Life Plans, Inc. v. Security Life of Denver Insurance Company
1:11-cv-08449
| N.D. Ill. | Jul 12, 2012Background
- 2011 contract where Life Plans, Inc. (plaintiff) agreed to market a specialized policy; Security Life of Denver Insurance Co. (defendant) agreed to underwrite it.
- Plaintiff alleges defendant refused to perform and brings breach of contract and breach of the implied covenant of good faith and fair dealing claims.
- Defendant moves to dismiss under Rule 12(b)(3) and (b)(6) for improper venue and failure to state a claim.
- Delaware law applies due to contract choice-of-law; forum selection clause designates Delaware courts as proper but not exclusive venue.
- Court denies defendant’s motion to dismiss; forum clause is not exclusive, so venue is not improper; Delaware law governs the contract and governing rules of pleading apply to conditions precedent and the implied covenant.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Forum/venue exclusivity under the clause | Delaware courts proper; clause not exclusive | Venue improper by clause | Forum clause not exclusive; venue not dismissed |
| Breach of contract claim and conditions precedent | Plaintiff performed all obligations except where excused or prevented | Condition precedent existence negates breach | Sufficient pleading; need not allege all conditions precedent at this stage |
| Breach of the implied covenant of good faith and fair dealing | Discretion to approve policy must be exercised reasonably | Covenant inapplicable where contract expressly controls | Covenant claim viable; discretion must be exercised in good faith |
| Relation between contract terms and implied covenant | Implied covenant fills limits on discretion | Express contract terms control rights and duties | Implied covenant survives to limit discretionary act within reasonable expectations |
Key Cases Cited
- Klaxon Co. v. Stentor Electric Manufacturing Co., 313 U.S. 487 (U.S. Supreme Court 1941) ( governs choice-of-law when not dangerous or immoral to apply state law)
- DeValk Lincoln Mercury, Inc. v. Ford Motor Co., 811 F.2d 326 (7th Cir. 1987) (enforces choice-of-law unless public policy harms Illinois)