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Keggi v. Northbrook Prop. & Cas. Ins. Co.

Court of Appeals of Arizona, Division One, Department D

December 5, 2000, Filed

1 CA-CV 99-0566


 [*44]   [**786]  THOMPSON, Judge

P1 Caroline Saunders Keggi appeals from the trial court's judgment in favor of Northbrook Property and Casualty Insurance Company (Northbrook) and TIG Insurance Company (TIG). Keggi sought a declaratory judgment that policies issued by the two insurance companies covered Keggi's injuries arising from drinking bacteria-contaminated water served by the insurers' policyholder, Desert Mountain Properties (Desert Mountain). The trial court concluded that the pollution exclusion clauses barred coverage for Keggi's alleged injury. The trial court further concluded that Keggi lacked standing to pursue her claim against TIG. For the following reasons, we reverse the trial court's judgment and remand for further proceedings.


P2 Keggi was a professional golfer who, on occasion, lived and trained at her parents' home in a mixed-use development in north Scottsdale, Arizona, known as Desert Mountain. Desert Mountain included homes, golf courses, and clubhouses. These facilities were served by a water distribution system that originally was owned, operated, and maintained [***3]  by the Carefree Ranch Water Company, and later was purchased by Desert Mountain.

P3 In late February 1993, the City of Scottsdale detected both total and fecal coliform  [**787]   [*45]  bacteria in the water system at Desert Mountain. The source of the bacteria remains unknown. Before receiving notice of the contamination Keggi became seriously ill. Keggi had consumed contaminated water from the taps at her parents' home and from the Desert Mountain facilities.

P4 Keggi sued Desert Mountain and others for her injuries, asserting claims for negligence, strict liability, and breach of the implied warranties of merchantability and fitness. She alleged that Desert Mountain negligently operated and maintained the water system and that it was strictly liable for serving her contaminated water. She claimed damages for medical expenses, loss of earnings, and loss of earning capacity.

P5 Northbrook provided commercial general liability (CGL) and umbrella insurance coverage for Desert Mountain. TIG provided Desert Mountain's excess liability coverage. Desert Mountain tendered defense of the Keggi lawsuit to Northbrook and TIG, but both insurers denied coverage and refused to [***4]  defend. Northbrook disclaimed coverage based on the pollution exclusion clause. TIG refused to cover or defend the lawsuit until the limits on the underlying Northbrook policies were exhausted. Desert Mountain filed a declaratory judgment action against Northbrook and TIG, alleging breach of contract and insurance bad faith claims.

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199 Ariz. 43 *; 13 P.3d 785 **; 2000 Ariz. App. LEXIS 173 ***; 336 Ariz. Adv. Rep. 14


Subsequent History:  [***1]  Northbrook's Petition for Review Denied October 5, 2001, Reported at: 2001 Ariz. LEXIS 197. Petition for Review Denied October 3, 2001.

Prior History: Appeal from the Superior Court of Maricopa County. Cause No. CV 97-07389. The Honorable Jeffrey A. Hotham, Judge.



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Civil Procedure, Judgments, Declaratory Judgments, General Overview, State Declaratory Judgments, Public Health & Welfare Law, Healthcare, Appeals, Standards of Review, De Novo Review, Contracts Law, Defenses, Ambiguities & Mistakes, Insurance Law, Policy Interpretation, Ambiguous Terms, Construction Against Insurers, Claim, Contract & Practice Issues, Judicial Review, Exclusions, Ordinary & Usual Meanings, Plain Language, Commercial General Liability Insurance, Exclusions, Pollution, Contractual Liabilities, Types of Insurance, Excess Insurance, Coverage, Triggers