52 F.4th 324
7th Cir.2022Background
- Gina Bernacchi, a taxi passenger, was covered under First Chicago Insurance’s uninsured-motorist policy; an Illinois court later held she was covered up to $350,000.
- Bernacchi submitted a demand on Feb. 11, 2021 requesting the $350,000 policy limit (deadline March 30); First Chicago delayed, requested records and interrogatories, and made a $45,000 offer on June 25.
- On May 11, 2021 Bernacchi sued in federal court seeking specific performance directing First Chicago to "adjust her claim" (i.e., admit/deny liability and state compensatory damages and basis).
- At hearings Bernacchi’s counsel confirmed her claim rested on duties in Illinois statutes and administrative regulations rather than on a specific contract provision.
- The district court dismissed, reasoning Bernacchi’s claim relied on Illinois statutes/regulations that do not create a private right of action and that she had not pleaded a contract term requiring a timely adjustment; it denied leave to amend as futile.
- The Seventh Circuit affirmed: the court could resolve the antecedent question about private rights of action; the complaint failed to plead an enforceable contractual duty to adjust claims; amendment would be futile.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court decided on grounds not presented (party-presentation rule) | Bernacchi: court sua sponte dismissed on unbriefed grounds, denying fair notice | First Chicago: parties fully briefed and argued state-law duties; dismissal addressed an antecedent legal question | Court: No violation — parties argued state statutes/regulations and plaintiff admitted reliance on them, so court could decide antecedent issue |
| Whether complaint pleads a contractual basis for specific performance to force claim adjustment | Bernacchi: contract (and arbitration/pay-all-sums provisions) creates duty to adjust claim | First Chicago: complaint cites statutes/regulations, not any contract term requiring timely adjustment | Court: Complaint fails Rule 12(b)(6) — no contract language alleged that is "certain and unambiguous" to compel specific performance |
| Whether cited Illinois statutes/regulations provide a private right of action | Bernacchi: statutes/regulations create enforceable duties or an implied private remedy | First Chicago: those provisions are enforced by the Illinois Department of Insurance and do not create a private cause of action | Court: Statutes/regulations do not confer a private right; enforcement lies with the regulatory agency |
| Whether leave to amend should have been granted | Bernacchi: proposed counts (breach via implied covenant; implied private right) could cure defects | First Chicago: proposed amendments would be futile | Court: Denial affirmed — implied covenant gives no independent claim under Illinois law; implied private-right claim fails the four-factor test and is precluded by statutory enforcement scheme |
Key Cases Cited
- United States v. Sineneng-Smith, 140 S. Ct. 1575 (2020) (party-presentation rule and limits on courts acting beyond parties’ framing)
- U.S. Nat’l Bank of Oregon v. Indep. Ins. Agents of Am., Inc., 508 U.S. 439 (1993) (courts may resolve antecedent dispositive legal issues not briefed by parties)
- Cefalu v. Breznik, 154 N.E.2d 237 (Ill. 1958) (specific-performance requires a contract certain and unambiguous in terms)
- Weis v. State Farm Mut. Ins. Co., 776 N.E.2d 309 (Ill. Ct. App. 2002) (violations of Title 50 Illinois Administrative Code do not create a private cause of action)
- Am. Serv. Ins. Co. v. Passarelli, 752 N.E.2d 635 (Ill. Ct. App. 2001) (statutory claim-practice provisions vest enforcement with State Director of Insurance rather than private suits)
- Fox v. Heimann, 872 N.E.2d 126 (Ill. Ct. App. 2007) (implied covenant of good faith and fair dealing is not an independent cause of action under Illinois law)
- Marque Medicos Fullerton, LLC v. Zurich Am. Ins. Co., 83 N.E.3d 1027 (Ill. Ct. App. 2017) (factors for implying a private right of action must all be met)