Illinois Non-Profit Risk Management Association v. Human Services Center of Southern Metro-East

NO. 4-07-0472 Filed 1/9/08
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
ILLINOIS NON-PROFIT RISK MANAGEMENT ) Appeal from
ASSOCIATION, ) Circuit Court of
Plaintiff, ) Sangamon County
v. ) Nos. 03L34
HUMAN SERVICE CENTER OF SOUTHERN ) 03L35
METRO-EAST, TRADE INDUSTRIES, CAREER ) 03L75
DEVELOPMENT CENTER, FIVE STAR ) 03LM341
INDUSTRIES, and LAWRENCE CRAWFORD ) 03LM511
ASSOCIATION FOR EXCEPTIONAL CITIZENS, ) 05LM1345
Defendants and Third-Party )
Plaintiffs-Appellants, )
v. )
RISK MANAGEMENT ADMINISTRATORS, INC., )
STANLEY W. MURRAY, DAVID STOVER, )
KENNETH BEST, GREG SHAVER, THOM )
POLLOCK, DAVID BAKER, ARLAN McCLAIN, )
and JO McVEY, ) Honorable
Third-Party Defendants- ) Leslie J. Graves,
Appellees. ) Judge Presiding.
______________________________________________________________
JUSTICE TURNER delivered the opinion of the court:
Defendants and third-party plaintiffs (pool members),
Human Service Center of Southern Metro-East, Trade Industries,
Career Development Center, Five Star Industries, and Lawrence
Crawford Association for Exceptional Citizens (Lawrence Crawford)
appeal from the dismissal with prejudice and without leave to
amend their third-party complaint concerning a workers' compensa-
tion self-insurance pool against third-party defendants, Risk
Management Administrators, Inc. (RMA); Stanley W. Murray; David
Stover; Kenneth Best; Greg Shaver; Thom Pollock; David Baker;
Arlan McClain; and Jo McVey.
On appeal, the pool members argue the trial court erred
in dismissing their claims against third-party defendants. We
affirm.
I. BACKGROUND
Plaintiff, Illinois Non-Profit Risk Management Associa-
tion (INRMA), is a group workers' compensation self-insurance
pool organized under the Illinois Insurance Code (Insurance Code)
(215 ILCS 5/107a.04 (West 2002)). The pool members are five
former insureds of the pool. RMA is the pool's administrator.
Murray was the president of RMA. Stover, Best, Shaver, McClain,
McVey, Pollock, and Baker were directors and trustees (trustees)
of INRMA.
The pool members are not-for-profit agencies providing
rehabilitation services to Illinois residents with physical and
mental disabilities. At various times, pool members entered into
pooling agreements with INRMA that provided the pool members with
workers' compensation insurance coverage. The pooling agreements
provided each pool member shall make annual contributions or
premiums to the pool. Annual contributions were determined by
using standard Insurance Code rates and each member's experience-
modification factor. A deposit in the amount of 25% of the
estimated annual contribution was due at the beginning of each
pool year. Along with the annual contributions, pool members
were subject to assessments, as necessary, for additional contri-
butions on a pro rata basis of annual contributions. Assessments
were levied when the loss experience exceeded the total net
premiums collected. The pooling agreement provided members were
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liable for these year-end assessments for a three-year period
regardless of whether they renewed their membership in the pool
for the following year.
In February and March 2003, INRMA filed separate
complaints against these five pool members for failure to pay the
year-end assessments in breach of the parties' pooling agree-
ments. Each pool member filed answers and counterclaims against
INRMA and brought third-party actions against Murray, RMA, and
the trustees. The cases were eventually consolidated.
