Sophie Toulon v. Continental Casualty Company

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 16-1510
SOPHIE P. TOULON,
Plaintiff-Appellant,
v.
CONTINENTAL CASUALTY COMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:15-cv-138 — Manish S. Shah, Judge.
____________________
ARGUED FEBRUARY 14, 2017 — DECIDED DECEMBER 14, 2017
____________________
Before ROVNER, WILLIAMS, and HAMILTON, Circuit Judges.
WILLIAMS, Circuit Judge. In September 2002, Sophie Toulon
applied for a Preferred Solution long-term care insurance
policy (the Policy) issued by Continental Casualty Company.
Continental provided Toulon with a “Long Term Care
Insurance Personal Worksheet,” along with the application,
to help her determine whether the Policy would work for her,
2 No. 16-1510
given her financial circumstances. The Worksheet discussed
Continental’s right to increase premiums and how such
increases had been applied in the past. Toulon decided not to
fill out the Worksheet but she signed it and submitted it with
her application.
Toulon’s Policy became effective on July 15, 2002 and it
stated that although Continental could not cancel the Policy
as long as each premium was paid on time, Continental could
make changes to the premium rates. But there was a “10-Year
Rate Guarantee Rider” which stated that premiums would
not be increased during the first ten years after the effective
coverage date. In September 2013, more than eleven years
after the 2002 coverage date, Continental raised Toulon’s
premiums by 76.5%.
In January 2015, Toulon sued Continental, on behalf of
herself and all others who had purchased the Policy, claiming
that Continental had engaged in a scheme to lure elderly
people into purchasing the Policy by offering artificially low
premiums for the first ten years and by not disclosing that
Continental would raise its rates substantially just at the time
when elderly insureds would likely need to make claims.
Toulon amended her complaint twice, ultimately asserting
claims for fraudulent misrepresentation, fraudulent
omissions, unjust enrichment, and violation of the consumer
fraud and deceptive trade practices acts of all fifty states and
the District of Columbia. Continental moved to dismiss the
Second Amended Complaint (the Complaint) under Fed. R.
Civ. P. 12(b)(6) for failure to state a claim, and the district
court granted the motion.
Toulon now appeals from the district court’s dismissal of
the Complaint. We agree with the district court that Toulon
No. 16-1510 3
failed to state claims for fraudulent misrepresentation,
because she did not identify a false statement made by
Continental, or for fraudulent omission, because Continental
did not owe Toulon a duty to disclose. The district court also
properly dismissed Toulon’s claim for violation of the Illinois
Consumer Fraud and Deceptive Practices Act (ICFA), which
as an Illinois resident was the only consumer fraud statute
applicable to Toulon, since she did not identify (1) a deceptive
practice engaged in by Continental, (2) a material omission of
Continental, or (3) an unfair practice. Finally, the district court
was correct to dismiss the count alleging unjust enrichment
because Toulon’s claims of fraud and statutory violation,
upon which her unjust enrichment claim was based, were
legally insufficient and an express contract governed the
parties’ relationship.
I. BACKGROUND
Continental began selling the Policy in 1998. Four years
later, Toulon applied for and ultimately bought the Policy in
2002, which was sold to her by her husband, Gregory Toulon,
an insurance agent. In addition to the application, Continental
asked applicants to fill out a Worksheet which provided,
[L]ong term care insurance can be expensive,
and is not appropriate for everyone. State law
requires the insurance company to ask you to
complete this worksheet to help you and the
insurance company determine whether you
should buy this policy. …
Premium
… The company has a right to increase
premiums in the future. The company has sold
4 No. 16-1510
long term care insurance since 1965 and has sold
this policy since 1998. The company has not
raised its rates for this policy. However, the
company did raise rates by 15% in 1995 on long
term care policies sold seven to 12 years ago that
provided essentially similar coverage.
Have you considered whether you could afford
to keep this policy if premiums were raised, for
example, by 20%?
Instead of completing the Worksheet, Toulon checked off
and signed a statement at the bottom of the Worksheet, which
said, “I choose not to complete this information.”
Immediately below this, her husband and insurance agent,
Gregory Toulon, indicated that he “explained to the applicant
the importance of completing this information.”
Continental issued the Policy to Toulon, with an effective
date of coverage of July 15, 2002 and it stated in large bold
letters on the first page, “GUARANTEED RENEWABLE FOR
LIFE/PREMIUMS SUBJECT TO CHANGE.” Under this
heading, the Policy stated that Continental cannot cancel or
refuse to renew the Policy and cannot change the Policy
without the policyholder’s consent. It then provided,
“However, We may change the premium rates. Any change
will apply to all policies in the same class as Yours in the state
where the policy was issued. We will notify You in writing 31
days before Your premium changes.” The policy had a “10-
Year Rate Guarantee Amendment Rider” attached, which
amended the “Premiums Subject to Change” provision by
stating: “In no event will the premium rate increase during
the initial 10 years after your Effective Date of Coverage.” In
2013, eleven years after her policy was issued and after her
No. 16-1510 5
ten-year rate guarantee rider had expired, Continental
increased premiums for the Policy by 76.5% to $3,140.18
annually.
