EBCF Enters., Inc. v. Erie Ins. Exch.

572 F.Supp.3d 489

EBCF ENTERPRISES, INC., Angelo Palivos, and Christina Palivos, Plaintiffs,

v.ERIE INSURANCE EXCHANGE, Defendant.

No. 20 C 5476

United States District Court, N.D. Illinois, Eastern Division.

Signed November 12, 2021

Antonio Maurizio Romanucci, David Adam Neiman, Romanucci & Blandin, LLC, Chicago, IL, John Sheehan Spadaro, John Sheehan Spadaro, LLC, Smyrna, DE, for Plaintiff EBCF Enterprises, Inc.

Catherine T. Mitchell, Ryan F. Stephan, Teresa M. Becvar, Stephan Zouras, LLP, Chicago, IL, for Plaintiffs Angela Palivos, Christina Palivos.

Bruce Michael Lichtcsien, Jonathan Robert Puskar, Hinkhouse Williams Walsh LLP, Chicago, IL, Adam J. Kaiser, Alston & Bird LLP, New York, NY, Kristin A. Shepard, Pro Hac Vice, Alston & Bird LLP, District of Columbia, DC, Tiffany L. Powers, Pro Hac Vice, Alston & Bird LLP, Atlanta, GA, for Defendant.

MEMORANDUM OPINION AND ORDER

JORGE ALONSO, United States District Judge

After their automobile insurance company (defendant Erie Insurance Exchange ("Erie")) sent them a rebate worth 30% of two months’ premium, plaintiffs EBCF Enterprises, Inc. ("EBCF"), Angelo Palivos ("Angelo") and Christina Palivos ("Christina") filed a first amended complaint asserting that defendant's failure to provide a larger rebate breached their insurance contracts, violated the Illinois Consumer Fraud and Deceptive Trade Practices Act and constituted unjust enrichment.¹ Erie moves to dismiss. For the reasons set forth below, the Court grants the motion to dismiss.

I. BACKGROUND

Plaintiffs believe defendant obtained a windfall when the COVID-19 pandemic reduced driving and, hence, automobile accidents, thereby increasing defendant's profits. The following facts are from plaintiffs’ first amended complaint, and the Court takes them as true.

Plaintiffs allege "[a]uto insurance rates, including those set by Erie, are intended to cover the claims and expenses that [insurance companies] expect to occur in the future, extrapolated from historical data." (Am. Complt. ¶ 23). Plaintiffs allege that when Illinois Governor J.B. Pritzker issued "stay-at-home" orders during the spring of 2020 in response to the COVID-19 pandemic, it resulted in fewer people driving, which resulted in fewer automobile accidents. At that point, according to plaintiffs, the premiums plaintiffs had already paid for automobile insurance during that time "became unconscionably excessive." (Am. Complt. ¶ 23). Plaintiffs allege that "[i]n spring 2020, Erie promised to pay dividends amounting to 30% of two months’ premiums," but, according to plaintiffs, that refund "was and is inadequate to compensate for the excessive premiums that its customers have paid as a result of COVID-19." (Am. Complt. ¶¶ 29-30).

Plaintiffs allege that they purchased automobile insurance from Erie. Specifically, plaintiff EBCF purchased a policy that was in effect from September 23, 2019 through September 23, 2020. Erie renewed the policy for the period of September 23, 2020 through September 23, 2021. Similarly, plaintiffs Angelo and Christina Palivos purchased a policy in effect from February 1, 2020 through February 1, 2021. They renewed the policy for the period of February 1, 2021 through February 1, 2022.

Based on these allegations, plaintiffs assert claims for breach of contract, unjust enrichment and violation of the Illinois Consumer Fraud and Deceptive Trade Practices Act. Defendant moves to dismiss.

Defendant attached to its motion to dismiss a copy of each plaintiff's policy. The Court may consider those documents without converting the motion to dismiss to a motion for summary judgment, because the policies are referred to in plaintiffs’ complaint and are central to plaintiffs’ claims. Equal Employment Opportunity Comm'n v. Concentra Health Services, Inc. , 496 F.3d 773, 778 (7th Cir. 2007).

EBCF's policy provides, in relevant part:

In return for your timely premium payment and your compliance with all the provisions of this policy, we agree to provide the coverages you have purchased.

* * *

You may cancel the entire policy, any auto , or any coverage by mailing us written notice stating at what future date you want the cancellation to take effect.

* * *

If your policy is cancelled, we will return no more than the pro rata unused share of your premium.

* * *

Your policy may be changed by asking us . Asking our Agent is the same as asking us. Your request must contain enough information to identify you . If we agree with your request, we will then issue a Declarations . If there is a change in the information used to develop the policy premium, we may adjust your premium during the policy period effective as of the date the change occurred. Premium adjustments will be made using the rules and rates in effect for our use.

