FOURTH DIVISION
February 14, 2008
No. 1-06-3300
DOD TECHNOLOGIES, Individually and ) Appeal from the Circuit
on Behalf of All Others Similarly Situated, ) Court of Cook County,
) Chancery Division
Plaintiff-Appellant, )
) No. 05 CH 4677
v. )
) Honorable William Maki,
MESIROW INSURANCE SERVICES, INC., ) Judge Presiding
and JOHN DOE COMPANIES 1-10, )
)
Defendants-Appellees. )
JUSTICE MURPHY delivered the opinion of the court:
Plaintiff, DOD Technologies, brought a five-count putative class-action complaint against
defendant, Mesirow Insurance Services, Inc., plaintiff’s insurance broker, alleging that defendant
received contingent commissions from insurers without informing plaintiff. The trial court
granted defendant’s motion to dismiss pursuant to section 2-615 of the Code of Civil Procedure
(Code) (735 ILCS 5/2-615 (West 2004)) on the basis that (1) section 2-2201 of the Code (735
ILCS 5/2-2201 (West 2004)) precludes claims for breach of fiduciary duty and (2) plaintiff failed
to allege actual damages or reliance on the alleged concealment.
I. BACKGROUND
Plaintiff’s second amended complaint alleges as follows. Defendant is a licensed Illinois
insurance broker, or “insurance producer.” An insurance producer is “a person required to be
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licensed under the laws of this State to sell, solicit, or negotiate insurance.” 215 ILCS 5/500-10
(West 2004).
Plaintiff provided defendant with confidential and proprietary information with the
expectation that defendant would seek the desired insurance at the lowest possible price.
Standard industry practice is for consumers to make a single payment to the broker that includes
both the insurer’s premium and the broker’s commission; the producer deducts the commission
and forwards the premium to the insurer. Defendant also received “contingent commissions”
from insurers, including Hartford Insurance Company, for its placement of insurance for plaintiff
and other putative class members. The contingent commissions were based on three factors: (1)
the aggregate amount of business referred to the insurer paying the kickbacks, (2) the “loss ratio”
performance of the book of business referred to that insurer, and (3) renewals.
Defendant did not disclose its receipt of the contingent commissions to plaintiff. These
undisclosed financial incentives caused defendant to refer business to a paying insurer even if the
policy and rates quoted by that insurer were not the most advantageous for the customer. These
kickbacks, which should have been returned to plaintiff like any other rebate, inflated the cost of
insurance to consumers and created a conflict preventing brokers from acting in the customers’
best interest. Had plaintiff known about the contingent commissions, it would have been more
diligent in its selection of insurance. Approximately 10% or more of defendant’s revenues as an
insurance broker is derived from kickbacks.
Plaintiff’s second amended complaint alleges breach of fiduciary duty, consumer fraud,
fraudulent concealment, unjust enrichment, and accounting. Plaintiff based its breach of
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fiduciary duty count on section 500-80(e) of the Illinois Insurance Code (215 ILCS 5/500-80(e)
(West 2004)), which requires an insurance producer to disclose fees not directly attributable to
premiums, and section 2-2201, which precludes breach of fiduciary duty actions against
insurance producers but excepts claims based on the wrongful retention or misappropriation of
premiums. In alleging that the statute of limitations should be tolled due to defendant’s
fraudulent concealment and misrepresentation, plaintiff quoted a portion of defendant’s Web site,
which provided:
“Our philosophy is to provide sound and unbiased advice with an emphasis
on protecting your interests at all times. Rather than focusing on one area, we are
adept at reviewing your entire situation, integrating personal and professional
goals to identify and eliminate any areas of vulnerability. We are committed to
being a resource for you.”
The trial court dismissed counts I, IV, and V (breach of fiduciary duty, unjust enrichment,
and accounting) on the basis that section 2-2201 of the Code precludes claims for breach of
fiduciary duty. Counts II and III (consumer fraud and fraudulent concealment) were dismissed
because there was no proof of actual damages or reliance on the alleged concealment.
