Tovares v. Gallagher Bassett Services, Inc. et al

Filing 130

ORDER denying 114 Motion for Summary Judgment. Signed by U.S. District Judge Jeffrey L. Viken on 5/6/20. (SB)

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UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
CIV. 16-5051-JLV

ANNIE TOVARES,
Plaintiff,

ORDER

vs.
GALLAGHER BASSETT SERVICES,
INC., AND PRAETORIAN INSURANCE
COMPANY,
Defendants.
INTRODUCTION

Plaintiff Annie Tovares filed an action against the defendants Gallagher
Bassett Services, Inc., and Praetorian Insurance Company alleging bad faith
and misrepresentation in violation of South Dakota law.1

(Docket 1).

Defendants filed separate amended answers to plaintiff’s complaint. (Dockets
85 & 86). Defendants filed a second motion for summary judgment, together
with a brief, two affidavits with six exhibits and defendants’ statement of
undisputed material facts. (Dockets 114, 115, 116, 116-1 through 116-4,
117, 117-1 through 117-2 & 118).

Plaintiff filed a responsive brief, together

with an affidavit with five exhibits, plaintiff’s response to defendants’ statement
of undisputed facts and plaintiff’s statement of material facts for which there is

1As

a result of defendants’ first motion for summary judgment, the court
dismissed plaintiff’s bad faith claim. (Docket 87at pp. 25 & 36).

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an issue to be tried. (Dockets 121, 122, 122-1 through 122-5, 123 & 125).
Defendants filed a reply brief, together with defendants’ response to plaintiff’s
statement of material facts and objections to exhibits in support of their motion
for summary judgment. (Dockets 128 & 129).
For the reasons stated below, defendants’ second motion for summary
judgment is denied.
STANDARD OF REVIEW
In the order resolving defendant’s first motion for summary judgment,
the court laid out in detail the standard of review for resolving a motion for
summary judgment. (Docket 87 at pp. 2-4). That standard of review is
incorporated by reference and will not be restated in this order.
UNDISPUTED MATERIAL FACTS
The following recitation consists of the material facts developed from the
complaint (Docket 1), defendants’ amended answers (Dockets 85 & 86),2 the
parties’ statements of undisputed material facts (Dockets 118, 123, 125 & 128)
and other evidence where indicated.3 Where a statement of fact is admitted by
the opposing party, the court will only reference the initiating document.

2Because

the admissions in each answer are identical, the court will only
reference the answer of Defendant Gallagher Bassett Services, Inc., unless
otherwise indicated. (Docket 85).
3The

court references the parties’ submissions without quotation marks,
unless indicated.
2

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These facts are “viewed in the light most favorable to the [party] opposing the
motion.” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986). The facts material to defendant’s second motion for summary
judgment are as follows.4
Plaintiff Annie Tovares works at Menards in Rapid City, South Dakota.
On Wednesday, March 19, 2014, she fell at work.

One of Menards’

surveillance cameras recorded her fall.5 Ms. Tovares did not hit her head, but
she immediately felt dazed, disoriented and like her brain got jarred.

Ms.

Tovares told someone at work that she had fallen. (Docket 117-1 at p. 10:2122).6
On March 19, 2014, a Menard’s employee notified Gallagher Bassett
Services, Inc. (“GBS”) of Ms. Tovares’ fall and possible injuries.7

(Docket 116-2

4Many

of the undisputed material facts were included in the court’s order
on defendants’ first motion for summary judgment. (Docket 87 at pp. 4-14).
For clarity, many of those undisputed facts will be incorporated into this order
without reference to the record from which the facts were developed. Facts
developed after the previous order will include a reference to the recently
developed record.
5See

Docket 47-6 (DVD in Clerk of Court file).

6The

court cites to the page of the transcript in CM/ECF as opposed to
the page of the transcript because the parties submitted different sections of
the transcript.
7Defendant

Praetorian Insurance Company (“Praetorian”) issued a policy
of worker’s compensation insurance to Ms. Tovares’ employer, Menards, Inc.
GBS is the claim administrator which handled Ms. Tovares’ claim for
Praetorian. See Dockets 1 ¶ 38, 116 ¶ 2, 116-1 & 122-3.
3

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at pp. 1-3).

Christina Manwaring was the adjustor assigned by GBS to handle

Ms. Tovares’ worker’s compensation claim.8
The following Tuesday, Ms. Tovares had a bloody nose at work and that
night she had blurry vision and a sharp ringing in her ears.

At work the

following morning the lights hurt Ms. Tovares’ eyes and head. She felt dizzy
and was worried something serious happened because of her fall. She spoke
to her supervisor and went to the emergency room at the Rapid City Regional
Hospital in Rapid City, South Dakota. After visiting the ER, Ms. Tovares went
to see her ophthalmologist at Wright Vision Center. As instructed by the ER
physician, Ms. Tovares took a couple of days off work.
Ms. Tovares’ bill for the hospital services, CT scan and ER activities
totaled $2,513.

