South Dakota Bad Faith Insurance Complaint (Civil Action)

COMPLAINT FOR BREACH OF INSURANCE CONTRACT, COMMON-LAW BAD FAITH, AND STATUTORY VEXATIOUS-REFUSAL ATTORNEY FEES — SOUTH DAKOTA

TABLE OF CONTENTS

1. Caption
2. Parties, Jurisdiction, and Venue
3. General Allegations
4. The Insurer's Conduct
5. Count I — Breach of Insurance Contract
6. Count II — Common-Law Bad Faith (Champion)
7. Count III — Statutory Attorney Fees under SDCL § 58-12-3
8. Count IV — Exemplary (Punitive) Damages under SDCL § 21-3-2
9. Damages
10. Prayer for Relief
11. Demand for Trial by Jury
12. Signature Block
13. Verification
14. Certificate of Service
15. South Dakota Practice Notes
16. Sources and References

1. CAPTION

STATE OF SOUTH DAKOTA

IN CIRCUIT COURT

[________________________________] JUDICIAL CIRCUIT

COUNTY OF [________________________________]

CIV. NO. [________________________________]

COMPLAINT FOR BREACH OF CONTRACT, BAD FAITH, STATUTORY ATTORNEY FEES, AND EXEMPLARY DAMAGES

(Jury Trial Demanded)

COMES NOW Plaintiff [PLAINTIFF NAME], by and through undersigned counsel, and for cause of action against Defendant [INSURER NAME], alleges and states as follows:

2. PARTIES, JURISDICTION, AND VENUE

1. Plaintiff [PLAINTIFF NAME] is, and at all relevant times was, a resident and citizen of [COUNTY] County, South Dakota.

2. Defendant [INSURER NAME] is a [STATE OF INCORPORATION] corporation authorized to transact insurance business in the State of South Dakota, with its principal office at [ADDRESS]. Defendant may be served with process through its registered agent for service in South Dakota: [REGISTERED AGENT NAME AND ADDRESS], or alternatively through the South Dakota Director of Insurance pursuant to SDCL § 58-6-39.

3. This Court has subject-matter jurisdiction pursuant to S.D. Const. art. V, § 5 and SDCL § 16-6-9. The amount in controversy exceeds the jurisdictional minimum.

4. Venue is proper in [COUNTY] County under SDCL § 15-5-1 and § 15-5-6 because Plaintiff resides in this County, the insured loss occurred in this County, and/or Defendant transacts business in this County.

5. All conditions precedent to recovery under the Policy have been performed, satisfied, or waived.

3. GENERAL ALLEGATIONS

A. The Insurance Policy

6. On or about [__/__/____], Defendant issued Policy No. [POLICY NUMBER] (the "Policy") to Plaintiff, providing [TYPE OF COVERAGE — e.g., homeowners, commercial property, automobile, UM/UIM, life, disability, health] coverage with limits of not less than $[POLICY LIMITS].

7. The Policy was in full force and effect at all times relevant to this action, and all premiums had been timely paid.

8. The Policy is a contract governed by South Dakota law and subject to the six-year statute of limitations of SDCL § 15-2-13.

B. The Covered Loss

9. On or about [__/__/____], Plaintiff suffered a loss covered by the Policy when [DESCRIBE LOSS EVENT IN DETAIL — date, location, cause, nature, and extent of damage or injury] (the "Loss").

10. The Loss is a covered peril or covered event under the insuring agreement of the Policy, and is not subject to any exclusion, limitation, or condition that bars or reduces coverage.

11. The amount of the covered Loss is not less than $[LOSS AMOUNT], exclusive of attorney fees, interest, costs, and exemplary damages.

