Kim v. State Farm Mutual Automobile Insurance Co. , 2021 IL App (1st) 200135 ( 2021 )

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Kim v. State Farm Mutual Automobile Insurance Co., 2021 IL App (1st) 200135Appellate Court PENNY KIM, Individually and on Behalf of All Others Similarly
Caption Situated, Plaintiff-Appellant, v. STATE FARM MUTUAL
AUTOMOBILE INSURANCE COMPANY, and STATE FARM
FIRE AND CASUALTY COMPANY, Defendants-Appellees.
District & No. First District, Fourth Division
No. 1-20-0135
Filed June 30, 2021
Decision Under Appeal from the Circuit Court of Cook County, No. 15-CH-8655; the
Review Hon. Caroline K. Moreland, Judge, presiding.
Judgment Affirmed.
Counsel on Kent D. Sinson and Lisa K. Lange, of Sinson Law Group, of Chicago,
Appeal for appellant.
Joseph A. Cancila Jr., James P. Gaughan, and Allison N. Siebeneck,
of Riley Safer Holmes & Cancila LLP, of Chicago, for appellees.
Panel JUSTICE LAMPKIN delivered the judgment of the court, with
opinion.
Justices Reyes and Martin concurred in the judgment and opinion.
OPINION
¶1 Plaintiff Penny Kim’s amended complaint against defendants State Farm Mutual
Automobile Insurance Company (State Farm Mutual) and State Farm Fire and Casualty
Company (State Farm Fire) (collectively, State Farm) sought class certification for individuals
with personal injury claims arising from motor vehicle collisions and damages from State
Farm’s alleged misrepresentations about or concealment of excess, or “umbrella,” insurance
policies. Kim also alleged against State Farm claims of insurance code violations, common
law and statutory fraud, negligent misrepresentation, and attorney fees and costs.
¶2 The circuit court granted summary judgment in favor of State Farm and against Kim,
(1) ruling that insurers were not required to disclose the existence of an umbrella insurance
policy in response to a demand under the insurance statutory provision at issue and (2) denying
Kim’s motion for additional discovery.
¶3 On appeal, Kim argues that (1) the circuit court misapplied the statutory provision
regarding the disclosure of insurance coverage, (2) she presented sufficient evidence in support
of her claims of fraud and negligent misrepresentation to show that State Farm made actionable
false representations and omissions to conceal its insured’s policy limits, (3) she was entitled
to attorney fees and costs based on State Farm’s vexatious and unreasonable actions, and
(4) she was entitled to discovery on all her claims and class issues.
¶4 For the reasons that follow, we affirm the judgment of the circuit court. 1
¶5 I. BACKGROUND
¶6 This case arises from a brief series of communications in May 2012 between State Farm
and Kim’s counsel, Kent Sinson, following an automobile accident involving Kim and State
Farm’s insured, Elizabeth Swann. At no time did State Farm communicate directly with Kim.
¶7 On May 9, 2012, four days before Kim filed her personal injury lawsuit against Swann,
Sinson wrote to State Farm claim representative Connie O’Connor and made the following
demand: “Pursuant to 215 ILCS 5/143.24(b), please disclose your insured’s policy limits.”
O’Connor responded in May 2012, identifying Swann’s bodily injury automobile coverage of
$100,000 per person and $300,000 per accident. Upon receiving O’Connor’s disclosure,
Sinson contacted O’Connor and “confronted her,” stating that he had a hard time believing that
Swann would live in the wealthiest suburb in the Chicagoland area and not have an umbrella
policy, the premium on which usually runs about $300-$400 per year.
¶8 On May 21, 2012, Sinson again wrote to O’Connor to clarify that when he originally asked
for disclosure of Swann’s policy limits, he meant to request disclosure of any policy potentially
applicable to Swann’s accident with Kim. On May 24, 2012, claim representative Marco
Ruvalcaba sent sworn, written confirmation disclosing that Swann was insured under an
umbrella policy with a $1 million limit for liability coverage. Ruvalcaba copied the law firm
representing Swann in Kim’s personal injury suit on this disclosure. Thus, within weeks of
Kim filing her personal injury lawsuit against Swann and before Swann was required to
In adherence with the requirements of Illinois Supreme Court Rule 352(a) (eff. July 1, 2018), this
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appeal has been resolved without oral argument upon the entry of a separate written order.
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respond to the complaint, Kim knew the coverage limits for both Swann’s auto policy and the
umbrella policy.
¶9 Kim served Swann with interrogatories and production requests that demanded disclosure
of, among other things, all insurance policies potentially applicable to the accident. Swann
responded in August 2012 by disclosing her husband’s auto policy but not her umbrella policy.
Kim and her counsel knew this was incorrect, given State Farm’s prior disclosure of the
existence and limits of the umbrella policy. Sinson immediately moved for sanctions,
identifying the existence of the umbrella policy and the incorrect nature of the interrogatory
response. 2 Swann promptly corrected her answers within 30 days, on September 14, 2012, to
include the umbrella policy.
¶ 10 In December 2012, Swann was deposed. She explained that when she originally answered
Kim’s interrogatories, she was aware of her umbrella policy but did not realize it was relevant
to the personal injury case because she mistakenly believed it provided coverage only for “act
of God kinds of things” related to her homeowners insurance. She also stated that she did not
discuss her policy limits, coverages, or the existence of an umbrella policy with any State Farm
personnel prior to answering the interrogatories. Swann’s counsel also stated on the record that
the error was his fault and he failed to list the umbrella policy in the initial discovery response.