In January 2005, the pool members, excluding Lawrence
Crawford, filed a second-amended third-party complaint against
Murray, RMA, and the trustees. Lawrence Crawford filed its
third-party complaint in February 2005. The complaints set forth
claims of breach of fiduciary duty (RMA and Murray) (count I),
fraud (RMA and Murray) (count II), negligent misrepresentation
(RMA and Murray) (count III), civil conspiracy (RMA and Murray)
(count IV), breach of contract (RMA) (count V), and breach of
fiduciary duty (trustees) (count VI). Count III was voluntarily
withdrawn.
The third-party complaints alleged the pool members
paid all annual contributions required under the pooling agree-
ment. By 1999, the pool had developed a deficit and INRMA levied
a $2 million assessment against the pool members. At that time,
RMA, Murray, and the trustees allegedly represented to pool
members that INRMA did not have a cash-flow problem, and the $2
million was not to pay operating expenses or claims losses but
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would be set aside with interest being returned to the pool. The
dispute arose when INRMA levied three "extraordinary assess-
ments," including $2 million in 2001, $3 million in 2002, and an
additional $3.6 million dissolution assessment in 2002. The pool
members refused to pay the additional assessments. INRMA ceased
writing workers' compensation coverage in April 2002. The pool
members alleged Murray, Stover, and others engaged in a scheme to
deceive INRMA members about the true performance of the pool by
manipulating INRMA's finances and making public statements about
INRMA's financial performance that were false and misleading.
The third-party complaints alleged INRMA made payments
of $161,740 in 1996 and $102,728 in 1997 to Risk Management
Solutions, Inc. (RMS), despite Murray's letter to the Illinois
Department of Insurance that RMS did not have operational employ-
ees or staff and did not perform services for INRMA during 1996
and 1997. The pool members also alleged INRMA paid $59,836 to
FIRM, Inc., for promotional and newsletter services. The news-
letters allegedly encouraged brokers of the pool to divert "good
risk" existing and potential pool members from INRMA to a work-
ers' compensation insurance entity controlled by Murray. The
pool members alleged RMA, Murray, and the trustees participated
in and approved the diversion of "good risk" members from the
pool.
The third-party complaints alleged RMA owed a fiduciary
duty to the pool members and breached that duty by, inter alia,
misrepresenting the financial condition of the pool to pool
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members. In the civil-conspiracy count, the pool members alleged
RMA contracted with Ernst & Young to provide accounting services
for INRMA. RMA and Murray then allegedly conspired with Ernst &
Young to prepare inaccurate, untruthful, and deceptive reports
for the purpose of misrepresenting the true financial condition
of the pool. The pool members alleged they suffered damage in
excess of $260,000, collectively, based on extraordinary and
unwarranted assessments.
In January 2006, the trustees filed a motion to dismiss
count VI of the second-amended third-party complaint pursuant to
section 2-615 of the Code of Civil Procedure (Procedure Code)
(735 ILCS 5/2-615 (West 2006)). The trustees argued the pool
members could not maintain an action against them for breach of
fiduciary duty, and even if they could, the complaint failed to
allege facts sufficient to establish a fiduciary relationship.
RMA and Murray also filed a motion to dismiss counts I,
II, IV, and V pursuant to section 2-619.1 of the Procedure Code
(735 ILCS 5/2-619.1 (West 2006)). RMA and Murray argued the pool
members' claim for breach of fiduciary duty in count I was barred
by the doctrines of res judicata and collateral estoppel based on
this court's decision in Illinois Non Profit Risk Management
Ass'n v. Support Systems & Services, Inc., No. 4-05-0161 (October
21, 2005) (unpublished order under Supreme Court Rule 23) (here-
inafter SSS). Count II's allegation of fraud was subject to
dismissal because it was not pled with sufficient particularity
and specificity. Further, counts IV and V failed to state a
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cause of action.
In May 2007, the trial court dismissed counts I, II,
IV, and V against RMA and Murray with prejudice and without leave
to amend. The court also dismissed count VI against the trustees
with prejudice and without leave to amend. The court entered a
finding that no just reason existed for delaying enforcement or
appeal. See 210 Ill. 2d R. 304(a). This appeal followed.
