July 26, 2026  ·  Complaint filed July 22, 2026  ·  United States District Court for the District of Colorado, No. 1:26-cv-03309

Newman News, By David Brunk

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Mercer v Chubb accuses insurer of bad faith for imposing extra $1M retention on related claims

Mercer Global Advisors Inc. filed suit against Federal Insurance Company d/b/a Chubb in the United States District Court for the District of Colorado, alleging the insurer breached its professional-liability policy by refusing to treat multiple claims and a subpoena as "Related Claims" under Policy No. 8400-2015. The complaint, filed July 22, 2026, seeks in excess of $1,000,000 in unreimbursed defense costs, statutory damages under Colorado law—including two times the covered benefits owed—actual, compensatory, and consequential damages in excess of $1,000,000, and a declaratory judgment that the claims are related. The amount in controversy exceeds the $75,000 minimum required for diversity jurisdiction under 28 U.S.C. § 1332(a)(1).

The policy defines "Related Claims" as those arising from the same or related facts, circumstances, transactions, or events and requires they be treated as a single claim with a single $1,000,000 self-insured retention. Mercer alleges that two FINRA arbitration demands—filed by clients in June 2023 and January 2024, respectively—and a later subpoena all stem from the same underlying conduct: allegations of inappropriate investment advice by the same advisers, firm, and general partner during the same time period. The complaint states, "The JT Demand, the JT SOC, the ME SOC, and the Subpoena are 'Related Claims' under the Policy’s definition because they arise out of the same or related facts, circumstances, transactions, or events." (Compl. ¶23).

Chubb initially confirmed the claims as related but reversed its position in August 2024, separating one arbitration and imposing a second $1,000,000 retention. Mercer contends the reversal was unjustified and forced it to bear over $1,000,000 in unreimbursed defense fees and costs.

Alleged mechanism: Chubb’s treatment of "Related Claims" under Policy No. 8400-2015

The Policy defines "Related Claims" as those "arising out of the same or related facts, circumstances, transactions, or events" and states that all such claims shall be treated as a single claim. The complaint quotes the Policy: "[A]ll Related Claims shall be treated as a single Claim." (Compl. ¶11).

The complaint asserts that these claims are "Related Claims" under the Policy’s definition because they arise from the same or related facts, circumstances, transactions, or events. On February 13, 2025, Chubb assigned the subpoena a third $1,000,000 retention before agreeing on June 23, 2025, to treat it as related to the JT SOC and closing the claim.

However, on August 8, 2024, Chubb reversed its position without explanation, separating the ME SOC from the JT SOC. The complaint alleges that this reversal was made without legal justification. The complaint states, "On or about August 8, 2024, without explanation, Chubb reversed its position and separated the ME SOC from the JT SOC." (Compl. ¶32).

In June 2025, Chubb agreed to treat the subpoena and JT SOC as "Related Claims" and closed a claim that had imposed a third $1,000,000 retention. Mercer alleges that Chubb’s reversal and refusal to consolidate the remaining arbitration forced it to incur over $1,000,000 in unreimbursed defense costs. The complaint states, "Mercer demanded that Chubb reimburse Mercer for the over $1,000,000 in defense fees and costs that Mercer was forced to bear as a result of Chubb’s imposition of a second retention." (Compl. ¶40).

Financial impact: $1,000,000 retentions, $5,000,000 aggregate limit, and unreimbursed defense costs

The complaint alleges that Policy No. 8400-2015 imposes a $1,000,000 self-insured retention for each "Claim" under its Professional Liability Coverage Part and caps the maximum aggregate limit of liability at $5,000,000. Mercer contends that Chubb’s decision in August 2024 to separate one arbitration from the others triggered a second $1,000,000 retention. The complaint further alleges that Chubb’s actions resulted in unreimbursed defense costs exceeding $1,000,000. (Compl. ¶40, ¶49, ¶56).

In November 2024, Mercer demanded that Chubb reimburse these unreimbursed expenses. The complaint states that Mercer sought reimbursement for the over $1,000,000 in defense fees and costs it was forced to bear due to the second retention. The complaint alleges that Chubb’s refusal to treat the ME SOC as a "Related Claim" to the JT SOC and the subpoena was unsupported by the Policy’s language, evidence, or law. (Compl. ¶39).