A. District Court Proceedings
On January 8, 2015, Toulon filed a complaint in the
Northern District of Illinois, alleging that Continental falsely
represented the likelihood and magnitude of premium
increases on the Policy. The complaint stated that she was
bringing the action “on behalf of herself, and all others
similarly situated.” Toulon asserted that the district court had
jurisdiction over the action pursuant to 28 U.S.C.
§ 1332(d)(2)(A), as modified by the Class Action Fairness Act
of 2005 (CAFA), “because at least one member of the [c]lass is
a citizen of a different state than the defendant, there are more
than 100 members of the [c]lass, and upon information and
belief the aggregate amount in controversy exceeds
$5,000,000.00, exclusive of interest and costs.”
Toulon filed her First Amended Complaint, which the
district court dismissed for failure to state a claim. Toulon
then filed a Second Amended Complaint on September 11,
2015, alleging four causes of action: (1) fraudulent
misrepresentation, (2) fraudulent omissions, (3) unjust
enrichment, and (4) violations of the consumer fraud and
deceptive trade practices acts of all fifty states and the District
of Columbia. The Complaint alleged that Toulon was 68 years
old at the time that she applied for the Policy and her highest
level of education was high school. Toulon also stated that she
had no knowledge related to long-term care insurance at the
6 No. 16-1510
time she purchased the Policy and did not know what factors,
variables and assumptions determined the initial premiums.
According to Toulon, Continental “knew that it would
have to drastically increase premiums in the future and that
disclosing the need to do so would scare away customers.”
So, Toulon maintains, Continental devised a scheme to offer
the Policy with artificially lowered premiums and rate-
stabilizing riders, without disclosing that it would implement
significant premium rate increases once the rate-stabilization
period ended.
Continental filed a motion to dismiss the Complaint for
failure to state a claim. The district court granted the motion
and dismissed the Complaint with prejudice. On appeal,
Toulon challenges the district court’s dismissal and maintains
that the Complaint adequately states claims for fraudulent
misrepresentation, fraudulent omissions, unjust enrichment,
and violation of the Illinois Consumer Fraud and Deceptive
Business Practices Act (ICFA). 1
II. ANALYSIS
A. Subject Matter Jurisdiction Exists Pursuant to the
Class Action Fairness Act of 2005 (CAFA)
Before we address the merits of the district court’s
decision granting Continental’s motion to dismiss, we must
first address whether the district court properly asserted
jurisdiction over Toulon’s Complaint. As noted above,
1 Although the Complaint alleges violations of the consumer fraud
and deceptive practices acts of all fifty states and the District of Columbia,
Toulon is a citizen of Illinois and the parties address only ICFA in their
briefs so, like the district court, we will analyze whether the Complaint
states a claim under ICFA.
No. 16-1510 7
Toulon alleged in her Complaint that the district court had
jurisdiction under CAFA which provides, so long as other
requirements are met that are satisfied here,
The district courts shall have original jurisdiction of … a
class action in which—
(A) Any member of a class of plaintiffs is a citizen of a
State different from any defendant …
28 U.S.C. § 1332(d)(2)(A). Although Toulon and Continental
are both citizens of Illinois, because CAFA requires only
“minimal diversity,” jurisdiction was appropriate in the
district court as long as at least one person who would be a
member of the class Toulon sought to represent was a citizen
of a state other than Illinois.
In her Complaint, Toulon defined the class she sought to
represent as
[a]ll persons who purchased ‘Preferred
Solution’ long-term care insurance, in the
United States from any of the Defendants or a
subsidiary or affiliate thereof at any time during
the period from January 1, 1998 to the present.
She further alleged that “[t]he ‘Preferred Solution’ policies
were approved to be sold in at least 32 states,” that “[t]he
Policy was sold in Illinois, as well as throughout the country,”
and that “the members of the Class are geographically
dispersed throughout the United States.” Based on these
allegations, Toulon concluded that “at least one member of
the Class is a citizen of a different state than defendant.”
Continental agreed with Toulon that minimal diversity
existed and that jurisdiction was appropriate under CAFA.
8 No. 16-1510
The parties submitted a joint status report to the district court
stating as much.
When Toulon submitted her Circuit Rule 3(c)(1) docketing
statement to this court, she stated that the district court had
jurisdiction under CAFA because, among other reasons, “a
member of a class of plaintiffs is a citizen of a state different
from defendant.” We found this statement insufficient to
establish minimal diversity and ordered Toulon to identify
the name and state of citizenship of at least one plaintiff
whose citizenship is diverse from Continental. Toulon was
unable to identify a specific class member who is a citizen of
a state other than Illinois. However, Continental moved to
supplement the record with affidavits from two of its
employees to establish the requisite jurisdictional facts.
