COLORADO v. SAFETY

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IN THE COURT OF APPEALS STATE OF ARIZONA DIVISION ONE COLORADO CASUALTY INSURANCE ) COMPANY, a Colorado corporation, ) ) Plaintiff/Appellee, ) ) v. ) ) SAFETY CONTROL COMPANY, INC., an ) ) Arizona corporation; EMPLOYER S MUTUAL CASUALTY COMPANY, an ) ) insurance company, ) ) Defendant/Appellant, _________________________________ ) ) HUGO ROMAN, an individual, ) ) Intervenor/Appellee. ) ) No. DIVISION ONE FILED: 09/11/2012 RUTH A. WILLINGHAM, CLERK BY: DLL 1 CA-CV 10-0871 DEPARTMENT E O P I N I O N (AS MODIFIED) Appeal from the Superior Court in Maricopa County Cause No. CV2007-007955 The Honorable Edward O. Burke, Judge, Retired AFFIRMED IN PART; REVERSED IN PART; REMANDED Raymond Greer & Sassaman PC Phoenix By Daniel W. McCarthy Michael J. Raymond Attorneys for Defendant/Appellant Safety Control Co., Inc. Stinson Brown By William G. Stinson, Jr. Glendale And William H. Douglas, PLLC Scottsdale By William H. Douglas Attorneys for Defendant/Appellant Employer s Mutual Casualty Co. The Rees Law Firm By David W. Rees Attorneys for Plaintiff/Appellee Tucson And Fennemore Craig PC By Julio M. Zapata John D. Everroad Alexander R. Arpad Attorneys for Intervenor/Appellee Phoenix J O H N S E N, Judge ¶1 We address in this case the validity and effect of a Damron agreement involving a contractor and its excess insurer by which the contractor assigned to a tort victim the contractor s indemnification rights against its primary insurer. 1 We hold the agreement is enforceable but remand for a determination of whether the stipulated judgment falls within the primary insurer s policy. FACTS AND PROCEDURAL HISTORY ¶2 hired The DBA Arizona Construction Department Company of Transportation ( DBA ) to perform ( ADOT ) a road- improvement project on the Loop 101 freeway. Safety Control Company, Inc. was one of DBA s subcontractors. As required by 1 A Damron agreement is an agreement between a claimant and an insured in which the insured consents to a judgment and agrees to assign to the claimant the insured s claims against its insurer in exchange for the claimant s covenant not to execute on the stipulated judgment. See Damron v. Sledge, 105 Ariz. 151, 460 P.2d 997 (1969); see also United Servs. Auto Ass n v. Morris, 154 Ariz. 113, 741 P.2d 246 (1987). 2 the subcontract, Safety Control purchased from Employer s Mutual Casualty Company ( EMC ) a certificate of insurance identifying DBA as an additional insured on a policy providing primary coverage for liability arising out of Safety Control s work. DBA itself had purchased a policy from Colorado Casualty Insurance Company that provided excess coverage for liability arising out of the work of its subcontractors, including Safety Control. ¶3 A injuring a damages. collision motorist, Colorado occurred Hugo at Roman, Casualty the who tendered sued against DBA and ADOT. ADOT DBA s subcontractors, including Safety Control. EMC rejected the tender. construction site, and DBA for defense to the Safety Control and Roman eventually settled his claims DBA and ADOT stipulated with Roman for entry of judgment of $750,000; Roman received $75,000 from DBA (paid by Colorado Casualty) and $20,000 from ADOT, and agreed not to execute on the stipulated judgment. DBA, ADOT and Colorado Casualty assigned to Roman their rights against the subcontractors and other insurers. ¶4 Colorado Casualty then filed suit against three subcontractors and their insurance carriers including Safety Control and EMC to recover what it had paid to defend DBA and ADOT and settle with Roman. and dismiss, arguing Roman in turn moved to intervene Colorado 3 Casualty had assigned its subrogation rights to him as part of the settlement agreement. The superior court did not dismiss the suit, but allowed Roman to intervene. Roman then filed a counterclaim against Colorado Casualty and a cross-claim against the subcontractors. ¶5 Roman and Colorado Casualty eventually settled their claims against all but Safety Control and EMC. The superior court ruled on summary judgment that EMC breached a duty to defend DBA and that as a result, DBA was entitled to settle with Roman without EMC s consent as long as the settlement was not collusive or fraudulent. After more briefing, the court held the stipulated judgment was neither collusive nor procured by fraud and that EMC therefore was liable to Roman on the stipulated judgment and for his attorney s fees. The court also held Safety Control breached its subcontract with DBA by failing to procure completed-operations insurance coverage and would be liable for damages to the extent that EMC did not satisfy what remained (after the other settlements) of the stipulated judgment and awards of attorney s fees. ¶6 judgment. Safety Control and EMC timely appealed from the We have jurisdiction pursuant to Article 6, Section 9, of the Arizona Constitution, and Arizona Revised Statutes ( A.R.S. ) section 12-2101(A)(1) (2011). 