TBL Collectibles, Inc. v. Owners Ins. Co. (285 F. Supp. 3d 1170, 2018)

PHILIP A. BRIMMER, United States District Judge

This matter is before the Court on Plaintiff's Motion for Partial Summary Judgment on Its First Claim for Declaratory Relief [Docket No. 62], Defendant Owners Insurance Company's Motion for Summary Judgment [Docket No. 63], Plaintiff's Motion to Exclude Certain Opinions and Testimony of Defendant's Expert, John P. Craver, Esq. [Docket No. 54], and Owners' Motion to Exclude Certain Opinions and Testimony of Plaintiff's Expert David Young [Docket No. 83]. This Court has jurisdiction pursuant to 28 U.S.C. § 1332.

I. BACKGROUND

This case involves a dispute between the parties regarding payment of an insurance claim for stolen coins. Plaintiff TBL Collectibles, Inc. owns and operates Colorado Coins, Cards & Comics, a retail coin and collectibles store in Arvada, Colorado. Docket No. 62 at 2, ¶ 1; Docket No. 63 at 3, ¶ 2. At all times relevant to this action, plaintiff held an insurance policy with defendant Owners Insurance Company, that provided commercial property insurance coverage. Docket No. 63 at 3, ¶ 1. On August, 30, 2015, plaintiff's store was burglarized after hours. Docket No. 62 at 3, ¶ 4. The only items stolen were a floor safe and its contents. Id. at 3, ¶ 6. Plaintiff alleges that the safe contained $31,800 in cash and $81,317 in bullion coins. Id.

Plaintiff reported the loss to the Arvada Police Department ("APD") on August 30, 2015. Docket No. 62-19 at 7. As part of its investigation into the incident, the APD prepared an Incident/Investigation Report containing a list of the stolen items as reported by Bruce Wray, the co-owner and manager of the store. Docket No. 1 at 3, ¶ 11; Docket No. 62-18 (APD Report); Docket No. 62-19 (APD Report continued); Docket No. 75 at 3 (stating that the "APD generated an Incident and Investigation Report ('APD Report'), which also lists the coins Mr. Wray asserts were taken during the burglary"); Docket No. 62 at 3, ¶ 2 (stating that store is managed by owner of TBL, Bruce Wray). On August 31, 2015, plaintiff informed defendant of the loss and submitted a claim under the insurance policy. Docket No. 62 at 3, ¶ 5. Defendant immediately assigned the claim to an adjuster, Jayme Larson. Docket No. 63 at 5, ¶ 9. Ms. Larson contacted Mr. Wray on September 1, 2015. Id. On September 2, 2015, Ms. Larson visited the store, where she "confirmed placement of the safe that was stolen by left over marks on the carpet." Docket No. 1 at 6, ¶ 17; Docket No. 12 at 5, ¶ 17; Docket No. 67-11 at 20 (September 8, 2015 claims note).

At defendant's request, plaintiff provided the following documentation to substantiate the loss: (1) a handwritten list of the stolen items, which included the description and cost of each coin; (2) the APD Report; (3) invoices and deposit slips from Cornerstone Bullion, from which plaintiff had purchased coins prior to the theft; and (4) check copies, cash receipts, and bank statements reflecting plaintiff's coin purchases in the four years prior to the theft. See Docket No. 62 at 6, ¶¶ 17-18; Docket No. 67 at 8-9, ¶¶ 1, 5; Docket No. 62-24 at 6, 23:18-25 (discussing Cornerstone Bullion invoices and deposit slips); 62-25 (handwritten list of stolen items); Docket No. 62-26 at 2 (discussing invoices for coin purchases from Cornerstone Bullion); Docket No. 62-32 at 2 (discussing check copies and bank statements); Docket No. 67-2 at 3, 47:21-25 (noting that plaintiff purchased certain coins from Cornerstone Bullion); Docket No. 67-4 (APD Report).

On November 6, 2015, defendant authorized a policy limit payment of $15,000 for the stolen cash. Docket No. 1 at 7, ¶ 22; Docket No. 67-11 at 11. According to defendant, the Cornerstone Bullion invoices confirmed the existence of the cash in the safe. Docket No. 63 at 5, ¶¶ 9-10; Docket No. 62-24 at 6, 23:14-24:8.

Ms. Larson continued her investigation of the stolen coins. See Docket No. 63-13 at 1; Docket No. 67-11 at 11. After discussions with the Home Office claims department, Ms. Larson ultimately concluded that the coins would be considered business personal property under the terms of plaintiff's insurance policy. See Docket No. 63-13 at 1; Docket No. 67-11 at 9-10. She determined, however, that the documentation provided did not adequately substantiate plaintiff's loss. Docket No. 62-29 at 2; Docket No. 63-13 at 2-3; Docket No. 67-11 at 5-7. Ms. Larson assigned a forensic accounting firm-RGL Forensics-to inspect plaintiff's business records. Docket No. 63-13 at 2. The accountant who reviewed the records, Paul DeBoer, determined that, although the records demonstrated a pattern of coin purchases, they did not prove the ownership or existence of the specific coins allegedly kept in the safe. Docket No. 63 at 6, ¶ 15; Docket No. 68 at 5-6, ¶ 15; Docket No. 62-32 at 2; Docket No. 67-11 at 3 (2/1/16 claims note). Mr. Wray was unable to provide further documentation because he did not keep written records of the coins he bought and sold. Docket No. 63 at 4-5, ¶ 8; Docket No. 68-5 at 9, 12. In addition, plaintiff admitted that many of the stolen items were purchased with cash and it did not have receipts. Docket No. 68-5 at 12-14.

On March 16, 2016, defendant sent plaintiff a letter denying its claim for the stolen coins. Docket No. 63-13. The letter states: "The documentation you have provided has show a pattern of purchasing coins, however it has not substantiated the specific coins you are claiming." Id. at 2. The letter then quotes from the "Duties In the Event of Loss or Damage" provision of plaintiff's insurance policy and explains that, based on the policy language, plaintiff has "a duty to provide complete inventories of damaged and undamaged property" and to "prove the loss." Id. at 3. Citing plaintiff's failure to comply with that duty, the letter states that defendant is "unable to issue any further payments on [plaintiff's] claim." Id.

The March 16, 2016 letter does not reference fraud as a basis for defendant's denial of payment. See id. Moreover, Ms. Larson's claims notes indicate that she found Mr. Wray believable and perceived his continued purchasing activities after the loss to be "an indication that the loss [was] legitamite [sic]." Docket No. 67-11 at 4 (2/1/16 claims notes entry). Both Ms. Larson and Donald Gibson, a representative in the Home Office claims department, see Docket No. 62-24 at 7, 28:4-6; Docket No. 62-32, testified that they never determined Mr. Wray's claim was false or fraudulent. Docket No. 62-24 at 6-7, 24:14-25:4; Docket No. 77-4 at 3, 15:6-13.