¶ 11 In April 2013, Kim amended her complaint against Swann to add State Farm Mutual as a
defendant and assert proposed class claims against it regarding the disclosure of the umbrella
policy.
¶ 12 In June 2013, Kim made an initial settlement demand for the combined policy limits of
$1.1 million. Swann produced copies of both her State Farm Mutual auto insurance policy and
her State Farm Fire umbrella policy, with the relevant declaration pages, by September 2013.
Kim voluntarily dismissed her personal injury suit against Swann in April 2017. In April 2018,
Kim settled her bodily injury claims against Swann in exchange for payment of the combined
coverage limits of $1.1 million, releasing all claims “without reliance upon any statement or
representation of the released parties or her representatives.”
¶ 13 State Farm Mutual moved to dismiss the claims against it, but the circuit court denied that
motion on December 22, 2014. The court concluded that the issues raised in State Farm
Mutual’s motion could be “revisit[ed] *** on a summary judgment.”
¶ 14 In March 2015, State Farm responded to Kim’s interrogatories and requests for production.
State Farm objected to Kim’s discovery requests on the grounds that, among other things, they
improperly sought class-wide, company-wide, and nationwide merits discovery on a range of
topics either unlimited in timeframe or dating back to 1988. In May 2015, Kim’s asserted class
claims against State Farm Mutual were severed and transferred to the chancery division of the
circuit court of Cook County. In September 2015, Kim filed a fourth amended complaint,
which raised three claims against State Farm Mutual: count I for common law fraud, count II
for violation of section 143.24b of the Illinois Insurance Code (215 ILCS 5/143.24b (West
2010)), and count III for violation of the Consumer Fraud and Deceptive Business Practices
Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2010)).
¶ 15 Shortly thereafter, Kim responded to State Farm’s interrogatories. She did not answer when
she became aware of Swann’s umbrella policy, citing the attorney-client privilege. She also
2
This motion was unresolved and rendered moot when Kim later voluntarily dismissed her suit
against Swann in April 2017.
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did not identify any action that she personally took based on a mistaken belief about the
existence of the umbrella policy or quantify her alleged damages for emotional distress or the
“time value of money.” However, she admitted that her attorney’s knowledge regarding the
existence and limits of Swann’s umbrella policy was properly imputed to her.
¶ 16 In November 2016, this case was stayed pending resolution of the appeal in Demarco v.
CC Services, Inc., No. 14-CH-10416 (Cir. Ct. Cook County, May 12, 2015), which raised the
same issue of whether a demand under section 143.24b of the Insurance Code requires the
disclosure of any umbrella policy. The circuit court’s dismissal order in Demarco was affirmed
in an unpublished order on March 24, 2017. See Demarco v. CC Services, Inc., 2017 IL App
(1st) 152933-U. Though Kim was free to resume proceedings against State Farm at that time,
she took no action for more than six months.
¶ 17 In December 2017, State Farm Mutual moved for summary judgment on all three counts
of the fourth amended complaint. In response, Kim filed a motion under Illinois Supreme Court
Rule 191 (eff. Jan. 4, 2013) for additional discovery. In May 2018, Kim requested leave to file
a corrected fourth amended complaint, which contained two additional claims—count IV for
negligent misrepresentation and count V for attorney fees and costs under section 155 of the
Insurance Code (215 ILCS 5/155 (West 2010))—and added State Farm Fire as a defendant.
State Farm Mutual opposed the motion and renewed its motion for summary judgment in July
2018. After extensive briefing, the court granted Kim’s motion for leave, and Kim filed her
corrected fourth amended complaint in November 2018. The court allowed State Farm leave
to supplement its pending summary judgment motion to address these new claims, and State
Farm did so in December 2018.
¶ 18 On June 5, 2019, the court denied Kim’s Rule 191 motion for additional discovery.
Thereafter, the court denied various pending motions for leave to submit overlength briefs and
instructed the parties to re-brief the summary judgment motion in compliance with the page
limits set by local rule. By October 2019, State Farm’s summary judgment motion was fully
briefed, and the matter was provisionally set for oral argument on January 8, 2020. On January
2, 2020, the court granted State Farm’s motion for summary judgment on the papers. This
appeal followed.
¶ 19 II. ANALYSIS
¶ 20 Kim argues that State Farm was not entitled to summary judgment because (1) the circuit
court misapplied the law regarding the disclosure of insurance coverage and (2) she presented
sufficient evidence to support claims of fraud and negligent misrepresentation. She also argues
that she was entitled to (3) attorney fees and costs under the Insurance Code and (4) discovery
on all her claims and class issues.
¶ 21 A trial court’s order granting summary judgment is reviewed de novo. Seitz-Partridge v.
Loyola University of Chicago, 409 Ill. App. 3d 76, 82 (2011); see also Thomas v.
Weatherguard Construction Co., 2018 IL App (1st) 171238, ¶ 63 (under de novo review, the
reviewing court performs the same analysis the trial court would perform). A defendant is
entitled to summary judgment where the pleadings, depositions, admissions, and affidavits in
the record—even when viewed in the light most favorable to the plaintiff—show that there is
no genuine issue as to any material fact and the defendant is entitled to judgment as a matter
of law. Seitz-Partridge, 409 Ill. App. 3d at 82; Murray v. Chicago Youth Center, 224 Ill. 2d
213, 228 (2007). If the plaintiff fails to establish triable fact issues as to her asserted claims,
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the court must enter summary judgment in favor of the defendant. Salerno v. Innovative
Surveillance Technology, Inc., 402 Ill. App. 3d 490, 497 (2010).
