*District Judge of the Southern District of Texas, sitting by

designation.

REVISED

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

 

No. 96-40078

 

STATE FARM FIRE AND CASUALTY COMPANY,

Plaintiff-Appellant,

versus

VIRGIL L. FULLERTON, ET AL,

Defendants,

W. BRYANT BUCKNER, Individually and as

Representative of the Estate of Karen Jones,

deceased; JACOB JOSEPH ANSLUM, Individually

and as Representative of the Estate of

Karen Jones, deceased; STEPHEN PAUL BUCKNER,

Individually and as Representative of the

Estate of Karen Jones, deceased,

Defendants-Appellees.

 

Appeal from the United States District Court

For the Eastern District of Texas, Beaumont

 

July 22, 1997

Before KING and HIGGINBOTHAM, Circuit Judges, and LAKE,* District

Judge.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

This case requires us to surmise how a Texas court would rule

on a question that has received diverse answers in those states 
that have considered it: whether an insured’s guilty plea in a

prior criminal proceeding can preclude third parties from

collecting on the insured’s policy. More specifically, we must

determine whether Texas law allows the heirs of the victims of a

shooting to argue that the shooting was unintentional in spite of

the fact that the insured pled guilty to murder.

We hold that the insured’s guilty plea satisfies the

requisites of issue preclusion. We will reverse the district

court’s declaration that the policy affords coverage and enter

judgment in favor of State Farm.

I.

On July 7, 1992, Virgil L. Fullerton killed his wife, Artie

Harris Fullerton, and his step-daughter, Karen Denby Jones, with a

shotgun at their rural residence. Fullerton’s precise motive has

never come to light, but the family had experienced considerable

domestic friction. A number of dangerous incidents convinced him

that his wife was trying to kill him. At one point, Artie

Fullerton considered filing assault charges against her husband,

and after her death her relatives asserted that Fullerton treated

her cruelly. Whatever the story behind the slayings, Fullerton did

not try to escape justice: he immediately called the sheriff’s

department and went peaceably to jail.

The state of Texas charged Fullerton with two counts of

capital murder. His attorney concluded that Fullerton had a good

chance of acquittal if he pled not guilty by reason of insanity.

But the attorney was reluctant to adopt that strategy because

Fullerton was approaching seventy years of age and was in poor
 

1 The executrix of Artie Fullerton’s estate, Judith A. Pace,

was also involved in the case throughout the trial. State Farm,

however, succeeded in its motion for judgment notwithstanding the

3

health. Unlike an order of commitment to a psychiatric hospital,

a conviction on something less than capital murder might allow

Fullerton to return home if he entered the last stages of a

terminal illness. Based on this advice, Fullerton pled guilty to

the lesser offense of simple murder. The court sentenced him to

life imprisonment. The judgment of conviction stated that

Fullerton was mentally competent, and the issue of his mental

competence to form the intent to kill never surfaced before the

court. He remains incarcerated.

The heirs of the two victims brought wrongful death actions

against Fullerton in state court. At the time of the shooting,

Virgil and Artie Fullerton held a homeowners’ insurance policy that

provided coverage for, among other things, personal liability for

bodily injuries. In general, the policy covered injuries “caused

by an occurrence” and defined an “occurrence” as “an accident,

including exposure to conditions, which results in bodily injury

. . . during the policy period.” It excluded, however, injuries

“caused intentionally by or at the direction of the insured.”

State Farm, the issuer of the policy, provided Fullerton a defense

under a reservation of rights and filed this declaratory judgment

action in federal court to establish that it has no duty to defend

or indemnify Fullerton against the wrongful death claims. Its

complaint listed Fullerton and the representatives of Karen Jones’s

estate as defendants.1 Fullerton himself did not answer the suit.
verdict as to Pace because of a policy exclusion for bodily

injuries sustained by insureds. Pace has not appealed that ruling.

 

2 State Farm also urged a judicial estoppel theory based on

Anslum’s testimony at the sentencing phase of Fullerton’s trial.

This theory is not before us on appeal.

