On March 3, 2000, a Keystone employee covered by the Plan was injured in a motor
vehicle accident while under the influence of alcohol. (R 43-1, FAC {J 11-12.) On behalf of
Keystone, EBC submitted the injured employee’s medical bills to Conseco for payment. (Jd. ¥
13.) Conseco refused to pay the claim, citing the alcohol-related injury exclusion. (/d. q 14.)
Keystone filed suit against Conseco and EBC in this Court.

ANALYSIS
1 Breach Of Contract (Count IV)

Keystone’s breach of contract claim fails because Keystone cannot establish a genuine
issue of material fact as to whether a contract existed that obligated EBC to procure stop-loss
insurance for Keystone.

Under Illinois law,' a party claiming breach of contract must establish that: (1) a valid
and enforceable contract existed; (2) the plaintiff performed according to the contract; (3) the
defendant breached the contract; and (4) the breach resulted in damages. D.S.A. Fin. Corp. v.
County of Cook, 801 N.E.2d 1075, 1078 (Ill. App. Ct. 2003) (citations omitted). A valid contract
requires the parties to agree to definite and essential terms that enable the court to determine the
parties” intent and whether a breach occurred. Academy Chicago Publishers v. Cheever, 144 Ill.
2d 24, 578 N.E.2d 981, 983-84 (Ill. 1991). Because the existence of a contract is a question of
law, Barefield v. Village of Winnetka, 81 F.3d 704, 709 (7" Cir. 1996); Corluka v. Bridgford

Foods of Ill, Inc., 284 Il. App. 3d 190, 194, 671 N.E.2d 814, 818 (Ill. App. Ct. 1996), the

' Neither party addresses whether Illinois or Texas law should apply. Because both
parties rely on Illinois law, and because federal courts sitting in diversity apply the substantive
law of the state in which the suit was brought, Orix Credit Alliance, Inc. v. Taylor Mach. Works,
Inc., 125 F.3d 468, 478 n.4 (7" Cir. 1997) (citing Heller Int'l Corp. v. Sharp, 974 F.2d 850, 856
(7" Cir, 1992)), the Court applies Illinois law to Keystone’s breach of contract and negligent
misrepresentation claims.

4


If anything, EBC acted as a mere conduit of information when it relayed information from
Conseco to Keystone. Where a party acts as “a sort of informational conduit, and never purports
to independently offer ‘information’ regarding the [matter] it may avoid liability in a negligent
misrepresentation action.” Zahorik v. Smith, Barney, Harris, Upham & Co., Inc., 664 F. Supp.
309, 314 (NLD, Ill 1987). The “commercial information provider” exception does not apply.
CONCLUSION

Keystone’s breach of contract claim fails because Keystone cannot establish the existence
of a contract. Keystone’s negligent misrepresentation claim fails because Keystone seeks
recovery in tort for purely economic losses and cannot establish that the “commercial
information provider” exception applies. Accordingly, summary judgment is granted as to

Counts IV and V. This resolves all claims against EBC in this case.

Dated: April 12, 2004 ENTERED

Yh

United States Dtrict Court Judge


fails to establish a genuine issue of material fact as to whether such a contract existed, and
summary judgment is granted on Count IV.
I. Negligent Misrepresentation (Count V)

Keystone’s negligent misrepresentation count fails because Keystone improperly seeks to
recover damages based solely on economic losses, and because it fails to establish a genuine
issue of material fact as to whether EBC is a “commercial information provider.”

To prove negligent misrepresentation,’ Keystone must show: (1) a false statement of
material fact; (2) carelessness or negligence in ascertaining the truth of the statement by
defendant; (3) an intention to induce the other party to act; (4) action by the other party in
reliance on the truth of the statements; (5) damage to the other party resulting from such reliance;
and (6) that defendant owed a duty to plaintiff to communicate accurate information.* Orix, 125
F.3d at 475 n.2 (citing Board of Educ. v. A, C and S, Inc., 131 Il. 2d 428, 452, 546 N.E.2d 580
(1989)).

Illinois Jaw generally prohibits a plaintiff from recovering in tort for purely economic

losses, although the prohibition is not absolute. Moorman Mfg. Co. v. Nat’l Tank Co., 91 Ill. 2d

> Under Illinois law, negligent misrepresentation and common law fraud require that the
plaintiff prove all but one of the same elements. Quinn v. McGraw-Hill Co., Inc., 168 F.3d 331,
335 (7 Cir. 1999) (citing Board of Educ. v..A, C and S, Inc., 131 Ml. 2d 428, 452, 546 N.E.2d
580 (1989)). Negligent misrepresentation differs from common law fraud in that in order to
sustain a negligent misrepresentation action, the Plaintiff need not show knowledge or
recklessness regarding the truth of the statement of material fact, but instead must show that the
defendant was careless or negligent in ascertaining the truth of the statement. 4, C and S, 131 Ill.
2d at 452, 546 N.E.2d 580 (1989).

