Appeal from the Superior Court in Maricopa County. No. CV2007-007842 and CV2008-017049 (Consolidated). The Honorable Mark H. Brain, Judge.
For Appellant: John P. Flynn, Peter J. Moolenaar, Dioguardi Flynn, LLP, Scottsdale.
For Charter Oak and Travelers, Appellees: William C. Reeves, Morales Fierro & Reeves, Phoenix.
For Drachman Leed, Appellee: Myles P. Hassett, Julie K. Moen, The Hassett Law Firm, PLC, Phoenix.
For For American E& S, Appellee: S. Gregory Jones, Pak & Moring, PLC, Scottsdale.
For Curiae IIABAZ, Amicus: Christopher Robbins, DeCiancio Robbins, PLC, Tempe.
For Curiae Leading Builders of America, Amicus: Holly P. Davies, Lorber Greenfield & Polito, LLP, Tempe.
For Curiae Leading Builders of America, Amicus: Alan H. Packer, Bonnie T. Roadarmel, Clayton T. Tanaka, Susannah M. Eichele, Newmeyer & Dillion, LLP, Newport Beach, CA.
Judge Kent E. Cattani delivered the opinion of the Court, in which Presiding Judge Maurice Portley and Judge John C. Gemmill joined.
[236 Ariz. 327] CATTANI, Judge:
[¶1] KB Home Tucson, Inc. (" KB" ) appeals from the entry of summary judgment in favor of The Charter Oak Fire Insurance Company and Travelers Property Casual Insurance Company (collectively, " Charter Oak" ) on KB's claims for declaratory relief, breach of contract, and breach of the covenant of good faith and fair dealing. KB also appeals from the entry of summary judgment in favor of Drachman Leed Insurance, Inc. (" Drachman Leed" ) and American E& S Insurance Brokers of California, Inc. (" American E& S" ) on KB's claims for negligence, negligent misrepresentation, and fraud. All of the claims relate to whether KB was entitled to coverage as an " additional insured" under insurance policies issued to a subcontractor hired by KB. For reasons that follow, we reverse the entry of judgment in favor of Charter Oak, but affirm the entry of judgment in favor of Drachman Leed and American E& S.
[236 Ariz. 328] FACTS AND PROCEDURAL BACKGROUND
[¶2] KB hired GRG Construction Co., Inc. (" GRG" ) in May 1999 to perform work at a residential subdivision in Tucson. The contractual relationship continued for approximately four years. Charter Oak provided liability coverage for GRG, including " additional insured" coverage for any person or entity GRG was obligated to cover by virtue of a written contract or agreement. Drachman Leed and American E& S were GRG's insurance agents/brokers who--at GRG's direction--issued Certificates of Insurance requested by KB relating to GRG's policy with Charter Oak and with another insurer, Evanston Insurance Company (" Evanston" ).
[¶3] Charter Oak issued two annual general liability policies to GRG during the relevant time periods. The policies included a blanket additional insured endorsement, which provided as follows:
WHO IS AN INSURED - (Section II) is amended to include any person or organization you are required to include as an additional insured on this policy by a written contract or written agreement in effect during this policy period and executed prior to the occurrence of any loss.
[¶4] GRG's written contracts with KB provided, in pertinent part:
7. All work and materials must be acceptable to and comply with all rules, regulations and requirements of [KB].
7. [GRG] shall protect and indemnify [KB] from any claims, liability, or losses suffered by anyone wholly or partially through the negligence of [GRG] or any of his agents or employees. [KB] shall retain a reasonable portion of all payments due [GRG] until such claims are settled or suitable indemnity arrangements acceptable to [KB] are provided by [GRG].
8. [GRG] shall purchase and pay for all employer's liability and workman's compensation insurance required by the State in which this work is performed and shall also purchase and pay for public liability, property damage, products liability, and product performance insurance [in specified amounts]. Certificates of coverage or copies of such policies shall be furnished to [KB] prior to the commencement of work.
[¶5] After the parties signed the contract, KB sent annual letters to GRG describing its insurance requirements. These letters detailed the minimum coverage mandated by KB and stated that KB " must be named as an Additional Insured on the General Liability Policy." In response, GRG directed Drachman Leed to provide KB a copy of Charter Oak's above-described blanket additional insured endorsements, together with certificates of liability insurance ...