Plaintiff filed this lawsuit on July 13, 2016, asserting three claims for relief: (1) declaratory judgment as to whether plaintiff fulfilled its post-loss obligations under the insurance policy; (2) breach of contract; and (3) unreasonable delay or denial of benefits under Colo. Rev. Stat. § 10-3-1115. Docket No. 1. On July 5, 2017, plaintiff moved for partial summary judgment on its first claim for a declaratory judgment. Docket No. 62. On July 6, 2017, defendant moved for summary judgment on all claims. Docket No. 63. Both parties have also filed motions to exclude certain expert opinions under Fed. R. Evid. 702. See Docket No. 54 (plaintiff's motion to exclude opinions of John Craver); Docket No. 83 (defendant's motion to exclude opinions of David Young).

II. MOTIONS TO EXCLUDE

The Court will begin by addressing the parties' motions to exclude certain opinions of expert witnesses given that the outcome of those motions may affect the Court's resolution of the pending summary judgment motions.

A. Legal Standard

The admissibility of expert testimony is governed by Federal Rule of Evidence 702, which provides:

A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if: (a) the expert's scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702. As the rule makes clear, while required, it is not sufficient that an expert be qualified based upon knowledge, skill, experience, training, or education to give opinions in a particular subject area. Instead, the Court must "perform[ ] a two-step analysis." 103 Investors I, L.P. v. Square D Co. , 470 F.3d 985, 990 (10th Cir. 2006). After determining whether the expert is qualified, the Court must assess whether the specific proffered opinions are reliable. See id. ; Fed. R. Evid. 702 (requiring that the testimony be "based on sufficient facts or data," be the "product of reliable principles and methods," and reflect a reliable application of "the principles and methods to the facts of the case").

Rule 702 thus imposes on the district court a "gatekeeper function to 'ensure that any and all scientific testimony or evidence admitted is not only relevant, but reliable.' " United States v. Gabaldon , 389 F.3d 1090, 1098 (10th Cir. 2004) (quoting Daubert v. Merrell Dow Pharm., Inc. , 509 U.S. 579, 589, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) ). To perform this role, the Court must "assess the reasoning and methodology underlying the expert's opinion, and determine whether it is both scientifically valid and applicable to a particular set of facts." Dodge v. Cotter Corp. , 328 F.3d 1212, 1221 (10th Cir. 2003) (citing Daubert , 509 U.S. at 592-93, 113 S.Ct. 2786 ). The Supreme Court in Daubert identified four non-exclusive factors a court may consider in assessing reliability; however, those factors are not applicable in every case. See Kumho Tire Co. v. Carmichael , 526 U.S. 137, 141, 150-53, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). Indeed, the trial court has "the same kind of latitude in deciding how to test an expert's reliability ... as it enjoys when it decides whether or not that expert's relevant testimony is reliable." Id. at 152, 119 S.Ct. 1167. Regardless of the specific factors applied, the objective of Daubert 's gatekeeping requirement is to ensure that an expert "employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field." Id.

Although the proponent of the challenged testimony has the burden of establishing admissibility, United States v. Nacchio , 555 F.3d 1234, 1241 (10th Cir. 2009) (citing Ralston v. Smith & Nephew Richards, Inc. , 275 F.3d 965, 970 n.4 (10th Cir. 2001) ), the reliability standard does not require proof "that the opinion is objectively correct, but only that the witness has sufficient expertise to choose and apply a methodology, that the methodology applied was reliable, that sufficient facts and data as required by the methodology were used and that the methodology was otherwise reliably applied." United States v. Crabbe , 556 F.Supp.2d 1217, 1221 (D. Colo. 2008) (internal citation omitted).

Assuming the standard for reliability is met, the Court must also ensure that the proffered testimony will assist the trier of fact. See Kumho Tire , 526 U.S. at 156, 119 S.Ct. 1167 ; United States v. Rodriguez-Felix , 450 F.3d 1117, 1122-23 (10th Cir. 2006). "Relevant expert testimony must logically advance[ ] a material aspect of the case and be sufficiently tied to the facts of the case that it will aid the jury in resolving a factual dispute." United States v. Garcia , 635 F.3d 472, 476 (10th Cir. 2011) (internal quotation marks and citations omitted). In assessing whether expert testimony will assist the trier of fact, the Court should also consider "whether the testimony 'is within the juror's common knowledge and experience, and 'whether it will usurp the juror's role of evaluating a witness's credibility.' " Id. at 476-77 (quoting Rodriguez-Felix , 450 F.3d at 1123 ).

B. Analysis

1. Plaintiff's Motion to Exclude Testimony of John Craver

Defendant has designated John P. Craver, an attorney who practices in the field of insurance law, as an expert witness. Docket No. 54-1 at 3, 6. In his expert report, Mr. Craver concludes that defendant had a "reasonable basis to deny portions of [plaintiff's] claim based on the evidence they had in their claim file at the time of the denial." Id. at 10. Plaintiff does not challenge Mr. Craver's qualifications as an expert witness. See Docket No. 61 at 1. Instead, plaintiff seeks to exclude a number of his statements and opinions on grounds that: (1) they are irrelevant, (2) they improperly usurp the function of the trial judge, (3) they are conclusory, and (3) they are factually erroneous. See generally Docket No. 54; Docket No. 61.

a. Relevance

Plaintiff argues that the following opinions and statements expressed in Mr. Craver's expert report are irrelevant and that the Court should order that Mr. Craver not state them at trial: (1) Mr. Craver's references to Colo. Rev. Stat. § 13-17-101 ; (2) Mr. Craver's references to Colorado Division of Insurance Regulation 5-1-14; (3) Mr. Craver's opinions regarding defendant's prompt handling of plaintiff's claim; and (4) Mr. Craver's opinions regarding insurance fraud. See Docket No. 54 at 8-12.

