Able Masonry Development Co.,v. Hastings Mutual Insurance Company

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

Able Masonry Development Co.,

individually and on behalf of a class of

persons similarly situated,

Plaintiff,

No. 24 CV 1338

v.

Judge Lindsay C. Jenkins

Hastings Mutual Insurance Company, et

al.,

Defendants.

MEMORANDUM OPINION AND ORDER

Able Masonry Development Co. sued its insurer, Hastings Mutual Insurance

Company,1 and the insurer’s broker, several entities that the Court refers to as Brown

& Brown, claiming that Able Masonry had been overcharged for insurance premiums.

[Dkt. 1-1.] Hastings removed the case to federal court [Dkt. 1] and moves to dismiss

some of the claims against it. [Dkt. 21.] The removal dragged Brown & Brown into

federal court as well, and it moves to dismiss on jurisdictional grounds. [Dkt. 20.]

Hastings’s motion is granted in part and denied in part; Brown & Brown’s is denied.2

I. Background

Able Masonry, an Illinois corporation, is a masonry contractor. [Dkt. 1-1 ¶¶ 1,

4.] Between 2019 and 2023, it purchased worker’s compensation insurance from

1 The Clerk is directed to fix the misspelled word “Compnay” in the caption.

2 Able Masonry filed its response brief on April 23, 2024. Hastings has not filed a reply

brief, nor did it propose a briefing schedule, request the Court set a deadline, or follow Brown

& Brown’s briefing schedule. If Hastings wished to file a reply, it should have so indicated by

now, so the Court rules based on its opening brief and Able Masonry’s response.

Separately, Able Masonry’s motion for leave to file a surreply in opposition to Brown

& Brown’s motion to dismiss [Dkt. 30] is granted.

Hastings, a Michigan corporation. [Id. ¶¶ 5, 28–30.] Brown & Brown, a broker,

facilitated the transaction and received a portion of the premiums as a fee. [Id. ¶¶ 31–

32, 92.] The policy included a “terrorism premium” under the Terrorism Risk

Insurance Program Reauthorization Act of 2019. [Id. ¶ 37.] Able Masonry alleges that

Defendants represented that the terrorism premium would total about $489 and be

paid annually, but the $489 premium was actually assessed monthly, resulting in an

overpayment of more than $5,000 per year. [Id. ¶¶ 38, 44, 52.]

Able Masonry filed a 14-count putative class action in Illinois state court in

January 2024 on behalf of itself and others that had been overcharged terrorism

premiums. [Dkt. 1-1.] It named Hastings and three Brown & Brown entities as

Defendants. [Id. ¶¶ 8–17.]3 Counts I, II, VI, and VII were individual claims against

Hastings for breach of contract, breach of fiduciary duty, consumer fraud, and unjust

enrichment, respectively. [Id. ¶¶ 71–88, 116–38.] Counts VIII, IX, XIII, and XIV

sought classwide relief from Hastings on the same legal theories. [Id. ¶¶ 139–58, 189–

213.] The remaining claims alleged that each Brown & Brown entity breached a

3 The citizenship of the Brown & Brown entities does not impact the Court’s jurisdiction

because 28 U.S.C. § 1332(d)(2)(A) requires only be minimal diversity, as long as there is more

than $5 million in controversy in the aggregate, exclusive of interest and costs. See Sudholt

v. Country Mut. Ins. Co., 83 F.4th 621, 624 (7th Cir. 2024). Able Masonry is an Illinois citizen,

and Hastings is a Michigan citizen, so minimal diversity is present. No party disputes that

more than $5 million is in controversy. Viewing the allegations in the light most favorable to

finding jurisdiction, see Sykes v. Cook Inc., 72 F.4th 195, 206 (7th Cir. 2023), Able Masonry’s

allegations and claims for punitive damages and attorney’s fees on behalf of Illinois and

nationwide classes satisfy the amount in controversy requirement. [See Dkt. 1-1 ¶¶ 58–70.]

Further, because Hastings, the primary Defendant, is not a citizen of Illinois, and no party

has suggested that more than two-thirds of the members of all Plaintiff classes are citizens

of Illinois, the abstention provisions in § 1332(d)(3) and (4) do not apply.

fiduciary duty to Able Masonry and sought individual (Counts III–V) and classwide

(Counts X–XII) relief. [Id. ¶¶ 89–115, 159–88.]