¶ 22 A. Disclosure of Insurance Coverage
¶ 23 Kim argues that State Farm violated section 143.24b of the Insurance Code by failing to
disclose Swann’s umbrella policy in response to Sinson’s May 9, 2012, letter. Kim argues that
the trial court misapplied the law and State Farm engaged in “judge shopping” to obtain a
favorable outcome.
¶ 24 This claim presents a question of law—i.e., whether section 143.24b of the Insurance Code
requires disclosure of an umbrella policy as a “private personal passenger automobile liability
insurance policy.” We review de novo both questions of law and issues of statutory
construction. Progressive Universal Insurance Co. of Illinois v. Liberty Mutual Fire Insurance
Co., 215 Ill. 2d 121, 127-28 (2005); Best Buy Stores, L.P. v. Department of Revenue, 2020 IL
App (1st) 191680, ¶ 17. When construing a statute, the court attempts to ascertain and give
effect to the intent of the legislature, which “is best determined from the plain and ordinary
meaning of the language used in the statute.” Rosenbach v. Six Flags Entertainment Corp.,
2019 IL 123186, ¶ 24. “When the statutory language is plain and unambiguous, we may not
depart from the law’s terms by reading into it exceptions, limitations, or conditions the
legislature did not express, nor may we add provisions not found in the law.” Id. Only when a
statute is ambiguous may a court look beyond its express language and rely on “extrinsic aids,”
such as legislative history. Nowak v. City of Country Club Hills, 2011 IL 111838, ¶¶ 11, 13.
¶ 25 Section 143.24b provides:
“Any insurer insuring any person or entity against damages arising out of a
vehicular accident shall disclose the dollar amount of liability coverage under the
insured’s personal private automobile liability insurance policy upon receipt of the
following: (a) a certified letter from a claimant or any attorney purporting to
represent any claimant which requests such disclosure and (b) a brief description of
the nature and extent of the injuries, accompanied by a statement of the amount of
medical bills incurred to date and copies of medical records.” (Emphasis added.)
215 ILCS 5/143.24b (West 2010).
¶ 26 State Farm argues that, as an initial matter, Kim’s disclosure demand was deficient under
the terms of the statute because it was not sent by certified mail, did not describe Kim’s injuries,
did not enclose medical records, and did not state the medical expenses that Kim had incurred
for accident-related treatment. Nevertheless, State Farm contends that its disclosure provided
to Kim’s counsel satisfied the requirements of section 143.24b.
¶ 27 The plain and unambiguous language of section 143.24b requires disclosure of potentially
available coverage under “personal private passenger automobile liability insurance
polic[ies].” Id. Contrary to Kim’s argument on appeal, the title of that section does not broadly
refer to “liability coverage” but more narrowly refers to the “[d]isclosure of dollar amount of
automobile liability coverage.” (Emphasis added.) Id. It is well settled in Illinois that a personal
automobile insurance policy is not the same as an umbrella policy. In Hartbarger v. Country
Mutual Insurance Co., 107 Ill. App. 3d 391, 394 (1982), the plaintiff argued that an umbrella
policy was an automobile policy and thus was required to provide uninsured motorist coverage
under the Insurance Code. This court rejected that position, holding that “an umbrella liability
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policy is entirely different from an automobile policy.” Id. at 396. This court quoted
approvingly a decision from the Alabama Supreme Court, which stated:
“ ‘Automobile liability policies and motor vehicle liability policies insure against the
risk of loss through the operation of specific automobiles. An umbrella policy, on the
other hand, is fundamentally excess insurance designed to protect against a catastrophic
loss. Before an umbrella policy is issued, a primary policy (the “underlying policy”)
must be in existence ***. *** The umbrella policy issued by Trinity Universal is an
inherently different type of insurance from an automobile or motor vehicle liability
policy ***.’ ” Id. at 395 (quoting Trinity Universal Insurance Co. v. Metzger, 360 So.
2d 960, 962 (Ala. 1978)).
See also Mei Pang v. Farmers Insurance Group, 2014 IL App (1st) 123204, ¶ 11 (“[i]n Illinois,
umbrella policies and primary auto policies are distinct” and an “umbrella policy does not
provide the same type of coverage as an automobile policy”); 215 ILCS 5/143.13 (West 2010)
(“ ‘[p]olicy of automobile insurance’ ” defined separately from “ ‘[a]ll other policies of
personal lines’ ”).
¶ 28 Moreover, Kim’s interpretation of section 143.24b has been rejected by courts interpreting
the Illinois statute. In Roppo v. Travelers Commercial Insurance Co., 869 F.3d 568, 595 (7th
Cir. 2017), the Seventh Circuit affirmed the federal district court’s dismissal of the same
nondisclosure claim at issue here as baseless because umbrella policies are not automobile
policies and section 143.24b could not reasonably be construed to encompass umbrella policies
based on the plain language of the statute, which defined a “policy of automobile insurance”
as distinct from other types of liability insurance.
¶ 29 Kim also argues that State Farm engaged in “judge shopping” to seek reconsideration of a
prior circuit court judge’s December 2014 ruling, which denied State Farm’s motion to dismiss.
The record, however, refutes this argument.