4 DISCUSSION A. ¶7 Standard of Review. On review of summary judgment, we view all facts and inferences in the light most favorable to the parties against whom judgment was entered. Case Corp. v. Gehrke, 208 Ariz. 140, 143, ¶ 10, 91 P.3d 362, 365 (App. 2004). Interpretation of a contract is a question of law that we review de novo. Grubb & Ellis Mgmt. Servs., Inc. v. 407417 B.C., L.L.C., 213 Ariz. 83, 86, ¶ 12, 138 P.3d 1210, 1213 (App. 2006). B. The Disagreement Between Roman and Colorado Casualty Does Not Preclude Them from Pursuing Their Claims Against EMC and Safety Control. ¶8 We first address the contention by Safety Control and EMC that the judgment against them is unenforceable because a dispute remains between Roman and Colorado Casualty about which of them owns some of the claims at issue. ¶9 The record discloses that the initial version of a settlement Casualty agreement reserved among Colorado Roman, DBA, Casualty s ADOT right to and Colorado pursue claims against Safety Control and/or EMC for fees and costs it incurred in defending DBA and ADOT against Roman s complaint. But the final version of the settlement agreement omitted any mention of any such subrogation rights. Colorado Casualty s complaint and Roman s complaint-in-intervention disagree about which of them has the right to pursue the claims for fees and costs. 5 ¶10 The superior court s judgment includes $97,011.03 awarded to Colorado Casualty, which we understand to be on its claims for reimbursement of defense fees and costs. amount, however, the judgment Casualty shall resolve amongst themselves. summary judgment provides, their dispute Roman As to that and concerning Colorado this award Consistent with that statement, in the proceedings in the superior court and on appeal, Roman and Colorado Casualty assert that they have agreed to pursue the assigned claims jointly and to resolve the question of which of them is entitled to the proceeds after the matter is resolved on the merits. ¶11 Safety Procedure Control 17(a) to and support EMC cite their Arizona argument Rule that of the Civil superior court should have determined which party owns the claims for fees and costs before entering judgment. That rule states, Every action shall be prosecuted in the name of the real party in interest. The purpose of this rule is to enable the defendant to avail himself of the evidence and defenses that he has against the real party in interest and to assure the finality of the results in the application of res judicata. Cruz v. Lusk Collection Agency, 119 Ariz. 356, 358, 580 P.2d 1210, 1212 (App. 1978). ¶12 not Under these circumstances, we conclude Rule 17(a) does preclude the judgment the superior 6 court entered on the claims for recovery of defense fees and costs. and EMC do not argue that the agreement Safety Control between Roman and Colorado Casualty has prevented them from raising any defenses to the claims recovery. The or that judgment the judgment only awarded might the allow fees and a double costs to Colorado Casualty, not to Roman or to both of them, and we fail to see how Safety Control and EMC might be prejudiced. C. The Settlement Agreement Is Not Otherwise Invalid. ¶13 An insurance policy imposes on the insurer the duty to defend the insured against claims potentially covered by the policy and the duty to indemnify the insured for covered claims. United Servs. Auto. Ass n v. Morris, 154 Ariz. 113, 117, 741 P.2d 246, 250 (1987); Ariz. Prop. & Cas. Ins. Guar. Fund v. Helme, 153 Ariz. 129, 137, 735 P.2d 451, 459 (1987). The insured, in turn, must cooperate with the insurer and aid in his defense. See Helme, 153 Ariz. at 136, 735 P.2d at 458; see also Morris, 154 Ariz. at 117, 741 P.2d at 250. ¶14 In Damron v. Sledge, 105 Ariz. 151, 460 P.2d 997 (1969), our supreme court held that when an insurer breaches a contract of insurance by failing to defend, the duty of cooperation does not prevent the insured from entering into a settlement with the claimant and assigning his rights under the policy to the claimant. Id. at 153, 460 P.2d at 999; see Morris, 154 Ariz. at 119, 741 P.2d at 252 (insured may enter 7 similar agreement if insurer defends but reserves its right to dispute coverage). As long as the stipulated judgment is not fraudulent or collusive, an insurer that has failed to defend is bound by the judgment with respect to all matters which were litigated or could have been litigated in that action. State Farm Mut. Auto. Ins. Co. v. Paynter, 122 Ariz. 198, 200, 593 P.2d 948, 950 (App. 1979). 