American Inter-Fidelity Corp v. M.L. Sullivan Insurance Agency, Inc.
1:15-cv-04545
| N.D. Ill. | Jun 9, 2017Background
- AIFE, an insurer of trucking carriers, calculates premiums by vehicles and miles; it alleges broker-defendants collected correct figures from carriers but underreported to AIFE and remitted lower premiums, keeping the difference.
- Defendants: M.L. Sullivan Insurance Agency (Sullivan), Transportation Insurance Solutions (TIS), and agent Sebastian Miklowicz. TIS is newly named; relationship to Sullivan unclear.
- Fourth Amended Complaint asserts multiple claims: Consumer Fraud Act, breach of contract (withdrawn), accounting, conversion, breach of fiduciary duty, constructive trust (as remedy), unjust enrichment, negligent misrepresentation, negligent supervision, fraud against Miklowicz, and constructive trust against Miklowicz.
- Defendants moved to dismiss several counts; the court reviewed earlier dismissal rulings and limited briefing to the current complaint.
- Court dismissed: Count I (ICFA), Count II (withdrawn), Count IV (conversion), Count VI and XI (constructive trust claims as standalone remedies), and Count VIII (negligent misrepresentation). Court allowed to proceed: accounting (Count III), unjust enrichment (Count VII), breach of fiduciary duty (survives per discussion), negligent supervision and fraud-related claims where pleaded (survival referenced generally).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether ICFA applies to insurer’s claim that brokers underreported risk and withheld premiums | AIFE: broker scheme deceived parties and harmed insured carriers and consumer interests | Defendants: harm was to insurer (lost premiums); insured consumers were not harmed, so ICFA not implicated | Dismissed — ICFA requires consumer-protection injury; here alleged injury primarily to insurer, not consumers (Count I dismissed) |
| Whether accounting is appropriate | AIFE: equitable accounting needed due to disputed, voluminous records and possible fiduciary breach; remedy at law may be inadequate | Defendants: no lack of legal remedy; discovery ongoing so accounting unnecessary | Denied — factual complexity, disputed sums, and potential fiduciary issues justify an accounting (Count III survives) |
| Whether conversion claim (money allegedly withheld) is viable | AIFE: defendants wrongfully took premiums payable to AIFE | Defendants: money claims not specific chattel; conversion requires identifiable specific fund | Dismissed — amount not sufficiently specific/identifiable at pleading; conversion unavailable (Count IV dismissed) |
| Whether constructive trust may be pleaded as standalone claim | AIFE: seeks constructive trust over wrongfully retained funds | Defendants: constructive trust is remedy, not independent claim | Dismissed without prejudice as a standalone claim; constructive trust may be imposed as remedy if plaintiff prevails on substantive claims (Counts VI & XI dismissed) |
| Whether unjust enrichment is an independent claim here | AIFE: unjustly retained premiums enriched defendants at AIFE’s expense | Defendants: unjust enrichment is merely a remedy | Survives — court follows Seventh Circuit view recognizing unjust enrichment as an independent cause of action (Count VII survives) |
| Whether negligent misrepresentation against broker survives | AIFE: broker supplied false mileage/units and thus supplied misleading business information | Defendants: broker was merely a conduit of carrier-provided data, not a commercial information provider | Dismissed — plaintiff failed to allege broker acted as an information provider for others’ guidance (Count VIII dismissed) |
Key Cases Cited
- Roppo v. Travelers Co., 100 F. Supp. 3d 636 (N.D. Ill.) (ICFA requires consumer-protection concerns to be implicated)
- Moorman Mfg. Co. v. Nat'l Tank Co., 91 Ill. 2d 69 (Ill. 1982) (negligent misrepresentation requires defendant be in the business of supplying information for others' business decisions)
- Horbach v. Kaczmarek, 288 F.3d 969 (7th Cir. 2002) (conversion for money requires a specific, identifiable fund or chattel)
- Cleary v. Philip Morris Inc., 656 F.3d 511 (7th Cir. 2011) (recognizes unjust enrichment as an independent cause of action under Illinois law)
- Addante v. Pompilio, 303 Ill. App. 172 (Ill. App. Ct.) (conversion sustained where plaintiff’s deposit was a specific, undisputed sum)