Sophie Toulon v. Continental Casualty Company
877 F.3d 725
| 7th Cir. | 2017Background
- Sophie Toulon (insured) purchased a Continental Preferred Solution long-term care policy in 2002; the policy was issued with a 10-Year Rate Guarantee Rider but stated in bold that premiums were "subject to change."
- Continental provided a statutorily prescribed Worksheet disclosing that the company had a right to increase premiums and noting a past 15% increase on similar policies; Toulon signed but did not complete the Worksheet.
- In 2013, after the 10-year guarantee expired, Continental increased Toulon’s premium by 76.5%.
- Toulon sued in 2015 (class action under CAFA) asserting fraudulent misrepresentation, fraudulent omission, unjust enrichment, and violations of consumer-fraud statutes (analyzed under Illinois ICFA).
- The district court dismissed the Second Amended Complaint with prejudice under Fed. R. Civ. P. 12(b)(6); Toulon appealed.
- The Seventh Circuit affirmed, concluding Toulon failed to plead actionable affirmative misstatements, a duty to disclose, an ICFA violation, or an unjust-enrichment theory given the governing contract.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Jurisdiction under CAFA | Class is nationwide; at least one class member diverse from defendant | Minimal diversity exists; evidence shows many policies issued outside Illinois | CAFA jurisdiction proper after supplementing record with affidavits (affirmed) |
| Fraudulent misrepresentation | Statements in Worksheet/Policy implied low or limited future increases (≤20%); misled elderly purchasers | Worksheet and policy accurately disclosed right to raise rates; statements are not false or misleading | Dismissed — no affirmative false statement or justifiable reliance alleged |
| Fraudulent omission / concealment | Continental knew it would substantially increase rates post-guarantee and failed to disclose that fact | No fiduciary/special-relationship duty to disclose; no plausible allegation Continental knew regulators would approve large future increases | Dismissed — no duty to disclose and allegations of pre-knowledge implausible |
| ICFA violation (deceptive or unfair practice) | Omissions and implied promises were deceptive/unfair and caused substantial injury | Disclosures and policy language negated deception; purchaser could avoid harm by choosing other products | Dismissed — no deceptive act, no material omission pled, and no actionable unfair practice |
| Unjust enrichment | Continental was unjustly enriched by procuring contracts through fraud | There is an express contract governing the parties; fraud/ICFA claims fail | Dismissed — unjust enrichment unavailable where an express contract governs and predicate claims fail |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (plausibility standard for Rule 12(b)(6))
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility pleading framework)
- Camasta v. Jos. A. Bank Clothiers, Inc., 761 F.3d 732 (7th Cir. 2014) (Rule 9(b) fraud particularity requirements)
- Connick v. Suzuki Motor Co., 675 N.E.2d 591 (Ill. 1996) (elements and duty analysis for fraudulent concealment)
- Crichton v. Golden Rule Ins. Co., 576 F.3d 392 (7th Cir. 2009) (half-truths can create disclosure duties)
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) (special trust relationship standard for concealment claims)
- Davis v. G.N. Mortg. Corp., 396 F.3d 869 (7th Cir. 2005) (ICFA claims require fraud-style specificity and totality of disclosures considered)
- Rakes v. Life Investors Ins. Co. of America, 582 F.3d 886 (8th Cir. 2009) (policy language can mean insurer "can" change premiums)
- Robinson v. Toyota Motor Credit Corp., 775 N.E.2d 951 (Ill. 2002) (unconscionably high price alone generally insufficient to establish ICFA unfairness)
- Doe v. Dilling, 888 N.E.2d 24 (Ill. 2008) (elements for fraud under Illinois law)