4

He stated by affidavit: “I do not believe that insurance coverage

exists for these claims because any action taken by me was

intentional and intended to cause harm to Artie Harris Fullerton

and Karen Denby Jones.” The other defendants—Stephen Paul Buckner,

Jacob Joseph Anslum, and W. Bryant Buckner (collectively “the

Buckners”)—moved for appointment of a guardian ad litem on the

grounds that Fullerton is not mentally competent. The court

granted the motion over State Farm’s objection.

State Farm moved for summary judgment on the theories that

Fullerton’s conviction collaterally estops the Buckners from

litigating Fullerton’s intent and that the evidence that Fullerton

shot his wife and Jones intentionally leaves no genuine issue of

material fact. In support, it attached transcripts and other

documents from the criminal proceedings. The court denied the

motion without explanation. It similarly denied State Farm’s

motion for judgment as a matter of law at the close of evidence.2

At trial, the Buckners presented expert opinion that Fullerton

was “severely mentally ill” at the time of the shooting because he

was suffering from a “delusional disorder” that caused him to

believe that the victims wanted to kill him. The jury credited

this testimony and found that the killings were unintentional.

State Farm appeals and asserts a number of errors, including
5

evidentiary and instructional errors. Because we agree with State

Farm’s assertion that the Buckners are precluded from litigating

the issue of Fullerton’s intent, we do not reach any other issues

presented on appeal.

II.

Our inquiry into the preclusive effect of Fullerton’s guilty

plea is governed by Texas law. Angel v. Bullington, 330 U.S. 183,

191-93 (1947); In the Matter of King, 103 F.3d 17, 19 n.2 (5th Cir.

1997), cert. denied, 65 U.S.L.W. 3818 (U.S. June 16, 1997);

Cleckner v. Republic Van & Storage Co., 556 F.2d 766, 768-69 (5th

Cir. 1977). “A party seeking to assert the bar of collateral

estoppel must establish that (1) the facts sought to be litigated

in the second action were fully and fairly litigated in the first

action; (2) those facts were essential to the judgment in the first

action; and (3) the parties were cast as adversaries in the first

action.” Sysco Food Services, Inc. v. Trapnell, 890 S.W.2d 796,

801 (Tex. 1994). The third requirement, however, is subject to an

important qualification: “[t]o satisfy the requirements of due

process, it is only necessary that the party against whom the

doctrine is asserted was a party or in privity with a party in the

first action.” Id. at 802 (emphasis in original).

The second requirement need not detain us. Fullerton pled

guilty to a violation of Tex. Penal Code § 19.02. By entering this

plea, he admitted that he intended to kill his victims or at least
 

3 Section 19.02(b) reads:

A person commits an offense if he:

(1) intentionally or knowingly causes the death of an

individual;

(2) intends to cause serious bodily injury and commits an

act clearly dangerous to human life that causes the death

of an individual; or

(3) commits or attempts to commit a felony, other than

manslaughter, and in the course of and in furtherance of

the commission or attempt, or in immediate flight from

the commission or attempt, he commits or attempts to

commit an act clearly dangerous to human life that causes

the death of an individual.

Neither serious-bodily-injury murder nor felony murder, described

in subsections (2) and (3) of the statute respectively, was at

issue in the criminal proceedings, and the Buckners do not suggest

otherwise. According to the indictment and the complaint, which

State Farm filed as an exhibit with its motion for summary

judgment, Fullerton “knowingly and intentionally cause[d] the

death[s]” of his wife and Jones. Thus, a brief investigation of

the pleadings, see Jones v. City of Houston, 907 S.W.2d 871, 874

(Tex. App.—Houston [1st Dist.] 1995, writ denied), reveals that

either Fullerton’s intent to kill or knowledge that he was killing

were essential to his convictions.

6

knew that his actions would cause their deaths.3 In other words,

his convictions were valid because he admitted that the deaths were

not accidents. The convictions are inconsistent both with the

Buckners’ suggestion that Fullerton’s delusions made the shootings

acts of self-defense and with their contention that he was legally

insane during the incident. If the criminal proceedings decided

anything, it was that the shootings were not “occurrences.” See

Dinnery v. State, 592 S.W.2d 343, 352-54 (Tex. Crim. App. 1980)

(holding that a judicial confession in a guilty plea is itself

sufficient evidence to support the crime charged).