The bill from Wright Vision Clinic was $185.

Radiology billed Ms. Tovares $165.

Dakota

She did not receive copies of the bills for

these services until August 2014. (Docket 117-1 at p. 13:11-14).
On March 26, 2014, after speaking with a Menard’s employee, Ms.
Manwaring noted “[e]mployee was sent to Rapid City Regional Hosp ER. . . .
Rapid City Regional did a CT Scan today.” (Docket 116-2 at p. 3).

Ms.

When used in the individual tense the phrase will be “worker’s
compensation” and in the group tense “workers’ compensation,” unless in a
quotation.
8

4

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Manwaring’s notes of her telephone contact with Ms. Tovares on March 31,
2014, contain plaintiff’s description of her incident at Menards:9
She ws done, pulling a box off the cart, next she new she was on the
floor. She’s not sure how it happened. Thinks L. foot slipped, hit
L. hip, L. underarm struck the box she was handling, and it was
scraped and bruised. Initially she was in so much pain she
couldn’t believe it. The impact of her body hitting the concrete,
maybe the weight of the box made her fall even harder. She did not
strike her head, however once she stood up, he whole body was
vibrating. She knows she jarred her brain. She just stood there
to try and re-gain her “marbles” says she was in shock. Once the
pain subsided, she felt fine. She didn’t have any broken bones.
Physically she feels fine. A week later, she began experiencing
lightheadedness and dizziness. Equilibrium was off. Numerous
time of ringing in her head. Went to doctor on 3/26, and doctor
asked which ear was ringing, she couldn’t tell. Vision is slightly
blurry and pain in her head. She’s been better the last few days.
Went to ER on 3/26/2013 b/c that morning when she went to work
the bright lights in the building hurt her head and eyes. While she
was at ER, the did a CT scan. They said everything was negative.
But she was highly disappointed in the hospital staff. Never asked
to see her bruises, no x-rays of her body were done. She felt like
they didn’t believe what happened to her. Up until that day, she
had had a sharp ringing in her head, then went away. That night
she had some minor ringing in head, so she knows she jarred her
brain and she knows that can cause problems down the road. She
had a minor cold about a month ago. Does not suffer from
allergies/sinus issues. She did receive a call the next day to see
how she was feeling. FU with optimologist [sic] on 3/26/2014 and
told her everything looked fine. She was concerned about the lens
being dislodged.
(Docket 67-2 at p. 10; see also Docket 116-2 at p. 4).

9All

notes, correspondence and medical records are reported verbatim
without correction or clarification.
5

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March 26, 2014, ER records obtained by GBS contain the following
history of Ms. Tovares present illness:
Patient is a 64-year-old female who presents with blurred vision.
She states that a week ago she fell and landed on her left hip and
left elbow. She denies shooting [sic] her head at that time. Over
the past week since the fall she has had intermittent blurred vision
and ringing in her years. She has also had an intermittent sharp
headache but has not required medication as the heading duration
he was very brief. She denies numbness, tingling, or weakness.
No vertigo or lightheadedness. She denies pain otherwise. A
month ago she saw ophthalmology and they stented her left tear
duct for dry eye.
(Docket 67-2 at p. 57).

A CT scan of Ms. Tovares’ head reported “[v]entricles

and sulci are normal. There is no intracranial hemorrhage or mass. No bony
abnormality identified.”
“[n]ormal CT head.”
she declined.

(Docket 67-2 at p. 58). The CT report concluded

Id. ER physician charted “I offered to obtain an MRI but

The most likely cause of her symptoms is that they are related

to a head injury.

She is comfortable with discharge and will follow up with her

primary physician.”

(Docket 67-2 at p. 59).

An instruction sheet given to Ms.

Tovares at discharge from the ER contained the following caution:
You have had a head injury which does not appear serious at this
time. A concussion is a state of changed mental ability, usually
from a blow to the head. You should take clear liquids for the rest
of the day and then resume your regular diet. You should not take
sedatives or alcoholic beverages for 48 hours after discharge. After
injuries such as yours, most problems occur within the first 24
hours.

6

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Id. at p. 45 (emphasis in original).

The “minor symptoms” which may occur

included “dizziness,” “headaches” and “double vision.”

Id. (capitalization

omitted).
GBS’s claim file noted on April 1, 2014, Ms. Tovares was seen at Wright
Vision Center on March 26, 2014.
4).

