* After examining the briefs and appellate record, this panel has determined

unanimously that oral argument would not materially assist the determination of

this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is

therefore ordered submitted without oral argument. This order and judgment is

not binding precedent, except under the doctrines of law of the case, res judicata,

and collateral estoppel. It may be cited, however, for its persuasive value

consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.

FILED

United States Court of Appeals

Tenth Circuit

March 26, 2009

Elisabeth A. Shumaker

Clerk of Court

UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT

WILLIAM LOPEZ,

Plaintiff-CounterDefendant-Appellant,

v.

UNITED FIRE AND CASUALTY

COMPANY, an Iowa corporation,

Defendant-CounterClaimant-Appellee,

and

AMERICAN FAMILY MUTUAL

INSURANCE COMPANY, a

Wisconsin corporation,

Defendant.

No. 07-1250

(D.C. No. 05-cv-2603-RPM)

(D. Colo.)

ORDER AND JUDGMENT*

Before MURPHY, McKAY, and GORSUCH, Circuit Judges.
-2-

William Lopez appeals the district court’s grant of summary judgment to

United Fire and Casualty Company (United Fire), on (1) his claim that United

Fire breached the implied covenant of good faith and fair dealing by failing to

promptly pay him basic and enhanced personal injury protection (PIP)

lost-income benefits; and (2) his claim that this failure also constituted a “willful

and wanton failure . . . to pay [those] benefits when due” under the Colorado

Auto Accident Reparations Act (CAARA), Colo. Rev. Stat. § 10-4-708(1.8)

(repealed July 1, 2003). Mr. Lopez also appeals the district court’s denial of

attorney fees under the CAARA, Colo. Rev. Stat. § 10-4-708(1.7) (repealed July

1, 2003). Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.

I. Factual and Procedural History

On September 17, 2002, Mr. Lopez fell from the back of a garbage truck

while working for Pueblo Sanitation, Inc., seriously injuring himself. He began

receiving workers’ compensation medical and lost-income benefits. Mr. Lopez

alleged that he also contacted American Family Mutual Insurance Co. (American

Family), the company that insured his personal automobile, but was told he could

not submit a claim for benefits because his own automobile was not involved and

workers’ compensation benefits were available to him. Neither Mr. Lopez nor

Pueblo Sanitation filed an insurance claim with United Fire, the company that

insured the garbage truck. Mr. Lopez eventually filed a complaint in Colorado

state court on September 15, 2005, which was later removed to federal court.
1 All statutory cites are to Colorado Revised Statutes, unless otherwise

specified. This court has utilized the 2002 version of the CAARA,

Colo. Rev. Stat. §§ 10-4-701 through 726 (repealed July 1, 2003), because the

United Fire policy in question was issued in 2002 and Mr. Lopez’s accident

occurred that year. The CAARA, which prior to repeal governed the sale of

automobile insurance in Colorado, was enacted by the Colorado legislature in

1973 for the purpose of avoiding inadequate compensation to victims of

automobile accidents. See Reid v. Geico Gen. Ins. Co., 499 F.3d 1163, 1165

(10th Cir. 2007).

-3-

A. The Complaint

1. Claim for Declaratory Relief and Reformation

The complaint’s first cause of action sought, among other things, a

declaration that United Fire failed to properly offer enhanced PIP benefits under

§ 10-4-710.1

 Before its repeal, the CAARA required that automobile insurance

policies include certain minimum or basic PIP benefits to compensate injured

persons for medical and rehabilitative expenses and lost wages resulting from

automobile accidents. See § 10-4-706(1)(a)-(e). The CAARA also required an

insurer to offer, in exchange for higher premiums, two types of added or enhanced

PIP coverage. The first type was enhanced PIP medical-expense coverage which

was essentially basic PIP medical-expense coverage without that coverage’s

dollar or time limitations. See § 10-4-710(2)(a)(I). The second type of enhanced

PIP coverage, and the type Mr. Lopez claimed should have been offered to Pueblo

Sanitation, consisted of the enhanced PIP medical-expense coverage plus an

enhanced PIP lost-income coverage. § 10-4-710(2)(a)(II).
2 In diversity cases like this one, the substantive law of the forum state

governs the analysis of the underlying claims. Eck v. Parke, Davis & Co.,

256 F.3d 1013, 1016 (10th Cir. 2001). 

3 The only benefits at issue were the lost-income benefits described under

§ 10-4-710(2)(a)(II).

