Bad Faith Insurance Complaint - North Dakota

COMPLAINT FOR BREACH OF INSURANCE CONTRACT AND COMMON-LAW BAD FAITH — NORTH DAKOTA

TABLE OF CONTENTS

1. Caption
2. Parties, Jurisdiction, and Venue
3. General Allegations
4. The Policy and the Loss
5. Insurer's Handling and Denial
6. Count I — Breach of Insurance Contract
7. Count II — Common-Law Bad Faith (Tortious Breach of the Implied Covenant of Good Faith and Fair Dealing)
8. Count III — Declaratory Judgment
9. Damages
10. Reservation of Right to Seek Exemplary Damages under N.D.C.C. § 32-03.2-11
11. Prayer for Relief
12. Demand for Trial by Jury
13. Signature Block
14. Verification
15. Certificate of Service
16. North Dakota Practice Notes
17. Sources and References

1. CAPTION

STATE OF NORTH DAKOTA

IN THE DISTRICT COURT, [____________] JUDICIAL DISTRICT

COUNTY OF [______________]

CIVIL NO. [________________________________]

COMPLAINT FOR BREACH OF INSURANCE CONTRACT AND COMMON-LAW BAD FAITH

(JURY TRIAL DEMANDED)

Plaintiff, by and through undersigned counsel, complains of Defendant and alleges as follows:

2. PARTIES, JURISDICTION, AND VENUE

2.1. Plaintiff [PLAINTIFF NAME] ("Plaintiff") is [a citizen and resident of [COUNTY] County, North Dakota / a [STATE OF INCORPORATION] corporation with its principal place of business in [CITY, STATE]], and was so at all times material to this action.

2.2. Defendant [INSURER NAME] ("Insurer") is a [corporation / mutual insurance company] organized under the laws of [STATE], authorized to transact the business of insurance in North Dakota, and may be served through its registered agent [REGISTERED AGENT] at [ADDRESS], or through the North Dakota Insurance Commissioner under N.D.C.C. § 26.1-11-09 where applicable.

2.3. This Court has subject-matter jurisdiction over this action under the general civil jurisdiction conferred on the District Courts by N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. The amount in controversy exceeds the threshold for any limited-jurisdiction division.

2.4. Venue is proper in [COUNTY] County under N.D.C.C. ch. 28-04 because [the cause of action arose in this county / Defendant transacts business in this county / the insured property is located in this county / Plaintiff resides in this county and the action is on a contract performable in this county].

2.5. Defendant has sufficient continuous and systematic contacts with the State of North Dakota — including but not limited to issuing the Policy referenced below to a North Dakota resident, collecting premiums, and adjusting the claim through North Dakota personnel or vendors — to support both general and specific personal jurisdiction.

3. GENERAL ALLEGATIONS

3.1. North Dakota recognizes a common-law tort of bad faith against an insurer for the unreasonable handling of an insured's first-party claim. Corwin Chrysler-Plymouth, Inc. v. Westchester Fire Ins. Co., 279 N.W.2d 638 (N.D. 1979); Fetch v. Quam, 1999 ND 90, 593 N.W.2d 354; Hanson v. Cincinnati Life Ins. Co., 571 F. Supp. 2d 1075 (D.N.D. 2008).

3.2. The gravamen of the bad-faith inquiry is whether the insurer acted unreasonably in handling the insured's claim. Hanson, 571 F. Supp. 2d at 1079; Wallace v. Allstate Ins. Co., 2008 ND 173, 755 N.W.2d 884.

3.3. North Dakota's Unfair Claim Settlement Practices Act, N.D.C.C. § 26.1-04-03, defines a non-exhaustive set of prohibited claim-handling practices and is enforced administratively by the North Dakota Insurance Department. While § 26.1-04-03 does not create a private right of action, conduct violating its standards is competent evidence of bad faith.

4. THE POLICY AND THE LOSS

4.1. On or about [POLICY ISSUE DATE], Defendant issued to Plaintiff insurance policy number [POLICY NUMBER] (the "Policy") with effective dates [EFFECTIVE DATES] and the following relevant coverages and limits: [DESCRIBE COVERAGES — e.g., dwelling Coverage A $______; personal property Coverage C $______; loss-of-use Coverage D $______; UM/UIM $______; disability monthly indemnity $______].