II. ANALYSIS
A. Motion to Dismiss
A motion to dismiss pursuant to section 2-615 attacks the legal sufficiency of the
complaint. R & B Kapital Development, LLC v. North Shore Community Bank & Trust Co., 358
Ill. App. 3d 912, 920 (2005). A court reviewing an order granting a section 2-615 motion takes
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all well-pled facts as true. R & B, 358 Ill. App. 3d at 920. “On review of a section 2-615
dismissal, the reviewing court must determine whether the allegations of the complaint, when
interpreted in [the] light most favorable to the plaintiff, sufficiently set forth a cause of action on
which relief may be granted.” R & B, 358 Ill. App. 3d at 920. We review a dismissal pursuant to
section 2-615 de novo. Collins v. Superior Air-Ground Ambulance Service, Inc., 338 Ill. App. 3d
812, 815 (2003).
Although plaintiff makes frequent references to the trial court’s abuse of discretion, a
dismissal pursuant to section 2-615 is reviewed de novo. Collins, 338 Ill. App. 3d at 815.
1. Breach of fiduciary duty
Plaintiff argues that the trial court erred in dismissing its claims for breach of fiduciary
duty, unjust enrichment, and accounting because it has alleged the existence of a fiduciary
relationship between plaintiff and defendant. Defendant responds that section 2-2201 of the
Code precludes claims for breach of fiduciary duty.
To state a claim for breach of fiduciary duty, a plaintiff must establish (1) a fiduciary duty
on the part of the defendant, (2) the defendant’s breach of that duty, and (3) damages that were
proximately caused by the defendant’s breach. Neade v. Portes, 193 Ill. 2d 433, 444 (2000).
Historically, Illinois has recognized that the relationship between an insured and his broker,
acting as the insured’s agent, is a fiduciary one. AYH Holdings, Inc. v. Avreco, Inc., 357 Ill. App.
3d 17, 32 (2005); Perelman v. Fisher, 298 Ill. App. 3d 1007, 1011 (1998).
In 1996, the General Assembly enacted Public Act 89-638 (Pub. Act 89-638, § 5, eff.
January 1, 1997), which added section 2-2201 of the Code. Section 2-2201 provides:
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“(a) An insurance producer *** shall exercise ordinary care and skill in
renewing, procuring, binding, or placing the coverage requested by the insured or
proposed insured.
(b) No cause of action brought by any person or entity against any
insurance provider, registered firm, or limited insurance representative
concerning the sale, placement, procurement, renewal, binding, cancellation of,
or failure to procure any policy of insurance shall subject the insurance producer,
registered firm, or limited insurance representative to civil liability under
standards governing the conduct of a fiduciary or fiduciary relationship except
when the conduct upon which the cause of action is based involves the wrongful
retention or misappropriation by the insurance producer, registered firm, or
limited insurance representative of any money that was received as premiums, as
a premium deposit, or as payment of a claim.
***
(d) While limiting the scope of liability of an insurance producer,
registered firm, or limited insurance representative under standards governing the
conduct of a fiduciary or a fiduciary relationship, the provisions of this Section
do not limit or release an insurance producer, registered firm, or limited
insurance representative from liability for negligence concerning the sale,
placement, procurement, renewal, binding, cancellation of, or failure to procure
any policy of insurance.” (Emphasis added.) 735 ILCS 5/2-2201 (West 2004).
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The goal of a court when construing a statute is to ascertain the legislature’s intent, “and
the surest indicator *** is the language in the statute.” Department of Public Aid ex rel. Schmid
v. Williams, 336 Ill. App. 3d 553, 556 (2003). “To this end, a court may consider the reason and
necessity for the statute and the evils it was intended to remedy, and will assume the legislature
did not intend an *** unjust result.” In re Marriage of Beyer, 324 Ill. App. 3d 305, 309 (2001).
A court may not supply omissions, remedy defects, substitute different provisions, add
exceptions, limitations, or conditions, or otherwise change the law so as to depart from the plain
meaning of the language employed in the statute. Beyer, 324 Ill. App. 3d at 309-10. If the
language of the statute is clear, its plain and ordinary meaning must be given without resorting to
other aids of construction. Beyer, 324 Ill. App. 3d at 310.
Since the enactment of section 2-2201, the relationship between an insured and its broker
continues to be a fiduciary one. See Perelman, 298 Ill. App. 3d at 1013 (an insured’s failure to
read the terms of a policy was not an absolute bar to recovery against his broker for breach of
fiduciary duty); Cincinnati Insurance Co. v. Guccione, 308 Ill. App. 3d 220, 224 (1999) (a
question of fact existed as to whether the broker breached his fiduciary duty to the insured by
misleading him about the nature and potential cost of his policy). Rather than eliminate the
fiduciary relationship between the insured and the producer, the plain language of section 2-2201
protects the insurance producer from civil liability arising out of the fiduciary relationship.