The first and third requisites for issue preclusion require

more searching analysis. We first take up the question of whether
7

a guilty plea counts as “full and fair litigation” under Texas law.

Then we ask whether the preclusive effect of Fullerton’s plea

extends to the Buckners; in the traditional language of collateral

estoppel, we must determine whether the Buckners are in privity

with Fullerton.

III.

If Fullerton had been convicted on the murder counts after a

full trial, there would be no question that the jury’s factual

finding that he killed intentionally would satisfy the full-andfair-litigation prong of the test for issue preclusion. Texas law

collaterally estops an insured who has suffered a conviction for

murder before a jury from arguing in a subsequent coverage dispute

that the killing was not willful. Francis v. Marshall, 841 S.W.2d

51, 54 (Tex. App.—Houston 1992, no writ) (imposing sanctions for

frivolous litigation on an insured who sought to recover benefits

after a murder conviction). See also United States v. Thomas, 709

F.2d 968, 972 (5th Cir. 1983) (“Because of the existence of a

higher standard of proof and greater procedural protection in a

criminal prosecution, a conviction is conclusive as to an issue

arising against the criminal defendant in a subsequent civil

action.”).

Unfortunately, Texas courts have not decided whether a guilty

plea produces similarly preclusive effects in subsequent coverage

litigation. We are thus in the uncomfortable position of

speculating how a Texas court might answer a close question of

first impression. We may consult a variety of sources in making an
8

Erie-guess: dicta in Texas court decisions, the general rule on the

issue, and the rules in other states that Texas might look to, as

well as treatises and law journals. Hill v. London, Stetelman, &

Kirkwood, Inc., 906 F.2d 204, 207 (5th Cir. 1990). After reviewing

case law from other jurisdictions, which is divided roughly evenly

on the question, we have concluded that Texas would most likely

follow the rule that a valid guilty plea serves as a full and fair

litigation of the facts necessary to establish the elements of the

crime and thus that a Texas court would preclude Fullerton from

contesting State Farm’s assertion that he acted intentionally.

A.

A survey of the preclusive effects of guilty pleas in other

jurisdictions gives us little guidance. Even if Texas wanted to

follow the general rule, it would be unable to identify a majority

view with any confidence.

Some courts treat a conviction pursuant to a guilty plea in

the same way they would treat a conviction imposed by a jury after

a full-blown trial. An especially thorough and well-reasoned

justification for this approach appears in Ideal Mutual Ins. Co. v.

Winker, 319 N.W.2d 289 (Iowa 1982). In Winker, an off-duty deputy

sheriff shot and killed his girlfriend and pled guilty to seconddegree murder. The administrator of the girlfriend’s estate

brought a wrongful death action against the deputy, who was insured

under a law enforcement officers’ comprehensive liability policy.

The insurer in turn brought a declaratory judgment action to

establish that it had no duty to defend the deputy because of an
9

exclusion for injuries “resulting from a criminal act.” The deputy

admitted that the plea could be used as evidence of his intent, but

he insisted that he should be allowed to present countervailing

evidence that the shooting was not criminal because it was the

result of a nervous breakdown.

Overruling a prior case, Book v. Datema, 131 N.W.2d 470

(1964), the Iowa Supreme Court prohibited “relitigation concerning

an essential element of a crime when the accused has tendered a

guilty plea, which necessarily admits the elements of the crime,

and the court has ascertained that a factual basis exists for the

plea and accepts it.” Winker, 319 N.W.2d at 295. The court

considered the apparently contrary rule announced in comment b to

§ 85 of the Restatement (Second) of Judgments (1982), which

indicates that preclusion “does not apply where the criminal

judgment was based on a plea of nolo contendere or a plea of

guilty.” According to the court, this technical rule does little

work in light of the statement several lines later that

[a] defendant who pleads guilty may be held to be

estopped in subsequent civil litigation from contesting

facts representing the elements of the offense.

However, under the terms of this Restatement such an

estoppel is not a matter of issue preclusion, because

the issue has not actually been litigated, but is a

matter of the law of evidence beyond the scope of this

Restatement.