4.2. Plaintiff paid all premiums when due and complied with all conditions precedent to coverage.

4.3. On or about [DATE OF LOSS], [DESCRIBE THE LOSS — e.g., a covered fire occurred at the insured premises located at [ADDRESS]; a covered automobile collision occurred at [LOCATION]; Plaintiff became disabled within the meaning of the Policy].

4.4. The loss is a covered cause of loss under the Policy and is not subject to any applicable exclusion.

4.5. Plaintiff timely reported the loss to Defendant on or about [NOTICE DATE], providing all information reasonably requested. Defendant assigned claim number [CLAIM NUMBER].

5. INSURER'S HANDLING AND DENIAL

5.1. Plaintiff submitted to Defendant [a sworn proof of loss / written notice of disability / supporting documentation] on [DATE]. [Describe documentation submitted.]

5.2. Despite the foregoing, Defendant engaged in the following claim-handling conduct, each of which was unreasonable and lacked any reasonable basis under the policy language and the facts known or knowable on reasonable investigation:

• [Failed to acknowledge the claim with reasonable promptness — N.D.C.C. § 26.1-04-03(2)];
• [Failed to adopt or follow reasonable standards for the prompt investigation of the claim — N.D.C.C. § 26.1-04-03(3)];
• [Did not attempt in good faith to effect a prompt, fair, and equitable settlement once liability became reasonably clear — N.D.C.C. § 26.1-04-03(6)];
• [Compelled Plaintiff to institute litigation to recover amounts due under the Policy by offering substantially less than the amounts ultimately recovered — N.D.C.C. § 26.1-04-03(7)];
• [Misrepresented pertinent facts or policy provisions — N.D.C.C. § 26.1-04-03(1)];
• [Failed to provide a prompt, reasonable explanation of the basis in the policy for denial — N.D.C.C. § 26.1-04-03(14)];
• [Other: ____________________________________].

5.3. Defendant denied the claim in whole or in part by letter dated [DENIAL DATE], asserting the following ground(s): [GROUND(S) STATED]. The stated ground(s) are unsupported by the policy language, by the evidence, and by any reasonable construction of either.

5.4. Defendant's denial and handling conduct were objectively unreasonable, and Defendant knew or recklessly disregarded the absence of a reasonable basis for its conduct.

5.5. [Where pattern evidence is available, plead it here: "On information and belief, the conduct described above is part of a general claim-handling practice by Defendant, evidenced by [prior NDID market-conduct findings / consent orders / regulatory complaints / similar litigation / internal claim-handling manuals or incentive structures / repeat conduct in the handling of Plaintiff's claim]."]

6. COUNT I — BREACH OF INSURANCE CONTRACT

6.1. Plaintiff realleges and incorporates by reference paragraphs 1.1 through 5.5.

6.2. The Policy is a valid and enforceable contract of insurance between Plaintiff and Defendant.

6.3. Plaintiff performed all material conditions precedent under the Policy or was excused from performance.

6.4. Defendant breached the Policy by [refusing to pay the policy benefits owed / underpaying the claim / failing to provide a defense or indemnity / improperly invoking an inapplicable exclusion].

6.5. Plaintiff has been damaged by the breach in an amount equal to the policy benefits owed plus consequential damages reasonably foreseeable at policy inception, together with prejudgment interest under N.D.C.C. § 32-03-04 and § 32-03-05.

7. COUNT II — COMMON-LAW BAD FAITH (TORTIOUS BREACH OF THE IMPLIED COVENANT OF GOOD FAITH AND FAIR DEALING)

7.1. Plaintiff realleges and incorporates by reference paragraphs 1.1 through 6.5.

7.2. Every contract of insurance in North Dakota carries an implied covenant of good faith and fair dealing. Corwin Chrysler-Plymouth, Inc. v. Westchester Fire Ins. Co., 279 N.W.2d 638 (N.D. 1979).

7.3. Defendant breached that covenant by handling the claim unreasonably, denying benefits without a reasonable basis, and either knowing of, or recklessly disregarding, the absence of any reasonable basis for its conduct, as set forth in paragraphs 5.1–5.5 above.

7.4. Defendant's bad-faith conduct is a tort independent of the breach of contract count. Fetch v. Quam, 1999 ND 90, 593 N.W.2d 354.

