Phoenix Control Sys., Inc. v. Ins. Co. of N. America
In Phoenix Control Sys., Inc. v. Ins. Co. of N. America, 165 Ariz. 31, 35, 796 P.2d 463, 467 (1990), an insured agreed that he intended to use material copyrighted by his competitor in soliciting business from a potential client because he believed he had the legal right to use the material.
When he was sued by the holder of the copyright for infringement, his insurer, whose policy covered liability for copyright infringement but excluded coverage for intentional acts, declined to provide a defense.
The supreme court, in reversing the declaratory judgment in favor of the insurer, noted that a court could not say that the intentional act exclusion applied as a matter of law because "there is no presumption in insurance law that a person intends the ordinary consequences of his actions."
Thus, the question presented was not whether the insured intended to use the copyright but whether the insured intended to engage in copyright infringement. Id. at 35, 796 P.2d at 467.
Thus, even if the insurers could establish that the subcontractors intended to accomplish the construction in the way that they did, that would not, as Phoenix Control demonstrates, establish in and of itself that they expected or intended their construction to cause property damage.
It is only when the "nature and circumstances of the insured's intentional act are such that harm is substantially certain to result that intent may be inferred as a matter of law." Phoenix Control at 36, 796 P.2d at 468.