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SIXTH DIVISION
April 30, 2004

No. 1-02-2257

 

Plaintiff, Brad D. Bunting, brings this class action on behalf of himself and a putative classconsisting of all persons similarly situated. In his second amended complaint, plaintiff alleged thatdefendants, The Progressive Corporation and Progressive Michigan Insurance Company(collectively referred to as Progressive), committed widespread consumer fraud and breach ofcontract in connection with a purported company-wide, systematic pattern and practice ofdenying Progressive's insureds the full recovery due to them under their contracts of insurance byfailing to pay the actual cash value for their vehicles when they were declared to be total losses. Plaintiff further alleged that Progressive committed these acts through the use of fraudulentvaluations of the vehicles prepared by defendant CCC Information Services, Inc. The trial courtdismissed all counts of plaintiff's complaint. Plaintiff now appeals.

BACKGROUND

Progressive Michigan Insurance Company issued an automobile insurance policy toplaintiff, a resident of the State of Michigan. Plaintiff's insurance policy provided, in relevant part,that in the event of a total loss of his vehicle, he would be paid the vehicle's "actual cash value,"reduced by the applicable deductible. On or about March 21, 2000, plaintiff was involved in anautomobile accident while driving his 1990 Ford Taurus. Plaintiff notified Progressive MichiganInsurance Company, which deemed the vehicle a total loss. Progressive Michigan InsuranceCompany, to assist it in determining how much to pay plaintiff, used CCC Information Services,Inc. (CCC), an Illinois corporation and provider of total-loss valuation services. Based uponCCC's valuation report, Progressive proposed to pay plaintiff $4,025. Plaintiff disputed theamount, claiming that it was too low. A second evaluation was done by CCC and, based uponthat reevaluation, Progressive offered plaintiff $4,236. Plaintiff disputed this figure as well. Eventually, the parties invoked the appraisal provision of the policy, which states as follows:

"If we cannot agree with you on the amount of a loss, then we or you may demandan appraisal of the loss. If so, each party shall appoint a competent and impartialappraiser. The appraisers will determine the amount of the loss. If they fail toagree, the disagreement will be submitted to a qualified and impartial umpirechosen by the appraisers. The amount of loss agreed to by any two will bebinding. You will pay your appraiser's fees and expenses. We will pay ourappraiser's fees and expenses. Payment of the umpire and all other expenses of theappraisal will be shared equally between us and you. Neither we nor you waiveany rights under this policy by agreeing to an appraisal."

Plaintiff, however, was also sent a check in the amount of $4,236, which he accepted andnegotiated. A third appraiser was never appointed and Progressive's appraiser agreed on $4,950as the amount of loss. Plaintiff was sent a check for the difference plus license transfer fees andtaxes (making the total $5,266).

Plaintiff did not seek to vacate the appraisal award. Almost four months after his total-loss claim was settled, plaintiff moved for leave to join the instant case, which initially had beenfiled on behalf of then-plaintiff Megan Stephens, a resident of Oregon. Ms. Stephens had filedthis action on October 28, 1999, against Progressive Corporation, former defendant ProgressivePreferred Insurance Company (the company that issued Ms. Stephens' policy) and CCC. InJanuary 2000, defendants filed motions to dismiss Ms. Stephens' claims and/or to compelappraisal. On September 14, 2000, Ms. Stephens was granted leave to file a first amendedcomplaint adding plaintiff. Thereafter, pursuant to sections 2-615 and 2-619 of the Code of CivilProcedure (735 ILCS 5/2-615, 2-619 (West 2002)), all defendants filed motions to dismiss thefirst amended complaint and/or to compel appraisal with respect to the claims of both plaintiffs.

On April 19, 2001, the circuit court granted defendants' section 2-615 motions, identifiedseveral pleading deficiencies and struck plaintiffs' first amended complaint. The court noted thatplaintiff had failed to name, as a defendant, the entity that had issued plaintiff Bunting's policy,Progressive Michigan Insurance Company. The court concluded that the first amended complaintfailed to allege how plaintiffs had been damaged. The court also found that plaintiffs had failed toplead any allegations showing how the parent corporation, Progressive, could be liable for theacts of its subsidiaries. As to plaintiff Stephens, the trial court required her to submit to theappraisal process set forth in her insurance policy. The court also ordered plaintiff to file a secondamended complaint after the appraisal process had been completed and to plead with specificitythe facts surrounding the appraisals of both plaintiffs. Plaintiff Stephens and then-defendantProgressive Preferred proceeded to appraisal. The umpire determined that the actual cash valueof the vehicle was $14,250 and Progressive Preferred paid Ms. Stephens $15,000. After theappraisal process was completed, Ms. Stephens voluntarily dismissed her claims.

On November 1, 2001, a second amended complaint was filed on behalf of plaintiffBunting alone against Progressive Corporation, CCC, and a new defendant, Progressive MichiganInsurance Company. The second amended complaint contained five counts in which plaintiffalleged violations of the Illinois Consumer Fraud and Deceptive Business Practices Act (815ILCS 505/1 et seq. (West 2000), breach of contract, common law fraud, and intentionalinterference with contract.

In December 2001, Progressive Corporation and CCC filed motions to dismiss plaintiff'ssecond amended complaint, which the circuit court took under advisement. Plaintiff did not serveProgressive Michigan Insurance Company with the second amended complaint until June 2002. On June 18, 2002, Progressive Michigan Insurance Company filed a motion to quash for lack ofpersonal jurisdiction. That motion was never heard or ruled upon by the trial court because, onJune 28, 2002, the trial court granted the other defendants' motions to dismiss and dismissedplaintiff's claims with prejudice.

The circuit court articulated several grounds as the bases for its dismissal with prejudice ofplaintiff's second amended complaint. The trial court first addressed the section 2-619 (735 ILCS5/2-619) (West 2002)) bases of defendants' motions to dismiss. The trial court determined thatthe Federal Arbitration Act (FAA) (9 U.S.C.