Plaintiff first argues that Mr. Craver's references to Colo. Rev. Stat. § 13-17-101 are irrelevant and misleading because plaintiff may prevail on its bad faith claim under § 10-3-1115 merely by showing that defendant acted unreasonably in denying plaintiff's claim for insurance benefits. See Docket No. 54 at 9; Docket No. 61 at 4. Section 13-17-101 is a legislative declaration explaining that the general assembly has "set[ ] forth provisions for the recovery of attorney fees ... when the bringing or defense of an action ... is determined to have been substantially frivolous, substantially groundless, or substantially vexatious." In his expert report, Mr. Craver states that "[t]he absence of a reasonable basis [standard under § 10-3-1115 ] .... is quite similar to the proof required for attorney's fees awards under C.R.S. § 13-17-101"; under the latter provision, "fees are awarded if the claim is frivolous, groundless or lacking a rational basis." Docket No. 54-1 at 7. Defendant argues that these statements are admissible because they were only meant to illustrate that the "absence of a reasonable basis" standard under § 10-3-1115 is not a novel legal concept. Defendant also disavows any implication that plaintiff faces a higher burden under § 13-17-101. Defendant's arguments do not rebut plaintiff's contention that the statute is irrelevant to any issue in this case. Moreover, Mr. Craver's point that the absence of a reasonable basis is not a novel legal concept is neither relevant to the issues in this case nor likely to assist a jury in its resolution of the parties' factual disputes. Mr. Craver's statements and opinions regarding § 13-17-101 are therefore excluded as irrelevant. See United States v.Sparks , 8 Fed.Appx. 906, 912 (10th Cir. 2001) (unpublished) ("The district court has been charged by the Supreme Court with the responsibility of acting as a gatekeeper to exclude unreliable and irrelevant expert testimony.") (citing Daubert , 509 U.S. at 597, 113 S.Ct. 2786 ); A-W Land Co., LLC v. Anadarko E & P Co. LP , No. 09-cv-02293-MSK-MJW, 2017 WL 4161278, at *9 (D. Colo. Sept. 20, 2017) (excluding expert testimony as irrelevant under Fed. R. Evid. 702(a) and 401 ).

Plaintiff next challenges Mr. Craver's references to Colo. Code Regs. § 702-5:5-1-14 ("Regulation 5-1-14"). That regulation prescribes certain penalties for an insurer's failure to make timely decisions and/or payment on first-party claims. See Colo. Code Regs. § 702-5:5-1-14(4)(A)(1). Specifically, the statute imposes a monetary fine if an insurer "fails to make a decision and/or pay benefits due under the policy within sixty (60) days after a valid and complete claim has been received, and there is not a reasonable dispute between the parties." § 702-5:5-1-14(4)(A)(1)(b). A "valid and complete claim" has been "received" by an insurer when

(1) All information and documents necessary to prove the insured's claim have been received by the insurer; ... 3) The terms and conditions of the policy have been complied with by the insured; ... (5) There are no indicators on the claim requiring additional investigation before a decision can be made; and/or ... (7) Negotiations or appraisals to determine the value of the claim have been completed; and/or (8) Any litigation on the claim has been finally and fully adjudicated.

§ 702-5:5-1-14(4)(A)(2)(a). The statute further provides that a "reasonable dispute" may exist when: (1) information necessary for a determination on the claim has not been submitted; (2) conflicting information has been submitted and additional investigation is needed; (3) the insured has failed to comply with the terms of the insurance policy; or (4) litigation has commenced regarding the claim. § 702-5:5-1-14(4)(A)(2)(b).

In his expert report, Mr. Craver states that: (1) the regulation "provides guidance to insurers on when the [sic] have a duty to pay first party claims" in Colorado, Docket No. 54-1 at 9; (2) "[in] reviewing these ... regulations, it does not appear that there is a valid and complete claim that Owners Insurance owes at this time," id. ; (3) the regulation "would indicate that Owners Insurance had a reasonable basis for not paying" plaintiff's claim, id. ; and (4) defendant's handling of the claim complied with the regulation. Id. at 10.

Defendant contends that Mr. Craver's discussion of the regulation "provides context for the parameters of insurance claims handling." Docket No. 60 at 5. In response, plaintiff claims that at least two cases have specifically held that Regulation 5-1-14 is irrelevant in bad faith actions brought pursuant to Colo. Rev. Stat. § 10-3-1115. See Docket No. 54 at 9-10; Docket No. 61 at 5. The cases plaintiff cites do not support this proposition.

In Fisher v. State Farm Mutual Automobile Insurance Co. , --- P.3d ----, 2015 WL 2198515 (Colo. App. 2015), the Colorado Court of Appeals held that Regulation 5-1-14 did not support the insurer's argument that "it is not unreasonable, as a matter of law, to deny or delay payment on anything less than an entire [underinsured motorist] claim." Id. at ----, 2015 WL 2198515 at *5. In reaching that conclusion, the court reasoned that "the regulation and its authorizing statute simply have no application to the civil action established by section 10-3-1115. Rather, the regulation applies to administrative penalties assessed by the Commissioner of Insurance pursuant to the Commissioner's statutory authority to regulate the insurance industry." Id. at ----, 2015 WL 2198515 at *6. The court further stated that, "although administrative regulations 'may be used as valid ... evidence of industry standards,' when a statute defines a standard of reasonableness, as it does here, an administrative regulation may not modify or contradict that standard." Id. At first glance, these statements seem to support plaintiff's contention that Mr. Craver's references to Regulation 5-1-14 are irrelevant in this case. When read in context, however, it is clear that the statements were made in conjunction with the Fisher court's determination that the regulation's reference to a "valid and complete claim" does not preclude an insured from asserting a bad faith claim based on the unreasonable delay or denial of only a portion of his claim for benefits. See id. at ----, 2015 WL 2198515 at *6 (stating issue as "whether an insured's demand for payment on one component of a UIM claim is sufficient in and of itself such that an insurer has an obligation to not unreasonably delay or deny paying benefits for it under section 10-3-1115 ); see also id. ("[T]he plain language of section 10-3-1115 does not preclude a determination that an insurer unreasonably denied or delayed payment of part of an insured's UIM claim . Thus, even if the regulation addressed this issue, it could not modify or contradict the plain language of the statute." (emphasis added) ). Fisher thus does not stand for the proposition that the regulation is never relevant to the reasonableness inquiry under § 10-3-1115.

Plaintiff's citation to Etherton v. Owners Insurance Co. , 829 F.3d 1209 (10th Cir. 2016), is similarly unavailing. There, the court stated that an insurer does not necessarily act "reasonably if it meets the regulation's minimum standards."

Etherton , 829 F.3d at 1228 n.7. But even if compliance with the regulation is not conclusive of liability under § 10-3-1115, it may still be relevant. See Am. Family Mut. Ins. Co. v. Allen , 102 P.3d 333, 343-44 (Colo. 2004) ("[W]here the legislative enactment or administrative rule is not conclusive of the standard of care, the statute or rule may be used as evidence of the standard of care from which the trier of fact may evaluate the defendant's conduct."). The court in Etherton recognized as much when it stated that "regulations ... provide minimum standards," and "an insurer may act unreasonably it if violates the regulation." Etherton , 829 F.3d at 1228 n.7. Consistent with other decisions in this district, the Court finds that defendant's references to the Department of Insurance regulations are relevant to plaintiff's statutory bad faith claim. See Stamey v. Nat'l Gen. Ins. Co. , No. 15-cv-0560-WJM-MJW, 2016 WL 8540310, at *4 (D. Colo. Sept. 22, 2016) (stating that Regulation 5-1-14 "provides evidence of what is reasonable, but is not conclusive of the statutory standard of reasonableness under § 10-3-1115"); Spendrup v. Am. Family Mut. Ins. Co. , No. 13-cv-00513-KLM, 2014 WL 321155, at *4 (D. Colo. Jan. 29, 2014) (finding that Regulation 5-1-14 provided evidence that "genuine disagreement" as to amount of compensable damages existed, such that defendant's failure to advance payment of insurance claim did not constitute an unreasonable denial of benefits under § 10-3-1115 ).

