The slip opinion is the first version of an opinion released by the Chief Clerk of the 

Supreme Court. Once an opinion is selected for publication by the Court, it is 

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number: _____________

Filing Date: April 25, 2022

No. A-1-CA-38977

OR&L CONSTRUCTION, L.P.,

Plaintiff-Appellant,

v.

MOUNTAIN STATES MUTUAL

CASUALTY COMPANY,

Defendant-Appellee.

APPEAL FROM THE DISTRICT COURT OF DOÑA ANA COUNTY

Jarod K. Hofacket, District Judge

The Furth Law Firm, P.A.

Ben Furth

Paul Hibner

Las Cruces, NM 

for Appellant

Modrall, Sperling, Roehl, Harris & Sisk, P.A.

Tim L. Fields

Jeremy K. Harrison

Albuquerque, NM 

for Appellee
OPINION

MEDINA, Judge.

{1} Plaintiff OR&L Construction, L.P. (OR&L) appeals the district court’s grant 

of summary judgment in favor of Defendant Mountain States Mutual Casualty 

Insurance Company (Mountain States). OR&L contends that the district court erred 

by entering summary judgment in Mountain States’ favor and should have granted 

summary judgment in OR&L’s favor; the district court should have applied the 

“mend the hold” doctrine to prevent Mountain States from changing its reason for 

denying OR&L’s claim for coverage; the district court erred in dismissing OR&L’s 

claims for breach of the implied covenant of good faith and fair dealing and 

violations of the Unfair Practices Act (UPA), NMSA 1978, § 57-12-2 (2009, 

amended 2019), and the Unfair Insurance Practices Act (UIPA), NMSA 1978, 

§ 59A-16-20 (1997); the district court erred by holding OR&L had notice of its 

policy’s exclusions as a matter of law; and the district court erred by holding OR&L 

suffered no damages as a matter of law. OR&L also argues that the district court 

erred in awarding attorney fees and costs to Mountain States. 

{2} We affirm and clarify two aspects of the implied covenant of good faith and 

fair dealing. First, we hold that the reasonable expectations doctrine is a judicial 

doctrine, and an insurer does not violate the implied covenant if it does not consider 

an insured’s reasonable expectations of coverage when processing claims. Second, 
2

we hold that an insurer’s good faith duty to investigate ends after it determines a 

claim is not covered under the terms of an insured’s policy, and thus a failure to 

investigate beyond the terms of the policy does not violate the implied covenant.

BACKGROUND

{3} OR&L is a construction business that conducts, among other things, roof 

repair, including “torch-down” roofing—a technique which uses a flaming torch to 

heat and seal tar paper onto a roof. OR&L sought a general commercial liability 

policy through insurance broker Pat Campbell Insurance, LLC (Pat Campbell) that 

would cover all its operations, including torch-down roofing. Mountain States does 

not sell insurance directly to the public, and instead authorizes brokers, like Pat 

Campbell, to sell its insurance products. Through Pat Campbell, OR&L obtained a 

Mountain States general commercial liability insurance policy. 

{4} In February 2016, Mountain States transmitted a complete copy of OR&L’s

policy to Pat Campbell. The complete policy contained two exclusions, “Designated 

Work” and “Designated Ongoing Operations,” which specifically precluded 

coverage for damage caused by torch-down roofing. Pat Campbell then sent a tenpage “Commercial Package Policy” document to OR&L. The ten-page document 

contained a two-page forms list which identified several forms included in OR&L’s 

policy, including several exclusions. Pat Campbell did not read the complete policy 

and failed to discover the torch-down roofing exclusion. OR&L reviewed the ten-
3

page policy document and the list of forms identifying the exclusions, but believed 

it acquired coverage for torch-down roofing based on Pat Campbell’s 

representations. 

{5} In March 2016, a fire occurred at a home while OR&L was performing torchdown roofing. OR&L submitted a claim for coverage to Mountain States, believing 

that its policy covered damage caused by such an incident. Shortly after, OR&L 

participated in two phone calls with Mountain States claims adjuster Kimberly 

Kroner to discuss the fire. During the first call, OR&L informed Ms. Kroner that the 

fire occurred while OR&L was performing torch-down roofing, and Ms. Kroner 

replied that OR&L’s policy contained a torch-down roofing exclusion. OR&L 

informed Ms. Kroner it was unaware the policy excluded torch-down roofing and 

that it had only received a ten-page policy document from Pat Campbell. Ms. Kroner 

ended the first call and discussed the exclusion with Mountain States’ chief 

underwriting officer, who informed her the exclusion was valid. Ms. Kroner then 

made a second call to inform OR&L that the policy exclusion was valid and that 

OR&L had no coverage for a fire caused by torch-down roofing. A week later, Ms. 

Kroner sent OR&L a letter officially denying coverage due to the torch-down 

roofing exclusion. Mountain States did not investigate whether Pat Campbell had 

provided OR&L with a complete copy of the policy and believed that OR&L did not 
4

have the complete policy. OR&L subsequently sued Mountain States and Pat 

Campbell in May 2016. 

