Docket No. 89201–Agenda 30–September 2000.

GRACEIA M. VOYLES, Appellee, v. SANDIA MORTGAGE

CORPORATION, n/k/a Fleet Mortgage Corporation, Appellant.

Opinion filed May 24, 2001.

	CHIEF JUSTICE HARRISON delivered the opinion of the

court:

	The plaintiff, Graceia M. Voyles, brought the present action

in the circuit court of Du Page County against the defendant,

Sandia Mortgage Corporation (now known as Fleet Mortgage

Corporation), seeking damages for the defendant’s submission of

allegedly inaccurate reports about her to credit reporting agencies.

Following a bench trial, the trial judge awarded the plaintiff a total

of $10,000 in damages, finding that the defendant was negligent in

submitting certain information to the credit reporting agencies and

in failing to timely correct alleged inaccuracies therein. The trial

judge denied the plaintiff recovery on several other theories of

recovery, including defamation, tortious interference with

prospective economic advantage, and breach of duty of good faith

and fair dealing. The court also denied plaintiff’s request for

punitive damages based upon her claim that defendant had acted

wilfully. Plaintiff appealed, and defendant cross-appealed.

	The appellate court did not disturb the trial court’s ruling of

liability on plaintiff’s claims for negligent reporting of credit

information and failure to timely correct alleged inaccuracies;

however, in light of its disposition of plaintiff’s other claims, the

appellate court vacated the trial court’s award of damages on the

negligence counts and remanded for hearings on damages related

thereto. Finding that the defendant had acted intentionally, the

appellate court reversed the trial court’s judgment in favor of the

defendant on the plaintiff’s other claims and remanded the cause to

the circuit court for hearings on plaintiff’s damages arising from

those claims as well. 311 Ill. App. 3d 649. We allowed the

defendant’s petition for leave to appeal (177 Ill. 2d R. 315(a)), and

we now reverse the judgment of the appellate court and affirm the

judgment of the circuit court.

	The facts pertinent to our disposition may be stated briefly. In

1976 the plaintiff bought a single-family home in Springfield,

financing the purchase with a loan from a local lender, Citizens

Savings and Loan Association (Citizens). In 1979, the plaintiff

moved to the Chicago area. Late in 1981 or early in 1982,

plaintiff’s lawyer, Wayne Golomb, moved into the residence and

eventually began making the mortgage payments. Subsequently,

Citizens failed and was placed in receivership under the Resolution

Trust Corporation. The plaintiff’s loan was subsequently sold to

another entity, and defendant Sandia Mortgage Corporation began

servicing the loan in April 1991. The defendant soon discovered

that the assessment on the property had increased, causing the

plaintiff’s real estate taxes to rise. Because of that increase, the

escrow that had been established to cover property taxes on the

property had become insufficient. To make up for the deficiency,

the defendant increased the plaintiff’s monthly mortgage payment

from $503 to $582. The increased payments were reflected in a

mortgage payment booklet sent to the plaintiff in the summer of

1991. Golomb noticed that the required monthly payment had

increased and, on August 7, 1991, he sent a note to the defendant

questioning the new amount. On August 16, one of the defendant’s

customer service representatives called Golomb. A note she made

of the conversation stated, “I called Mr. Golomb this a.m. He was

very vague, stating that he is sending us the payments on this

mortgage and wants us to send mail to him–told him to send power

of attny [sic] from Mrs. Voyles.” Apart from the insufficient escrow, the defendant was also concerned that the property might

have been sold by the plaintiff to Golomb, activating the due-on-

sale clause in the mortgage.

	Notwithstanding the August 16 conversation, Golomb sent

defendant checks in the old amount of $503 in September and

October for payment of the mortgage–less than the new monthly

payment of $582. The defendant returned those checks with a

letter to plaintiff dated October 3, 1991. The defendant explained

that the loan was delinquent and set forth the total payment

required for reinstatement. The defendant recommended that the

correct amount be paid to reinstate the account and to avoid

having adverse information placed on the plaintiff’s credit record. In defendant’s letter, it provided telephone numbers where plaintiff

could request further information or discuss the matter in greater

detail.

