Suzanne Wolf v. Riverport Insurance Company

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 24-2010
SUZANNE WOLF ,
Plaintiff-Appellant,
v.
R IVERPORT I NSURANCE C OMPANY ,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 20-cv-7084 — Steven C. Seeger, Judge.
____________________
A RGUED DECEMBER 11, 2024 — DECIDED M ARCH 20, 2025
____________________
Before EASTERBROOK, B RENNAN , and ST. EVE, Circuit Judges.
ST. EVE, Circuit Judge. More than four years after Suzanne
Wolf suffered multiple pelvic fractures in a car crash with an
underinsured motorist, Riverport Insurance Company paid
Wolf benefits it owed her under her employer’s general com-
mercial liability policy. Wolf then filed this suit against River-
port, alleging that Riverport unreasonably delayed payment.
She sought relief under section 155 of the Illinois Insurance

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2 No. 24-2010
Code, 215 ILCS 5/155(1), which provides a supplemental rem-
edy for an insurer’s unreasonable delay in settling an insur-
ance claim in an action for breach of contract.
The district court granted judgment on the pleadings to
Riverport under Rule 12(c) of the Federal Rules of Civil Pro-
cedure. On appeal, Wolf challenges this decision, as well as a
prior decision denying discovery. We reject both challenges.
Wolf argues that Riverport breached a contractual duty to in-
vestigate and settle her claim for underinsured motorist ben-
efits in good faith, but the policy Riverport issued to her em-
ployer contains no such duty. Accordingly, Wolf lacks a via-
ble legal theory to support her claim—and the district court
properly granted Riverport’s motion for judgment under
Rule 12(c). Without a viable breach-of-contract theory, Wolf
also cannot show that the court’s discovery decision actually
and substantially prejudiced her: Her claim fails to meet the
Rule 12(c) standard regardless of whether she could have ob-
tained evidence that Riverport acted in bad faith. We therefore
reject her challenge to the court’s discovery decision without
reaching the merits.
I. Background
Wolf suffered multiple pelvic fractures after the driver of
another vehicle ran a red light and struck her vehicle as she
crossed an intersection. The driver carried only $100,000 of li-
ability insurance. After accepting this amount to resolve her
claim against him, Wolf filed claims for underinsured motor-
ist benefits with her personal automobile insurer and her em-
ployer’s general commercial liability insurer, Riverport, to
cover the remainder of her losses. Wolf resolved her claim
with her personal insurer for the $150,000 policy limit. She

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No. 24-2010 3
eventually resolved her claim with Riverport, too, but only af-
ter four years of negotiations ending in arbitration.
Under the policy Riverport issued to Wolf’s employer,
Riverport agreed to “pay all sums the ‘insured’ is legally en-
titled to recover as compensatory damages from the owner or
driver of an ‘underinsured motor vehicle,’” subject to a
$1,000,000 liability limit for any one accident. The parties
agreed that Wolf qualified as an insured, but they disagreed
about the value of her claim. Wolf demanded the policy limit.
Two years later, Riverport offered her $100,000. In response,
Wolf requested arbitration. Another two years passed, and
Riverport agreed to arbitrate the dispute. The arbitration
panel awarded Wolf $905,000. Soon after, Riverport sent her
a check for the award less the payouts she had received from
the driver’s and her personal insurers.
This action, which Wolf commenced after Riverport’s pay-
out, concerns the parties’ protracted negotiations. Wolf filed
suit in the Circuit Court of Cook County, and Riverport re-
moved to federal court, invoking diversity jurisdiction. In her
second amended complaint, Wolf alleges that Riverport failed
to promptly respond to communications; delayed its investi-
gation into her claim; attempted to settle her claim for an un-
reasonably low amount, forcing her to pursue arbitration; and
delayed the arbitration, among other related conduct. After
answering this complaint, Riverport moved for judgment on
the pleadings under Rule 12(c) of the Federal Rules of Civil
Procedure. The district court granted the motion.
II. Discussion
We review a district court’s grant of judgment under Rule
12(c) de novo. Citizens Ins. Co. of Am. v. Wynndalco Enters., LLC,

