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March 18, 2026 Get Citation Alerts Download PDF Add Note

James Berns v. State Farm Mutual Automobile Insurance Company

District Court, D. Colorado

• Citations: None known
• Docket Number: 1:24-cv-01971

• Precedential Status: Unknown Status

• Opinion

• Authorities (4)

• Cited By (0)

• Summaries (0)

• Similar Cases (35.2K)

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Trial Court Document

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Civil Action No. 24-cv-01971-GPG-NRN

JAMES BERNS,

Plaintiff,                                                           

v.

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,

Defendant.                                                           

                        ORDER                                        

GRANTING PLAINTIFF’S UNOPPOSED MOTION FOR ISSUANCE OF CERTIFIED

QUESTION TO THE COLORADO SUPREME COURT PURSUANT TO C.A.R. 21.1

(ECF No. 55)

and

CERTIFYING QUESTION TO THE COLORADO SUPREME COURT

N. REID NEUREITER

United States Magistrate Judge

                     BACKGROUND                                      

The magistrate judges and district judges of the District of Colorado have been 

vexed by an ongoing Colorado state insurance law question that arises with regularity in
the discovery context. The issue is as follows:

In an insurance bad faith lawsuit, there is a perceived tension between two
conflicting doctrines. On the one hand is the so-called “suspension rule,” which arguably
states that the insurer’s duty to settle or resolve a claim is suspended once a lawsuit or
arbitration is filed and there is a genuine disagreement about the amount of
compensable damage. See Rabin v. Fid. Nat. Prop. & Cas. Ins. Co., 863 F. Supp. 2d
1107, 1113 (D. Colo. 2012); see also Bucholtz v. Safeco Ins. Co. of Am., 773 P.2d 590,
593–94 (Colo. App. 1988) (obligation to negotiate as a reflection of good faith is
suspended when insured demands arbitration); Johnston v. Standard Fire Ins. Co., No.
20-cv-02106-CMA-MEH, 2022 WL 1225311, at *4 (D. Colo. Apr. 25, 2022) (where
lawsuit had been filed, and there was disagreement regarding damages at the time suit
was filed, insurer’s duty to negotiate, settle, or pay claim is suspended).

On the other hand is the arguably conflicting principle that an insurer has a 

continuing duty to act in good faith towards the insured, and that duty continues even
after litigation is filed. See Sanderson v. Am. Fam. Mut. Ins. Co., 251 P.3d 1213, 1217 (Colo. App. 2010) (“This duty of good faith and fair dealing continues unabated during
the life of an insurer-insured relationship, including through a lawsuit or arbitration
between the insured and the insurer, although the adversarial nature of such
proceedings may suspend the insurer’s obligation to negotiate as a reflection of good
faith.”); see also Lynn v. State Farm Mut. Auto. Ins. Co., 748 F. Supp. 3d 1030, 1034 (D.
Colo. 2024) (noting the insurer’s continuing duty of good faith and fair dealing, even

through litigation, and the countervailing principle that litigation suspends some “but not
all” of the insurer’s duties to its insured).

The problem arises in the context of pre-trial discovery where a plaintiff-insured
seeks access to the post-litigation claim files of the insurer, wanting to know how or
whether the insurer continued to evaluate the claim even after the filing of the lawsuit as
new information is learned or produced in discovery. Insurers resist such discovery,
arguing that once a lawsuit is filed, the claim file necessarily fills with attorney-client
privileged material and attorney work product, and because under the suspension rule,
once a lawsuit is filed, there is no obligation to continue to evaluate or settle the claim
because the plaintiff has elected to have the fact-finder decide how much, if any, is
owed. Plaintiffs, on the other hand, assert that they should be entitled to know whether
the insurer has fulfilled its duty to act in good faith in evaluating a claim, even after the
filing of litigation.

The tension between these two competing positions is fully described in the

decision of this Court in Cunningham v. Travelers Home and Marine Insurance Co., 781
F. Supp. 3d 1263 (D. Colo. 2025). That opinion recounts multiple inconsistent decisions
by Colorado federal judges on the precise question that arises in the instant case;
namely, when, and under what circumstances, is post-litigation discovery of an insurer’s
claim file and decision-making discoverable in a bad faith insurance case? See
Cunningham, 791 F.Supp.3d at 1266–69 (relating in detail the decisions of Judges
Arguello, Wang, and Magistrate Judge Neureiter finding against post-filing discovery on
the one hand, and the decisions of Judge Blackburn and Magistrate Judges Starnella
and Dominguez-Brazwell in favor of such discovery on the other).