2 ¶15 EMC argues DBA s settlement with Roman was collusive because, unlike the insured in a typical Damron/Morris situation, DBA was not compelled to settle to avoid the sharp thrust of personal liability. See Damron, 105 Ariz. at 153, 460 P.2d at 999. Given that Colorado Casualty was providing DBA with EMC a defense, argues the impermissible purpose of the agreement was not to protect DBA but to shift liability for the settlement amount from Colorado Casualty to EMC. ¶16 We begin our analysis by noting that DBA assigned to Roman only its indemnity claim against EMC; it did not assign a claim for breach of any other duty an insurer owes an insured. See generally Rawlings v. Apodaca, 151 Ariz. 149, 159, 726 P.2d 565, 575 (1986). Under these circumstances, we see no reason 2 An exception applies to an adjudication involving an issue as to which there is a conflict of interest between the insured and the insurer; in that case, even if the insurer refused to defend, it is not bound by the adjudication. Farmers Ins. Co. of Ariz. v. Vagnozzi, 138 Ariz. 443, 448, 675 P.2d 703, 708 (1983) (citing Restatement (Second) of Judgments § 58 (1982)). 8 why the validity of the settlement and assignment should not be governed by general principles of indemnity law. A Tumbling-T Ranches v. Flood Control Dist. of Maricopa County, 220 Ariz. 202, 207, ¶ 11, 204 P.3d 1051, 1056 (App. 2008) (citing Restatement (Second) of Judgments § 57(1)(1982). ¶17 In A Tumbling-T Ranches we approved a Damron/Morris agreement in a purely commercial indemnity setting. at 208, ¶ contention 15, that 204 P.3d there at 1057 was no (expressly ability 220 Ariz. reject[ing] to enter into the a Damron/Morris agreement in a context other than an insurance case ). Having held in A Tumbling-T Ranches that parties to a commercial indemnification dispute may enter into a Damron agreement, we cannot accept EMC s argument that DBA s settlement with Roman is invalid simply because DBA was enjoying the benefit of a defense provided by Colorado Casualty after EMC declined. As we held in Paynter, an insurer that refuses to defend a claim must know that a judgment may be entered against the insured and that it will be liable if the claim is within its policy. 122 Ariz. at 201, 593 P.2d at 951. EMC may not escape the consequences of its decision to decline to defend DBA in this case simply because DBA s other insurer did not make the same decision. ¶18 We also cannot accept EMC s further argument that the agreement is an invalid attempt to shift Colorado Casualty s 9 defense and indemnity obligations to EMC, pursuant to Leflet v. Redwood Fire & Casualty Insurance Co., 226 Ariz. 297, 247 P.3d 180 (App. 2011). homeowners sued Leflet was a construction-defect case in which a developer. The developer and its insurer eventually stipulated to a judgment that the homeowners agreed to enforce insurers. against ¶19 the developer s subcontractors and their Id. at 299, ¶ 7, 247 P.3d at 182. We do not agree with EMC that our decision to invalidate the Morris agreement in Leflet requires us to reject the Damron agreement at issue here. Central to our decision in Leflet settlement was effectively the notion transferred that to the the we subcontractors disapproved insurers an indemnity obligation that lay in the first instance with the developer s insurer. See id. at 298-99, ¶ 2, 247 P.3d at 181- 82. We also emphasized in that case that the agreement assigned the developer s insurers, bad-faith exposing those their policy limits. rights insurers against to the liability subcontractors in excess Id. at 299, ¶ 7, 247 P.3d at 182. of By contrast, the agreement in this case assigned nothing more than an indemnity claim that may be enforced against EMC only if the stipulated judgment proves to be a liability that is within the scope of the coverage that EMC promised to provide to DBA. 3 3 In a motion for reconsideration of our original decision in this appeal, EMC argues the settlement improperly relieved 10 D. Issues of Fact Remain About Whether the Judgment Falls Within the EMC Policy. 