Able Masonry served Hastings on January 17, 2024. [See Dkt. 1 at 2.] Brown

& Brown entered an appearance on February 9, 2024 and filed a notice that it had

tendered a check for $1,612.30 to the court, which it asserted constituted full payment

of the damages Able Masonry claimed against it. [Dkt. 20 at 2.] Several hours later,

Able Masonry filed a motion for class certification. [Id. at 3.] On February 16, 2024,

Hastings unilaterally removed the case to this Court. [Dkt. 1.] See 28 U.S.C. § 1453(b)

(“A class action … may be removed by any defendant without the consent of all

defendants.”). Hastings filed a partial motion to dismiss under Federal Rule of Civil

Procedure 12(b)(6) for failure to state a claim. [Dkt. 21.] Brown & Brown moved to

dismiss for lack of subject-matter jurisdiction pursuant to Rule 12(b)(1). [Dkt. 20.]

II. Legal Standard

A motion to dismiss pursuant to Rule 12(b)(1) challenges the Court’s subject-

matter jurisdiction, whereas a motion to dismiss under Rule 12(b)(6) tests the legal

sufficiency of the plaintiff’s claims. In both cases, the Court takes well-pleaded factual

allegations as true and draws reasonable inferences in favor of the plaintiff, Choice

v. Kohn L. Firm, S.C., 77 F.4th 636, 638 (7th Cir. 2023); Reardon v. Danley, 74 F.4th

825, 826–27 (7th Cir. 2023), but it need not accept statements of law or conclusory

factual allegations as true, Bilek v. Fed. Ins. Co., 8 F.4th 581, 586 (7th Cir. 2021). To

survive dismissal, a claim must be “plausible, rather than merely speculative,” which

requires a plaintiff to allege “just enough details about the subject matter of the case

to present a story that holds together.” Russell v. Zimmer, Inc., 82 F.4th 564, 570–71

(7th Cir. 2023) (cleaned up).

III. Brown & Brown’s Motion

Brown & Brown moves to dismiss all claims against it for lack of subject-matter

jurisdiction. [Dkt. 20.] Fed. R. Civ. P. 12(b)(1). It does not contest Hastings’s removal

per se; instead, it argues that the claims against it had become moot when Hastings

filed the notice of removal, so the Court lacks jurisdiction over those claims. [Dkt. 27

at 5–6.]4 In Brown & Brown’s view, before the case was removed, Brown & Brown

made a valid tender under Illinois law, “providing full relief to Able on its claims

against Brown & Brown,” and mooting the controversy between them. [Dkt. 20 at 4

(citation omitted).] Able Masonry responds that tender did not fully satisfy its claims

against Brown & Brown, so those claims are not moot. [Dkt. 25 at 10–12.] The Court

agrees with Able Masonry that its claims against Brown & Brown remain live.

A. The Barber Rule

Illinois courts recognize what they call the “Barber rule,” whereby a defendant

can admit liability and tender the full amount of relief a plaintiff seeks, extinguishing

the controversy between them. See Barber v. Am. Airlines, Inc., 948 N.E.2d 1042 (Ill.

2011). As the Court understands it, the primary use for the Barber rule is to moot a

putative class representative’s claim before he moves for class certification. See id. at

1045–46. The Supreme Court of Illinois recently addressed the differences between a

4 Brown & Brown argues that the proper course is for the Court to dismiss these claims,

rather than remand them. [Dkt. 27 at 6, 16.] The Court concludes that Able Masonry’s claims

against Brown & Brown are not moot, so it does not address the dismiss-or-remand issue.

tender and its closest federal cousin, an offer of judgment under Federal Rule of Civil

Procedure 68. Joiner v. SVM Mgmt., LLC, 161 N.E.3d 923 (Ill. 2020).

Joiner began by reiterating the Barber rule: “when a defendant tenders the full

amount requested by a plaintiff purporting to represent a class before the named

plaintiff files a class-certification motion, the plaintiff’s claim becomes moot.” Id. at

929 (citations omitted). It distinguished a tender from a Rule 68 offer of judgment:

“An offer is ‘a statement that one is willing to do something for another person or to

give that person something.’ A tender, however, ‘is defined as the actual proffer of

money, as distinguished from the mere proposal or proposition to proffer it.’” Id. at

934 (cleaned up) (first quoting Black’s Law Dictionary (11th ed. 2019); and then

quoting McLean v. Yost, 652 N.E.2d 426, 427 (Ill. 1995)). Joiner went on to state that

“[t]he federal rule expressly contemplates a plaintiff’s choice to accept or decline such

an offer. Our rule does not.” Id. (citation omitted). Thus, unlike a Rule 68 offer, which

if unaccepted has no effect, Campbell-Ewald Co. v. Gomez, 577 U.S. 153, 156 (2016);

Chapman v. First Index, Inc., 796 F.3d 783, 786–87 (7th Cir. 2015), a valid tender

moots the case as a matter of Illinois law, Joiner, 161 N.E.3d at 935–36.