{6} In August 2016, OR&L received a demand for payment from the 

homeowner’s insurance company. Pat Campbell purchased the homeowner’s 

demand through a July 2017 settlement agreement. In July 2018, OR&L and Pat 

Campbell entered into a second settlement agreement in which Pat Campbell agreed 

in part to pay OR&L’s attorney fees related to litigation between Pat Campbell and 

OR&L, and extinguish the homeowner’s demand in exchange for OR&L releasing 

all its claims against Pat Campbell. In exchange, OR&L agreed not to pursue further 

legal action against Pat Campbell for any cause of action arising from the fire. 

{7} After settling with Pat Campbell, OR&L filed a third amended complaint 

which solely asserted claims against Mountain States. OR&L sought relief for 

alleged violations of the UPA, breach of contract and breach of the implied covenant 

of good faith and fair dealing, and violations of the UIPA. OR&L also sought 

reformation of OR&L’s policy to strike the torch-down roofing exclusion and 

damages. 

{8} Mountain States answered the complaint and asserted a counterclaim against 

OR&L, requesting a declaratory judgment due to the policy’s exclusion of losses 

arising from torch-down roofing. In support of its counterclaim, Mountain States 

alleged that OR&L had actual or constructive notice of the exclusion because the 
5

complete policy had been provided to Pat Campbell, and inquiry notice of the torchdown roofing exclusion from the ten-page policy document Pat Campbell provided 

to OR&L. OR&L subsequently filed a motion in limine asserting that Mountain 

States mended its hold because Mountain States had initially denied OR&L’s 

coverage claim due to the torch-down roofing exclusion, not OR&L’s notice of the 

exclusion. 

{9} The parties filed and briefed several motions for summary judgment. In a 

detailed order, the district court granted summary judgment to Mountain States, 

finding that Mountain States had disclosed the torch-down roofing exclusion to 

OR&L. The district court found that the ten-page policy document OR&L received 

reasonably informed OR&L of its rights and obligations and that there were 

exclusions in the policy. Thus, per Young v. Seven Bar Flying Service, Inc., 1984-

NMSC-069, 101 N.M. 545, 685 P.2d 953, OR&L had notice of the exclusions as a 

matter of law, and the documents supplied to OR&L would allow Mountain States 

to rely on the torch-down roofing exclusion. 

{10} The district court also found that OR&L’s release of Pat Campbell was an 

alternate basis for granting summary judgment to Mountain States. OR&L’s 

expectation of coverage was directly attributable to Pat Campbell, not Mountain 

States, and Mountain States could only be held vicariously liable for Pat Campbell’s 

acts and omissions. The district court found that because Pat Campbell was acting 
6

as an agent for Mountain States when it delivered the policy to OR&L and OR&L 

released Pat Campbell, no liability could be imputed to Mountain States for Pat 

Campbell’s acts or omissions. 

{11} The district court also dismissed OR&L’s claims for breach of the implied 

covenant of good faith and fair dealing and violations of the UPA and UIPA. 

Regarding OR&L’s expectations of coverage, the district court found that the 

reasonable expectations doctrine is a judicial remedy, and that Mountain States 

therefore had no duty to consider OR&L’s reasonable expectations of coverage. The 

district court also found that Mountain States did not breach the implied covenant or 

violate its duty to investigate the cause of the fire because the scope of an insurer’s 

investigation is limited to the facts and circumstances of the loss and does not 

encompass the insured’s expectations of coverage. Additionally, the district court 

found Mountain States had no obligation to attempt to settle due to its good faith 

belief that OR&L’s policy did not cover its loss from the fire. 

{12} Regarding OR&L’s motion in limine, the district court found that Mountain 

States did not mend its hold. The district court found that the doctrine did not 

preclude Mountain States from further explaining the basis of its claims decision or 

responding to legal arguments and that explaining how a policy exclusion was 

enforceable was not mending the hold. 
7

{13} Because Pat Campbell had purchased the homeowner’s claim against OR&L, 

the district court found that OR&L was in the position it expected to be when it 

sought coverage for torch-down roofing and suffered no damages. Finally, the 

district court found that OR&L either chose not to do available work due to the 

litigation, which would be a failure to mitigate, or there was no work available 

meaning there could be no lost profits. Because the availability of work and whether 

that work was declined was in dispute, the district court denied summary judgment 

on the issue of mitigation, but noted that its other rulings fully resolved the case and 

no issues were preserved for trial.

{14} In a separate order, the district court found that Mountain States was entitled 

to its fees and costs and overruled all of OR&L’s objections to Mountain States’ cost 

bill, awarding Mountain States $53,465.82 in fees and costs. This appeal followed.

DISCUSSION

I. Summary Judgment

{15} “Our review on a grant of summary judgment is de novo.” Salas v. Mountain 

States Mut. Cas. Co. (Salas II), 2009-NMSC-005, ¶ 12, 145 N.M. 542, 202 P.3d 801 

(internal quotation marks and citation omitted). “Summary judgment is only 

appropriate where there are no genuine issues of material fact and the movant is 

entitled to judgment as a matter of law.” Id. (internal quotation marks and citation 

omitted). “Moreover, the existence of a duty is a question of law, which we review 
8

de novo.” Id.; see Azar v. Prudential Ins. Co. of Am., 2003-NMCA-062, ¶ 43, 133 

N.M. 669, 68 P.3d 909.

