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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Depositors Insurance Company, No. CV-17-02972-PHX-GMS 9 Plaintiff, AMENDED ORDER 10 v. 11 Christina Ubrina, et al., 12 Defendants. 13 H & E Equipment Services, Inc., 14 Counter-Claimant, 15 v. 16 Depositors Insurance Company, 17 Counter-Defendant. 18 19 Travelers Property Casualty Company of America, Intervenor. Pending before the Court are the Motion for Summary Judgment of Plaintiff Depositors Insurance Company (Doc. 67) and the Cross Motion for Summary Judgment of Defendant H&E Equipment Services, Inc. (Doc. 70). For the following reasons, Depositors’ Motion is denied, and H&E’s Cross Motion is granted. BACKGROUND I. The Accident and the Underlying Lawsuit The Lower Buckeye Jail needed washing and painting, so Riddle Painting was hired to do the job. Riddle did not own all the equipment needed, so it leased a mobile lift from H&E Equipment Services. Riddle’s project at the jail went tragically wrong. One day, as two Riddle employees were driving the lift, it tipped over, killing both men. As required by law, the beneficiaries of Riddle’s deceased employees received Arizona’s workers’ compensation benefits. The workers’ compensation statute prevented the families from suing Riddle, but the statute did not shield H&E. So the families sued H&E in Arizona state court. H&E requested that Riddle’s general liability insurer, Depositors Insurance Company, defend H&E in the state-court action and pay any damages for which it might eventually be held liable. Depositors agreed to cover half of the cost of H&E’s defense but reserved its right to file a separate lawsuit to determine whether it owed H&E a duty to defend or indemnify. Depositors then filed this lawsuit to resolve those questions. H&E filed a counterclaim, asserting that Depositors owes it duties to defend, reimburse, and indemnify, as well as a single claim of breach of contract. II. The Lease Agreement and the Additional Insured Endorsements The lease agreement between Riddle and H&E obligated Riddle to do certain things. First, Riddle was required to maintain and inspect the lift in compliance with its owner’s manual, and “inform[] all potential operators of the [lift] of said instructions, signs and limitations.” (Doc. 70-1 at 27.) Next, Riddle had to purchase and maintain general liability insurance, and provide coverage to H&E as an additional insured. (Id.) Lastly, Riddle was required to indemnify and hold H&E harmless for all claims arising from the use, operation, or condition of the lift, including all damages or injuries to property or people. (Id.) Riddle purchased a general liability insurance policy (“CGL policy”) from Depositors. The CGL policy contained two provisions at issue in these motions: a Blanket Additional Insured Endorsement and a Contractors Enhancement Plus Endorsement. Both endorsements have multiple requirements and limitations on who counts as an additional insured under the contract, but the first requirement for both is the same: in order to be covered as an additional insured, the party seeking coverage must have signed a valid, written agreement with Riddle that required Riddle to add the party as an additional insured. (Doc. 70-1 at 212; 216.)1 / / / / / / The other limitations on coverage under the two endorsements differed. The Blanket Endorsement limited coverage by only applying to “liability for ‘bodily injury’ or ‘property damage’ caused, in whole or in part, by ‘your [i.e., Riddle’s] work’ for the additional insured.” (Id. at 212.) As relevant here, the Contractor’s Endorsement limited coverage by only applying “to the extent [Riddle is] held liable due to . . . [m]aintenance, operation or use of equipment leased to [Riddle] by [H&E].” (Id. at 216.) DISCUSSION I. Legal Standards A principal purpose of summary judgment is to identify factually unsupported claims and dispose of them. Celotex Corp. v. Catrett, 477 U.S. 317, 323–24 (1986). Summary judgment is appropriate if the evidence, viewed in the light most favorable to the nonmoving party, shows “that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). Only disputes over facts that might affect the outcome of the suit will preclude the entry of summary judgment, and the disputed evidence must be “such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of [the record] which it believes demonstrate the absence of a genuine issue of material fact.”