The requirements for a proper tender are specific: “A tender … is only effective

if it is for the entire amount owed. The defendant must actually produce the tender;

a mere offer or promise is insufficient. In making an effective tender, the defendant

admits liability.” Id. at 935 (citations omitted). Joiner also clarified several additional

points. First, if a statute permits the recovery of costs and reasonable attorney’s fees,

the defendant may effect a tender by stipulating that it will pay fees and costs in an

amount to be determined by the court. Id. at 937–38. Second, the best practice is to

deposit the tender with the court. Id. at 938. Third, a defendant need not tender relief

for every claim against it; a partial tender may be effective as to specific claims. Id.

at 937. A tender that meets these requirements renders the plaintiff’s claim moot if

he has not yet moved for class certification. Id. at 936 (“An issue is moot if no actual

controversy exists. When a defendant admits liability and provides the plaintiff with

all relief requested—as she does with a tender—no controversy exists.” (cleaned up)).

B. The Effect of a Tender on Federal Jurisdiction

The parties disagree about whether an effective tender, which moots a claim

under Illinois law, also means that there is no federal subject-matter jurisdiction.

Federal courts’ subject-matter jurisdiction extends only to “cases” and “controversies”

within the meaning of Article III of the Constitution. See, e.g., Parents Protecting Our

Children, UA v. Eau Claire Area Sch. Dist., 95 F.4th 501, 504–05 (7th Cir. 2024). One

facet of Article III jurisdiction is standing: to proceed in federal court, a plaintiff “must

have suffered (1) a concrete and particularized injury that is actual or imminent, (2)

traceable to the defendant’s conduct, and (3) can be redressed by judicial relief.” Hero

v. Lake Cnty. Elec. Bd., 42 F.4th 768, 772 (7th Cir. 2022) (citations omitted). Further,

“[a]n actual controversy must exist at every phase of the litigation. … A claim

becomes moot when it is impossible for a court to grant any effectual relief. If this

occurs, federal courts lose subject matter jurisdiction over the case.” Gill v.

Linnabary, 63 F.4th 609, 612–13 (7th Cir. 2023) (cleaned up).

Able Masonry contends that a “case or controversy” is broader under federal

law than Illinois law, so while a tender moots a claim under Illinois law, the claim

may nevertheless remain live for purposes of federal jurisdiction. [Dkt. 25 at 9–10.]

It cites cases where the mooting of a class representative’s personal claim did not

moot the entire class action. [Id.] See U.S. Parole Comm’n v. Geraghty, 445 U.S. 388,

397–401 (1980) (discussing this issue and citing cases). Cases about the consequences

of an individual plaintiff’s claim becoming moot while a federal class action is pending

do not control here, where the question is whether the claims against Able Masonry

were moot when Hastings purported to remove them to this Court.

A defendant may remove an action only if there is original federal jurisdiction

at the time of removal, and the Court must remand claims over which it lacks subject-

matter jurisdiction. 28 U.S.C. § 1441(a), (c); Bergquist v. Mann Bracken, LLP, 592

F.3d 816, 819 (7th Cir. 2010). An individual plaintiff whose claim is moot cannot

represent a class, and he has a “concrete stake” that supports federal jurisdiction only

if a class has been certified or a motion for class certification has been denied. Collins

v. Village of Palatine, 875 F.3d 839, 846 (7th Cir. 2017) (“When the plaintiff’s own

claim is dismissed, he can no longer be the class representative. At that point either

another class representative must be found or the suit is kaput.” (cleaned up)); Culver

v. City of Milwaukee, 277 F.3d 908, 910 (7th Cir. 2002) (“A properly certified class

action survives the mootness of the original representative’s claims, but an individual

action must be dismissed in identical circumstances, and this suit became an

individual action when the class was decertified. The would-be class representative

has standing to appeal, however, [under Geraghty] ….” (citations omitted)). But a

plaintiff cannot rely on a mootness exception if there was not federal subject-matter

jurisdiction in the first place. See Friends of the Earth, Inc. v. Laidlaw Env’t Servs.

(TOC), Inc., 528 U.S. 167, 191 (2000) (“[I]f a plaintiff lacks standing at the time the

action commences, the fact that the dispute is capable of repetition yet evading review

will not entitle the complainant to a federal judicial forum.” (citation omitted)).

The Court agrees with Brown & Brown that if there is an effective tender under

Illinois law, it means there is not a live controversy for Article III purposes. [Dkt. 27

at 7–10.] As the Supreme Court of Illinois explained in Joiner, “[a]n issue is moot if

no actual controversy exists. When a defendant admits liability and provides the

plaintiff with all relief requested—as she does with a tender—no controversy exists.”

161 N.E.3d at 936 (cleaned up). This definition of mootness tracks the federal

definition. When a defendant “provides the plaintiff with all relief requested,” id., it

becomes “impossible for a court to grant any effectual relief,” and there is no federal

subject-matter jurisdiction. Gill, 63 F.4th at 613 (cleaned up); see also Hero, 42 F.4th

at 772 (noting that a judicially redressable injury is essential for standing).