Unable to find any cases utilizing the American Law Institute’s

notion of “evidentiary estoppel,” the court “conclude[d] that the

conclusive effect given to a guilty plea . . . is founded on issue

preclusion rather than estoppel.” Winker, 319 N.W.2d at 293-94

(citing especially Prosise v. Haring, 667 F.2d 1133 (4th Cir.
10

1981), aff’d, 462 U.S. 306, 103 S. Ct. 2368, 76 L. Ed. 2d 595

(1983)).

The same result obtained in State Mutual Ins. Co. v. Bragg,

589 A.2d 35 (Me. 1991), in which a man pled guilty to murdering his

wife and son and attempting to murder his daughter. When he

entered the pleas, he was the defendant in a wrongful death suit

brought by the personal representative of his deceased wife. The

court held that the guilty pleas precluded any recovery from the

man’s insurer or the personal representative because he had a “full

and fair opportunity to litigate in the prior suit.” Id. at 37

(quoting Hossler v. Barry, 403 A.2d 762, 769 (Me. 1979)). It

explained that “murder and attempted murder are crimes in which the

intent to cause, or the expectation of causing injury inheres.”

Id.

Similarly, in State Farm Fire & Cas. Co. v. Sallak, 914 P.2d

697 (Or. Ct. App.), rev. denied, 920 P.2d 551 (Or. 1996), the court

held that a man who pled guilty to resisting arrest and assaulting

a police officer could not argue in a declaratory judgment action

that his insurer should provide coverage because the injuries he

inflicted were not “expected or intended.” Like the Winker and

Bragg courts, the Sallak court found it especially significant that

the criminal proceedings included “a colloquy with [the judge] to

satisfy the court that the plea was voluntarily and intelligently

made.” Id. at 700. “Because the factual basis rule requires that

the trial court be convinced that the plea is founded on fact, we

conclude that acceptance of [the insured’s] plea is the equivalent
11

of a judicial determination of each of the material elements of

[his] crime and satisfies the ‘actually litigated’ requirement of

issue preclusion.” Id. See also Bower v. O’Hara, 759 F.2d 1117,

1128 (3d Cir. 1985) (Sloviter, J., dissenting) (“[T]here seems to

be almost no deviation from the general principle that when a

defendant has pled guilty in a federal criminal action the

defendant will be estopped in a subsequent civil suit by or against

the United States government or its agencies from contesting issues

encompassed by the prior guilty plea.”); United States v.

$31,697.59 Cash, 665 F.2d 903, 906 (9th Cir. 1982) (precluding a

litigant who pled guilty to a federal crime from relitigating facts

in a subsequent forfeiture hearing, in spite of any failure to

ensure that the guilty plea had a factual basis); Colorado Farm

Bureau Mut. Ins. Co. v. Snowbarger, 934 P.2d 909, 911 (Colo. Ct.

App. 1997) (applying issue preclusion to an insured who pled guilty

to sexual assault because “intent is an issue that, when finally

decided in a previous criminal prosecution, cannot be relitigated

so as to avoid the intentional acts exclusion of an insurance

policy”); State Farm Fire & Cas. Co. v. Groshek, 411 N.W.2d 480,

484 (Mich. Ct. App. 1987) (“[A]n insured’s plea of guilty to a

crime involving intentional conduct . . . dispels any triable

factual issue regarding the insured’s intention or expectation to

cause injury to the victim.”); State v. Gonzalez, 641 A.2d 1060,

1061 (N.J. Super. Ct. App. Div. 1994) (“[O]ne who has been

convicted of a crime, whether by way of trial or a plea of guilty,

should not be permitted to re-litigate, in another forum, the fact
12

of his guilt.”), aff’d, 667 A.2d 684 (N.J. 1995); Merchants Mut.

Ins. Co. v. Arzillo, 472 N.Y.S.2d 97 (N.Y. App. Div. 1984) (holding

that the recent expansion of collateral estoppel warrants applying

it even when a litigant has previously entered an Alford-type plea

and insisted at sentencing that he was framed); Commercial Union

Ins. Co. v. Mauldin, 303 S.E.2d 214, 217 (N.C. Ct. App. 1983)

(“[The insured’s] guilty plea to second degree murder was an

admission that he had the general intent to do the act, and it

excluded him from coverage under the insurance policy.”). See also

In the Matter of Nassau Ins. Co., 577 N.E.2d 1039 (N.Y. 1991)

(applying issue preclusion to third-party claimants who sought to

contest the intent of an insured who waived his right to a jury

trial on a murder charge and was convicted of manslaughter after

raising only the successful defense of extreme emotional

disturbance).