One of the arguments against allowing discovery of post-litigation material was 

provided by Judge Arguello. Not only are such documents not relevant, but:
from a practical standpoint, requiring production of post-litigation claim
notes would necessarily result in inconsistent discovery obligations
between parties. Once an insured files suit, insurers are required to defend
against claims of breach of contract and bad faith, and they are subject to
the discovery rules and deadlines set by courts. If insurers are required to
continue to evaluate claims post-litigation and provide information to
plaintiffs, plaintiffs could simply circumvent discovery rules and deadlines
by submitting new information and demanding an insurer’s post-litigation
analysis. This is not what the law requires. To hold otherwise would
incentivize plaintiffs to rush to the courthouse to file a lawsuit and then
continue to submit records to insurers in an attempt to avoid the discovery
process.

Johnston, 2022 WL 1225311 at *4 (sustaining objections and overruling Magistrate
Judge Hegarty’s discovery order allowing discovery). In stark contrast is a decision by
Judge Blackburn allowing an insurer’s representative to be deposed on post-lawsuit
claim handling:

Assuming the claim of Mr. Bise in this case is fairly debatable, American
Family’s duty to negotiate the claim is suspended until that debate is
resolved in this litigation. That suspension, however, does not mean
evidence of American Family’s post-litigation handling of the claim of Mr.
Bise is irrelevant to his claims of breach of insurance contract, unreasonable
delay or denial of benefits, and common law bad faith. Rather, evidence of
American Family’s post-litigation claim handling arguably is relevant to all
three of these claims. That evidence is relevant to a determination of
whether American Family’s position in the debate is correct or incorrect.
Evidence of American Family’s post-litigation claim handling has a tendency
to make consequential facts related to all three claims “more or less
probable” than they “would be without the evidence.” Fed. R. Evid. 401(a).
Of course, relevant evidence is discoverable.

Bise v. Am. Fam. Ins. Co., No. 22-cv-03270-REB-KAS, 2024 WL 3023549, at *5 (D.
Colo. May 7, 2024).

This is an issue that arises in federal court with regularity because of the
frequency with which insurance cases are removed from state court on diversity
grounds. It is also an issue not likely to percolate up to the Tenth Circuit Court of
Appeals or the Colorado Supreme Court for resolution because of the great deference
given to trial judges in discovery matters. But notwithstanding the deference given to
trial judges (or magistrate judges) in discovery matters, the apparent tension between
these two doctrines in the discovery context cries out for resolution by Colorado’s
Supreme Court. Parties (and judges) regularly spend undue time and money fighting in
the pretrial context about a legal question that should be resolved once and for all by
the Colorado Supreme Court. Or, if the issue cannot be resolved with finality, some
guidance should be provided so that litigating parties and judges can better understand
and apply these competing principles in particular cases. There are multiple secondary
questions that flow from the underlying question, such as whether the insurer is required
to produce a post-litigation privilege log, or whether a plaintiff taking an insurer’s
deposition under Rule 30(b)(6) is entitled to ask questions about how information

produced in the litigation discovery process was incorporated or evaluated by the
insurance adjuster.

CERTIFICATION OF QUESTION TO THE COLORADO SUPREME COURT

Under Colorado Appellate Rule 21.1(a), when requested, the Colorado Supreme 

Court may answer questions of law certified to that court by a federal court “if there is
involved in any proceeding before it questions of law of this state which may be
determinative of the cause then pending in the certifying court and as to which it
appears to the certifying court that there is no controlling precedent in the decisions of
the supreme court.” Such legal questions are determined de novo by the Colorado
Supreme Court. See generally Hernandez v. Ray Domenico Farms, Inc., 2018 CO 15, ¶
5, 414 P.3d 700, 702.

At a discovery hearing held in this case on February 2, 2026, this Court again
confronted the question of whether a plaintiff in an insurance bad faith case is entitled to
discovery of the insurer’s post-litigation claim notes. See ECF No. 46 (Statement of
Joint Discovery Dispute, laying out the factual background of the discovery dispute and
the Parties’ respective positions). It is a question that merits certification to the
Colorado Supreme Court.

RELEVANT FACTS OF THIS MATTER

The relevant facts of this case are similar to the usual circumstances under which
this issue arises.

The plaintiff, James Berns, was injured in a car accident caused by a third party.
The third party was insured by GEICO and GEICO offered its policy limits on or around

April 18, 2022. Mr. Berns had uninsured/underinsured motorist coverage issued by the
Defendant State Farm Mutual Automobile Insurance Company (“State Farm”). Mr.
Berns requested that State Farm pay his underinsured motorist benefits up to his policy
limit of $250,000. State Farm responded to the demand advising Mr. Berns that, based
on the nature of the accident, it had questions concerning the causal relationship
between his claimed injuries and the accident.