Able Masonry emphasizes that a live controversy under Article III exists “[a]s

long as the parties have parties have a concrete interest, no matter of how small, in

the outcome of the litigation.” [Dkt. 25 at 9 (quoting Chafin v. Chafin, 568 U.S. 165,

172 (2013)).] This is true, but a tender causes the plaintiff loses his concrete stake in

the case because he has received complete relief. Joiner, 161 N.E.3d at 936. The Court

explained above why the prospect of certifying a class does not give a plaintiff whose

individual claim is moot a personal stake in the outcome unless a motion for class

certification has been denied. See Collins, 875 F.3d at 846; Culver, 277 F.3d at 910.

Nor does the fact that the court may need to hold a hearing and award costs

and reasonable attorney’s fees, see Joiner, 161 N.E.3d at 937–38, give a plaintiff a

concrete personal stake in the outcome of the suit. Seeking attorney’s fees and costs

incurred in bringing a suit is insufficient to confer standing. See Steel Co. v. Citizens

for a Better Env’t, 523 U.S. 83, 107 (1998) (“The litigation must give the plaintiff some

other benefit besides reimbursement of costs that are a byproduct of the litigation

itself. An interest in attorney’s fees is insufficient to create an Article III case or

controversy where none exists on the merits of the underlying claim.” (cleaned up));

Choice, 77 F.4th at 639 (“Choice’s decisions to hire an attorney and pay an appearance

fee are insufficient to establish standing.” (citations omitted)). It stands to reason that

a case may be moot even if a request for fees and costs remains pending. Cf. Wojan v.

Gen. Motors Corp., 851 F.2d 969, 971–73 (7th Cir. 1988) (explaining that a district

court has the power to sanction litigants even if it lacks subject-matter jurisdiction

over the underlying case). Thus, when a defendant moots a claim under Illinois law

through a tender, the plaintiff loses a personal stake for purposes of federal

jurisdiction, even though the court may award him fees and costs.

Finally, Able Masonry argues that the Seventh Circuit has rejected the notion

that a tender moots a claim. [Dkt. 25 at 12–13.] The cases it cites, however, concern

offers of judgment under Rule 68, Chapman, 796 F.3d at 786–87, and deposits to the

court under Rule 67, see Fulton Dental, LLC v. Bisco, Inc., 860 F.3d 541, 543–46 (7th

Cir. 2017). The Supreme Court of Illinois holds that a tender is not equivalent to a

Rule 68 offer of judgment and that depositing a tender with the court does moot a

plaintiff’s claim. Joiner, 161 N.E.3d at 935–36, 938. While a tender is a procedural

device not available in federal court, cf. Fed. R. Civ. P. 67–68, when performed in

Illinois court, it has substantive effect. [Dkt. 20 at 6–7; Dkt. 27 at 12.] See Windy City

Metal Fabricators & Supply, Inc. v. CIT Tech. Fin. Servs., Inc., 536 F.3d 663, 670 (7th

Cir. 2008) (“[A]s a general matter, a district court exercising jurisdiction because the

parties are of diverse citizenship must apply state substantive law and federal

procedural law.” (citing Erie R.R. v. Tompkins, 304 U.S. 64 (1938))).

The Court holds that a case that becomes moot because the defendant tendered

complete relief to the plaintiff under Joiner means that there is not a live controversy

for purposes of federal subject-matter jurisdiction.

C. Brown & Brown’s Tender

That brings the Court to the issue of whether Brown & Brown effected a proper

tender under the Barber rule. If it did, then when Hastings removed this action to

federal court, there was no Article III controversy, and the Court lacks subject-matter

jurisdiction over the claims against Brown & Brown. If, however, the tender was not

proper, then there remains a live controversy, and the Court has jurisdiction.

On February 9, 2024, Brown & Brown filed a notice stating that it tendered

the amount of $1,612.30 in full satisfaction of Able Masonry’s clam against it and that

it would pay costs and reasonable attorney’s fees determined by the court. [Dkt. 20 at

2.] The $1,612.30 figure equaled Brown & Brown’s 10% fee of the $16,123 that Able

Masonry had been overcharged for the terrorism premium. [Id.] Brown & Brown

delivered a check for that amount payable to the court to the court’s trust account,

the best practice under Joiner. [Id.] Brown & Brown argues that this tender satisfied

the requirements of Joiner and rendered Able Masonry’s claims against it moot, so

those claims were not properly removed. [Id. at 4–7.]