II. ANALYSIS
A. Standard of Review
In the case sub judice, the trustees filed a motion to
dismiss under section 2-615, while RMA and Murray filed a motion
to dismiss under section 2-619.1. A motion to dismiss under
section 2-615 of the Procedure Code challenges only the legal
sufficiency of the complaint. Russell v. Blagojevich, 367 Ill.
App. 3d 530, 532, 853 N.E.2d 920, 923 (2006). A motion under
section 2-619.1 allows a party to "combine a section 2-615 motion
to dismiss based upon a plaintiff's substantially insufficient
pleadings with a section 2-619 motion to dismiss based upon
certain defects or defenses." Edelman, Combs & Latturner v.
Hinshaw & Culbertson, 338 Ill. App. 3d 156, 164, 788 N.E.2d 740,
747 (2003). When reviewing a dismissal pursuant to sections 2-
615 and 2-619 of the Procedure Code (735 ILCS 5/2-615, 2-619
(West 2006)), we accept all well-pleaded facts as true and make
all reasonable inferences therefrom. Zahl v. Krupa, 365 Ill.
App. 3d 653, 658, 850 N.E.2d 304, 309 (2006). We review an order
granting a motion to dismiss pursuant to section 2-615 or 2-619
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de novo. Edelman, 338 Ill. App. 3d at 164, 788 N.E.2d at 747-48.
B. Breach of Fiduciary Duty (RMA and Murray)
In dismissing the pool members' third-party complaint,
the trial court did not specify the theories relied upon for
dismissal. The pool members argue the court erred in dismissing
their claim for breach of fiduciary duty against RMA and Murray
(count I) pursuant to sections 2-619(a)(4) and 2-615 of the
Procedure Code because the claim was not barred by res judicata
or collateral estoppel or by section 2-2201(b) of the Procedure
Code (735 ILCS 5/2-2201(b) (West 2006)). We disagree.
Section 2-619(a)(4) of the Procedure Code (735 ILCS
5/2-619(a)(4) (West 2006)) allows a trial court to dismiss a
cause of action on the grounds it is "barred by a prior judg-
ment." This section incorporates the doctrine of res judicata
and collateral estoppel. Yorulmazoglu v. Lake Forest Hospital,
359 Ill. App. 3d 554, 558, 834 N.E.2d 468, 471 (2005).
"Under the doctrine of res judicata, a final
judgment on the merits rendered by a court of
competent jurisdiction acts as a bar to a
subsequent suit between the parties involving
the same cause of action. [Citations.] The
bar extends to what was actually decided in
the first action, as well as those matters
that could have been decided in that suit.
[Citation.] For the doctrine of res judicata
to apply, the following three requirements
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must be satisfied: (1) there was a final
judgment on the merits rendered by a court of
competent jurisdiction, (2) there is an iden-
tity of cause of action, and (3) there is an
identity of parties or their privies." River
Park, Inc. v. City of Highland Park, 184 Ill.
2d 290, 302, 703 N.E.2d 883, 889 (1998).
"Res judicata promotes judicial economy by preventing repetitive
litigation and also protects parties from being forced to bear
the unjust burden of relitigating essentially the same case."
Arvia v. Madigan, 209 Ill. 2d 520, 533, 809 N.E.2d 88, 97 (2004).
