Sipes v. Allstate Indemnity Co., 2013 WL 2467704

Fire destroyed the rental property at 413 30 1/4 Rd., Grand Junction; Allstate insured the property and paid/denied benefits accordingly.
Sipes filed a claim; Allstate assigned the claim to its senior claims analyst and consulted multiple investigators and an attorney for coverage analysis.
Investigations included Clifton Fire Department (Rowland) determining two potential origins and that the fire was incendiary, and Phoenix Investigations (Kramarczyk) suggesting an unidentified human act as likely cause.
Booker prepared a coverage analysis opining that there was a reasonable basis to deny coverage as an intentional act and potentially arson, with motive tied to mold and financial concerns.
Littleton prepared an outcome summary favoring denial under the intentional act exclusion; Rand Smith reviewed and agreed with denial based on circumstantial evidence and possible arson, leading to a denial letter on September 23, 2010.
Sipes filed suit on September 8, 2011 seeking damages for unreasonable delay or denial of benefits under Colorado statutes.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Allstate reasonably denied benefits under the statute	Sipes argues denial was unreasonable and baseless under 10-3-1115/1116.	Allstate contends it had a reasonable basis based on investigations and expert analyses indicating arson or misrepresentation.	Genuine disputes of material fact exist; summary judgment denied on reasonableness.
Whether evidence supports a reasonable belief of intentional arson	Sipes asserts no direct evidence of intentional arson; inferences are weak or disputed.	Allstate relied on fire origin/cause reports and Booker’s analysis showing incendiary origin and motive.	Disputes remain about arson inference; not entitled to judgment as a matter of law.
Whether Allstate reasonably relied on circumstantial and expert evidence to deny	Sipes contends reliance on expert reports is flawed and Lentini’s report was not considered.	Allstate reasonably relied on the available reports available before the denial; Lentini’s report not considered at the time.	Reasonableness questioned; factual disputes preclude summary judgment on reliance.
Whether mold, financial motive, or circumstantial evidence establish a reasonable motive	Sipes disputes the existence or strength of motive based on mold or finances.	Allstate argues mold and financial difficulties provide motive and support denial.	Genuine disputes of material fact regarding motive preclude summary judgment.

State Farm Mut. Auto. Ins. Co. v. Reyher, 266 P.3d 383 (Colo.2011) (insurer’s denial evaluated based on information available at time of decision)
COPIC v. COPIC Ins. Co., 192 P.3d 519 (Colo.App.2008) (reasonableness under Colorado bad-faith standards; context for statutory claims)
Vaccaro v. Am. Fam. Ins. Grp., 275 P.3d 750 (Colo.App.2012) (statutory claim is less onerous than common-law bad faith; fairly debatable does not end inquiry)
Kisselman v. Am. Fam. Mut. Ins. Co., 292 P.3d 964 (Colo.App.2011) (statutory claim analyzed separately from common-law bad faith; burden differs)
Zolman v. Pinnacol Assurance, 261 P.3d 490 (Colo.App.2011) (reasonableness typically a fact question; can be decided on law when no genuine disputes)
Sanderson v. Am. Fam. Mut. Ins. Co., 251 P.3d 1213 (Colo.App.2010) (fairly debatable standard in common-law context; not controlling on statutory claims)
Travelers Ins. Co. v. Savio, 706 P.2d 1258 (Colo.1985) (industry standards as frame for insurer reasonableness)
Pekarek v. Sunbeam Prods., Inc., 672 F.Supp.2d 1161 (D.Kan.2008) (professional methodology not exclusive; justifiable deviations may be acceptable)