Able Masonry argues that its claims are not moot because the tender was not

for the full value of its claims against Brown & Brown. [Dkt. 25 at 11–12.] It seeks a

refund of “all premiums overcharged,” not just Brown & Brown’s commission, as well

as punitive damages. [Id.; see, e.g., Dkt. 1-1 at 15.] Brown & Brown responds that

Able Masonry brings claims under the Illinois Insurance Placement Act (the “Act”),

735 ILCS 5/2-2201, which limits Brown & Brown’s potential liability to the premiums

that it wrongfully withheld—its 10% commission, not the full overpayment that Able

Masonry paid to Hastings. [Dkt. 27 at 10–12.]

The Court reads the Act differently than Brown & Brown. Able Masonry does

not dispute that Brown & Brown received 10% of the premiums [Dkt. 25 at 10–12],

but the Act seems to address when an insurance broker may be liable for breach of

fiduciary duty, not the amount of potential liability:

No cause of action brought … against any insurance producer,5 … shall

subject the insurance producer … to civil liability under standards

governing the conduct of a fiduciary or a fiduciary relationship except

when the conduct upon which the cause of action is based involves the

wrongful retention or misappropriation by the insurance producer … of

any money that was received as premiums, as a premium deposit, or as

payment of a claim.

735 ILCS 5/2-2201(b). The Act provides that an insurance broker is not liable as a

fiduciary unless it wrongfully retained or misappropriated funds, but Brown & Brown

5 An insurance broker is an “insurance producer.” Skaperdas v. Country Cas. Ins. Co.,

28 N.E.3d 747, 752–53 (Ill. 2015).

cites no authority that holds that a fiduciary’s liability is limited to a refund of the

fee the fiduciary received. [See Dkt. 27 at 10–12.]

But even if the maximum refund Able Masonry may recover is the 10% Brown

& Brown received, Able Masonry’s claims are not moot. It seeks punitive damages,

and Illinois law permits punitive damages for breach of fiduciary duty, at least under

some circumstances. In re Est. of Wernick, 535 N.E.2d 876, 887 (Ill. 1989) (“We agree

that a breach of a fiduciary duty may warrant the imposition of punitive damages. …

The ultimate determination, however, is dependent upon the specific facts of the case

involved.”). Recent Illinois caselaw suggests that punitive damages may be available

in a breach of fiduciary duty claim brought under the Act. See County of Cook v. USI

Ins. Servs. Corp. of Ill., Inc., 2020 IL App (1st) 181889-U, ¶¶ 20, 96, 181–89 (noting

that the plaintiff sought punitive damages for breach of fiduciary duty under the Act

but affirming judgment in favor of the defendant on that claim).

Brown & Brown does not argue the punitive damages point in its reply brief,

but even if it could successfully argue that Able Masonry’s allegations cannot support

the imposition of punitive damages, it would still not moot Able Masonry’s claim. A

proper tender under Illinois law requires the defendant to “admit[ ] liability and

provide[ ] the plaintiff with all relief requested.” Joiner, 161 N.E.3d at 936. Brown &

Brown has not admitted liability with respect to punitive damages, and it has not

provided Able Masonry with all the relief it has requested. [See also Dkt. 30-1 at 1–2

(arguing that the tender was not effective because Brown & Brown’s reply brief

contests the amount of its liability).] The claims against Brown & Brown remained

live for purposes of federal subject-matter jurisdiction after the tender, and those

claims were properly removed to this Court. Brown & Brown’s motion to dismiss for

lack of subject-matter jurisdiction is therefore denied.

IV. Hastings’s Motion

Hastings moves to dismiss all claims against it besides Count I, the individual

breach of contract claim, for failure to state a claim. [Dkt. 21.] Fed. R. Civ. P. 12(b)(6).

Able Masonry abandons Counts II, VII, IX, and XIV, the breach of fiduciary duty and

unjust enrichment claims, but argues that Counts VI and XIII (its Illinois Consumer

Fraud and Deceptive Business Practices Act (“ICFA”) claims) and Count VIII (its

classwide breach of contract claim) are adequately pleaded. [Dkt. 26 at 2 & n.1.]

A. ICFA Claims

Counts VI and XIII assert individual and class claims for violations of the

ICFA. Hastings argues that these claims fail as a matter of law and that the statute

of limitations expired before Able Masonry sued. [Dkt. 21 at 5–8.]

1. The Merits

Hastings argues that “Illinois enacted the [ICFA] in 1965 primarily for the

purpose of defining and prohibiting deceptive trade practices.” [Id. at 6 (citations

omitted).] “By the very nature of these two entities, Hastings … cannot interfere with

the promotion or conduct of [Able Masonry’s] business as [it] is not in the masonry or

commercial contracting market,” and Able Masonry “is not in the insurance

industry.” [Id.] Hastings cites Chabraja v. Avis Rent A Car System, Inc., 549 N.E.2d

872, 876 (Ill. App. Ct. 1989), for the proposition that “the prefatory notes to the statute

specifically refer to deceptive conduct that unreasonably interferes with another in

the promotion and conduct of his or her business.” [Dkt. 21 at 6 (cleaned up).]