-4-

Under Colorado law, when an insurance company has violated the CAARA

by failing to offer enhanced PIP coverage, the legal remedy is to reform the

policy to include that coverage.2

 Clark v. State Farm Mut. Auto. Ins. Co.,

319 F.3d 1234, 1241 (10th Cir. 2003) (“‘[W]hen . . . an insurer fails to offer the

insured optional coverage that satisfies [the CAARA], additional coverage in

conformity with the offer mandated by statute will be incorporated into the

policy.’”) (quoting Brennan v. Farmers Alliance Mut. Ins. Co., 961 P.2d 550, 554

(Colo. App. 1998)) (ellipsis and emphasis in original). Mr. Lopez therefore asked

the district court to reform the policy to include the enhanced PIP coverage

described in § 10-4-710(2)(a)(II), from the date of issuance.3

2. Breach of Contract Claim

The complaint’s second cause of action argued, as to United Fire, that once

the court reformed the insurance contract to include the enhanced PIP benefits

from the date of issuance, the court should then find that United Fire breached the

contract by failing to properly pay Mr. Lopez those benefits when due.
4 We note at this point that an argument may be made that the plain language

of § 10-4-708 restricts its application to only the payment of basic PIP benefits in

§ 10-4-706. See also Colo. Div. of Ins. Am. Reg. 5-2-8(4)(B) (“Section 

10-4-708(1), C.R.S., provides that benefits under the coverages enumerated in

§ 10-4-706, C.R.S. are overdue if not paid within 30 days after the insurer

receives reasonable proof of the fact and amount of the expenses incurred.”). 

Nevertheless, because we affirm on other grounds we do not address this

question. For the purposes of this order and judgment only, we treat the section

as if it also applies to the payment of enhanced PIP benefits under § 10-4-710.

-5-

3. CAARA Claim For Willful and Wanton Failure to Pay

Benefits When Due

The complaint’s third cause of action alleged, as to United Fire, that not

only did it fail to pay Mr. Lopez the enhanced benefits when due under

§ 10-4-708(1), its failure was willful and wanton under § 10-4-708(1.8), and he

was therefore entitled to treble damages. Under § 10-4-708(1): “Payment of

benefits . . . shall be made on a monthly basis. Benefits for any period are

overdue if not paid within thirty days after the insurer receives reasonable proof

of the fact and amount of expenses incurred during that period . . . .”4

 Under

§ 10-4-708(1.8):

[I]n the event of willful and wanton failure of the insurer to pay such

benefits when due, the insurer shall pay to the insured, in addition to

any other amounts due to the insured under this subsection . . . , an

amount which is three times the amount of unpaid benefits recovered

in the proceeding.

In Dale v. Guaranty National Insurance Co., the Colorado Supreme Court held

that a “willful and wanton failure to pay benefits when due is established when an
5 Because Mr. Lopez was an insured under the contract, this was a first-party

breach claim. See Farmers Group, Inc. v. Williams, 805 P.2d 419, 429-30

(Colo. 1991) (Vollack, J., dissenting); see also Travelers Ins. Co. v. Savio,

706 P.2d 1258, 1274-76 (Colo. 1985).

-6-

insurer acts without justification and in disregard of [a] plaintiff’s rights.” 

948 P.2d 545, 551 (Colo. 1997) (internal quotation marks omitted).

4. Claim for Breach of The Implied Covenant of Good Faith and

Fair Dealing

The complaint’s fourth cause of action alleged, as to United Fire, that its

failure to pay Mr. Lopez the enhanced PIP benefits when they were due

constituted a violation of the insurance contract’s implied covenant of good faith

and fair dealing. Under Colorado law, all insurance contracts contain an implied

covenant of good faith and fair dealing. Id. at 551 n.6. “For an insured to prevail

on a first-party tortious bad faith breach of contract claim against the insurer,5

 the

insured must establish that the insurer acted: (1) unreasonably and (2) with

knowledge of or reckless disregard of its unreasonableness.” Id. at 551.

B. Answer and Amended Answer

Following the filing of Mr. Lopez’s state court complaint, his counsel sent

a letter to United Fire on November 11, 2005, referencing the accident and asking

for a copy of the insurance policy and declarations. On November 21, 2005,

Ron Reihmann, a claims representative for United Fire, responded with a letter
-7-

briefly describing the policy coverage and enclosing an application for PIP

benefits and medical and wage-loss information authorization forms.

The case was removed to federal district court on December 22, 2005. The

certificate of compliance accompanying the notice of removal asserted the

complaint had been served on American Family and United Fire on December 8,

2005. United Fire filed its answer in federal court on December 28, 2005,

generally denying the majority of the allegations therein and stating it had been

unable to complete its internal investigation because Mr. Lopez had not yet

submitted an insurance claim. United Fire also filed a counterclaim seeking a

declaration that its liability for PIP coverage was subject to a $200,000 cap under

the policy. On February 6, 2006, United Fire amended its answer to admit it

would not be able to prove that enhanced PIP coverage had been properly offered

and the insurance contract would have to be reformed to include that coverage.

C. Summary Judgment Motions

Although the parties agreed reformation was necessary, they disagreed as to

the effective date. In a February 20, 2006, letter to Mr. Lopez’s counsel, United

Fire voluntarily reformed the contract to include enhanced PIP coverage from

October 14, 2005, the date one of its claim representatives, while investigating a

different insurance claim, had incidentally become aware of Mr. Lopez’s potential
6 The letter itself stated the effective date was October 15, 2005, but the

parties later apparently agreed benefits were paid from October 14, 2005. The

exact date is not integral to our ruling.