A. The Torch-Down Roofing Exclusion

{16} Much of this case hinges on whether the torch-down roofing exclusion in 

OR&L’s policy is enforceable. OR&L contends that the exclusion is not enforceable 

because OR&L applied for torch-down roofing coverage; OR&L was informed that 

the policy covered all its operations; Pat Campbell testified that it never would have 

thought the policy contained an exclusion for coverage it had applied for; the policy 

document identified itself as the policy and contained material terms; and the tenpage policy document it received represented it covered OR&L’s business 

operations. OR&L also contends that the district court erred in determining it had 

notice of the exclusion as a matter of law because no reasonable person would know 

that OR&L’s policy contained a torch-down roofing exclusion, OR&L applied for 

and expected it would receive torch-down roofing coverage, and Pat Campbell did 

not believe that there would be an exclusion for coverage it had applied for. Based 

on the foregoing, OR&L claims it had reasonable expectations of coverage and the 

policy should be reformed to eliminate the torch-down roofing exclusion. We 

disagree and explain.

{17} “In New Mexico, if an insured is supplied with a copy of his policy or a 

memorandum of insurance, then he may rely on the document so supplied to inform 
9

him of all his rights and duties under the insurance contract.” Young, 1984-NMSC069, ¶ 10. “If an insurer gives the impression that all of the material provisions of an 

insurance contract are contained in a document furnished to the insured by the 

insurer, then the insurer cannot invoke provisions in the original which were not 

included in the copy given to the insured.” Id. “However, failure of an insurer to 

provide an individual with a copy of an applicable insurance policy will not, in every 

case, release the individual from the . . . provisions in the policy.” Id.

{18} New Mexico courts have examined many situations similar to the present case 

to determine whether a policy exclusion may be enforced. Two cases are particularly 

helpful in guiding our analysis, with the first being Stock v. ADCO General Corp., 

1981-NMCA-075, ¶ 2, 96 N.M. 544, 632 P.2d 1182. In Stock, the plaintiff purchased 

insurance through a broker to cover his tractor-trailer fleet. The policy, as issued, 

was not what the plaintiff requested and was not what was quoted to the broker. Id.

¶ 3. The policy contained a “named driver endorsement” that had not been requested 

or discussed and was not on the application. Id. The insurance company knew this 

limitation was unusual and provided the broker with special stickers to attach to the 

policy to warn the insured of the endorsement and its limited coverage, but the broker 

failed to attach the stickers to the plaintiff’s policy. Id.

{19} Neither the broker nor the plaintiff read the policy. Id. ¶ 4. Therefore, neither 

broker nor plaintiff were aware of the named driver endorsement limitation, and that 
10

one of the plaintiff’s drivers was not on that list. Id. The driver who was not on the 

list was later involved in a tractor accident, and the plaintiff sued after he was denied 

coverage for the accident. Id. ¶¶ 4-5. The plaintiff admitted he had not read the 

policy, but argued that the limitation did not apply because he was never made aware 

of the limitation and he had reason to expect the policy would provide coverage 

based on similar policies he had received. Id. ¶ 7. This Court held that the plaintiff’s

failure to read the policy was not contributory negligence; it was reasonable for the 

plaintiff to expect the policy would contain the coverage he requested; the plaintiff

was not advised by the broker that the policy was different; and the plaintiff was not 

bound to read the policy word for word. Id. ¶¶ 10-11. This Court ultimately did not 

reform the policy, but only declined to do so because the policy had already expired. 

See id. ¶ 25.

{20} The second guiding case is Young. In Young, the plaintiff purchased an aircraft 

that he leased to Seven Bar Flying Service (Seven Bar). 1984-NMSC-069, ¶ 1. Seven 

Bar insured the aircraft on its master insurance policy with National Union (the 

insurance company). Id. The plaintiff was supplied with a certificate of insurance 

informing him that the insurance company had insured the aircraft. Id. ¶ 11. The 

aircraft was subsequently stolen and the plaintiff sued Seven Bar for negligence and 

breach of the lease agreement, as well as the insurance company for wrongful refusal 

to pay his claim on the stolen aircraft. Id. ¶ 1. The plaintiff contended that the 
11

insurance company should be estopped from asserting the time-to-sue limitation in 

Seven Bar’s master policy because the plaintiff was never provided with a copy of 

the policy. Id. ¶ 8.

{21} The New Mexico Supreme Court disagreed, holding that the insurance 

company could assert the time-to-sue limitation. Id. ¶ 12. The Court stated that “[i]f 

an insurer gives the impression that all of the material provisions of an insurance 

contract are contained in a document furnished to the insured by the insurer, then the 

insurer cannot invoke provisions in the original that were not included in the copy 

given to the insured.” Id. ¶ 10. However, the plaintiff had been provided with a 

certificate of insurance, which stated “[f]or particulars concerning the limitations, 

conditions and terms of the coverage you are referred to the original [p]olicy or 

[p]olicies in the possession of the [a]ssured.” Id. ¶ 11. Therefore, the insurance 

company was not estopped from asserting the time-to-sue limitation. Id. ¶ 12.