¶ 30 In 2014, this case was pending in the law division of the circuit court of Cook County and
included both personal injury claims against State Farm’s insured, Elizabeth Swann, and
asserted class claims against State Farm Mutual. By March 2015, after the court had denied
State Farm Mutual’s motion to dismiss, the personal injury claim against Swann was nearly
ready for trial, while discovery was only beginning with respect to Kim’s class claims. Swann
therefore moved to sever Kim’s personal injury claim against her from the asserted class claims
to allow the personal injury claim to proceed to trial. State Farm Mutual did not oppose that
request. In the event the court granted the severance motion, State Farm Mutual asked that it
transfer the severed class claims to the Chancery Division under General Order 1.2 of the
Circuit Court of Cook County (Cook County Cir. Ct. G.O. 1.2 (Aug. 1, 1996)). The Law
Division court granted both motions. State Farm did not ask the Chancery Division court to
reconsider the December 2014 ruling on its motions to dismiss. Rather, the arguments in State
Farm’s denied motion to dismiss were properly revisited under the appropriate legal standard
in the context of State Farm’s motion for summary judgment.
¶ 31 We conclude that the circuit court properly granted summary judgment in favor of State
Farm on Kim’s claim, under section 143.24b of the Insurance Code, that State Farm failed to
disclose Swann’s insurance coverage.
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¶ 32 B. Fraud and Negligent Misrepresentation
¶ 33 1. Common Law and Statutory Fraud
¶ 34 To prevail on a claim for fraudulent misrepresentation, a plaintiff must establish the
following elements: (1) a false statement of material fact, (2) known or believed to be false by
the person making it, (3) an intent to induce the plaintiff to act, (4) action by the plaintiff in
justifiable reliance on the truth of the statement, and (5) damage to the plaintiff resulting from
such reliance. Freedberg v. Ohio National Insurance Co., 2012 IL App (1st) 110938, ¶ 36.
Similarly, a cause of action under the Consumer Fraud Act requires a plaintiff to demonstrate
(1) a deceptive act or practice by the defendant, (2) the defendant’s intent that the plaintiff rely
on the deception, and (3) the occurrence of the deception during a course of conduct involving
trade or commerce. Id. (citing Sheffler v. Commonwealth Edison Co., 2011 IL 110166, ¶ 62).
¶ 35 To demonstrate a triable claim for common law or statutory fraud, Kim must present
evidence sufficient to support the inference that State Farm made a false or misleading
statement or omission of material fact. See id. Before the circuit court, Kim asserted that the
underlying act forming the basis for her fraud claims was State Farm’s alleged failure to
disclose the existence of the umbrella policy in the May 16, 2012, confirmation of coverage
letter to Kim’s attorney. Kim’s common law and statutory fraud claims are tethered to her
section 143.24b claim—which, as discussed above, does not as a matter of law require
disclosure of excess umbrella insurance. Thus, Kim’s fraud claims fail for the same reason.
¶ 36 On appeal, Kim argues that the alleged underlying misrepresentation by defendants
includes the initial, incorrect interrogatory response provided by Swann. Kim contends that
this is appropriate because an alleged misrepresentation must be evaluated based upon the
“entirety of the circumstances,” such that “inconsistent” representations may sustain a cause
of action for fraud. The record establishes, however, that the circumstances surrounding that
discovery response cannot support a cause of action for fraud. State Farm promptly informed
Kim of the umbrella policy as soon as her attorney clarified that he was requesting the
information. Defendants made this disclosure three months before Swann provided her
inaccurate interrogatory response, which omitted the umbrella policy and which she promptly
corrected to disclose the umbrella policy upon realizing the error. Thus, despite the prolonged
litigation surrounding Swann’s discovery responses, the fact remains that Kim was already
aware of the umbrella policy—and the total combined policy limits available under Swann’s
liability coverages—within two weeks of filing suit. The actions by her counsel confirm that
there was no confusion about the existence and limits of the umbrella policy. Specifically, in
response to Swann’s omission of the umbrella policy in her discovery responses, Kim’s
counsel immediately moved for sanctions, without even first conferring with Swann’s counsel,
stating that those responses were wrong for not identifying the umbrella policy.
¶ 37 Furthermore, none of the supposedly inconsistent representations identified by Kim were
actually made by State Farm. Contrary to Kim’s assertions, statements made by Swann or her
counsel in discovery cannot be attributed to State Farm, which was not a party to the litigation
at the time and did not sign or verify those discovery responses. Kim’s reliance on People
ex rel. Terry v. Fisher, 12 Ill. 2d 231 (1957), to support her position that the insurance company
and the defendant in an auto case are one and the same, is misplaced. In Fisher, the court ruled
that a defendant insured must disclose the existence of liability insurance in response to
discovery requests. Id. at 238-39. The court concluded that the insured must disclose any
relevant insurance policies under the Illinois discovery rules. Id. at 239. The opinion neither
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discussed agency principles, nor suggested that an insurer has discovery obligations in an
action against its insured, to which action the insurer is not a party. Illinois courts recognize
that agency does not result from a mere insurer/insured relationship, and an attorney’s duty is
to his client, not the insurer, regardless of how his fees are paid. See Mid-West Energy
Consultants, Inc. v. Covenant Home, Inc., 352 Ill. App. 3d 160, 164 (2004) (parties to a contract
are not each other’s fiduciaries); Apex Mutual Insurance Co. v. Christner, 99 Ill. App. 2d 153,
171-72 (1968) (attorney’s duty is to client-insured, even when insurer pays fees).
