UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

GUIDEONE MUTUAL INSURANCE CO.,

Plaintiff/Counter-Defendant,

v.

GOOD SHEPHERD LUTHERAN CHURCH,

Defendant/Counter-Plaintiff.

No. 20 CV 4730

Judge Manish S. Shah

MEMORANDUM OPINION AND ORDER

GuideOne Mutual Insurance Company filed this lawsuit against Good 

Shepherd Lutheran Church, a policyholder, seeking a declaratory judgment that 

GuideOne had done all that it had promised under their contract. Good Shepherd

disagrees. The church brings counterclaims for statutory and common law fraud, 

breach of contract, breach of fiduciary duty, and for attorney fees pursuant to the 

Illinois Insurance Code. GuideOne moves to dismiss five of Good Shepherd’s six 

counterclaims under Rule 12(b)(6). For the reasons discussed below, GuideOne’s 

motion is granted in part and denied in part.

I. Legal Standards

To survive a motion to dismiss under Rule 12(b)(6), a complaint (or in this case 

an answer asserting counterclaims) must state a claim upon which relief may be 

granted. Fed. R. Civ. P. 12(b)(6). The complaint must contain “sufficient factual 

matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” 

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 

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U.S. 544, 570 (2007)). In reviewing a motion to dismiss, a court must construe all 

factual allegations as true and draw all reasonable inferences in the claimant’s favor. 

Sloan v. Am. Brain Tumor Ass’n, 901 F.3d 891, 893 (7th Cir. 2018). 

II. Background

After a fire broke out at Good Shepherd, the church filed a claim with its longtime insurer, GuideOne. [37] at 27–28.1 GuideOne’s adjuster said that the 

replacement cost would be “determined by the actual amount incurred and paid for 

the fire restoration project.” Id. at 29. When GuideOne issued an initial check to the 

church based on non-union labor rates, Good Shepherd’s pastor sought assurances 

that by accepting those funds the church would not be “locked in and limited” by a

preliminary estimate of its loss. See id. at 29–30, 36–38. GuideOne’s adjuster said

that Good Shepherd would “eventually receive the amount that [Good Shepherd] 

actually spends to repair and restore” its building. Id. at 30. On the basis of these 

statements, the church cashed the check. See id. at 30, 52–53. When it came time to 

select a contractor, GuideOne’s adjuster said that the church was free to make its 

own choice. Id. at 30. Later, when the church sought to recover its actual costs based 

on union labor rates, GuideOne refused to pay. Id. at 33–40.

Good Shepherd claims that GuideOne’s adjuster misrepresented the policy in 

order to lure the church into settling its claim for less than it was entitled to receive. 

Id. at 48, 52. GuideOne’s representative knew that his statements were false and

1 Bracketed numbers refer to entries on the district court docket. Referenced page numbers 

are taken from the CM/ECF header placed at the top of the filings. The facts are taken from 

church’s answer to the second amended complaint. [37]. 

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deceived the church into thinking that its choice of contractor would not affect the 

claim. Id. Furthermore, GuideOne failed to communicate its own obligations under 

the policy and misrepresented a requirement that the insured accept cost estimates. 

Id. at 49. Relying on GuideOne’s representations, the church made important 

decisions about how to pursue its claim, how to negotiate with a contractor, and which 

contractor to hire. See id. at 48–49, 52–53.

The church also alleges that GuideOne’s handling of its claim was unfair and 

adversarial. Id. at 46–47. The relationship deteriorated after Good Shepherd chose a 

general contractor that used union labor. Id. at 31–33. When Good Shepherd sought 

to update GuideOne about its plans, GuideOne’s adjuster claimed that the insurer, 

rather than the church, had the right to choose the contractor for the repair. Id. at 

32. GuideOne refused to pay for or investigate revised fire restoration costs that 

included union labor. Id. at 33, 44, 47. When Good Shepherd’s adjuster sent a revised 

estimate reflecting the rates of the church’s chosen contractor, GuideOne’s 

representative replied that the insurance claim had been resolved and advised the 

church to file for appraisal pursuant to the policy. Id. at 33–34. Repeated appeals 

from the church and an appraisal filing failed to move GuideOne. Id. at 35–40. Even 

when the two arrived in court, GuideOne continued to throw up roadblocks: the two 

parties agreed to participate in a settlement conference before a federal magistrate 

judge but GuideOne withdrew because it could not or would not participate unless 

the contractors participated in the conference. Id. at 40–41.

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Good Shepherd brings six counterclaims for (1) breach of contract; (2) attorney 

fees pursuant to Section 155 of the Illinois Insurance Code; (3–4) violations of the 

Illinois Consumer Fraud and Deceptive Business Practices Act; (5) breach of fiduciary 

duty; and (6) common law fraud. [37]. GuideOne moves to dismiss all of the 

counterclaims except for breach of contract. [39].

