Minnesota Bad Faith Insurance Complaint (Civil Action with Minn. Stat. § 604.18 Claim)

COMPLAINT FOR BREACH OF INSURANCE CONTRACT (Minn. Stat. § 604.18 CLAIM RESERVED) — MINNESOTA

TABLE OF CONTENTS

1. Caption
2. Parties, Jurisdiction, and Venue
3. General Allegations — The Policy and the Loss
4. Insurer's Claim Handling
5. Count I — Breach of Insurance Contract
6. Count II — Declaratory Judgment
7. Count III — Common-Law Bad Faith / Breach of Duty to Settle (Third-Party Claims Only)
8. Reservation of Minn. Stat. § 604.18 Claim
9. Damages
10. Prayer for Relief
11. Demand for Trial by Jury
12. Signature Block
13. Verification (If Required)
14. Acknowledgment Under Minn. Stat. § 549.211
15. Minnesota Practice Notes
16. Sources and References

1. CAPTION

STATE OF MINNESOTA

DISTRICT COURT

COUNTY OF [________________________________]

[________________________________] JUDICIAL DISTRICT

Court File No. [________________________________]

Case Type: [Contract / Insurance / Other Civil]

COMPLAINT

(JURY TRIAL DEMANDED)

Plaintiff, for its Complaint against Defendant [INSURANCE COMPANY NAME] ("Insurer"), states and alleges as follows:

2. PARTIES, JURISDICTION, AND VENUE

2.1. Plaintiff [PLAINTIFF NAME] ("Insured") is [an individual residing in / a [STATE] corporation with its principal place of business at] [ADDRESS], [COUNTY] County, Minnesota.

2.2. Defendant [INSURER NAME] ("Insurer") is a [STATE OF INCORPORATION] insurance corporation authorized to transact insurance in the State of Minnesota under Minn. Stat. ch. 60A. Insurer may be served through the Commissioner of Commerce pursuant to Minn. Stat. § 60A.19, subd. 3, or through its registered agent at [REGISTERED AGENT ADDRESS].

2.3. This Court has subject-matter jurisdiction under Minn. Const. art. VI, § 3 and Minn. Stat. § 484.01.

2.4. Venue is proper in [COUNTY] County under Minn. Stat. § 542.09 because [the cause of action arose in this county / Plaintiff resides in this county / the insured property is located in this county].

2.5. The amount in controversy exceeds $[________________________________], exclusive of interest, costs, and attorney fees, and is therefore not subject to mandatory arbitration under Minn. Gen. R. Prac. 114 or any local rule.

3. GENERAL ALLEGATIONS — THE POLICY AND THE LOSS

3.1. At all material times, Insurer issued to Insured Policy No. [POLICY NUMBER] ("the Policy"), an "insurance policy" within the meaning of Minn. Stat. § 604.18, subd. 1(a), with effective dates of [POLICY PERIOD]. A true and correct copy of the Policy is attached as Exhibit A.

3.2. The Policy was a [FIRST-PARTY PROPERTY / DISABILITY / UM/UIM / HOMEOWNERS / COMMERCIAL PROPERTY / OTHER] insurance policy obligating Insurer to pay proceeds directly to Insured upon a covered loss.

3.3. The premium for the Policy was paid in full and the Policy was in force on [DATE OF LOSS].

3.4. On or about [DATE OF LOSS], Insured suffered a covered loss, namely: [DESCRIBE LOSS — e.g., wind damage to roof, total fire loss, business interruption, theft of insured property, personal injury triggering UM/UIM, disability under occupational definition, etc.].

3.5. Insured timely reported the loss to Insurer on [DATE OF NOTICE OF CLAIM] and was assigned Claim No. [CLAIM NUMBER].

3.6. Insured cooperated with Insurer's investigation and complied with all post-loss conditions of the Policy, including but not limited to: providing notice of loss; submitting a sworn proof of loss; producing requested documents; and submitting to an examination under oath where requested.

3.7. The amount of the covered loss is $[AMOUNT OF LOSS], supported by [ESTIMATES, INVOICES, MEDICAL RECORDS, FORENSIC ACCOUNTING, AS APPLICABLE], attached as Exhibits B–[__].