-8-

claim.6 It enclosed a lump-sum check for enhanced PIP benefits for income lost

from the proposed reformation date until February 20, 2006, the date of the letter;

it then paid enhanced PIP lost-income benefits every two weeks from that point

until final settlement was eventually reached. On March 20, 2006, Mr. Lopez

moved for partial summary judgment on his declaratory relief claim, seeking a

declaration that the policy should be reformed to include enhanced PIP

lost-income coverage from date of issuance, and a ruling that the contract had

been breached by failure to pay those benefits. United Fire opposed Mr. Lopez’s

motion and responded with its own summary judgment motion, seeking, among

other things, a dismissal of Mr. Lopez’s bad faith and willful and wanton failure

to pay benefits claims.

In its various motions, United Fire asserted the insurance contract had

already been reformed effective October 14, 2005, and argued that date was

proper because “it was shortly after that date that [United Fire] became informed

that there was even an issue of enhanced PIP.” Aplt. App. at 238.

In his various motions, responses, and replies regarding summary judgment,

Mr. Lopez argued first that United Fire’s selection of an October 2005

reformation date was unreasonable and it was therefore bad faith and willful and

wanton conduct for it to not have paid enhanced PIP benefits for income lost prior
-9-

to that time. In the alternative, he argued that even if the delay in payment of

enhanced benefits was reasonable, the company should at least have timely paid

basic PIP lost-income benefits–which the parties agreed were included in the

policy as written–and that it was bad faith and willful and wanton conduct for it

not to have done so. In response to this second argument, United Fire argued that

Mr. Lopez had not submitted a complete insurance claim for basic PIP

lost-income benefits until March 29, 2006, and that its April 13, 2006, payment of

those basic PIP benefits was therefore timely.

D. Summary Judgment Ruling

The district court entered its order on the parties’ motions for summary

judgment on November 27, 2006. It held: “Under the facts and circumstances of

this case, United Fire’s policy should be reformed to provide enhanced PIP

benefits as of the date of its issuance, and not October 14, 2005, the date [on]

which United Fire stated it first received notice of a claim.” Id. at 365. The court

held, “[a]lthough United Fire’s failure to pay enhanced PIP benefits from the date

of the accident is a breach of the insurance policy, [Mr.] Lopez has failed to show

support for a claim of bad faith,” and dismissed Mr. Lopez’s bad faith claim. Id. 

On March 12, 2007, following a joint motion for clarification of the court’s order,
7 The district court dismissed the claims against American Family, finding it

had no liability unless Mr. Lopez’s expenses exceeded the $200,000 aggregate

cap in the United Fire policy. Because Mr. Lopez agreed the cap would not be

exceeded, the court found his claims against American Family were not ripe.

-10-

the court entered another order summarily dismissing Mr. Lopez’s willful and

wanton failure to pay benefits claim.7

E. Motion for and Ruling on Attorney Fees

Mr. Lopez then moved for an award of attorney fees under § 10-4-708(1.7). 

United Fire argued to the district court, among other things, that fees should be

denied because Mr. Lopez had failed to provide a notice required under that

section. The court denied attorney fees, but for a different reason. 

The court held that § 10-4-708(1.7) “provides for the recovery of attorney

fees where the insured successfully brings a proceeding based on the contention

that he or she properly submitted claims for payment but the insurer failed to

make prompt payment of such direct benefits claimed when they were due.” 

Aplt. App. at 469. The court held that in the present case, however, the basis for

United Fire’s liability was its inability to establish that it had properly offered

enhanced PIP coverage in compliance with § 10-4-710. The court held:

In this case, [Mr. Lopez’s] claims against United Fire were premised

on its alleged failure to properly offer enhanced PIP benefits under

C.R.S. § 10-4-710 as it existed during the applicable time period,

thereby requiring a reformation of United Fire’s policy to include

such benefits and, consequently, the entitlement to payment of

enhanced PIP benefits.
-11-

Id. at 469-70. The court finally stated that “[t]he statutory mechanism for the

payment of enhanced PIP benefits was not applicable until the policy was

reformed to include enhanced PIP benefits, the very purpose of this litigation. 

There was no breach of the contract as the policy was written.” Id. at 470.

II. Analysis of Summary Judgment

Although, as noted above, Colorado law governs our analysis of the

underlying claims, “we are governed by federal law in determining the propriety

of the district court’s grant of summary judgment. Accordingly, we review the

grant of summary judgment de novo, applying the same standard as the district

court pursuant to Rule 56(c) of the Federal Rules of Civil Procedure.” Stickley v.

State Farm Mut. Auto. Ins. Co., 505 F.3d 1070, 1076 (10th Cir. 2007) (internal

quotations omitted). Summary judgment is appropriate when there is no genuine

issue of material fact and the moving party is entitled to judgment as a matter of

law. See Fed. R. Civ. P. 56(c). Further, as a general matter, “[t]he [CAARA] is

to be liberally construed to further its remedial and beneficent purposes.” 

Brennan, 961 P.2d at 553.