[Docket 45-1 at 7, 26, 27].

Angelo and Christina Palivos's policy provides, in relevant part:

In return for "your" timely premium payment and "your" compliance with all of the provisions of this policy, "we" agree to provide the coverages "you" have purchased. "Your" coverages and limits of protection are shown on the "Declarations," which are part of this policy.

* * *

"You" may change this policy by asking "us." Asking "our" Agent is the same as asking "us." "Your" request must contain enough information to identify "you." If "we" agree with "your" request, "we" will then issue a "Declarations." If there is a change in the information used to develop the insurance premium, "we" may adjust "your" premium during the policy period effective as of the date the change occurred. Premium adjustments will be made using the rules and rates in effect for "our" use. Changes that may result in a premium increase or decrease during the policy period include, but are not limited to:

1. change to "your" address;

2. change to the location where the insured vehicle is principally garaged;

3. change in "your" marital status;

4. change to the distance "you" drive to or from work or school;

5. change in the use of "your" vehicle (i.e., business use of the vehicle);

6. addition or deletion of an "auto" or lienholder or another party having a financial interest in "your" vehicle(s);

7. addition or deletion of a licensed driver in "your" household regardless of whether they have their own "auto" and insurance; and

8. changes which modify the appearance or performance of "your" vehicle with customized equipment. Customized equipment includes those items or changes that are other than what is offered by the auto manufacturer of that specific model of vehicle or what is added or altered by the auto dealer when the vehicle is new at the time of original sale. Equipment added to a vehicle to allow a disabled person to enter, exit or operate the vehicle is not considered customized equipment.

* * *

"You" may cancel this policy by mailing or delivering to "our" Agent or "us" written notice stating at what future date "you" want the cancellation to take effect. "We" may waive these requirements by confirming the date of cancellation to "you" in writing.

* * *

If this policy is cancelled, "we" will return the pro rata unused share of "your" premium.

[Docket 45-2 at 7, 9-10].

II. STANDARD ON A MOTION TO DISMISS

The Court may dismiss a claim pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure if the plaintiff fails "to state a claim upon which relief can be granted." Fed.R.Civ.P. 12(b)(6). Under the notice-pleading requirements of the Federal Rules of Civil Procedure, a complaint must "give the defendant fair notice of what the ... claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Conley v. Gibson , 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957) ). A complaint need not provide detailed factual allegations, but mere conclusions and a "formulaic recitation of the elements of a cause of action" will not suffice. Twombly , 550 U.S. at 555, 127 S.Ct. 1955. To survive a motion to dismiss, a claim must be plausible. Ashcroft v. Iqbal , 556 U.S. 662, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Allegations that are as consistent with lawful conduct as they are with unlawful conduct are not sufficient; rather, plaintiffs must include allegations that "nudg[e] their claims across the line from conceivable to plausible." Twombly , 550 U.S. at 570, 127 S.Ct. 1955.

In considering a motion to dismiss, the Court accepts as true the factual allegations in the complaint and draws permissible inferences in favor of the plaintiff. Boucher v. Finance Syst. of Green Bay, Inc. , 880 F.3d 362, 365 (7th Cir. 2018). Conclusory allegations "are not entitled to be assumed true," nor are legal conclusions. Iqbal , 556 U.S. at 680 & 681, 129 S.Ct. 1937 (noting that a "legal conclusion" was "not entitled to the assumption of truth[;]" and rejecting, as conclusory, allegations that "petitioners ‘knew of, condoned, and willfully and maliciously agreed to subject [him]’ to harsh conditions of confinement"). The notice-pleading rule "does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Iqbal , 556 U.S. at 678-679, 129 S.Ct. 1937.

Where a plaintiff alleges a breach of contract, a district court "may determine [the contract's] meaning as a matter of law" if "the contract is unambiguous." McWane, Inc. v. Crow Chi. Indus., Inc. , 224 F.3d 582, 584 (7th Cir. 2000). An "unambiguous contract controls over contrary allegations in the plaintiff's complaint." McWane , 224 F.3d at 584.

III. DISCUSSION

A. Illinois Consumer Fraud Act

In Count II, plaintiffs assert that defendant violated the Illinois Consumer Fraud and Deceptive Trade Practices Act ("ICFA"), 815 ILCS 505/1 et seq. Plaintiffs allege:

Erie's conduct offends the public policy of Illinois that insurance premiums are to be based on risk. The premiums charged and collected by Erie are excessive and not based on risk after the COVID-19 pandemic dramatically reduced the amount of driving and the number of insurance claims.

(...