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# FI LED
APR11 2 011 M OLLY C. DW Y ER, CLERK U
. S. C O U R T OF APPE ALS2

( “ O n e Be a c o n ” )
. Th e u n d e r l y i n g c o mpl a i n t , w h i c h w a s f i l e d b y Tr i
- St a rTh e me B ui l de r s , I nc . / P C L C ons truc t i on S e r vi c e s , I nc . ( “ T r i
- S t a r ” ) , a l l e ge d tha tO ne B e a c on fa i l ed t o d ef

end and i nd em ni fy T ri -S t ari n an act i on agai nsti tby the C ol orado R i ver I ndi a n T r i be s ( “ T r i be s ” )
. T r i
- S t a r , the ge ne r a l c ontr a c t oron a r e s or ta nd c a s i no pr oj e c t( “ P r oj e c t ” ) be i ng de ve l op ed b y the T r i be s , ha d s ubc ontr a c t e d the pl um bi ng
a nd H V A C w or k t o G ol den W est M e c ha ni c a l ( “ G ol de n W e s t ” )
. P ur s ua ntt o the subcon tra ctagre em ent , G ol den W es tagre ed t o m ake T ri -S t aran addi t i on al i nsured
un der i t s com m er ci al general l i abi l i ty (“ C G L ”) i nsurance pol i cy . T he fi rs tpo l i cy w as ent er ed in to on M ar ch 24 , 19 98 , three days before G ol den W es t ’ s s ub cont ra ct
a gr e e m e ntw a s f

or m a l l y e xe c ut e d. S u b seq u en t l y, G o l d en W estp ro c e e d ed t o o b t ai n a ri d er t o i t s C G L p o l i cy,
e f f e c t i ve A pr i l 20, 1998, w hi c h pr ovi de d tha t the “ W ho I s A n I ns ur e d” s e c t i on of the p o lic y ( S e c tio n I I ) is a m e n d e d to in c lu d e “[ T r i- S ta r ], b u t o n ly w ith r e s p e c t to lia b ility
a r i s i ng outof

. . . [ G ol de n W e s t ’ s ] ongoi ng ope r a t i ons pe r f or m e d f or. . . [ T r i
- S t a r ] on the [ P r oj e c t ]
. . . , a nd onl y t o the e xt e ntof l i a bi l i ty r e s ul t i ng f

r om oc c ur r e nc e s a r i s i ng
ou tof
. . . [G ol den W es t ’ s] negl i gence. ” A pp el l ee ’ s E xcerpt s of R
. at26 6-67
. W hen the t er m of the i ni t i al po l i cy ended, a sec on d po l i cy , w i th the sa m e a dd i t i on al i nsured endo rs em entand w i th a coverage per i od of M ar ch 24 , 19 99 t o M ar ch 24 , 20 00 , w as
e nt e r e d i nt o. C ons i s t e ntw i th the a bove c hr onol ogy , T r i
- S t a ra r gue s w i thout3

cont ra di ct i on that G ol den W es t w as engaged i n ong oi ng op er at i on s w hen i tob t ai ned th e a d d itio n a l in s u r e d e n d o r s e m e n t. A f te rth e c o m p le tio n o f

th e P r o je c t, th e T r ib e s f

ile d a c o m p l a in t a g a in s t T r iS ta r . I n r e le v a n t p a r t, th e c o m p la in t a lle g e d th a t, a f te r T r i- S ta r h a d is s u e d a c e r tif ic a te
o f s u b s t a n tia l c o m p le tio n , th e T r ib e s d is c o v e r e d “s u b s ta n tia l a n d m a te r ia l d e f e c ts in the desi gn and con struct i on of t he re sort ” and, as a consequence, the T ri bes s uffe re d d a m a g e . A p p e lla n t’s E x c e rp ts o f R
. a t 2 8
- 3 2 . S o m e o f th e s e d a m a g e s o b v io u s ly
ar ose outof t he pl um bi ng and H V A C sy st em s f or w hi ch T ri -S t ar , as the general cont ra ct or, w as re spon si bl e. A ft erO neB ea con d eni ed T ri -S t ar ’ s t ender of covera ge, the l a t t e ri ni t i a t e d the pr e s e nta c t i on. O neB ea con, w hi ch i s the succ es sor t o H aw keye Insura nce C om pany, the i nsurer th at i ssu ed t he C G L pol i c y t o G ol de n W e s t , m ove d f ors um m a r y j udge m e nt . T he ba s i s f orthe m o t i o n w a s tha tthe da m a ge s uf f e r e d by the T r i be s w a s notc ove r e d by the a ddi t i ona l i ns ur e d e ndor s e m e ntt o the C G L pol i c y . U nde rO ne B e a c on’ s r e a di ng of t he po l i cy , T ri -S t arw as on l y covered for dam ages suff er ed w hi l e G ol den W es tw as perf orm i ng w ork o n t he P roj ec t . B ec ause the com pl ai ntagai nstT ri -S t ar , for w hi ch i ta s ke d O n e B e a c on t o pr ovi de a de f e ns e , a l l e ge d tha tthe da m a ge s s uf f e r e d by the T ri bes a rose af

t er the com pl et i on of G ol den W es t ’ s opera t i on s, O neB ea con argues that i t w as no t ob l i gat ed t o prov i de ei ther a defe nse o r i nd em ni fi ca t i on . T hi s w as so even4

though the c on d u ct t h a tga ve r i s e t o the da m a ge a l l e ge dl y oc c ur r e d a s a r e s ul tof G o l d en W est ’ s o p erat i o n s d u ri n g th e co n stru ct i o n o f t h e P r oject
. O n eB eaco n al so
ar gu ed t hatthe com pl ai ntand a fol l ow -up l ett er prov i di ng addi t i on al i nform at i on w er e
n o t a d e q u a te to tr ig g e r its d u ty to d e f e n d o r in d e m n if