A. Bad Faith and Willful and Wanton Claim Regarding Basic PIP

Benefits

Mr. Lopez first argues that by February 28, 2006, he had provided

reasonable proof of the fact and amount of his lost income under § 10-4-708(1),

and that basic PIP lost-income benefits were therefore fifteen days overdue when
8 In § 10-4-708(1.3), the Colorado legislature directed the commissioner of

insurance to promulgate a rule “establish[ing] guidelines for the timely payment

of personal injury protection benefits including the penalties for the failure to

timely pay such benefits or to otherwise comply with the rule.” The legislature

required that “[t]he guidelines for timely payment established by rule shall

include at the minimum a list of the items necessary, in addition to the

requirements set forth in section 10-4-706, to establish proof of the fact and

amount of expenses incurred . . . .” Id. The commissioner subsequently

promulgated Colo. Div. of Ins. Am. Reg. 5-2-8 pursuant to that statute. 

See Colo. Div. of Ins. Am. Reg. 5-2-8(1). Further, § 3 of Am. Reg. 5-2-8 reads:

The Colorado Reparations (No-Fault) Act was repealed effective

July 1, 2003. Automobile insurance policies with personal injury

protection (PIP) benefits issued or renewed prior to July 1, 2003 will

continue to incur PIP claims until such benefits do not apply any

longer. This regulation applies to claims occurring under No-Fault

Policies issued prior to July 1, 2003.

-12-

they were paid on April 13, 2006. His argument is based on Colorado Division of

Insurance Amended Regulation 5-2-8(4)(C)(2) (2004), 3 Colo. Code Regs.

§ 702-5, which addresses the documents usually sufficient to establish proof of

the fact and amount of wage loss when a claimant is pursuing PIP lost-income

benefits.8

 It reads in pertinent part:

In the usual case, if the claimant is pursuing covered PIP wage loss

benefits, the following documents are sufficient to establish proof of

the fact and amount of wage loss incurred:

a. A properly executed application for benefits from the

PIP claimant; and

b. Written verification by a health care provider that the

claimant is not able to perform his/her work as a result

of the injury; and

c. Written verification of employment and income[.]
-13-

Mr. Lopez argues that he provided these documents by February 28, 2006, and the

regulation’s thirty-day clock started at that time.

In the usual case, these documents would show that an injured party was

employed at the time of the accident, the amount he or she earned through that

employment, and that the party was no longer able to work because of the injury. 

But another factor comes into consideration when the insured is injured on the

job. Under § 10-4-707(5), an injured worker’s entitlement to PIP lost-income

benefits is reduced to the extent that worker receives lost income benefits under

the workers’ compensation statute. Tate v. Indus. Claim Appeals Office, 815 P.2d

15, 19 (Colo. 1991). Thus, in a case such as this, information regarding the

injured party’s employment and the severity of the party’s injury, standing alone,

is not sufficient to allow the insurer to determine the amount of benefits.

Nevertheless, even if we assume for the sake of argument that Mr. Lopez

had provided the documentation required by the regulation by February 28, 2006,

the regulation goes on to provide that

[i]f an insurer does not pay a claim for benefits under § 10-4-706,

C.R.S. within 30 days of receipt of the appropriate documents

described in this regulation and as set forth in § 10-4-708, C.R.S., the

insurer shall immediately notify the PIP claimant or the claimant’s

representative . . . of the reason(s) the claim has not been paid. If the

claim has not been paid because an investigation is underway, the

insurer shall document in the claim file the actions being taken to

investigate the claim and the efforts being made to promptly

conclude the investigation.

Am. Reg. 5-2-8(4)(D).
-14-

The record reveals that United Fire informed Mr. Lopez that it was not

paying basic PIP lost-income benefits because the workers’ compensation

information was ambiguous and Mr. Lopez had made no specific claim as to the

amount of benefits owed. Thus, the issue is whether United Fire’s delay in

payment for these reasons constituted bad faith or a willful and wanton failure to

pay benefits when due.

As noted above, to show that United Fire acted in bad faith, Mr. Lopez had

to show that United Fire acted: “(1) unreasonably and (2) with knowledge of or

reckless disregard of its unreasonableness.” Dale, 948 P.2d at 551. To show that

United Fire’s actions in paying those basic PIP benefits constituted a willful and

wanton failure to pay benefits when due, Mr. Lopez had to establish that United

Fire “act[ed] without justification and in disregard of [his] rights.” Id. (quotation

omitted).

In Dale, the Colorado Supreme Court explained that a willful and wanton

failure to pay a claim is not identical to a claim of bad faith, holding that while

“[p]roof of willful and wanton conduct as we have defined it will also prove that

the insurer knowingly or recklessly acted unreasonably toward its insured . . . a

finding that the insurer’s conduct was not willful and wanton is not the equivalent

of a finding that the insurer did not act in bad faith.” Id. The court held this was

so “because willful and wanton conduct under the No-Fault Act is a subset of

insurance bad faith” in that “[w]hile a willful and wanton claim under the
-15-

No-Fault Act is limited to the circumstances concerning the refusal to pay

insurance benefits when due, the tort of bad faith breach of an insurance contract

encompasses an entire course of conduct and is cumulative.” Id.