(Docket 116-2 at p. 5; see also Docket 116-

Wright Vision Center listed her medications as: “acyclovir, 400 mg tablet,

Dexilant 30 mg, delayed release, Pred Forte 1% Eye Drops[.]” (Dockets 67-2 at
p. 49 and 118 ¶ 16).
On April 8, 2014, Ms. Manwaring noted the insurance in this case was
Praetorian’s workers’ compensation policy for the period November 1, 2013, to
November 1, 2014.10

(Docket 116-2 at p. 5).

The same day, Ms. Manwaring

noted in the claim file that “[c]ompensability is undetermined. Claimant has
indicated she did not hit her head in her fall, however she presented to ER with
concussive symptoms one week later. Full medical records have been
requested, but not yet received.”

Id. at p. 6.

10See

also Dockets 108-1 & 122-4. While defendants oppose plaintiff’s
use of page 3 of Docket 122-4, defendants produced the same three pages as
part of their supplemental response to plaintiff’s motion to compel. See
Docket 108-1. Defendants inferentially raise a claim that Praetorian is not the
proper defendant because “QBE had purchased Praetorian.” (Docket 129 at
p. 10) (referencing Docket 116-2 at p. 5). That claim is inconsistent with
defense counsel’s representation in her declaration producing the three pages
of the insurance policy. (Docket 108). There is no reference to QBE in the
declaration or insurance policy. Defendants’ inferential claim will not be
considered.
7

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On April 10, 2014, Ms. Manwaring noted in the claim file that the
“[r]eserves are appropriate for probable ultimate cost. No changes are
warranted at this time. Claimant has not lost anytime from work and medical
reserves reflect conservative care.”

Id. at p. 7.

Regarding resolution and

closure of the claim file, Ms. Manwaring noted “[o]nce claimant is placed at
MMI [maximum medical improvement], file can be prepared for closure as no
permanency is anticipated. File closure may be viable within 90 days if
claimant reaches MMI in the near future.”

Id.

Her recommendations for

management of the claim file included the following:
1.

Build rapport with claimant to avoid litigation.

2.

Obtain updated medical reports and outline recommended
treatment plan in the file. Push for eventual MMI release.

3.

Document completion and submission of all state forms and
filings.

4.

Complete initial investigation and document compensability
decision in the file notes in 010 note.

5.

Complete updated POA no later than 5/6/14.

Id.
On April 21, 2014, Ms. Manwaring received a copy of the Regional
Hospital ER records, including the CT report. (Docket 67-2 at pp. 54-62; see
also Dockets 116-2 at p. 8 & 118 ¶ 9).

On April 23, 2014, Ms. Manwaring

sought permission to deny Ms. Tovares’ claim. In that request, she stated:
Left side contusions. The location indicted claimant had significant
bruising on her left side, however she did not strike her head.
8

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Claimant presented to the ER one week later complaining of double
vision and indicated she felt she had a head injury from her fall.
The claimant maintains she did NOT hit her head when she fell.
The ER notes indicate her complaints are likely from a head injury.
Claimant was referred to eye doctor for FU due to blurred vision.
These notes have also been received and indicate the claimant had
had her tear ducts stinted one month prior as well as previous
cataract surgery.
There were no issued found.
Requesting
authority to deny file based on claimant’s treatment appearing to
have no relation to her work incident.
(Docket 116-2 at p. 9) (capitalization in original).

Ms. Manwaring’s supervisor,

Angela Smith, agreed. “Reviewed the file with adjuster and agree with
recommendation for denial due to the head complaints not being related to her
work incident. . . . The ER notes indicate her complaints are likely from a head
injury. . . . Review and approval of the denial sent to ABM [Assistant Branch
Manager], Dorothy Stolle this date.”

Id. at p. 10.

On April 29, 2014, Ms.

Stolle authorized closing the file. “Agree with denial of file at this time as
medical diagnosis does not relate to work injury.”

Id. at pp. 10-11.

On April 30, 2014, Ms. Manwaring sent Ms. Tovares a letter on GBS
letterhead.

(Docket 116-1). The letter stated:

Gallagher Bassett Services is the Workers’ Compensation
Administrator for the above captioned client. We are in receipt of
your claim for Workers’ Compensation benefits due to an alleged
injury from an alleged accident on or about 3/19/2014.
We have investigated this claim and found no evidence to support
your claim for benefits under South Dakota Workers’ Compensation
provisions.
We must, therefore, accordingly deny your claim.
Please call this office if you have any questions.
Id.
9

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When Ms. Tovares read the letter from GBS she “was highly upset,
especially after I looked in the dictionary and found out the definitions,
because I felt highly insulted. I felt like my integrity was being hurt by those
words because basically I was being called a liar.