Plaintiff also challenges the relevance of Mr. Craver's opinions on the timeliness of defendant's claims handling. Docket No. 54 at 10. Mr. Craver states in his report that (1) "there were no substantial delays in the adjustment" of plaintiff's claim, Docket No. 54-1 at 9; (2) defendant's investigation of the claim was "prompt and proactive," id. ; and (3) the policy benefits determined to be owed have been paid in a timely manner. Id. at 10. Plaintiff contends that these opinions are irrelevant because its bad faith claim is predicated on defendant's unreasonable denial of benefits, not its failure to conduct an adequate or timely investigation. Docket No. 54 at 10. Defendant responds that the opinions regarding defendant's prompt claims handling "support[ ] the position that Owners' basis for denying the safe claim was justified, because it illustrates Owners' claim handling practices with regard to related portions of the claim." Docket No. 60 at 6. The Court is not persuaded by this asserted connection. The fact that defendant timely investigated plaintiff's claim and awarded benefits on a portion of the loss does not make it any more likely that defendant had a reasonable basis for denying payment for the stolen coins. Accordingly, Mr. Craver's opinions regarding the timeliness of defendant's claims handling are irrelevant to plaintiff's bad faith claim and will be excluded.

Plaintiff lastly requests that the Court exclude Mr. Craver's opinions regarding fraudulent insurance claims and Special Investigation Unit ("SIU") investigations. Docket No. 54 at 11-12. In his report, Mr. Craver states:

It should also be noted that the Colorado legislature, through C.R.S. § 10-1-128, makes it clear that there is a strong public policy within the state wherein the state is critically interested in investigating and stopping insurance fraud. The General Assembly has stated that insurance fraud is expensive and that it increases premiums and places businesses at risk. Insurance fraud reduces the customer's ability to raise their standard of living and decreases the economic vitality of the state. I am not suggesting here that Owners Insurance has alleged its insured is committing insurance fraud. I think it is simply important for a jury to know that a critical investigation into theft claims and the amount of the damages sustained, including the use of SIU departments to investigate background, credit and financial issues, is clearly authorized and in fact encouraged by the state's statutes and regulations. There was nothing unusual in an insurer conducting an SIU investigation in a claim of this nature.

Docket No. 54-1 at 9. Plaintiff contends that these opinions are irrelevant and prejudicial because there is no evidence that defendant suspected Mr. Wray of reporting a false or fraudulent claim. Docket No. 54 at 11. The Court agrees. Although plaintiff's claim was initially referred to the SIU for investigation, see Docket No. 60-4 at 2-5, 34:1-35:23, 40:1-41:1, there is no evidence that anyone at Owners suspected Mr. Wray of lying about the stolen coins. See Docket No. 62-24 at 6-7, 24:14-25:4; Docket No. 67-11 at 4 (2/1/16 claim note); Docket No. 77-4 at 3, 15:6-13. The sole reason defendant gave for denying plaintiff's claim was that plaintiff had failed to provide adequate documentation of the stolen coins. See Docket No. 63-13. Any statements or opinions regarding insurance fraud and SIU investigations will therefore be excluded as irrelevant.

b. Statements Regarding Applicable Law

Plaintiff identifies nineteen statements in Mr. Craver's expert report which allegedly constitute impermissible statements of law. See Docket No. 54 at 6-7. These statements appear to set forth the various legal standards Mr. Craver applied in reaching his conclusions. According to defendant, the statements were meant to "provide context as to the legal parameters for insurance industry standards." Docket No. 60 at 9-10. The Court notes that statements eleven through thirteen and nineteen, as identified in plaintiff's motion, see Docket No. 54 at 7, have already been excluded as irrelevant. However, the Court agrees with plaintiff that statements one through eight and fourteen and fifteen should also be excluded.

The Tenth Circuit has held that "a witness may refer to the law in expressing an opinion" or "aid the jury in understanding the facts in evidence even though reference to those facts is couched in legal terms." Specht v. Jensen , 853 F.2d 805, 809 (10th Cir. 1988). However, witness testimony that aims to "direct the jury's understanding of the legal standards upon which [its] verdict must be based" improperly usurps the role of the trial judge and is therefore inadmissible. Id. at 810. The Court finds that the first eight statements challenged by plaintiff fall within this prohibition. These statements do nothing more than rephrase the legal standard under § 10-3-1115 and express Mr. Craver's beliefs as to the legal rights and obligations of the parties. Although Mr. Craver may certainly refer to the law in stating his opinions, he may not "define the legal parameters within which the jury must exercise its fact-finding function." Id. at 809-810.

Defendant argues that industry standards in Colorado are defined by state statute and case law and thus it is impossible for Mr. Craver to express any opinion that defendant complied with those standards without citing to the relevant legal authorities. Docket No. 60 at 10. But defendant's argument fails to distinguish between those statements of Mr. Craver that merely rephrase the determinative legal standard in this case-whether defendant acted reasonably in denying plaintiff's claim-and Mr. Craver's references to statutory and regulatory provisions that, though not conclusive of liability, may illustrate what constitutes "reasonable" conduct in the insurance industry. See Hangarter v. Provident Life & Accident Ins. Co. , 373 F.3d 998, 1017 (9th Cir. 2004) (holding that expert witness did not "usurp the court's role" where his references to California statutory provisions, which informed his understanding of insurance industry norms, were "ancillary to the ultimate issue of bad faith"). Pursuant to this distinction, the Court finds that statements sixteen through eighteen regarding Regulation 5-1-14 are admissible. In contrast to the other challenged statements, Mr. Craver's reference to the regulation is not an attempt to "define the legal parameters within which the jury must exercise its fact-finding function." Specht , 853 F.2d at 809-10. Mr. Craver merely seeks to identify certain regulatory standards that may bear on the reasonableness of defendant's conduct for purposes of § 10-3-1115.

