M&C Prevails on Choice of Law Motion Eliminating Plaintiff’s Claims for Breach of the Implied Covenant of Good Faith and Fair Dealing and Exemplary Damages

December 9, 2005

M&C’s insurance company client issued an excess insurance policy to a world wide supplier of wine products. Its excess policy, as well as that of the primary insurer, were issued in Illinois. The headquarters for the supplier was located in Illinois at the time the policies were issued but a management-based office was thereafter located in California. A claim was filed against the insured following a substantial loss stemming from the alleged failure of the product in locations outside the U.S.

The insured sued both carriers in the Orange County Superior Court, California, seeking damages for alleged breach of contract, for breach of the implied covenant of good faith and fair dealing, and with a claim for exemplary or punitive damages. Both defendant insurers filed Motions for Choice of Law arguing that Illinois substantive law should apply, rather than California law. The motions were granted.

Thereafter, M&C filed a demurrer to the amended pleading by the Plaintiff, arguing that pursuant to Illinois statues (Ins. Code § 155) Plaintiffs’ claims for Breach of the Implied Covenant of Good Faith and Fair Dealing and for Exemplary Damages could not be maintained. The trial court granted the Demurrer and subsequently denied Plaintiff’s Motion for Reconsideration.

Jean M. Lawler, Bryan M. Weiss and Daniel G. Pezold, of the firm's Insurance Law practice group, were the attorneys representing the excess carrier in this matter.