{22} “[T]he critical difference appears to be whether the document supplied to the 

insured may have suggested that all the restrictions of the policy were set forth in 

the document.” Willey v. United Mercantile Life Ins. Co., 1999-NMCA-137, ¶ 18, 

128 N.M. 98, 990 P.2d 211. For that reason, we conclude that this case is more like 

Young than Stock. The forms schedule in the ten-page policy document OR&L 

received states that there are several terms and conditions, not just policy exclusions 

to OR&L’s coverage, not contained within the ten-page document. The “Additional 
12

Property Coverage” and “Additional General Liability Coverages” forms also direct 

the insured to “[r]efer to captioned endorsements for applicable limits and 

deductibles” that are not listed in the ten-page document itself. Thus, the ten-page 

policy document notifies the insured that there are limits and restrictions to OR&L’s 

coverage that are fully explained within the complete policy.

{23} To the extent OR&L contends that Salas II, 2009-NMSC-005, and Salas v. 

Mountain States Mutual Casualty Co. (Salas I), 2007-NMCA-161, 143 N.M. 113, 

173 P.3d 35, prevent the exclusion from being enforceable, we disagree. It is true 

that, under both Salas cases, insurers have a primary responsibility to provide 

insureds with reasonable notice of the contents of their policy by providing a copy 

of the policy or some other documentation of its terms and that a failure to do so 

precludes the insurer from relying on an undisclosed provision to limit coverage.

Salas II, 2009-NMSC-005, ¶ 13; Salas I, 2007-NMCA-161, ¶ 38. But Mountain 

States did not fail to provide OR&L with reasonable notice of the contents of its 

policy because the ten-page policy document indicates that it does not contain the 

policy’s complete terms and conditions. We, therefore, affirm the district court’s 

grant of summary judgment in Mountain States’ favor because OR&L had notice of 

the torch-down roofing exclusion as a matter of law and Mountain States may rely 

on the exclusion to deny OR&L’s claim. Compare Young, 1984-NMSC-069, ¶ 11 

(holding that the policy limitation was enforceable because the insured received a 
13

“Certificate of Insurance” that directed him to refer to the original policy for the 

complete terms and conditions of coverage (internal quotation marks omitted)), with 

Willey, 1999-NMCA-137, ¶ 18 (holding that the policy limitation was not 

enforceable because the document the insured received did not mention any policy 

restrictions).

B. The Release of Pat Campbell

{24} “New Mexico law permits an insured to sue an agent for failing to obtain a 

requested policy.” Wilson v. Berger Briggs Real Est. & Ins., Inc., 2021-NMCA-054, 

¶ 9, 497 P.3d 654. “Liability may be predicated either upon the theory that the 

defendant is the agent of the insured and has breached a contract to procure a policy 

or insurance, or that he owes a duty to his principal to exercise reasonable skill, care, 

and diligence in securing the insurance requested and negligently failed to do so.” 

Id. (alterations, internal quotation marks, and citation omitted). 

{25} Mountain States argues that OR&L and Pat Campbell’s settlement agreement 

is an alternative basis for affirming summary judgment in its favor. Mountain States 

asserts that Pat Campbell was acting as an insurance broker for OR&L when it 

delivered the policy to OR&L, and thus was acting as OR&L’s agent at that time. 

Because any liability of Mountain States for Pat Campbell’s failures is vicarious 

liability, Mountain States argues that OR&L’s release of Pat Campbell releases all 

claims against Mountain States derived from Pat Campbell’s actions. OR&L 
14

disagrees, arguing that the settlement does not release or involve Mountain States 

and only provides for payment of attorney fees incurred in pursuing claims against 

Pat Campbell, extinguishes the homeowner’s claims, and amends OR&L’s 

complaint to remove Pat Campbell. OR&L also argues that its claims against 

Mountain States are not based on vicarious liability.

{26} While we agree that some of OR&L’s claims against Mountain States are 

based on direct liability, we determine that its release of Pat Campbell releases any 

claims against Mountain States derived from Pat Campbell’s actions or omissions. 

“The rule under general principles of insurance law is that an insurance broker 

represents the insured.” Barth v. Coleman, 1994-NMSC-067, ¶ 23, 118 N.M. 1, 878

P.2d 319. Some cases have held the opposite, which illustrates the challenge of 

applying general agency principles to cases in which insurance is sold through 

brokers. See id.

{27} But regardless of Pat Campbell’s agency relationship to either Mountain 

States or OR&L, Pat Campbell has been discharged from this lawsuit. Thus, if we 

assume without deciding that Pat Campbell was acting as an agent of OR&L, OR&L 

has no recourse against Pat Campbell due to the settlement agreement. In contrast, 

if we assume without deciding that Pat Campbell was acting as an agent of Mountain 

States, OR&L has no recourse against Mountain States for Pat Campbell’s actions 

that can be imputed to Mountain States because “with the release of an agent, the 
15

means by which liability can be imputed to the principal is destroyed.” Valdez v. RWay, LLC, 2010-NMCA-068, ¶ 4, 148 N.M. 477, 237 P.3d 1289. Thus, Mountain 

States cannot be held vicariously liable for the acts and omissions of Pat Campbell. 