C. Compliance with Policy Conditions

12. Plaintiff timely notified Defendant of the Loss on or about [__/__/____] and has fully cooperated with Defendant's investigation, including:

• Submitting a sworn Proof of Loss on [__/__/____];
• Providing photographs, repair estimates, medical records, receipts, and other documentation reasonably requested;
• Permitting inspection of the [property / vehicle / records];
• Submitting to an Examination Under Oath on [__/__/____] (if applicable);
• Producing all reasonably requested documents and records.

13. Plaintiff has performed every condition precedent to recovery under the Policy.

4. THE INSURER'S CONDUCT

14. On [__/__/____], Plaintiff (through counsel) sent Defendant a written demand for payment of the Loss (the "Demand"). A true and correct copy of the Demand is attached as Exhibit A.

15. Despite Plaintiff's complete performance, the absence of any reasonable basis for refusal, and the Demand, Defendant has [denied the claim outright / underpaid the claim / unreasonably delayed payment] by [describe specific conduct, dates, and stated grounds].

16. Defendant's stated reason(s) for denial [summarize grounds asserted in denial letter dated __/__/____] are pretextual, contrary to the Policy language, contrary to South Dakota law, and unsupported by any reasonable investigation.

17. Defendant's conduct includes, without limitation:

• Failing to acknowledge or act upon claim communications within thirty (30) days as required by SDCL § 58-33-67(1);
• Failing to adopt or adhere to reasonable standards for the prompt investigation of the Loss;
• Failing to conduct a reasonable investigation before denying coverage;
• Misrepresenting policy provisions and applicable South Dakota law;
• Demanding documentation already provided in order to manufacture delay;
• Offering to pay substantially less than the amount clearly owed;
• Failing to provide a reasonable explanation, based on the Policy and applicable law, for denial or compromise;
• Compelling Plaintiff to institute litigation to recover amounts due under the Policy by offering substantially less than the amounts ultimately recovered;
• [OTHER SPECIFIC ACTS].

18. Defendant had no reasonable basis for its refusal to pay, and Defendant knew, or recklessly disregarded the fact, that no reasonable basis existed.

19. Defendant's refusal to pay was vexatious and without reasonable cause within the meaning of SDCL § 58-12-3.

5. COUNT I — BREACH OF INSURANCE CONTRACT

20. Plaintiff realleges and incorporates Paragraphs 1 through 19 as if fully set forth herein.

21. The Policy is a valid, enforceable contract between Plaintiff and Defendant.

22. Plaintiff performed all obligations and conditions required of Plaintiff under the Policy.

23. Defendant materially breached the Policy by failing and refusing to pay the covered Loss in the amount of not less than $[LOSS AMOUNT].

24. As a direct and proximate result of Defendant's breach, Plaintiff has suffered damages in the amount of the unpaid policy benefits, plus consequential damages, pre-judgment interest under SDCL § 21-1-13.1 and § 54-3-16, and costs of suit.

6. COUNT II — COMMON-LAW BAD FAITH (CHAMPION)

25. Plaintiff realleges and incorporates Paragraphs 1 through 24 as if fully set forth herein.

26. Defendant owed Plaintiff an implied duty of good faith and fair dealing in the handling, investigation, evaluation, and payment of the claim arising from the Loss.

27. Pursuant to Champion v. United States Fidelity & Guaranty Co., 399 N.W.2d 320 (S.D. 1987), and its progeny, an insurer's breach of that duty constitutes the intentional tort of bad faith, separate and apart from breach of contract.

28. Defendant breached its duty of good faith and fair dealing by, inter alia:

• Denying or unreasonably delaying payment of policy benefits without a reasonable basis;
• Failing to conduct a fair, prompt, and thorough investigation;
• Asserting policy defenses Defendant knew or should have known were inapplicable;
• Engaging in conduct described in SDCL § 58-33-67 (admissible as evidence of bad faith though not independently actionable);
• Placing its own pecuniary interests above those of its insured;
• [OTHER SPECIFIC ACTS].