Continental brought the motions to supplement under 28
U.S.C. § 1653 which provides that “[d]efective allegations of
jurisdiction may be amended upon terms, in the trial or
appellate courts.”
The first affidavit, from Ciaran O’Loughlin, Assistant Vice
President of Long-Term Care Pricing, states that of the more
than 170,000 Preferred Solution insurance policies sold by
Continental in the United States between 1998 and 2003, more
than 158,000 were issued outside of Illinois. The second
affidavit, from Colleen Broomhead, Director of Regulatory
Operations, identified ten people who purchased Preferred
Solution policies during the relevant time period and who
reside in a state other than Illinois. The Broomhead affidavit
contains details about the significant ties each person has to
his or her home state, which is not Illinois, such as living at
the same address for many years, having in their home state
a driver’s license, a job, and/or a registered vehicle, and
No. 16-1510 9
receiving medical care there. Such details establish that the
people described the Broomfield affidavit have resided in
states other than Illinois with the intent to remain in those
other states, and therefore they are citizens of states other than
Illinois. Myrick v. WellPoint, Inc., 764 F.3d 662, 664 (7th Cir.
2014) (“[c]itizenship means domicile (the person’s long-term
plan for a state of habitation) rather than just current
residence”).
We grant Continental’s motions to supplement the record
with the O’Loughlin and Broomhead affidavits pursuant to
28 U.S.C. § 1653. Stockman v. LaCroix, 790 F.2d 584, 587 (7th
Cir. 1986) (leave granted under 28 U.S.C. § 1653 to
supplement record with affidavits regarding the citizenship
of general and limited partners to establish complete
diversity); see also Gold v. Wolpert, 876 F.2d 1327, 1329 n.2 (7th
Cir. 1989). With the affidavits submitted, we find there is
minimal diversity, and the district court properly asserted
jurisdiction under CAFA.
We note that, despite the fact that Toulon chose to file her
case in federal court pursuant to CAFA, Toulon opposed
Continental’s motion to supplement the record with
affidavits to confirm that minimal diversity existed. She also
filed a Motion for Conditional Relief, asking that if we did not
find sufficient evidence that minimal diversity existed, that
we vacate the district court’s opinion and order the case
dismissed without prejudice. Because we have found that
minimal diversity exists in this case, and that the district court
10 No. 16-1510
properly asserted jurisdiction under CAFA, we deny
Toulon’s Motion for Conditional Relief.
B. Standard of Review
“Our review of the district court's dismissal under Federal
Rule of Civil Procedure 12(b)(6) is de novo.” Golden v. State
Farm Mut. Auto. Ins. Co., 745 F.3d 252, 255 (7th Cir. 2014). “To
survive a motion to dismiss, a complaint must contain
sufficient factual matter, if accepted as true, to ‘state a claim
to relief that is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S.
544, 570 (2007)). We “must accept as true all of the allegations
contained in a complaint” that are not legal conclusions. Id.“Threadbare recitals of the elements of a cause of action,
supported by mere conclusory statements, do not suffice.” Id.Claims of fraud are “analyzed under the heightened
pleading standard set forth in Federal Rule of Civil Procedure
9(b). … Rule 9(b) requires a pleading to state with
particularity the circumstances constituting fraud. … [This]
ordinarily requires describing the who, what, when, where,
and how of the fraud.” Camasta v. Jos. A. Bank Clothiers, Inc.,
761 F.3d 732, 736–37 (7th Cir. 2014).
C. Toulon’s Complaint Failed to State Claim for
Fraudulent Misrepresentation
1. No Affirmative False Statements of Material Fact
In Count I of the Complaint, Toulon quotes statements
from the Worksheet that Continental has the right to increase
premiums in the future; Continental has sold the Policy since
1998 and has not raised premiums for it; and in 1995
No. 16-1510 11
Continental raised premiums by 15% for a similar long-term
care policies. Toulon also quotes the question from the
Worksheet: “Have you considered whether you could afford
to keep this policy if the premiums were raised, for example,
by 20%?” In addition, she quotes the statement from the
Policy, “However, We may change the premium rates.” She
asserts that “one of more” of the quoted statements from the
Worksheet and the statement from the Policy that Continental
“may” change the premium rates are false statements of
material fact. She also alleges that these statements falsely
imply that a premium rate increase is uncertain, but if there is
a premium rate increase, it will be limited to 15 to 20%.
Because Continental allegedly knew that it would impose a
substantial premium rate increase more than ten years in the
future, Toulon asserts that the statements were “express and
implied misleading representations” that Toulon and the
class relied on to their detriment. So, Toulon concludes that
Continental committed fraudulent misrepresentation.
To state a claim for fraudulent misrepresentation a
plaintiff must allege:
(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
upon the truth of the statement; and (5) damage
to the plaintiff resulting from such reliance.