See Kinetics, Inc. v. El Paso Prods. Co., 1982-NMCA-160, ¶ 29, 99 N.M. 22, 653 

P.2d 522 (“Vicarious liability is based on a relationship between the parties . . . under 

which it has been determined as a matter of policy that one person should be liable 

for the act of the other.” (internal quotation marks and citation omitted)). 

{28} We therefore hold that OR&L’s release of Pat Campbell is alternative basis 

for affirming the district court’s grant of summary judgment to Mountain States 

regarding any actions of Pat Campbell that could be imputed to Mountain States. We 

now address OR&L’s claims for direct liability.

C. The Implied Covenant of Good Faith and Fair Dealing

{29} “Under the common law, all insurance contracts include an implied covenant 

of good faith and fair dealing that the insurer will not injure its policyholder’s right 

to receive the full benefits of the contract.” Sherrill v. Farmers Ins. Exch., 2016-

NMCA-056, ¶ 34, 374 P.3d 723 (internal quotation marks and citation omitted). 

“[T]he implied covenant of good faith and fair dealing cannot be used to override 

express provisions in a written contract.” Smoot v. Physicians Life Ins. Co., 2004-

NMCA-027, ¶ 10, 135 N.M. 265, 87 P.3d 545. “Thus, it is breached only when a 
16

party seeks to prevent the contract’s performance or to withhold its benefits from the 

other party.” Azar, 2003-NMCA-062, ¶ 51.

{30} OR&L argues that Mountain States breached the implied covenant of good 

faith and fair dealing in three ways. First, OR&L argues that, per Barth, 1994-

NMSC-067, insurers have a nondelegable duty to ensure the insured’s reasonable 

expectations of coverage when denying coverage due to a policy exclusion and that 

Mountain States’ failure to consider its reasonable expectations violates the UIPA. 

Second, OR&L argues that Mountain States violated both the UIPA and its 

nondelegable duty to investigate by not investigating the cause of the fire, or whether 

OR&L had notice of the torch-down roofing exclusion. Third, OR&L argues that 

Mountain States did not attempt to resolve OR&L’s claims in good faith in violation 

of the UIPA. We disagree, and we explain.

1. The Reasonable Expectations Doctrine

{31} In Barth, the New Mexico Supreme Court held that “[w]hen deciding whether 

an exclusionary clause is effective to nullify coverage under an insurance policy, we 

give consideration to the reasonable expectations of the insured.” 1994-NMSC-067, 

¶ 14. Nothing in Barth requires the insurer to consider the insured’s reasonable 

expectations. Rather, the “reasonable expectations” doctrine is a judicial doctrine 

applied by the courts when interpreting an insurance policy. See Rummel v. 

Lexington Ins. Co., 1997-NMSC-041, ¶ 22, 123 N.M. 752, 945 P.2d 970 (“The 
17

court’s construction of an insurance policy will be guided by the reasonable 

expectations of the insured.”). OR&L identifies no authority, and we are aware of 

none, that requires an insurer to consider the reasonable expectations of the insured 

when determining whether coverage applies to a particular claim. Stated differently, 

the doctrine guides construction of a policy in circumstances where such is at issue 

or where given provisions require a court to ascertain their meaning. But to reiterate, 

it is not a doctrine applicable to insurers themselves, nor does it govern what insurers 

must cover in an insurance policy.

{32} As such, the “reasonable expectations” doctrine is not applicable in this case. 

The doctrine may be invoked when (1) “the language of an insurance policy or 

representations of [an] insurance company lead [the] insured to reasonably expect 

coverage”; (2) the language of the policy is ambiguous; or (3) “when the dynamics 

of the insurance transaction make way for its application.” Rehders v. Allstate Ins. 

Co., 2006-NMCA-058, ¶ 33, 139 N.M. 536, 135 P.3d 237 (internal quotation marks 

and citation omitted). However, “[u]nambiguous insurance policy exclusions are to 

be enforced unless they are contrary to law or public policy.” Berlangieri v. Running 

Elk Corp., 2002-NMCA-046, ¶ 15, 132 N.M. 92, 44 P.3d 538. The torch-down 

roofing exclusion is not ambiguous, nor is it contrary to law or public policy. It is 

true that the doctrine of reasonable expectations is not limited to disputed policy 

language and that the dynamics of the insurance transaction often affect the insured’s 
18

reasonable expectations. Barth, 1994-NMSC-067, ¶ 15. However, unlike the 

defendant in Barth, OR&L had notice of the torch-down roofing exclusion from the 

ten-page policy document, and therefore Mountain States could rely on the exclusion 

to deny OR&L’s claim. See id. ¶¶ 18-20 (holding that the defendant had a reasonable 

expectation of coverage because the insured was (1) uninformed about the nature of 

what he purchased, (2) did not receive the policy before the incident leading to a 

claim for coverage arose, and (3) had no notice the policy contained an exclusion 

precluding coverage for the incident). 

{33} We therefore affirm the district court’s dismissal of OR&L’s claims for 

violation of the implied covenant of good faith and fair dealing regarding the 

reasonable expectations doctrine. We also affirm the dismissal of OR&L’s UIPA 

claims regarding its reasonable expectations because the UIPA does not obligate 

insurers to consider an insured’s reasonable expectations of coverage. See generally

§ 59A-16-20.