* To establish a duty, the plaintiff must show that the defendant making the allegedly
negligent misrepresentation “is in the business of supplying information for the guidance of
others in their business transactions” to recover under Ilinois law. Jd. (citing Rankow v. First
Chicago Corp., 870 F.2d 356, 362 (7" Cir. 1989) (quoting Moorman Mfg. Co. v. Nationall Tank
Co., 91 Ill. 2d 69, 435 N.E.2d 443, 452 (Ill. 1982)).

6


Pas

question whether the parties agreed to the essential terms of the contract is a question of law.
Mansourou v. John Crane, Inc., 248 Ill. App. 3d 963, 968, 618 N.E.2d 689, 692 (Ill. App. Ct.
1993) (citations omitted).

Keystone bears the burden of showing that a contract exists. Carpenter v. City of
Northlake, 948 F, Supp. 759, 764 (N.D. Ill. 1996). Simply alleging that a contract existed, even
if the allegations are adequate to state a claim, is insufficient to avoid summary judgment.” Id.
Keystone must do more than merely argue the existence of a contract—Keystone must identify
deposition testimony, documentation, or some other evidentiary support showing the existence of
acontract. See id. Keystone has failed to do so.

Keystone presents no evidence of an enforceable contract. See Carpenter, 948 F. Supp. at
763. EBC states in its Rule 56.1 statement that “EBC never had an oral or written agreement
with Keystone that EBC would obtain insurance coverage for Keystone as outlined in the bid
package.” (R. 51-1, Def.’s Rule 56.1 Statement { 3(b).) Keystone merely responds that
“Plaintiff disputes and denies the allegations set forth in Paragraph b.” (R. 54-1, Pl.’s Rule 56.1
Response {| 3(b).) Keystone’s response fails to include “specific references to the affidavits, parts
of the record, and other supporting materials” as required by Local Rule 56.1. Accordingly, the
Court deems EBC’s statement admitted.

Keystone provides no other evidence as to the existence of a contract between EBC and

Keystone that obligated EBC to procure particular coverage for Keystone. As a result, Keystone

2 Where the nonmovant bears the burden of proof at trial, the movant need not negate the
opponent’s claim. Celotex, 477 U.S. at 323, 106 S. Ct. at 2552. Accordingly, “the burden on the
moving party may be discharged by [pointing out to the district court) that there is an absence of
evidence to support the non-moving party’s case.” Jd. Once the moving party satisfies this
burden, the opposing party must set forth specific facts showing that there is a genuine issue for
trial. Fed. R. Civ. P. 56(e).

5


December 29, 1999 supports the reasonable conclusion and/or inference that

the requested coverage had been obtained. Further, First Amended Complaint

Exhibit B shows evidence that EBC was acting as agent of record for the

procurement of the requested insurance package. By nature of the relationship

between EBC and Keystone throughout the bid process there was an

agreement for EBC to procure a treaty with certain provisions as requested.
(R. 54-1, Pl.’s Rule 56.1 Response { 4(c).) Thus, Keystone identifies two pieces of
evidence—the “Christina Cole fax” and Exhibit B—to refute EBC’s statement that all
information originated with Conseco, Neither piece of evidence, however, supports an inference
that EBC was a commercial information provider.

The cover sheet is the only part of the fax written by EBC employee Christina Cole. The
cover sheet states in its entirety:

Kathy, Please sign the following application and fax it back to my

attention. I will need you to mail me the original ASAP. .. . You will

need to make the first month’s premium payment, the following is how it

is broken out.
{R. 54-1, Pl.’s Rule 56.1 Response, Ex. B.) Attached to this cover sheet is an insurance
application undisputedly prepared by Conseco, On its face, the Cole fax states that the sender is
merely conveying information to Keystone. Nothing in the Cole fax suggests that the sender is
anything but a conduit of information.

The second piece of evidence that Keystone cites also fails to support an inference that
EBC is a commercial information provider. It merely establishes that EBC served as “agent of
record” on Keystone’s behalf. But EBC does not dispute that it served as Keystone’s agent. In
any event, does not suggest that EBC is a commercial information provider.