y . T h e d is tr ic t c o u r t a g r e e d w ith b o th o f O n e B e a c o n ’s a r g u m e n ts a n d g r a n te d its m o tio n f o r s u m m a r y ju d g e m e n t. T h is
a ppe a l f ol l ow e d. I. W e turn fi rs tt o th e issu e o f the const ruct i on of t he addi t i on al i nsured
e ndor s e m e nt . W e be gi n w i th a br i ef su m m ary of the c om m on l a w rul e s tha tthe S upr e m e C our t of A r i z ona ha s pr om ul ga t e d w i th r e s pe c t t o the c ons truc t i on of i nsurance c on tra ct s. W hen con strui ng di sput ed prov i si on s, the l angu age of the po l i cy is c r itic a l, Stat e Far m Mut . A ut o. I ns . C o. v . W

i l s on , 782 P
. 2d 727, 734 ( A r i z . 1989) ( e n b a n c ) , a n d th e w o r d s a r e g iv e n “th e irp la i n a n d o r d in a r y m e a n in g ,” Sp arks v. R e publ i c N at ’ l L i f e I ns . C o. , 647 P
. 2d 1 1 2 7 , 1132 ( A r i z . 1982) ( e n ba nc )
. P e r ha ps
m os ts i gni f

i c a nt l y , th e cons truc t i on of the t e r m s of

a n i ns ur a nc e c ontr a c ts houl d be
u n d e r ta k e n f

r o m th e p e r s p e c tiv e o f a la y m a n , o n e “u n tr a in e d in th e la w o rin s u r a n c e .” Id
. a t1135. C ons e que nt l y , A r i z ona c our t s a r e “ n o t c onc e r ne d w i th w ha tthe

‘ com m er ci al cust om s’ ar e i n t he i n su ra nce i nd ustry , bu tra ther, w hatthe ordi nary pers on ’ s un ders t andi ng of the po l i cy w ou l d b e. ” Id
. M or e ove r , “ [ w ] he r e the l a ngua geT h e s u b c la u s e o f th e a d d itio n a l in s u r e d e n d o r s e m e n t th a t p r o v i d e s c o v e r a g e “o n ly 1 t o th e ex t en t o f l i ab i l i ty resu l t i n g fro m o ccu rren ces ari si n g o u to f .
. . [G o l d en W est ’ s] n e g lig e n c e ,” A p p e lle e ’s E x c e rp ts o f R . a t 2 9 7 , w a s a p p a r e n tly a d d e d in r e s p o n s e to s om e c a s e s th a th a d b r o a d l y c o n s tru e d th e “ a r i s i n g o u to f ” l a n g u a g e t o p r o vi de coverage t o t he addi t i on al i nsured beyond thatfor w h ich i tw ou l d h ave been v ic a r io u s ly lia b le
. Se e , e . g. , Mi kula v . Mi l l e rB r e w i ng C o. , 701 N
. W
. 2d 613, 622–23 ( W i s. 2005) ( “ I f

the
. . . [ i ns ur e r ] i nt e nde d t o e xc l ude c ove r a ge f orl i a bi l i ty a r i s i ng fr om the addi t i on al i nsured’ s ow n negl i gence, i t shou l d and coul d have spel l ed ou tas m u c h .” )
. 5 em pl oyed i s uncl ea r a nd ca n b e r ea sonabl y c on strued i n m ore th an on e s ense , an
am bi gu i ty i s s ai d t o exi st. . . . ” I d. a t 1 1 3 2
. B e f or e a ddr e s s i ng the c ons e que nc e s of a f i ndi ng of a m bi gui ty , w e a ddr e s s the thr e s hol d i s s ue of

w he the rthe l a ngua ge of the a ddi t i ona l i ns ur e d e ndor s e m e nta ti s s ue he r e c a n r e a s ona bl y be c ons true d i n m or e t h an o n e sen se . W e hol d tha ti tc a n. B ec ause the addi t i on al i nsured i s a general cont ra ct or pres u m ab ly perf orm i ng w ork on i t s ow n be ha l f

a nd thr ough a num be r of othe rs ubc ontr a c t or s , the l a ngua ge c a n be
r e a d t o l i m i tthe c ove r a ge t o “ l i a bi l i ty a r i s i ng outof [ G ol de n W e s t ’ s ] ongoi ng ope r a t i ons pe r f

or m e d f or[ T r i
- S t a r ] , ” A ppe l l e e ’ s E xc e rpt s of R
. a t297, a s o p p o s e d to l i ab i l i ty ari si n g o u to f t h e n eg lig e n c e o f T ri -S t ar an d i t s o th er su b co n tract o rs. 1 F u r th e r , th e la n g u a g e c a n r e a s o n a b ly b e c o n s tru e d a s lim itin g T r i- S ta r ’s c o v e r a g e o n ly t o t he e xt e nte xp r e s s l y s pe c i f i e d i n the c on tr a c t( r a the rtha n b a s e d o n a t em po ra l l i m i t at i on ). F or exam pl e, al tho ug h the i nsurance c on tra ct , pu rs uantt o excl usi on j (6), excl ud es coverage for “property d am age” t o “ thatpart i cul arpartof any property that6

m u s t b e r e s to r e d , r e p a ir e d o r r e p la c e d ” b e c a u s e th e in s u r e d ’s w o r k w a s “in c o r r e c tly perf orm ed on i t , ” Id
. a t312, thi s e xc l u si o n i s n o ta ppl i c a bl e t o pr ope r ty da m a ge
ar i si ng ou tof

c ompl e t e d o pe r a t i on s . H ow e ve r , be c a us e the a dd i t i on a l i ns ur ed
e n d o r s e m e n t is lim ite d to d a m a g e s a r is in g o u t o f th e in s u r e d ’s “o n g o in g o p e r a tio n s ,” T ri -S t arw ou l d n otbe abl e t o cl ai m thi s a dd i t i on al “ com pl et ed op er at i on s” coverage. I nde e d, a s one c om m e nt a t orha s obs e r ve d:

T h e k ey p h ra se
— “ar isin g o u t o f th e N am ed In su re d ’s on go i ng op er at i on s” (w hi ch i s notdefi ned)— addres se s on l y the t ype of a ct i vi ty (ong oi ng op er at i on s) fr om w hi ch th e . . . [ a d d itio n a l in s u r e d ’s ] lia b ility m u s t a r is e in o r d e rto be covered, no tw hen t he i nj ury or dam age m ustoccur. In o th er w o rd s, th is l an g u ag e d o es n o tst at e t h ati n j u ry m u st o c c u r , o rlia b ility m u s t a r is e , dur i ng th e N am e I n su re d ’s ongo i ng ope r a t i ons , butr a the rr e qui r e s onl y tha tthe l i abi l i ty ar i se “ out

of ” the on go i ng op er at i on s, w hi ch m ay r e qui r e onl y a m i ni m a l c a us a l c onne c t i on be t w een the l i abi l i ty a nd the “ on go i ng op er at i on s. ” .
. . A t th e ver y l ea st , there i s an ar gu m ent that the endo rs em ent ’ s und ef i ned l a ngua ge i s a m bi guous a nd s houl d be c ons true d a ga i ns tthe draf t er . 3 D a v e n L o w h u r s t e t a l., N ew App l em an In su ra n ce L aw P ract i ce G ui de 30A
- 66 ( J e f f r e y E
. T hom a s e ta l
. e ds
. , 2011)
. S i gni f i c a nt l y , the onl y case tha tc ons true d the addi t i on al i nsured endo rs em entw i tho utre sortt o t he un ders t andi ng of the i nsurance i ndus tr y he l d tha t“ the onl y r e a s ona b l e co n cl us i on” i s tha tthe a l l e ge d l i a bi l i ty f or pr ope r ty d a ma g e o c c u r r i n g a f t e rc o mp l e t i o n c a me w i th i n th e s c o p e o f th e o n goi ng
o p e r a tio n s c la u s e . Va l l e y I n s . Co
. v . W

e l l i n g t o n Ch e s wi c k

, LLC , N o. 05- 1886, 20067

W L 3030282, a t*5 ( W
. D
. W a s h. 2006) ( “ [ W ] hi l e the pr ope r ty da m a ge m a y notha ve
o c c u r r e d d u r in g . . . o n g o in g o p e r a tio n s , th e a lle g e d lia b ility d id .” ) , vacat ed on other g rounds , N o . 0 5
- 1 8 8 6 , 2 0 0 7 W L 1 5 3 1 6 7 4 , a t * 3 ( W .D . W a s h . 2 0 0 7 ) ; s e e a l s o N
. Y. C i t y H ous . A uth. v . Me r c hant

s Mut . I ns . C o. , 44 A
. D
. 3d 540, 5 4 1 (N
. Y
. A pp. D i v. 20 07 ) ( w here t enantw as shoti n apartm entw i th a d ef ec t i ve do orl ock aft er const ruct i on w as com pl et e a nd there w as “ no re co rd ev i dence thatthe do ors w er e fa u lty d u e t o p o o r w o rk m an sh ip o r in stallati o n ,” as o p p o se d to v an d alism , th e ten an t’ s i nj ur i e s d i d “ n o t a r i s e o u t o f [ th e i n s u r e d ’ s ] o n g o i n g o p e r a t i o n s p e r f o r me d f or [ t he H o u s in g A u th o r ity ].” ( s e c o n d a lte r a tio n in o r ig in a l) )
. M oreover, the ca se s thathave l i m i t ed coverage of th e addi t i on al i nsured
e ndor s e m e nt t o da m a ge s oc c ur r i ng dur i ng the na m e d i ns ur e d’ s ongoi ng ope r a t i ons have no t re l i ed on the pl ai n l angu age of cl ause . Inst ea d, they have draw n i nfer ence s
r e ga r di ng the s c ope of c ove r a ge by r e l y i ng on the dr a f t i ng hi s t or y of

the c l a us e by the i ns ur a nc e i ndus tr y . T he di s tr i c tc our t ’ s opi ni on he r e i s i l l us tr a t i ve . T he di s tr i c tj udge
c o n c e d e d th a t th e la n g u a g e o f th e c la u s e a t is s u e h e r e w o u ld c o v e rth e p r o p e r ty da m a ge a l l e ge d i n the c om pl a i nt f i l e d a ga i ns t T r i
- S t a r . A s the di s tr i c t j udge obs e r ve d: A ny cl ai m for per sonal i nj ury or prope rty dam age r el at ed to a s u b c o n tr a c to r ’ s w o r k w ill, n e c e s s a r ily , r e la te b a c k to the pe r i od of

t i m e w he n the s ubc ontr a c t or w a s w or ki ng on t he pr oj e c t . T hi s i s s o be c a us e a ny a c t i on i n the c a us a t i on c h a in th a t a s u b c o n tr a c to rs e ts in m o tio n w ill in e v ita b ly r e la te b a c k to th e s u b c o n tr a c to r ’s n e g lig e n t a c tio n s o rf a u lty8 w or km a ns hi p, w hi c h c a n onl y oc c ur w hi l e t he s u b c o n tr a c to ris s till w o r k in g o n th e p r o je c t. T r i
- StarT he m e B ui lde rs , I