Here, the pool members do not dispute that a final
judgment on the merits had been rendered in SSS. Instead, they
argue both cases involved distinct causes of action and no
identity of parties or their privies existed between them and the
third-party plaintiff in SSS. In that case, the third-party
plaintiff, Support Systems & Services, Inc. (Support Systems),
was a member of the same pool as in the present case. In Novem-
ber 2002, INRMA filed a complaint against Support Systems for
failure to pay its year-end assessments in breach of the pooling
agreement. Support Systems filed an amended third-party com-
plaint against RMA alleging breach of contract, breach of fidu-
ciary duty, and constructive fraud based on RMA's representations
that it was on sound financial footing and the assessments would
put the program back in good shape. This court found, inter
alia, no authority to establish the existence of a fiduciary
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relationship between Support Systems and RMA. This court found,
in part, as follows:
"There is no fiduciary relationship between
an insurer and its insured. If there is no
fiduciary relationship between INRMA and
[Support Systems], INRMA (the principal) owes
no fiduciary duty to [Support Systems], its
insured. Therefore, RMA, as INRMA's agent,
owes no fiduciary duty to [Support Systems]
either." SSS, slip order at 18.
In determining the identity of causes of action, our
supreme court has adopted the transactional test. River Park,
184 Ill. 2d at 311, 703 N.E.2d at 893. Under that test, "sepa-
rate claims will be considered the same cause of action for
purposes of res judicata if they arise from a single group of
operative facts, regardless of whether they assert different
theories of relief." River Park, 184 Ill. 2d at 311, 703 N.E.2d
at 893. Moreover, "the transactional test permits claims to be
considered part of the same cause of action even if there is not
a substantial overlap of evidence, so long as they arise from the
same transaction." River Park, 184 Ill. 2d at 311, 703 N.E.2d at
893.
Here, the pool members' claims arise from the same
group of operative facts as in SSS. In a motion to consolidate
and transfer, the pool members stated the SSS case "arose from
the same acts and events" as the present consolidated cases.
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Thus, the pool members' cause of action here was the same as set
forth in SSS, even though different theories of relief have been
asserted.
The pool members, however, maintain they were not in
privity with the third-party plaintiff in SSS, thereby precluding
the application of res judicata. "Privity exists between two
parties who adequately represent the same legal interests."
Marvel of Illinois, Inc. v. Marvel Contaminant Control Indus-
tries, Inc., 318 Ill. App. 3d 856, 864, 744 N.E.2d 312, 319
(2001). "It is the identity of interest that controls in deter-
mining privity, not the nominal identity of the parties." People
ex rel. Burris v. Progressive Land Developers, Inc., 151 Ill. 2d
285, 296, 602 N.E.2d 820, 826 (1992). "A nonparty may be bound
under privity if his interests are so closely aligned to those of
a party that the party is the virtual representative of the
nonparty." City of Rockford v. Unit Six of the Policemen's
Benevolent & Protective Ass'n of Illinois, 362 Ill. App. 3d 556,
563, 840 N.E.2d 1283, 1289 (2005). However, "where a party has
no standing to bring a cause of action on behalf of another
party, either individually or derivatively, it also must be said
to lack privity with the other party because it cannot adequately
represent the other party's legal interests." Mount Mansfield
Insurance Group, Inc. v. American International Group, Inc., 372
Ill. App. 3d 388, 394, 865 N.E.2d 524, 530 (2007).
In this case, we find the pool members were in privity
with the third-party plaintiff in SSS as members of the same
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workers' compensation pool. RMA was the pool administrator and
Murray its president and chief executive officer. Support
Systems and the pool members signed identical pooling agreements
stating they were made and entered into by and among the trustees
and members of INRMA. Both cases arose out of the same assess-
ments levied by INRMA against its pool members in 2001 and 2002,
which all members shared on a pro rata basis.
The interests of all the pool members are identical
because any amounts levied against one pool member necessarily
affect the amounts other members are required to pay. Allowing
the pool members to repeatedly litigate this fiduciary-duty claim
would not promote the interests of judicial economy. Further,
repetitive litigation runs the risk of inconsistent judgments.
Accordingly, the pool members' claim against RMA and Murray for
breach of fiduciary duty is barred by res judicata.
