Colorado Bad Faith Insurance Claim

In a recent decision that explains what policyholders must prove to prevail on a statutory bad faith claim in Colorado, the Tenth Circuit Court of Appeals affirmed summary judgment in favor of Mid-Century Insurance Company in El Dueno, LLC v. Mid-Century Insurance Company. ¹ The ruling is a clear reminder that under Colorado law, an insurer’s reliance on a qualified, independent expert, absent contrary evidence, can serve as a reasonable basis for a claim decision and defeat allegations of bad faith.

The dispute began when El Dueno, the owner of a commercial property in Greeley, Colorado, submitted a hail damage claim following a July 2018 storm. Initially, Mid-Century’s adjuster, Maggie Fields, inspected the property and found signs of hail damage, leading the insurer to issue a payment. However, El Dueno later submitted a revised estimate exceeding $340,000. This was significantly more than the initial scope of damage by Mid-Century. 

Mid-Century reassigned the file to a large-loss adjuster, who in turn retained Rimkus Engineering to assess the roof. Rimkus engineer William Templeton conducted an inspection and concluded that the roof damage was not caused by hail but rather due to wear, tear, and other non-covered causes. Mid-Century relied on this report in denying further payment on the roof portion of the claim, while still issuing an additional payment for hail damage to HVAC units as identified by a separate vendor.

El Dueno filed suit alleging bad faith under Colorado Revised Statutes Sections 10-3-1115 and 10-3-1116. Mid-Century moved for summary judgment. The federal district court granted the motion, holding that the insurer’s reliance on a qualified engineering report, unrebutted by any evidence of industry-standard violations, was reasonable as a matter of law. On appeal, the Tenth Circuit agreed.

The appellate court emphasized that under Colorado law, an insurer’s conduct must be evaluated based on whether it had a reasonable basis for its claim decision and whether it violated any applicable industry standards. Importantly, the court noted that El Dueno did not provide a competing engineering opinion at the time of Mid-Century’s coverage decision. It never took the deposition of Mr. Templeton, the insurer’s roofing expert, and failed to submit any expert testimony that Mid-Century’s claims handling fell below industry standards. While El Dueno eventually, during litigation, retained former adjuster Kerry Freeman as an expert, Freeman was not an engineer, did not address whether Templeton’s report violated any engineering standards, and offered no opinion on whether Mid-Century acted in bad faith.

In affirming summary judgment, the Tenth Circuit reiterated that mere disagreement with an insurer’s conclusions or expert opinions is insufficient to prove bad faith. Without evidence that Mid-Century ignored relevant facts, failed to investigate fully, or acted contrary to established norms, the court found no triable issue of material fact. The court underscored that policyholders bear the burden of articulating and proving how an insurer’s conduct deviated from acceptable standards, especially when relying on the findings of independent professionals.

The ruling sends a clear signal to policyholders and their counsel that challenging an insurer’s denial based on a third-party expert report requires more than simply disputing the outcome. To succeed on a bad faith claim in Colorado, claimants must be prepared to offer timely, substantive evidence, which is ideally in the form of expert testimony demonstrating that the insurer’s reliance on its expert was not only incorrect, but unreasonable under applicable standards. Without such a showing, courts are likely to continue rejecting bad faith allegations at the summary judgment stage.

Thought For The Day  

“Get your facts first, then you can distort them as you please.” 

—Mark Twain

¹ El Dueno v. Mid-Century Ins. Co., No. 24-1110, 2025 WL 1540329 (10^th Cir. May 30, 2025) (The appellate briefs by El Dueno and Mid-Century submitted to the Tenth Circuit are also attached)