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4 No. 24-2010
70 F.4th 987, 994 (7th Cir. 2023). Rule 12(c) states, “[a]fter the
pleadings are closed—but early enough not to delay trial—a
party may move for judgment on the pleadings.” Either party
can use a Rule 12(c) motion “to dispose of the case on the basis
of the underlying substantive merits.” Alexander v. City of Chi-
cago, 994 F.2d 333, 336 (7th Cir. 1993). A Rule 12(c) motion also
provides a vehicle for the defendant to raise several of the de-
fenses enumerated in Rule 12(b)—including failure to state a
claim upon which relief can be granted—after the close of the
pleadings. Fed. R. Civ. P. 12(h)(2)(B). When a defendant files
a Rule 12(c) motion to challenge the sufficiency of the com-
plaint, as Riverport did here, the motion performs the same
function as a Rule 12(b)(6) motion to dismiss—and the com-
plaint must meet the Rule 12(b)(6) standard for the suit to sur-
vive. See Wynndalco, 70 F.4th at 994; 5C Charles Alan Wright
& Arthur R. Miller, Federal Practice and Procedure § 1367 (3d ed.
Aug. 2024 update) [hereinafter Wright & Miller].
The Supreme Court changed the Rule 12(b)(6) standard in
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007), and Ash-
croft v. Iqbal, 556 U.S. 662, 678 (2009), adopting a plausibility
standard and abandoning the “beyond doubt” and “no set of
facts” standard from Conley v. Gibson, 355 U.S. 41, 45–46
(1957). See 5B Wright & Miller § 1357 (4th ed. July 2024 up-
date). By implication, Twombly and Iqbal also changed the Rule
12(c) standard. As the district court noted, however, some of
our decisions reviewing judgments granted under Rule 12(c)
still refer to the abrogated Conley standard. See Wynndalco, 70
F.4th at 994; Scottsdale Ins. Co. v. Columbia Ins. Grp., 972 F.3d
915, 919 (7th Cir. 2020); Landmark Am. Ins. Co. v. Hilger, 838
F.3d 821, 824 (7th Cir. 2016). We therefore take this oppor-
tunity to clarify that under Rule 12(c), as under Rule 12(b)(6),
the factual allegations in the complaint, accepted as true, must

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No. 24-2010 5
“raise a right to relief above the speculative level” for the suit
to proceed any further. Twombly, 550 U.S. at 555.
In applying this standard, we consider the pleadings and
any exhibits attached thereto (here, Wolf’s second amended
complaint and the insurance policy). See Fed. R. Civ. P. 10(c)
(“A copy of a written instrument that is an exhibit to a plead-
ing is a part of the pleading for all purposes.”). To meet the
plausibility standard, Wolf needs a recognizable legal right.
See, e.g., McCready v. White, 417 F.3d 700, 703 (7th Cir. 2005)
(claims properly dismissed for want of a right of action). And
the factual allegations in her complaint must support a rea-
sonable inference that Riverport can be held liable for a dep-
rivation of that right. See Ashcroft, 556 U.S. at 678.
Wolf seeks relief only under section 155 of the Illinois In-
surance Code, which permits a court to award attorney’s fees,
costs, and statutory damages
[i]n any action by or against a company wherein there
is in issue the liability of a company on a policy or pol-
icies of insurance or the amount of the loss payable
thereunder, or for an unreasonable delay in settling a
claim, and it appears to the court that such action or
delay is vexatious and unreasonable . . . .
215 ILCS 5/155(1).
Section 155 “provides a remedy in a specified type of ‘ac-
tion’ (case); it does not create a cause of action; it presupposes
rather than authorizes a suit.” Hennessy Indus., Inc. v. Nat'l Un-
ion Fire Ins. Co. of Pittsburgh, 770 F.3d 676, 679 (7th Cir. 2014);
see also Moles v. Ill. Farmers Ins. Co., 229 N.E.3d 856, 861–62 (Ill.
App. Ct. 2023). That is, section 155 supplements the remedies
otherwise available in an action for breach of contract, breach

