The South Dakota Supreme Court once again reaffirmed that an insured can sue their insurance company for bad faith in handling a claim in a case we brought before the Court (Brooks v. Milbank Insurance Company, 2000 S.D. 16, 605 N.W.2d 173). After the Court’s decision, and prior to a second trial, the matter was settled. Details of the first trial decision can be found below.
In Brooks v. Milbank Insurance Company, a rental house owned by our client was destroyed by fire. The insurance company refused to pay the loss, claiming our client conspired to have the house set on fire. The only evidence inculpating our client stemmed from a recorded “interview” of one of the tenants conducted by an investigator hired by Milbank Insurance. During this “interview” the tenant was threatened with prosecution and was told “If I find out the truth, you get to go home.” The tenant later testified he didn’t light the fire, nor was he hired by our client to do so, and only confessed because he was threatened and thought he was going to jail.
After a five-day trial, a Roberts County jury found in favor of our client and determined the value of the house at $15,000. The Court then awarded attorney’s fees under SDCL 58-12-3 in the amount of $77,287.50 because it found the insurance company acted vexatiously and without reasonable basis. We appealed a prior dismissal of the bad faith action against the insurance company. The Supreme Court reinstated the bad faith claim in a February 2000 decision. The Court also sent the attorney’s fee award back to the Trial Court for review on a procedural issue. On remand, the attorney’s fees were again awarded, this time in the amount of $75,437.50.