4. INSURER'S CLAIM HANDLING

4.1. Despite the clear coverage afforded by the Policy and Insured's full compliance with all conditions, Insurer engaged in the following claim-handling conduct:

a. [DESCRIBE: e.g., delayed acknowledgment beyond the 10-business-day deadline of Minn. Stat. § 72A.201, subd. 4(1)];

b. [DESCRIBE: e.g., failed to complete its investigation within 30 business days as required by Minn. Stat. § 72A.201, subd. 4(3)];

c. [DESCRIBE: e.g., failed to advise of acceptance or denial within 60 business days of receipt of proof of loss as required by Minn. Stat. § 72A.201, subd. 4(7)];

d. [DESCRIBE: e.g., relied on a one-sided expert report that contradicted the documented physical evidence and the conclusions of Insured's expert];

e. [DESCRIBE: e.g., misrepresented Policy provisions and applicable law in correspondence dated [DATE]];

f. [DESCRIBE: e.g., made a low-ball offer of $[AMOUNT] not supported by any documented loss analysis];

g. [DESCRIBE: e.g., refused to pay the undisputed portion of the claim while continuing to investigate the disputed portion].

4.2. On [DATE OF DENIAL], Insurer issued a written denial of Insured's claim citing [STATED GROUNDS FOR DENIAL]. A true and correct copy of the denial letter is attached as Exhibit C.

4.3. The grounds asserted by Insurer for denial are not supported by the Policy language, the documented facts of the loss, or applicable Minnesota law, as more fully set forth below.

4.4. Insured exhausted all internal appeal procedures of the Policy by submitting a written appeal on [DATE OF APPEAL], which Insurer denied on [DATE OF APPEAL DENIAL] (Exhibit D).

5. COUNT I — BREACH OF INSURANCE CONTRACT

5.1. Insured incorporates paragraphs 1.1 through 4.4 as though fully set forth herein.

5.2. The Policy is a valid, binding, and enforceable contract of insurance between Insured and Insurer.

5.3. Insured performed all conditions precedent under the Policy or such conditions have been waived or excused.

5.4. Insurer breached the Policy by failing and refusing to pay the proceeds owed for the covered loss described above.

5.5. As a direct and proximate result of Insurer's breach, Insured has been damaged in an amount exceeding $[________________________________], plus pre-judgment interest under Minn. Stat. § 549.09, costs, and disbursements.

6. COUNT II — DECLARATORY JUDGMENT

(Plead only if coverage is disputed.)

6.1. Insured incorporates paragraphs 1.1 through 5.5 as though fully set forth herein.

6.2. An actual, justiciable controversy exists between Insured and Insurer concerning the parties' respective rights and duties under the Policy with respect to the loss of [DATE OF LOSS], in particular: [STATE COVERAGE ISSUE — e.g., whether the wear-and-tear exclusion applies; whether the loss occurred during the policy period; whether the cause of loss is a covered peril].

6.3. Pursuant to the Minnesota Uniform Declaratory Judgments Act, Minn. Stat. ch. 555, Insured is entitled to a judicial declaration that the Policy provides coverage for the loss and that Insurer is obligated to pay all sums owed thereunder.

7. COUNT III — COMMON-LAW BAD FAITH / BREACH OF DUTY TO SETTLE (Third-Party Claims Only)

(Plead only in third-party liability-defense scenarios; omit for first-party claims.)

7.1. Insured incorporates paragraphs 1.1 through 5.5 as though fully set forth herein.

7.2. The Policy obligated Insurer to defend and indemnify Insured against third-party claims and conferred upon Insurer the exclusive right to control settlement.

7.3. By virtue of that contractual relationship, Insurer owed Insured a fiduciary duty to act in good faith in the defense and settlement of claims against Insured. Short v. Dairyland Ins. Co., 334 N.W.2d 384 (Minn. 1983).

7.4. On [DATE], the underlying claimant offered to settle the third-party claim against Insured for $[AMOUNT], an amount within the Policy limits.