¶ 38 In addition, any statements made in the personal injury suit are protected by the litigation
privilege. It is well established that statements made in the course of judicial proceedings are
absolutely privileged and “[t]here is no civil cause of action for misconduct which occurred in
prior litigation.” (Internal quotation marks omitted.) O’Callaghan v. Satherlie, 2015 IL App
(1st) 142152, ¶¶ 27-28 (affirming dismissal of claims against attorneys based on discovery
violations, failure to disclose evidence, concealment of evidence, and misrepresentations in
underlying litigation). This is true regardless of the individual’s subjective motivation. Id. ¶ 30
(“As stated, motives and diligence before taking the challenged actions are irrelevant for
purposes of the litigation privilege.”); Scarpelli v. McDermott Will & Emery LLP, 2018 IL App
(1st) 170874, ¶¶ 30-31 (the privilege immunizes statements and conduct and “an attorney’s
motives are irrelevant with respect to the applicability of the privilege, as is the reasonableness
or unreasonableness of his conduct”); Kim v. Hoseney, 545 F. App’x 521, 522 (7th Cir. 2013)
(recognizing absolute privilege under Illinois law against claims of fraud or intentional
misrepresentations “for statements, no matter how reckless or dishonest” in judicial
proceedings). When courts instruct parties to “attempt to redress injuries from misconduct in
judicial proceedings in the same litigation,” they contemplate that the parties will do so using
traditional motion practice and sanctions procedures—not by pursuing litigation against a new
party. See Johnson v. Johnson & Bell, Ltd., 2014 IL App (1st) 122677, ¶ 19 (describing such
a process). Here, Kim immediately moved for sanctions upon receipt of Swann’s inaccurate
discovery response in the personal injury action but then elected to abandon this remedy in
favor of settling her claims against Swann.
¶ 39 Moreover, contrary to Kim’s argument on appeal, State Farm has not waived the
protection of the litigation privilege. Illinois law is clear that an affirmative defense raised for
the first time in a motion for summary judgment “is timely and may be considered even if not
raised in defendant’s answer.” Salazar v. State Farm Mutual Automobile Insurance Co., 191
Ill. App. 3d 871, 876 (1989). According to the record, Kim never pled a discernible fraud claim
against State Farm based on Swann’s discovery responses; rather, Kim specifically alleged that
any misrepresentation of coverage limits by the tortfeasor in a discovery response subjects that
tortfeasor to sanctions. Only during the course of the original summary judgment briefing did
Kim suggest she was pursuing an independent fraud claim based on Swann’s discovery
response, and State Farm properly raised the litigation privilege at that time. See, e.g.,
Van Meter v. Darien Park District, 207 Ill. 2d 359, 378-79 (2003) (denying motion to strike
argument raised for the first time on reply in answer to argument advanced by moving party);
see also People v. Roberson, 212 Ill. 2d 430, 440 (2004) (waiver rule is one of administrative
convenience rather than a jurisdictional bar); accord People v. Lann, 261 Ill. App. 3d 456, 466
(1994).
¶ 40 Kim’s common law and statutory fraud claims also fail to establish that State Farm
deceived her with a material misrepresentation or omission. See Freedberg, 2012 IL App (1st)
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110938, ¶ 36. For common law fraud, Kim must demonstrate that she relied on this deception
to her detriment, while under the Consumer Fraud Act, she must establish that she sustained
damages due to the misrepresentation. Id. Kim, however, identifies no deception because State
Farm promptly disclosed the umbrella policy in response to counsel’s request for clarification.
Additionally, the cases cited by Kim arose in different states with different legal obligations
and different procedural postures. See, e.g., Merritt v. State Farm Mutual Automobile
Insurance Co., 544 S.E.2d 180, 182 (Ga. Ct. App. 2000) (Georgia statute specifically required
insurers to disclose the existence of excess or umbrella coverage); Pipkins v. State Farm
Mutual Automobile Insurance Co., No. 16-83-SDD-EWD, 2016 WL 6518654, *4 (M.D. La.
Aug. 17, 2016) (plaintiffs alleged that State Farm Mutual knowingly misrepresented
“ ‘pertinent facts or insurance policy provisions relating to any coverages at issue,’ ” in
violation of a Louisiana statute (emphasis omitted)); Earl v. State Farm Mutual Automobile
Insurance Co., 91 N.E.3d 1066, 1069 (Ind. Ct. App. 2018) (umbrella policy was not disclosed
until after the jury returned a verdict at trial). None of these cases is probative of any deception
here, where Illinois law is clear that insurers are not required to disclose umbrella policies
under section 143.24b and State Farm promptly disclosed Swann’s umbrella policy within two
weeks of the filing of the personal injury lawsuit when specifically requested.
¶ 41 Further, the record precludes any inference that Kim was injured in reliance on a mistaken
belief that Swann had only $100,000 in available insurance coverage related to the accident.
In her discovery responses, Kim failed to identify a single specific action that she personally
took based on such a mistaken belief. Moreover, Kim agreed that her attorney’s knowledge
was imputed to her, and the record shows that her attorney was not confused about the umbrella
policy. See Morris v. Margulis, 197 Ill. 2d 28, 37 (2001) (submitting an affidavit inconsistent
with a party’s prior testimony does not create a disputed fact sufficient to survive summary
judgment).