Doe v. Dilling, 888 N.E.2d 24, 35–36 (Ill. 2008) (citations
omitted). We agree with the district court that Toulon has
failed to adequately explain the first element of her claim
because she does not allege how the statements in the
Worksheet or the Policy are false. She does not and cannot
12 No. 16-1510
challenge the accuracy of the statements in the Worksheet that
Continental (1) had the right to increase premiums in the
future; (2) offered the Policy since 1998; (3) had not yet raised
its rates on the Policy; and (4) in 1995 had raised its rates on a
similar long-term care policies by 15%. Similarly, Toulon does
not and cannot explain how a question regarding whether the
applicant can afford the Policy if rates are raised by, for
example, 20% is false. A question, by its very nature, cannot
be a false statement of material fact. This is especially true
here since the question Toulon identifies as false or fraudulent
came directly from the Illinois regulation that dictates that
content of the Worksheet. See 50 Ill. Adm. Code 2012 Ex. F
(West 2002).
In addition, Toulon does not explain how the statement
that Continental “may” change rates is false. She asserts that
because Continental knew that it would increase premiums
after the rate-stabilization period ended, it misrepresented a
certainty that rates would change by stating that there was
only a mere possibility that rates “may” change. Like the
district court, we are not convinced that stating that the rates
“may” change, meaning they might or might not change,
would be a falsehood, even if Continental knew the rates
would change. More importantly, we believe Toulon is
misinterpreting the meaning of the word “may” in the
sentence. When read in context, the word “may” seems to be
used in the sense of “can” or “has the right to” rather than
“might possibly.” The full context in which the sentence
appears is as follows:
GUARANTEED RENEWABLE FOR
LIFE/PREMIUMS SUBJECT TO CHANGE
No. 16-1510 13
Your policy will remain in effect during Your
lifetime as long as each premium is paid on
time. We cannot cancel or refuse to renew Your
policy. We cannot change Your policy without
Your consent. However, We may change the
premium rates. Any change will apply to all
policies in the same class as Yours in the state
where the policy was issued. We will notify you
in writing 31 days before Your premium
changes.
The heading of the section, which appears in bold capital
letters on the first page of the Policy, indicates that while the
Policy is guaranteed renewable for life, the premiums are not
guaranteed to stay the same and are subject to change. The
text that follows bears this out. The second and third
sentences explain what Continental “cannot” do—it cannot
cancel or refuse to renew the Policy, and it cannot change the
Policy without the policyholder’s consent. Then, the fourth
sentence, which is highlighted by Toulon, starts with
“However,” and goes on to state, “We may change the
premium rates.” The word “However” indicates that what
follows is an action Continental “can” take, as opposed to the
actions it “cannot” take. So, in the context of the preceding
sentences, the word “may” means “can” and not “might
possibly.” See Rakes v. Life Investors Ins. Co. of America, 582 F.3d
886, 890 (8th Cir. 2009) (long-term care insurance policy
stated, “We cannot cancel or refuse to renew this Policy. …
We can, however, change Your premiums based on Your
premium class.”).
This is further reinforced by the sentences that follow,
which explain to whom such a rate change would apply as
14 No. 16-1510
well as how and when it would be communicated. It makes
more sense to give this information after confirming that
Continental has the right to change the rates as opposed to
giving the information even though the rates “may or may
not” change. Finally, this reading of the sentence is consistent
with the statement in the Worksheet that “[t]he company has
a right to increase premiums in the future.” Because the
sentence, “[h]owever, We may change the premiums rates”
means that Continental “can” or “has the right to” change the
premium rates, Toulon cannot allege that the sentence is a
false statement of material fact. So, she has not identified any
explicit, false statements of material fact to satisfy the first
element for a claim of fraudulent misrepresentation. See id. at
894 (no fraudulent misrepresentation when rates were raised
for long-term care insurance policy because language in
policy made clear that “plaintiffs were not guaranteed a level
premium for life.”).
2. No Implied Falsehood or Justifiable
Reliance
Even if Continental did not make any explicit false
statements of material fact, Toulon maintains that her claim
for fraudulent misrepresentation should survive because
Continental falsely implied that “that the likelihood and
extent of future premium rate increases was unknown, but if
necessary would fall in a range of 15 to 20% … .” She bases
this assertion on the Worksheet’s statement that in 1995
Continental had raised its rates by 15% on similar long-term
care policies and it included in the Worksheet the question,
“Have you considered whether you could afford to keep this
policy if the premiums were raised, for example, by 20%?”
This statement and question, whether considered separately
No. 16-1510 15
or together, cannot be interpreted as a promise that
Continental would not raise its premium rates by more than
20%.
