MONTHLY QUIZ: Plaintiff purchases a 550 page self-help book that includes numerous marketing statements and promises passwords for access to 56 pages of website “bonus material.” Plaintiff allegedly buys the book based upon what he believes is exclusive access to the website “bonus material.” However, since he does not receive exclusive access to the bonus material, Plaintiff sues Publisher for, among other things, statutory consumer fraud, deceptive trade practices and $2.43 in alleged damages (i.e. the alleged price for 56 pages of “bonus material”). After suit is filed, Publisher posts the bonus material to a website, for free. Publisher moves to dismiss the complaint, arguing that Plaintiff fails to allege any deceptive conduct and that Plaintiff’s claims are nothing more than breach of a promise. However, according to Plaintiff, a claim for consumer fraud only requires a showing that a defendant intended a plaintiff to rely on its act or information, but does not require the intent to deceive. Plaintiff also points out that even negligent, or innocent, misrepresentations are actionable. Can Plaintiff support his claims for consumer fraud and deceptive trade practices based upon these facts? You be the judge? (Answer below)
ILLINOIS GUARANTY FUND - DRAMSHOP LIABILITY: Plaintiff-Estate filed petition under IL Dramshop Act (Act) after Decedent was fatally injured in collision with drunk Driver. Defendant's insurer was insolvent and Defendant was represented by Illinois Insurance Guaranty Fund (Fund). Prior to trial, Defendant moved for summary judgment on the issue of whether Defendant's liability should be offset by other insurance proceeds (i.e. Driver's liability policy and Estate's UIM auto policy). Defendant contended that Section 546 Illinois Insurance Guaranty Fund Statute (215 ILCS 5/546 (Statute), which provides that an insured or claimant must “exhaust all coverage provided by any other insurance policy” before a recovery can be had “against the Fund,” required a reduction of the statutory cap. The Appellate Court disagreed. In view of the phrase “other recoveries” in the Statute, any setoff stemming other available policies, should be properly applied to a jury's verdict and then reduced to the statutory maximum, if applicable (i.e. the same procedure as if Defendant was not being defended by the Fund). Rogers v. Imeri, 2013 IL App (5th) 110546 (Mar. 12, 2013)
INSURANCE GUARANTY FUND - DRAMSHOP LIABILITY: After being served at Defendant-Bar, Alleged Intoxicated Person (“AIP”), injures Plaintiffs in auto accident. Plaintiffs sue Bar under the IL Dramshop Act (Act), and Bar is defended by the Illinois Insurance Guaranty Fund. Meanwhile, Plaintiffs recover insurance proceeds from their respective health insurers, underinsured motorist insurers, and the AIP’s auto liability insurer. At the conclusion of trial, Plaintiffs were awarded amounts exceeding the maximum statutory award under the Act. However, Defendant argued that since Section 546 Illinois Insurance Guaranty Fund Statute (Statute) required setoffsfor other insurance recoveries be applied against each Plaintiff’s Dramshop Act recovery. Trial and Appellate Courts agreed, holding that under Section 546(a) of the Statute, Plaintiff’s $58,652.33 Dramshop awards should be reduced by the amounts already recovered from other insurance claims. Guzman v. 7513 West Madison Street, Inc. - 2013 IL App (1st) 122161 (Mar. 29, 2013)
INSURANCE LAW - POLICY CANCELLATION: Defendant-Tractor Owner and Trucking Company (collectively Company) procured automobile Policy with Insurer which covered several vehicles. Company was required to, but failed to make monthly premium payments. However, Company mailed payments after receiving cancellation notices, but prior to cancellation. Later, Policy was cancelled due to Company’s non-payment, but then reinstated. Company then requested that several vehicles listed on the Policy be removed, resulting in a premium credit. Following another non-payment, Insurer issued a notice of cancellation, which Company later claimed in an affidavit it never received. When no payment or requests for extension were received, Insurer cancelled Policy and refunded the excess premium amount. About two weeks after cancellation, Trucker, while driving Company’s vehicle (i.e. tractor) and hauling a trailer owned by Seed Business was involved in an auto accident with Driver. Driver’s Estate filed a wrongful death suit against Company, Driver, and Seed Business, all of whom tendered their defense to Insurer. Insurer denied coverage to all Defendants and sought a declaration that it had no duty to defend or indemnify the underlying suit since Policy was cancelled prior to accident. While Insurer argued that it followed the proper procedures, under both Policy and Insurance Code, for cancelling the Policy for nonpayment of the premium, the courts disagreed. The trial and appellate courts found that, under the circumstances, Insurer was obligated to apply the premium credit on Company’s account to the premium amount due - reasoning that given the excess premium on Company’s account, Insurer did not have a basis to cancel the Policy for nonpayment. However, Section 155 sanctions were denied as Insurer had not acted in bad faith and there was a bona fide dispute as to whether Policy was properly cancelled.Auto-Owners Insurance Company v. Yocum, 2013 IL App (2nd) 111267 (Mar. 29, 2013)
ANSWER TO QUIZ: No. Plaintiff loses, Publisher wins. While the Illinois Consumer Fraud Act allows plaintiffs to recover for either an unfair practice or deceptive conduct, the Appellate Court found that Publisher’s actions did not amount to deceptive conduct. In this case, the Court found that none of the marketing statements were literally false, though they were designed to pique Plaintiff’s interest. Further, the Court found that none of the marketing statements in this case have reasonably been construed as misleading and therefore, Publisher was entitled to dismissal. Aliano v. Ferris, et al. 2013 IL App (1st) 120242 (Mar. 29, 2013).