Contracts are to be read and interpreted as if by a layperson untrained in law or business. See Nucor Corp. v. Employers Ins. Co. of Wausau, 231 Ariz. 411, 414, 296 P.3d 74, 77 (Ct. App. 2012). A layperson reading the heading would, at the very most, be unsure of its meaning, and would not understand it as a clear additional limitation on coverage. The heading’s meaning in the Contractors Endorsement is structurally ambiguous. First, the drafter placed it in a different section of the endorsement than the express coverage limitations. Had the parties intended to include a requirement that an agreement requiring coverage as an additional insured specify that such coverage be “primary and non-contributory,” they likely would have added it, along with the other limitations, in the body of the endorsement. Further, even if the location of the phrase does not render it ambiguous, its meaning is not clear, particularly to a lay reader untrained in law or business. Depositors contends that it is unambiguously a limitation on coverage, requiring that any party wishing to establish additional insured status must show that it signed an agreement with Riddle that specifically stated that Riddle’s coverage would be primary and non-contributory. But that meaning of the heading is no more obvious that the meaning advanced by H&E, which contends that the phrase simply indicates that coverage provided under the endorsement to additional insureds will be primary and non-contributory. An examination of the endorsement suggests that the heading should not be interpreted as a substantive limitation on coverage. Common sense suggests that the exclusion of “primary and non-contributory” from the sections of the endorsement that set forth explicit limitations on coverage means that the phrase should not be interpreted as such a limitation. Cf. Herman Chanen Const. Co. v. Guy Apple Masonry Contractors, Inc., 9 Ariz. App. 445, 447, 453 P.2d 541, 543 (Ariz. Ct. App. 1969) (“The doctrine of Expressio unius est exclusion alterius is that the expression in a contract of one or more things in a class, implies the exclusion of all things not expressed, although all would have been impliedly included had none been specifically expressed.”). Here, the explicit limitations on coverage are included in the substantive sections below the section heading. The limitations are clearly expressed. The drafters of the contract did not include “primary and non-contributory” in the sections setting forth limitations. Finally, the text of the heading itself does not clearly establish that “primary and non-contributory” is a limitation on coverage. This is because it does not employ the same clear language as the express limitations. For example, the first express limitation of the endorsement states a party otherwise qualifying as an additional insured “is an additional insured only with respect to liability for ‘bodily injury.”’ (Doc. 70-1 at 216.) (emphasis added). Another clause also incorporates clear limiting language when it states the added insured “is an insured only to the extent you are held liable.” (Id.) (emphasis added). By asking this Court to give the same limiting effect to heading as the two limitations, when the heading does not contain limiting language like “only when” or “to the extent that,” Depositors strains the plainest reading of the document. The heading of the document does not impose an additional limitation on coverage. The second issue is whether Riddle has been “held liable.” The endorsement covers an additional insured “only to the extent [Riddle] is held liable due to . . . [m]aintenance, operation or use of equipment leased to [Riddle] by [H&E].” (Id.) The parties do not dispute that liability in this case, if any, would arise from the operation or use of the boom lift rented to Riddle by H&E. It is also undisputed that Riddle made payments to the decedents’ families as required by Arizona’s workers’ compensation statute. The sole issue is whether Riddle has been “held liable” for the accident that killed two of its employees. Riddle’s payments to the families of the decedents qualify as “liability” under the ordinary meaning of the term. “Liable” is defined as “bound or obligated according to law or equity.” Webster’s Third New Int’l Dictionary of the English Language Unabridged 1302 (1981); see also Columbia River Rentals, LLC v. Phillips, No. CV-08-395-HU, 2009 WL 632933, at *7 (D. Or. Jan. 14, 2009) (noting that “the primary meaning of ‘liable’ is to mean a legal obligation.”), report and recommendation adopted by Columbia River Rentals, LLC v. Phillips, Civil No. 08-395-HU, 2009 WL 598014 (D. Or. Mar. 6, 2009).2