nc . / P C L C ons tr . Se r vs . , I

nc . v . H aw ke y e - Se c . I ns . C o. , 653 F . S u p p . 2 d 9 7 3 , 9 7 9 ( D . A r iz . 2 0 0 9 )
. N ev ert h el ess, th e d i stri ctj u d g e d ecl i n ed t o ap p l y th e l an g u ag e o f t h e cl au se be c a us e doi ng s o w oul d “ e r a s e [ ] the di s t i nc t i on be tw e e n ongoi ng ope r a t i ons c ove r a ge and com pl et ed op er at i on s c ov er age. ” I d
. “ T hus , the onl y m e a ni n g fu l di s t i nc t i on b et w een th e t w o ty p e s o f co v erag e b eco m es o n e o f w h en th e d am ag es m an i fest th em se lv es : d u rin g th e s u b co n trac to r’s o n g o in g o p er atio n s o r af ter th e s u b co n trac to r’s
w or k i s c om pl e t e d? I f

the l a t t e r , the n a n [ a ddi t i ona l i ns ur e d] e ndor s e m e ntc ont a i ni ng
on go i ng op er at i on s l angu age w i l l no tprov i de coverage. ” Id
. T he di stri ctj ud ge’ s s t at em ent i s i ncorrec tbeca use, as expl ai ned abo ve, anot her “m e a n in g f

u l d is tin c tio n b e tw e e n th e tw o ty p e s o f c o v e r a g e ” is th e d if

f e r e n c e e x p r e s s ly
s t a t e d i n the c ontr a c t ; f

or e xa m pl e , e xc l us i on j ( 6) i s nota ppl i c a bl e t o pr ope r ty da m a ge tha ta r i s e s outof

c om pl e t e d w or k. I nde e d, O ne B e a c on c onc e de s tha tthe di s tr i c tj udge hi m s e l f m a y ha ve got t e n i tw rong w he n he s ugge s t e d tha tthe “ onl y m e a ni ngf ul di st i nct i on ” betw ee n t he t w o types of coverage provi ded b y the C G L po l i cy “ becom es
on e of w he n the da ma ge s ma ni f e s t the msel ves. ” Id
. O n the c ontr a r y , the i s s ue O neB eaco n argu es i s w hen t he dam ages occurre d and no tw hen t hey m ani fe st ed th em sel v es. F i n al l y, al th o u g h th e co n tractco n t ai n s a d efi n i t i o n o f t h e “ p ro d u ct s-U nd erthe C G L po l i cy , O neB ea con agree s to “ pay tho se sum s thatthe i nsured 2 b e c o m e s le g a lly o b lig a te d to p a y a s d a m a g e s b e c a u s e o f ‘b o d ily in

ju r y ’ o r‘p r o p e r ty da m a ge t o w hi c h .
. . [ the ] i n sur a nc e a ppl i e s . ” A ppe l l e e ’ s E xc e rpt s of R
. a t309. S i gn i fi ca nt l y, the “ i nsurance [onl y] appl i es t o ‘ bo di l y i nj ury’ and ‘ prop er ty dam age’

. . . i f:
. . . [t ] he ‘ bo di l y i nj ury’ or ‘ prop er ty dam age’ i s c ause d b y a n ‘ occurre nce’ that t akes p lace in th e ‘ coverage t er ri t ory’ and .
. . occurs du ri ng the po l i cy peri od
. ” Id
. T he cl ause is th en qu al i fi ed by anot her e xcept i on thatprov i des thatthe “ i nsurance doe s nota ppl y t o: . . . [ tha t ] pa r t i c ul a r p art o f an y p rope r ty tha tm us tbe r e s t or e d, r e pa i r e d or r e pl a c e d be c a us e ‘ [ the i ns ur e d’ s ]
. . . w or k’ w a s i nc or r e c t l y pe r f or m e d on i t . ” Id
. a t312. T hi s e xc l us i on i s the n qua l i f i e d by y e ta nothe re xc e pt i on tha tc ove r a ge “ doe s not a ppl y t o ‘ pr ope r ty da m a ge ’ i nc l ude d i n the ‘ pr oduc t s - c om pl e t e d ope r a t i ons haza rd. ’ ” Id
. T he “ prod uct s- com pl et ed op er at i on s hazar d ,” w hi ch appears un der
“ D ef i ni t i on s, ” provi des that“ al l ‘ bo di l y i nj ury’ and ‘ prop er ty d am age’ occurri ng aw ay f r om pr e m i s e s . . . [ tha t t h e i ns ur e d] ow n[ s ] orr e nt [ s ] a nd a r i s [ e s ] outof ‘ [ the in s u r e d ’s ] . . . p r o d u c t’ o r‘[ th e in s u r e d ’s ] . . . w o r k ’” is c o v e r e d , ex c e pt f or“ [ w ] ork thathas notye tbeen com pl et ed or abando ned. ” Id
. a t320. 9 c om pl e t e d ope r a t i ons ha z a r d, ” nothi ng i n the p l a i n l a ngua ge of tha tde f

i ni t i on 2 i nd i ca t es thatthe re l at i on shi p betw ee n “ on go i ng op er at i on s” coverage a nd “ com pl et ed op er at i on s” coverage i s t hat “ on go i ng op er at i on s” coverage cea se s t o h ave e ff ec ton ce th e p r im a r y in s u r e d ’s o p e r a tio n s a r e c o m p le te . T he ongoi ng ope r a t i ons c l a us e , w hi c h a p pe a r s i n the “ W ho I s A n I ns ur e d”
s e c tio n , h o w e v e r , a d d r e s s e s “o n ly th e ty p e o f a c tiv ity
. . . f r o m w h ic h th e . . . lia b ility
m ustar i se i n o rdert o b e c ov er ed, no t w h en th e in ju ry or dam age m ustoccur. ” 3 D a v e n L o w h u r s t e t a l., N ew App l em an Insurance L aw P ract i ce G ui de 30 A -66 (Je ff re y E
. T hom a s e ta l
. e ds
. , 2 0 1 1 ). U nde rthe s e c i r c um s t a nc e s , c ons trui ng the w or ds