Mercer seeks reimbursement for the improperly imposed $1,000,000 retention, statutory damages under Colorado law—including two times the covered benefits owed under C.R.S. § 10-3-1116—and declaratory relief confirming that the claims are "Related Claims" under the Policy. The complaint also demands actual, compensatory, and consequential damages in excess of $1,000,000.

Parties and roles: Mercer, Chubb, OG Crimson Holdings, and non-party claimants

Mercer Global Advisors Inc., a Delaware corporation headquartered in Denver, Colorado, is the plaintiff in the action. The complaint alleges that Mercer acquired assets from another investment advisory firm in December 2021.

The defendant is Federal Insurance Company, an Indiana corporation doing business as Chubb, with its principal place of business in Indianapolis, Indiana. Chubb issued Policy No. 8400-2015, which Mercer contends provides professional-liability coverage for the claims at issue. The named insured under the policy is OG Crimson Holdings, L.P., a non-party to the litigation and the primary insured under the Policy. Mercer is an additional insured under the policy, as the complaint alleges it is entitled to coverage for claims arising from its professional services.

The underlying disputes involve two non-party claimants, identified in the complaint by their initials. Both filed Statements of Claim in FINRA arbitrations—one in June 2023 (JT SOC) and the other in January 2024 (ME SOC)—alleging inappropriate investment advice by Mercer advisers. Mercer also received a subpoena related to the same underlying conduct in late 2024. The complaint alleges that the initial demand (JT Demand), the two arbitrations (JT SOC and ME SOC), and the subpoena all arise from "the same or related facts, circumstances, transactions, or events" and are therefore "Related Claims" under the policy’s definition.

First and Fourth Claims for Relief: Breach of Contract and Declaratory Judgment

Mercer Global Advisors Inc. alleges in its First Claim for Relief that Federal Insurance Company d/b/a Chubb breached Policy No. 8400-2015 by refusing to treat multiple claims and a subpoena as "Related Claims" and by failing to reimburse Mercer for defense costs. The Policy defines "Related Claims" as those arising from the same or related facts, circumstances, transactions, or events and states that all such claims shall be treated as a single claim. The complaint states, "The JT Demand, the JT SOC, the ME SOC, and the Subpoena are 'Related Claims' under the Policy’s definition because they arise out of the same or related facts, circumstances, transactions, or events." (Compl. ¶23).

Mercer asserts that the initial demand, the two arbitrations, and the subpoena all stem from the same underlying conduct: allegations of inappropriate investment advice by the same advisers, firm, and general partner during the same time period. Despite this, Chubb’s reversal in August 2024 subjected Mercer to two separate retentions, forcing it to bear over $1,000,000 in unreimbursed defense costs. Mercer demanded reimbursement for these costs in November 2024, stating, "Mercer demanded that Chubb reimburse Mercer for the over $1,000,000 in defense fees and costs that Mercer was forced to bear as a result of Chubb’s imposition of a second retention." (Compl. ¶40). However, Chubb refused, maintaining that one arbitration was not a "Related Claim." The complaint alleges that Chubb’s refusal to treat the ME SOC as a "Related Claim" to the JT SOC and the subpoena was without legal justification. (Compl. ¶39).

In its Fourth Claim for Relief, Mercer seeks a declaratory judgment that the initial demand, the two arbitrations, and the subpoena are "Related Claims" under the Policy. The complaint requests the court to confirm that these claims arise from the same or related facts, circumstances, transactions, or events and must be treated as a single claim with a single retention. The complaint states, "The JT Demand, the JT SOC, the Subpoena, and the ME SOC are 'Related Claims' under the Policy’s definition." (Compl. ¶79a). Mercer argues that Chubb’s refusal to consolidate the claims was unsupported by the Policy’s language, evidence, or law.

The breach of contract claim centers on two alleged violations: (1) Chubb’s refusal to treat the claims as "Related Claims," and (2) its failure to timely reimburse Mercer for defense costs. Mercer contends that these actions breached the Policy’s express terms and caused it to incur substantial unreimbursed expenses. The declaratory judgment claim seeks to resolve the dispute over the Policy’s interpretation, ensuring that Chubb cannot impose multiple retentions for claims arising from the same underlying conduct.

Second and Third Claims for Relief: Common Law Bad Faith and Statutory Unreasonable Delay/Denial

Mercer Global Advisors Inc. alleges Chubb engaged in common-law bad faith and violated Colorado’s statutory prohibitions on unreasonable delay or denial of insurance claims, seeking both compensatory and statutory damages.