The Colorado Supreme Court thus held that although the “element of

reasonableness” in both claims could be considered equivalent, the claims

themselves could not be considered equivalent and “a finding on the element of

reasonableness in the willful and wanton claim may be preclusive with respect to

the same element in the bad faith claim” only if the evidence that supports the

common-law bad faith claim is identical to the evidence that supports the

statutory willful and wanton conduct claim. Id. at 552. In the present case, the

assertion under both claims is a failure to pay PIP benefits when due and the

evidence supporting both claims was identical. We therefore see no difference

between the burdens of proof required for each claim and, as explained below,

hold that United Fire’s actions were reasonable as a matter of law.

In his benefits application, Mr. Lopez claimed that he either was eligible

for or had received workers’ compensation in the amount of $213.33 per week. 

To support this claim he provided an indemnity activity log from the workers’

compensation insurer, Pinnacol. After receiving notice of Mr. Lopez’s claim,

United Fire wrote a number of letters attempting to obtain an executed application

for PIP benefits, wage and medical authorizations, information regarding the

amount of workers’ compensation benefits Mr. Lopez had received, and the
-16-

amount of PIP benefits he was claiming. United Fire’s correspondence

consistently reiterated that Mr. Lopez had failed to supply the information

necessary for a valid claim. The record shows no response to this correspondence

until February 27, 2006, when Mr. Lopez sent United Fire a letter disputing its

contention that he had not, at that point, properly submitted a claim. That letter

enclosed further documentation regarding his inability to work, but provided no

new information regarding workers’ compensation payments.

On March 23, 2006, Mr. Reihmann sent a letter to Mr. Lopez’s legal

counsel in which he reasserted United Fire’s position that a proper insurance

claim for lost income had not been filed by Mr. Lopez because the indemnity

activity log appeared to pay Mr. Lopez more than the basic PIP weekly benefit. 

The letter asserted:

You have provided no assertion of what the amounts [owed by

United Fire] should be during the first year from the date of the

accident, and indeed admitted that neither you nor your client had

access to the Worker’s Compensation file or documentation of the

settlement of the Worker’s Compensation claim, for United Fire to

make a reasoned determination of what may be owed during the first

year.

Aplt. App. at 227. United Fire further claimed “the offset that United Fire is

entitled to is still unclear, since you have yet to provide us with a copy of any

release signed by your client outlining what the Pinnacol payments represented.” 

Id. The letter complained that because “[t]he Pinnacol Indemnity Activity

document indicates that your client was paid $19,221.76 during the first year” and
9 Although it is not clear how United Fire arrived at its $19,221.76 figure,

the log shows a number of different payments being made. Under “Comp Code

PP,” the log shows $35,527.52 in payments consisting of two “Regular” payments

of $426.66, a “Regular” payment of $170.38, a “Lump Sum” payment of

$9,503.82, and a “Settlement” of $25,000. Aplt. App. at 230-31. Under “Comp

Code TT,” the log shows $9,264.62 in payments, consisting of one “Regular”

payment of $304.76, and twenty-one “Regular” payments of $426.66. Id. The

$426.66 regular payments, under both the PP and TT “Comp Code” sections are

all for two-week periods, which would be consistent with the application’s claim

that Mr. Lopez was entitled to $213.33 per week in workers’ compensation

benefits. Id. But there is nothing to explain the difference between the payments

under the PP and TT codes, what the lump sum and settlement payments were for,

(continued...)

-17-

that the first year of PIP payments under either the enhanced or basic PIP formula

would be less than that amount, “it does not appear that you have provided

sufficient documentation as to any [wage] loss [as to the first year of disability]

at this time.” Id. at 227-28.

On appeal, Mr. Lopez argues that “the fact that United Fire came up with

an incorrect number in reading the figures on the Pinnacol Assurance log . . . does

not establish that, as a matter of law, it acted reasonably.” Aplt. Reply Br. at 5. 

We believe that under the circumstance of this case no reasonable jury could find

that United Fire acted unreasonably in trying to obtain more information

regarding the amount of workers’ compensation payments. First, United Fire–not

Mr. Lopez–was the proactive party in trying to obtain the information necessary

to properly handle the claim. Second, the indemnity activity log provided by

Mr. Lopez is unclear as to the amount of workers’ compensation lost-income

payments he received.9

 Third, until March 23, 2006, Mr. Lopez never responded
9

(...continued)

or what the remaining regular payments covered.

-18-

to United Fire’s inquiries regarding its inability to determine the amount of

workers’ compensation benefits received or the amount of benefits being claimed. 

