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Court of Appeals of Arizona, Division One, Department D
November 29, 2007, Filed
No. 1 CA-CV 05-0254
[**612] [*161] GEMMILL, Chief Judge
P1 In this appeal we address several insurance coverage issues arising from alleged construction-defect litigation. In 2000, Regal Homes, Inc. ("Regal") and Auto-Owners Insurance Company ("Auto-Owners") (collectively "Appellants") filed their complaint against Appellees CNA Insurance, Transportation Insurance Company, and Valley Forge Insurance Company (collectively "CNA"). 1 This is the second appeal in this case. In the first appeal, we determined that the trial court had improperly granted summary judgment to CNA and we remanded for further proceedings. Regal Homes, Inc. v. CNA Insurance, 1 CA-CV 02-0202 (Ariz. App. May 15, 2003) (mem. Decision).
P2 After remand from the first appeal, additional discovery was accomplished and CNA again moved for summary judgment. The trial court granted CNA's motion. Appellants seek reversal of the summary judgment. 2 For the reasons that follow, we affirm in part, reverse in part, and remand.
FACTS AND PROCEDURAL HISTORY
P3 Regal was the builder and developer of a single family residential community known as "The Shores." Regal obtained primary commercial general liability ("CGL") insurance coverage directly from Auto-Owners for 1995 and from Zurich Companies ("Zurich") for 1996 through 1998. Regal hired GMS Concrete, Inc. ("GMS") as [***3] a subcontractor to perform work on The Shores. Regal had an oral understanding with GMS, but no written agreement, regarding the procurement of additional coverage for Regal. GMS was insured by CNA, 3 and Regal was identified in certificates of insurance as an additional insured under the CNA policies.
P4 Regal was sued in superior court by eight homeowners from The Shores ("Bootz litigation" or "Bootz"). Zurich and Auto-Owners participated in the defense and settlement of the Bootz litigation. Regal requested [**613] [*162] that CNA participate in the defense, but CNA refused. CNA asserted that its policies provided only excess coverage for Regal. The Bootz litigation was settled with funds contributed by Auto-Owners, Zurich, and Regal. Neither Auto-Owners nor Zurich exhausted its primary policy limits of coverage. 4
P5 Appellants' claim is that the CNA coverage was primary, not excess, and that CNA should provide reimbursement for defense costs and indemnity payments. In our prior decision, we held that a disputed issue of fact existed as to whether CNA's coverage was primary or excess. The pertinent portion of CNA's blanket additional insured endorsement, issued to GMS, provides:
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217 Ariz. 159 *; 171 P.3d 610 **; 2007 Ariz. App. LEXIS 229 ***; 518 Ariz. Adv. Rep. 18
REGAL HOMES, INC., an Arizona corporation; AUTO-OWNERS INSURANCE COMPANY, Plaintiffs/Appellants, v. CNA INSURANCE; TRANSPORTATION INSURANCE COMPANY; VALLEY FORGE INSURANCE COMPANY, Defendants/Appellees.
Subsequent History: Review denied by, Request denied by Regal Homes/Auto-Owners Ins v. CNA Ins., 2008 Ariz. LEXIS 90 (Ariz., June 3, 2008)
Prior History: [***1] Appeal from the Superior Court in Maricopa County. Cause No. CV 2000-002163. The Honorable Michael J. O'Melia, Judge (Deceased).
Disposition: AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
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