III. Analysis

A. Section 155

Section 155 of the Illinois Insurance Code allows an insured to recover attorney 

fees when an insurer, either by litigating its liability or loss or by delaying the 

settlement of a claim, acts in a “vexatious and unreasonable” way. 215 ILCS 5/155(1). 

The statute “provides an extracontractual remedy” and “presupposes an action on the 

policy.” Cramer v. Ins. Exch. Agency, 174 Ill.2d 513, 523 (1996). Under Section 155, a 

party can recover reasonable attorney fees, other costs, and an additional penalty set 

by statute. 215 ILCS 5/155(1). Because Section 155 offers a statutory remedy for 

insurer misconduct, Illinois does not recognize a separate “new tort” of bad faith. 

Cramer, 174 Ill.2d at 526–27.

GuideOne does not challenge the substance of Good Shepherd’s Section 155 

counterclaim. [39] at 5–7. Instead, the insurance company argues that the church has 

pled a bad faith tort claim preempted by the Illinois Insurance Code, and 

alternatively that Good Shepherd is seeking remedies that go beyond those provided 

for in the statute. Id.; [46] at 2–3. Good Shepherd contends that its claim is statutory 

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and does not sound in tort. [41] at 5–6. The church also argues that it has adequately 

pled facts to support its Section 155 claim. Id. at 7–8. 

Good Shepherd is right: its counterclaim is for the extracontractual remedies

under the statute, not damages from a bad faith tort. [37] at 44–46; see Creation

Supply, Inc. v. Selective Ins. Co. of the Se., 995 F.3d 576, 578 (7th Cir. 2021) (“Section 

155 permits an insured to seek extracontractual damages from an insurer in any case 

in which at least one of three issues remains undecided: (1) the insurer’s liability 

under the policy, (2) the amount of the loss payable under the policy, or (3) whether 

there was unreasonable delay in settling a claim.”). Although breach of contract and 

Section 155 can provide the only remedies for a straightforward failure-to-pay case, 

see Sieron v. Hanover Fire and Cas. Ins. Co., 485 F.Supp.2d 954, 961 (S.D. Ill. 2007), 

the church does not stray from that limitation here. Good Shepherd alleges delay and 

misconduct by GuideOne in the denial of a portion of its fire loss claim, and that claim 

is for the extracontractual remedies under Section 155. [37] at 44–46; see Sloan v. 

Am. Brain Tumor Ass’n, 901 F.3d 891, 893 (7th Cir. 2018). GuideOne admits as much 

by acknowledging that Good Shepherd “makes an allegation of unreasonable and 

vexatious conduct.” [39] at 6. That Good Shepherd used the words “bad faith” in its 

pleading, [37] at 45, does not transform its counterclaim into one for tort liability. 

GuideOne is right that Good Shepherd has requested remedies outside those 

authorized by Illinois law. [37] at 44–46. Under Count II the church seeks breach of 

contract damages, attorney fees, punitive damages, and “any other assessment of 

damages” available under Section 155. Id. at 46. Breach of contract and punitive 

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damages are outside the statutorily authorized remedies. 215 ILCS 5/155(1). The 

church is not required to conform its pleading to the statute, however, because if final 

judgment is entered for Good Shepherd, this court will “grant the relief to which each 

party is entitled” whether or not it is spelled out in the pleadings. Fed. R. Civ. P. 54(c). 

That the church overstepped in its request is of no consequence at this stage of the 

case.

The motion to dismiss the Section 155 claim is denied.

B. Breach of Fiduciary Duty

In order to state a claim for breach of fiduciary duty, a plaintiff must show that 

“(1) a fiduciary duty exists; (2) the fiduciary duty was breached; and (3) the breach 

proximately caused the injury to which the plaintiff complains.” Ball v. Kotter, 723 

F.3d 813, 826 (7th Cir. 2013) (citing Neade v. Portes, 193 Ill.2d 433, 444 (2000)). In 

general, no fiduciary relationship exists between an insurer and insured in Illinois. 

Crichton v. Golden Rule Ins. Co., 576 F.3d 392, 397–98 (7th Cir. 2009); Greenberger

v. GEICO Gen. Ins. Co., 631 F.3d 392, 401 (7th Cir. 2011). “The plaintiff has the 

burden to plead with specificity and prove by clear and convincing evidence the 

existence of a fiduciary or special relationship.” Greenberger, 631 F.3d at 401

(citing Martin v. State Farm Mut. Auto Ins. Co., 348 Ill.App.3d 846 (1st Dist. 2004)); 

see Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547, 572 (7th Cir. 2012).