On that date, Mr. Lopez’s counsel sent American Family’s counsel a letter–and

forwarded a copy of this letter to United Fire’s counsel–which specifically set

forth Mr. Lopez’s calculations showing the amount of workers’ compensation

received and the amounts he claimed were owed by the insurers. Even this letter,

since it was addressed to American Family’s counsel, made no attempt to address

United Fire’s prior correspondence. Less than thirty days from its receipt of this

letter, United Fire acknowledged that a valid PIP lost-income claim had been

received and paid the basic PIP lost-income benefits, despite the fact that it “still

ha[d] questions regarding the income amounts already paid to [Mr. Lopez] as

reflected in the Pinnacol Indemnity Activity document.” Aplt. App. at 359. 

Under these facts, no reasonable jury could determine that United Fire’s

fifteen-day delay in paying basic PIP benefits was unreasonable.

B. Bad Faith and a Willful and Wanton Claim Regarding Enhanced

PIP Benefits

As noted above, United Fire voluntarily reformed the insurance contract to

include enhanced PIP lost-income benefits from October 14, 2005, and began 

paying Mr. Lopez for income lost after that date. It chose October 14 because
-19-

its internal investigation had revealed that on that date one of its claim

representatives, while investigating a different insurance claim, had incidentally

become aware of Mr. Lopez’s potential claim.

United Fire advanced this same argument on summary judgment, asserting

the effective reformation date “should at best be to when United Fire was put on

notice that such an issue even exist[ed],” Aplt. App. at 113, and that it should

only have to pay Mr. Lopez for wages he lost after it became aware its policy

violated Colorado law. It argued “reformation should not make an insurer liable

for coverage it could not foresee during a time it reasonably did not know of such

exposure.” Id. at 351. Mr. Lopez disagreed, arguing that although United Fire

had reformed the insurance policy to include enhanced PIP coverage, its failure to

reform the policy to pay those benefits from the date the policy was issued

constituted bad faith and a willful and wanton failure to pay benefits when due

under § 10-4-708(1.8).

Resort to a judicial forum is not necessarily bad faith–or willful and wanton

conduct–because an insurer may legally challenge claims as long as the legal

questions presented by its arguments are fairly debatable. See Travelers Ins. Co.

v. Savio, 706 P.2d 1258, 1275 (Colo. 1985); Brennan, 961 P.2d at 557; Brandon

v. Sterling Colo. Beef Co., 827 P.2d 559, 561 (Colo. App. 1991). But Mr. Lopez

argued to the district court, and argues to this court on appeal, that a review of the

applicable case law shows that United Fire’s arguments were not fairly debatable.
10 These cases are Clark v. State Farm Mut. Auto. Ins. Co. (Clark I),

319 F.3d 1234, 1241 (10th Cir. 2003); Clark v. State Farm Mut. Auto. Ins. Co.

(Clark II), 292 F. Supp. 2d 1252, 1268 (D. Colo. 2003); and Clark v. State Farm

Mut. Auto. Ins. Co. (Clark III), 433 F.3d 703, 713 (10th Cir. 2005). 

-20-

Under Colorado law, when an insurer delays paying insurance benefits to

pursue legal arguments, the reasonableness of that party’s decision is a question

of law. See Tozer v. Scott Wetzel Servs., Inc., 883 P.2d 496, 499 (Colo. App.

1994) (“To submit such a question to the jury would not only require the [lay]

jurors to assess the reasonableness of a legal argument, . . . it would require the

parties . . . to provide the jurors with legal advice through the guise of expert

testimony.”). In support of its legal arguments, United Fire cited to the Clark line

of decisions by the district court and this court.10

We need not examine the Clark cases in detail, however, because United

Fire also relied on Breaux v. American Family Mutual Insurance Co.,

387 F. Supp. 2d 1154 (D. Colo. 2005). In Breaux, which was decided

approximately six months before United Fire’s summary judgment motion was

filed, the insured purchased an insurance policy from American Family in

February 2000. At that time, American Family offered several optional enhanced

PIP coverages but did not offer the enhanced PIP lost-income coverage required

by § 10-4-710(2)(a)(II). Evidence was presented that American Family amended

its general PIP endorsement in January 2001, to offer coverage complying with

§ 10-4-710(2)(a)(II), but made no change to the insured’s policy. The insured
11 More specifically, United Fire argued that the policy should be reformed to

the date it realized it could not prove it had made the required offer of coverage.

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was injured in an automobile accident in September 2001 and eventually sued

to have her policy reformed “to include enhanced PIP benefits [under

§ 10-4-710(2)(a)(II)] as of the issuance date of the policy.” Breaux,

387 F. Supp. 2d at 1164. The district court found that reformation was clearly

proper but exercised its discretion to set “the appropriate date of reformation [as]

the date that [American Family] became aware that it was not in compliance with

section 10-4-710(2)(a)(II) as to Plaintiff’s policy.” Id. (emphasis added). But the

district court did not pick the date of issuance of Ms. Breaux’s policy as the

reformation date, despite the fact that there is nothing in the opinion showing

American Family should not have been aware at the time of issuance of either

(1) what coverages it offered, or (2) what Colorado law required. The court

instead chose January 1, 2001, as the proper reformation date, which was the date

American Family amended its PIP endorsement to add § 10-4-710(2)(a)(II)

coverage. Thus, it appears the court chose the date that it was clear American

Family had realized its previous PIP coverage options violated Colorado law.