2. The Duty to Investigate

{34} Insurers are required to promptly investigate and process an insured’s claim 

for coverage. See § 59A-16-20(C). “In this context, insurer conduct is measured by 

basic standards of competency and the insurer is charged with knowledge of the duty 

owed to its insured.” Sherrill, 2016-NMCA-056, ¶ 39 (omission, internal quotation 

marks, and citation omitted). 
19

{35} There is no evidence in the record that Mountain States violated its duty to 

investigate or otherwise sought to prevent the policy’s performance or withhold its 

benefits. OR&L’s policy is clear that there is no coverage for torch-down roofing. 

After OR&L submitted its claim for coverage, Mountain States inquired as to the 

cause of the fire, informed OR&L that its policy did not cover torch-down roofing, 

and confirmed that the policy exclusion still precluded coverage after OR&L 

expressed that it was unaware of the exclusion. Thus, once Mountain States 

performed its investigation and determined OR&L lacked coverage for the fire, there 

was no other performance due under the contract. 

{36} To the extent OR&L argues that Mountain States violated a nondelegable duty 

to investigate whether OR&L had notice of the torch-down roofing exclusion under 

the Salas cases, we disagree. As we have explained, neither Salas case imposes such 

a duty on insurers. The Salas cases only require insurers to give reasonable notice of 

the contents of their policy, and Mountain States met that requirement. See Salas I, 

2007-NMCA-161, ¶ 38; Salas II, 2009-NMSC-005, ¶ 13. Mountain States had no 

duty to consider OR&L’s reasonable expectations of coverage when processing its 

claim, had no duty to investigate the fire once it determined OR&L’s claim was 

excluded from coverage, and had no duty to investigate whether OR&L had notice 

of the torch-down roofing exclusion. 
20

{37} We therefore affirm the district court’s dismissal of OR&L’s claims for 

violation of the implied covenant of good faith and fair dealing regarding the duty 

to investigate. Based on the forgoing, we also affirm the dismissal of OR&L’s UIPA

claims related to its reasonable expectations and Mountain States’ duty to 

investigate. The UIPA does not require insurers to investigate the cause of an 

incident leading to a claim when there is no coverage. See generally § 59A-16-20.

3. Resolution of OR&L’s Claims

{38} Finally, we briefly address OR&L’s assertion that Mountain States failed to 

attempt in good faith to resolve OR&L’s claims and the claims against it. The UIPA 

requires insurers to attempt “in good faith to effectuate prompt, fair and equitable 

settlements of an insured’s claims in which liability has become reasonably clear.” 

Section 59A-16-20(E). However, an insured cannot raise a claim of bad faith based 

on an insurer’s failure to pay a covered claim unless the insured can establish that 

coverage exists. Haygood v. United Servs. Auto. Ass’n, 2019-NMCA-074, ¶ 21, 453 

P.3d 1235. OR&L has failed to establish coverage for claims regarding torch-down 

roofing; therefore, OR&L’s argument that Mountain States did not attempt to resolve 

its claim or any other claims in good faith is unavailing. Accordingly, we affirm the 

dismissal of OR&L’s claims that Mountain States violated the implied covenant of 

good faith and fair dealing or the UIPA by failing to promptly effectuate claims 

resolution.
21

D. Mountain States’ Alleged Misrepresentations

{39} Under the UPA, an unfair or deceptive practice is “a false or misleading oral 

or written statement, visual description or other representation of any kind 

knowingly made in connection with the sale, lease, rental or loan of goods or services 

or in the extension of credit or in the collection of debts by a person in the regular 

course of the person’s trade or commerce, that may, tends to or does deceive or 

mislead any person.” Section 57-12-2(D). To establish a UPA violation, a plaintiff 

must show four elements: “(1) the defendant made a false statement, (2) the 

defendant made the statement in connection with the sale of services and knew that 

the statement was false, (3) the defendant made the statement in the regular course 

of trade or commerce, and (4) the statement was one which may, tends to, or does 

deceive or mislead any person.” Dellaira v. Farmers Ins. Exch., 2004-NMCA-132, 

¶ 20, 136 N.M. 552, 102 P.3d 111 (alteration, omission, internal quotation marks, 

and citation omitted). “The ‘knowingly made’ requirement is met if a party was 

actually aware that the statement was false or misleading when made, or in the 

exercise of reasonable diligence should have been aware that the statement was false 

or misleading.” Stevenson v. Louis Dreyfus Corp., 1991-NMSC-051, ¶ 17, 112 N.M. 

97, 811 P.2d 1308.

{40} OR&L argues that Mountain States made several material misrepresentations 

that merit reversal on different grounds. OR&L appears to contend that Mountain 
22

States violated the UPA by (1) making material misrepresentations in its denial 

letter, and (2) that the ten-page policy document deceived both Pat Campbell and 

OR&L. OR&L similarly argues that Mountain States violated the UIPA by 

misrepresenting OR&L’s policy provisions in its denial letter based on the torchdown roofing exclusion, and that the denial letter failed to address OR&L’s 

constructive notice of the exclusion in violation of the UIPA, which parallels 

OR&L’s argument that Mountain States mended its hold by asserting OR&L’s 

actual and constructive notice of the torch-down roofing exclusion in defending this 

litigation. 