7.5. As a direct and proximate result of Defendant's bad faith, Plaintiff has suffered damages including, without limitation: (a) the unpaid policy benefits; (b) consequential economic loss caused by Defendant's delay or denial (e.g., [temporary housing, lost rental income, lost business income, foreclosure costs, financing costs, repair-cost escalation]); (c) attorney's fees and costs incurred to obtain policy benefits, recoverable as bad-faith damages where available; and (d) emotional distress and mental anguish where supported by the evidence.

8. COUNT III — DECLARATORY JUDGMENT

8.1. Plaintiff realleges and incorporates by reference paragraphs 1.1 through 7.5.

8.2. An actual, justiciable controversy exists between Plaintiff and Defendant concerning the rights, duties, and obligations of the parties under the Policy.

8.3. Pursuant to N.D.C.C. ch. 32-23 (Uniform Declaratory Judgments Act), Plaintiff seeks a declaration that:

• A. The loss described herein is a covered loss under the Policy;
• B. No exclusion bars coverage;
• C. Defendant is obligated to pay the policy benefits in accordance with the Policy terms; and
• D. [Other declaratory relief — e.g., the appraisal clause has been invoked, the proper measure of loss is replacement cost, etc.].

9. DAMAGES

9.1. Contract damages: The unpaid policy benefits in an amount to be proven at trial, currently estimated at $[AMOUNT], plus prejudgment interest at the statutory rate under N.D.C.C. § 32-03-04, § 32-03-05.

9.2. Bad-faith consequential damages: Foreseeable consequential losses caused by Defendant's unreasonable conduct, including without limitation [ITEMIZE], in an amount to be proven at trial.

9.3. Attorney's fees and litigation costs incurred to obtain policy benefits, where recoverable as bad-faith damages.

9.4. Emotional distress / mental anguish as supported by the evidence.

9.5. Costs of suit under N.D.C.C. § 28-26-06.

10. RESERVATION OF RIGHT TO SEEK EXEMPLARY DAMAGES UNDER N.D.C.C. § 32-03.2-11

10.1. Plaintiff EXPRESSLY RESERVES the right to seek exemplary (punitive) damages under N.D.C.C. § 32-03.2-11.

10.2. Plaintiff acknowledges that under N.D.C.C. § 32-03.2-11, a claim for exemplary damages may not be included in the original complaint and must instead be advanced by motion for leave to amend supported by one or more affidavits or deposition transcripts establishing a prima facie factual basis for the claim.

10.3. Plaintiff intends to make such a motion at an appropriate time after development of the factual record.

11. PRAYER FOR RELIEF

WHEREFORE, Plaintiff respectfully requests that the Court enter judgment in Plaintiff's favor and against Defendant as follows:

• A. Compensatory damages on Count I (Breach of Contract) in an amount to be proven at trial;
• B. Compensatory damages on Count II (Bad Faith), including consequential damages, attorney's fees as bad-faith damages, and emotional-distress damages as supported by the evidence;
• C. Declaratory relief on Count III as set forth above;
• D. Prejudgment interest at the statutory rate under N.D.C.C. § 32-03-04 and § 32-03-05;
• E. Post-judgment interest at the statutory rate;
• F. Costs of suit under N.D.C.C. § 28-26-06;
• G. Leave to amend to add a claim for exemplary damages under N.D.C.C. § 32-03.2-11 upon a prima facie showing; and
• H. Such other and further relief as the Court deems just and proper.

12. DEMAND FOR TRIAL BY JURY

Pursuant to N.D. R. Civ. P. 38, Plaintiff demands a trial by jury on all issues so triable.

13. SIGNATURE BLOCK

Dated: [DATE]

Respectfully submitted,

[LAW FIRM NAME]

By: [________________________________]

[ATTORNEY NAME], ND State Bar ID No. [####]

Counsel for Plaintiff

[STREET ADDRESS]

[CITY, ND ZIP]

Telephone: [NUMBER]

Email: [EMAIL]

14. VERIFICATION

STATE OF NORTH DAKOTA

COUNTY OF [______________]

I, [PLAINTIFF NAME], being first duly sworn, state that I am the Plaintiff in the foregoing action; that I have read the Complaint and know its contents; and that the matters stated in the Complaint are true to my own knowledge except those matters stated on information and belief, and as to those I believe them to be true.

[________________________________]

[PLAINTIFF NAME]

Subscribed and sworn to before me this [____] day of [_______________], 20[____].