In summary, the Court will permit testimony as to Regulation 5-1-14. All other statements identified by plaintiff, see Docket No. 54 at 6-7, will be excluded.

c. Conclusory Opinions

Plaintiff also argues that the following statements and opinions contained in the expert report are unsupported: (1) defendant's claim handling complied with industry practices, Docket No. 54-1 at 10; (2) defendant acted in compliance with the Unfair Claims Practices Act, id. ; (3) defendant fully complied with the requirements of § 10-3-1104, id. ; (4) defendant's denial of the claim cannot "fairly be considered willful," id. ; (5) "businesses of this nature are required, by statute, to keep receipts and records of purchases of valuable commodities such as gold coins," id. ; (6) "[b]usinesses are required for tax purposes to maintain an accurate inventory of the purchase date for items purchased, as well as the amount paid for the items purchased," id. ; and (7) a "business is expected to have some proof of purchase or ownership of valuable inventory of this nature for numerous legal reasons."Id. ; see also Docket No. 54 at 12-13 (listing challenged opinions). Defendant contends that these statements "are supported by [Mr. Craver's] review of all relevant documents" and that the "expert report specifically connects [Mr. Craver's] specialized knowledge to the facts at issue in this case." Docket No. 60 at 14. With the exception of the first statement challenged by plaintiff, the Court disagrees.

Fed. R. Evid. 702(b) requires that expert testimony be "based on sufficient facts or data." Thus, a district court is not required "to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert." Etherton , 829 F.3d at 1218 (quoting General Elec. Co. v. Joiner , 522 U.S. 136, 146, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997) ). Mr. Craver asserts that businesses are legally obligated to maintain records of purchased items. His report, however, contains no reference to legal authorities supporting this conclusion. While Mr. Craver may be correct, defendant bears the burden of establishing the admissibility of an expert's opinion and Mr. Craver's opinion is mere ipse dixit . Accordingly, the Court finds that Mr. Craver's opinions regarding businesses' record-keeping obligations lack a sufficient basis to satisfy the requirements of Fed. R. Evid. 702.

The Court also agrees that Mr. Craver does not adequately support his opinions concerning defendant's compliance with the "Unfair Claims Practices Act." Most notably, Mr. Craver does not specify the portions of the Act to which his second and fourth opinions pertain. If the opinions relate to § 10-3-1115, Mr. Craver's statement that defendant acted in compliance with the Act goes to the ultimate legal issue in this case. See Specht , 853 F.2d at 808 ("[T]estimony which articulates and applies the relevant law ... circumvents the jury's decision-making function by telling it how to decide the case."). Although Mr. Craver may "testify about how the law applies to a certain set of facts," he may not offer opinions on ultimate issues without explaining how he reached his conclusions. United States v. Richter , 796 F.3d 1173, 1195-96 (10th Cir. 2015) ("[A]n expert may not simply tell the jury what result it should reach without providing any explanation of the criteria on which that opinion is based or any means by which the jury can exercise independent judgment."). To the extent that Mr. Craver is relying instead on § 10-3-1113, his opinion is both unreliable and irrelevant. See Vaccaro v. Am. Family Ins. Grp. , 275 P.3d 750, 756 (Colo. App. 2012) (recognizing that "the standard contained in § 1115 arguably is less onerous on the insured" than the standard for common law bad faith claims under § 10-3-1113 (internal quotations and brackets omitted) ). Mr. Craver's first, second, and fourth statements, identified above, are therefore excluded to the extent that they rely on § 10-3-1113 or express an unsupported opinion as to the reasonableness of defendant's actions under § 10-3-1115.

The Court reaches a different conclusion, however, insofar as Mr. Craver opines as to defendant's compliance with Colo. Rev. Stat. § 10-3-1104 and "industry practices." As this Court has previously recognized, conduct of the kind set forth in § 10-3-1104 is "relevant to determining whether an insurer's delay or denial was reasonable" for purposes of a statutory bad faith claim because " § 10-3-1115 disclaims only the intent requirement, and not the definition of reasonableness, under a common law claim." Etherton v. Owners Ins. Co. , No. 10-cv-00892-PAB-KLM, 2013 WL 68702, at *5 (D. Colo. Jan. 7, 2013)

(internal quotation marks omitted). Although Mr. Craver's explanation for these conclusions is thin, he references particular requirements of § 10-3-1104, see, e.g. , Docket No. 54-1 at 9 ("The statute also provides insurers should consider all available information in making claims decisions."), and identifies specific actions by defendant that purportedly complied with those requirements. See id. at 10 (stating that defendant "investigated coverage promptly" and "proactively looked for coverage to assist the insured"). As to the claim that defendant complied with "industry practices," the Court agrees that Mr. Craver should have clarified the particular practices to which he refers. Nevertheless, he does address defendant's compliance with § 10-3-1104 and Regulation 5-1-14, both of which provide some evidence of applicable "industry standards." The Court therefore declines to exercise its gatekeeping role to exclude Mr. Craver's opinions on defendant's compliance with (1) § 10-3-1104 and (2) Regulation 5-1-14.

d. Erroneous Statements of Fact

Plaintiff contends that Mr. Craver's expert report contains the following erroneous factual statements: (1) plaintiff submitted no documentary or independent proof of ownership; (2) the only evidence submitted supporting ownership is the statement of the insured that he owned his property; (3) the insured's lack of proof supports an inference that he did not own or purchase the coins; (4) there is no regulation, statute, or formula to determine the adequacy of proof of ownership to substantiate a loss; and (5) an insurer does not act unreasonably in seeking resolution through the courts. Docket No. 54 at 14. Defendant argues that these facts are simply Mr. Craver's "observations" based on the evidence he reviewed. Docket No. 60 at 12.

To the extent these statements constitute mere factual assertions based on the evidence reviewed, the Court finds that Fed. R. Evid. 702 is an inappropriate vehicle for challenging them. Although the accuracy of the facts and assumptions underlying an expert opinion may impact the reliability of that opinion, see Crabbe , 556 F.Supp.2d at 1224, the accuracy of the facts themselves is an issue more appropriately reserved for trial. See id. ("The accuracy of the assumption is an issue for trial because it affects the weight of the opinion."); see also United States v. Crabbe , No. 06-CR-00294-MSK, 2007 WL 1704138, at *2 (D. Colo. June 11, 2007) ("The 702 Hearing is not intended to address the weight or persuasiveness of a proffered opinion, nor the accuracy or assumptions upon which an opinion is based. These issues are more appropriately addressed at trial."). Contrary to plaintiff's assertion, however, statements three through five appear to be statements of opinion, not fact. Nevertheless, the Court agrees with plaintiff that statements three and five are both unsupported and irrelevant. As previously noted, there is no evidence that defendant suspected plaintiff's claim as being false or fraudulent. And defendant did not "seek[ ] resolution through the courts"-it was plaintiff that initiated this lawsuit. Because these opinions lack a basis in fact and are irrelevant to the issues in this case, they will be excluded. Mr. Craver will, however, be permitted to opine on the absence of standards governing the adequacy of documentation proving a loss, as this opinion is relevant to the reasonableness of defendant's conduct.