Good Shepherd argues that the particular nature of GuideOne’s misconduct 

distinguishes this case, and that a fiduciary relationship existed because GuideOne 

filed a subrogation action and canceled a settlement conference with Good Shepherd.

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[41] at 11–12. But insurer misconduct does not speak to the existence of a fiduciary 

relationship, which depends instead on the special trust, confidence, and influence

between two parties. See Greenberger, 631 F.3d at 401; Connick v. Suzuki Motor Co.,

174 Ill.2d 482, 500 (1996); Martin, 348 Ill.App.3d at 850. Here, no relationship of 

special trust has been pled and GuideOne’s alleged misconduct does not speak to the 

existence of fiduciary duties.

Amendment of Good Shepherd’s claim for breach of fiduciary duty would be 

futile. Good Shepherd’s claim depends entirely on the flawed legal theory that a 

fiduciary duty between an insurer and insured can arise from misconduct. [37] at 50–

51; [41] at 11–12. No additional facts or arguments will cure this legal defect. 

Counterclaim V is dismissed with prejudice. See McCoy v. Iberdrola Renewables, Inc., 

760 F.3d 674, 685 (7th Cir. 2014) (citing Foman v. Davis, 371 U.S. 178, 182 (1962))

(“While the federal courts ‘should freely give leave [to amend a pleading] when justice 

so requires,’ Rule 15(a)(2), a district court may deny leave for a variety of reasons, 

including undue delay and futility.”) (alteration in original).

C. Fraud

Counts III and IV both allege claims of consumer fraud and unfair practices 

under the Illinois Consumer Fraud Act. Count VI is a claim for common law fraud. 

The Consumer Fraud Act prohibits “unfair or deceptive acts or practices ... in 

the conduct of any trade or commerce.” 815 ILCS 505/2. Deceptive or unfair practices 

include any “misrepresentation or the concealment, suppression or omission of any 

material fact.” Id. To state a claim under the Act, a plaintiff must show “that the 

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defendant committed a deceptive or unfair act with the intent that others rely on the 

deception, that the act occurred in the course of trade or commerce, and that it caused 

actual damages.” Vanzant v. Hill’s Pet Nutrition, Inc., 934 F.3d 730, 736 (7th Cir. 

2019) (citing Siegel v. Shell Oil Co., 612 F.3d 932, 934–35 (7th Cir. 2010)). 

The elements of common law fraud are “(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 (1996); see Wigod v. Wells Fargo

Bank, N.A., 673 F.3d 547, 569 (7th Cir. 2012). Under either the Consumer Fraud Act 

or a common law theory, a plaintiff alleging fraud must meet the heightened pleading 

standards of Rule 9(b). Greenberger v. GEICO Gen. Ins. Co., 631 F.3d 392, 399 (7th 

Cir. 2011).

In a contractual setting, a plaintiff pleading fraud must show more than “the 

mere fact that a defendant promised something and then failed to do it.” Avery v.

State Farm Mut. Auto. Ins. Co., 216 Ill.2d 100, 169 (2005) (quoting Zankle v. Queen 

Anne Landscaping, 311 Ill.App.3d 308, 312 (2nd Dist. 2000)); Greenberger, 631 F.3d 

at 399. In other words, “a breach of contractual promise, without more, is not 

actionable” either under the Consumer Fraud Act, Avery, 216 Ill.2d at 169, or under 

a theory of common law fraud. See Greenberger, 631 F.3d at 401. The plaintiff must 

prove that the defendant engaged in fraudulent acts or practices distinct from any 

underlying breach of contract. Id. at 399 (citing Avery, 296 Ill.2d 100).

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GuideOne argues that Avery bars the church’s fraud claims because Good 

Shepherd is essentially alleging that the insurance company has not paid what it

owes under their contract. [39] at 8. Good Shepherd points out that “[a]n insurer’s 

conduct may give rise to both a breach of contract and a separate and independent 

tort action.” [41] at 8 (quoting Cramer v. Ins. Exch. Agency, 174 Ill.2d 513, 528 (1996)). 

The church also argues that Section 155 of the Illinois Insurance Code does not 

preempt its fraud claims. Id. at 8–9.

Good Shepherd is correct that an insurer’s conduct can be the basis for both 

claims of fraud and breach of contract. See, e.g., Wigod v. Wells Fargo Bank, N.A., 673 

F.3d 547 (7th Cir. 2012) (mortgagor stated claims for breach of contract and violation 

of Consumer Fraud Act). But to be actionable, fraud claims in a contractual setting

must go beyond a “garden-variety breach of contract.” Greenberger, 631 F.3d at 399 

(citing Avery, 296 Ill.2d 100). In this case, Good Shepherd’s claims fail not because of 

preemption or a lack of particularity under Rule 9(b) but because the church has not 

alleged fraud separate from the alleged breach of contract. 