Even if count I is not barred by res judicata, the pool
members cannot show a fiduciary relationship exists between them
and RMA and Murray. The pool members claim that the pooling
agreements show the pool members "expressly appointed RMA as
their agent." However, RMA was not a party to the pooling
agreements. Further, the pooling agreements only state RMA is an
agent for the pool members for the purpose of filing reports,
making or arranging for payment of claims, medical expenses, and
all other things required or necessary, "insofar as they affect
the [m]ember's liability under the Illinois Workers' Compensation
or Occupational Diseases Act." The pool members have not alleged
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any failure of RMA to submit workers' compensation claims to
INRMA, a failure to pay claims, or any refusal to defend. The
pool-administrator agreement, on the other hand, states RMA acted
as INRMA's exclusive agent to conduct the pool's business and act
in INRMA's best interest with an "undivided duty of loyalty."
Accordingly, the pool members cannot establish a claim for breach
of fiduciary duty.
C. Fraud
The pool members argue the trial court erred in dis-
missing their fraud claim against RMA and Murray (count II)
pursuant to sections 2-619(a)(9) and 2-615 of the Procedure Code
(735 ILCS 5/2-615, 2-619(a)(9) (West 2006)) because the complaint
alleged sufficient facts to establish the claim and Murray's
affidavit did not negate the claim. We disagree.
To state a cause of action for common-law fraud, a
plaintiff must set forth the following elements: "(1) a false
statement of material fact; (2) defendant's knowledge that the
statement was false; (3) defendant's intent that the statement
induce the plaintiff to act; (4) plaintiff's reliance upon the
truth of the statement; and (5) plaintiff's damages resulting
from reliance on the statement." Connick v. Suzuki Motor Co.,
174 Ill. 2d 482, 496, 675 N.E.2d 584, 591 (1996).
A claim of fraud "must be pleaded with sufficient
specificity, particularity, and certainty to apprise the opposing
party of what he is called upon to answer." Hirsch v. Feuer, 299
Ill. App. 3d 1076, 1085, 702 N.E.2d 265, 272 (1998). "Thus, a
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plaintiff must at least plead with sufficient particularity facts
establishing the elements of fraud, including what misrepresen-
tations were made, when they were made, who made the misrepresen-
tations[,] and to whom they were made." Board of Education of
City of Chicago v. A, C & S, Inc., 131 Ill. 2d 428, 457, 546
N.E.2d 580, 594 (1989).
In count II, the pool members alleged RMA and Murray
engaged in an extensive fraudulent scheme to deceive INRMA
members as to the true performance and financial condition of the
pool. The scheme was allegedly conducted for the purpose of
continuing operation of the pool so RMA, Murray, Stove, and
others could siphon money from the pool for their own use.
In claiming fraudulent concealment, the pool members
also alleged RMA had a duty to reveal material facts regarding
the financial management and condition of INRMA based on a
fiduciary relationship to pool members. RMA and Murray allegedly
concealed these material facts, which they knew presented a false
picture of INRMA's financial condition, with the intent to
deceive the pool members and induce them to renew their member-
ship in the pool. The pool members alleged they acted in justi-
fiable reliance on the facts as they knew them and suffered
damages.
"In order to prove fraud by intentional concealment of
a material fact, the plaintiff must show the existence of a
special or fiduciary relationship with the defendant that would
give rise to a duty to speak." Lewis v. Lead Industries Ass'n,
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342 Ill. App. 3d 95, 105, 793 N.E.2d 869, 876 (2003); see also
Magna Bank of Madison County v. Jameson, 237 Ill. App. 3d 614,
618, 604 N.E.2d 541, 544 (1992) (no duty to speak exists "absent
a fiduciary or other legal relationship between the parties").
In absence of a fiduciary relationship here, RMA and Murray had
no duty to speak. Thus, the pool members' fraud claim based on
the fraudulent concealment of a material fact fails.
In claiming fraudulent inducement, the pool members
alleged RMA and Murray explained the $2 million assessment by
stating INRMA did not have a cash-flow problem and the amount
would be set aside with interest being returned to the program.
