Insurance Law

Dist. Ct. did not err in granting defendant-insurance company’s motion to dismiss plaintiff-insured’s action alleging that defendant breached terms of insurance policy by failing to defend or indemnify plaintiff for $24 million settlement of underlying lawsuit alleging that plaintiff had assessed and collected excessive overdraft fees from its bank customers. Dist. Ct. could properly find that provision in policy that excluded coverage for claims “based upon, arising from or in consequence of fees or charges” applied, such that defendant was not required to defend or indemnify plaintiff in underlying lawsuit. Ct. rejected plaintiff’s argument that dismissal was improper because underlying lawsuit asserted injuries that were primarily caused by plaintiff’s policies and practices, since: (1) only harm alleged in underlying lawsuit was plaintiff’s maximization of excessive overdraft fees; and (2) there was no policy or practice alleged that existed independent of plaintiff’s overdraft fee scheme. Ct. further noted that instant exclusion served necessary purpose of avoiding “moral hazard,” where plaintiff would otherwise be free to create another alleged improper fee scheme knowing that defendant would reimburse it if and when said scheme was discovered.

In action alleging fraudulent and negligent misrepresentation, as well as negligence arising out of defendant-counsel for insurance company’s failure to disclose during discovery existence of $1 million umbrella policy that covered plaintiff’s car accident with insured, Dist. Ct. did not err in dismissing all three claims, since neither plaintiff nor her counsel had relied on any misrepresentation regarding existence of umbrella policy where plaintiff pleaded in complaint that her counsel “repeatedly expressed uncertainty” about lack of umbrella policy at time defendant had only stated that insured had automobile insurance policy that applied to accident. Also, said defendant did not owe plaintiff duty of care to reveal existence of umbrella policy, since: (1) said attorney only owed such duty to his client; and (2) client did not hire said attorney for benefit of plaintiff, who otherwise was in adversarial relationship with client. Too, plaintiff had no valid claim under 215 ILCS 5/143.24(b) that required disclosure of policy limits under certain circumstances, where: (1) plaintiff had failed to disclose description of her injuries or medical records as required by said statute when requesting such policy limits; and (2) defendants’ disclosure of insured’s automobile liability insurance policy satisfied requirements of said statute. Finally, allegations in instant complaint were sufficient to provide Dist. Ct. with jurisdiction to hear said case under class action provisions under CAFA, since (1) plaintiff alleged that defendant insurance company had failed to disclose existence of umbrella policies to at least 500 others; (2) subject umbrella policies concerned at least $1 million each, so as to satisfy $5 million amount in controversy requirement for CAFA treatment; and (3) local controversy exception to class action treatment under CAFA did not apply since, although instant claim was filed in state where certain defendants were located, defendant insurance company was primary defendant that was located in different state.