Colorado Casualty Insurance v. Safety Control Co.
269 P.3d 693
Ariz. Ct. App.2012Background
- ADOT hired DBA for a road project; Safety Control, a DBA subcontractor, purchased primary coverage from EMC identifying DBA as additional insured, with DBA’s Colorado Casualty excess policy covering subcontractor liability.
- A collision at the construction site injured Hugo Roman, who sued ADOT and DBA; Colorado Casualty tendered DBA’s defense to Safety Control/EMC, who rejected it; Roman settled with DBA and ADOT and assigned rights to Roman and Colorado Casualty.
- Colorado Casualty sued Safety Control and EMC to recover defense costs and the Roman settlement; Roman intervened and asserted claims against Colorado Casualty and subcontractors.
- Roman and Colorado Casualty settled against most defendants; the superior court held EMC breached a duty to defend and was liable for the stipulated judgment and Roman’s fees, while Safety Control breached its subcontract by failing to procure completed-operations coverage.
- The court granted summary judgment on several issues and remanded to determine if the stipulated judgment falls within EMC’s policy and to resolve remaining issues related to Safety Control’s breach and damages.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Damron/Morris agreement is enforceable against EMC | Roman/Colorado Casualty argue Damron enforceable; assignment valid | EMC contends Damron not applicable or improperly shifting liability | Damron agreement enforceable; remand to determine policy-coverage fit. |
| Whether the stipulated judgment falls within EMC’s policy | Damron assignment should bind EMC if judgment arises from Safety Control’s operations | Coverage depends on whether judgment arises out of Safety Control’s ongoing operations | Remand to resolve whether judgment is a covered liability. |
| Whether the collision occurred during Safety Control’s ongoing operations | Subcontract required completed-operations coverage for DBA | Policy form cited but subcontract required more endorsements | Subcontract required completed-operations coverage; remand to determine damages and coverage. |
| Damages scope for Safety Control breach and relation to Damron | Damages limited to stipulated judgment amount | Damages may exceed or differ, measured by failed coverage | Damages to be determined on remand consistent with completed-operations coverage and Damron framework. |
Key Cases Cited
- Damron v. Sledge, 105 Ariz. 151 (1969) (insurer breach allows settlement and assignment of rights if not fraudulent or collusive)
- Morris v. United Services Auto. Ass'n, 154 Ariz. 113 (1987) (insurer liable for covered claims; Morris framework applied to Damron-type settlements)
- Paynter v. State Farm Mut. Auto. Ins. Co., 122 Ariz. 198 (App. 1979) (insurer bound by stipulated judgment in Morris context)
- Leflet v. Redwood Fire & Casualty Ins. Co., 226 Ariz. 297 (App. 2011) ( Damron-like concerns; insurer/primary-vs-excess dynamics)
- Associated Aviation Underwriters v. Wood, 209 Ariz. 137 (App. 2004) (insurer bound by issues underlying stipulated judgments)
- Regal Homes, Inc. v. CNA Ins., 217 Ariz. 159 (App. 2007) (definition of arising out of in indemnity/coverage context)