29. Defendant acted with knowledge that no reasonable basis existed for its refusal to pay or, in the alternative, with reckless disregard of the absence of any such reasonable basis. Walz v. Fireman's Fund Ins. Co., 1996 S.D. 135, 556 N.W.2d 68; Phen v. Progressive N. Ins. Co., 2003 S.D. 133, 672 N.W.2d 52.

30. As a direct and proximate result of Defendant's bad faith, Plaintiff has suffered damages including, but not limited to, the unpaid policy benefits, consequential economic loss, emotional distress, attorney fees and costs incurred in pursuing the policy benefits, and other damages to be proven at trial.

7. COUNT III — STATUTORY ATTORNEY FEES UNDER SDCL § 58-12-3

31. Plaintiff realleges and incorporates Paragraphs 1 through 30 as if fully set forth herein.

32. SDCL § 58-12-3 provides that in any action against an insurance company on a policy of insurance, if the company has refused to pay the full amount of the loss, and the refusal is "vexatious or without reasonable cause," the court shall allow the plaintiff a reasonable sum as attorney fees, in addition to the amount of the loss.

33. Defendant has refused to pay the full amount of the Loss owed under the Policy.

34. Defendant's refusal is vexatious and/or without reasonable cause, in that [summary of facts establishing the refusal lacks any colorable defense, e.g., the asserted exclusion is facially inapplicable; the investigation was a pretext; the denial contradicts the insurer's own field adjuster's report].

35. Plaintiff is therefore entitled to recover, in addition to the unpaid policy benefits, all reasonable attorney fees incurred in the prosecution of this action, to be determined by the Court following a separate hearing pursuant to SDCL § 58-12-3.1.

8. COUNT IV — EXEMPLARY (PUNITIVE) DAMAGES UNDER SDCL § 21-3-2

36. Plaintiff realleges and incorporates Paragraphs 1 through 35 as if fully set forth herein.

37. Pursuant to SDCL § 21-3-2, exemplary damages are recoverable when, in any action for breach of an obligation not arising from contract where the defendant has been guilty of oppression, fraud, or malice, actual or presumed, the jury, in addition to actual damages, may give damages for the sake of example.

38. Defendant's bad-faith conduct, as alleged above, was willful, wanton, and malicious, was committed with conscious disregard of Plaintiff's rights, and constitutes oppression, fraud, or malice within the meaning of SDCL § 21-3-2.

39. Plaintiff anticipates a hearing pursuant to SDCL § 21-1-4.1 and, at that hearing, will present clear and convincing evidence of a reasonable basis to believe Defendant engaged in willful, wanton, or malicious conduct sufficient to permit discovery and submission of this Count to the trier of fact.

40. An award of exemplary damages is necessary to punish Defendant and to deter Defendant and other insurers from engaging in similar conduct.

9. DAMAGES

41. As a direct and proximate result of Defendant's conduct, Plaintiff has been damaged in amounts to be proven at trial, including:

• Contract damages (unpaid policy benefits): $[AMOUNT];
• Consequential damages flowing from the breach and bad-faith handling, including loss of use, additional out-of-pocket expenses, business interruption, and finance charges or interest paid on borrowed funds: $[AMOUNT];
• Emotional distress and mental anguish flowing from the bad-faith tort: $[AMOUNT];
• Reasonable attorney fees under SDCL § 58-12-3: in an amount to be determined by the Court;
• Exemplary (punitive) damages under SDCL § 21-3-2;
• Pre-judgment interest under SDCL § 21-1-13.1 and § 54-3-16;
• Post-judgment interest at the statutory rate;
• Costs of suit under SDCL § 15-17-37 and applicable rules.