¶ 42 According to the record, Kim ultimately received the full coverage limits under Swann’s
automobile insurance policy ($100,000) and umbrella policy ($1 million). Nonetheless, Kim
claims damages for emotional distress and the “time value of money.” However, Kim did not
disclose any basis for any emotional distress or the “time value of money” damages in her
discovery responses and relied instead on her and her attorney’s affidavits submitted in
response to State Farm’s summary judgment motion. But those affidavits are improper to the
extent that they are inconsistent with Kim’s discovery responses. See id.; Xeniotis v. Satko,
2014 IL App (1st) 131068, ¶ 70 (striking inconsistent affidavit as a change in testimony).
Further, Kim identifies no Illinois law recognizing the “time value of money” as an
independent theory of damages. Moreover, there was no delay here where State Farm informed
Kim of the umbrella policy within two weeks of the filing of the personal injury lawsuit.
¶ 43 Kim also claims damages based on emotional distress, but this claim fails as a matter of
law. Damages for fraud must be pecuniary in nature, for “the tort of common-law fraud is
primarily addressed to the invasion of economic interests.” Giammanco v. Giammanco, 253
Ill. App. 3d 750, 761 (1993); see also Cangemi v. Advocate South Suburban Hospital, 364 Ill.
App. 3d 446, 469 (2006) (“Although some cases have extended this rule to include those things
‘which the law recognizes as of pecuniary value,’ a plaintiff’s damages to support a claim of
fraud must nevertheless be ‘material,’ and may not consist solely of emotional harm.”). “A
fraud action does not afford a remedy for harm to one’s pride” or other emotional harm.
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Giammanco, 253 Ill. App. 3d at 762; see also Cangemi, 364 Ill. App. 3d at 469-70 (citing
cases).
¶ 44 Kim also lacks standing to sue under the Consumer Fraud Act. A plaintiff seeking to sue
under the Consumer Fraud Act must either be a consumer or satisfy the “consumer nexus” test,
which requires the plaintiff to have suffered damages resulting from conduct directed toward
the market or which otherwise implicates consumer protection concerns. Bank One Milwaukee
v. Sanchez, 336 Ill. App. 3d 319, 321-22 (2003). Kim, however, is a third-party beneficiary of
an insurance policy issued by a defendant, and courts interpreting Illinois law have consistently
rejected this theory of standing. See McCarter v. State Farm Mutual Automobile Insurance
Co., 130 Ill. App. 3d 97, 101 (1985) (holding third-party claimant under insurance policy was
not a consumer under the Consumer Fraud Act); Roppo v. The Travelers Cos., 100 F. Supp. 3d
636, 651 (N.D. Ill. 2015) (rejecting consumer nexus theory in similar case). Kim’s reliance on
Elder v. Coronet Insurance Co., 201 Ill. App. 3d 733, 749 (1990), to support her argument for
expanding the Consumer Fraud Act’s scope is misplaced. Elder, as a matter involving a first-
party claim by an insured against his own insurer, distinguished itself from McCarter, which
involved a third-party claimant. Id. The other authorities cited by Kim do not address the issue
of standing under the Consumer Fraud Act or even any claim under it. Rather, each of those
cases involved a declaratory judgment action brought by the third-party claimant against an
insurer. See, e.g., State Farm Fire & Casualty Co. v. Perez, 387 Ill. App. 3d 549 (2008);
Holmes v. Federal Insurance Co., 353 Ill. App. 1062 (2004); Reagor v. Travelers Insurance
Co., 92 Ill. App. 3d 99 (1980); M.F.A. Mutual Insurance Co. v. Cheek, 34 Ill. App. 3d 209(1975).
¶ 45 Further, Kim’s theory does not satisfy the “consumer nexus” (or “consumer-at- large”) test.
Illinois courts have long held that the application of the Consumer Fraud Act is limited to
deception “in the course of trade or commerce.” As defined by the statute, “[t]he terms ‘trade’
and ‘commerce’ mean the advertising, offering for sale, sale, or distribution of any services
and any property, tangible or intangible, real, personal or mixed, and any other article,
commodity, or thing of value wherever situated.” 815 ILCS 505/1(f) (West 2010). The mere
fact that a defendant is a business that engages in commerce is insufficient to satisfy this
element. In Continental Assurance Co. v. Commonwealth Edison Co., 194 Ill. App. 3d 1085,
1093 (1990), the court concluded that although the Consumer Fraud Act is to be liberally
construed, it could not reasonably be interpreted to include the type of fraud alleged by
shareholders in the context of a stock redemption because the redemption of shares of stock
did not constitute either any type of “advertising” or “offering for sale,” or a “sale” or
“distribution” of property as those terms are used in the Consumer Fraud Act. See also Mosier
v. Village of Holiday Hills, 2019 IL App (2d) 180681, ¶ 20 (affirming dismissal of Consumer
Fraud Act claim against village based on issuance of building permits because “[t]he Village
did not advertise or offer anything for sale or sell anything”).
¶ 46 Illinois courts have long recognized that a business may maintain a cause of action under
the Consumer Fraud Act even when it was not a consumer of the defendant’s goods, so long
as “the alleged conduct involves trade practices addressed to the market generally or otherwise
implicates consumer protection concerns.” Downers Grove Volkswagen, Inc. v. Wigglesworth
Imports, Inc., 190 Ill. App. 3d 524, 534 (1989). In Sanchez, the court extended the “consumer
nexus” test to an individual. 336 Ill. App. 3d at 323-24. But in that case, the plaintiff alleged
that the defendant forged her signature to bind her “to a commercial transaction through a
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fraudulent act.” Id. at 324. The court thus had “little trouble concluding” that those allegations
implicated consumer protection concerns. Id. The same cannot be said here, where Kim failed
to allege any wrong conduct by State Farm that impacted consumers. See Roppo, 100 F. Supp.
3d at 651, aff’d, 869 F.3d 568.