Mizuho Corp. Bank (USA) v. Cory & Associates, Inc., 341 F.3d 644 (7th Cir. 2003), for example,
considered section 2-2201(b) an “automatic exemption from liability for breaches of fiduciary
duty.” Mizuho, 341 F.3d at 651-52. Similarly, AYH Holdings, a summary judgment case based
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on the broker’s failure to disclose the insurer’s unsound financial condition, acknowledged that
section 2-2201(b) “immunizes an insurance broker from claims based on breach of fiduciary
duty” but held that it could not determine when the cause of action accrued and, therefore,
whether section 2-2201 barred the claim. AYH, 357 Ill. App. 3d at 43. Moore v. Johnson County
Farm Bureau, 343 Ill. App. 3d 581, 585 (2003), which relates to the failure to procure adequate
insurance, also noted that section 2-2201 “limits any civil liability arising out of a fiduciary
relationship between an insured and an insurance agent.”
Plaintiff argues that its complaint falls within the exception to section 2-2201 for causes
of action involving “the wrongful retention or misappropriation” of money received as
premiums. Defendant responds that “wrongful retention or misappropriation” means diverting
funds intended to pay premiums for another wrongful purpose. While Black’s Law Dictionary
defines “misappropriation” as “the application of another’s property or money dishonestly to
one’s own use” (Black’s Law Dictionary 1019 (8th ed. 2004)), the parties have cited, and this
court has found, no cases explaining what constitutes “wrongful retention or misappropriation”
of premiums in section 2-2201(b).
Defendant argues that wrongful retention or misappropriation “plainly means diverting
funds intended to pay premiums for another wrongful purpose, such as placing money received
as premiums into a broker’s operating account rather than into a premium trust account, or failing
to pay money received as a premium to the insurer.” Despite defendant’s interpretation of the
“plain” meaning of the statute, it only cites Western Life Insurance Co. of America v. Chapman,
31 Ill. App. 3d 368 (1975). In Western Life, an insurance agent violated a provision of the
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Insurance Code providing that premiums collected by insurance agents were held in a fiduciary
capacity and could not be “ ‘misappropriated or converted to his own use or illegally withheld’ ”
when he gave premium money to his brother or placed it in an account that was not a premium
trust account. Western Life Insurance, 31 Ill. App. 3d at 372, quoting Ill. Rev. Stat. 1971, Ch. 73,
par. 1065.52.
Also instructive is case law interpreting section 500-115 of the Insurance Code, which
provides that any money that an insurance producer receives for soliciting, negotiating, renewing,
continuing, or binding insurance policies “shall be held in a fiduciary capacity and shall not be
misappropriated, converted, or improperly withheld.” 215 ILCS 5/500-115(a) (West 2004).
“Thus, insurance producers act as fiduciaries in holding the collected premiums in trust for the
benefit of the insurer.” Safeway Insurance Co. v. Daddono, 334 Ill. App. 3d 215, 218 (2002).
Subsection 500-115(d) provides that an insurance producer who “knowingly misappropriates or
converts to his or her own use or illegally withholds fiduciary funds” commits a criminal act.
215 ILCS 5/500-115(d) (West 2004). In People v. Lambert, 195 Ill. App. 3d 314 (1990), the
court affirmed the defendant’s conviction for criminal breach of fiduciary duty under the
precursor to section 500-115 when he received checks from a widow for insurance coverage but
the insurance company had no record of applications for insurance or billings for insurance
renewals that corresponded to the checks.
While these cases are instructive as to how courts have interpreted misappropriation or
conversion, the case at bar presents a different set of facts. The trial court granted the section 2-
615 motion based on the belief that defendant was protected from “civil liability under standards
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governing the conduct of a fiduciary or fiduciary relationship.” 735 ILCS 5/2-2201(b). In
granting the motion, the court did not find that plaintiff’s complaint alleged the exception for
“when the conduct upon which the cause of action is based involves the wrongful ***
misappropriation by the insurance producer *** of any money that was received as premiums.”
