Court Opinion

ID: 9522306
Source: CourtListenerOpinion
Date Created: 2023-08-07 02:22:08.464051+00
Date Added: 2024-06-11T13:02:30.051594
License: Public Domain

JUSTICE STOUDER, dissenting: I respectfully disagree with the result reached by my colleagues. I believe the complaint fails to state a cause of action and I would hold that pursuant to the certified issue of law presented to and accepted by this court for review under Supreme Court Rule 308(a) (87 Ill. 2d R. 308(a)) the complaint should have been dismissed. There are two basic propositions which are at the heart of this controversy. The first is the well-established policy in Illinois which prohibits a direct action against an insurance company to recover damages for injuries caused by the company’s insured. This policy is so well established that the mere mention that a tortfeasor may have insurance may result in reversible error. The second proposition is, I believe, equally clear and that is an insurance company may be liable for the fraudulent misrepresentations of its agent which induced the execution of a release of liability of the company’s insured. Since the first proposition contemplates no direct action against an insurance company and the second proposition does contemplate such direct action, how can the propositions be reconciled? The insurance company would reconcile these issues by arguing that if the release was induced by fraudulent misrepresentation, the direct action against it would be for rescission only which, if successful, would be followed by the usual tort action against the insured for damages caused by the insured. On the other hand, the plaintiff insists that because there was fraudulent misrepresentation inducing the execution of the release he is entitled to recover directly from the insurance company the damages caused by the insured. Neither party nor the majority have found any authority supporting either contention which they make. This issue does not appear to have been presented in Illinois, although it has occurred in other States, including States which like Illinois have policies against direct actions against insurance companies. In none of the other jurisdictions have I been able to find authorities which hold that rescission is the only remedy available where a release has been secured by fraudulent misrepresentation, and likewise I find no authorities which permit the recovery of damages for fraudulent misrepresentation based on the damages caused by the tortfeasor. Although several of the decisions from other jurisdictions have discussed limiting the remedy to rescission where it is claimed a release was secured by fraudulent misrepresentations, this limiting restriction has generally been rejected. See also Farm Bureau Mutual Insurance Co. v. Seal (1962), 134 Ind. App. 269, 179 N.E.2d 760; Montoya v. Moore (1967), 77 N.M. 326, 442 P.2d 363; Brown v. Ocean Accident & Guarantee Corp. (1913), 153 Wis. 196, 140 N.W. 1112; Annot., 58 A.L.R.2d 500 (1958). Although rescission could be the exclusive remedy to secure relief from the release induced by fraudulent misrepresentation and such a rule might be consistent with our Illinois policy against direct action against an insurance company, it is usually held in other jurisdictions the party deceived has an election of remedies. Such party may either elect to commence an action to rescind the release or bring an action at common law for damages for fraud and deceit. (Kordis v. Auto Owners Ins. Co. (1945), 311 Mich. 247, 18 N.W.2d 811.) However, where the election has been made to seek damages for fraud and deceit, the damages so recoverable are necessarily related to and restricted to those caused by the misrepresentation. The damages recoverable are not those which might have been recovered in an action against the tortfeasor, but only those which are proximately caused by the false misrepresentation. As a New York court said in Ahern v. General Accident, Fire & Life Assurance Corp. (1963), 19 App. Div. 2d 883, 244 N.Y.S.2d 347, a case strikingly similar to this case where plaintiff sought to recover a sum he would have received in a trial against the original tortfeasor, “in attempting to prove his damage he asserts that had the release not been given he would have been able to obtain an attorney who would have been able to trace competent witnesses who would have testified in such a manner as would have resulted in a verdict for the plaintiff. That is entirely speculative.” (19 App. Div. 2d 883, 883, 244 N.Y.S. 2d 347, 349.) Both in Ahern and in Kordis the court allowed that an allegation that the difference between the value of the settlement at the time the release was procured was substantially in excess of the settlement fraudulently obtained was a sufficient allegation of damage to sustain a claim for fraudulent misrepresentation. No such allegation of damages is contained in the complaint filed in this case. Therefore, I would have held that Richardson’s complaint failed to allege any recognizable pecuniary loss because recovery in a trial of his personal injury claim was too speculative. Finally, in passing, there are several issues not addressed by the trial court because of the manner in which it determined to resolve the major issue. However, I have grave doubts that the allegations in the complaint do sufficiently allege false misrepresentation by the company’s agent or that the remedy based on loss of consortium is appropriate or that the amended complaint was properly filed long after the period allowed therefor had expired, without a showing of due diligence.