United Fire’s argument was essentially that the district court should follow

its ruling in Breaux and exercise its discretion to reform the insurance policy to

the date United Fire received notice that it had failed to offer the proper enhanced

PIP lost-income coverage in regard to the Pueblo Sanitation policy.11 United Fire
12 Mr. Lopez also argues for the first time on appeal that the effective date

of reformation is irrelevant to the amount of enhanced PIP benefits owed to

Mr. Lopez. It appears Mr. Lopez is arguing that because United Fire admitted

that the reformation date was, at latest, the middle of October 2005, then

(1) enhanced PIP coverage–i.e., benefits equaling eighty-five percent of his lost

income from the day after the date of the accident–was at least incorporated as of

that date, and thus (2) once he had presented reasonable proof of his claim at the

end of February 2006, those benefits–i.e., lost-income from the day after the

accident–should have been paid within thirty days. Mr. Lopez never raised this

argument in the district court. We review issues not raised in the district court

only for plain error, which is not present here. Kelly v. Metallics W., Inc.,

410 F.3d 670, 676 (10th Cir. 2005). 

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argues this legal position was fairly debatable and we agree. Consequently, we

affirm the court’s decision that it was not bad faith or a willful and wanton failure

to pay benefits when due for United Fire to delay payment of enhanced PIP

lost-income benefits by relying on its previous decision in Breaux.

12 

Mr. Lopez also complains that United Fire acted in bad faith and committed

willful and wanton conduct by delaying payment of enhanced PIP lost-income

benefits after the district court ordered that such benefits were due. He argues the

district court could not properly grant summary judgment because the benefits

had not been paid at the time of the court’s order and the court therefore had no

way of determining if future acts of bad faith or willful and wanton conduct

would occur.

We first note that Mr. Lopez’s response to United Fire’s summary judgment

motion did not argue that the court could not rule on the motion until the benefits

were paid. Kelly, 410 F.3d at 676 (holding we review issues not raised only for
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plain error). But even if the argument had been made it would clearly have

failed. Mr. Lopez’s bad faith and willful and wanton conduct claims necessarily

had to concern conduct by United Fire that occurred prior to the court’s order. In

this case the claims regarding the enhanced PIP lost-income benefits were based

on the reasonableness of the legal arguments regarding reformation put forth by

United Fire. Those arguments were properly settled by the court in its summary

judgment order. Mr. Lopez could not have brought a proper claim arguing that a

wrong might be committed at some point in the future. Even if a claim existed

for conduct by United Fire that occurred after the court’s order, it would be

a separate claim that is not properly reviewable in this appeal.

III. Analysis of Denial of Attorney Fees

Mr. Lopez’s final claim is that the district court erred in denying his

request for attorney fees. Mr. Lopez moved for an award of attorney fees under

§ 10-4-708(1.7). Subsection (a) of § 10-4-708(1.7) reads:

At least twenty days prior to the commencement of the proceeding

the party claiming the benefits shall set forth the amount claimed and

in controversy in a separate document entitled “Notice to insurer of

amount claimed”, which shall include no more than those amounts

the insured claims are denied or not timely paid by the insurer. The

notice shall also specify the amount, if any, claimed for attorney

fees. The notice shall be served on all parties no later than twenty

days prior to the commencement of the arbitration hearing or trial,

and shall be served in the manner set forth in rules promulgated by

the commissioner of insurance. If such notice is not timely served,

there shall be no award of attorney fees to the person claiming

benefits, unless the arbitrator or court determines that the failure was

the result of excusable neglect, in which case the arbitration or trial
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shall be continued to a date at least twenty days after the notice is

filed.

As noted above, United Fire argued that Mr. Lopez could not collect attorney fees

because he had failed to provide the notice referred to above and the district court

denied fees because “[t]here was no breach of the contract as the policy was

written.” Aplt. App. at 470. Mr. Lopez argues the court’s denial was inconsistent

with its previous holding that a breach of contract did occur. We affirm the

denial of attorney fees but for a different reason than that advanced by the district

court. See Proctor v. United Parcel Serv., 502 F.3d 1200, 1206 (10th Cir. 2007)

(internal quotation omitted) (“We may affirm the district court’s decision for any

reason supported by the record.”).

We review de novo “any statutory constructions or legal conclusions that

provide a basis for the award” of attorney fees, “[a]lthough the ultimate decision

to award fees rests within the district court’s discretion.” Phelps v. Hamilton,

120 F.3d 1126, 1129 (10th Cir. 1997). We note that “[i]n the absence of a statute,

court rule, or private contract to the contrary, attorney fees are not recoverable by

a prevailing party in either a contract or a tort action.” Adams v. Farmers Ins.

Group, 983 P.2d 797, 801 (Colo. 1999). Mr. Lopez is seeking attorney fees under

§ 10-4-108(1.7), which the Colorado Supreme Court has stated is the subsection

that “pertains to the availability and amount of attorney fee awards.” Id. at 803. 