735 ILCS 5/2-2201(b) (West 2004).
According to the complaint, plaintiff provided defendant with confidential and
proprietary information with the expectation that defendant would seek the desired insurance at
the lowest possible price. The complaint alleged that the contingent commissions were based on
the aggregate amount of business referred to the insurer paying the kickbacks, the “loss ratio”
performance of the book of business referred to that insurer, and renewals. According to the
complaint, these undisclosed incentives caused defendant to refer business to a paying insurer
even if the policy and rates quoted by that insurer were not the most advantageous for the
customer. We note that a court interpreting a statute will assume that the legislature did not
intend an unjust result (Beyer, 324 Ill. App. 3d at 309); the placement of policies that are not the
most advantageous for the consumer is most certainly unjust. We hold that the placement of
policies with companies that were not the most advantageous for the consumers constitutes “the
wrongful *** misappropriation” of money received as premiums.
It is not the undisclosed incentives that constitute misappropriation. Rather, the
undisclosed incentives, as alleged in the complaint, were what led defendant to place certain
policies without regard for the customer’s needs and in breach of its fiduciary duty. We hold that
a producer misappropriates premiums within the terms of section 2-2201 when it directs a
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premium to an insurer, the price or coverage is not in the customer’s best interest, and the
placement earns the producer undisclosed contingent incentives.
We find that section 2-2201 of the Code does not preclude plaintiff’s claim for breach of
fiduciary duty, because plaintiff comes within the exception in section 2-2201(b) by alleging in
its complaint that defendant misappropriated certain premiums by placing them with an insurer
when the placement was not in the best interest of the consumer. Accordingly, we reverse the
trial court’s dismissal of counts I, IV, and V (breach of fiduciary duty, unjust enrichment, and
accounting).
2. Unjust enrichment
Defendant also argues that the unjust enrichment count should be dismissed because a
contract governs the relationship between the parties. Defendant did not raise this argument in
its motion to dismiss the second amended complaint, and plaintiff did not respond to the
argument in its reply brief. While an appellant who fails to raise an issue in the trial court waives
that issue, an appellee may raise an issue on review that was not presented to the trial court in
order to sustain the judgment, as long as the factual basis for the issue was before the trial court.
Schanowitz v. State Farm Mutual Automobile Insurance Co., 299 Ill. App. 3d 843, 848 (1998).
A claim for unjust enrichment cannot be asserted when a specific contract exists between
the parties and concerns the same subject matter. Zadrozny v. City Colleges, 220 Ill. App. 3d
290, 295 (1991). The complaint only alleges that plaintiff “retained” defendant, and the contract
attached to the complaint appears to be between plaintiff and Hartford Insurance. Under these
circumstances, we do not believe that whether a “specific” contract concerning “the same subject
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matter” can be determined. Accordingly, we reject defendant’s argument.
3. Consumer fraud
Plaintiff alleges that defendant violated the Consumer Fraud and Deceptive Trade
Practices Act (Consumer Fraud Act) (815 ILCS 505/1 et seq. (West 2004)) by planning these
schemes with insurers, failing to disclose the truth about the extent of the kickbacks, and failing
to disclose its conflict of interest. Plaintiff alleges that it relied on “the faulty information given”
by defendant and, as a result, paid excessive premiums. Defendant contends that the trial court
properly dismissed plaintiff’s consumer fraud count because it failed to allege the omission of a
material fact or actual damages.
To establish a claim under the Consumer Fraud Act, plaintiff must show that (1)
defendant committed a deceptive act or practice; (2) defendant intended for plaintiff to rely on
the deception; (3) the deception occurred in the course of conduct involving trade or commerce;
(4) plaintiff suffered actual damages; and (5) plaintiff’s damages were proximately caused by
defendant’s deceptive conduct. Sklodowski v. Countrywide Home Loans, Inc., 358 Ill. App. 3d
696, 703 (2005). A complaint alleging a consumer fraud violation must be pled with the same
particularity as that required under common law fraud. Connick v. Suzuki Motor Co., Ltd., 174
Ill. 2d 482, 501 (1996). The Consumer Fraud Act is to be liberally construed to effectuate its
purpose. Johnson v. Matrix Financial Services Corp., 354 Ill. App. 3d 684, 690 (2004).
