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Associated Aviation Underwriters v. Wood9/29/2004
p. 1988), and on its allegation that any acts that had caused TCE to seep into the aquifer had been committed only by TAA/City's tenants. The trial court (J. Buchanan) apparently accepted AAU's argument and, in granting the motion, ruled that "the insurance policies which are at issue in [this DRA] do not provide coverage for the judgments" in Gerardo. Judge Buchanan entered judgment in favor of AAU in March 1993.
On Intervenors' appeal from that summary judgment, this court reversed. Smith v. Tucson Airport Auth., 180 Ariz. 165, 882 P.2d 1291 (App. 1994). There, we concluded that the issue of whether no coverage existed because of TAA/City's alleged non-liability under landlord/tenant law was "a liability question, not a coverage question," and that the grant of summary judgment had violated Morris. Id.
Our supreme court initially granted review of that decision. After oral argument, however, the court concluded "that non-liability-dependent coverage issues are not precluded or foreclosed by the Court of Appeals' opinion." Smith v. Tucson Airport Auth., 183 Ariz. 1, 899 P.2d 162 (1995). Apparently on that basis, the supreme court determined that review had been improvidently granted but ordered that our decision not be published. Id.
Due to collateral issues concerning Environmental Protection Agency claims against TAA/City arising out of these same incidents, this case did not come up on the trial court's calender for several years following our supreme court's denial of review. The only activity that occurred between 1995 and 1998 in this litigation was a change of judge; Judge Velasco replaced Judge Buchanan as the trial judge.
In July 1998, the trial court (J. Velasco) ordered briefing on the issues to be tried in light of Judge Buchanan's 1990 case management order. In its January 1999 minute entry, the trial court stated that "the Phase I portion of this cause will require the Intervenors to prove 1)... the policy/policies[,] 2)... notice and 3) happening of an insured event." The court also stated that during phase II, " f necessary[,]... the Intervenors shall have the burden of establishing the settlement was reasonable given the issues affecting liability, defense and coverage." In addition, noting the need "to bring some measure of resolution within a reasonable period of time," the trial court ordered that Intervenors "select by lot a total of 20 intervenors for trial." Six of the twenty intervenors chosen were eventually dismissed from the case, leaving fourteen intervenors for trial.
In September 2000, after a bench trial held in June and July on phase I, the trial court issued its findings of fact and conclusions of law. The court found that " he events of migration, dispersal and ingestion" of TCE qualified as "accidents" under AAU's accident policies in effect from 1960-1969, but were not "occurrences" under AAU's occurrence policy in effect from 1969-1972. The court also found that "TCE contaminated water was supplied to the homes, schools and workplaces of Intervenors during the entire period of AAU's coverage," and that an individual's first exposure to TCE causes "cellular damage." The court further found that such cellular damage constitutes "bodily injury " under AAU's accident policies and that those injuries occurred during AAU's policy period. Based on those findings, the trial court concluded that AAU's accident policies provided coverage for Intervenors' claims.
In that same ruling after the phase I trial, the trial court concluded that any inquiry into "the injury aspect contemplated by the policies" was foreclosed by Morris, "subject to reasonableness vis à vis the alleged injury and the settlement amo
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