	Golomb sent a check for only $503 in November 1991. On

November 7, 1991, he sent a letter to defendant cautioning

defendant against further contact with the plaintiff/mortgagor,

stating his opinion that the last payment on the loan had been

rejected without cause, and threatening suit.

	On December 17, 1991, the defendant, by its assistant vice-

president, James Duran, sent Golomb a letter informing him that

the payments for August, September, October, and November

were due and that plaintiff owed a total of $2,328. Duran again

offered to answer any questions about the account.

	Early in January 1992, Golomb sent the defendant two checks

totaling the amount due. One was an insurance company check

payable to the defunct Citizens Savings & Loan for $1,669.50,

which had been issued as compensation for certain repairs on the

home; the second check was Golomb’s personal check for the

balance. In response, the defendant returned both checks to

Golomb, stating that it could not accept the insurance company

check because Citizens was listed as the payee; the defendant

further explained that even if the defendant were designated the payee, defendant could not accept the check until repairs to the

property were completed, repair bills were paid in full with copies

thereof submitted to defendant, executed and notarized lien

waivers were completed by each contractor involved, and Golomb

signed an insurance claim affidavit.

	Golomb responded by sending the defendant his personal

check for $582, representing the correct monthly payment due in late January. The next week, Golomb sent a check for $1,669.50.

Because a balance of $658.50 remained, however, the defendant

returned the checks to Golomb, stating that the entire amount due would have to be paid to avoid default. The defendant reiterated

that concern in a letter to the plaintiff on February 4, 1992, explaining that it would not accept less than the full amount due

and that it would institute foreclosure proceedings if it did not

receive full payment. At the same time, the defendant referred the

matter to its foreclosure department. Later that month, Golomb sent the defendant a letter stating that he would not make any

further payments on the loan.

	As a result of this ongoing dispute, defendant informed two

credit reporting agencies, TRW and Trans Union, of the status of

the plaintiff’s mortgage and of the initiation of foreclosure

proceedings. Reports issued by those companies reflected that

foreclosure proceedings had been instituted and that the last

payment had been received in July 1991. Golomb ultimately paid

the arrearage and, as the defendant’s records indicate, defendant

then reinstated the mortgage “out of foreclosure” effective June 3,

1992.

	As noted earlier, the plaintiff did not occupy the Springfield

house but was instead living in the Chicago area, in Naperville. In

March 1992, the plaintiff attempted to refinance the mortgage on

her house in Naperville, and she submitted an application to

Citibank, the original lender on that property. In the course of

processing the plaintiff’s application, Citibank obtained credit

reports on the plaintiff from the two credit reporting agencies.

Those reports stated that plaintiff’s mortgage on the Springfield

property was in foreclosure. In June of 1992, after receiving full

payment, the defendant notified Citibank that the Springfield

mortgage was no longer delinquent. Thereafter, Golomb supplied

Citibank with additional information required by Citibank to complete plaintiff’s application. That information was not related

to the controversy between plaintiff and defendant. Citibank

ultimately denied the plaintiff’ application for a new loan on the

Naperville property for a reason unrelated to credit reporting: the

plaintiff was no longer employed. Citibank concluded that

plaintiff’s credit status was “satisfactory.”

	In September 1992, the plaintiff initiated the present action

against the defendant in the circuit court of Du Page County. The

plaintiff alleged that the defendant was negligent in reporting

information about her to the credit agencies and in failing to

promptly correct falsely reported information. The trial court

originally ruled for the defendant, granting summary judgment for

the defendant on the ground that the plaintiff could not establish

that the defendant’s conduct proximately caused the plaintiff’s

injury: Citibank’s denial of the plaintiff’s application for refinancing. In an appeal from that ruling, the appellate court

reversed the circuit court judgment and remanded the cause for

further proceedings, finding the existence of several questions of

material fact that precluded entry of summary judgment. Voyles v. Sandia Mortgage Co., No. 2–94–0158 (1995) (unpublished order under Supreme Court Rule 23). On remand, the plaintiff added a

further claim to her action, alleging the breach of an implied duty

of good faith and fair dealing, and seeking an award of punitive

damages. After the bench trial was conducted, but before the judge

issued his ruling, the plaintiff added yet another count, alleging

tortious interference with prospective business advantage. Also, the

plaintiff argued that the negligent-reporting counts should be

construed as defamation claims.