[________________________________]

Notary Public

(My Commission Expires: [_______________])

15. CERTIFICATE OF SERVICE

I hereby certify that on [DATE], the foregoing COMPLAINT was served on Defendant in accordance with N.D. R. Civ. P. 4 by [method — e.g., personal service via [process server], certified mail return receipt requested, service through the North Dakota Insurance Commissioner under N.D.C.C. § 26.1-11-09], addressed as follows:

[SERVICE LIST WITH ADDRESSES]

[________________________________]

[ATTORNEY NAME]

16. NORTH DAKOTA PRACTICE NOTES

• Common-law bad-faith tort. North Dakota recognizes bad faith as an independent tort grounded in the implied covenant of good faith and fair dealing. Corwin Chrysler-Plymouth v. Westchester Fire Ins. Co., 279 N.W.2d 638 (N.D. 1979). The dispositive inquiry is whether the insurer acted unreasonably in handling the claim. Hanson v. Cincinnati Life Ins. Co., 571 F. Supp. 2d 1075 (D.N.D. 2008).
• No private right of action under N.D.C.C. § 26.1-04-03. The Unfair Claim Settlement Practices section is enforced by the Insurance Commissioner. Plead it as evidentiary support for the common-law bad-faith count, not as a stand-alone cause of action.
• Punitive damages under N.D.C.C. § 32-03.2-11. This is the single most important procedural rule for ND bad-faith litigators. Punitive damages MAY NOT be pleaded in the original complaint. The plaintiff must move for leave to amend with a supporting affidavit or deposition transcript establishing a prima facie factual basis. The trial standard is clear and convincing evidence of "oppression, fraud, or actual malice." Cap is the greater of two times compensatory damages or $250,000.
• Statute of limitations. Six years for breach of an insurance contract under N.D.C.C. § 28-01-16(1). Bad-faith tort claims arising from the insurance relationship are typically subject to the six-year period because ND looks to the substance of the action.
• Service of process on insurers. N.D.C.C. § 26.1-11-09 designates the Insurance Commissioner as agent for service of process for foreign insurers. Service may also be made on the registered agent under N.D. R. Civ. P. 4.
• Parallel DOI complaint. Filing a complaint with the North Dakota Insurance Department (insurance.nd.gov/consumers/complaints) preserves a regulatory record and may produce evidence usable in litigation. The DOI does not adjudicate damages.
• Reasonable-basis defense. An insurer may defeat a bad-faith claim by demonstrating that there was a reasonable basis for its denial or delay even if the basis is ultimately rejected. Wallace v. Allstate Ins. Co., 2008 ND 173. Frame the complaint to negate any colorable reasonable basis.
• Liability vs. first-party. The common-law bad-faith tort applies clearly to first-party claims. Third parties generally lack standing to sue an insurer directly. Excess-judgment liability for failure to settle within limits is a distinct doctrine and should be pleaded with care.

17. SOURCES AND REFERENCES

• N.D.C.C. ch. 26.1-04 (Prohibited Practices in the Insurance Business) — https://ndlegis.gov/cencode/t26-1c04.pdf
• N.D.C.C. § 32-03.2-11 (Exemplary damages) — https://codes.findlaw.com/nd/title-32-judicial-remedies/nd-cent-code-sect-32-03-2-11/
• N.D.C.C. § 28-01-16 (Statute of limitations) — https://ndlegis.gov/cencode/t28c01.pdf
• North Dakota Rules of Civil Procedure — https://www.ndcourts.gov/legal-resources/rules/ndrcivp
• North Dakota Insurance Department — https://www.insurance.nd.gov
• Consumer complaint form — https://www.insurance.nd.gov/consumers/complaints
• Corwin Chrysler-Plymouth, Inc. v. Westchester Fire Ins. Co., 279 N.W.2d 638 (N.D. 1979)
• Fetch v. Quam, 1999 ND 90, 593 N.W.2d 354
• Hanson v. Cincinnati Life Ins. Co., 571 F. Supp. 2d 1075 (D.N.D. 2008)
• Wallace v. Allstate Ins. Co., 2008 ND 173, 755 N.W.2d 884
• Olander v. State Farm Mut. Auto. Ins. Co., 317 F.3d 807 (8th Cir. 2003)
• Seifert v. Farmers Union Mut. Ins. Co., 497 N.W.2d 694 (N.D. 1993)

Disclaimer: This template is provided for informational purposes only and does not constitute legal advice. A North Dakota-licensed attorney must review and customize this document before filing. Laws, citations, and court rules change frequently; verify all authorities before use.