Opinion ID: 2679718
Heading Depth: 2
Heading Rank: 6

Heading: bad-faith denial of coverage

Text: Finally, we address Glacier’s claim that Travelers denied its claim for Policy coverage in bad faith. Glacier avers that Travelers is liable under both Colorado - 15 - common law and Colorado statutes. It argues that Travelers’ bad faith extended to (1) its delay in making the initial claims decision, (2) its failure to request information or clarification from Glacier during its investigation, (3) its decision not to entertain Glacier’s request to reconsider the claim denial, and (4) its refusal to pay the claim even after the district court ruled that the original wells/pumps were covered property. As set forth above, we review de novo the district court’s entry of summary judgment in Travelers’ favor. Under Colorado common law, all insurance contracts “contain[] an implied duty of good faith and fair dealing.” Goodson v. Am. Standard Ins. Co. of Wis., 89 P.3d 409, 414 (Colo. 2004) (en banc). “[A] separate action in tort [arises] when the insurer breaches its duty of good faith and fair dealing.” Am. Family Mut. Ins. Co. v. Allen, 102 P.3d 333, 342 (Colo. 2004) (en banc). In a first-party insurance contract such as this one, to establish a bad-faith claim, the insured “must prov[e] that the insurer acted unreasonably under the circumstances [and] that the insurer either knowingly or recklessly disregarded the validity of the insured’s claim.” Goodson, 89 P.3d at 415. The insurer’s conduct is evaluated objectively to determine whether a “reasonable person would find that the insurer’s justification for denying or delaying payment of a claim was ‘fairly debatable’ (i.e., if reasonable minds could disagree as to the coverage-determining facts or law).” - 16 - Sanderson v. Am. Family Mut. Ins. Co., 251 P.3d 1213, 1217 (Colo. App. 2010). Moreover, “resort to a judicial forum does not necessarily evince bad faith or unfair dealing, regardless of the outcome of the proceeding.” Id. Even a mistaken belief about whether a claim is compensable can “be within the scope of permissible challenge.” Id. Glacier’s statutory claim is based on Colo. Rev. Stat. §§ 10-3-1115 & 10-3-1116, which provide for a cause of action against an insurer that has unreasonably delayed or denied a claim. Such a civil action “is in addition to, and does not limit or affect, other actions available by statute or common law.” Vaccaro v. Am Family Ins. Grp., 275 P.3d 750, 756 (Colo. App. 2012) (internal quotation marks omitted). A “statutory claim requires only that a first-party claim be denied without a reasonable basis. Thus, the standard contained in § 1115 arguably is less onerous on the insured, and the remedies contained in § 1116 are more financially threatening to the insurer than a traditional common law bad faith claim.” Id. (brackets and internal quotation marks omitted). In a statutory claim, “the only element at issue . . . is whether an insurer denied benefits without a reasonable - 17 - basis.” Id. at 760. And as with a common law claim, “it is reasonable for an insurer to challenge claims that are ‘fairly debatable.’” Id. at 759.4 Glacier correctly points out that a “fairly debatable” showing, standing alone, is insufficient to support summary judgment for the insurer under both the statutes and the common law. See id. at 759-60 (statutory claim); Sanderson, 251 P.3d at 1217-18 (common law claim). This does not, however, preclude summary judgment where “there are no genuine issues of material fact [and] reasonableness may be decided as a matter of law.” Schuessler v. Wolter, 310 P.3d 151, 162 (Colo. App. 2012) (internal quotation marks omitted). The chronology of relevant events is as follows:  July 30, 2009 Glacier tendered its claim to Travelers  Aug. 26, 2009 Travelers apprised Glacier that photos of the job site would be taken and requested additional information from Glacier 4 Glacier also invokes Colorado Division of Insurance Regulation 5-1-14, which states that the insurer’s decision should be made within sixty days after receipt of the claim, “unless there is a reasonable dispute between the parties concerning such claim.” Colo. Div. of Ins. Reg. § 5-1-14(4)(A)(1)(a); see also id. § 5-1-14(4)(A)(2)(b) (identifying relevant reasonable disputes as “[c]overage under the policy for the loss claimed has not been determined; . . . [i]ndicators are present in the application or submission of the claim and additional investigation is necessary; [or] [l]itigation is commenced on the claim”). The regulation directs the insurer to act reasonably; therefore, our discussion and conclusions on Glacier’s statutory and common law claims also apply to the regulation. - 18 -  Sept. 16, 2009 Glacier sent Travelers a summary of damages  Oct. 14, 2009 Travelers informed Glacier that it was investigating the claim and had assigned a claim