But some courts refuse to treat guilty pleas as fully

litigated matters for the purposes of collateral estoppel. The

Supreme Judicial Court of Massachusetts, for example, has

distinguished convictions that resulted from full-blown trials from

convictions that resulted from guilty pleas and has held that

collateral estoppel does not apply in the latter situation. The

court explained that allowing re-litigation of facts underlying

guilty pleas would compromise neither of the central goals of issue

preclusion: efficiency and fairness.

When a defendant pleads guilty, waiving his right to a

trial by jury, scarce judicial and prosecutorial

resources are conserved. While the judge taking the

plea must satisfy himself that there is a factual basis
13

for a charge, he need not find that the defendant

actually committed the crime to which he is pleading

guilty. Cf. North Carolina v. Alford, 400 U.S. 25, 37-

38 & n.10, 91 S. Ct. 160, 167 & n.10, 27 L. Ed. 2d 162

(1970). Furthermore, because there have been no

findings, a conviction after a plea of guilty does not

present the possibility of inconsistent factual

determinations. For collateral estoppel purposes,

those factors justify treating a conviction after a

guilty plea differently from a conviction after a

trial.

Aetna Cas. & Sur. Co. v. Niziolek, 481 N.E.2d 1356, 1364 (Mass.

1985). The number of states agreeing with Massachusetts law rivals

the number that disagrees. See, e.g., Rawling v. City of New

Haven, 537 A.2d 439, 445 (Conn. 1988) (stating in dicta that “[a]s

a general rule, a criminal judgment based on a plea of nolo

contendere or a plea of guilty has no preclusive effect in a

subsequent civil action”); Continental Cas. Co. v. Maguire, 471

P.2d 636 (Colo. Ct. App. 1970) (concluding that an insured was

insane and thus acted unintentionally in spite of a prior plea of

guilty to simple assault); Teitelbaum Furs, Inc. v. Dominion Ins.

Co., 375 P.2d 439, 441 (Cal. 1962) (in bank) (“Considerations of

fairness to civil litigants and regard for the expeditious

administration of criminal justice . . . combine to prohibit the

application of collateral estoppel against a party who, having

pleaded guilty to a criminal charge, seeks for the first time to

litigate his cause in a civil action.” (dicta)), cert. denied, 372

U.S. 966, 83 S. Ct. 1091, 10 L. Ed. 2d 130 (1963); Brohawn v.

Transamerica Ins. Co., 347 A.2d 842, 848 (Md. 1975) (“A plea of

guilty to a criminal charge . . . may be rebutted or explained in

the subsequent civil case in which it is admitted.”); Glens Falls
14

Group Ins. Corp. v. Hoium, 200 N.W.2d 189, 192 (Minn. 1972)

(allowing an insured to enter evidence of his reasons for pleading

guilty to criminal assault); Prudential Property & Cas. Ins. Co. v.

Kollar, 578 A.2d 1238, 1240 (N.J. Super. Ct. App. Div. 1990) (“We

have applied collateral estoppel only where the conviction

definitively and unambiguously established the nature of the

insured’s intent and where such conviction was the result of a

trial, not a plea.”); Stidham v. Millvale Sportsmen’s Club, 618

A.2d 945, 954 (Pa. Super. Ct. 1992) (noting that because of a

unilateral plea bargain, the insured’s “intent was never fully,

fairly and definitively litigated”), appeal denied, 637 A.2d 290

(Pa. 1993); Safeco Ins. Co. v. McGrath, 708 P.2d 657, 660 (Wash.

Ct. App. 1985) (refusing to apply issue preclusion because of the

“powerful, coercive forces” confronting an insured who insists that

he acted in self-defense and chose to enter an Alford-type plea to

assault charges), rev. denied, 105 Wash.2d 1004 (1986). Although

many of these opinions cite section 85 of the Restatement (Second)

of Judgments, they do not conduct the Winker court’s careful

inquiry into the Restatement’s notion of estoppel.