“ ongoi ng ope r a t i ons ” t o e xc l ude da m a ge tha ta r o se fr om c onduc tpe r f or m e d by G o ld e n W e s t w hi l e i t

s ope r at i ons w e r e ongoi ng r e q u ir e s a p a r s in g s o a b s tru s e a s to“ S ubc ontr a c t or s a r e of t e n r e qui r e d c ontr a c tua l l y t o na m e . . . the ge ne r a l c ontr a c t or 3 a s [an ] ad d i t i ona l i ns ur e d[ ] unde rthe i rC G L pol i c i e s . C om pl i a nc e i s c onf i r m e d by i s s ui ng pol i c y e ndor s e m e nt s t o the a ddi t i ona l i n su red p ar t i e s . T he y of t e n do not r e c e i ve the a c tua l e ndor sem e nt , butr a the ra r e not i f i e d by w a y of

a c e r t i f i c a t e of i nsurance. ” P a rd ee C o n str. C o . v. In s. C o . o f th e W est , 9 2 C a l. R p tr . 2 d 4 4 3 , 4 4 7 n .2 (C al
. C t . A pp . 4t h 2 00 0) (c i t at i on om i t t ed). 10 b e in c o n si st en tw i th “ w h atth e o rd i n ary p erso n ’ s u n d erst an d i n g o f t h e p o l i cy w o u ld be. ” Sp arks , 647 P
. 2d a t1135
. T h i s i s pa r t i c ul a r l y true he r e , e ve n i f the ope r a t i ve la n g u a g e w a s u n a m b ig u o u s o n its f a c e , b e c a u s e it w a s o b ta in e d b y G o ld e n W e s t w h ile i tw a s a c tua l l y e nga ge d i n ongoi ng o p erat i o n s f orT r i
- S t a r . N ori s i tof a ny consequence, as O neB ea con argues, thatthe ce rt i fi ca t e of liab il it y i nsurance “ that [a l l egedl y] evi denced G ol den W es t ’ s a nd O ne B ea con’ s i nt entw hen t hey negot i at ed [ t h e ] c o n tr a c t,” A p p e lle e ’s B r . a t 4 4 , w a s p r o v id e d to T r i- S ta r . T h e c e r tif ic a te
c ont a i ne d onl y the l a ngua ge m odi f y i ng the “ W ho I s a n I ns ur e d” c l a u se; i t m a de no
r e f e r e n c e to a n y o th e rc la u s e in th e c o n tr a c t. 3 T he i nt ent of the i nsurance i nd ustry draf t sm en, w hi ch w as tra ce d i n other c as es
a n d u p o n w h i c h th e d is tr ic t c o u r t r e lie d , se e T ri -Star T hem e B ui lders , Inc. , 6 5 3 F. S up p. 2d a t 97 9– 81 , i s no t c on tr ol l i ng . W hi l e the Supr e me Cour t of A r i zona has l oo ked t o t he ca se l aw of ot her j uri sdi ct i on s i n con strui ng part i cul arcl au se s in an in s u r a n c e c o n tr a c t, se e E m p’rs
. Mut . C as. C o. v. D G G & C ar, Inc. , 183 P
. 3d 513, 516 (A ri z. 20 08 ) (e n banc) , the three i nt er m edi at e appel l at e court ca se s thatth e d istr i ct j ud ge l oo ked t o h er e r el y a l m ostexcl u siv ely on t he i nt entof t he i nsurance i nd ustry11

d r a f ts m e n in o r d e r to lim it th e s c o p e o f th e c la u s e a t is s u e h e r e . See P ardee , 9 2 C a l. R p tr . 2 d a t 4 5 6 , H

ar t f or d I ns . C o. v . O hi o C as . I

ns . C o. , 189 P
. 3d 195, 201–02 ( W a s h. A p p . 2 0 0 8 ) , W

e i t zC o. v . Mi d-C en t u ry Ins
. C o. , 181 P
. 3d 309, 312–13 ( C ol o. A pp. 2 0 0 7 )
. S u c h e v i d e n c e “ m i g h tb e p e r s u a s i v e i f th e c o n tr o v e r s y . . . we r e b e twe e n two i nsurer s, ” Sp arks , 647 P
. 2d a t1135, ori f i ts ugge s t e d tha t the l a ngua ge r e f l e c t e d the
m u tu a l in te n t o f th e p a r tie s . Se e , e . g. , F i reg u a rd S p ri n kl er S

ys. v. Sco t t

sda l e In s. , 864 F .2 d 6 4 8 , 6 5 1 (9t h C i r. 19 88 ). T hi s e vi dence i s w ho l l y l ac ki ng here
. Indeed, as p r e v io u s ly o b s e r v e d , th e o n ly c o u r t t o c o n s tru e th e a d d itio n a l in s u r e d e n d o r s e m e n t,
w i thoutr e f

e r e nc e t o the i ndus tr y ’ s dr a f t i ng hi s t or y , he l d tha t i tpr ovi de d c ove r a ge f or d am ag es o ccu rri n g aft er t h e co m p l et i o n o f o p erat i o n s. S i gn i fi ca nt l y, th e C G L po l i cy here cont ai ns cl ause s thatl i m i tthe t em po ra l coverage i n l angu age thatdem on stra t es the ea se w i th w hi ch the i nt ent of t he i nsurance i ndus tr y ’ s dr a f

t s m e n c oul d ha ve be e n r e f l e c t ed
. T he f

i r s ti s the s c ope of

c ove r a ge cl ause , w hi ch prov i des that“ [t ] he ‘ bo d i l y i nj ury’ or ‘ prop er ty dam age’ ” f or w hi ch
c ove r a ge i s pr ovi de d m us t oc c ur “ dur i ng the pol i c y pe r i od. ” A ppe l l e e ’ s E xc e rpt s of R
. a t 309. T he pl a i n l a ngua ge of thi s pr ovi s i on l i m i t s the s c ope of c ove r a ge t o da m a ge th att ak es p l ace “du ri n g th e p o l i cy p e r io d .” O utdoorW or ld v
. C ont ’ l