2. Defendant's Motion to Exclude Testimony of David Young

Plaintiff has designated David Eugene Young, a certified professional public adjuster, as an expert witness. Docket No. 83-1 at 1. Mr. Young opines that Mr. Wray complied with his obligations under the terms of the insurance policy and that defendant's denial of insurance benefits was unreasonable. Docket No. 83-1 at 8-9; Docket No. 84 at 3. In particular, his report concludes that: "[t]he Home Office blocked [Jayme Larson] from paying [plaintiff's claim] and forced her to throw every possible argument not to do so to the insured"; Owners made up requirements not found in the insurance policy; Owners "has attempted to create a level of ownership proof that the insured cannot meet when in fact, the insured HAS complied with the Duties After Loss provision of his policy"; Owners has failed to effectuate a prompt, fair, and equitable settlement of claims "even though liability has become 'reasonably' clear"; and "Bruce Wray ... has complied with the terms of his policy and is therefore entitled to payment." Docket No. 83-2 at 5-6.

Defendant moves to exclude certain of Mr. Young's opinions on grounds that Mr. Young is generally unqualified to opine on the matters addressed in his report, see Docket No. 83 at 9-11, and that his opinions are: (1) based on an unreliable methodology, see id. at 5-8, 13-15; (2) based on insufficient facts or data, see id. at 11-15; (3) irrelevant, see id. at 8-9; and (4) unhelpful to the trier of fact. See id. at 11.

a. Qualifications

Defendant argues that Mr. Young is unqualified to opine as to whether defendant's handling of plaintiff's claim was reasonable because he has never worked as an accountant, attorney, or adjuster for an insurance company. Docket No. 83 at 10. According to defendant, this places Mr. Young "on the outside looking in, with no clear view of either the applicable Colorado industry standards or whether they were met in this particular case." Id.

Plaintiff responds by citing Mr. Young's qualifications. Mr. Young has his own insurance adjusting firm and is licensed to provide public adjusting services in several states, including Colorado. See Docket No. 83-1 at 12; Docket No. 84-2 at 12, 58:18-20, 60:2-3. For the past twenty-five years, he has also owned and operated the Adjusters Insurance School, located in Mesa, Arizona, which offers a one-year training program for in-house insurance adjusters. See Docket No. 84 at 4; Docket No. 84-2 at 8, 38:21-39:19. Mr. Young is further approved as an Instructor in Insurance Topics in Colorado and has contributed to portions of the Insurance Settlement Handbook addressing the appraisal of insurance claims. See Docket No. 83-1 at 14; Docket No. 84-2 at 12, 60:10-16. To maintain his credentials, Mr. Young has completed continuing education training on state-specific laws governing the insurance industry. Id. at 13, 65:5-15.

In light of this experience, the Court finds that Mr. Young is sufficiently qualified to offer the opinions challenged by defendant. Defendant maintains that Mr. Young has no experience with industry-side claims handling. See Docket No. 83 at 10; Docket No. 85 at 3. But defendant does not cite any authority for the proposition that a public adjuster is unqualified to opine on an insurance company's handling of an claim merely because he serves as an advocate for the insured. Cf. Williamson v. Metropolitan Property & Cas. Ins. Co. , 2017 WL 4355975, at *5 (D.N.M. Sept. 28, 2017) (finding that experience representing insureds in New Mexico rendered attorney "qualified as an expert in the customs and practices of the insurance industry" in the state); Southerland v. Argonaut Ins. Co. , 794 P.2d 1102, 1106 (Colo. App. 1990) ("We reject the notion that only present or former employees of the insurance industry are qualified to render expert opinions about its operations."). The "chief distinction" between staff/independent adjusters and public adjusters is that "public adjusters directly represent the claimant during the claims process and take a percentage of the settlement for their services." Steven Plitt & Ryan Sandstrom, Evaluating the Relationship Between Independent Insurance Adjusters and Insureds: The Case Against Imposing an Independent Duty of Care , 48 Creighton L. Rev. 245, 252 n.33 (2015). It is unclear how this distinction bears on a public adjuster's knowledge of claims handling practices and coverage issues. Moreover, although public adjusters may not be "regulated by the practices of any particular insurance company," they are required to "adhere to state and federal laws and regulations." Id.

Defendant also ignores the breadth and variety of Mr. Young's experience. In addition to being a certified public adjuster, Mr. Young is trained in SIU adjusting, owns and operates a one-year training program for in-house insurance adjusters, contributes to publications on insurance topics, and participates in continuing education training on state-specific laws governing the insurance industry. His experience is thus not limited to public claims adjusting. Although defendant argues that Mr. Young has never worked as an attorney, let alone practiced law in Colorado, see Docket No. 85 at 3, Mr. Young is licensed as both a public adjuster and an instructor on insurance topics in Colorado. See Docket No. 83-1 at 12, 14. These certifications indicate that he is sufficiently knowledgeable about Colorado laws and regulations governing the insurance industry to offer expert opinions. The question is whether the opinions that defendant has challenged are otherwise admissible.

b. Reliability

Defendant challenges the reliability of certain opinions expressed in Mr. Young's expert report. See Docket No. 83 at 5-8, 11-15. Specifically, defendant argues that: (1) Mr. Young did not apply a methodology to reach his conclusions, id. at 6; (2) the methodology employed by Mr. Young is unreliable because he fails to address the ultimate fact question (i.e. , whether defendant complied with industry standards), Mr. DeBoer's analysis of plaintiff's financial records, and the legal standards cited in Mr. Young's report, id. at 6-7; and (3) Mr. Young's opinions are conclusory and/or based on insufficient facts or data. Id. at 12-15.

Defendant's arguments challenge the methodology employed by Mr. Young in reaching his conclusions. See Docket No. 83 at 6. As plaintiff argues, the purpose of standard of care experts in bad faith litigation is to "[a]pply[ ] the facts of a case to the applicable industry standards." Docket No. 84 at 6; see also O'Sullivan v. Geico Cas. Co. , 233 F.Supp.3d 917, 925 (D. Colo. 2017) (finding that bad faith expert's methodology, which consisted of "explaining what he [knew] of insurance industry standards and practices based on his experience, explaining the facts and evidence he reviewed in this case, then opining on the ways he believe[d] Geico's handling of Plaintiff's claim fell short [of] the relevant industry standards" was "sufficiently reliable" for expert to offer admissible testimony under Rule 702 ). Here, Mr. Young reviewed the litigation documents, applicable Colorado statutes, treatise materials, and FC & S bulletins in formulating his opinions. See Docket No. 84 at 6; Docket No. 83-2 at 1-2; Docket No. 84-2 at 5, 11:4-12:7. While this type of review is consistent with the methodology typically employed by experts in bad faith litigation, see O'Sullivan , 233 F.Supp.3d at 925, the Court largely agrees with defendant that Mr. Young did not reliably apply that methodology in reaching his conclusions.