A Texas court could approach this body of law in a variety of

ways. The fact that the record supports Fullerton’s claim that he

had a viable insanity defense distinguishes this case from many of

the decisions applying collateral estoppel. In Winker, for

example, the court noted that the insured “[a]pparently . . .

decided that the chances of prevailing on an insanity defense were

slight given the medical experts’ opinions.” 319 N.W.2d at 297.
15

Many of these cases emphasize the statutory duty of state judges to

ensure that the plea rests on a factual basis before accepting it.

See, e.g., Bragg, 589 A.2d at 37; Sallak, 914 P.2d at 700. See

also Gonzalez, 641 A.2d at 1063 (rejecting the California and

Maryland approaches in part because those states, unlike New

Jersey, “permit a defendant to plead guilty and yet assert

innocence”). Texas statutes do not prohibit Alford-type pleas;

they require only that “[n]o plea of guilty or plea of nolo

contendere shall be accepted by the court unless it appears that

the defendant is mentally competent and the plea is free and

voluntary.” See TEX. CODE CRIM. PROC. ANN. art. 26.13(b) (West 1989);

Allen v. State, 827 S.W.2d 69, 70 (Tex. App.—Houston [1st Dist.]

1992, no writ) (explaining that a court may allow a criminal

defendant to withdraw exculpatory evidence and enter a guilty

plea). The judge who accepted Fullerton’s plea did not engage him

in a discussion of the facts of the case; the court fulfilled its

duty to confirm that Fullerton was mentally competent and that his

plea was free and voluntary, but it did not prod the possibility

that Fullerton had a viable defense. Because Fullerton’s plea did

not lead to an airing of the facts, a Texas court might conclude

that the reasoning in the second line of cases should govern and

might hold that the plea did not qualify as full and fair

litigation of Fullerton’s intent.

On the other hand, Fullerton’s affidavit acknowledging

responsibility and his decision not to respond to State Farm’s

declaratory judgment act suggest that a belief in his own innocence
16

did not color his guilty plea. If the acknowledgment of guilt was

not an Alford-type plea, a Texas court might find it highly

reliable. The uncontradicted circumstances do not suggest selfdefense, and Fullerton’s behavior immediately after the shootings

is not characteristic of someone who, “as a result of severe mental

disease or defect, did not know that his conduct was wrong.” TEX.

PENAL CODE § 8.01 (West 1994). See also Love v. State, 909 S.W.2d

930, 943 (Tex. App.—El Paso 1995, writ ref’d) (affirming a jury

finding of sanity, in spite of a history of mental illness, where

a lucid defendant shot family members without provocation). 

In short, the unsettled law in other jurisdictions leaves us

unenlightened on how Texas would resolve the question of full and

fair litigation. Perhaps the more recent decisions tend to favor

treating a guilty plea as the equivalent of a conviction after a

trial. But nothing approaching a consensus has emerged.

Predicting how a Texas court might act requires us to glean what

few hints we can from the tenor of relevant Texas opinions.

B.

We ground our conclusion that Texas would regard Fullerton’s

plea as full and fair litigation on three observations. First,

Texas has not hesitated to give default civil judgments preclusive

effect, in spite of the cursory nature of the adjudication leading

to those judgments. Second, language in a 1949 Texas Supreme Court

case suggests a willingness to give guilty pleas to murder charges

heavy weight in later civil proceedings. And finally, Texas courts

have indicated that Texas issue-preclusion rules are virtually
17

identical to the issue-preclusion rules followed in federal courts,

which routinely give guilty pleas preclusive effect.

Texas courts ask not whether the issue to be precluded could

have been litigated, but whether it was actually litigated —

whether it was “adequately deliberated and firm.” Mower v. Boyer,

811 S.W.2d 560, 563 (Tex. 1991). Three factors are especially

important in analyzing the question of full and fair litigation:

“1) whether the parties were fully heard, 2) whether the court

supported its decision with a reasoned opinion, and 3) whether the

decision was subject to appeal or was in fact reviewed on appeal.”

