Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-92-01208/USCOURTS-ca10-92-01208-1/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

RICHARD MITCHELL and 

LARRY COTTEN I 

TENTH CIRCUIT 

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) 

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Plaintiffs-Appellees, ) 

F1 l L E .U 

United Etatos Court n1' Appeald Tenth Ct~utt 

APR 1 2 1'94 

v. 

) 

) No. 92-1208 

STATE FARM FIRE AND 

CASUALTY COMPANY I 

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) 

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) 

Defendant-Appellant. ) 

Appeal from the United States District Court 

District of Colorado 

(D.C. No. 86-S-2171) 

Opinion on Petition for Rehearing En Bane 

Miles C. Cortez, Jr. (Stephen J. Hensen and Fermin G. Montoya of 

CORTEZ FRIEDMAN, P.C., with him on the brief), Denver, Colorado, . for Plaintiffs-Appellees. 

Alan Epstein of HALL & EVANS (William J. Hunsaker of MAKRIS, 

HUNSAKER, TOWEY & MELONAKIS, P.A., with him on the brief), Denver, 

Colorado, for Defendant-Appellant. 

Before LOGAN, Circuit Judge, FEINBERG, Senior Circuit Judge,~ 

and McWILLIAMS, Senior Circuit Judge. 

McWILLIAMS, Senior Circuit Judge. 

* Honorable Wilfred Feinberg, Senior Circuit Judge for the Second Circuit, sitting by designation. 

Appellate Case: 92-1208 Document: 01019287079 Date Filed: 04/12/1994 Page: 1 
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" Mitchell and Cotten, appellees, filed a timely petition for 

rehearing, and, on order of Court, State Farm, the appellant, has 

now filed a response thereto. 

In the petition for rehearing, counsel asserts that plaintiffs' claim for breach of the duty of good faith and fair dealing 

was based on two separate matters: (1) representatives of State 

Farm "induced and permitted" plaintiffs to overinsure the subject 

property; and (2) unreasonable delay in handling plaintiffs' 

claim. In this connection, counsel went on to state that "the 

panel failed to recognize the plaintiffs' theory of 

defendant's bad faith predicated on the overinsurance and misleading conduct of State Farm's agent." 

It is true that in their amended complaint plaintiffs did 

make a possible reference to overinsurance in their claim based on 

an alleged breach of the duty of State Farm to exercise good faith 

and fair dealing with the plaintiffs. It is also correct that in 

closing argument to the jury, counsel for the plaintiffs stated 

that both of the plaintiffs' claims, i.e., breach of contract and 

breach of duty, were based, in part, on "overinsurance" and "misleading conduct." In this regard, counsel did ask the jury to 

return verdicts in favor of the plaintiffs on both of their 

claims, i.e. breach of contract and breach of duty, and to fix 

their damages at $256,000 on each claim, assuring the jury, at the 

same time, that there would be only "one recovery." Notwithstanding, the jury was nonetheless instructed, without objection, that 

the plaintiffs' claim based on breach of duty of good faith and 

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Appellate Case: 92-1208 Document: 01019287079 Date Filed: 04/12/1994 Page: 2 
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fair dealing was based on unreasonable delay by State Farm in making payments due under the policy. 

Specifically, Instruction No. 23 reads as follows: 

In order for the plaintiffs to recover from 

the defendant on their claim of breach of duty of 

good faith and fair dealing, you must find all of 

the following have been proved: 

1. The plaintiffs incurred damages; 

2. The defendant acted unreasonably in delaying payment on plaintiffs' claim without a legitimate basis for said delay; 

3. The defendant knew its conduct was unreasonable or the defendant recklessly disregarded the 

fact that its conduct was unreasonable; and 

4. The defendant's unreasonable conduc~ was 

a cause of the plaintiffs' damages. 

If you find that any one or more of these four 

propositions has not been proved by a preponderance 

of the evidence, then your verdict must be for the 

defendant. 

On the other hand, if you find that all of 

these four propositions have been proved by a preponderance of the evidence, then your verdict must 

be for the plaintiffs (emphasis added) . 

Under Instruction No. 23, the jury was instructed, in so many 

words, that plaintiffs' bad faith claim was based on unreasonable 

delay by State Farm of payments due plaintiffs under the policy. 

There is no mention in Instruction No. 23 of "overinsurance" or 

"misleading conduct." We do not regard "delayed payment" to be a 

synonym for "overinsurance" or 11misleading conduct." All of which 

would suggest that the jury was confused and returned verdicts 

which cannot be "fairly harmonized." 

Accordingly, appellees' petition for rehearing is hereby denied by the panel. 

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,., 

In accordance with Rule 3S(b}, Federal Rules of Appellate 

Procedure, the suggestion for rehearing en bane was transmitted to 

all of the judges of the court who are in regular active service. 

No member of the panel and no judge in regular active service on 

the court having requested that the court be polled on rehearing 

en bane, Rule 35, Federal Rules of Appellate Procedure, the suggestion for rehearing en bane is denied. 

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