	The trial judge ultimately awarded the plaintiff a total of

$10,000 in compensatory damages on the two negligence counts,

agreeing with the plaintiff that the defendant had issued false or

inaccurate credit reports without exercising due care. The judge

ruled against the plaintiff, however, on the counts alleging breach

of an implied duty of good faith and fair dealing and tortious

interference with prospective business advantage. The judge found

that the defendant’s conduct was not intentional. The trial court

also rejected the plaintiff’s defamation claims, concluding that she

had failed to prove special damages.

	Both parties appealed. The appellate court disagreed with the

trial judge’s finding that the defendant had not acted intentionally.

The appellate court believed that the defendant had “embarked on

a course of action to force plaintiff into foreclosure by raising her

monthly payments with no notice and then arbitrarily and

capriciously refusing plaintiff’s tender of amounts owing.” 311 Ill.

App. 3d at 656. The appellate court entered judgment for the

plaintiff on the counts rejected by the trial judge: breach of the duty

of good faith and fair dealing, tortious interference with

prospective economic advantage, and defamation. As previously

noted, the appellate court vacated the award of damages on the

negligence counts and remanded the cause to the circuit court for

reconsideration of the plaintiff’s damages on all counts. 311 Ill.

App. 3d at 661.

	The defendant first argues that the appellate court erred in

recognizing an independent cause of action in tort for the alleged

breach of an implied duty of good faith and fair dealing arising

from a contract. For the reasons that follow, we decline to

recognize the cause of action in the circumstances of this case.

	Until the decision below, appellate court panels which had

squarely addressed the question had consistently refused to

recognize an independent tort for breach of the implied duty of

good faith and fair dealing in a contract. See, e.g., Harris v. Adler School of Professional Psychology, 309 Ill. App. 3d 856, 860-61 (1999); Coleman v. Madison Two Associates, 307 Ill. App. 3d 570, 578 (1999); Guardino v. Chrysler Corp., 294 Ill. App. 3d 1071, 1080 (1998); Northern Trust Co. v. VIII South Michigan Associates, 276 Ill. App. 3d 355, 367 (1995); Anderson v. Burton Associates, Ltd., 218 Ill. App. 3d 261, 267 (1991); Carlson v. Carlson, 147 Ill. App. 3d 610, 614 (1986).

	In Cramer v. Insurance Exchange Agency, 174 Ill. 2d 513 (1996), this court considered an analogous question arising in the

insurance context. In that case, this court refused to recognize an

independent action in tort for breach of an implied covenant of

good faith and fair dealing, stating that the claim would be proper

only in the narrow context of cases involving an insurer’s

obligation to settle with a third party who has sued the

policyholder. Discussing the requirement of good faith and fair

dealing implicit in all contracts, this court explained:

		“This principle ensures that parties do not try to take

advantage of each other in a way that could not have been

contemplated at the time the contract was drafted or to do

anything that will destroy the other party’s right to receive

the benefit of the contract. [Citations.] This contractual

covenant is not generally recognized as an independent

source of duties giving rise to a cause of action in tort.

[Citations.]” Cramer, 174 Ill. 2d at 525.

	As we have noted, Cramer recognized an exception to that rule. This court stated in Cramer that a separate action in tort would remain available when an insurer breaches its duty to settle

an action brought against the insured by a third party. The court

reasoned that in that setting the insured relies on the insurer for defense of the action, yet the insurer’s interest in defeating the

claim may conflict with the insured’s interest in avoiding a

judgment that exceeds the amount of the policy limits. The policy

does not spell out the insurer’s duty to settle, however, and

therefore tort law remains an appropriate ground on which to

evaluate the insurer’s conduct. Cf. Cramer, 174 Ill. 2d at 525-26. Cramer distinguished duty-to-settle cases from actions by an insured against its insurer arising from the insurance contract. The

court noted, in the latter context, “The policyholder does not need

a new cause of action to protect him from insurer misconduct

where an insurer refuses to pay. The policyholder has an explicit

contractual remedy.” Cramer, 174 Ill. 2d at 526.