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, for compensatory damages equal to the unpaid policy benefits in an amount not less than $[AMOUNT], plus consequential damages;
• B. On Count II, for compensatory damages flowing from Defendant's common-law bad faith, including emotional distress and consequential economic loss;
• C. On Count III, for an award of reasonable attorney fees under SDCL § 58-12-3 to be determined by the Court at a separate hearing pursuant to SDCL § 58-12-3.1;
• D. On Count IV, for exemplary (punitive) damages under SDCL § 21-3-2 in an amount sufficient to punish Defendant and deter similar conduct, subject to a hearing under SDCL § 21-1-4.1;
• E. For pre-judgment and post-judgment interest as allowed by South Dakota law;
• F. For the costs and disbursements of this action;
• 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 a matter of right pursuant to SDCL § 15-6-38 and S.D. Const. art. VI, § 6.

12. SIGNATURE BLOCK

Dated this [____] day of [_______________], 20[____].

[LAW FIRM NAME]

By: [________________________________]

[ATTORNEY NAME]

South Dakota Bar No. [________]

Attorney for Plaintiff

[STREET ADDRESS]

[CITY, SD ZIP]

Telephone: [NUMBER]

Email: [EMAIL]

13. VERIFICATION

STATE OF SOUTH DAKOTA

COUNTY OF [________________________________]

I, [PLAINTIFF NAME], having been first duly sworn upon oath, depose and state that I am the Plaintiff in the foregoing Complaint, that I have read the same, and that the facts stated therein are true and correct to the best of my knowledge, information, and belief.

[________________________________]

[PLAINTIFF NAME]

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

[________________________________]

Notary Public, State of South Dakota

(My Commission Expires: [_______________])

14. CERTIFICATE OF SERVICE

I hereby certify that on the [____] day of [_______________], 20[____], a true and correct copy of the foregoing COMPLAINT was served upon Defendant by service of the Summons and Complaint pursuant to SDCL § 15-6-4 through its registered agent for service of process, addressed as follows:

[REGISTERED AGENT NAME AND ADDRESS]

[________________________________]

[ATTORNEY NAME], South Dakota Bar No. [________]

15. SOUTH DAKOTA PRACTICE NOTES

• Dual-track remedy. South Dakota recognizes both a common-law tort of first-party bad faith (Champion v. United States Fidelity & Guaranty Co., 399 N.W.2d 320 (S.D. 1987)) and a statutory attorney-fee remedy for vexatious or unreasonable refusal to pay (SDCL § 58-12-3). They are complementary and routinely pled together. Champion extended the Kunkel third-party rule to first-party claims.
• Bad-faith standard. The two-prong test from Walz and Phen: (i) absence of a reasonable basis for denial or non-performance, AND (ii) the insurer's knowledge or reckless disregard of the lack of a reasonable basis. Bad faith is an intentional tort requiring conscious wrongdoing.
• No private right of action under § 58-33. The Unfair Trade Practices Act (SDCL § 58-33-66 to § 58-33-69) is enforced administratively by the Director of the South Dakota Division of Insurance only. Conduct described in § 58-33-67 (e.g., the 30-day acknowledgment requirement) is admissible as evidence of bad faith but does NOT create a separate cause of action.
• Punitive-damage gateway — § 21-1-4.1. Before any discovery on punitive damages, and before the jury may consider them, the court must hold a hearing and find by clear and convincing evidence a reasonable basis to believe the defendant engaged in willful, wanton, or malicious conduct. Plead the count, then file the § 21-1-4.1 motion supported by a fact record (claim file, expert affidavit, deposition excerpts of insured-side custodians).
• Vexatious-refusal fees — § 58-12-3. Awarded by the court (not the jury) at a separate hearing under § 58-12-3.1. The standard — "vexatious or without reasonable cause" — is somewhat lower than the common-law bad-faith standard, so § 58-12-3 fees may be available even where the bad-faith tort fails. Maintain segmented time records.
• Statute of limitations. Six years on the contract under SDCL § 15-2-13. The bad-faith tort follows tort accrual; courts have applied the three-year tort limitations period under SDCL § 15-2-14, but accrual analysis is fact-specific. File well within the contract period.
• Service on insurer. A foreign or domestic insurer authorized in South Dakota may be served through its registered agent or through the Director of the Division of Insurance under SDCL § 58-6-39.
• Pre-judgment interest. SDCL § 21-1-13.1 authorizes pre-judgment interest on liquidated or readily ascertainable damages at the Category D rate set under SDCL § 54-3-16 (currently 10% per annum).
• Damages on the bad-faith count. Recoverable damages include the policy benefits (when not separately recovered on contract), consequential economic loss, emotional distress, and attorney fees incurred in pursuing the policy benefits as a separate element of bad-faith damages (the so-called "Brandt fees" — adopted in concept though not under that name in SD).
• ERISA preemption alert. If the policy is an employee-welfare benefit plan governed by ERISA (29 U.S.C. § 1001 et seq.), state-law bad-faith and § 58-12-3 claims are generally preempted under Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41 (1987). Confirm plan status and convert to a § 502(a) civil enforcement action in federal court if applicable.
• DOI complaint as adjunct. A consumer complaint to the South Dakota Division of Insurance (124 S. Euclid Ave., 2nd Floor, Pierre, SD 57501; (605) 773-3563) generates a 20-day insurer response window and creates a useful evidentiary record. It is not a prerequisite to suit and is not a substitute for civil litigation.
• Removal exposure. Diversity jurisdiction is common in bad-faith cases. If the insured loss exceeds $75,000 and the insurer is a non-South Dakota citizen, expect removal to the U.S. District Court for the District of South Dakota.