Good Shepherd claims that GuideOne committed fraud because it refused “to 

fully honor [Good Shepherd’s] fire loss claim,” took “an adversarial position to its 

insured,” failed to consider or investigate updated cost requests, failed to properly 

communicate about its position on costs and its obligations under the policy, and 

made misrepresentations and omissions in handling the claim. [37] at 46–50, 52–53. 

The church alleges that GuideOne’s adjuster knowingly misrepresented the meaning 

of the policy in order to entice the church to settle its fire loss claim for less than it

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was entitled to recover. Id. at 48. Finally, Good Shepherd alleges that GuideOne’s 

adjuster misled the church into “thinking that its choice of a contractor would not 

adversely affect its ability to settle its fire loss claim.” Id. 

That GuideOne refused to handle Good Shepherd’s claim a certain way, did not

communicate as it should have, failed to consider certain costs, or took adversarial 

actions are all allegations that the insurer failed to fulfill its contractual promises. 

Just as it does in its claim for breach of contract, [37] at 41–44, Good Shepherd is 

alleging that GuideOne owed various duties that the insurer failed to perform. Id. at 

48–49. Those allegations cannot constitute fraud because “a ‘deceptive act or practice’ 

involves more than the mere fact that a defendant promised something and then 

failed to do it.” See Avery, 216 Ill.2d at 169 (quoting Zankle, 311 Ill.App.3d at 312). 

That GuideOne’s adjuster misrepresented the meaning and effect of the policy and 

the choice of contractor presents a closer question, but also does not rise to the level 

of fraud. The representations at issue were about the meaning and effect of the policy: 

whether the contract bound Good Shepherd to an initial estimate and whether Good 

Shepherd’s choice of contractor would affect its claim. [37] at 48. The determination 

of the statements’ truth or falsity depends on the scope of the underlying policy, and 

they were made as part of a contractual relationship. In order to show fraud, Good 

Shepherd needed to allege fraudulent acts that were distinct from those alleged in its 

breach of contract claim. See Greenberger, 631 F.3d at 399 (dismissing fraud claims 

where a plaintiff’s fraud and contract claims “rest on the same factual foundation”). 

It has not done so here. Instead, Good Shepherd’s fraud and contract claims rely on 

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identical facts about the policy and GuideOne’s conduct. Compare [37] at 41–44, with

id. at 48–50, 52–53. The church’s fraud claims are premised on the language of the 

policy, duplicate Good Shepherd’s breach of contract claim, and cannot form the basis 

for a fraud action.2

Good Shepherd originally brought its fraud counterclaims in response to 

GuideOne’s first complaint. [8]. GuideOne moved to dismiss the fraud counterclaims 

and raised the argument that fraud allegations centered on a mere breach of contract

did not state a claim. [10] at 5–6. When GuideOne twice amended its complaint, [18]; 

[36], the church was on notice of the issue and had an opportunity to show how its 

fraud claims were not barred by Avery/Greenberger. Its counterclaims to GuideOne’s 

second amended complaint, [37], have not solved the problem and there is no reason 

to believe an amendment will succeed in doing so. That the church has twice failed to 

show how its fraud claims are distinct from the underlying breach of contract, has 

not sought leave to amend, and has not described how it would address this deficiency 

if given the chance indicate that amendment would be futile. See Webb v. Frawley, 

906 F.3d 569, 582–83 (7th Cir. 2018); James Cape & Sons Co. v. PCC Constr. Co., 453 

F.3d 396, 400–401 (7th Cir. 2006) (affirming a district court’s dismissal with prejudice 

where a plaintiff failed to properly request leave to amend and “[t]he district court 

could have quite reasonably believed that an amended complaint would suffer the 

same fatal flaws as the one before it.”).

2 Good Shepherd also alleges that GuideOne committed fraud by improperly litigating the 

claim. [37] at 49. But that allegation too turns on a dispute about coverage under the policy 

and is therefore barred by Avery/Greenberger.

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The Consumer Fraud Act and common law fraud counterclaims are dismissed 

with prejudice.

IV. Conclusion

GuideOne’s motion to dismiss, [39], is granted in part and denied in part. Good

Shepherd’s counterclaim for remedies under Section 155 of the Illinois Insurance 

Code is not dismissed. The counterclaims for breach of fiduciary duty, consumer 

fraud, and common law fraud are dismissed with prejudice. GuideOne shall file an 

answer to counterclaims I and II and the parties shall file a status report on August 

4, 2021, with a proposal for a case schedule. 

ENTER: 

___________________________ 

Manish S. Shah

United States District Judge

Date: July 21, 2021

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