Rexrode v. Bazar, 937 S.W.2d 614, 617 (Tex. App.—Amarillo 1997, no

writ). These factors are in keeping with the rule that a Mary

Carter agreement can cast doubt on the fairness of an earlier

judgment and can give a trial court reason to use its discretion to

re-open issues because of misgivings about the “quality or

extensiveness of the procedures” in the earlier suit. See Scurlock

Oil Co. v. Smithwick, 724 S.W.2d 1, 7 (Tex. 1986) (quoting

Restatement (Second) of Judgments § 28(3) (1982)).

These general principles do not counsel against our finding

that Fullerton’s criminal proceedings included a full and fair

airing of his intent. The judge gave Fullerton a full hearing;

indeed, he did just what Fullerton asked him to do, which was

accept his guilty plea. There was no need for a reasoned opinion.

And Fullerton had the right to appeal his conviction. Unlike the

Mary Carter agreement in Scurlock Oil, Fullerton’s plea did not

skew the proceedings against him. He cannot take advantage of
18

abstract legal statements designed to protect parties “whose

procedural predicament is not of their own making.” Trapnell, 890

S.W.2d at 805.

We are reluctant to place much weight on the fact that, for

Texas civil litigants, “[a]n agreed judgment . . . has the same

degree of finality and binding force as one rendered by a court at

the conclusion of adversary proceedings.” Forbis v. Trinity

Universal Ins. Co., 833 S.W.2d 316, 319 (Tex. App.—Fort Worth 1992,

writ dism’d) (citing Barrientes v. Harlandale Indep. School Dist.,

764 S.W.2d 28, 29 (Tex. App.—San Antonio 1989, writ denied)). The

consequences of a capital murder conviction are difficult to

compare to the consequences of losing a civil lawsuit.

Consequently, it is difficult to map the reasons for entering a

guilty plea onto the reasons for settling with an opponent in a

civil lawsuit. Unlike a civil defendant, Fullerton could not

threaten the state with a counterclaim or bring in a third-party

defendant. The differences between plea agreements and civil

settlements make us unsure whether Texas courts would give them the

same preclusive effects.

Rather than ground our Erie-guess on generalities, we turn to

two specific Texas opinions. First, the case of Mendez v. Haynes

Brinkley & Co., 705 S.W.2d 242 (Tex. App.—San Antonio 1986, writ

ref’d n.r.e.), suggests that Texas courts do not understand “full

and fair” litigation to require an active courtroom confrontation.

The owners of an apartment building paid $358 to an insurance

recording agent, who took responsibility for insuring the building
 

4 We do not agree with the interpretation of Mendez offered in

In re Turner, 144 B.R. 47 (E.D. Tex. Bankr. 1992). The Turner

court noted that the recording agent in Mendez gave a deposition

and thus inferred that the parties actually agreed to the first

judgment. Id. at 52. As an agreed settlement, the judgment in

Mendez would fit into the rule announced in comment e to § 27 of

the Restatement (Second) of Judgments: “In the case of a judgment

entered by confession, consent, or default, none of the issues is

actually litigated . . . [unless] the parties have entered an

agreement manifesting such an intention.” The court in Turner

followed In re Stowell, 113 B.R. 322 (W.D. Tex. Bankr. 1990), and

held that Texas courts would follow § 27 of the Restatement in

spite of Mendez.

The passing reference to the recording agent’s deposition in

Mendez does not indicate that he consented to the judgment against

him. Even if he did consent, that fact played no role in the

court’s application of issue preclusion. See also Greater Houston

Transp. Co. v. Wilson, 725 S.W.2d 427, 430 (Tex. App.—Houston [14th

Dist.] 1987, writ ref’d n.r.e.) (giving preclusive effect to a

default judgment entered as a sanction for failing to appear for

depositions).

19

against fire. When the building burned down and the owners

discovered they were uninsured, they sued the recording agent and

Haynes Brinkley, the general insurance agent with whom the

recording agent was supposed to have done business. The recording

agent did not answer the suit, and the owners dismissed Haynes

Brinkley in order to obtain a final default judgment against the

recording agent. When the owners brought a second suit against

Haynes Brinkley, they were faced with the obstacle of issue

preclusion, for the default judgment stated that the recording

agent never contacted Haynes Brinkley, which meant that Haynes

Brinkley could not be liable. Although the court of appeals did

not discuss the full-and-fair-litigation requirement, it did not

hesitate to hold that the owners could not prevail because “the

judgment states unequivocally that the premises were not insured.”