As noted earlier, Illinois regulations required Continental
to issue the Worksheet along with the application for its long-
term care policy and the regulations also dictated what
should be contained in the Worksheet. 50 Ill. Admin. Code
2012.123(c)(2) (West 2002); 50 Ill. Adm. Code 2012 Ex. F (West
2002). Both the statement about how much Continental had
raised the premium on similar policies in the past and the
question about whether the applicant could afford to keep the
policy if the premiums were raised by 20% came directly from
the model Worksheet contained in the Illinois regulation. 50
Ill. Adm. Code 2012 Ex. F (West 2002). While it is true that the
question about whether the applicant could afford the policy
if the premiums were raised by 20% was optional, rather than
required by the regulation, this distinction cannot convert a
hypothetical question suggested by a regulation into a false
promise to never raise premium rates beyond 20%. We agree
with the district court’s conclusion that “the statements
contained in the Worksheet and Policy were not of the type
from which ‘fraud is the necessary or probable inference.’”
Toulon v. Continental Casualty Co., 2016 WL 561909 at *3 (N.D.
Ill. Feb. 12, 2016) (quoting Connick v. Suzuki Motor Co. Ltd., 675
N.E.2d 591 (Ill. 1996)).
Toulon contends that the statement about Continental’s
previous 15% rate increase on similar policies and the
question about being able to afford the Policy if premium
rates increased by 20% were “tacit misrepresentations” that
the premiums would not increase by more than 20% and cites
Glazewski v. Coronet Ins. Co., 483 N.E.2d 1263 (Ill. 1985) in
16 No. 16-1510
support. However, Glazewski is distinguishable from the
instant case. In Glazewski, the Illinois Supreme Court found
the plaintiff had stated a claim for fraud because “the issuance
of coverage by an insurance company in return for a premium
is a tacit representation to the consumer that the coverage has
value,” yet the policy purchased by the plaintiffs in Glazewski
had no value. Id. at 1266. In contrast, in Toulon’s case, the
Policy she paid for with a rate-stabilized premium for ten
years had substantial value, even if she did not make a claim
during that period. Charles Hester Enter., Inc. v. Illinois
Founders Ins. Co., 499 N.E.2d 1319, 1324 (Ill. 1986) (no false
statement of material fact because insurance policy had
value). Finally, there were no actions or statements by
Continental that “tacitly” represented that premiums would
never be raised, or if they were raised, that the increase would
not exceed 20%.
Furthermore, if Toulon or others who purchased the
Policy mistakenly interpreted the statements above to be an
implied promise to not raise premiums more than 20%,
reliance on such an implied promise would not be justified
since the Worksheet stated that “[t]he company has a right to
increase premiums in the future” and it did not state that this
right was limited to only 20%. Similarly, the Policy stated
“Premiums Subject to Change” and “We may change the
premium rates,” without putting a limitation of 20%, or any
other percentage, on either statement. Given the many
statements that premiums were subject to change without
limitation, neither Toulon nor any class members could have
justifiably relied on an allegedly implied promise to not raise
premium rates more than 20%. See Davis v. G.N. Mortg. Corp.,
396 F.3d 869, 882-83 (7th Cir. 2005). Because Toulon failed to
adequately allege a false representation of material fact and
No. 16-1510 17
justifiable reliance, the district court was correct to dismiss her
claim for fraudulent misrepresentation.
D. Complaint Did Not State Claim for Fraudulent
Omissions
In Count II, Toulon attempts to state a claim for fraudulent
omissions (also known as fraudulent concealment), alleging
that Continental fraudulently failed to disclose that it was
going to raise premium rates on the Policy far in excess of 20%
after the rate-stabilization period ended. “In order to state a
claim for fraudulent concealment, a plaintiff must allege that
the defendant concealed a material fact when he was under a
duty to disclose that fact to plaintiff.” Connick, 174 675 N.E.2d
at 593. A duty to disclose may be based on a fiduciary
relationship or a relationship of trust and confidence where
“defendant [is] in a position of influence and superiority over
plaintiff.” Id. Or it may arise when a defendant tells a half-
truth and then becomes obligated to tell the full truth. Crichton
v. Golden Rule Ins. Co., 576 F.3d 392, 397-98 (7th Cir. 2009).
Toulon admits that under Illinois law, no fiduciary
relationship exists between an insurer and an insured.
Nevertheless, she maintains that Continental had a duty to
disclose the substantial premium increase because she had a
special relationship of trust and confidence with Continental
and because Continental told a half-truth that premiums
“may” increase and therefore was obligated to tell the full
truth that premiums would increase.
Before we analyze whether Continental had a duty to
disclose a substantial premium increase, we must first
examine whether Toulon pled sufficient facts to support her
contention that Continental “knew” that, more than ten years
in the future, it would seek to impose an increase in its
18 No. 16-1510
premium rates “far in excess of 20%.” To support this
contention, Toulon cites various studies and standards,
almost all of which were published after Continental
introduced and priced the Policy in 1998. Toulon also cites
Continental’s experience, but as was disclosed in the
Worksheet, Continental’s experience had been that in the ten
years before it sold the Policy to Toulon, it had increased
premiums on similar policies by 15%. So, its own experience
would not dictate that Continental knew it would increase
rates “far in excess of 20%” over a decade later.
Also, regardless of whether Continental knew it would
want to increase rates substantially many years in the future,
it would not be able to do so without regulatory approval.