To bring a civil action for damages, the Consumer Fraud Act requires that a plaintiff
suffer “actual damage.” 815 ILCS 505/10a(a) (West 2004); Avery v. State Farm Mutual
Insurance Co., 216 Ill. 2d 100, 195 (2005) (plaintiff must suffer “actual damage”). The
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complaint alleges that plaintiff was damaged by increased premiums and profits that defendant
received from the undisclosed contingent commissions. Defendant contends that plaintiff’s
alleged damages are speculative because there is no support for the idea that if defendant had
disclosed receipt of the contingent commissions, plaintiff’s premiums would have been reduced
by the amount of the contingent commission.
In White v. DaimlerChrysler Corp., 368 Ill. App. 3d 278, 287 (2006), the plaintiff alleged
that the value of his Jeep was diminished by a defective exhaust manifold. The court
acknowledged that diminution of value has been held to be a legally cognizable injury under the
Act; however, the plaintiff did not specify how the value of his Jeep had been diminished. White,
368 Ill. App. 3d at 287. “He never says he would have done anything differently, like bargain for
a lower price or refuse to buy the vehicle, if he had known about exhaust manifold failures.”
White, 368 Ill. App. 3d at 287. While this is not a diminution-of-value case, it is significant that
plaintiff’s only allegation as to what it would have done differently (which is in a different count)
is that it would have been “more diligent in its selection of insurance” and would have required
competing bids from defendant. Thus, plaintiff does not allege that it would have refused to use
defendant’s services if it had known of the contingent commissions or that it would have
bargained for better insurance prices while still using defendant as a broker.
Plaintiff contends on appeal that it is sufficient that “the basic elements of actual damage
are pleaded but not that they are proved at this stage.” It cites Pappas v. Pella Corp., 363 Ill.
App. 3d 795, 805 (2006), which is distinguishable; the plaintiffs in that case alleged that they
suffered actual damage because their windows underwent rotting and deterioration.
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Defendant argues that an additional reason for dismissing the consumer fraud count is
that it did not allege the omission of a material fact. The Consumer Fraud Act defines a
deceptive act as “the use or employment of any deception, fraud, false pretense, false promise,
misrepresentation or the concealment, suppression or omission of any [such] material fact *** in
the conduct of trade or commerce.” 815 ILCS 505/2 (West 2004). 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. Mackinac v.
Arcadia National Life Insurance Co., 271 Ill. App. 3d 138, 141 (1995). It is difficult to believe
that a consumer would not rely on a broker’s acceptance of contingent commissions in deciding
which broker to patronize or what insurance coverage to purchase. However, while plaintiff
alleged that it would have scrutinized defendant’s bills had it known of the contingent
commissions, it did not allege that the types or the amount of commissions paid to defendant
were material to plaintiff’s decision to purchase insurance coverage. Therefore, while it may
have acted differently, that difference is of little consequence.
Defendant also claims that section 10b(1), which provides that the Act does not apply to
“[a]ctions or transactions specifically authorized by laws administered by any regulatory body or
officer acting under statutory authority of this State or the United States” (815 ILCS 505/10b(1)
(West 2004)), applies because its conduct was “in compliance” with section 500-80(e) of the
Insurance Code (215 ILCS 5/500-80(c) (West 2004)). See Avery, 216 Ill. 2d at 192-93; Guinn v.
Hoskins Chevrolet, 361 Ill. App. 3d 575, 581 (2005). Section 500-80(e) establishes various
disclosure requirements when “an insurance producer or business entity charges any fee or
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compensation separate from commissions deductible from, or directly attributable to, premiums
on insurance policies or contracts.” 215 ILCS 5/500-80(e) (West 2004). Defendant argues that if
section 500-80(e) does not apply because it did not “charge” the consumer directly but instead
received the commission from an entity other than the consumer. However, subsection 500-80(e)
does not specify that the consumer must be charged, only that the separate fee be charged.
Therefore, we conclude that section 10b(1) did not immunize defendant.
We affirm the dismissal of the consumer fraud count.