As Able Masonry notes, however, the portion of Chabraja that Hastings cites

addressed the purpose of the Illinois Deceptive Trade Practices Act, not the ICFA;

the ICFA is broader and protects “consumers.” [Dkt. 26 at 3–4.] See Chabraja, 549

N.E.2d at 876 (“It should be noted that the Illinois Deceptive Trade Practices Act was

enacted to prohibit unfair competition and was not intended to be a consumer

protection statute. The acts which the statute means to curtail are ‘deceptive conduct

constituting unreasonable interference with another's promotion and conduct of

business.’ ‘Consumer’ is not included in the definitions for the Illinois Deceptive Trade

Practices Act as it is in those for the Illinois Consumer Fraud and Deceptive Practices

Act.” (cleaned up)). A corporation can be a “consumer” for purposes of ICFA protection

[see Dkt. 26 at 4 (citing authority)], and because Hastings has not argued that Able

Masonry’s allegations are insufficient [see id. at 4 n.2], the Court holds that the

Complaint states viable ICFA claims.

2. Timeliness

Turning to the statute of limitations question, Hastings argues that the ICFA

claim accrued in 2019, when the alleged violations began, and Able Masonry was on

notice of the violations no later than 2020, so the three-year statute of limitations ran

before Able Masonry filed suit in 2024. [Dkt. 20 at 6–8.] Able Masonry agrees that a

three-year statute of limitations applies to ICFA claims and that the limitations

period begins to run when the plaintiff is injured. [Dkt. 26 at 4–5.] It argues, however,

that Hastings’s conduct constituted “a continued repeated injury,” so under the

“continuing violation doctrine,” “the limitation period does not begin until the date of

the last injury or when the tortious act ceased.” [Id. at 5. (cleaned up).]

The Court disagrees that Hastings’s conduct constitutes a single continuing

tort for purposes of the statute of limitations. In Rodrigue v. Olin Employees Credit

Union, the Seventh Circuit analyzed how it believed the Supreme Court of Illinois

would apply the continuing violation rule to the conversion of multiple checks:

In concluding that the conversion of all 269 checks should be treated as

a single, continuing wrong, the district court relied principally on the

Illinois Appellate Court’s opinion in Field v. First Nat’l Bank of

Harrisburg, 619 N.E.2d 1296 [(Ill. App. Ct. 1993)]. …

Field plainly supports the district court’s conclusion as to the statute of

limitations; but looking to the Illinois Supreme Court’s own cases

concerning the continuing violation rule, we are convinced that the

Court would not apply that rule to a cause of action for the conversion

of negotiable instruments. …

Where a cause of action arises not from individually identifiable wrongs

but rather from a series of acts considered collectively, the Illinois

Supreme Court has deemed application of the continuing violation rule

appropriate. For example, in Cunningham v. Huffman, 609 N.E.2d 321

(Ill. 1993), the Court held that the continuing violation rule tolled a

statute of repose governing medical malpractice claims, where the

plaintiff's claim of malpractice arose from a continuous, related,

unbroken course of negligent treatment. … Likewise, in Feltmeier v.

Feltmeier, 798 N.E.2d 75 (Ill. 2003), the Court concluded that the

continuing violation rule applied to an abused wife’s cause of action for

intentional infliction of emotional distress by her husband, where the

cause of action was based on a pattern of abuse that took place over the

course of more than 11 years. …

By contrast, as the Court’s opinion in [Belleville Toyota, Inc. v. Toyota

Motor Sales, U.S.A., Inc., 770 N.E.2d 177, 191 (Ill. 2002),] reveals, the

continuing violation rule does not apply to a series of discrete acts, each

of which is independently actionable, even if those acts form an overall

pattern of wrongdoing. In Belleville Toyota, an automobile dealership

sued its wholesale distributor and importer, alleging breach of dealer

agreements and numerous violations of the Motor Vehicle Franchise Act

… in the defendants’ allocation of automobiles to plaintiff over the

course of almost 10 years. … The Illinois Supreme Court … conclude[d]

that the continuing violation rule was inapplicable. The Court could not

accept the notion that the defendants’ automobile allocations, each of

which was “the result of discrete decisions by defendants … constituted

one, continuing, unbroken, decade-long violation ….” “Rather, each

allocation constituted a separate violation … supporting a separate

cause of action.” Thus, the nature of the alleged wrong did not justify

the application of the continuing violation rule. …

Belleville Toyota leads us to believe that the continuing violation rule

should not apply here, either. Unlike a cause of action for medical

malpractice based on a course of negligent treatment with cumulative

effects, or a cause of action for the intentional infliction of emotional

distress arising from a course of tortious acts considered as a whole,

Rodrigue’s claim for conversion does not depend on the cumulative

nature of either Wiltshire’s or Olin’s acts. Rather, a cause of action for

conversion arose each time Wiltshire cashed or deposited one of the

checks she had embezzled. …

We recognize that the Supreme Court in Feltmeier cited Field as an

example of a case that treated a series of repeated or ongoing acts as “a

continuing whole for prescriptive purposes.” But the Court did so for

illustrative purposes only.

