragraph 30 lacks context or connection to claim denial	Dismissed: allegations are conclusory and lack factual detail to plausibly show vexatious/unreasonable conduct; leave to amend granted
Whether statutory recitations (¶¶ 28–29) suffice	Those paragraphs identify specific improper claim practices under 215 ILCS 5/154.6	Reciting code provisions without factual support is insufficient notice pleading	Dismissed: mere recitation of code violations is inadequate to plead a Section 155 claim
Whether the photo allegation (¶ 30) alone states a claim	Plaintiff asserts investigators took photos at oblique/distant angles to minimize damage appearance	Travelers notes plaintiff did not allege photos were relied on to deny or deprive coverage and plaintiff did not defend the allegation in response brief	Dismissed: photo allegation, without showing it affected claim handling or denial, is insufficient; plaintiff’s silence in briefing waives reliance on it
Whether plaintiff may amend	N/A	N/A	Court allows amendment consistent with Rule 11 by a set date (May 9, 2017)

Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for pleadings)
Ashcroft v. Iqbal, 556 U.S. 662 (plausibility and rejection of conclusory allegations)
Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017 (Section 155 is an extracontractual remedy for vexatious and unreasonable insurer conduct)
Citizens First Nat’l Bank of Princeton v. Cincinnati Ins. Co., 200 F.3d 1102 (examples of when insurer conduct is not vexatious)
Richards v. Mitcheff, 696 F.3d 635 (Rule 12(b)(6) and notice-pleading principles)
Smith v. Equitable Life Assurance Soc’y of the U.S., 67 F.3d 611 (investigation failures can support bad-faith claims)
Buais v. Safeway Ins. Co., 275 Ill. App. 3d 587 (Illinois case recognizing failure to investigate can state a Section 155 claim)