On May 13, 2014, Rooftop sent American Family an estimate that indicated that the cost to repair the hail damage was approximately $70,000.

On May 28, 2014, American Family re-inspected the Chastains' home and increased its estimate of the covered damage to approximately $4,000. Two days later, American Family sent the Chastains a payment for approximately $3,000 – $4,000 less their $1,000 deductible.

More than one year later, on September 11, 2015, Rooftop sued American Family, asserting claims for breach of contract and unreasonable delay or denial of insurance benefits under CRS Section 10-3-1116(1).

CRS Section 10-3-1116 governs claims for unreasonable delay or denial of insurance benefits.

American Family moved for partial summary judgment, arguing that Rooftop's statutory claim for unreasonable delay or denial of insurance benefits under CRS Section 10-3-1116(1) was barred by the one-year statute of limitations provided in CRS Section 13-80-103(1)(d).

Recognizing that no Colorado appellate court had addressed this issue, the U.S. District Court for the District of Colorado certified the following question of law to the Colorado Supreme Court:

Is a claim brought pursuant to Colorado Revised Statutes § 10-3-1116 subject to the one-year statute of limitations found in Colorado Revised Statutes § 13-80-103(1)(d) and applicable to “[a]ll actions for any penalty or forfeiture of any penal statutes”?

Now, the court has issued its decision.

The Colorado Supreme Court's Decision

The court answered the certified question in the negative, holding that the one-year statute of limitations found in CRS Section 13-80-103(1)(d) does not apply to an action brought under CRS Section 10-3-1116(1) because Section 10-3-1116(1) is not an “action[] for any penalty or forfeiture of any penal statute[]” within the meaning of Section 13-80-103(1)(d).

In its decision, the court explained that the one-year statute of limitations in Section 13-80-103(1)(d) applies to “[a]ll actions for any penalty or forfeiture of any penal statutes” – but that the statute did not define “penal.”

The court then reasoned that the legislature considered a defining feature of a cause of action for penalties to be a determination of either overpayment or delinquency, and that that defining feature was “conspicuously absent” from a cause of action under Section 10-3-1116(1), where an insured only must file a complaint alleging that an insurer delayed or denied the payment of insurance benefits without a reasonable basis.

Accordingly, the court held that the one-year statute of limitations found in Section 13-80-103(1)(d) does not apply to a cause of action brought pursuant to Section 10-3-1116(1).

The case is Rooftop Restoration, Inc. v. American Family Mutual Ins. Co., No. 17SA31 (Colo. May 29, 2018). For Plaintiff: Levin Sitcoff PC, Bradley A. Levin, Nelson A. Waneka, Denver, Colorado; Furtado Law PC, David J. Furtado, Rodney J. Monheit, Denver, Colorado. For Defendant: Campbell, Latiolais & Averbach, LLC, Colin C. Campbell, Kirstin M. Dvorchak, Greenwood Village, Colorado. For Amicus Curiae Colorado Defense Lawyers [**2] Association: Gordon & Rees LLP, John R. Mann, Denver, Colorado. For Amicus Curiae Colorado Trial Lawyers Association: Keating Wagner Polidori Free, P.C., Zachary C. Warzel, Melissa A. Hailey, Denver, Colorado. For Amicus Curiae United Policyholders: The Fowler Law Firm, LLC, Timms R. Fowler, Fort Collins, Colorado; Taussig, Taussig & Smith, P.C., Scott D. Smith, Denver, Colorado.