Keystone fails to dispute that EBC is in the business of administering Keystone’s self-

funded insurance, not supplying information for the guidance of others in their business dealings.


Minute OF8e¥ Forn (06/97)

Ni

United States District Court, Northern District of Illinois

ssi Sitti if Oth
Name of tained Sud Amy]. St. Eve iin Joa rhe
CASE NUMBER 02 C755 DATE 4/12/2004
CASE Keystone vs. Conseco Med.
TITLE

{In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature

of the motion being presented.]

(11)

MOTION:

DOCKET ENTRY:

qd) D Filed motion of [ use listing in “Motion” box above.]

(2) oO Brief in support of motion due

(3) Oo Answer brief to motion due___. Reply to answer brief due___.

(4) oO Ruling/Hearing on set for___—_at

(5) Qa Status hearing(held/continued to] [set for/re-set for] on setfor_ at.

(6) Q Pretrial conference{held/continued to] (set for/re-set for]on___———s set for at_

(7) Oo Trial[set for/re-set for]on____at

(8) oO (Bench/Jury trial] [Hearing] held/continued to___at

(9) Oo This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to}
COFRCP4(m) CiLocal Rule 41.1 CIFRCP4i(a)(1) CIFRCP41(a)(2).

ao) «if (Other docket entry] _ Enter Memorandum Opinion and Order. Defendant Employee Benefit Corporation's

motion for summary judgment (R. 47-1) is denied as moot in light of its amended motion for summary judgment

(R. 50-1). Defendant's motion for summary judgment (R. 50-1) is granted.

ie?

a [For further detail see order attached to the original minute order.]

No notices required, advised in open court.

No notices required. number of notices

Notices mailed by judge's staff. APR 7% 2008

Notified counsel by telephone. dale docketed

Docketing to mait notices.

Mail AO 450 form.

Copy to judge/magistrate judge.

courtroom
tad deputy’s
initials

+ Date/time received in

railing deputy initials

central Clerk’s Office



69, 88, 435 N.E.2d 443, 451 (Ill. 1982); Gerdes v. John Hancock Mut. Life Ins. Co., 712 F. Supp.
692, 696 (N.D. III. 1989) (citations omitted). One such exception is the “commercial information
provider” exception, Courts narrowly construe this exception. Gerdes, 712 F. Supp. at 697. To
qualify for this exception, the plaintiff must establish that the defendant is “in the business of
supplying information for the guidance of others in their business dealings” by establishing that
the defendant 1) is in the business of supplying information, and 2) provides this information for
the guidance of others in its business relations with third parties. Jd. at 696, One is not in the
business of “supplying information” if the information is merely ancillary to the services
rendered or products sold. Lemont Partners v. Meijer Stores Ltd. Partnership, No. 02 C 1799,
2002 WL 31641623, at *13 (N.D. Ill. Nov. 22, 2002).

Keystone seeks damages for purely economic losses,’ but argues that the “commercial
information provider” exception applies because EBC is in the business of supplying
information. The Court disagrees. EBC argues that, as Keystone’s agent,’ it merely relayed
information from Conseco to Keystone. EBC stated in its Rule 56.1 statement that “(alll
representations containing the nature and the extent of the coverage to be provided to Keystone
originated with [Conseco].” (R. 51-1, Def.’s Rule 56.1 Statement { 4(c).). In response, Keystone
states that:

Defendant denies the allegation set forth in Paragraph c. There is evidence to

support the allegations in Paragraph 47 of the First Amended Complaint which
is the paragraph quoted by EBC. As stated above, the Christina Cole fax of

> EBC states in its Rule 56.1 statement that “[t]he damages sought by Keystone are
economic damages arising out of an alleged contract.” (R.51-1, Def.’s Rule 56.1 Statement
4(d).) Keystone does not adequately dispute this statement, and the Court deems it admitted.

§ It is undisputed that EBC served as Keystone’s agent. (R. 55-1, Pl.’s Resp. Br. at 1-3,

7)
7


consistently fails to include “specific references to the affidavits, parts of the record, and other
supporting materials” as required by Local Rule 56.1. The consequences of Keystone’s failure to
adhere to Local Rule 56.1 are discussed below.