1. ¶20 Legal principles. Although we agree with the superior court that the Damron agreement that DBA, Colorado Casualty and Roman entered in this case is valid, an agreement under Damron or Morris does not create coverage that the insured did Morris, 154 Ariz. at 120, 741 P.2d at 253. is liable for the stipulated judgment not purchase. To the contrary, EMC only if the constituted a liability falling within its policy. judgment Id.; see Paynter, 122 Ariz. at 200, 593 P.2d at 950. 2. Whether the judgment is a liability that arises out of Safety Control s operations. ¶21 The EMC policy insured DBA with respect to liability arising out of [Safety Control s] ongoing operations performed pursuant to the subcontract. general, and comprehensive [A]rising out of is a broad, term[] effecting broad coverage. Regal Homes, Inc. v. CNA Ins., 217 Ariz. 159, 163, ¶ 15, 171 Colorado Casualty of its obligations to defend and indemnify DBA for claims arising out of DBA s work. But Safety Control s subcontract required it to procure primary coverage for DBA for liability arising out of Safety Control s ongoing operations for DBA. And EMC concedes that it provided primary insurance to DBA for claims arising out of Safety Control s ongoing operations and that Colorado Casualty, by contrast, provided direct primary insurance to DBA [] for everything else. EMC offers no argument based on either policy s other insurance clause to support the proposition that Colorado Casualty should have to share the expense of a liability arising from Safety Control s ongoing operations on the project. 11 P.3d 610, 614 (App. 2007) (citing Farmers Ins. Co. v. Till, 170 Ariz. 429, 430, 825 P.2d 954, 955 (App. 1992)). For claimed damages to arise out of an event, there must be evidence of a causal relationship between the damages and the event, but proximate causation is not required. Farmers, 170 Ariz. at 430, 825 P.2d at 955. ¶22 In considering whether the stipulated judgment was a liability arising out of Safety Control s operations, we first determine whether the bearing on coverage. judgment has any preclusive effects Under general principles of indemnity law, if an indemnitor has received reasonable notice of the action but declines an defense, absent disputing the liability if diligence and opportunity a conflict existence the to or interest it and extent of defended prudence. indemnitor determined in is the precluded judgment. is the from indemnitee s action Restatement from in estopped the the Judgments ( Restatement ) § 57(1) (1982). the participate of indemnitee reasonable assume with (Second) due of The result is that relitigating Cunningham v. issues Goettl Air Conditioning, Inc., 194 Ariz. 236, 240, ¶ 19, 980 P.2d 489, 493 (1999) (quoting Restatement § 57(1)). See also A Tumbling-T Ranches, 220 Ariz. at 208, ¶ 15, 204 P.3d at 1057 ( We discern no fundamental difference between the obligations imposed under 12 [Restatement] § 57(1) and those set forth in the Damron/Morris line of cases. ). ¶23 There is no dispute that EMC received notice and an opportunity to participate in the case Roman brought against DBA. Nor does EMC raise any real argument that DBA did not defend itself diligently and prudently in that case. Accordingly, EMC is bound for purposes of coverage by any issues determined by the stipulated judgment. See Associated Aviation Underwriters v. Wood, 209 Ariz. 137, 150, ¶ 37, 98 P.3d 572, 585 (App. 2004) (insurer bound by legal and factual issues that underlie Having stipulated inspected the judgment entered stipulated pursuant judgment and to Morris). reviewed the circumstances under which it was entered, however, we cannot say it determined judgment is issues a that liability necessarily that arose resolve out of whether Safety the Control s operations, within the meaning of the EMC policy. ¶24 in Roman s complaint alleged DBA and ADOT were negligent configuring, including installing pavement markings, and maintaining temporary various traffic devices, barricades and concrete barriers, used to control traffic during the freeway construction project. DBA contracted with Safety Control