Despite Toulon’s allegations in the Complaint to the contrary,
Continental could not “know” whether, more than ten years
in the future, the regulators would approve a rate increase.
For all these reasons, it seems just as likely that Continental
did not “know” at the time it priced and issued the Policy in
1998 that in 2013 it would seek to, and be able to, raise its rates
“far in excess in 20%.” See Twombly, 550 U.S. at 570 (need to
allege sufficient facts to push claim “across the line from
conceivable to plausible”).
However, even if Toulon had alleged sufficient facts to
support her claim that Continental knew it would plan to and
be able to substantially increase rates over ten years in the
future, we cannot find she has sufficiently alleged that
Continental had a duty to disclose this information. In Illinois,
“the standard for identifying a special trust relationship is
extremely similar to that of a fiduciary relationship. … [S]tate
and federal courts in Illinois have rarely found a special trust
relationship to exist in the absence of a more formal fiduciary
No. 16-1510 19
one.” Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 571 (7th
Cir. 2012) (internal quotation marks and citations omitted). In
Wigod, we examined a number of Illinois cases and concluded
that “the defendant accused of fraudulent concealment must
exercise overwhelming influence over the plaintiff … [and]
asymmetric information alone does not show the degree of
dominance needed to establish a special trust relationship.”
Id. at 572–73 (internal quotation marks and citations omitted).
Nevertheless, asymmetric information is the main reason
Toulon gives in the Complaint to support her contention that
she and Continental had a special relationship of trust and
confidence. Toulon alleges that her “highest level of
education was high school” and she “had no knowledge
related to Long Term Care Insurance.” But Toulon studiously
avoids any mention in the Complaint about what knowledge
her husband, who was the insurance agent who sold her the
Policy, had regarding long-term care insurance. Toulon also
maintains that she “placed her trust and confidence in
Continental based on its decades-long experience with long-
term care insurance” compared to her “relative inexperience
and lack of sophistication.” Yet, to the extent that Toulon
claims that she relied on Continental to help her determine if
the Policy was affordable for her, such a claim is undermined
by the fact that she did not fill out the Worksheet and did not
share the necessary financial information for Continental to
help her make that determination.
We agree with the district court that if Toulon’s allegations
were sufficient to support a claim of a special relationship that
resulted in a duty to disclose, “then any insurer that complied
with Illinois’s disclosure requirements would find itself in
such a relationship with every elderly insured who had been
20 No. 16-1510
unsophisticated in the ways of insurance at the time of
purchase. Such a holding would contradict Illinois’s rule
against insurers being fiduciaries as a matter of law.” Toulon,
2016 WL 561909 at *4.
Toulon asserts that an alternative reason why Continental
had a duty to disclose is because by stating that it “may”
impose a rate increase, Continental told a half-truth that then
imposed on it a duty to tell the whole truth that Continental
definitely would impose a rate increase. Crichton, 576 F.3d at
398 (“a duty to disclose may arise … if the defendant makes
an affirmative statement that it passes off as the whole truth
while omitting material facts that render the statement a
misleading ‘half-truth’”). As we said, we do not believe that
the sentence, “[h]owever, We may change the premium rates”
means that it is possible that Continental will change the
premium rates. We think it means Continental has the right
to change the premium rates, which cannot be deemed to be
a half-truth. For this reason, Continental had no duty to
disclose their alleged knowledge that they would increase
premium rates substantially at the end of the rate-
stabilization period.
E. Toulon’s Complaint Did Not State Claim for
Violation of the Illinois Consumer Fraud and
Deceptive Practices Act (ICFA)
1. Toulon Does Not Sufficiently Allege Continental
Engaged in Deceptive Act
Based on the same allegations that she used to support her
claims for fraudulent misrepresentation and fraudulent
omissions, Toulon alleges that Continental violated ICFA by
failing to disclose that premiums would definitely increase
No. 16-1510 21
after the rate-stabilization period ended and that the increase
would be far in excess of 20%. The elements of a claim under
ICFA are:
(1) the defendant undertook a deceptive act or
practice; (2) the defendant intended that the
plaintiff rely on the deception; (3) the deception
occurred in the course of trade and commerce;
(4) actual damage to the plaintiff occurred; and
(5) the damage complained of was proximately
caused by the deception. … [A] complaint
made pursuant to the ICFA must be pled with
the same specificity as that required under
common law fraud.
Davis, 396 F.3d at 883 (internal quotation marks and citations
omitted). “[W]hen analyzing a claim under the ICFA, the
allegedly deceptive act must be looked upon in light of the
totality of the information made available to the plaintiff.” Id.
at 884.
We concur with the district court that Toulon failed to
adequately allege that Continental engaged in a deceptive act
or practice. Toulon again asserts that Continental’s statements
that it “may” change the premium rates and that it previously
raised rates on similar long-term care policies by 15%,
combined with the question in the Worksheet asking if
applicants could afford the policy if premiums were raised,
for example, by 20%, created a false impression that it was
uncertain whether Continental would raise rates and, if it did,
it would raise rates by no more than 15 or 20%. We disagree.