¶ 47 We conclude that the circuit court properly granted summary judgment in favor of State
Farm on Kim’s claims of common law and statutory fraud.
¶ 48 2. Negligent Misrepresentation
¶ 49 In Illinois, the tort of negligent misrepresentation is a narrow and limited exception to the
Moorman doctrine (Moorman Manufacturing Co. v. National Tank Co., 91 Ill. 2d 69 (1982)),
which generally bars a tort recovery for a purely economic loss. Fox Associates, Inc. v. Robert
Half International, Inc., 334 Ill. App. 3d 90, 94 (2002). The claim requires proof of
“(1) a false statement of material fact, (2) carelessness or negligence in ascertaining the
truth of the statement by the [speaker], (3) an intention to induce the other party to act,
(4) action by the other party in reliance ***, and (5) damage to the other party resulting
from such reliance, (6) when the party making the statement is under a duty to
communicate accurate information.” Id.For the reasons discussed above, Kim cannot identify any false statement made by State Farm,
let alone any negligent action taken to induce reliance.
¶ 50 In addition, a negligent misrepresentation claim may only be brought against a defendant
who is “in the business of supplying information for the guidance of others in their business
dealings” and provided untrue information to the plaintiff. Id. at 95. The sale of insurance
policies is not the sale of “information,” as contemplated under this exception. See First
Midwest Bank, N.A. v. Stewart Title Guaranty Co., 218 Ill. 2d 326, 341 (2006); see also
Gondeck v. A Clear Title & Escrow Exchange, LLC, 47 F. Supp. 3d 729, 749 (N.D. Ill. 2014)
(“An insurance policy is ‘a noninformational product’ for purposes of the economic loss
doctrine.”). Moreover, defendants were not otherwise “in the business” of providing
information to Kim to guide her business dealings, especially given the adverse nature of their
relationship and the fact that Kim was not a State Farm policyholder. Nor can Kim establish
any of the other elements of this tort based on the uncontroverted record, which shows there
was no actionable misstatement or omission, reliance, or injury. See Freedberg, 2012 IL App
(1st) 110938, ¶ 36 (no recovery for negligent misrepresentation absent proof plaintiff relied on
misstatement to her detriment); Fox Associates, Inc., 334 Ill. App. 3d at 94-96.
¶ 51 Further, the Illinois Supreme Court has rejected the notion that a plaintiff may seek
damages for emotional distress based upon this exception to the Moorman doctrine. In Brogan
v. Mitchell International, Inc., 181 Ill. 2d 178, 185 (1998), the court recognized that “[t]here
exists no broad duty to avoid misrepresentations that cause only emotional harm.” The court
emphasized the “limited nature” of liability for negligent misrepresentation, which “serves to
preserve the proper sphere of contractual-based recovery and prevents the creation of tort
liability which could unduly impede the flow of communication in society.” Id.¶ 52 We conclude that the trial court did not err in granting summary judgment to State Farm
on Kim’s claim for negligent misrepresentation.
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¶ 53 C. Attorney Fees and Costs
¶ 54 Kim argues that she is entitled to attorney fees and costs under Section 155 of the Insurance
Code based on State Farm’s alleged “bad faith” or “unreasonable and vexatious acts
constituting improper claims practices.” Specifically, Kim contends that State Farm engaged
in bad faith by allegedly failing to disclose the existence of Swann’s umbrella policy limits.
This claim is fatally deficient as a matter of law.
¶ 55 Section 155 permits a cause of action when “there is in issue the liability of a company on
a policy or policies of insurance or the amount of the loss payable thereunder, or for an
unreasonable delay in settling a claim, and it appears to the court that such action or delay is
vexatious and unreasonable.” 215 ILCS 5/155(1) (West 2010). Binding Illinois Supreme Court
precedent holds that penalties under section 155 are only available to the insured, not to third
parties who are strangers to the policy. 3 See Yassin v. Certified Grocers of Illinois, Inc., 133
Ill. 2d 458, 466 (1990) (dismissing plaintiff’s third-party claim under section 155); Stamps v.
Caldwell, 133 Ill. App. 2d 524, 528 (1971) (same); Roppo, 100 F. Supp. 3d at 652 (“the remedy
embodied in section 155 of the Insurance Code does not extend to third parties”).
¶ 56 We conclude that the circuit court properly granted summary judgment in State Farm’s
favor with respect to Kim’s claim for section 155 fees and costs.
¶ 57 D. Rule 191(b) Motion for Further Discovery
¶ 58 When a party contends that she needs to conduct discovery before responding to a motion
for summary judgment, the party must submit an affidavit that satisfies the requirements of
Illinois Supreme Court Rule 191(b) (eff. Jan. 4, 2013). A court’s decision to deny discovery
requested under Rule 191(b) is a discovery ruling and will not be reversed absent an abuse of
discretion. Jordan v. Knafel, 378 Ill. App. 3d 219, 235 (2007). A trial court abuses its discretion
only when “ ‘no reasonable person would take the view adopted by the trial court.’ ” Janda v.
United States Cellular Corp., 2011 IL App (1st) 103552, ¶ 96 (quoting Foley v. Fletcher, 361
Ill. App. 3d 39, 46 (2005)).