	Cramer, as well as the line of appellate cases previously cited, would thus bar the plaintiff’s tort action here for breach of the

implied covenant of good faith and fair dealing. The appellate court

below, however, believed that Cramer was distinguishable on the ground that it involved an action under the Illinois Insurance Code,

which contains a statutory remedy for the insured in that case. The

appellate court theorized that in the absence of a remedy provided

by the legislature, the courts of this state are free to impose a duty

of good faith and fair dealing based in tort law.

	Although Cramer involved section 155 of the Insurance Code (215 ILCS 5/155 (West 1994)), the opinion’s rationale was not

confined to that context. The court’s description of the covenant

of good faith and fair dealing as a rule of construction, rather than

an independent source of tort liability, was not limited to the area

of insurance law, and is as apt here as it is in other circumstances.

Moreover, this court’s analysis in Cramer made clear that, irrespective of a statutory remedy, the existence of a contractual

remedy would have made the tort theory unnecessary. Cramer, 174 Ill. 2d at 526-27.

	In this case, the plaintiff had recourse to both her specified remedies under the parties’ contract and traditional tort remedies which she in fact sought to employ but failed to prove. A cause of

action for violation of a duty of good faith and fair dealing would,

as a practical matter, add little to this or any plaintiff’s remedial

repertoire. As the appellate court’s own analysis of this issue

suggests, the requisite evidence for plaintiff to prevail on the tort claims is less than that which the appellate court would have

required for a showing that defendant violated a duty of good faith

and fair dealing:

		“Defendant’s conduct was intentional and outrageous. In

the future, in order to state a claim for bad faith, a

defendant’s conduct would have to be similarly egregious

and outrageous.” 311 Ill. App. 3d at 656.

	First, we do not agree that defendant intended to create the

credit controversy; nor do we believe the reporting of the dispute

wrongful. Moreover, we do not believe it advisable to recognize a

cause of action for violation of a duty of good faith and fair dealing

in the factual context of this case; nor do we see a need to expand

the reach of the limited cause of action acknowledged by Cramer in duty-to-settle cases. “It is plaintiff’s burden, in urging this court

to create new rights of action or expand existing ones, to persuade

the court of the need for such new or expanded rights.”

Zimmerman v. Buchheit of Sparta, Inc., 164 Ill. 2d 29, 39 (1994). We are not persuaded.

	The defendant also challenges the appellate court’s

determinations that the plaintiff may recover for defamation and for

tortious interference with prospective business expectations. The

appellate court concluded that the defendant’s actions in relating

the impending foreclosure of the plaintiff’s property to the credit

reporting agencies were intentional and wrongful.

	An underlying element common to both the defamation claim

and the tortious interference claim, as pleaded by the plaintiff, is

the assumption that the defendant wrongfully declared the

plaintiff’s mortgage to be delinquent for nonpayment of the higher

amounts, because the defendant had initially failed to provide the

plaintiff with an explanation for the monthly increase in her

mortgage payments. In essence, the plaintiff maintained that the

defendant could not increase the payments without first providing

an explanation for the increase. Accordingly, the plaintiff believed

that payment of less than was required by the new payment booklet

did not constitute a delinquency and therefore could not provide

grounds for an adverse report to the credit reporting agencies.

	We do not agree with the premise of the plaintiff’s argument

that the defendant was required first to provide an explanation for

the increased payment. The defendant provided the necessary

notice by sending a new payment booklet showing the increased

amount of the monthly payments. That was all that the mortgage

agreement required. It provided:

		“If the amount of the Funds held by Lender shall not be

sufficient to pay taxes, assessments, insurance premiums

and ground rents as they fall due, Borrower shall pay to

Lender any amount necessary to make up the deficiency

within thirty days after notice from Lender to Borrower

requesting payment thereof.”

The required notice in this case was given when the defendant sent

the plaintiff the new payment booklet showing the increased

amount of each payment. Although it certainly would have been

helpful for the defendant to have given the borrower an explanation

for the increase when the new payment booklet was sent, the

defendant’s failure to do so did not excuse the plaintiff’s

subsequent refusal to make the required payments–payments the

plaintiff does not now contest, and conceded were required.

