Updates on Insurance Coverage, Construction Defect
and Commercial Auto Law Developments
in Arizona and New Mexico
Greetings from Evans & Co. with another Case Notes summary of important developments in the courts where we practice. We write this month with updates on construction defect, insurance coverage litigation, and commercial auto law in the states of Arizona and New Mexico, which we last briefed about four months ago.   

Please recall that our past Case Notes are archived at and we would be pleased to bring current the decisions on which we've reported previously, at your request.

The Arizona Court of Appeals construes the “completed operations” hazard in light of potential bright lines for completion – “substantial completion”, when the property is put to its “intended use”, and when the contract is deemed completed – and assuming different dates are associated with these different events, concludes the policy language is ambiguous and therefore remands for jury or judge determination after fact finding on the issue of when “completed operations” attaches.

The Arizona Federal District Court, applying Arizona law, underscores the various obligations that remain in an insurer which filed an interpleader for policy limits which were thought inadequate to fully compensate all claimants – which include, sensibly enough, attempting to resolve the allocation of funds through state court proceedings and mediation. It appears the well-intended and possibly provident interpleader was not prosecuted effectively by counsel for the insurer.
We digest another Arizona Federal District Court case where, in defending a bad faith claim, the insurance representative could not recall whether the coverage decision was or was not based on advice of counsel. Predictably this lead to the waiver of privilege of some of the coverage counsel’s file. While we generally counsel against waiver of privilege (by presenting a knowledgeable and prepared insurance deponent, which does not seem to have been done here) this case causes us to wonder if a good deposition given by competent coverage counsel, after privilege waiver, might be preferable to a bad deposition given by a confused and under-prepared insurance adjuster.

Readers of Case Notes interested in commercial auto insurance law will recall our briefing New Mexico law as it developed through Lucero I (tractor and trailer each entitled to a separate $1million of liability coverage in what the insurer thought was a $1million per accident policy) and Lucero II in the New Mexico Supreme Court, saying Lucero I was wrong and policy limits are $1 million for both. The prospects of increased primary coverage has not died quietly, motivated by plaintiffs’ counsel: we digest a further attempt to resurrect Lucero I which was defeated in the 10th Circuit Court of Appeals.

The Federal District Court for New Mexico offers a very important commercial auto liability coverage analysis, under facts we have seen arise repeatedly in oilfield and other industrial operations: the insured, who was contracted by the well owner to supervise the work and operations at the well-site, was sued by the survivors of an employee of a well servicing company under numerous negligence theories, when a truck owned by the well servicing company, being driven by the well servicing contractor’s employee at the direction of the insured, had a one-vehicle accident resulting in the death of that driver. The “deep pocket” would have been the insured’s CGL coverage (presumably auto coverage was limited to $1 million) but the CGL policy included an exclusion for bodily injury arising from “autos” which was upheld, and provided coverage for “hired autos” which was not found to be triggered here.  

Click here for our Case Notes for both states. (19 pages)

Click here for Arizona only. (10 pages)

Click here for New Mexico only. (9 pages)

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