¶ 59 Discovery is not warranted under Rule 191(b) where the issues raised by a motion for
summary judgment are questions of law, not of disputed fact. See Kittleson v. United Parcel
Service, Inc., 162 Ill. App. 3d 966, 968-69 (1987). A party invoking Rule 191(b) must show
that the evidence he or she intends to secure will be sufficient to demonstrate a genuine fact
issue pertinent to the pending motion for summary judgment. See Meudt v. Travelers Insurance
Co., 57 Ill. App. 3d 286, 291-92 (1978). Discovery is properly denied if a movant does not
sufficiently describe the evidence he or she anticipates obtaining through the discovery sought,
as Rule 191(b) is not intended to authorize “a ‘fishing expedition.’ ” Janda, 2011 IL App (1st)
103552, ¶ 98. A movant also must demonstrate that discovery is the only vehicle for obtaining
the facts he or she needs to oppose summary judgment. See Ill. S. Ct. R. 191(b) (eff. Jan. 4,
2013).
3
The authorities cited by plaintiff do not contradict this conclusion. See Loyola University Medical
Center v. Med Care HMO, 180 Ill. App. 3d 471 (1989) (allowing section 155 claim by assignee medical
provider); Garcia v. Lovellette, 265 Ill. App. 3d 724 (1994) (allowing section 155 claim by passenger
defined as an insured under the terms of the policy). Neither of these cases involved a third-party claim.
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¶ 60 Kim’s Rule 191 motion failed all of these tests. First, the court’s January 7, 2020, ruling
granted State Farm’s summary judgment motion exclusively on purely legal grounds. And
second, Kim’s Rule 191(b) affidavits fail to support her claim for more discovery.
¶ 61 The court’s January 7, 2020, ruling—granting summary judgment in favor of State Farm
on issues of law—shows that no discovery could have changed those rulings and further
discovery would have been futile. As discussed above, Kim failed to show that she was
deceived, that she relied on any statement from State Farm, or that she sustained any cognizable
damages arising from State Farm’s alleged conduct. These were elements of her claims that
were within her own knowledge and control. And Kim admitted she was never misled about
the existence of Swann’s umbrella policy and sustained no resulting injury. There was no
question that Kim could have posed to anyone else that would have told her more about what
she personally knew, what she personally believed, what she personally did, or what injuries
she personally claimed to have suffered. See Emerson Electric Co. v. Aetna Casualty & Surety
Co., 281 Ill. App. 3d 1080, 1089 (1996) (affirming trial court’s denial of Rule 191(b) motion
where plaintiff failed to demonstrate how any further discovery would support its case). As a
result, Kim failed to demonstrate that additional discovery would have created a genuine issue
of fact pertinent to State Farm’s summary judgment motion.
¶ 62 Rule 191(b) requires a party seeking discovery in the face of a summary judgment motion
to state with specificity what discovery is needed, what the party believes the discovery will
reveal, and the basis for the party’s belief that the requested discovery will produce the party’s
sought-after proofs. Janda, 2011 IL App (1st) 103552, ¶ 98; Meudt, 57 Ill. App. 3d at 291-92.
Kim’s affidavit did none of these things. Far from being specific, Kim sought extensive class-
wide discovery, including responses to over 70 requests for production spanning a 31-year
timeframe; production of every automobile insurance claim file in which a person living in
Illinois was injured by an allegedly liable driver who was insured by State Farm at the time
and also had an umbrella policy as of the date of the accident; and the depositions of at least
seven individuals, including State Farm adjusters O’Connor and Ruvalcaba, State Farm agent
Dan Catanzara, State Farm executive Phil Supple, a State Farm corporate representative,
Swann (who was already deposed about her discovery response in the personal injury suit),
and Swann’s attorney.
¶ 63 Kim did not demonstrate that this discovery was necessary to allow her to meaningfully
oppose summary judgment on her claims. Kim had already identified the communications
underlying her fraud claims—i.e., her counsel’s May 2012 communications with State Farm
and Swann’s August 2012 interrogatory response in her personal injury suit. There is no
dispute about the occurrence of those communications, when they occurred, or what was said
in each. Nor could Kim contend that she needed discovery from State Farm regarding her
attorney’s communications with State Farm, whether she was deceived, whether she acted in
reliance on an incorrect belief regarding Swann’s available insurance coverage, or any injuries
she claimed to have sustained as a result. In short, Kim does not and cannot demonstrate
entitlement to conduct any further discovery in this matter. See Meudt, 57 Ill. App. 3d at 291-
92; Emerson Electric, 281 Ill. App. 3d at 1089.
¶ 64 Kim also mischaracterizes State Farm’s summary judgment motion as a “Celotex-type”
motion that unfairly raises a premature attack on her inability to muster the proofs she needs.
A “Celotex-type” motion is one in which a defendant seeks summary judgment based on the
plaintiff’s lack of proofs regarding matters outside the plaintiff’s control and knowledge. Jiotis
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v. Burr Ridge Park District, 2014 IL App (2d) 121293, ¶¶ 23, 25-28, 44-47 (Rule 191 discovery
properly allowed early in action, despite defendant’s submission of its own affidavits denying
allegations of complaint; plaintiff identified deponents and gave bases for relief regarding what
specific testimony those individuals would provide as to information beyond the plaintiff’s
control). Here, in contrast, State Farm relied on information Kim supplied in discovery and her
own admissions about matters fully within her knowledge that defeated her claims.
¶ 65 We conclude that the circuit court properly denied Kim’s Rule 191(b) motion for further
discovery.
¶ 66 III. CONCLUSION
¶ 67 For the foregoing reasons, we affirm the judgment of the circuit court, which granted State
Farm’s motion for summary judgment and denied Kim’s motion for further discovery.
¶ 68 Affirmed.
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