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6 No. 24-2010
of the tort-based duty to settle (inapplicable here), or another
tort. See Voyles v. Sandia Mortg. Corp., 751 N.E.2d 1126, 1131
(Ill. 2001) (confining the tort-based duty to settle to “the nar-
row context of cases involving an insurer’s obligation to settle
with a third party who has sued the policyholder”); Cramer v.
Ins. Exch. Agency, 675 N.E.2d 897, 904 (Ill. 1996) (noting that
section 155 alters the usual rule that attorney’s fees and puni-
tive damages are unavailable for a breach of contract).
To obtain the relief Wolf seeks, then, it is not enough for
her to allege facts showing that Riverport caused a “vexatious
and unreasonable” delay in settling her claim. She must also
allege facts showing a plausible breach of a right conferred
elsewhere. This appeal turns on whether she has.
Wolf asserts that contract law creates a relevant cause of
action. Under Illinois law, the elements of a breach-of-contract
claim are (1) a valid and enforceable contract; (2) performance
by the plaintiff; (3) breach by defendant; and (4) resulting in-
jury to the plaintiff. See Batson v. Oak Tree, Ltd., 2 N.E.3d 405,
414 (Ill. App. Ct. 2013). The parties’ dispute concerns the
breach element. Did Riverport’s negotiation conduct, as al-
leged by Wolf in her complaint, plausibly breach some obli-
gation under the policy?
“[A]n essential function of contracts is to allocate risk[.]”
Mkt. St. Assocs. Ltd. P'ship v. Frey, 941 F.2d 588, 595 (7th Cir.
1991). Insurance policies, which are contracts, exemplify this
function: “The essence of an insurance policy is a promise by
the insurer to compensate the insured for the loss of some-
thing of value that is covered under the policy, thereby shift-
ing the risk of loss from the insured to the insurer.” Kartman
v. State Farm Mut. Auto. Ins. Co., 634 F.3d 883, 890 (7th Cir.
2011). Under the policy at issue here, for example, Riverport

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No. 24-2010 7
provided underinsured motorist coverage to Wolf in ex-
change for premiums paid by her employer. A failure to pay
Wolf for covered losses would breach the contract. But by the
time Wolf filed this suit, Riverport had paid Wolf. The con-
tract must therefore impose some other obligation on River-
port—and Riverport must have plausibly breached that obli-
gation—for Wolf’s suit to proceed.
Beyond their risk-allocation function, some contracts also
“set in motion a cooperative enterprise, which may to some
extent place one party at the other’s mercy.” Mkt. St., 941 F.2d
at 595. The contractual obligation of one of the parties might
be contingent upon a condition particularly within the power
of that party. See, e.g., Dasenbrock v. Interstate Rest. Corp., 287
N.E.2d 151, 154 (Ill. App. Ct. 1972) (lease stated that no rent
would be due until the lessee obtained all the necessary li-
censes, consents, and permits for construction of a commer-
cial development). Or a contract might vest one of the parties
with broad discretion in performing a term of the contract.
See, e.g., Diamond v. United Food & Com. Workers Union Loc. 881,
768 N.E.2d 865, 870 (Ill. App. Ct. 2002) (a local union’s bylaws
vested authority in the local union’s president to “interpret
the bylaws and rules of the Local Union”).
In these circumstances, Illinois courts have invoked the
implied covenant of good faith and fair dealing. See Beraha v.
Baxter Health Care Corp., 956 F.2d 1436, 1443–45 (7th Cir. 1992)
(collecting and interpreting Illinois cases); Dayan v. McDon-
ald's Corp., 466 N.E.2d 958, 971–72 (Ill. App. Ct. 1984) (collect-
ing cases). The covenant operates as a rule of construction (not
a source of independent duties) under Illinois law. See Voyles,
751 N.E.2d at 1131. Applying this rule, each Illinois court in
these collected cases construed the contract to oblige the party

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8 No. 24-2010
vested with contractual discretion “to exercise that discretion
reasonably, with proper motive and in a manner consistent
with the reasonable expectations of the parties.” Beraha, 956
F.2d at 1444 (emphasis omitted) (citing Dayan, 466 N.E.2d at
972); see also, e.g., Dasenbrock, 287 N.E.2d at 155 (implying a
contractual obligation on the part of the lessee to obtain the
permits); Diamond, 768 N.E.2d at 871 (implying a contractual
obligation on the part of the local union’s president to “inter-
pret[] the bylaws in a reasonable manner”).
Under Wolf’s interpretation, the policy at issue here
vested Riverport with broad discretion to investigate and set-
tle her claim for underinsured motorist benefits—and the im-
plied covenant of good faith and fair dealing obliged River-
port to exercise this discretion reasonably. This is the duty
Wolf argues Riverport breached. Applying Illinois law, how-
ever, we do not find any basis in the policy to invoke the im-
plied covenant of good faith and fair dealing.
Wolf pins her interpretation on a provision in the business
auto coverage form within the policy. This form imposes on
Riverport a duty to indemnify an insured for the insured’s
bodily-injury liability to a third party, as well as an underin-
sured motorist’s bodily injury liability to an insured (through
an endorsement, which supplements the standard coverage).*
* Under the business auto coverage form, Riverport promised to “pay
all sums an ‘insured’ legally must pay as damages because of ‘bodily in-
jury’ … caused by an ‘accident’ and resulting from the ownership, mainte-
nance or use of a covered ‘auto.’” The underinsured motorist coverage en-
dorsement adds coverage for “all sums the ‘insured’ is legally entitled to
recover as compensatory damages from the owner or driver of an ‘under-
insured motor vehicle,’” if the damages “result from ‘bodily injury’