for the concrete barriers used to help divert traffic around the construction other site; traffic other control subcontractors devices, 13 all of were which responsible were for installed pursuant to a plan that Safety Control argues was not within its scope of work. ADOT and DBA Against this background, the judgment to which stipulated did not specify how the collision occurred or the manner in which any of its subcontractors was negligent in causing Roman s injuries. incorporated which by expressly reference the provided parties that neither Indeed, the judgment settlement DBA nor agreement, ADOT admitted liability for any of the claims that have been asserted against them. ¶25 In determining the scope of an insurer s duty to defend, whether a claim arose out of a party s work must be determined initially from the allegations in the complaint against [the party] and the facts known at that time. Homes, 217 Ariz. at 164, ¶ 19, 171 P.3d at 615. Regal But we deal here with an insurer s duty to indemnify, not with its duty to defend. An insurer s duty to indemnify hinges not on the facts the claimant alleges and hopes to prove but instead on the facts (proven, stipulated or otherwise create the insured s liability. established) that actually See Lennar Corp. v. Auto-Owners Ins. Co., 214 Ariz. 255, 261, ¶ 11; 151 P.3d 538, 544 (App. 2007); Salerno v. Atlantic Mut. Ins. Co., 198 Ariz. 54, 58-59, ¶ 17, 6 P.3d 758, 762-63 (App. 2000) (court of appeals looked beyond allegations in complaint in determining coverage). 14 ¶26 that The record contains no finding by the superior court DBA s liability to Roman under the stipulated judgment arose out of Safety Control s operations, within the meaning of the EMC policy; nor does it appear the parties asked the court to address that issue. conduct whatever Therefore, on remand, the court shall proceedings it deems appropriate to resolve that issue. 3. ¶27 Safety Control s ongoing operations. EMC urges us to reverse two rulings the superior court made on summary judgment that on remand will bear on whether the stipulated judgment falls within the policy. the policy insured DBA for liability Control s ongoing operations for DBA. Safety Control s operations were First, as stated, arising out of Safety The superior court held ongoing at the time of the collision; on appeal, EMC argues there is no coverage under its policy because Safety Control s ongoing operations were completed at the time of the collision. ¶28 The policy does not define ongoing operations, and no Arizona court has construed the phrase. The interpretation of an insurance policy presents a question of law, which we review de novo. First Am. Title Ins. Co. v. Action Acquisitions, LLC, 218 Ariz. 394, 397, ¶ 8, 187 P.3d 1107, 1110 (2008). We interpret insurance contracts according to their plain and ordinary meaning, Keggi v. Northbrook Prop. & Cas. 15 Ins. Co., 199 Ariz. 43, 46, ¶ 11, 13 P.3d 785, 788 (App. 2000), and examine the policy s terms from the standpoint of one untrained in law or the insurance business, Thomas v. Liberty Mut. Ins. Co., 173 Ariz. 322, 325, 842 P.2d 1335, 1338 (App. 1992). ¶29 The phrase ongoing operations in this context is not ambiguous. EMC cites Hartford Insurance Co. v. Ohio Casualty Insurance Co., 189 P.3d 195, 202, ¶ 27 (Wash. App. 2008), which held that liability arising out of ongoing operations means liability that arises while the work is still in progress. 4 Adopting that definition, we hold the collision that gave rise to the stipulated judgment in this case occurred during Safety Control s ongoing operations because it occurred while Safety Control s work under the subcontract was still in progress. ¶30 furnish In and installation, required to its subcontract, pay tools, install for Control labor, all Safety services, supplies, and maintain 4 insurance, concrete and promised to materials, equipment barriers on the Courts in other jurisdictions generally agree with this definition. See Liberty Mut. Fire Ins. Co. v. E.E. Cruz & Co., 475 F. Supp. 2d 400, 410 (S.D.N.Y. 2007) ( ongoing operations encompasses all performance under the Contract that occurs prior to the completion of the contracted work ); Weitz Co., LLC v. Mid-Century Ins. Co., 181 P.3d 309, 313 (Colo. App. 2007) ( that [which] is going on [or] actually in process (citations omitted)); Mikula v. Miller Brewing Co., 701 N.W.2d 613, 621 (Wis. App. 2005) ( work . . . that is actually in process, or that is making progress (citations omitted)). 