I did not lie about this

situation.” (Docket 117-1 at p. 14:4-10). She testified:
In my mind a false statement is that they investigated my claim and
found no evidence to support my claim. . . . I believe that that is a
false statement. If they actually did their job and if they actually
watched the video, if they actually read my medical records, then
how could they claim that they investigated and found no evidence
to support my claim?
(Docket 122-1 at pp. 16:19-17:1). Ms. Tovares understood she was not going
to have any financial benefit from the worker’s compensation policy for her onthe-job injuries.

Id. at p. 21:7-18.

Ms. Tovares believed from this letter that

workers’ compensation was not going to pay her medical bills. (Docket 117-1
at p. 12:15-22).
On May 6, 2014, Ms. Manwaring received and reviewed the video
surveillance of Ms. Tovares’ fall. (Docket 116-2 at p. 11). She noted in the
claim file “[t]he claimant tripped over the bottom shelf and fell on her rear,
hitting the shelf with her arm. She did not strike her head.”

Id. Ms.

Manwaring again noted for the file, “[a]s the claimant did not strike her head in
her fall, and no evidence of a concussion was notated, the file has been
denied.” Id. at p. 12.

10

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In August 2014, Ms. Tovares received the March ER and CT bill.
(Dockets 118 ¶ 31 & 117-1 at p. 13:11-14). Ms. Tovares borrowed money to
pay the medical bills by taking out a loan on her credit card. (Docket 122-1 at
pp. 6:25-7:1). In addition to borrowing money, Ms. Tovares had to pay a cash
advance fee of more than $100 but less than $200. (Docket 117-1 at
p. 13:1-6).
While there were communications between Ms. Manwaring and Ms.
Tovares’ attorney, Michael Simpson, beginning in May 2014, on October 20,
2014, Attorney Simpson filed a petition for hearing with the South Dakota
Department of Labor and Regulation, Division of Labor and Management,
Workers’ Compensation on Ms. Tovares’ behalf.

On November 12, 2014,

Praetorian filed an answer admitting Ms. Tovares fell on March 19, 2014, and
that she sought medical attention on March 26, 2014.
Following a series of negotiations between Attorney Simpson and
Attorney Daniel Ashmore representing Praetorian, on March 9, 2015, Attorney
Ashmore tendered a check for $3,225.12 to Attorney Simpson.

On March 12,

2015, Attorney Simpson mailed an executed notice of dismissal with prejudice
to the South Dakota Department of Labor and Regulation, Division of Labor
and Management.

There are no unpaid medical benefits owed to Ms. Tovares

under the South Dakota Workers’ Compensation Act.
No one from either GBS or Praetorian provided Ms. Tovares with a copy
of the workers’ compensation insurance policy or told her the terms of
11

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coverage.

(Docket 117-1 at pp. 15:11-14 & 17-24 & 16:22-15). Ms. Tovares

never personally asked for a copy of the policy.

Id. at p. 15:15-16.

The Menard’s insurance policy with Praetorian contained the following
endorsement:
SOUTH DAKOTA MANAGED CARE ENDORSEMENT
This endorsement applies only to the insurance provided by the
policy because South Dakota is shown in Item 3.A. of the
Information Page [Docket 122-4 at p. 1].
This endorsement provides for the payment of benefits under the
workers compensation law of South Dakota to provide medical
services and health care to injured workers for compensable injuries
and diseases by means of a managed care program which meets the
requirements established by the Department of Labor.
(Docket 122-4 at p. 2).
ANALYSIS
Plaintiff’s complaint alleges one surviving cause of action against the
defendants, that is, count II, misrepresentation. (Docket 1 at pp. 6-7).

In

addition to compensatory damages and attorney’s fees, the complaint seeks
punitive damages.

Id. at p. 8.

Defendants’ second motion for summary judgment asserts count II must
be dismissed because “[t]he evidence . . . establishes, as a matter of law, that
no valid misrepresentation cause of action exists under SDCL § 58-33-5.”
(Docket 115 at p. 1). They assert Ms. Tovares’ “[c]omplaint solely relies on the
April 30, 2014 letter as the basis for the misrepresentation claim. . . . This

12

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letter is the only conduct that can form the basis of Plaintiff’s claim.”11
p. 4 (referencing Docket 1 ¶¶ 51-58).

Id. at

Defendants argue “this Court may grant

summary judgment for Defendants because reasonable minds cannot differ as
to whether the April 30, 2014 denial letter is actionable under SDCL § 58-335.”

Id. at p. 3.
Referring to the statutory language, defendants argue “[t]he only

conceivable ground of recovery under SDCL § 58-33-5 would be for
misrepresentation of the terms of the insurance policy.

The statute pertains to

making a false statement regarding the actual policy, not about facts of a
claim.”

Id. at p. 5. Defendants submit “[t]he use of the word ‘alleged’ in the

denial letter is an accurate use of Plaintiff’s allegations and the use of the word
‘alleged’ cannot support a finding of liability under SDCL § 58-33-5.”