	As the defendant correctly notes, falsity is an element of the

plaintiff’s defamation claim. Krasinski v. United Parcel Service, Inc., 124 Ill. 2d 483, 490 (1988). To recover on a claim of defamation, plaintiff must prove that the statement or publication

was false. Troman v. Wood, 62 Ill. 2d 184, 198 (1975); Wynne v. Loyola University, 318 Ill. App. 3d 443, 451 (2000); Vickers v. Abbott Laboratories, 308 Ill. App. 3d 393, 400 (1999). The plaintiff cannot, however, establish that the defendant’s reports to

the credit agencies were false. The reports stated simply and

correctly, “Foreclosure proceeding started, Account last paid on

7/91.” These reports were accurate: the plaintiff was delinquent in

her mortgage. By that time, the plaintiff and her tenant had not

made a full payment on the mortgage since the preceding July.

Moreover, the defendant had taken steps within its own

organization to initiate the foreclosure process. Because the reports

were accurate, the plaintiff’s action for defamation must fail.

	The plaintiff argues, however, that truth is an affirmative

defense and that the defendant failed to plead it in a timely manner. As we have noted, decisions of this court have reached the

opposite conclusion, characterizing falsity as an element of the

defamation plaintiff’s cause of action. See Krasinski, 124 Ill. 2d at 490; Troman, 62 Ill. 2d at 198. Even if truth were an affirmative defense, however, the defendant’s assertion of it would be

considered timely in the circumstances of this case. The plaintiff did

not raise her defamation claim until she filed her written closing

argument, a number of months after the conclusion of the trial.

Therein, the plaintiff characterized the counts alleging the

defendant’s negligence in reporting the delinquency to the credit

agencies as claims for defamation. The defendant had no earlier

opportunity to formally raise the defense, though it has consistently

argued that the report it made to the credit agencies was truthful

and accurate. Given these circumstances, even if we were to adopt the plaintiff’s pleading requirement, we would consider the

defendant’s assertion of the defense to be timely.

	The appellate court also concluded that the plaintiff is entitled

to recover on her claim of tortious interference with prospective

business advantage. We believe that this theory, too, is unavailing.

	The elements of this cause of action are well established:

			“To state a cause of action for intentional interference

with prospective economic advantage, a plaintiff must

allege (1) a reasonable expectancy of entering into a valid

business relationship, (2) the defendant’s knowledge of the

expectancy, (3) an intentional and unjustified interference

by the defendant that induced or caused a breach or

termination of the expectancy, and (4) damage to the

plaintiff resulting from the defendant’s interference.”

Anderson v. Vanden Dorpel, 172 Ill. 2d 399, 406-07 (1996).

	We believe that the plaintiff’s claim in this case founders on

the third element, the requirement that she show an intentional and

unjustified interference by the defendant. The interference alleged

by the plaintiff in the present case involved the allegedly false

reports the defendant made to the credit agencies. As we have

stated, however, those reports were accurate and proper, and

therefore they cannot represent an unjustified interference with the

plaintiff’s prospective business expectancy.

	We note in passing that ignorance of the basis for the increase

in payments, though perhaps an initial source of controversy between defendant and Golomb, does not appear to have sustained the dispute–a dispute, we might add, that defendant repeatedly offered to resolve if plaintiff would only bring the account current

by payment of the full amount owed. The defendant’s actions do not support the appellate court’s conclusion that defendant set out

to “force plaintiff into foreclosure.” See 311 Ill. App. 3d at 656.

The circuit court’s determination that defendant’s conduct was not intentional is certainly not against the manifest weight of the evidence.

	Finally, we note that at oral argument the defendant asked this

court to reinstate the circuit court judgment, which awarded the

plaintiff $10,000 on her negligence claims. Apparently, the

defendant no longer wishes to challenge the trial judge’s findings

on those counts, and we need not discuss them separately.

	For the reasons stated, the judgment of the appellate court is

reversed, and the judgment of the circuit court of Du Page County

is affirmed.

Appellate court judgment reversed;

circuit court judgment affirmed.

	JUST^ICEICE T%HOTHOMAS took no part in the consideration or

decision of this case.