7.5. Insurer rejected, ignored, or unreasonably failed to accept the within-limits settlement offer, despite (a) clear liability of Insured, (b) clear damages exceeding the Policy limits, and (c) Insured's repeated demand that Insurer settle within limits.

7.6. As a direct and proximate result of Insurer's breach of its duty to settle in good faith, an excess judgment in the amount of $[EXCESS JUDGMENT] was entered against Insured in [Underlying Action Caption].

7.7. Insurer is liable to Insured for the full amount of the excess judgment.

8. RESERVATION OF MINN. STAT. § 604.18 CLAIM

8.1. Insured expressly reserves the right to seek leave of Court to amend this Complaint to add a claim for taxable costs and attorney fees under Minn. Stat. § 604.18 upon completion of discovery and a prima facie evidentiary showing as required by § 604.18, subd. 4(a).

8.2. The reserved § 604.18 claim will allege that Insurer:

a. Lacked any reasonable basis for denying Insured's claim for benefits under the Policy; and

b. Knew of, or acted in reckless disregard of, the lack of a reasonable basis for the denial.

8.3. Insured will seek the following remedies under § 604.18, subd. 3:

a. An amount equal to one-half of the "proceeds awarded" in excess of any pre-trial settlement offer made by Insurer at least ten (10) days before trial, capped at $250,000; and

b. Reasonable attorney fees actually incurred to establish the § 604.18 violation, capped at $100,000.

8.4. Insured does not plead the § 604.18 claim at this time, in compliance with Minn. Stat. § 604.18, subd. 4(a) (prohibiting initial pleading of the claim).

9. DAMAGES

9.1. As a direct and proximate result of Insurer's breach, Insured has sustained the following damages:

a. Unpaid policy benefits in the amount of $[AMOUNT];

b. Consequential damages reasonably foreseeable from the breach, including [e.g., additional living expense, mitigation costs, replacement-cost shortfall, lost rental income, lost business income], in the amount of $[AMOUNT];

c. Pre-judgment interest under Minn. Stat. § 549.09 from the date the obligation to pay matured;

d. Costs and disbursements as allowed by law; and

e. Such other and further relief as the Court deems just and equitable.

9.2. Insured does NOT seek punitive damages under Minn. Stat. § 549.20 in connection with this Complaint, and does NOT plead any cause of action for which punitive damages would be available, in order to preserve the future § 604.18 motion under § 604.18, subd. 3(b) (no double recovery).

10. PRAYER FOR RELIEF

WHEREFORE, Plaintiff respectfully prays that this Court enter judgment in favor of Plaintiff and against Defendant as follows:

A. On Count I (Breach of Contract), for compensatory damages in an amount exceeding $[AMOUNT], plus pre-judgment interest, costs, and disbursements;

B. On Count II (Declaratory Judgment), for a declaration that the Policy provides coverage for the loss and that Defendant is obligated to pay all sums owed thereunder;

C. On Count III (Common-Law Bad Faith — third-party only), for the full amount of the excess judgment entered against Plaintiff, plus consequential damages, costs, and disbursements;

D. For pre-judgment interest under Minn. Stat. § 549.09 from the earliest date allowed by law;

E. For costs and disbursements;

F. For leave to amend to add a Minn. Stat. § 604.18 claim upon a prima facie showing; and

G. For such other and further relief as the Court deems just and equitable.

11. DEMAND FOR TRIAL BY JURY

Plaintiff hereby demands a trial by jury on all issues so triable as of right, pursuant to Minn. R. Civ. P. 38.

12. SIGNATURE BLOCK

Dated: [__/__/____]

Respectfully submitted,

[LAW FIRM NAME]

By: ________________________________
[ATTORNEY NAME] (Atty. Reg. No. [________])
[FIRM NAME]
[ADDRESS]
[CITY, STATE, ZIP]
Telephone: [(___) ___-____]
Email: [[email protected]]

ATTORNEYS FOR PLAINTIFF

13. VERIFICATION (IF REQUIRED)

STATE OF MINNESOTA
COUNTY OF [________________________________]

I, [PLAINTIFF NAME], being first duly sworn upon oath, depose and state that I am the Plaintiff in the above-entitled action; that I have read the foregoing Complaint and know the contents thereof; and that the same is true of my own knowledge except as to those matters stated upon information and belief, and as to those matters I believe them to be true.