adjuster  Oct. 22, 2009 The claim adjuster met with Glacier personnel at the job site and requested further documents, which were provided forthwith  Nov. 3, 2009 Glacier sent additional information to Travelers  Dec. 2, 2009 Travelers denied the claim  Feb. 16, 2010 Glacier’s attorneys requested reconsideration  Mar. 24, 2010 Travelers reiterated its denial of the claim  July 15, 2010 Glacier filed suit against Travelers  Sept. 22, 2011 District court ruled that the Policy covered the costs of repairing and reworking the original wells/pumps  Oct. 2011 Travelers hired an expert to evaluate Glacier’s expenses that fell within the district court’s order  Mar. 14, 2012 Travelers’ expert prepared an interim report  Apr. 30, 2012 Travelers informed Glacier that it was continuing to investigate the claim and requested cost backup documents  May 3, 2012 Glacier provided the cost backup documents  July 26, 2012 Travelers’ expert issued his final cost analysis - 19 -  Aug. 15, 2012 Travelers’ proffered to Glacier its coverage determination of $9,142.25 Glacier argues that Travelers’ bad faith was demonstrated by the four-month interval between Glacier’s claim submission and Travelers’ decision to deny the claim. Glacier asserts that Travelers’ claim-processing conduct was unreasonable because Travelers did not request additional information or request to inspect the job site between the claim filing on July 30, 2009, and the claim denial on December 2, 2009. Aplt. Opening Br. at 29. This assertion is belied by the record, which includes an email from Travelers to Glacier dated August 26, 2009, seeking to arrange an inspection of the job site and requesting additional information. Aplt. App. Vol. 1 at 46 (attachment to the parties’ “Stipulated Facts”). In addition, the record reflects that on October 22, 2009, the claim adjuster met with Glacier personnel at the job site and requested further documents. Id. Vol. 2 at 304-05, 329-30.5 Following its receipt of additional documents in early November 2009, Travelers made the claim decision on December 2, 2009. Based on the undisputed facts, summary judgment was appropriate because no reasonable jury could have found that Travelers 5 We recognize Glacier’s argument that Glacier, not Travelers, initiated some of the claim-processing communications, which Glacier contends demonstrates Travelers’ failure to process the claim in a timely fashion. But Glacier cites no authority for its position that the insurance company must request information before the insured provides it or risk a finding of bad faith. We decline to adopt such a rule. - 20 - unreasonably delayed or denied processing Glacier’s claim, a determination that is fatal to both the statutory and common law claims. Glacier also contends that Travelers’ bad faith was demonstrated by Travelers’ decision not to reconsider its initial denial of the claim and its delay in tendering payment even after the district court ruled that the original wells/pumps were covered by the Policy. “Th[e] duty of good faith and fair dealing continues unabated during the life of an insurer-insured relationship, including through a lawsuit or arbitration between the insured and the insurer, although the adversarial nature of such proceedings may suspend the insurer’s obligation to negotiate as a reflection of good faith.” Sanderson, 251 P.3d at 1217. Glacier avers that Travelers acted unreasonably by denying reconsideration without further investigation or discussion and that Travelers’ refusal to ascertain and tender “the undisputed amount owed” until just before trial was in bad faith, Aplt. Opening Br. at 33.6 But Travelers did not merely refuse Glacier’s reconsideration 6 Glacier relies on its expert’s opinion “that Travelers had continued to unreasonably delay[] payment of the claim after receipt of the Court’s order [holding that the Policy covered the repair and reworking of the original wells/pumps].” Aplt. Opening Br. at 29. But this conclusory opinion does not establish a genuine issue of material fact. See Zolman v. Pinnacol Assurance, 261 P.3d 490, 500 (Colo. App. 2011) (noting that expert’s “affidavit and report simply state his conclusory opinions that [the insurer] acted in bad faith without establishing any genuine issue of material fact”). - 21 - request; rather, Travelers engaged an expert, informed Glacier of the expert’s interim report, and requested additional documentation. Moreover, the amount owed was disputed throughout the trial. Accordingly, applying the appropriate standards, we conclude that no reasonable jury could have found on the evidence presented that Travelers’ post-claim-denial conduct unreasonably delayed or denied Glacier’s claim. Again, this determination is fatal to both the statutory and common law claims. Summary judgment in Travelers’ favor was therefore appropriate on Glacier’s bad-faith claims.