As we explained when discussing Toulon’s fraudulent
misrepresentation claim, we do not believe the statements
and question can be interpreted as a promise that rates would
22 No. 16-1510
not be raised more than 15 or 20%. In addition, the statement
“Premiums Subject to Change” from the Policy and the
explicit statement in the Worksheet, “The company has a right
to increase premiums in the future,” should have made clear
to applicants that Continental could change the premium
rates without limitation.
Similarly, Toulon did not adequately allege that
Continental violated ICFA by failing to disclose a material
fact. Toulon asserts that Continental “[c]oncealed, suppressed
and omitted that it would significantly increase premium
rates after the expiration of the rider period …” First, we are
not convinced that Toulon alleged sufficient facts to support
her contention that Continental “knew” that more than ten
years in the future it would seek to, and be able to raise rates
“far in excess of 20%.” Second, Continental never stated that
it would not raise premium rates or that it would not raise
premium rates more than 20%. To the contrary, Continental
made clear it could raise premium rates, without limitation,
after the rate-stabilization period ended. So, if Continental
“knew” that, over ten years in the future, it could and would
raise premiums more than 20%, its failure to disclose this to
Toulon and other applicants means, at worst, that Continental
could have given applicants more detailed information. This
is not sufficient to state a claim under ICFA. Phillips v. DePaul
University, 19 N.E.3d 1019, 1030 (Ill. App. Ct. 2014) (no ICFA
violation where information published by defendant
“certainly could have been more specific” but where
defendant made “no affirmative misrepresentation”).
Another reason why Toulon failed to state a claim for
omission of a material fact under ICFA is that she did not
plead that she would not have bought the Policy if she had
No. 16-1510 23
known about the premium increase after the expiration of the
rate-stabilization period. “An omission is ‘material’ if the
plaintiff would have acted differently had it been aware of it,
or if it concerned the type of information upon which it would
be expected to rely in making its decision to act.” DOD
Technologies v. Mesirow Ins. Services, Inc., 887 N.E.2d 1, 10 (Ill.
App. Ct. 2008). Toulon alleged that “Continental knew that if
it advised Sophie P. Toulon … that there would be a certain
and significant increase in premium rates in the future, that it
would dissuade her … from obtaining long term care
insurance from Continental.” This statement is not the same
as an affirmative statement that Toulon would not have
bought the Policy had she known there was going to be a
substantial rate increase more than ten years in the future.
Perhaps Toulon cannot make such a statement because, as her
counsel stated at oral argument, Toulon continues to maintain
the Policy by paying the increased premium. Regardless of
the reason, the Complaint does not include an affirmative
statement that, had she known about the premium increase in
advance, Toulon would not have bought the Policy. This is an
additional reason why Toulon has failed to state a claim that
Continental made a “material” omission in violation of ICFA.
Id. (no claim stated for omission of material fact in violation
of ICFA because plaintiff did not allege it would not have
purchased insurance had it known about contingent
commissions received by defendant); see also Galvan v.
Northwestern Memorial Hosp., 888 N.E.2d 529, 541 (Ill. App. Ct.
2008).
24 No. 16-1510
2. Toulon Does Not Sufficiently Allege That
Continental Engaged in Unfair Practice
Toulon also asserts that Continental violated ICFA
because, by failing to disclose the substantial premium
increase that would take place more than ten years in the
future, Continental engaged in an “unfair practice.” When
assessing whether a practice is “unfair” under ICFA, the
following factors are considered: “(1) whether the practice
offends public policy; (2) whether it is immoral, unethical,
oppressive, or unscrupulous; and (3) whether it causes
substantial injury to consumers.” Cohen v. American Sec. Ins.
Co., 735 F.3d 601, 609 (7th Cir. 2013) (citations omitted).
In her brief Toulon specifies two provisions of the Illinois
Administrative Code that are the public policies that were
allegedly violated by Continental’s failure to disclose a
significant premium increase after the rate-stabilization
period ended. The first Administrative Code section she cites
cannot be relied on by Toulon because it applies to “any
traditional long-term care policy issued … on or after January
1, 2003,” and Toulon purchased the Policy in 2002. 50 Ill.
Adm. Code 2012.64(a) (West 2002). The other Administrative
Code section, 50 Ill. Adm. Code 2012.122(b)(4) (West 2002),
prohibits “[m]isrepresenting a material fact in selling or
offering to sell a traditional long-term care insurance policy.”
However, as we have stated above, none of the statements
from the Worksheet or Policy identified by Toulon
misrepresents a material fact, so this public policy was not
violated by Continental.