________________________________
[PLAINTIFF NAME]

Subscribed and sworn to before me this [___] day of [MONTH], [YEAR].

________________________________
Notary Public

14. ACKNOWLEDGMENT UNDER MINN. STAT. § 549.211

The undersigned hereby acknowledges that costs, disbursements, and reasonable attorney and witness fees may be awarded pursuant to Minn. Stat. § 549.211 to the party against whom the allegations in this pleading are asserted.

________________________________
[ATTORNEY NAME]

15. MINNESOTA PRACTICE NOTES

15.1. The Two-Step § 604.18 Procedure (CRITICAL)

Minnesota is procedurally unusual: the statutory bad-faith claim is bifurcated from the underlying coverage claim and may never appear in the initial complaint. Minn. Stat. § 604.18, subd. 4(a). The proper sequence is:

1. File the breach-of-contract complaint (this template). Develop the merits of coverage through discovery.
2. Move to amend to add a § 604.18 claim. The motion must be supported by one or more affidavits making a prima facie showing of (i) absence of a reasonable basis for denial and (ii) knowledge of, or reckless disregard for, that absence.
3. Try the underlying claim first; the fact-finder determines the amount of "proceeds awarded."
4. Separate post-trial proceeding before the judge to award § 604.18 taxable costs and fees. § 604.18, subd. 4(b).

15.2. The § 604.18 Damages Formula

The remedy is TAXABLE COSTS, not contract damages or tort damages:

"Proceeds awarded" are themselves capped at the policy limits — Selective Ins. Co. v. Sela, 943 N.W.2d 690 (Minn. 2020) — even where consequential damages (e.g., extra-contractual losses) push the verdict higher.

15.3. The Pre-Trial Offer Trigger

To minimize § 604.18 exposure, an insurer must make a written settlement offer at least 10 days before trial that approximates the eventual verdict. Insurers commonly use this provision strategically. From the insured's perspective, the offer benchmark is the floor of the bad-faith calculation — any verdict exceeding it by more than de minimis exposes the insurer.

15.4. The "Reasonable Basis" / "Fairly Debatable" Standard

To prevail, the insured must show by clear and convincing evidence that the denial lacked a reasonable basis and that the insurer knew it or acted in reckless disregard of that fact. The Eighth Circuit's "fairly debatable" gloss — under which an insurer is not liable where coverage is fairly debatable on the facts or the law — applies. Friedberg v. Chubb & Son, Inc., 691 F.3d 948 (8th Cir. 2012). This is a high bar: garden-variety coverage disputes will not support § 604.18 relief.

15.5. No Private Right of Action Under § 72A.20 / § 72A.201

The Minnesota Unfair Claims Practices statutes (Minn. Stat. §§ 72A.20, subd. 12 and 72A.201) are enforced exclusively by the Commissioner of Commerce. Morris v. Am. Family Mut. Ins. Co., 386 N.W.2d 233 (Minn. 1986). Do not plead a stand-alone private cause of action under either statute. Such allegations may be cited as evidence of bad faith in support of a § 604.18 motion, subject to the admissibility limits of § 604.18, subd. 4(c) (Department of Commerce investigations and findings are inadmissible as standards of conduct).

15.6. Common-Law Third-Party Bad Faith Survives § 604.18

Short v. Dairyland Ins. Co., 334 N.W.2d 384 (Minn. 1983), and its progeny establish a Minnesota common-law claim for breach of the insurer's fiduciary duty to settle within policy limits in the third-party (liability-defense) context. § 604.18 did not displace this common-law remedy. In a Short v. Dairyland claim, the insured (or the assignee) recovers the full excess judgment.

15.7. Arbitration and Appraisal Bar

§ 604.18, subd. 4(c) prohibits the award of § 604.18 taxable costs in any case where the proceeds were established by arbitration or appraisal. Plaintiffs evaluating whether to invoke an appraisal clause should weigh the lost § 604.18 leverage against the speed and lower cost of appraisal.