16 freeway and the access road to prevent drivers from proceeding into the construction area. price basis, and the Safety Control was paid on a unit subcontract separately specified the charges to install and to remove specific quantities of barriers and rent for each day each barrier was in use. The subcontract further provided that Safety Control was responsible for the barriers and required to maintain them until completion and final acceptance of the entire project by ADOT. ¶31 Under the subcontract and the undisputed facts in the record before the superior court on summary judgment, Safety Control s ongoing operations continued from the time Safety Control installed the barriers until the time it removed them. Accordingly, given it was undisputed that the barriers were in place and in use at the time of the collision in which Roman sustained summary injury, we judgment hold that the the court collision correctly occurred concluded during on Safety Control s ongoing operations, within the meaning of the EMC policy. 4. ¶32 Work put to its intended use. EMC next argues the superior court erred by rejecting its argument on summary judgment that Roman s claim against DBA fell within a policy after . . . [t]hat exclusion portion of your for injury work out that of occurs which the injury arises has been put to its intended use by any person or 17 organization other than another contractor or subcontractor engaged in performing operations for a principal as part of the same project. EMC argues that Safety Control s work was put to its intended use when the barriers were set in place. the collision occurred after barriers were Because installed, EMC argues, the intended use exclusion bars coverage. ¶33 On its face, however, the policy exclusion does not apply if Safety Control s work was put to its intended use by another contractor or subcontractor on the project. We agree with the superior court that in this context, Safety Control s barriers were put to their intended use by DBA, which had contracted for installation of the barriers to regulate traffic flow around the construction site until work was completed and ADOT accepted the project. EMC cites no authority for the proposition that in a situation such as this, devices installed to control traffic during a highway construction project are put to [their] intended use by the motorists whom the barriers control rather than by the contractor that has installed the barriers to control the motorists. the superior court that as a exclusion did not bar coverage. 18 Accordingly, we agree with matter of law, this policy E. Safety Control Breached the Subcontract by Failing to Procure Completed Operations Coverage for DBA. ¶34 that Roman s only remaining claim against Safety Control is it breached the subcontract by failing to procure additional insurance coverage for DBA with respect to Safety Control s work on the construction site. 5 policy covered liability for Safety As noted, the EMC Control s ongoing operations, but the superior court found on summary judgment that Safety Control breached by failing completed operations coverage for DBA. also to procure It held Safety Control would be liable for the stipulated judgment if and to the extent that EMC fails to perform under the ongoing operations policy. ¶35 The subcontract stated that Safety Control must procure a commercial general liability insurance policy for DBA that would cover all operations by Safety Control, including [c]ompleted operations other specified coverages. and products liability and several The subcontract continued, Each of the above required certificates . . . shall provide that a provision or endorsement has been made naming [DBA] as additional named insured[] as respects liabilities arising out of [DBA s] performance of the work under this Agreement, including products and completed operations liability . . . . Each of the above required certificates shall also provide that an endorsement has been made naming [DBA] as additional named insured as respects to operations performed for [DBA] 5 Roman expressly has disclaimed any direct indemnity claim that DBA may have had against Safety Control. 