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No. 24-2010 9
In another provision—the provision upon which Wolf re-
lies—the form imposes on Riverport the “duty to defend any
‘insured’ against a ‘suit’ asking for [covered] damages,” with
“suit” defined as a civil proceeding in which “[d]amages be-
cause of ‘bodily injury’… are alleged.” In the same provision,
the form grants Riverport “the right” to defend any insured
against a suit by a third party seeking damages for harm al-
leged within coverage. It further states that Riverport “may
investigate and settle any claim or ‘suit’ as [Riverport] con-
sider[s] appropriate.”
Wolf argues that this contractually vested discretion to in-
vestigate and settle claims extends to claims by insureds
against Riverport for underinsured motorist benefits. But Illi-
nois law directs us to read contractual language in context, see
Matthews v. Chi. Transit Auth., 51 N.E.3d 753, 776 (Ill. 2016),
and in context, we conclude that the clause at issue grants
Riverport this discretion as part of the right to defend in-
sureds. That is, under the plain language of the policy, the
right to defend insureds includes the right to investigate and
settle claims, or to control the defense. The right to defend in-
sureds does not apply in a suit by an insured against River-
port—so neither does the right to control the defense.
To be sure, Riverport had discretion over the extent of its
investigation into Wolf’s claim and its settlement efforts.
Riverport exercised this discretion by rejecting Wolf’s settle-
ment offer. But this right to exercise discretion came from out-
side the provision Wolf cites. Due process alone would vest
Riverport with the right to defend itself and control its own
sustained by the ‘insured’ caused by an ‘accident.’” Unmodified provi-
sions of the coverage form apply to the endorsement.

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10 No. 24-2010
defense (as distinct from an insured’s defense, which explains
why the provision at issue would apply only to an insured’s
defense). See Richards v. Jefferson County, 517 U.S. 793, 798
(1996) (explaining that constitutional due process rules reflect
“our deep-rooted historic tradition that everyone should have
his own day in court”) (internal quotation marks and citation
omitted). In addition, an insured has a contractual remedy for
a refusal to pay or an indefinite payment delay by Riverport
without needing to resort to the implied covenant of good
faith and fair dealing: The insured can bring an action under
the policy for the proceeds due under the policy. See Cramer,
675 N.E.2d at 903–04 (refusing to recognize an extracontrac-
tual “duty to settle” first-party claims made by a policyholder
against an insurer because the “policyholder does not need a
new cause of action to protect him from insurer misconduct
where an insurer refuses to pay”).
In sum, under the terms of the policy, Riverport did not
have an implied contractual obligation to investigate and set-
tle Wolf’s claim against it for underinsured motorist benefits
in good faith because (1) the policy did not specifically vest
Riverport with discretion to investigate and settle her insur-
ance claim; and (2) Wolf had a contractual remedy for a re-
fusal to pay or payment delay by Riverport (an action for the
proceeds due under the policy, which is now moot). Both rea-
sons distinguish cases such as Diamond. Therefore, Wolf’s
breach-of-contract theory fails, and the district court properly
granted judgment under Rule 12(c).
Our interpretation of the policy also resolves the final
issue: Wolf’s appeal of a discovery decision. In the district
court, Wolf filed a motion to compel Riverport to produce
documents on Riverport’s privilege log. The magistrate judge

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No. 24-2010 11
supervising discovery denied the motion in part, and the
district judge affirmed. A district judge reviews a magistrate-
judge discovery decision for clear error, and we review the
district-judge decision for an abuse of discretion. Fed. R. Civ.
P. 72(a); Domanus v. Lewicki, 742 F.3d 290, 295 (7th Cir. 2014);
Weeks v. Samsung Heavy Indus. Co., 126 F.3d 926, 943 (7th Cir.
1997). “We also will not reverse the district court’s decision
absent a clear showing that the denial of discovery ‘would
result in actual and substantial prejudice to the complaining
litigant.’” Weeks, 126 F.3d at 943 (quoting Searls v. Glasser, 64
F.3d 1061, 1068 (7th Cir. 1995)). Because Wolf has not
identified a relevant duty under the policy, she cannot show
that the district-judge decision denying discovery actually or
substantially prejudiced her. Additional evidence about
Riverport’s conduct cannot save her breach-of-contract claim.
We thus reject Wolf’s challenge to the district court’s
discovery decision without reaching the merits of that
decision.
* * *
The judgment of the district court is
AFFIRMED.

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