Colorado Casualty Insurance v. Safety Control Co., 230 Ariz. 560

DBA contracted with ADOT for a freeway project; Safety Control subcontracted its work and carried primary insurance with EMC, while DBA carried an excess policy with Colorado Casualty.
A collision at the job site injured Roman, who sued ADOT and DBA; Colorado Casualty tendered Defense but Safety Control and EMC refused.
DBA, ADOT, and Colorado Casualty settled with Roman for $750,000; Roman received $75,000 from Colorado Casualty and $20,000 from ADOT; the parties assigned to Roman their rights against Safety Control and other insurers.
Colorado Casualty sued Safety Control, EMC, and other subcontractors/insurers to recover defense/settlement costs; Roman intervened and pursued related claims.
Superior court granted summary judgment: EMC liable to Roman for the stipulated judgment and Roman’s fees; Safety Control breached by not procuring completed-operations coverage; the court remanded to determine whether the stipulated judgment falls within EMC’s policy.
On appeal, the court upheld the Damron/Morris framework as valid but remanded to resolve whether the judgment is a covered liability under EMC’s policy and clarified the scope of Safety Control’s breach regarding completed operations and ongoing operations.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Validity of the Damron agreement	Roman/DBA: Damron/Morris arrangement valid	EMC: Damron agreement invalid or improper	Damron agreement valid and enforceable
Effect of the Roman–Colorado Casualty dispute on pursuing claims	Roman/Colorado Casualty may pursue assigned claims	Dispute precludes or complicates recovery	Dispute does not preclude pursuing claims against EMC and Safety Control
Damron/Morris allocation of indemnity and coverage	Damron shifts indemnity against EMC; valid in indemnity context	Leflet concerns may bar shifting obligations	Damron/Morris agreement valid; Leflet distinction noted; not invalidated here
Whether the stipulated judgment falls within EMC’s policy	Judgment should be within EMC’s coverage for ongoing operations	Unclear whether arising out of Safety Control’s operations; potential non-coverage	Remand to determine if the judgment is a covered liability under EMC policy
Safety Control’s duty to procure completed-operations coverage	Subcontract required completed operations coverage for DBA	Completed operations coverage not required or misinterpreted form	Safety Control breached by failing to procure completed-operations coverage; remand for damages assessment

Damron v. Sledge, 105 Ariz. 151 (1969) (damages assignment permitted when insurer breaches defense)
United Servs. Auto Ass’n v. Morris, 154 Ariz. 113 (1987) (indemnity rights flow from defense failure; assignment permitted)
State Farm Mut. Auto. Ins. Co. v. Paynter, 122 Ariz. 198 (App. 1979) (insurer bound by judgment if within policy)
Leflet v. Redwood Fire & Casualty Insurance Co., 226 Ariz. 297 (App. 2011) (discussion of shifting indemnity/defense obligations; not controlling here)
A Tumbling-T Ranches v. Flood Control Dist. of Maricopa County, 220 Ariz. 202 (App. 2008) (Damron/Morris allowed in commercial indemnity context)
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) (interpretation of 'arising out of' in coverage)
Farmers Ins. Co. of Ariz. v. Helme, 153 Ariz. 129 (1987) (cooperation and defense-related indemnity principles)
Lennar Corp. v. Auto-Owners Ins. Co., 214 Ariz. 255 (App. 2007) (indemnity/coverage principles in Arizona)