The pool members alleged RMA and Murray knew these representa-
tions were false, and they were at the same time actively divert-
ing potential "good risk" members away from INRMA. The pool
members claimed RMA and Murray intended for them to rely on the
false statements to induce them to renew their memberships in the
pool. As a result of relying on the statements and renewing
their membership, the pool members alleged they suffered damages.
Generally, an expression of opinion will not support an
action for fraud. Peter J. Hartmann Co. v. Capital Bank & Trust
Co., 296 Ill. App. 3d 593, 601, 694 N.E.2d 1108, 1115 (1998).
Further, "financial projections are considered to be statements
of opinion, not fact." Lagen v. Balcor Co., 274 Ill. App. 3d 11,
17, 653 N.E.2d 968, 973 (1995). Statements concerning future
intent or conduct are not actionable as fraud. Ault v. C.C.
Services, Inc., 232 Ill. App. 3d 269, 271, 597 N.E.2d 720, 722
- 14 -
(1992).
Here, the pool members offered only nonspecific allega-
tions of fraud. The statement that INRMA did not have a cash-
flow problem amounts to an opinion, and the statement that money
would be set aside concerns future conduct. The statements
relied upon by the pool members in their fraudulent-inducement
claim amount to nothing more than opinions and predictions about
future conduct. Likewise, the pool members' allegations that RMA
and Murray engaged in a fraudulent scheme to deceive them as to
the true performance and financial condition of the pool neglect
to point out the yearly audits were on file for inspection and
review. Moreover, the publicly filed financial statements
clearly showed the pool was operating with a member deficit and
pointed out INRMA's "ability to absorb future variability is
based on future assessments of its members." The pool members'
allegations fail to set forth a valid claim for fraud, and the
trial court did not err in dismissing the claim with prejudice.
D. Civil Conspiracy
The pool members argue the trial court erred in dis-
missing their civil-conspiracy claim against RMA and Murray
pursuant to section 2-615 because they alleged sufficient facts
to state a claim. We disagree.
"Civil conspiracy consists of (1) an agreement between
two or more persons (2) for the purpose of accomplishing by some
concerted action either an unlawful purpose or a lawful purpose
by unlawful means, and (3) some tortious or illegal act by a
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party to the agreement in furtherance of the agreement." Karas
v. Strevell, 369 Ill. App. 3d 884, 919, 860 N.E.2d 1163, 1195
(2006). "Conspiracies are often intentionally 'shrouded in
mystery,' which by nature makes it difficult for the plaintiff to
allege with complete specificity all of the details of the
conspiracy." Time Savers, Inc. v. LaSalle Bank, N.A., 371 Ill.
App. 3d 759, 771, 863 N.E.2d 1156, 1167 (2007), quoting Adcock v.
Brakegate, Ltd., 164 Ill. 2d 54, 66, 645 N.E.2d 888, 895 (1994).
However, "the complaint must contain more than the conclusion
that there was a conspiracy, it must allege specific facts from
which the existence of a conspiracy may properly be inferred."
Fritz v. Johnston, 209 Ill. 2d 302, 318, 807 N.E.2d 461, 471
(2004).
In count IV, the pool members alleged RMA and Murray
agreed and conspired with Ernst & Young to prepare inaccurate,
untruthful, and deceptive reports for the purpose of misrep-
resenting the true financial condition of the pool to maintain
the pool in operation so payments to entities owned and/or
controlled by Murray, Stover, and their associates could con-
tinue. As a result, the pool members claimed they suffered
damages.
The pool members failed to adequately allege a claim of
civil conspiracy. The sole allegation of conspiracy against RMA
and Murray is that they agreed and conspired with Ernst & Young
to prepare inaccurate, untruthful, and deceptive audit reports.