BACKGROUND

Keystone is an employer that provides its employees with medical coverage via a self-
funded plan (the “Plan”). (R. 43-1, FAC 1, 7.) EBC is an insurance broker that administered
the Plan for Keystone. (Jd. §[ 2, 8.) Keystone sought to obtain stop-loss coverage for the Plan.
(d. {] 2, 8.) On October 19, 1999 EBC submitted a bid package on behalf of Keystone to the
entire market of insurers who write stop-loss policies for self-funded medical plans. (/d. J{ 2, 9;
R, 51-1, Def.’s Statement of Undisputed Material Facts (“Def.’s Rule 56.1 Statement”) { 3(a); R.
54-1, Pl.’s Response Statement of Undisputed Material Facts (“Pl.’s Rule 56.1 Response”) 4
3(a).) Conseco responded to EBC’s bid request with bids on December 14 and 17, 1999. (Id. J
3(f).) Conseco unambiguously stated that it based its bids on the information that Keystone
provided to Conseco. (/d.) Keystone verbally committed to award its business to Conseco on
December 28, 1999. (Id.  3(j).)

Conseco issued a reinsurance treaty with an effective date of January 1, 2000 that
outlined Keystone’s coverage. (Pearl Aff. J] 11.) Conseco issued a copy of the reinsurance treaty
to Keystone and EBC on September 5, 2000. (/d.) The reinsurance treaty contained an exclusion
for medical bills that resulted from a participant having been injured while under the influence of
alcohol. (R. 51-1, Def.’s Rule 56.1 Statement § 3(m); R. 54-1, Pl.’s Rule 56.1 Response § 3(m).)
Conseco never advised EBC or Keystone that the policy it intended to issue excluded coverage

for alcohol related injuries. (dd. 4 3(0).)


law.” Fed. R. Civ. P. 56(c). The party seeking summary judgment has the burden of establishing
the lack of any genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-323,
106 S. Ct. 2548, 2552 (1986). A genuine issue of triable fact exists only if “the evidence is such
that a reasonable jury could retum a verdict for the nonmoving party.” Pugh v, City of Attica,
259. F.3d 619, 625 (7 Cir. 2001) (quoting Anderson v. Liberty Lobby, Inc., 417 U.S. 242, 248,
106 S. Ct. 2505, 2510 (1986)). A party will successfully oppose summary judgment only if it
presents “definite, competent evidence to rebut the motion.” Equal Opportunity Comm'n v.
Roebuck & Co., 233 F.3d 432, 437 (7" Cir. 2000). The Court “considers the evidentiary record
in the light most favorable to the nonmoving party, and draws all reasonable inferences in his
favor.” Lesch v. Crown Cork & Seal Co., 282 F.3d 467, 471 (7" Cir. 2002).
Ii. Local Rule 56.1

The Court first addresses Keystone’s failure to comply with Local Rule 56.1, which
governs summary judgment briefing in the Norther District of Illinois. L.R. 56.1. Local Rule
56.1(a)(3) requires the moving party to provide a “statement of material facts as to which the
moving party contends there is no genuine issue and that entitle the moving party to a judgment
as a matter of law.” L.R. 56.1(a)(3). The opposing party must then file “a concise response to the
movant’s statement,” in which the nonmoving party must “admit or deny each factual statement
proffered by the defendant... , and designate with specificity and particularity those material
facts believed to establish a genuine dispute for trial.” Greer v. Board of Educ. of the City of
Chicago, 267 F.3d 723, 727 (7" Cir. 2001). The nonmoving party may also file a statement of
additional facts that require the denial of a summary judgment. L.R. 56.1(b)(3)(B). The moving

party must submit a reply addressing each additional fact. In its Rule 56.1 response, Keystone


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

KEYSTONE CONSOLIDATED
INDUSTRIES,

Plaintiff,
No. 02 C 0755
v.

CONSECO MEDICAL INSURANCE
COMPANY and EMPLOYEE
BENEFITS CORPORATION,

wee SS SS SS YS

Defendants.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Court Judge:

Plaintiff Keystone Consolidated Industries (“Keystone”) filed a five count First Amended
Complaint (“FAC”) against defendants Conseco Medical Insurance Company (“Conseco”) and
Employee Benefits Corporation (“EBC”), alleging breach of contract against Conseco (Count I)
and EBC (Count IV), negligent misrepresentation against Conseco (Count III) and EBC (Count
V), and estoppel against Conseco (Count II).

EBC moved for summary judgment on Counts IV and V. For the reasons stated herein,
EBC’s motion is granted.

LEGAL STANDARDS
IL Summary Judgment

Summary judgment is proper when “the pleadings, depositions, answers to

interrogatories, and admissions on file, together with affidavits, if any, show that there is no

genuine issue of material fact, and that the moving party is entitled to a judgment as a matter of