C as . C o. , 594 P .2 d 5 4 6 , 5 4 9 ( A r iz . C t. A p p . 1 9 7 9 ) ; s e e a ls o A e tn a C a s . & S u r . C o . v . Me r r itt , 974 F .2 d 1 1 9 6 , 1 1 9 9 ( 9 th C ir . 1 9 9 2 ) ( “T h e d e f in itio n o f

‘b o d ily i n

j u r y ’ a n d ‘p r o p e r ty12

da m a ge ’ l i m i tl i a bi l i ty t o s uc h i nj ur y orda m a ge sus t a i ne d dur i ng the pol i c y pe r i od. T h e c la u s e [ i s ] n o t a p r o m is e b y [ th e in s u r e r ] to in s u r e th e p r o p e r ty f o ra n in d e f

in ite t i m e aft er . . . co n stru ct i o n [i s] co m p l et e. ”). C o n si st en t w i th th i s d efi n i t i o n , th e cl au se
a ti s s ue he r e c oul d ha ve s i m pl y m i r r or e d the f or e goi ng l a ngua g e by pr ovi di ng
c o v e r a g e f

o rp r o p e r ty d a ma ge a r i s i n g f r o m and o cc u rr in g d u rin g G o ld en W es t’ s
o n g o in g o p e r a tio n s . C le a r e rlim itin g la n g u a g e m a y a ls o b e f o u n d in th e p r e - p r in te d a u to m a tic
a d d i t i o n al i n su red en d o rsem en t o f th e C G L p o l i cy. T h i s en d o rsem en t re a d s in
r e le v a n t p a r t a s f

o llo w s : W ho I s A n I ns ur e d i s a m e nde d t o i nc l ude a s a n i ns ur e d a ny pe r s on oror ga ni z a t i on f orw hom y ou a r e pe r f or m i ng ope r a t i ons w he n y ou a nd s uc h pe r s on oror ga ni z a t i on ha ve agre ed i n w ri t i ng i n a con trac t or a gree m entthatsuch pe r s on oror ga ni z a t i on be a dde d a s a n a ddi t i ona l i ns ur e d on your po l i cy . S uch p er son o r organi za t i on i s a n add i t i on al i ns ur e d onl y w i th r e s p ect t o l i a bi l i ty a r i s i ng outof y our o n g o in g o p e r a tio n s p e r f o r m e d f o rth a t in s u r e d
. A pers on ’s o ro r g a n iz a tio n ’s s ta tu s a s a n in s u r e d u n d e r[ th e a u to m a tic s tat us e ndors e m e nt

] en d s w he n y ourope r at i ons f orthat i nsured are c om

pl et ed
. A p p el l ee’ s E xc e rpt s of R
. a t322 ( e m pha s i s a dde d)
. T he f i r s ttw o s e nt e nc e s of

the fore go i ng cl ause ar e s ub st ant i al l y the sa m e a s the add it io n al i nsured endo rs em entat i ss ue here. T he l as tse nten ce , how ever , w as om i t t ed fr om the addi t i on al i nsured endo rs em ent . T hi s s ent ence w ou l d h ave m ade i tcl ea r that , on ce G ol den W es t ’ s w ork13

w as com pl et e, T ri -S t arw as no l on ger c ov er ed as an addi t i on al i nsured for dam ages th a t o c c u r r e d a f

te rG o ld e n W e s t’s o p e r a tio n s f o rT r i- S ta rw e r e f

in is h e d
. Se e T

r i
- Star T hem e B ui lders , Inc. , 65 3 F
. S up p. 2d at97 9. Indeed, al tho ug h t he cr i t i ca l se nt ence
w a s d e le te d f

r o m th e a d d itio n a l in s u r e d e n d o r s e m e n t, th e d is tr ic t ju d g e r e lie d u p o n its pr e s e nc e i n the pr e - pr i nt e d a ut om a t i c a ddi t i ona l i ns ur e d e ndor s e m e nta s l e ndi ng
a ddi t i ona l s uppor tt o hi s i nt e rpr e t a t i on of the phr a s e “ ongoi ng ope r a t i ons ” i n the
a d d itio n a l in s u r e d e n d o r s e m e n t a t is s u e h e r e . S e e id
. W e a r e i nc l i ne d t o dr a w the
o p p o s ite c o n c lu s io n f

r o m th is d e le tio n . C

f
. F i reg u a rd

S p ri n kl ers S

ys. , 864 F
. 2d a t651 ( “ W or ds de l e t e d f

r om a c ontr a c t m a y be the s tr onge s t e vi de nc e of the i nt e nt i on of

the pa r t i e s . ” ( quot i ng R oy al I nde m n. C o. v . Jo h n F
. C a w rs e L um be rC o. , 245 F
. S upp. 7 0 7 , 7 1 1 ( D . O r . 1 9 6 5 ) ) )
. W e ack n o w l ed g e t h at , ev en i f t h e ad d i t i o n al i n su red en d o rsem en ti s am b i g u o u s, i tm ay no tnece ss ar i l y res ul t i n a con struct i on agai nst the i nsured. W hi l e i tw as on ce the rul e i n A r i z ona tha ta n a m bi guous c ontr a c tw a s i nva r i a bl y co n st rue d a ga i ns tthe i nsurer , the S up re m e C o urtof A ri zona has m ore r ec ent l y hel d t hat , “ even i f a po l i cy i s app ar en tl y am bi gu ou s, a dec i si on t o requi re coverage f ol l ow s [ on l y] af

t er
c ons i de rat i o n of

‘ l e gi s l a t i ve goa l s , s oc i a l pol i c y , a nd e xa m i na t i on of the tr a ns a c t i on
as a w ho l e. ’ ” E m

p’ rs Mut . C as . C o. , 183 P
. 3d a t515 ( c i t i ng Stat e Far m Mut . A ut o. I ns . C o. , 782 P
. 2d a t734)
. T he f i r s ttw o c ons i de r a t i ons , “ l e gi s l at i v e goa l s ” a nd14