406 F.3d 434, 441–44 (7th Cir. 2005) (cleaned up); see Sanchelima Int’l, Inc. v. Walker

Stainless Equip. Co., LLC, 920 F.3d 1141, 1145–46 (7th Cir. 2019) (“Federal courts

sitting in diversity can decide cases involving unresolved issues of state law by

predicting how the relevant state court would rule.” (citation omitted)).

No subsequent Illinois decision has called Rodrigue’s analysis into question.

Cf. Barnes v. Anyanwu, 391 F. App’x 549, 553 (7th Cir. 2010) (per curiam) (Circuit

precedent on a state law issue “should be followed, unless there is a subsequent state

court decision or statutory amendment that renders that decision clearly wrong.”

(citation omitted)). Quite the opposite. In Kidney Cancer Association v. North Shore

Community Bank & Trust Co., the Illinois Appellate Court stated that Rodrigue was

“persuasive” and agreed that the Supreme Court of Illinois did not implicitly adopt

Field as the rule for when the continuing violation doctrine applies. 869 N.E.2d 186,

193–94 (Ill. App. Ct. 2007); see also Breitweiser v. Highland Cap. Brokerage, Inc.,

2019 IL App (1st) 181898-U, ¶¶ 21–23 (following Kidney Cancer and holding that a

series of independent, improper commission payments were not a single continuing

violation); Hullverson & Hullverson, L.C. v. Hullverson, 2016 IL App (5th) 150226-U,

¶ 72 (quoting Rodrigue while articulating the continuing violation rule). Rodrigue

appears to have gotten Illinois law right.

Hastings allegedly committed several discrete tortious acts that formed a

pattern of wrongdoing, not a single continuing violation. See Rodrigue, 406 F.3d at

443. The continuing violation doctrine applies when the defendant engages in a single

“course of conduct … with cumulative effects” or the plaintiff’s claim “aris[es] from a

course of tortious acts considered as a whole.” Id. That is not the case here. Hastings’s

acts may have “form[ed] an overall pattern of wrongdoing,” but each time Hastings

overbilled for the terrorism premium was “independently actionable” and gave Able

Masonry a complete cause of action. See id. (“Whether Wiltshire had negotiated one

check or 1000, Rodrigue had a valid cause of action for conversion; nothing about the

repeated or ongoing nature of Wiltshire's conduct affected the nature or validity of

Rodrigue’s suit, beyond increasing her damages.”). The continuing violation rule does

not apply to Hastings’s alleged series of discrete, independently actionable violations.

Even so, dismissal of these claims is not proper for two reasons. First, at least

some ICFA claims are timely. Able Masonry alleges that it overpaid for the terrorism

premium between 2019 and 2023, and it sued on January 5, 2024. [Dkt. 1 at 5; Dkt.

1-1 ¶ 30.] Because its claims are independently actionable, any claim that accrued on

or after January 5, 2021 is timely, even if the limitations period for some claims has

expired. See Rodrigue, 406 F.3d at 443. [Contra Dkt. 21 at 7–8 (arguing that Able

Masonry’s claims accrued in 2019 or 2020, so all its ICFA claims are time-barred).]

Second, factual disputes preclude conclusive resolution of which if any portion

of Able Masonry’s ICFA claims are untimely. “Dismissing a complaint as untimely at

the pleading stage is an unusual step, since a complaint need not anticipate and

overcome affirmative defenses, such as the statute of limitations. Further, these

defenses typically turn on facts not before the court at that stage in the proceedings.”

Sidney Hillman Health Ctr. of Rochester v. Abbott Lab’ys, Inc., 782 F.3d 922, 928 (7th

Cir. 2015) (cleaned up). Possible factual disputes include: (1) when Hastings charged

Able Masonry and it paid, which might affect some claims’ timeliness; (2) whether all

payments pursuant to a contract can be treated as a continuing violation, even though

all payments across all contracts cannot be; and (3) whether the discovery rule tolled

the statute of limitations. These disputes may or may not arise or prove dispositive,

but they preclude dismissing the ICFA claims in full or in part at this stage. See id.

(explaining that dismissing a complaint at the pleading stage based on a statute of

limitations defense “is appropriate only where the allegations of the complaint itself

set forth everything necessary to satisfy the affirmative defense” (cleaned up)).

* * *

Hastings’s motion to dismiss Counts VI and XIV is denied.

