3:15-cv-50110
N.D. Ill.Jan 4, 2016Background
- Plaintiff LaWanda Lacy bought "gap" (loan/lease payoff) coverage from Progressive and later suffered a total loss while owing more on the vehicle than its actual cash value.
- Lacy alleges Progressive misrepresented coverage in three ways: (1) the website option was titled "Loan/Lease Payoff" (suggesting full payoff), (2) a March 2011 rules-and-rate filing omitted 25% limiting language, and (3) a claims adjuster told her the entire indebtedness would be covered when her car was totaled (later revised).
- Progressive moved to dismiss for failure to state claims, arguing the website heading and adjuster statement cannot support justifiable reliance and that the rules-and-rate filing is not the required policy filing and therefore cannot be the basis for reliance or proximate causation.
- Lacy did not respond to defendants’ arguments about the website heading and the adjuster’s statement and thus abandoned those theories; the court dismissed claims based on those theories with prejudice.
- The court focused on the rules-and-rate filing theory: rules-and-rate filings need not contain policy language, Lacy pleaded no facts showing she knew of that filing at purchase, and she alleged no proximate causation from that omission.
- The court dismissed remaining claims without prejudice but granted Lacy leave to amend by January 29, 2016 (noting amendment may be unlikely to cure defects).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the website heading and adjacent link/supporting text can support justifiable reliance for misrepresentation claims | Lacy contends the "Loan/Lease Payoff" title misled her to expect full payoff coverage | Progressive says the site contained clear terms accessible via link next to the click point and the heading alone is insufficient to create justifiable reliance | Court: Lacy abandoned this argument by failing to respond; claims based on website heading dismissed with prejudice |
| Whether the claims adjuster’s oral statement supports reliance/damages | Lacy alleges the adjuster told her full indebtedness would be covered at time of loss | Progressive argues the adjuster’s statement occurred after purchase and therefore cannot have induced purchase reliance | Court: Lacy abandoned this argument by not responding; claims based on adjuster dismissed with prejudice |
| Whether omission of limiting language from a rules-and-rate filing can support misrepresentation/consumer-fraud claims | Lacy relies on Progressive’s March 2011 rules-and-rate filing omitting the 25% limitation as the actionable representation | Progressive argues rules-and-rate filings are not required to contain policy language and the operative policy/declarations (which do contain the limit) control; omission from a non-policy filing cannot support reliance or causation | Court: Dismissed claims based on this filing for failure to plausibly allege reliance or proximate causation, but dismissal without prejudice to amend |
| Whether Lacy plausibly alleged she knew of the rules-and-rate filing when purchasing coverage (necessary for reliance) | Lacy did not allege knowledge of the filing at purchase | Progressive emphasizes lack of allegation of knowledge and lack of causal link to purchase decision | Court: Found no allegation of knowledge; lack of reliance and proximate causation is fatal to misrepresentation and consumer-fraud claims |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
- Ashcroft v. Iqbal, 556 U.S. 662 (pleading standard and judicial experience/common sense)
- Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614 (Seventh Circuit pleading principles)
- Adams v. City of Indianapolis, 742 F.3d 720 (documents referenced in complaint may be considered on motion to dismiss)
- Alioto v. Town of Lisbon, 651 F.3d 715 (failure to respond waives arguments)
- Bonte v. U.S. Bank, N.A., 624 F.3d 461 (failure to respond to motion arguments results in waiver)
- Cocroft v. HSBC Bank USA, N.A., 796 F.3d 680 (Illinois consumer fraud requires deception to proximately cause injury)
- Jane Doe-3 v. McLean Cnty. Unit Dist. No. 5 Bd. of Dirs., 2012 IL 112479 (fraudulent and negligent misrepresentation require reliance)
- Campione v. Lincoln Nat’l Life Ins. Co., 58 Ill. App. 3d 688 (policy filings vs. contract language; missing exclusions in filings may raise enforceability issues)