“ s oc i a l pol i c y , ” a r e noti m pl i c a t e d he r e . M or e ove r , a s w e unde r s t a nd the “ tr a ns a c t i on
as a w ho l e, ” i tw as i nt ended t o p rovi de t he sa m e c ov er age f or t he ad d it io n al i nsured general cont ra ct or, T ri -S t ar , as the nam e i nsured subcon tra ct or, G ol den W es t , enj oyed
u n d e rth e C G L p o lic y . S o m e o f th e v e r y c a s e s o n w h ic h O n e B e a c o n r e lie s c le a r ly
un ders core thi s c on si dera t i on . T hey e m ph as i ze that

cont ra ct ors w ho h av e i nsi st ed up on bei ng nam ed as a ddi t i ona l i ns ur e ds w i l l r e a s ona bl y e xpe c tt o be c ove r e d f or th e sam e co m p l et ed o p erat i o n s as t h ei r su b co n tract o rs. “ M i ndf ul s uc h l i t i ga t i on i s t y pi c a l l y c om pl e x a nd e xpe ns i ve , i ti s rea s ona bl e t o c onc l ude the ke y m ot i va t i on i n p rocuri ng an addi t i on al i nsured endo rs em ent i s t o o ff se t th e c o st o f d ef

en d in g law su it s w h er e a g en er al co n trac to r’s lia b ility is c la im e d to b e d e r iv a tiv e .” H ar t f or d I ns . C o. , 189 P
. 3d a t202 ( quot i ng P ardee , 92 C al
. R pt r. 2d at45 7). N o tw ith s ta n d in g th e o b v io u s p u rp o s e o f th e g e n e r a l c o n tr a c to rin r e q u ir in g its subcon tra ct or t o m ake i tan addi t i on al i nsured, the i nsurance i nd ustry has e nd ea vo re d t o l i m i t the c ov e r a ge of the a dd i t i on a l i ns ur e d, e ve n tho ug h n a mi ng the ge ne r al
c o n tr a c to ra s a n a d d itio n a l in s u r e d w o u ld n o t a p p e a rto in c r e a s e th e e c o n o m ic
e x p o s u r e o f

th e in s u r a n c e c o m p a n y . T h e c o v e r a g e is f o r“b o d ily in

ju r y ” o r“p r o p e r ty dam age. ” U nd erthe t er m s of the C G L po l i cy , thi s prot ec t i on i s provi ded t o t he nam ed i ns ur e d, e ve n i f

the ge ne r a l c ontr a c t or w a s not a dde d a s a n a ddi t i ona l i ns ur e d. A ddi ng
a n a d d itio n a l in s u r e d d o e s n o t a lte rth e f a c t th a t th e in s u r e rd e f

e n d s a g a in s t a n d , if
n e c e s s a r y , p r o v i d e s i n d e m n i f i c a t i o n f o r , o n l y o n e d a m a g e c l a i m , a l b e i ta g a i n s ttwo15

d efen d an t s. M or e ove r , thi s c ove r a ge i s not ope n- e nde d, a s one of the c a s e s r e l i e d upon by O n e B e a c o n s u g g e s te d , see H a rt f o rd , 189 P
. 3d a t202 , b e c a u s e it o n ly a p p lie s to

“ p r o p e r ty d a ma g e ” th a t “ o c c u r s d u r i n g th e p o l i c y p e r i o d
. ” A p p e l l e e ’ s Ex c e rp t s o f R.
a t3 0 9
. In thi s c a s e , the w or k w a s c om pl e t e d no l a t e rtha n J une 15, 1999, a nd the po l i cy w ou l d have t er m i nat ed by i t s t er m s on M ar ch 24 , 20 00 , al tho u g h itw as
c a n c e l e d b y Go l d e n We s to n Au g u s t1 , 1 9 9 9
. T h e p o l i c y h e r e ( a n d o th e rs i m i l a rC GL po l i ci es ) w ou l d not “ al l ow a cont ra ct or w ho i s an addi t i on al i nsured t o b e i nd em ni fi ed f orda m a ge s a ri si n g f

r om a s ubc ontr a c t or ’ s w or k e ve n i f i ti s notdi s c ove r e d f

or ye ar s. ” H

a rt f o rd , 189 P
. 3d a t202. I n s u m , a n e x a m in a tio n o f th e tr a n s a c tio n a s a w h o le d o e s n o t p r o v i d e a b a s is f orc ons trui ng the c l a us e a t i s s ue i n f a vor of O ne B e a c on. O n the c ontr a r y , ourhol di ng
w i l l l i kel y r es ul ti n an eas i l y a cc om pl i shed change i n t he w ordi ng of t he addi t i on al i ns ur e d e ndor s e m e nti n l a ngua ge tha ti s c l e a rt o the i ns ur e d. S uc h a r e s ul tf ur the r s the p o lic y o f A r iz o n a th a t , “ [ i ] f a n in s u r e rd e s ir e s to lim it its lia b ility u n d e ra p o lic y , it
s houl d e m pl oy l a ngua ge w hi c h c l e a r l y a nd di s t i nc t l y c om m uni c a t e s t o the i ns ur e d the nature of the l i m i t at i on . ” Sp arks , 647 P
. 2d a t1133. II
. W e q u ic k ly d is p o s e o f