{41} We disagree. OR&L fails to point us to any record evidence demonstrating 

that Mountain States made any false statements or material misrepresentations. As 

we have determined, Mountain States is entitled to rely on the torch-down roofing 

exclusion because the ten-page document OR&L received contained notice of that 

exclusion. Mountain States cited the exclusion when denying OR&L’s claim and did 

not make a false statement or misrepresent any policy provisions when denying 

coverage. Thus, OR&L’s UPA claims must fail because it cannot show the first 

element required to establish a violation of the UPA. See § 57-12-2(D). We similarly 

affirm the dismissal of OR&L’s UIPA claims related to Mountain States’ alleged 

material misrepresentations, because OR&L has failed to establish that Mountain 
23

States misrepresented facts or policy provisions in violation of the UIPA. See § 59A16-20(A). 

{42} Finally, based on the forgoing, we conclude that the mend the hold doctrine 

is not applicable to Mountain States’ conduct in defending this case. The mend the 

hold doctrine precludes an insurer from asserting one reason to deny coverage of a 

claim and then raising a different reason for denial as a defense once litigation 

occurs. See Irwin v. Sovereign Camp of Woodmen of the World, 1910-NMSC-023, 

¶ 4, 15 N.M. 365, 110 P. 550. Mountain States has consistently asserted its belief 

that the torch-down roofing exclusion precludes coverage, both before and 

throughout the duration of this lawsuit. Ms. Kroner expressed that the exclusion 

precluded coverage for the fire when she spoke to OR&L, Mountain States’ denial 

letter relies on the torch-down roofing exclusion, and Mountain States asserted the 

exclusion as a counterclaim. While Mountain States explains its reliance on the 

exclusion in more detail in defending this lawsuit, we are aware of no authority, and 

OR&L cites none, that precludes an insurer from explaining the basis of its claims 

decision and asserting the insured’s notice of that exclusion in response to litigation.

{43} As expressed above, whether an insured has notice is a factual and legal 

question to be decided by the courts, not a claims denial question an insurer must 

consider when denying a claim for coverage. We therefore determine that Mountain 
24

States did not mend its hold and affirm the district court’s order denying OR&L’s 

motion in limine regarding the mend the hold doctrine.

E. Damages and Mitigation

{44} “In an ordinary lawsuit, denial of a motion for summary judgment is not 

appealable.” Doe v. Leach, 1999-NMCA-117, ¶ 12, 128 N.M. 28, 988 P.2d 1252. 

“Where a motion for summary judgment is based solely on a purely legal issue which 

cannot be submitted to the trier of fact, and the resolution of which is not dependent 

on evidence submitted to the trier of fact . . . the issue should be reviewable on appeal 

from the judgment.” Gallegos v. State Bd. of Educ., 1997-NMCA-040, ¶ 10, 123 

N.M. 362, 940 P.2d 468.

{45} Here, the district court found that OR&L suffered no damages in its order 

denying Mountain States’ motion for summary judgment based on OR&L’s failure 

to mitigate. OR&L challenges the district court’s finding that it suffered no damages 

as a matter of law. However, because Mountain States’ motion for summary 

judgment depended on an issue that needed resolution by the trier of fact—the 

availability of work and whether such work was declined—there is no appealable 

finding regarding damages. 

{46} Regardless, it is unnecessary for us to review the issue of damages to resolve 

this appeal. Because we have determined that Mountain States was legally entitled 

to rely on the torch-down roofing exclusion to deny OR&L’s claims, whether OR&L 
25

has suffered a monetary loss arising from the fire is irrelevant because Mountain 

States is not liable for that loss. It is not our practice to address issues unnecessary 

for the disposition of an appeal. See, e.g., Sandoval v. Cortez, 1975-NMCA-088, 

¶ 16, 88 N.M. 170, 538 P.2d 1192 (“Since we are affirming this case on points 

regarding liability it will be unnecessary for us to review the point regarding 

damages.”).

{47} It is true that a plaintiff may seek recovery under the UPA without proof of 

actual damages. See NMSA 1978, § 57-12-10(B) (2005) (authorizing recovery of 

“actual damages or the sum of one hundred dollars ($100), whichever is greater”). 

But because OR&L’s UPA claims fail, we similarly need not address OR&L’s claim 

for damages under the UPA. We therefore decline to further address the issue of 

damages.

II. Mountain States’ Cost Bill

{48} “In all civil actions or proceedings of any kind, the party prevailing shall 

recover his costs against the other party unless the court orders otherwise for good 

cause shown.” NMSA 1978, § 39-3-30 (1966). Similarly, our rules state “[u]nless 

expressly stated either in a statute or in these rules, costs . . . shall be allowed to the 

prevailing party unless the court otherwise directs.” Rule 1-054(D)(1) NMRA. As 

the prevailing party, Mountain States is “entitled to a presumption that it should be 

awarded costs.” Key v. Chrysler Motors Co., 2000-NMSC-010, ¶ 6, 128 N.M. 739, 
26

998 P.2d 575. The burden is on the losing party to demonstrate that an award of costs 

would be unjust or that other circumstances justify a denial or reductions of costs. 

