Gordon Rees Scully Mansukhani attorneys Katelyn S. Werner, Jack Mann, and Eve Bacanskas obtained summary judgment for the firm's client, an insurance company, in a first party bad faith case in federal court.
The lawsuit arose from injuries Plaintiff sustained in an automobile accident. Plaintiff filed a claim with his automobile insurer for underinsured motorist (UIM) benefits, which the insurer neither approved nor denied. Plaintiff then filed suit with claims of breach of contract, common law bad faith, and statutory violation of C.R.S. §§ 10-3-1115 and 1116. Plaintiff also filed an action for negligence against the alleged tortfeasors. The insurer issued “comfort letters” to the tortfeasors, by which it committed to protect them from any compensatory damage award at trial.
The Gordon & Rees team moved for summary judgment on the basis that Plaintiff cannot recover for breach of contract based on the insurer’s alleged failure to pay the UIM benefits because the amount of Plaintiff’s potential damages and the amount of liability coverage are the same, and thus UIM benefits are not triggered. Further, in the absence of insurance coverage, the insurer is entitled to judgment on Plaintiff’s claims for common law bad faith and statutory violation of C.R.S. §§ 10-3-1115 and 1116, seeking a penalty of three times his damages for an unreasonable delay or denial of benefits.
The Court agreed and granted judgment in the insurer’s favor on Plaintiff’s breach of contract and statutory violation claims. The Court reasoned that there can be no denial of benefits which are not owed under Colorado’s UIM statute. After the parties submitted additional briefing on Plaintiff’s claim for common law bad faith, the Court also granted judgment in favor of the insurer on the basis that Plaintiff’s alleged damages are not recoverable under Colorado law.