19 and shall have attached to it a duly executed additional insured endorsement in a form acceptable to Contractor. (CG2010(3/97)[)] or equivalent for the general liability. (Emphasis added.) ¶36 Safety Control argues the subcontract did not require it to procure completed operations insurance for DBA because the policy form referenced by number in the shall also provide sentence insured recited only above with states respect to that it covers liability an arising additional out of [the subcontractor s] ongoing operations performed for that insured. Even if we accept Safety Control s characterization of the industry form, the subcontract s citation to that form did not relieve Safety Control of the obligation to provide the other coverages the subcontract required. that [e]ach of the above The subcontract s statement required certificates shall also provide the specified endorsement plainly meant that the form endorsement would have to be procured in addition to the general coverage, completed subcontract specified. operations and other endorsements the Contrary to Safety Control s argument, the subcontract was not ambiguous in this respect. Accordingly, we agree with the superior court that as a matter of law, the subcontract required Safety Control operations coverage for DBA. 20 to procure completed ¶37 Safety accepted Safety Control s Control work argues, Control s without however, insurance objection, that and DBA because approved either DBA Safety waived any deficiency or impliedly agreed that Safety Control provided the proper insurance coverage. This argument fails because the subcontract includes two provisions specifying that any act or failure to enforce a provision by DBA does not constitute a waiver of Safety Control s obligations to obtain the required coverage. ¶38 Safety Control finally argues the superior court erred by holding that its breach of contract may render it liable for the stipulated judgment. Safety Control contract; failing DBA to breached alleges procure As noted, DBA does not allege that any only indemnity that completed obligation under the Control breached by Safety operations coverage for DBA. This means that, by contrast to damages that may be owed by an insurer or indemnitor under Damron or Morris, the amount for which Safety Control may be liable would not be measured by the stipulated judgment, but by the amount that would have been payable under the completed operations coverage Safety Control failed County, to provide. 150 P.3d See 1147, Frank 1155 Coluccio (Wash. 21 App. Constr. 2007) Co. v. (damages King for breach of obligation to provide insurance coverage is the amount that would have been covered by insurance ). 6 ¶39 Accordingly, on remand, the superior court shall modify the judgment to make clear that Safety Control may be liable only for damages caused by its completed operations coverage for DBA. failure to procure Safety Control argues that because, as we have held, the accident in which Roman was injured occurred during Safety Control s ongoing operations on the road project, the accident could not have arisen out of Safety Control s completed operations because those two types of coverages apply in distinctly different circumstances. We leave that issue for the superior court to address in the first instance on remand. CONCLUSION ¶40 Although, as stated above, we have affirmed several rulings of the superior court, we reverse the judgment against EMC and opinion remand to for further determine proceedings whether the consistent stipulated with judgment this is a liability that arose out of Safety Control s ongoing operations, within the meaning of the EMC policy. 6 In addition, we affirm We express no opinion of the amount of damages for which the finder of fact might determine Safety Control is liable on this claim, except to note that in the end, Roman may recover from all sources no more than the stipulated judgment, costs and fees. 22 the superior court s judgment against Safety Control but remand so that the court may clarify the circumstances under which Safety Control may be liable for damages and conduct whatever further proceedings it deems appropriate to ascertain the amount of those damages, if any. We decline all parties requests for attorney s fees pursuant to A.R.S. § 12-341.01 without prejudice to a request for fees incurred in this appeal to be filed by the prevailing party on remand before the superior court. /s/ DIANE M. JOHNSEN, Presiding Judge CONCURRING: /s/ PATRICIA A. OROZCO, Judge /s/ MAURICE PORTLEY, Judge 23

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