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Western Casualty & Surety Co. v. Hays6/20/1989
Appellants J.R. and Lois Hays and Hays Roofing & Supply, Inc. (Hays) appeal from a summary judgment entered in favor of appellee Western Casualty & Surety Company in its action seeking a declaratory judgment that it owes appellants no duty to defend or indemnify them under any of three insurance policies. Hays contends the trial court erred in interpreting policy definitions and argues that the court should have granted summary judgment in
favor of Hays. We find no error and affirm.
In reviewing a determination on whether an insurance company has a duty to defend a lawsuit brought against its insured, we first examine the facts alleged in the complaint. If the complaint on its face appears to impose a duty to defend, we may then look to other facts not alleged in the complaint to determine whether the case falls outside the policy coverage. Salvatierra v. National Indemnity Co., 133 Ariz. 16, 648 P.2d 131 (App.1982); Kepner v. Western Fire Insurance Co., 109 Ariz. 329, 509 P.2d 222 (1973). Hence, the facts that follow are those found in the entire record, viewed in the light most favorably to Hays, the parties against whom summary judgment was granted. Partin v. Olney, 121 Ariz. 448, 591 P.2d 74 (App.1978).
Hays purchased 160 acres of property in the Harquahala Valley in Maricopa County, Arizona in 1959. At some point, the property was conveyed to Hays Roofing & Supply, which entered into negotiations in late 1981 to sell the property to Wallace and Virginia Mollet. Before the property was conveyed to the Mollets on November 11, 1981, it was reconveyed to J.R. and Lois Hays.
The Mollets purchased the property with the intention of planting jojoba plants and producing beans for sale. At the time the property was sold, there were three wells on the property that had not been used for some years. The Mollets proceeded to plant and irrigate jojoba plants. By early 1986, they had planted 26 acres in jojoba but had not yet harvested any beans.
Unbeknownst to either the Mollets or Hays, on June 24, 1982, the Arizona Department of Water Resources designated the Harquahala Basin area as a subsequent irrigation non-expansion area pursuant to A.R.S. § 45-432 of the Arizona Groundwater Code. The proceedings that resulted in the order had commenced in December 1980. In March 1986, the Department of Water Resources ordered the Mollets to cease irrigating the property.
The Mollets sued Hays in May 1986 for intentional misrepresentation and consumer fraud. Their first amended complaint, filed in October 1986, added a cause of action for scheme or artifice to defraud pursuant to the Arizona Racketeering Act, A.R.S. §§ 13-2301 through 13-2317, and a cause of action for breach of contract. The second amended complaint, the one pertinent in this case, was filed in January 1987. It added a fifth cause of action for negligent misrepresentation.
The second amended complaint alleges that J.R. Hays is the president of and major stockholder in Hays Roofing and that his representations were made in both a personal and representative capacity. It alleges that Hays represented that the property had guaranteed water rights for the present and future, that at the time of his representations he knew the Department of Water Resources had commenced proceedings to eliminate irrigation on the property and that he concealed that information from the Mollets. The negligent misrepresentation count is based on t
Page 1 2 3 Arizona Personal Injury Attorneys
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