16. SOURCES AND REFERENCES

• SDCL § 58-12-3 — Attorney fees for vexatious refusal to pay — https://sdlegislature.gov/Statutes/58-12-3
• SDCL § 58-12-3.1 — Procedure for separate fee hearing — https://sdlegislature.gov/Statutes/58-12
• SDCL § 58-33-67 — Unfair or deceptive practices in dealing with insured — https://sdlegislature.gov/Statutes/58-33-67
• SDCL § 58-33-69 — No private cause of action — https://sdlegislature.gov/Statutes/58-33
• SDCL § 21-1-4.1 — Pre-discovery hearing for exemplary damages — https://sdlegislature.gov/Statutes/21-1-4.1
• SDCL § 21-3-2 — Exemplary damages — https://sdlegislature.gov/Statutes/21-3-2
• SDCL § 15-2-13 — Six-year statute of limitations on contract — https://sdlegislature.gov/Statutes/15-2-13
• Champion v. United States Fidelity & Guaranty Co., 399 N.W.2d 320 (S.D. 1987) — recognizing first-party bad-faith tort — https://www.courtlistener.com/opinion/7926219/champion-v-united-states-fidelity-guaranty-co/
• Kunkel v. United Security Ins. Co., 168 N.W.2d 723 (S.D. 1969) — third-party bad faith
• Walz v. Fireman's Fund Ins. Co., 1996 S.D. 135, 556 N.W.2d 68 — bad-faith elements
• Phen v. Progressive N. Ins. Co., 2003 S.D. 133, 672 N.W.2d 52 — reasonable-basis test
• Isaac v. State Farm Mut. Auto. Ins. Co., 522 N.W.2d 752 (S.D. 1994) — UM/UIM bad faith
• Julson v. Federated Mut. Ins. Co., 562 N.W.2d 117 (S.D. 1997) — intentional-tort framework
• Flockhart v. Wyant, 467 N.W.2d 473 (S.D. 1991) — § 21-1-4.1 procedure
• South Dakota Division of Insurance — https://dlr.sd.gov/insurance/
• South Dakota Division of Insurance Complaint Process — https://dlr.sd.gov/insurance/doi_complaint.aspx
• South Dakota Codified Laws (full text) — https://sdlegislature.gov/Statutes
• South Dakota Rules of Civil Procedure (Title 15, Chapter 6) — https://sdlegislature.gov/Statutes/15-6

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