This allegation is nothing more than a conclusion that a conspir-
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acy existed and fails to satisfy the pleading requirements to
state a cause of action for civil conspiracy. Moreover, the pool
members failed to adequately allege their underlying claim of
common-law fraud, and thus their conspiracy claim fails as a
matter of law. See Time Savers, 371 Ill. App. 3d at 772, 863
N.E.2d at 1168.
E. Breach of Contract
The pool members argue the trial court erred in dis-
missing the breach-of-contract claim against RMA pursuant to
section 2-615 of the Procedure Code because they alleged suffi-
cient facts to state a claim. We disagree.
In count V, the pool members alleged RMA entered into a
pool-administrator agreement with INRMA with the express intent
to benefit the pool members who were third-party beneficiaries of
the agreement. The pool members also alleged the agreement
indicated RMA would provide certain services to the pool on
behalf of INRMA for the benefit of the pool members. The pooling
agreement referenced the agreement between INRMA and RMA to
provide the described services. The pool members claimed RMA
breached its contractual duties under the pool-administrator
agreement and by reference under the pooling agreements to
administer the pool with good faith and fair dealing toward the
pool members.
In its motion to dismiss, RMA argued the pool members
lacked standing as third-party beneficiaries to bring their
contract claim because the only parties to the pool-administrator
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agreement were RMA and INRMA. Further, the pool members lacked
standing because the pool-administrator agreement did not express
an intent to benefit the pool members.
"A person who is not a party to a con-
tract may nevertheless sue based on the con-
tract if that person is directly benefitted
by the contract. [Citation.] The benefit
must be direct to the person asserting third-
party beneficiary status; an incidental bene-
fit is not a sufficient basis for the claim.
[Citation.] A person's status as third-party
beneficiary depends upon the intent of the
parties to the contract and must be deter-
mined on a case-by-case basis. [Citation.]
Circumstances surrounding the execution of
the contract may be considered [citation],
but the alleged third-party beneficiary must
be expressly named in the contract."
Paukovitz v. Imperial Homes, Inc., 271 Ill.
App. 3d 1037, 1039, 649 N.E.2d 473, 475
(1995).
In this case, the pool-administrator agreement does not
contain an express declaration identifying the pool members as
third-party beneficiaries. While the agreement makes reference
to "members," it is in terms of describing RMA's duties to INRMA
in operating the pool as INRMA's agent. Any benefit to the pool
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members is an incidental benefit of the agreement between RMA and
INRMA. As the pool members cannot properly claim status as
third-party beneficiaries, their breach-of-contract claim fails.
F. Leave To Amend
The pool members argue the trial court erred in denying
leave to amend their third-party complaint against RMA and
Murray. We disagree.
"A trial court's denial of a motion for leave to amend
a pleading is reviewed under an abuse[-]of[-]discretion stan-
dard." County of Cook ex rel. Rifkin v. Bear Stearns & Co., 215
Ill. 2d 466, 474, 831 N.E.2d 563, 568 (2005). To determine
whether an abuse of discretion occurred, courts look at four
factors, including: "(1) whether the proposed amendment would
cure the defective pleading; (2) whether other parties would
sustain prejudice or surprise by virtue of the proposed amend-
ment; (3) whether the proposed amendment is timely; and (4)
whether previous opportunities to amend the pleading could be
identified." Loyola Academy v. S & S Roof Maintenance, Inc., 146
Ill. 2d 263, 273, 586 N.E.2d 1211, 1215-16 (1992).
In this case, the pool members asked in the conclusion
of their response in opposition to the motion to dismiss for
leave to amend their pleading based upon newly acquired informa-
tion. They also made a similar request at the conclusion of oral
argument. The trial court indicated the pool members had re-
ceived opportunities to amend and any further attempt would be
futile.
