An Underinsured Motorist Insurance Carrier's "defenses as to liability and ... PIP offsets" may or may not be "fairly debatable," but even if they are, "fair debatability" is not a complete defense to a Bad Faith Claim in Colorado. The Appellate Court so held, contrary to a Trial Court's rulings, in Sanderson v. American Family Mutual Insurance Co., Download Sanderson v. American Family Mutual Insurance Co. (Colo. Ct. App. Div. II Case No. 09CA1263, Opinion Filed November 10, 2010) PUBLIC ACCESS, STATED NOT FINAL, also published as 2010 WL 4492375 *3 (Colo. Ct. App. Div. II, November 10, 2010)(authorized password required to access Westlaw).
However, in any Bad Faith Case, the facts can be a complete defense. Such was the case, after all, in Sanderson itself in which the Colorado Appellate Court held that "although fair debatability is part of the analysis of a bad faith claim, it is not necessarily sufficient, standing alone, to defeat such a claim. Nonetheless, applying the appropriate standard here, we conclude that no reasonable jury could have found, on the evidence presented, that [the Defendant UIM Carrier] acted in bad faith." Sanderson, 2010 WL 4492375 at *3. [Emphasis added.]
The issues of proving a "Fairly Debatable" Affirmative Defense, and of Proof on Failure to State a Claim or Cause of Action in First-Party Bad Faith Cases, are addressed in § 11:17 by Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" (Shepard's/McGraw-Hill Second Edition; West Publishing Company 2010 Supplement), and these issues are addressed in Third-Party Claims in id., §§ 5:16, 5:26 and 5:51.
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