Id. at

p. 9. “[N]o reasonable mind could find that use of the word ‘alleged’ in the
April 2014 letter was inappropriate,” according to the defendants because
“South Dakota law expressly provides that a claimant seeking workers’
compensation benefits must prove through medical evidence that an injury and
subsequent treatment are insured benefits.”

Id.

Defendants argue the letter

“applied the evidentiary burden prescribed by the South Dakota workers’

11Defendants

point out Ms. Tovares “has not developed any other basis
for her [misrepresentation] cause of action beyond the alleged statements in
this April 2014 letter, nor has she sought to amend her pleading to add any
other ground during the four years that this lawsuit has been pending before
the Court.” (Docket 115 at p. 4 n.2).
13

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compensation statute and stated we ‘found no evidence to support your claim
for benefits.’ ”

Id. at p. 10. In the defendants’ view “[t]his is not a

misrepresentation of the terms of an insurance policy.

It is simply a statement

consistent with the Act’s definition of a compensable injury.” Id.

In

summary, defendants submit “SDCL § 58-33-5 does not involve a
misrepresentation of ‘facts’ rather it addresses misrepresentation of policy
terms.”

Id. at p. 11.

As a separate basis for summary judgment for Praetorian, defendants
contend “[t]he statute does not impute the conduct of one person to another.”
Id. at p. 12. Because Praetorian is not the author, defendants submit
“Praetorian did not ‘make’ a misrepresentation in the April 30, 2014 letter.”
Id.

“[T]he alleged representation took place between the plaintiff and someone

other than the carrier,” defendants argue so “the carrier could not be directly
liable for the claim of misrepresentation.”

Id.

Defendants’ final argument is that plaintiff is not entitled to punitive
damages as a matter of law on her misrepresentation claim.
SDCL § 58-33-46.1).

Id. (referencing

They assert the language of the statute only permits

“recovery of all actual and consequential damages suffered as a result of such
act or practice including reasonable attorneys’ fees to be set by the court.” Id.
at p. 13 (citing SDCL § 58-33-46.1). Defendants also argue plaintiff did not
seek punitive damages on count II, as the punitive damages assertion is
separately stated in paragraphs 59-60 of the complaint.
14

Id.

Defendants

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conclude “[p]unitive damages were not demanded under the misrepresentation
claim, nor are they available under the governing statute SDCL § 58-33-46.1.”
Id. at p. 14.
Plaintiff’s response asserts misrepresentation under SDCL § 58-33-5 is
not Ms. Tovares’ only remaining claim. (Docket 121 at p. 6). Plaintiff
contends the facts alleged in her complaint satisfy each of the elements of the
following causes of action:
(1)

intentional deceit under SDCL 20-10-2(1) (assertion of a fact
by one who does not believe it to be true);

(2)

negligent deceit under SDCL 20-10-2(2) (assertion of a fact by
one who has no reasonable ground to believe it is true);

(3)

common law fraud; [and]

(4)

negligent infliction of emotional distress.

Id.
Plaintiff argues “[t]he well-pleaded facts alleged in the complaint, not the
legal theories of recovery or legal conclusions identified therein, must be viewed
to determine whether the pleading party provided the necessary notice and
thereby stated a claim in the manner contemplated by the federal rules.”

Id.

at p. 7 (citing Topchian v. JPMorgan Chase Bank, 760 F.3d 843, 848 (8th Cir.
2014); internal citation omitted). She submits “the court is under a duty to
examine the complaint to determine if the allegations provide for relief on any
possible theory.”
omitted).

Id. (citing Topchian, 760 F.3d at 849; internal citation

Ms. Tovares contends “a plaintiff need not plead fraud with complete
15

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insight before discovery is complete.”

Id. at p. 8 (brackets omitted; citing

Larson Mfg. Co. of South Dakota v. Connecticut Greenstar, Inc., 929 F. Supp.
2d 924, 937 (D.S.D. 2013); referencing Northwestern Public Service v. Union
Carbide Corp., 115 F. Supp. 2d 1164, 1171 (D.S.D. 2000); and Gunderson v.
ADM Services Inc., No. 4032, 2000 WL 1154423 at *3 (8th Cir. 2000)
(unpublished)).
Plaintiff points to the allegations of the complaint which support her
present assertions of deceit, fraud and negligent infliction of emotional distress.
Id. at pp. 10-11. While plaintiff incorporates a number of the allegations into
her argument from count I, bad faith, that claim has been dismissed.
Docket 87 at pp. 25 & 36.