When interpreting the meaning of that statute, we look to Colorado’s
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rules of statutory construction. Finstuen v. Crutcher, 496 F.3d 1139, 1148

(10th Cir. 2007). 

In construing a statute, our duty is to effectuate the intent and

purpose of the General Assembly. We read the statute as a whole,

giving sensible effect to all of its parts whenever possible.

If the statutory provisions are clear, we apply their plain and

ordinary meaning. If statutory provisions are in conflict, we adopt

the interpretation that best harmonizes the various provisions if

possible.

CLPF-Parkridge One, L.P., v. Harwell Invs., Inc., 105 P.3d 658, 660 (Colo. 2005)

(citations omitted).

Under § 10-4-708(1.7)(a):

At least twenty days prior to the commencement of the proceeding

the party claiming the benefits shall set forth the amount claimed and

in controversy in a separate document entitled “Notice to insurer of

amount claimed”, which shall include no more than those amounts

the insured claims are denied or not timely paid by the insurer.

§ 10-4-708(1.7)(a) (emphasis added). This notice must also include claimed

attorney fees. Id. Further, “[i]f such notice is not timely served, there shall be no

award of attorney fees to the person claiming benefits, unless the arbitrator or

court determines that the failure was the result of excusable neglect, in which

case the arbitration or trial shall be continued to a date at least twenty days after

the notice is filed.” Id.
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The parties agree no notice was served. Mr. Lopez argues on appeal, as he

did to the district court, that service of the notice was not required under the facts

of this case. Although the first sentence of subsection 1.7 states that the notice

must be served “[a]t least twenty days prior to the commencement of the

proceeding,” Mr. Lopez points out that the third sentence clarifies what is meant

by the phrase “the proceeding.” Id. That sentence reads: “The notice shall be

served on all parties no later than twenty days prior to the commencement of

the arbitration hearing or trial, and shall be served in the manner set forth in

rules promulgated by the commissioner of insurance.” Id. (emphasis added). 

Mr. Lopez therefore argues that because the present case was never set for trial or

arbitration he was not required to serve the notice. 

But the words “the proceeding” are used not just in subsection 1.7(a), they

are also used in subsection 1.7(c), which controls how the trial court is to

determine “the amount of attorney fees, if any, to be awarded.” Under

§ 10-4-708(1.7)(c)(I):

The award of attorney fees to the insured shall be in direct

proportion to the degree by which the insured was successful in the

proceeding. The determination of the degree of the insured’s success

shall be based upon a comparison of the amount of benefits set forth

in the notice of amount of benefits claimed and the amount of

benefits recovered in the proceeding. The percentage resulting from

this comparison shall be the degree by which the insured was

successful.
13 In Adams, the Colorado Supreme Court stated that this “statutory definition

of who constitutes a ‘successful’ party in the substantive proceedings is in need of

no additional clarification.” 983 P.2d at 802.

-27-

Thus, an award of attorney fees is based on the degree to which the party seeking

the fees was “successful” in “the proceeding.” But, as pointed out by Mr. Lopez,

there was no arbitration hearing or trial in this case. Mr. Lopez therefore

implicitly reads the references to “the proceeding” in subsection 1.7(c)(I), as

references to something that did take place in this case, such as the contract

action in general or possibly just the summary judgment proceedings. He

therefore argues the monies he eventually received from United Fire were proof

of monetary success in “the proceeding.” But such conflicting interpretations of

the phrase “the proceeding” would not harmonize the various provisions.

Mr. Lopez argued in the district court that he “was successful in recovering

100% of the PIP benefits sought in the litigation.” Aplt. App. at 455. But such

an interpretation ignores the statutory authorization to award attorney fees. An

insured’s “success” in “the proceeding” is formulaic. § 10-4-708(1.7)(c)(I). It is

measured by a comparison of the claimed benefits set forth in the statutory notice

with the amount of benefits recovered in “the proceeding.”13

At this time, we need not decide precisely what the Colorado legislature

intended with its reference to a “proceeding.” Here, if the phrase “the

proceeding” in subsection 1.7(a) and subsection 1.7(c)(I) is interpreted as a

reference to something that actually took place in this case, such as Mr. Lopez’s
14 Further, this interpretation would appear to be in direct contrast to the plain

language of subsection 1.7(a), which references “the arbitration hearing or trial.” 

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overall legal action or the summary judgment proceedings, then Mr. Lopez is

barred from collecting fees because he did not serve his notice at least twenty

days prior to “the commencement of the proceeding,” i.e., the filing of his

complaint or his motion for partial summary judgment.14 If “the proceeding” is

interpreted in those subsections as a reference to an “arbitration hearing or trial”

then, although no notice was required, Mr. Lopez is still not entitled to attorney

fees because, since there was no trial, there were no “benefits recovered in the

proceeding” and he was therefore not “successful in the proceeding.” Under

either interpretation, affirmance is required.

IV. Conclusion

The judgment of the district court is AFFIRMED.

Entered for the Court

Michael R. Murphy

Circuit Judge