Through 2022 and into 2023, Mr. Berns, through counsel, corresponded with
State Farm providing information, including medical records, and asking for a
breakdown of State Farm’s evaluation. On March 30, 2023, State Farm sent a letter

saying it had determined that the value of the claim was within the availability limits of
the responsible party and that there was no underinsured exposure. There was
additional correspondence into 2024 with Mr. Berns’ counsel which questioned the
medical records that State Farm had used to evaluate the claim and asking for a
reevaluation because there were now two doctors who recommended a cervical fusion
surgery for Mr. Berns.

In April 2024, Mr. Berns’ counsel sent a list of medical providers Mr. Berns had
seen for the five years prior to the accident, and again requested State Farm continue
its investigation of the claim. On April 23, 2024, Mr. Berns, through counsel, sent a letter
to State Farm requesting that State Farm extend or toll the statute of limitations as it
was likely to run in May 2024. State Farm declined to toll the statute of limitations and
Mr. Berns sued in Colorado state court on May 10, 2024, bringing claims of (1) breach
of contract for UIM contract benefits; (2) common law bad faith breach of insurance
claim; and (3) violations of Colo. Rev. Stat. §§ 10-3-1115 (1)(A) and 10-3-1116(1) for

unreasonable delay or denial of a claim. State Farm says that it was still waiting for pre-
accident medical records when Mr. Berns filed the lawsuit.

After the filing of the lawsuit, State Farm obtained additional pre-accident medical
records in April 2025 and proceeded with two Independent Medical Examinations
(“IME”). One IME doctor determined that Mr. Berns’ left carpal tunnel syndrome and left
cubital tunnel syndrome were not caused by the motor vehicle accident. State Farm
also obtained an IME to evaluate Mr. Berns’ cervical spine injury and possible surgery.
The second IME doctor determined that Mr. Berns’ cervical symptoms after June 2020
could not be related to the motor vehicle accident. State Farm has provided Mr. Berns

with copies of the two IME reports.

Mr. Berns argues he is entitled to see State Farm’s post-litigation claim file and
that the so-called “suspension rule,” if it even exists, cannot justify the withholding of
information that is presumed discoverable. State Farm argues that Mr. Berns’ demand
for disclosure of post-litigation is not justified. Says State Farm, because the insurer’s
duty to negotiate, settle, or pay an insured’s claim is suspended when an adversarial
pleading is filed and there is a genuine disagreement as to the amount of compensable
damages, post-litigation claim notes are irrelevant and should be protected from
discovery.

THE CERTIFIED QUESTION

At the February 2, 2026 discovery hearing—knowing the frequency with which
the matter arises in this District and the inconsistent decisions issued by the various
judges and magistrate judges on the question, but wedded to its prior decision in
Cunningham, the Court asked counsel whether Mr. Berns would be interested in

certifying the issue to the Colorado Supreme Court. See ECF No. 51 at 16–18. In
response, on March 12, 2026, Mr. Berns filed an unopposed motion for issuance of a
certified question to the Colorado Supreme Court pursuant to C.A.R. 21, ECF No. 55,
which was referred by Judge Gordon P. Gallagher, ECF No. 56.

It is hereby ORDERED that the unopposed motion is GRANTED, and the Court
CERTIFIES the following question of law to the Colorado Supreme Court:

In an insurance bad faith case, there appear to be two competing principles:
the “suspension rule” and the rule that an insurer owes a continuing duty of
good faith to its insured that continues after the filing of a lawsuit. In the face
of these two principles, when and to what extent is discovery allowed into
an insurer’s post-litigation claim notes or claim file, and its post-litigation
evaluation of the claim?

The Court finds that this is a question of law that may be determinative of the 

issue now pending in this certifying court, see C.A.R. 21.1(a); namely, whether the
discovery sought by Mr. Berns should be permitted. On this question, there is no
controlling precedent in the decisions of the Colorado Supreme Court.

It is further ORDERED the Clerk of Court shall forward this Certification Order
under this Court’s official seal to the Supreme Court of Colorado. Included with this
Certification Order should be a copy of the following entries from the docket in this case:
ECF No. 7 (Complaint and Jury Demand); ECF No. 46 (Joint Statement of Discovery
Dispute and all exhibits thereto); ECF No. 51 (Transcript of Discovery Hearing); ECF
No. 55 (Unopposed Motion for Issuance of Certified Question), as well as a copy of the
opinion in Cunningham v. Travelers Home and Marine Insurance Co., 781 F. Supp. 3d
1263 (D. Colo. 2025).

It is further ORDERED that this case is STAYED until further Order of Court.
Should the Colorado Supreme Court accept the certified question of law, the stay will

remain in place. Should the court decline to answer the certified question, the parties
shall promptly contact the undersigned’s chambers to schedule a status conference.

So ORDERED this 17th day of March, 2026.                             
                                   ____________________              
                                   N. Reid Neureiter                 
                                   United States Magistrate Judge