See

Considering the other allegations, plaintiff asserts

the following:
Gallagher told Plaintiff in the denial letter of April 30, 2014 that “We
have investigated this claim and found no evidence to support your
claim for benefits under South Dakota Worker’s Compensation
provisions.” That representation was false. (Docket 1 ¶ 52);
Gallagher misrepresented the fact that they had conducted an
investigation sufficient to make a determination to deny the claim.
Id. ¶ 54;
The attending physician’s notes state that “the most likely cause of
her symptoms is that they are related to a head injury.” Id. ¶ 18;
Under established South Dakota law governing payment of worker’s
compensation benefits, “[w]henever the purpose of the diagnostic
test is to determine the cause of a claimant’s symptoms, which
symptoms may be related to a compensable accident, the cost of the
diagnostic test is compensable, even if it should be later determined
that the claimant suffered from both compensable and non16

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compensable conditions.” Mettler v. Sibco, 628 N.W.2d 722, 724
(SD 2001). Id. ¶ 23;12
Gallagher, acting on behalf of Praetorian, misrepresented coverage
and available benefits in violation of SDCL § 58-33-5, entitling
plaintiff to recover her actual damages, including attorneys[’] fees,
pursuant to SDCL § 58-33-46.1. Id. ¶ 51; and
Defendants have acted with fraud, malice, or oppression, requiring
an award of punitive damages to punish and deter such conduct.
Id. ¶ 59.
(Docket 121 at pp. 10-11). Plaintiff submits “[t]hese allegations meet the
elements of (1) false representations, (2) knowledge of falsity, (3) as well as lack
of reasonable basis to believe the statements were true.”

Id. at p. 11.

Plaintiff argues the same allegations of her complaint also meet the
elements of deceit, fraud and negligent misrepresentation.

Id. at p. 12.

Finally, Ms. Tovares claims her “complaint alleges emotional distress caused by
defendants’ conduct.”

Id. at p. 13 (referencing Docket 1 ¶ 61).

Plaintiff contends the defendants are not unduly prejudiced because they
“have litigated each of these allegations since the first day of this lawsuit.”

Id.

at p. 14 (referencing Docket 85 ¶¶ 25 and 41-61). Asserting both of
defendants’ motions for summary judgment denied any intentional
misstatements, plaintiff submits “[t]he fact that defendants are already
litigating and contesting each of these issues shows they are already on notice
of them.”

Id. at p. 15.

12Defendants

admit “such case exists but denies it is established law or a
complete statement of the law.” (Docket 85 ¶ 23).
17

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Specifically addressing her misrepresentation claim under § 58-33-5,
plaintiff argues “[d]efendants simply ask the Court to draw the inference most
favorable to them by concluding the letter refers to something other than policy
benefits, and to ignore any other inferences.”

(Docket 121 at p. 17). Plaintiff

submits “[v]iewing the facts most favorably to the non-moving party, a jury
could reasonably find that the April 30 denial letter misrepresented benefits
available under the policy.” Id. Plaintiff acknowledges “no one” representing
the defendants “told her what benefits the policy would pay . . . . The only
representations defendants made to her concerned the benefits it would not
pay.”

Id. at p. 20 (emphasis in original).
Plaintiff spends the vast remainder of her argument focusing on GBS

misrepresenting its authority to act as Praetorian’s claim administrator.

Id. at

pp. 21-26. The court is not compelled to address this portion of plaintiff’s
argument as it is not relevant to defendants’ second motion for summary
judgment. To the contrary, the court finds there is sufficient evidence in the
record to show that GBS acted as Praetorian’s agent in dealing with Ms.
Tovares’ worker’s compensation claim.
In their reply, defendants oppose plaintiff’s argument she is entitled to
assert the additional causes of action first raised in Ms. Tovares’ brief.
(Docket 129 at pp. 1-4). Defendants argue “[t]he Court should disregard and
give no weight to Plaintiff’s attempt to assert new causes of action in a response
brief three and one half years after filing of this litigation.”
18

Id. at p. 4.

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Defendants contend plaintiff misinterprets and misapplies Mettler.

Id.

at p. 6. They submit “Mettler has no bearing on Plaintiff’s SDCL § 58-33-5
misrepresentation claim. . . . a Plaintiff reporting a hip/elbow claim who then
later self-diagnosed she must also have had a head injury, does not fall under
the scope of Mettler.”

Id. at pp. 6-7.

Because “[n]o invoices had been

submitted to Defendants for payment,” they assert the denial letter “simply
stated that the claim was investigated and there was no evidence to support
the claim for benefits.”

Id. at p. 9 & n.7.

Contending “only direct misrepresentations fall under SDCL § 58-33-5,”
defendants argue Praetorian “could not be directly liable for another’s
representation under this specific statute.”

Id. at p. 9 (referencing Delka v.

Continental Casualty Co., 748 N.W.2d 140 (S.D. 2008)).

Defendants claim

“[t]here is no authority on this point inconsistent with Delka.”

Id.

