South Dakota Judge Sides With Liberty Mutual in Bad Faith Dispute

May 23, 2019

A federal judge in South Dakota has dismissed part of a lawsuit filed by a couple who had to tear down their Sioux Falls house after a long-running dispute with their neighbors.

Judge Roberto Lange recently granted Liberty Mutual Insurance’s motion to dismiss the allegations that the company acted in bad faith by hindering Joseph and Sarah Sapienza’s legal defense, the Argus Leader reported.

The Sapienzas accused the insurance company of failing to pay for certain legal strategies, such as hiring an expert witness.

Lange gave the couple two weeks to show why he shouldn’t dismiss their claim that Liberty Mutual provided an inadequate defense and breached its duty to defend them.

The Sapienzas tore down their Sioux Falls house last June after being sued by their neighbors in 2015. The neighbors argued the home was too tall and close to their property.

A state judge later ruled that the couple’s home, which they had built in 2014, violated building standards for national historic districts.

The judge ordered the Sapienzas to make their home conform to the neighborhood’s historical standards, and the South Dakota Supreme Court upheld the ruling last year.

Several questions regarding the couple’s claims against Liberty Mutual will return to the high court.

Lange noted that questions remain about whether the costs that the Sapienzas incurred by demolishing their home are considered damages under their policy with Liberty Mutual.

South Dakota law doesn’t specify whether demolition costs would be considered damages since the Sapienzas were under a court-order injunction when they tore down their house.

Angela Brandt, the couple’s lawyer, said the Sapienzas are considering all their options to enforce the Liberty Mutual agreement.

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