In its Second Claim for Relief, Mercer contends Chubb breached the implied covenant of good faith and fair dealing under Colorado law, specifically citing C.R.S. §§ 10-3-1103 and 10-3-1104(1)(h). The complaint alleges Chubb refused to consolidate the claims as "Related Claims" and compelled Mercer to litigate to enforce coverage. The complaint states that Chubb’s position reversal "demonstrates that its current position lacks a reasonable basis and was made in bad faith." (Compl. ¶64). As damages, Mercer claims unreimbursed defense fees and costs exceeding $1,000,000 resulting from Chubb’s imposition of a second $1,000,000 self-insured retention. The complaint further alleges that Chubb unreasonably delayed payment of four legal invoices it later acknowledged were due. (Compl. ¶72).

In its Third Claim for Relief, Mercer alleges that Chubb violated Colorado’s statutory prohibitions on unreasonable delay or denial of insurance claims under C.R.S. §§ 10-3-1115 and 10-3-1116. The complaint states, "Chubb’s unreasonable delay and denial of payoff payment of covered benefits owed to Mercer violates C.R.S. § 10-3-1115." (Compl. ¶73). Mercer seeks statutory damages, including two times the covered benefits owed under C.R.S. § 10-3-1116. The complaint alleges that Chubb’s conduct—including its refusal to treat the ME SOC as a "Related Claim" and its delay in paying invoices—constitutes an unreasonable delay or denial of payment under Colorado law.

Distinctive pleading: Chubb’s unexplained reversal

The filing highlights Chubb’s reversal of its initial coverage position regarding one arbitration. On August 8, 2024, Chubb separated one arbitration from the others, imposing a second $1,000,000 retention without explanation, the complaint alleges. The complaint states, "On or about August 8, 2024, without explanation, Chubb reversed its position and separated the ME SOC from the JT SOC." (Compl. ¶32). The complaint further states that Chubb’s refusal to treat the arbitration as a "Related Claim" lacked legal justification, forcing Mercer to incur over $1,000,000 in unreimbursed defense fees and costs. The complaint alleges, "Chubb has refused to treat the ME SOC as a 'Related Claim' to the JT SOC and the Subpoena without any legal justification." (Compl. ¶39).

The complaint ties these actions to Chubb’s alleged bad faith under Colorado law. It cites the statutory prohibition on unreasonable delay or denial of payment, stating that insurers "shall not unreasonably delay or deny payment of a claim for benefits owed to or on behalf of a first-party claimant." (Compl. ¶67). The complaint alleges that Chubb’s conduct violated this provision and seeks statutory damages, including two times the covered benefits owed. The complaint states that Chubb’s actions "demonstrates that its current position lacks a reasonable basis and was made in bad faith." (Compl. ¶64).

Relief sought and procedural posture: $1,000,000+ damages, statutory penalties, declaratory judgment, and jury demand

Mercer Global Advisors Inc. seeks actual, compensatory, and consequential damages in excess of $1,000,000 from Federal Insurance Company d/b/a Chubb, alleging the insurer’s refusal to treat multiple claims as "Related Claims" under Policy No. 8400-2015 forced Mercer to bear unreimbursed defense costs above the $1,000,000 self-insured retention. The complaint, filed July 22, 2026 in the United States District Court for the District of Colorado, also demands statutory damages under Colorado law, including two times the covered benefits owed under C.R.S. § 10-3-1116. The amount in controversy exceeds the $75,000 minimum required for diversity jurisdiction under 28 U.S.C. § 1332(a)(1).

Mercer requests a declaratory judgment confirming that the initial demand, the two arbitrations, and the subpoena are "Related Claims" within the Policy’s definition, which states that all such claims shall be treated as a single claim. The complaint further seeks reimbursement of the $1,000,000 retention Chubb imposed on one arbitration after initially confirming it as related to the others.

In addition to monetary relief, Mercer demands pre-judgment and post-judgment interest, reasonable attorneys’ fees and costs, and a trial by jury on all claims. The complaint cites Colorado’s statutory framework governing unreasonable delay or denial of insurance claims, alleging Chubb violated the law by refusing to treat one arbitration as a "Related Claim" and by delaying payment of invoices it later acknowledged were due.

The allegations described here are taken from the filing and remain unproven; no responsive pleading is reflected in the source document.

The allegations described here are taken from the filing and remain unproven; no responsive pleading is reflected in the source document.

David Brunk is a civil litigation attorney. He can be reached at david@newmanbrunk.com.