PLAINTIFF’S ADDITIONAL CAUSES OF ACTION
The court is not going to permit plaintiff to assert new causes of action
not previously and clearly delineated in plaintiff’s complaint. This case has
been aggressively litigated for over three years based on the two causes of
actions laid out in plaintiff’s complaint.

Ms. Tovares “cannot raise a new

cause of action [in response to] . . . a motion for summary judgment.”

Plucker

v. United Fire & Casualty Co., No. CIV. 12-4075, 2015 WL 5697334, at *6
(D.S.D. Sept. 28, 2015) (referencing Gilmour v. Gates, McDonald & Co., 382
F.3d 1312, 1315 (11th Cir. 2004) (“Efficiency and judicial economy require that
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the liberal pleading standards under . . . Rule 8(a) are inapplicable after
discovery has commenced.

At the summary judgment stage, the proper

procedure for plaintiff to assert a new claim is to amend the complaint in
accordance with Fed. R. Civ. P. 15(a).

A plaintiff may not amend her

complaint through argument in a brief opposing summary judgment.”); Mueller
Pallets, LLC v. Vermeer Corp., No. CIV 09-4016, 2011 WL 4458833, at *3
(D.S.D. Sept. 23, 2011) (citing Gilmour with approval)).
SDCL § 58-33-5 AND MISREPRESENTATION
SDCL § 58-33-5, which plaintiff alleges forms the basis for count II,
provides in pertinent part, “[n]o person shall make . . . or cause to be made any
. . . statement misrepresenting the terms of any policy issued . . . or the
benefits or advantages promised thereby . . . .”

Id.

Chapter 58–33 provides

a private right of action for damages for any insured claiming to have been
injured by an insurance company’s unfair insurance practice.

See SDCL § 58-

33-46.1 (“Any person who claims to have been damaged by any act or practice
declared to be unlawful by this chapter shall be permitted to bring a civil action
for the recovery of all actual and consequential damages suffered as a result of
such act or practice including reasonable attorneys’ fees to be set by the
court.”).
Page three of Praetorian’s workers’ compensation policy for Menards
includes a declaration that “Workers Compensation Law means the workers or
workmen’s compensation law. . . of each state . . . named in Item 3.A. of the
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Information Page. . . . We [Praetorian] will pay promptly when due the benefits
required of you [Menards] by the workers compensation law.” (Docket 108-1
at p. 3). Praetorian’s obligation to promptly pay is based on the language of
SDCL 58-20-6. That section provides:
No [workers’ compensation policy] shall be issued unless it contains
the agreement of the insurer that it will promptly pay to the person
entitled to compensation all installments of the compensation that
may be awarded or agreed upon . . . . Such agreement shall be
construed to be a direct obligation by the insurer to the person
entitled to compensation, enforceable in his name.
Id.
Defendants ask the court to use Ms. Tovares’ own words as the basis for
granting their second motion for summary judgment on her misrepresentation
claim. It is disingenuous for defendants to argue Ms. Tovares did not
personally know if Ms. Manwaring properly investigated plaintiff’s worker’s
compensation claim.

For defendants to suggest the date of the letter was

correct, Ms. Tovares’ address was correct and the date of Ms. Tovares’ fall was
correct, does not make the content of the April 30, 2014, letter a fair and
accurate statement.

The court does not expect a lay person to know the

statutory and industrial obligations of an adjuster in complying with South
Dakota workers’ compensation laws as those rights and benefits are
incorporated into a workers’ compensation policy of insurance. It is for a jury
to decide whether defendants misrepresented the benefits to which plaintiff
was entitled under South Dakota’s workers’ compensation laws.

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Defendants’ reliance on Delka for the assertion that Praetorian cannot be
held responsible under § 58-33-5 is misplaced. In Delka, the South Dakota
Supreme Court held there was no liability under § 58-33-5 because the alleged
misrepresentation did not occur between the injured employee plaintiff and the
insurance carrier but between plaintiff and his employer.

Delka, 748 N.W.2d

at 152). That scenario is not present in Ms. Tovares’ case. Praetorian
employs GBS to act as its third-party administrator in resolving workers’
compensation claims.

The check issued by GBS states it was issued for

Praetorian. (Docket 122-3). Defendants admitted as much in their amended
answers to plaintiff’s complaint.

See Dockets 1¶38, 85 ¶ 38 & 86 ¶ 38.

This

is a classic principal-agent relationship. The court finds as a matter of law the
principal, Praetorian, is responsible for the acts of its agent GBS.