Toulon has also failed to allege facts to support a claim
that Continental’s actions in selling the Policy to Toulon were
“immoral, unethical, oppressive, or unscrupulous.” Cohen,
No. 16-1510 25
735 F.3d at 609. The Policy and Worksheet made clear that
Continental had the right to raise premiums after the rate-
stabilization period ended. “[T]here is nothing oppressive or
unscrupulous about giving a counterparty the choice to fulfill
his contractual duties or be declared in default for failing to
do so.” Id. at 610. If Toulon did not want to buy the Policy, she
could have looked elsewhere to determine if other companies
were selling long-term care policies that did not have rates
that could be raised in the future. Because Toulon was in no
way forced to buy the Policy, “there was a total absence of the
type of oppressiveness and lack of meaningful choice
necessary to establish unfairness …” in Continental’s sale of
the Policy to Toulon. Id. (quoting Robinson v. Toyota Motor
Credit Corp., 775 N.E.2d 951, 962 (Ill. 2002)).
Finally, Toulon does not adequately allege that
Continental caused her substantial injury under the law. She
claims that the 76.5% increase in her premium significantly
harmed her because it cost her thousands of dollars. Although
we recognize that the increase in the premium was
significant, under Illinois law, “charging an unconscionably
high price generally is insufficient to establish a claim for
unfairness.” Robinson, 775 N.E.2d at 961. Moreover, to
establish harm under ICFA, a plaintiff must show “that [s]he
suffered substantial injury, and that [s]he could not avoid this
injury.” Siegel v. Shell Oil Co., 612 F.3d 932, 937 (7th Cir. 2010).
Like the plaintiff in Siegel, Toulon cannot establish substantial
injury because she could have avoided the harm by
purchasing a different long-term care insurance policy from
another company. For all these reasons, the district court was
correct to dismiss Toulon’s claim purporting to allege a
violation of ICFA.
26 No. 16-1510
F. Toulon Failed To State Claim For Unjust Enrichment
In Count III of the Complaint, Toulon alleged that
Continental obtained contracts for insurance that allowed
Continental to raise premiums by more than 15% through
fraudulent misrepresentations. Toulon asserted that because
Continental procured the insurance contracts “through illegal
and improper means,” Continental has been unjustly
enriched by the premium payments made by Toulon and
others in the class she seeks to represent. “Unjust enrichment
does not constitute an independent cause of action. Rather, it
is a condition that may be brought about by unlawful or
improper conduct as defined by law, such as fraud, duress or
undue influence, or, alternatively, it may be based on
contracts which are implied in law.” Saletech, LLC v. East Balt,
Inc., 20 N.E.3d 796, 808 (1st Dist. 2014) (internal quotation
marks and citations omitted). We agree with the district court
that Toulon failed to state a claim for unjust enrichment
because she failed to state a claim for fraud or for violation of
ICFA and because there is an actual contract governing the
parties’ relationship so one cannot be implied in law.
Toulon asserts that “because a legally sufficient claim has
been established under the ICFA, Toulon has also established
a legally sufficient claim for unjust enrichment.” As explained
earlier, Toulon’s ICFA claim was not legally sufficient
because she did not identify a deceptive act or practice of
Continental, she did not adequately allege that Continental
failed to disclose a material fact, and she did not sufficiently
allege that Continental engaged in an “unfair practice.”
Because Toulon’s ICFA claim, as well as her claims for
fraudulent misrepresentation and fraudulent concealment,
were all properly dismissed, the district court correctly
No. 16-1510 27
dismissed her unjust enrichment claim. Ass’n Benefit Serv., Inc.
v. Caremark RX, Inc., 493 F.3d 841, 855 (7th Cir. 2007) (“when
the plaintiff’s particular theory of unjust enrichment is based
on alleged fraudulent dealings and we reject the plaintiff’s
claims that those dealings, indeed, were fraudulent, the theory
of unjust enrichment that the plaintiff has pursued is no
longer viable”) (emphasis in original).
An additional reason why Toulon’s claim for unjust
enrichment was properly dismissed was because there was an
actual contract that governed her relationship with
Continental. “A claim for unjust enrichment is ‘based upon an
implied contract; where there is a specific contract that
governs the relationship of the parties, the doctrine has no
application.’” Blythe Holdings, Inc. v. DeAngelis, 750 F.3d 653,
658 (7th Cir. 2014) (quoting People ex rel. Hartigan v. E&E
Hauling, Inc., 607 N.E.2d 165, 177 (Ill. 1992)). There is no
question that a contract for insurance governs the relationship
between Toulon and Continental. Toulon refers to the Policy
throughout the Complaint, including within the unjust
enrichment count, and attached it as an exhibit to the
Complaint. For this additional reason, the district court was
correct to dismiss her claim for unjust enrichment. Guinn v.
Hoskins Chevrolet, 836 N.E.2d 681, 704 (Ill. App. Ct. 2005)
(unjust enrichment claim properly dismissed because
plaintiff made references to retail installment contract
between plaintiff and defendant throughout the complaint
and attached contract as an exhibit to complaint).
28 No. 16-1510
III. CONCLUSION
We AFFIRM the district court’s dismissal of Toulon’s
Second Amended Complaint.