B. Classwide Breach of Contract

Next, Hastings argues that Count VIII, the breach of contract claim on behalf

of a class, fails as a matter of law. [Dkt. 21 at 11–14.] To certify a class action under

Rule 23, the prospective class must satisfy the numerosity, commonality, typicality,

and adequacy of representation requirements of Rule 23(a). Eddlemon v. Bradley

Univ., 65 F.4th 335, 338 (7th Cir. 2023). The class must also meet the requirements

of the relevant provision of Rule 23(b), here that common questions of law or fact

predominate over individual inquiries and that class treatment is the superior

method of resolving the controversy. Id.; see Fed. R. Civ. P. 23(b)(3).

Hastings argues that commonality and predominance are absent. [Dkt. 12 at

12.] It cites cases holding that class certification is improper where the “putative class

includes members insured under policies that are materially different.” [Id.] But most

of the cases Hastings cites arose at the class certification stage, see Mace v. Van Ru

Credit Corp., 109 F.3d 338, 340–41 (7th Cir. 1997) (vacating denial of motion for class

certification); Brousard v. Meineke Discount Muffler Shops, Inc., 155 F.3d 331, 334

(4th Cir. 1998) (reversing class certification); Avery v. State Farm Mut. Auto. Ins. Co.,

835 N.E.2d 801, 824 (Ill. App. Ct. 2005) (reversing class certification), and the cases

that arose at the pleading stage did not feature breach of contract claims, see Hagerty

v. Gen. Motors Corp., 319 N.E.2d 5, 7 (Ill. 1974) (tax); Goetz v. Village of Hoffman

Estates, 378 N.E.2d 1276, 1278 (Ill. App. Ct. 1978) (negligence). This distinction is

meaningful. The Rule 23 requirements are not pleading requirements; a plaintiff

must show with evidence that class certification is proper. Eddlemon 65 F.4th at 338–

39. The fact that a certain record could not support a classwide breach of contract

claim does not mean that Able Masonry cannot properly plead such a claim.

Able Masonry has done so. [See Dkt. 26 at 9–10.] The common questions of law

and fact it alleges will arise include whether Hastings overcharged class members for

the terrorism premium and whether it breached contractual duties to insureds. [Dkt.

1-1 ¶ 65.] If the class’s contracts included materially identical terms and Hastings

acted similarly with respect to all class members, common questions of law or fact

will arise and may predominate over individual questions. Fed. R. Civ. P. 23(a)(2),

(b)(3). If Hastings systematically overcharged the class in a similar manner, liability

may be able to be proven on a classwide basis, a question that could predominate over

individualized liability findings. [See Dkt. 26 at 12.] True, damages might need to be

assessed individually, but that does not preclude class certification in general or in

this context. See Butler v. Sears, Roebuck & Co., 727 F.3d 796, 800 (7th Cir. 2013)

(“[A] class action limited to determining liability on a class-wide basis, with separate

hearings to determine—if liability is established—the damages of individual class

members, or homogeneous groups of class members, is permitted by Rule 23(c)(4) and

will often be the sensible way to proceed.” (citations omitted)); Hydrite Chem. Co. v.

Calumet Lubricants Co., 47 F.3d 887, 890–91 (7th Cir. 1995) (explaining that liability

and damages are distinct issues in contract cases).

Whether Able Masonry’s breach of contract claim can proceed on behalf of a

class depends on the substance of Hastings’ contracts with putative class members.

It may be possible to certify this claim as a class action, so the Court denies Hastings’s

motion to dismiss Count VIII.¢

V. Conclusion

For the foregoing reasons, Brown & Brown’s motion to dismiss [Dkt. 20] is

denied; Hastings’s motion to dismiss [Dkt. 21] is granted in part and denied in part.

Counts IJ, VII, IX, and XIV are dismissed with prejudice pursuant to Able Masonry’s

abandonment of them. [Dkt. 26 at 2 n.1.] All other claims stand.

Enter: 24-cv-13388

Date: May 16, 2024

Lindsay C. Jenkins

United States District Judge

8 Able Masonry addresses whether striking class allegations is proper [Dkt. 26 at 8-9],

but Hastings did not move to strike. [See Dkt. 21.] The Court observes, however, that the

class definitions are improper insofar as they define the class to include “[a]1l persons ... who

... were overcharged on the ‘terrorism premium’ ... by Hastings.” [Dkt. 1-1 4{[ 60-61.]

“[C]lasses that are defined in terms of success on the merits—so-called ‘fail-safe classes’-—

also are not properly defined.” Mullins v. Direct Digit., LLC, 795 F.3d 654, 660 (7th Cir. 2015)

(citations omitted). The Court will not require Able Masonry to amend its class definitions at

this stage, but by no later than the class certification stage, it must “define the class[es] so

that membership does not depend on the liability of the defendant.” Jd.

21