Specifically, although Mr. Young makes factual "observations" based on the evidence and cites authorities ostensibly reflecting insurance industry standards, his ultimate conclusions do not clearly apply those standards to the facts. See Fed. R. Evid. 702(b)-(d) (requiring that the testimony be "based on sufficient facts or data," that the testimony be "the product of reliable principles and methods," and that the expert "reliably appl[y] the principles and methods to the facts of the case"). Instead, many of his opinions reflect his own interpretations of the evidence-interpretations that are both unhelpful to the jury, which is capable of interpreting the evidence without expert assistance, and unsupported. The Court finds that the following challenged opinions in Mr. Young's expert report suffer from these flaws: (1) Ms. Larson lacked final authority regarding the claim, Docket No. 83-2 at 5; (2) the Home Office prevented Ms. Larson from paying plaintiff's claim and forced her to assert every possible argument against paying the claim, id. ; (3) "[w]hen the value of the claim went up and the reserves were adjusted, the claim became harder to resolve," id. ; (3) "[w]hen an insurer assigns its SIU to a claim it is to find a reason not to pay the claim," id. at 6; (4) "[w]hen the insured filed a police report with the Arvada Police Department, he subjected himself to investigation as to whether the filing of the police report was accurate because there are grave penalties to a party filing a false police report," id. ; and (5) through his testimony that every claim must be treated differently, "Donald Gibson seems to be saying that Owners Insurance Company has no [standards for reasonable claims handling]." Docket No. 83-3 at 3. Plaintiff argues that these opinions are "extrapolated from the fact that Owners denied TBL's claim for failure to present a 'complete inventory' of stolen coins" when plaintiff had already provided the handwritten list and APD Report and allowed access to its books and records. See Docket No. 84 at 12. But plaintiff's argument does not address, let alone remedy, Mr. Young's failure to explain the basis for each of his conclusions. Moreover, to the extent Mr. Young's opinions are based solely or primarily on his experience as a public adjuster, he was required to "explain how that experience leads to the conclusion reached, why that experience is a sufficient basis for the opinion, and how that experience is reliably applied to the facts." United States v. Fredette , 315 F.3d 1235, 1240 (10th Cir. 2003) (quoting Fed. R. Evid. 702 advisory committee's note to 2000 amendments). He has failed to do so. The Court therefore finds that the opinions identified above do not satisfy the foundational requirements of Fed. R. Evid. 702(b)-(d). Accordingly, those opinions will be excluded.

The Court reaches the opposite conclusion as to Mr. Young's statements regarding the legal standards applicable in this case. Defendant challenges the following statements in Mr. Young's report:

Couch on Insurance points out, however, that [a provision requiring the insured to provide an inventory of damaged and undamaged property] "must be given a reasonable construction, and should not be used to relieve the insurer from liability for loss where literal compliance with the contract has become impossible...."

Docket No. 83-2 at 5.

Colorado Law (Colorado Revised Statute § 10-2-1104) requires an insurer to effectuate a prompt fair and equitable settlement of claims when liability has become reasonably clear.

Id. at 6.

Colorado's Unfair Claims Practices Act requires each insurer to develop standards for reasonable claims handling. ( Colorado Revised Statute § 10-3-1104(h) ).

Docket No. 83-3 at 3.

State Statutes and Standard of Care in the Industry also dictate appropriate behavior in the adjustment of claims.

Id. at 2.

Defendant contends that these opinions are unreliable because Mr. Young fails to adequately describe the legal standards he cites. Docket No. 83 at 7. But defendant does not argue that Mr. Young's descriptions of the above-cited legal standards are inaccurate or that the standards themselves are irrelevant to the issues in the case. Accordingly, defendant's argument goes to the reliability of Mr. Young's application of the standards to the facts in this case, not to the reliability of his citations to the standards themselves. Mr. Young's purported lack of comprehension as to the relevant legal standards may call into question the reliability of his ultimate conclusions regarding the reasonableness of defendant's conduct; however, it is not a sufficient basis for excluding any reference to the applicable legal standards. These opinions will therefore not be excluded.

The Court further declines to exclude certain factual statements deemed "erroneous" by defendant. Defendant specifically challenges the following statements in Mr. Young's expert report: (1) "Jayme Larson testified in her deposition that the conduct of Auto Owners in this case was unreasonable," Docket No. 83-2 at 3; (2) the applicable insurance policy requires the insured to submit to an examination under oath as a duty after loss, id. at 4; (3) "Owners would not accept [the hundred of pages of documents submitted by TBL Collectibles, including past business records and the Arvada Police Department Inventory, as] proof of the loss," id. ; and (4) Donald Gibson is an SIU adjuster. Docket No. 83-3 at 3; Docket No. 83 at 12. To the extent these opinions or statements are inaccurate, the Court finds, as it did with respect to Mr. Craver's statements above, that the accuracy of Mr. Young's interpretation of the evidence is an issue more appropriately reserved for trial.

c. Whether Opinions Will Assist the Trier of Fact

Defendant argues that certain of Mr. Young's opinions will not assist the trier of fact because they are either irrelevant, see Docket No. 83 at 8, or generally unhelpful to resolving the issues in this case. See id. at 11.

Defendant first contends that Mr. Young's opinions regarding the SIU have no bearing on the ultimate issues in the case-whether plaintiff complied with the terms of the policy and whether defendant acted unreasonably in denying the insurance claim. Docket No. 83 at 8. In his expert report, Mr. Young makes three references to the SIU. First, he observes that "Mr. Gibson told [Ms. Larson] that this claim should be run past SIU," Docket No. 83-2 at 3. Second, he suggests that "[t]he Home Office blocked [Ms. Larson] from paying the claim and forced her to throw every possible argument not to do so," including "reporting the claim to the SIU." Id. at 5. Finally, Mr. Young opines that

the SIU (Special Investigative Unit) is called upon to review claims when one or more issues exist: (1) there is suspected fraud involved, (2) there is questions of coverage or (3) when the insurer suspects a lawsuit. When an insurer assigns its SIU to a claim it is to find a reason not to pay the claim. The SIU in this case saw no reason to proceed and, after a brief review, took the SIU out of further investigation of the claim.

Id. at 6. Defendant argues that the SIU investigation is entirely irrelevant to this case because defendant does not assert that Mr. Wray was dishonest in the reporting of his claim. Docket No. 83 at 9. The Court agrees. As discussed above, there is no evidence that defendant suspected plaintiff of having filed a false or fraudulent claim or that defendant denied plaintiff's claim on that basis. Accordingly, Mr. Young's statements regarding the SIU are not necessary to "rebut any insinuation that Owners denied [plaintiff's] claim because TBL or its principle [sic], Bruce Wray, were being untruthful about the loss." Docket No. 84 at 10. These statements will therefore be excluded.