SDCL

§§ 58-20-1, 59-1-4 and 59-6-1.
Defendants claim Ms. Tovares has not identified “ ‘what was obtained or
given up [by the misrepresentation].’ ”

(Docket 115 at p. 5) (citing Hill v. Auto

Owners Ins. Co., No. CIV. 14-5037, 2015 WL 2092680, at *10 (D.S.D. May 5,
2015); brackets in original; internal citations omitted). Because Ms. Tovares
already incurred the medical expenses before the issuance of the April 30,
2014, letter, defendants argue she lost nothing by the alleged
misrepresentation. This argument is without merit.
A jury could reasonably find Ms. Tovares was compelled to borrow
money, incur credit card fees and ultimately incur Mr. Simpson’s worker’s
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compensation attorney’s fees because of the alleged misrepresentation of Ms.
Manwaring’s letter on behalf of GBS.

Hill offers no support for defendants’

arguments.
Defendants’ argument there were no misrepresentations about the policy
of insurance is the same argument defendants asserted in the first motion for
summary judgment.

Compare Docket 115 at p. 10 (The letter “is not a

misrepresentation of the terms of an insurance policy. It is simply a statement
consistent with the Act’s definition of a compensable injury.”) with Docket 63 at
p. 16) (“None of the ‘facts pled by Plaintiff . . . represent an actionable
misrepresentation of the policy terms.”). The defendants’ argument ignores
the other purpose of § 58-33-5, that is, to prohibit misrepresentation regarding
the benefits due under an insurance policy.
Defendants’ second bite at the apple fails.

“Whether there was a

misrepresentation by denial of entitlement to benefits or a misrepresentation of
the benefits to which plaintiff may have been entitled, the issue remains a jury
question.”

Tovares v. Gallagher Bassett Services, Inc., CIV. 16-5051, 2017 WL

4041983, at *9 (D.S.D. September 17, 2017).

“[V]iewed in the light most

favorable to the [plaintiff] opposing the motion,” the court finds plaintiff has
presented “sufficient evidence” to create a jury question. Matsushita Elec.
Indus. Co., 475 U.S. at 587.

Defendants’ second motion for summary judgment on count II of
plaintiff’s complaint is denied.
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PUNITIVE DAMAGES
In defendants’ first motion for summary judgment, they argued plaintiff’s
punitive damage claim must fail because there was no proof defendants acted
with actual or implied malice. (Dockets 63 at p. 21 and 72 at p. 13). The
court rejected that argument finding “[a] claim for presumed malice can be
shown by demonstrating a disregard for the rights of other[s].” (Docket 87 at
p. 35) (referencing Biegler v. American Family, 621 N.W.2d 592, 605 (S.D.
2001)).
In defendants’ second motion for summary judgment, they now argue
plaintiff’s complaint separately captioned a claim for punitive damages in
paragraphs 59 and 60. (Docket 115 at p. 13). By this separation in the
complaint, defendants submit “Tovares did not ask for punitive damages under
her misrepresentation claim.” Id. Yet, defendants acknowledge there is no
“independent cause of action for punitive damage[.]” Id. at p. 14 (citing O’Neill
v. O’Neill, 876 N.W.2d 486, 496 (S.D. 2016)). A fair reading of plaintiff’s
complaint demonstrates she is seeking punitive damages on both the bad faith
claim, which was dismissed, and the misrepresentation claim. Fed. R. Civ. P.
8(a)(3) (“A pleading that states a claim for relief must contain . . . a demand for
the relief sought, which may include relief in the alternative or different types of
relief.”).
Defendants’ second assertion is that the damages recoverable for a
violation of § 58-33-5 are limited to the statutory damages articulated in SDCL
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§ 58-33-46.1.

They assert those are “actual and consequential damages” and

“reasonable attorneys’ fees.”

SDCL § 58-33-46.1.

In South Dakota, punitive damages are governed by statute.
In any action for the 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 the actual
damage, may give damages for the sake of example, and by way of
punishing the defendant.
SDCL § 21-3-2. Defendants ignore the clear language of SDCL § 21-3-2,
which permits punitive damages “in addition to the actual damage[.]” Id.
(emphasis added).

Nothing in § 58-33-46.1 declares the damages available by

that section are the exclusive damages available.

Plus, it is clear that § 21-3-2

contemplates punitive damages may be awarded in addition to other statutory,
actual damages.
The court previously held Ms. Tovares may be entitled to punitive
damages for defendants’ conduct in disregarding plaintiff’s rights under SDCL
§ 58-33-5. (Docket 87 at p. 36).

Nothing in defendants’ second motion for

summary judgment changes the court’s earlier ruling.
Defendants’ second motion for summary judgment on punitive damages
is denied.

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ORDER
Based on the above analysis, it is
ORDERED that defendants’ second motion for summary judgment
(Docket 114) is denied.
Dated May 6, 2020.
BY THE COURT:
/s/ Jeffrey L. Viken
JEFFREY L. VIKEN
UNITED STATES DISTRICT JUDGE

26