4. Fraudulent concealment
As with the consumer fraud count, the trial court dismissed the fraudulent concealment
count on the basis that it failed to allege actual damages or reliance. To establish fraudulent
concealment, a plaintiff must allege (1) the concealment of a material fact; (2) the concealment
was intended to induce a false belief, under circumstances creating a duty to speak; (3) the
innocent party could not have discovered the truth through reasonable inquiry or inspection, or
was prevented from making reasonable inquiry or inspection, and relied upon misrepresentation
as a fact that did not exist; (4) the concealed truth was such that the injured party would have
acted differently if he had been aware of it; and (5) reliance by the person from whom the fact
was concealed led to his injury. Stewart v. Thrasher, 242 Ill. App. 3d 10, 16 (1993). There is a
high standard of specificity required for pleading fraud claims. Cwikla v. Sheir, 345 Ill. App. 3d
23, 31 (2003).
While the fraudulent concealment count alleges that defendant intended that plaintiff rely
on its misrepresentation and concealment, it does not allege that plaintiff actually relied on
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anything. The consumer fraud count does allege that plaintiff relied on “faulty information”
given by defendant, but it does not specify what this “faulty information” is.
The trial court also ruled that plaintiff failed to allege actual damages. This count alleges
that plaintiff “suffered actual damages”; elsewhere, plaintiff alleges that it was damaged by
increased premiums and profits that defendant received from the undisclosed contingent
commissions. Defendant cites Huls v. Clifton, Gunderson & Co., 179 Ill. App. 3d 904 (1989),
where the plaintiffs, who were purchasers of two businesses, claimed that the defendant’s failure
to disclose its relationship with the sellers caused it to offer to pay a price greater than the equity
value of the businesses, “which excess value such purchaser might not have been willing to pay
had such disclosures been made.” The court found that the plaintiffs failed to state a cause of
action for fraudulent concealment because they did not sufficiently allege damages. Huls, 179
Ill. App. 3d at 909. “[P]laintiffs fail to allege that what they received was not worth the money
they paid for it or that they could have purchased the companies for less. Furthermore, they do
not state they would not have purchased the companies had they known about the lack of
independence between the businesses and defendant.” Huls, 179 Ill. App. 3d at 909. See also
State Security Insurance Co. v. Frank B. Hall & Co., 258 Ill. App. 3d 588, 589-90 (1994). Here,
while plaintiff alleges that its premiums were inflated, it does not allege that it would not have
purchased its chosen insurance had it known of the contingent commissions.
5. Affirmative matter
Plaintiff argues that defendant’s motion to dismiss should have been stricken or denied
because it relied on a report prepared by the Insurance Information Institute. Defendant responds
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that citation to secondary sources is proper in a section 2-615 motion to dismiss.
A trial court may not consider documentary evidence not incorporated into the pleadings
as exhibits in ruling on a section 2-615 motion. Barber-Colman Co. v. A&K Midwest Insulation
Co., 236 Ill. App. 3d 1065, 1068 (1992). Regardless of whether the report is considered a
“secondary source,” however, in the hearing on defendant’s motion to dismiss, the trial court
makes no reference to it. While plaintiff claims that the trial court “presumably” relied on the
report “at least in part,” there is nothing in the record to support that contention. Accordingly, we
reject plaintiff’s argument.
B. Requests to Admit
On May 11, 2005, plaintiff served defendant with requests for production of documents,
requests to admit, and interrogatories. The next day, defendant filed a motion to dismiss, and in
the order setting a briefing schedule, the court stayed discovery during the pending motion to
dismiss. On June 23, 2005, upon agreement of the parties, portions of the complaint were
dismissed and plaintiff was granted leave to file a first amended complaint. Defendant filed a
motion to dismiss the first amended complaint and to stay discovery on September 22, 2005. On
October 4, 2005, the court stayed all discovery pending the resolution of defendant’s motion to
dismiss. In its response to defendant’s motion to dismiss the first amended complaint, plaintiff
argued that certain facts should be admitted because defendant failed to respond to the requests to
admit. On December 6, 2005, the trial court struck “all previously filed discovery and requests to
admit” and stayed discovery until further order of the court. The trial court noted that plaintiff
was not barred from renewing the requests to admit in the future.
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Plaintiff argues that the trial court abused its discretion when it refused plaintiff’s request
to deem facts admitted under Supreme Court Rule 216 (134 Ill. 2d R. 216) and later struck them.1
According to plaintiff, defendant “simply never responded” to requests to admit that it
propounded soon after filing the complaint. Plaintiff contends that the trial court “ignored and
directly controverted” supreme court rules regarding requests to admit and instead “fabricated as
rule that the requests were ‘untimely’ or ‘premature’ ” when it struck the requests to admit.