15.8. No Double Recovery

§ 604.18, subd. 3(b) bars an insured who recovers under § 604.18 from also recovering punitive damages under Minn. Stat. § 549.20 or attorney fees under any other statute "for the same conduct." Pleading punitive damages now may forfeit the § 604.18 remedy later.

15.9. Statute of Limitations

Six (6) years from accrual (typically the date of denial) for the underlying breach-of-contract action. Minn. Stat. § 541.05, subd. 1(1). The § 604.18 motion is derivative and is not independently time-barred.

15.10. Department of Commerce Complaint

A concurrent complaint with the Minnesota Department of Commerce may be filed at https://mn.gov/commerce/consumer/file-a-complaint/ (Consumer Portal) or by calling 651-539-1600. The Department's investigation and findings are not admissible as a standard of conduct in the § 604.18 proceeding (§ 604.18, subd. 4(c)) but the underlying records remain available through ordinary discovery.

15.11. Service on the Insurer

Domestic and foreign insurers may be served on the Commissioner of Commerce as statutory agent under Minn. Stat. § 60A.19, subd. 3. Confirm the current per-process fee and form requirements with the Commissioner before service.

16. SOURCES AND REFERENCES

• Minn. Stat. § 604.18 (First-party bad-faith taxable costs): https://www.revisor.mn.gov/statutes/cite/604.18
• Minn. Stat. § 72A.20 (Unfair methods/practices): https://www.revisor.mn.gov/statutes/cite/72A.20
• Minn. Stat. § 72A.201 (Regulation of claims practices — deadlines): https://www.revisor.mn.gov/statutes/cite/72A.201
• Minn. Stat. § 60A.19 (Service on Commissioner): https://www.revisor.mn.gov/statutes/cite/60A.19
• Minn. Stat. § 541.05 (Six-year contract limitations): https://www.revisor.mn.gov/statutes/cite/541.05
• Minn. Stat. § 549.09 (Pre- and post-judgment interest): https://www.revisor.mn.gov/statutes/cite/549.09
• Minn. Stat. § 549.211 (Sanctions): https://www.revisor.mn.gov/statutes/cite/549.211
• Minn. R. Civ. P. (Minnesota Rules of Civil Procedure): https://www.revisor.mn.gov/court_rules/cp/
• Short v. Dairyland Ins. Co., 334 N.W.2d 384 (Minn. 1983): https://law.justia.com/cases/minnesota/supreme-court/1983/c7-82-1330-2.html
• Morris v. Am. Family Mut. Ins. Co., 386 N.W.2d 233 (Minn. 1986): https://law.justia.com/cases/minnesota/supreme-court/1986/c5-85-224-2.html
• Friedberg v. Chubb & Son, Inc., 691 F.3d 948 (8th Cir. 2012): https://studicata.com/case-briefs/case/friedberg-v-chubb-&-son-inc/
• Selective Ins. Co. v. Sela, 943 N.W.2d 690 (Minn. 2020): https://cousineaulaw.com/news-resources/resources/minnesota-supreme-court-finds-proceeds-awarded-first-party-claim-benefits-described-minnesotas-bad-faith-statute-unambiguously-capped-insurance-policy/
• Quade v. Secura Ins., 814 N.W.2d 703 (Minn. 2012) (appraisal — causation): https://caselaw.findlaw.com/mn-supreme-court/1603333.html
• Minnesota Department of Commerce — Consumer complaints: https://mn.gov/commerce/consumer/file-a-complaint/
• Minnesota Department of Commerce — Insurance Division complaint form: https://mn.gov/commerce-stat/pdfs/life-health-complaint-form.pdf
• Hellmuth & Johnson, "Minnesota's First-Party Bad Faith Statute: Four Years Old": https://hjlawfirm.com/minnesotas-first-party-bad-faith-statute-four-years-old/
• Bench & Bar of Minnesota, "Is Minnesota's bad-faith insurance law working? Not so much.": https://mnbars.org/?pg=BenchBarofMinnesota&pubAction=viewIssue&pubIssueID=52616&pubIssueItemID=332278

END OF TEMPLATE