Apodaca v. AAA Gas. Co., 2003-NMCA-085, ¶ 103, 134 N.M. 77, 73 P.3d 215. “The 

trial court has discretion in assessing costs, and its ruling will not be disturbed on 

appeal unless it was an abuse of discretion.” Key, 2000-NMSC-010, ¶ 7 (internal 

quotation marks and citation omitted).

{49} OR&L argues that the district court abused its discretion in awarding costs in 

two ways. First, it asserts the district court erred in awarding costs for an expedited 

deposition transcript of OR&L’s expert because the district court did not cite the 

opinions in that transcript in its summary judgment order. Second, OR&L argues the 

district court should not have awarded expert costs for Mountain States’ expert 

because Mountain States sought non-recoverable costs, the expert’s rates were not 

reasonable rates for Southern New Mexico, the bill included block billing, and the 

district court likewise did not cite that expert’s opinion in its summary judgment 

order.

{50} We disagree. The district court entered a detailed twelve-page order awarding 

fees and costs to Mountain States. Specifically, the district court found that both 

experts were necessary to litigation, OR&L did not support its argument that 

Defendants’ expert fees or block billing was unreasonable, and that staff expenses 
27

and document production fees are not unrecoverable costs if those fees are assessed 

in preparation for the creation of an expert’s opinion.

{51} The district court affirmatively explained its reasons for awarding fees and 

costs in a manner that is not contrary to logic or reason. See Stansell v. New Mexico

Lottery, 2009-NMCA-062, ¶ 14, 146 N.M. 417, 211 P.3d 214 (“A trial court abuses 

its discretion when its decision is contrary to logic and reason.” (internal quotation 

marks and citation omitted)). Further, OR&L does not point us to any authority or 

evidence in the record demonstrating that the district court’s award of Mountain 

States’ costs was in error. We therefore cannot say the district court abused its 

discretion in awarding costs for the expedited deposition transcript and Mountain 

States’ expert.

{52} Finally, OR&L argues that the district court failed to consider the chilling 

effect that Mountain States’ cost bill would have on future UPA/UIPA claimants. 

This assertion is contrary to the plain language of the UPA and UIPA. The UPA 

explicitly directs the district court to award fees and costs to a party charged with a 

violation of the act if it determines the claim is groundless. Section 57-12-10(C). 

Similarly, under the UIPA, “[c]osts shall be allowed to the prevailing party unless 

the court otherwise directs.” NMSA 1978, § 59A-16-30 (1990); see H-B-S P’ship v. 

AIRCOA Hosp. Servs., Inc., 2008-NMCA-013, ¶ 28, 143 N.M. 404, 176 P.3d 1136 
28

(recognizing that staff expenses and document-production costs incurred in 

connection with the creation of an expert’s opinion are allowable).

{53} Therefore, there is no chilling effect implicated in an award of costs to UPA 

or UIPA defendants, and OR&L’s argument is without merit. See, e.g., Key, 2000-

NMSC-010, ¶ 16 (concluding that the Legislature did not intend to limit costs to 

prevailing defendants based on a theoretical chilling effect based on the language of 

the Motor Vehicle Dealers Franchising Act).

CONCLUSION

{54} For the above reasons, we affirm the district court’s order granting summary 

judgment in favor of Mountain States and dismissing OR&L’s claims for violations 

of the implied covenant of good faith and fair dealing, the UPA, and the UIPA. We 

also affirm the district court’s order awarding costs to Mountain States.

{55} IT IS SO ORDERED.

_______________________________

JACQUELINE R. MEDINA, Judge

I CONCUR:

______________________________

J. MILES HANISEE, Chief Judge

KRISTINA BOGARDUS, Judge (specially concurring).
29

BOGARDUS, Judge (specially concurring).

{56} I concur in the result reached by the majority, except for the section addressing 

the implied covenant of good faith and fair dealing. Because OR&L in this instance 

received the coverage contracted for, it is my view that the Court need not reach any 

arguments related to this issue. As the majority states “the implied covenant of good 

faith and fair dealing cannot be used to override express provisions in a written 

contract,” Smoot, 2004-NMCA-027, ¶ 10, and therefore this implied covenant is 

only breached “when a party seeks to prevent the contract’s performance or to 

withhold its benefits from the other party.” Azar, 2003-NMCA-062, ¶ 51. It is clear 

that the coverage purchased by OR&L in this case included express provisions that 

limited coverage. And there are no facts to support a contention that Mountain States 

unreasonably withheld its coverage decision or failed to properly investigate the 

claim, which might support a claim for lack of good faith and fair dealing even in 

light of the policy exclusions. See Haygood, 2019-NMCA-074, ¶¶ 22-23 (noting that 

a bad faith claim need not depend on the existence of coverage but may also arise 

where the insurer failed to deal fairly in claims handling). Because it is unnecessary 

to discuss the implied covenant of good faith and fair dealing to reach this Court’s 

decision here, I do not concur in this portion of the opinion.

______________________________

KRISTINA BOGARDUS, Judge