O n e B e a c o n ’s d u ty to d e f e n d a r g u m e n t b y o b s e r v in g th a t,16

at the very l ea st , the fol l ow -up l ett erand i t s a cc om panyi ng encl osures , t aken t og ether
w i th the c om pl a i nt , pr ovi de d s uf f i c i e nt i nf or m a t i on t o tr i gge r the obl i ga t i on t o de f e nd. I n d e e d , th e C G L p o lic y i t s e l f lis te d G o ld e n W e s t a s a “p lu m b in g c o n tr a c to r ,” A ppe l l e e ’ s E xc e rpt s of

R
. a t303, a nd the c om pl a i nt a l l e ge d da m a ge s a r i s i ng out of the p lu m b in g a n d H V A C w o r k p e r f o r m e d d u r in g t h e c o n s tru c tio n o f th e r e s o r t. M oreover, i ti s c on ce ded t hatG ol den W es tperf orm ed pl um bi ng an d H V A C w ork the r e . A l though the c om pl a i ntf i l e d by the T r i be s di d not m e nt i on G ol de n W e s t , the l e t t e r tha t O ne B e a c on a t t a c he d t o the c om pl a i nt e xpl i c i t l y s t a t e d t h at “ [u ] pon i nf or m a t i on a nd be l i e f

, s om e of the a l l e ge d da m a ge s ought by the T r i be [ s ] a r i s e s out of w ork p er form ed for .
. . [T ri -S t ar ] by G ol den W es t . ” A pp el l ant ’ s E xcerpt s of R
. at 3 9 . W h ile O n e B e a c o n a r g u e d th a t, “w ith o u t a c o p y o f th e s u b c o n tr a c t a g r e e m e n t” bet w ee n t he Joi ntV enture a nd G ol den W es t , i tw as no tpo ss i bl e t o d et er m i ne w hat p l um bi ng w or k w a s a c tu a l l y p e r f o r me d b y G o l d e n W e s t , A p p e l l e e ’ s Ex c e rp t s o f R. at2 0 , p r e -t ri al d i sco v ery i s th e ap p ro p ri at e v eh i cl e fo r ad d ressi n g th ei r co n cern s. I n d e e d , O n e B e a c o n a c k n o w le d g e d th a t th e d o c u m e n ts s u b s e q u e n tly p r o v id e d b y T r iS t a ri nc l ude d the s ubc ontr a c ta gr e e m e nta l ong w i th othe rdoc um e nt s d escr i bi ng the
s c o p e o f th e w o r k o f

G o ld e n W e s t. W e c on cl ud e thatthe com pl ai ntand the cover l ett erac com panyi ng i tw er e
s u f f ic ie n t to tr ig g e rth e d u ty to d e f e n d
. Se e Ke

pne r v . W

. F i r e I ns . C o. , 509 P
. 2d 222,17

2 2 4 ( A r iz . 1 9 7 3 ) ( “I f

th e c o m p la in t in th e a c tio n b r o u g h t a g a in s t th e in s u r e d u p o n its fa ce al l eges fa ct s w hi ch com e w it h i n t he coverage of the l i abi l i ty pol i cy , the i nsurer i s ob l i gat ed t o a ss um e the defe nse of the ac t i on . . . . ” (i nt er n al q u o tati o n o m i t t ed))
. U nde rthe s e c i rc um s t a nc e s , i ti s unne c e s s a r y t o r e m a nd t o r e s ol ve the di s put e d i s s ue
o f f a c ta s t o w he the rO ne B e a c on r e c e i ve d the s ubs e que nt l y pr ovi de d doc um en t s. A l though w e l e a ve f

orpr oc e e di ngs on r e m a nd the i s s ue of w h et he rothe rpr ovi s i ons in th e C G L p o lic y , s u c h a s j( 5 ) a n d j( 6 ) , p r o v id e d a b a s is f o rO n e B e a c o n to r e f

u s e to de f e nd, w e not e oura gr e e m e nt w i t h t h e di s tr i c tc our t ’ s hol di ng r e ga r di ng the i nsuffi ci ency of the para graph i n the com pl ai nt that al l eged t hat“ before the re sortw as ope ne d a nd the r e a f

t e r , . . . [ the T r i be s ] pr ovi de d .
. . T r i
- S t a rw i t h p u n ch l i st s of de f e c t s a nd othe ri t e m s r e qui r i ng r e pa i ra nd c or r e c t i on . . . . ” A ppe l l a nt ’ s E xc e rpt s of R
. a t28 ¶ 30. T hi s a l l eg at i o n f a i l e d t o a l l e ge a ny pr ope r ty da m a ge a r i s i ng outof G ol den W es t ’ s w o rk o n t he P roj ec t . Indeed, i n t he const ruct i on i nd ustry , a “ pu nch l i s t ” m e r e l y r e f

e r s t o “ w or k i t e m s tha tne e d t o be done
. . . for[ a ] pr oj e c tt o be
c o n s id e r e d . . . c o m p l e t e . ” 3 P h ilip L . B ru n e r& P a tr ic k J . O ’C o n n o r , J r ., B ru n er & O ’ Co n n o ro n Co n s tr u c t i o n La w § 8 :3 7 ( 2 0 1 0 ) ; see a l so P e r i niC or

p. v . G r e at e B ay H ot el & C asi no , Inc. , 6 1 0 A
. 2 d 3 6 4 , 3 7 5 (N
. J. 1 9 9 2 ) (“ G en eral l y, . . . [a ] p u n c h l i st in c lu d e s th o s e ite m s th a t r e s tr ic t th e f in a l c o m p le tio n o f

. . . [ a ] p r o

je c t.” ) , ab roga t ed
o n d i f f eren t g ro u n d

s b y T ret i n a P ri n t i n g, In c. v. F i t zp a tri ck & A sso cs. , 640 A
. 2d 788,18

79 2– 93 (N
. J. 19 94 ). RE V E RS E D a n d RE MAND E D.