Finally, defendant challenges Mr. Young's assertions that (1) "Owners Insurance Company has attempted to create a level of ownership proof that the insured cannot meet when in fact, the insured HAS complied with the Duties After Loss provision of his policy," and (2) Owners has failed to "effectuate a prompt fair and equitable settlement of claims." Docket No. 83-2 at 6; Docket No. 83 at 11. Defendant argues that these are unhelpful conclusory opinions because Mr. Young never explains what " 'reasonableness' means within the context of insurance claims handling in Colorado" or "how Owners' failed to comport with such standards." Docket No. 83 at 11. The Court agrees. Although Mr. Young appears to base his opinions-at least in part-on the standards set forth in § 10-3-1104, he does not articulate the factual basis for his conclusions or explain how the standards applied relate to the issue of defendant's reasonableness. As the Supreme Court has noted, "nothing in either Daubert or the Federal Rules of Evidence requires a district court to admit opinion evidence that is connected to existing data only by the ipse dixit of the expert." Joiner , 522 U.S. at 146, 118 S.Ct. 512. Accordingly, these opinions will be excluded.

III. SUMMARY JUDGMENT

A. Legal Standard

Summary judgment is warranted under Federal Rule of Civil Procedure 56 when the "movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a) ; see Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248-50, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A disputed fact is "material" if under the relevant substantive law it is essential to proper disposition of the claim. Wright v. Abbott Labs., Inc. , 259 F.3d 1226, 1231-32 (10th Cir. 2001). Only disputes over material facts can create a genuine issue for trial and preclude summary judgment. Faustin v. City & Cty. of Denver , 423 F.3d 1192, 1198 (10th Cir. 2005). An issue is "genuine" if the evidence is such that it might lead a reasonable jury to return a verdict for the nonmoving party. Allen v. Muskogee , 119 F.3d 837, 839 (10th Cir. 1997).

Where "the moving party does not bear the ultimate burden of persuasion at trial, it may satisfy its burden at the summary judgment stage by identifying a lack of evidence for the nonmovant on an essential element of the nonmovant's claim." Bausman v. Interstate Brands Corp. , 252 F.3d 1111, 1115 (10th Cir. 2001) (internal quotation marks omitted) (quoting Adler v. Wal-Mart Stores, Inc. , 144 F.3d 664, 671 (10th Cir. 1998) ). "Once the moving party meets this burden, the burden shifts to the nonmoving party to demonstrate a genuine issue for trial on a material matter." Concrete Works of Colo., Inc. v. City & Cty. of Denver , 36 F.3d 1513, 1518 (10th Cir. 1994). The nonmoving party may not rest solely on the allegations in the pleadings, but instead must designate "specific facts showing that there is a genuine issue for trial." Celotex Corp. v. Catrett , 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (internal quotation marks omitted). "To avoid summary judgment, the nonmovant must establish, at a minimum, an inference of the presence of each element essential to the case." Bausman , 252 F.3d at 1115. When reviewing a motion for summary judgment, a court must view the evidence in the light most favorable to the non-moving party. Id.

B. Analysis

Defendant moves for summary judgment on plaintiff's claims for declaratory judgment, breach of contract, and insurance bad faith under § 10-3-1115. Plaintiff has filed a cross motion for summary judgment on the declaratory judgment claim.

1. Declaratory Judgment

Plaintiff's first claim for relief seeks a declaratory judgment that (1) plaintiff has substantially complied with the terms of the insurance policy and (2) defendant is estopped from requiring, and/or has waived the right to require, further documentation of the existence and/or value of the stolen bullion coins. See Docket No. 1 at 11, ¶¶ 46-47.

Because declaratory judgment acts are procedural rules, "federal law determines whether a district court may properly enter a declaratory judgment" in a diversity case. Addison Ins. Co. v. Maynard , 08-cv-00054-WDM-BNB, 2008 WL 2079143, at *2 (D. Colo. 2008). The federal Declaratory Judgment Act provides that "[i]n a case of actual controversy within its jurisdiction, ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration, whether or not further relief is or could be sought." 28 U.S.C. § 2201. "[T]he question of whether this power should be exercised in a particular case is vested in the sound discretion of the district courts." St. Paul Fire & Marine Ins. Co. v. Runyon , 53 F.3d 1167, 1168 (10th Cir. 1995).

The Tenth Circuit has identified five factors (" Mhoon factors") a district court should consider in determining whether to exercise its discretion to hear a declaratory judgment action:

[1] whether a declaratory action would settle the controversy; [2] whether it would serve a useful purpose in clarifying the legal relations at issue; [3] whether the declaratory remedy is being used merely for the purpose of "procedural fencing" or "to provide an arena for a race to res judicata "; [4] whether use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and [5] whether there is an alternative remedy which is better or more effective.

Id. at 1169 (quoting State Farm & Cas. Co. v. Mhoon , 31 F.3d 979, 983 (10th Cir. 1994). Courts in this district have additionally looked to a sixth factor set forth in Constitution Associates v. New Hampshire Insurance Co. , 930 P.2d 556 (Colo. 1997) -whether the declaratory judgment action is "independent of and separable from the underlying action." Constitution Assocs. , 930 P.2d at 561 ; see, e.g. , Ace Am. Ins. Co. v. Dish Network, LLC , No. 13-cv-00560-REB-MEH, 2014 WL 811993, at *16 (D. Colo. Mar. 3, 2014) (finding analysis in Constitution Associates "instructive and in accord with an analysis of the Mhoon factors"); Addison Ins. Co. v. Rippy , No. 08-cv-00237-PAB-MJW, 2009 WL 723322, at *6 (D. Colo. Mar. 18, 2009) (noting that cases in this district have found "independent and separable" requirement in Constitution Associates to be instructive on issue of whether anticipatory declaratory judgment action would prejudice insured in underlying case); Maynard , 2008 WL 2079143, at *2-3 (applying "independent and separable" factor from Constitution Associates in determining whether to hear declaratory judgment action); see also Valley Forge Ins. Co. v. Health Care Mgmt. Partners, Ltd. , 616 F.3d 1086, 1093-94 (10th Cir. 2010) (declining to decide whether "state law rule purporting to prevent parties from seeking a declaratory judgment until a specified time could bind a federal district court," but citing with approval holding in Constitution Associates that "a declaratory judgment is permissible if it concerns issues that are independent of and separable from those in the underlying action" (internal quotation marks and emphasis omitted) ). Citing this factor, defendant argues that plaintiff's request for declaratory relief is improper because it is not independent of or separable from the other claims asserted in this action. See Docket No. 67 at 12-13. The Court agrees.

Courts have typically applied the factors listed above to decline jurisd