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The pool members did not include a proposed amended
complaint with supporting facts in the trial court. The failure
to do so "significantly diminishes our ability to determine
whether the proposed amendment" would provide them with a viable
theory against RMA and Murray. Mendelson v. Ben A. Borenstein &
Co., 240 Ill. App. 3d 605, 619, 608 N.E.2d 187, 196 (1992). The
failure to tender the proposed amendment forfeits review of the
trial court's decision. See Ignarski v. Norbut, 271 Ill. App. 3d
522, 532, 648 N.E.2d 285, 293 (1995); Mendelson, 240 Ill. App. 3d
at 619, 608 N.E.2d at 196.
G. Breach of Fiduciary Duty (Trustees)
The pool members argue the trial court erred in dis-
missing the breach-of-fiduciary-duty claim against the trustees
pursuant to section 2-615 because sufficient facts were alleged
to state a claim. We disagree.
To state a claim for breach of fiduciary duty, a
plaintiff must allege the existence of a fiduciary duty, a breach
of that duty, and damages proximately caused by the breach.
Neade v. Portes, 193 Ill. 2d 433, 444, 739 N.E.2d 496, 502
(2000). "A fiduciary relationship exists where there is a
special confidence reposed in one who, in equity and good con-
science, is bound to act in good faith with due regard to the
interests of the other." Schweickart v. Powers, 245 Ill. App. 3d
281, 290, 613 N.E.2d 403, 410 (1993).
"'A fiduciary or confidential relationship
exists where, by reason of friendship,
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agency, or business association and exper-
ience, trust and confidence are reposed by
one person in another who, as a result, gains
an influence and superiority over him.'"
Maercker Point Villas Condominium Ass'n v.
Szymski, 275 Ill. App. 3d 481, 484, 655
N.E.2d 1192, 1194 (1995), quoting Melish v.
Vogel, 35 Ill. App. 3d 125, 136, 343 N.E.2d
17, 26 (1975).
Regardless of the level of trust between the parties, a fiduciary
relationship requires one party to exert dominance and influence
over the other party. Lagen, 274 Ill. App. 3d at 21, 653 N.E.2d
at 975.
In count VI, the pool members alleged the trustees owed
a fiduciary duty to INRMA and its members pursuant to the first-
amended trust agreement and as officers of a nonprofit associa-
tion to manage and administer the pool with judgment and care.
The complaint alleged the trustees approved and acquiesced in
fraudulent payments and misrepresentations as to the pool's
financial condition.
Here, the pool members offer only conclusory allega-
tions that the trust agreement creates a fiduciary duty between
them and the trustees. Count VI merely claimed the trustees had
a duty to act prudently, but the trust-agreement clause cited in
support of the alleged fiduciary duty simply addresses how the
trustees are to be indemnified by INRMA. The pool members failed
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to establish the trustees exerted dominance and influence over
them based on the trust agreement.
The pool members' claim of a fiduciary duty based on
INRMA's nonprofit status is also insufficient to state a cause of
action for breach of fiduciary duty. According to section
107a.05(b) of the Worker's Compensation Pool Law, the
"'[t]rustees of a group workers' compensation pool' shall be
considered as though they were directors of a domestic mutual
insurance company." 215 ILCS 5/107a.05(b) (West 2006). Pooling
agreements are considered as policies of insurance. 215 ILCS
5/107a.05(b) (West 2006). It is well settled that an insurer
does not owe its insured a fiduciary duty. Nielsen v. United
Services Automobile Ass'n, 244 Ill. App. 3d 658, 666, 612 N.E.2d
526, 531 (1993). INRMA is the workers' compensation insurer of
the pool members. "Directors owe a fiduciary duty to their
corporations and to their shareholders." Stamp v. Touche Ross &
Co., 263 Ill. App. 3d 1010, 1015, 636 N.E.2d 616, 620 (1993).
The pool members' allegation that INRMA's nonprofit status
created a fiduciary relationship with the trustees failed to
state a cause of action.
III. CONCLUSION
For the reasons stated, we affirm the trial court's
judgment.
Affirmed.
APPLETON, P.J., and McCULLOUGH, J., concur.
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