The trial court has great latitude in ruling on discovery matters. Mutlu v. State Farm Fire
& Casualty Co., 337 Ill. App. 3d 420, 434 (2003). A trial court’s rulings on such matters will not
be disturbed absent a manifest abuse of discretion. Mutlu, 337 Ill. App. 3d at 434. While
plaintiff contends that “there is some question” as to whether requests to admit are discovery, in
Bright v. Dicke, 166 Ill. 2d 204, 208 (1995), our supreme court stated that “a request for
admissions is essentially a discovery tool.” After Bright, the supreme court amended Rule 201,
entitled “General Discovery Provisions,” to include requests to admit within the definition of
“discovery methods.” 166 Ill. 2d R. 201(a). More recently, in Vision Point of Sale, Inc. v. Haas,
226 Ill. 2d 334 (2007), the court concluded, “This amendment clearly reinforced our statement in
Bright that requests for admission are part of the discovery process, and *** [w]e hold, as we did
in Bright, that requests for admission constitute discovery.” Haas, 226 Ill. 2d at 345, 347. In
light of this clear statement by the supreme court, the requests to admit clearly fall within the
1
Plaintiff does not argue that the trial court erred in striking its requests for production of
documents and interrogatories, the other discovery it propounded.
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court’s order pertaining to stays of “discovery.”
Furthermore, in arguing that defendant “simply did not respond,” plaintiff ignores that the
trial court stayed discovery twice during defendant’s pending motions to dismiss. Indeed, while
plaintiff argues that the trial court needed “good cause” under Rule 183 to excuse defendant’s
failure to respond, it fails to address the trial court’s discretion to stay discovery while a motion
to dismiss is pending. In Adkins Energy, LLC v. Delta-T Corp., 347 Ill. App. 3d 373 (2004), the
court found that the trial court did not err when it stayed discovery until ruling on the defendant’s
motion to dismiss, even though the case could have been resolved earlier or settled if discovery
had not been postponed. “We cannot say that it was a manifest abuse of discretion for the trial
court to stay discovery until it ruled on the motion to dismiss, because if a cause of action had not
been stated, discovery would have been unnecessary.” Adkins Energy, 347 Ill. App. 3d at 381.
Similarly, in Redelmann v. Claire-Sprayway, Inc., 375 Ill. App. 3d 912 (2007), this court
affirmed the trial court’s stay of discovery pending the resolution of a motion to dismiss because
it was unwilling to permit the plaintiff to “go on a fishing expedition.” Redelmann, 375 Ill. App.
3d at 927. Here, as in Redelman, the trial court stated that plaintiff might be in a position to
renew the requests to admit in the future. Also, plaintiff has failed to explain how the requests to
admit would help him overcome the pleading deficiencies in its complaint. See Redelmann, 375
Ill. App. 3d at 927.
Although plaintiff argues that a stay was not in effect from June 23, 2005, when the
original complaint was dismissed, until October 4, 2005, when the court stayed all discovery
pending the resolution of defendant’s motion to dismiss, the court struck all filed discovery when
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it dismissed the first amended complaint. A trial court may properly quash a discovery request
when it has sufficient information upon which to decide a defendant’s motion to dismiss. Mutlu,
337 Ill. App. 3d at 434. Significantly, plaintiff does not argue that discovery was needed for the
trial court to rule on defendant’s motion to dismiss or for plaintiff to successfully resist the
motion. See Adkins Energy, 347 Ill. App. 3d at 381; Evitts v. DaimlerChrysler Motors Corp.,
359 Ill. App. 3d 504, 514 (2005) (“Discovery is not necessary where a cause of action has not
been stated.”).
The trial court did not abuse its discretion when it stayed discovery and struck plaintiff’s
requests to admit.
III. CONCLUSION
In summary, because we find that the conduct alleged in plaintiff’s complaint constituted
the “misappropriation” of money received as premiums, we reverse the dismissal of counts I, IV,
and V. We affirm the dismissal of the consumer fraud and common law fraud counts as well as
the trial court’s rulings regarding discovery.
Affirmed in part and reversed in part; cause remanded.
NEVILLE, P.J., and CAMPBELL, J., concur.
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