Id. at 246.4
20

Mendez involved factors not present in this case. The

building owners, in contrast to Fullerton, initiated the first suit

themselves. More importantly, they did not face the agonizing

decision of whether to preserve the possibility of winning a

subsequent suit at the cost of risking a capital murder conviction.

Nevertheless, both the default judgment in Mendez and the

conviction in this case were the results of one-sided litigation.

In both, a court entered judgments that flowed from the failure of

one side to assert any defense. This treatment of default

judgments suggests that in Texas “full and fair litigation” need

not involve contested issues. See also Rexrode, 937 S.W.2d at 617

(“For the purposes of collateral estoppel, an issue was ‘actually

litigated’ when it was properly raised, by the pleadings or

otherwise, and it was submitted for determination, and determined.”

(citing Van Dyke v. Boswell, O’Toole, Davis & Pickering, 697 S.W.2d

381, 384 (Tex. 1985))).

Although several decades old, at least one other Texas case

shows an inclination to credit the facts underlying guilty pleas.

In Greer v. Franklin Life Ins. Co., 221 S.W.2d 857 (Tex. 1949), a

woman stabbed and killed her husband and pled guilty to “murder

without malice.” Although she was a beneficiary under her

husband’s insurance policy, a Texas statute barred recovery where

a beneficiary willfully caused the insured’s death. Members of the

husband’s family brought suit against the wife and the insurer, and

the wife in turn asserted her claim to proceeds. At trial, the
21

wife admitted that the killing was not in self-defense. The Texas

Supreme Court held that she could not recover on the policy.

Whatever be the rule as to admissibility or effect in

a civil suit such as this of a criminal conviction of

the crime in issue, we think the wholly unqualified

admission of a plea of guilty with the other evidence

above mentioned and in the absence of contrary

evidence, established intent and illegality as a matter

of law.

221 S.W.2d at 860.

The Greer court’s explanation of why the wife was ineligible

for benefits contains an ambiguity. We are not certain whether the

court meant to rely on the plea as especially convincing evidence

or as a prior preclusive judgment. The references to

“admissibility” and “other evidence” suggest that the case does not

turn on issue preclusion. But the passage is consistent with the

notion that especially reliable guilty pleas automatically

establish certain facts “as a matter of law.” Even if we read

Greer’s holding in terms of preclusion, it involves defensive,

rather than offensive, issue preclusion. Nevertheless, it is a

clue that Texas law takes seriously guilty pleas to murder when

they bear on a subsequent coverage dispute.

Texas courts have indicated that there is “little difference”

between Texas and federal rules of issue preclusion. Trapnell, 890

S.W.2d at 801 n.7; Upjohn Co. v. Freeman, 906 S.W.2d 92, 101 n.7

(Tex. App.—Dallas 1995, no writ). We thus take comfort in the fact

that our case law has invoked a plea of guilty as a ground for

collateral estoppel. In Brazzell v. Adams, 493 F.2d 489 (5th Cir.

1974), a party who pled guilty to selling heroin sought damages
22

from state officials under § 1983 on an entrapment theory. We

asserted that “the general rule is that collateral estoppel applies

equally whether the prior criminal adjudication was based on a jury

verdict or a guilty plea.” Id. at 490. Other circuits agree.

See, e.g., Fontneau v. United States, 654 F.2d 8, 10 (1st Cir.

1981) (barring a party who pled guilty to federal tax evasion from

re-litigating the issue of fraud in a subsequent civil penalty

proceeding); Ivers v. United States, 581 F.2d 1362, 1367 (9th Cir.

1978) (“While a non-frivolous argument to the contrary might well

have been made to a finder of fact had Ivers chosen to proceed to

trial, we must take his plea of guilty to be an admission of each

and every essential element of the [federal] crime charged,

including the element of knowledge and willfulness.”); Nathan v.

Tenna Corp., 560 F.2d 761, 763 (7th Cir. 1977) (“Nathan is estopped

by his guilty plea to federal mail fraud charges from denying that

his participation in the commission-splitting scheme involved

illegal conduct.”).

We conclude that a Texas court would treat Fullerton’s guilty

plea as full and fair litigation of his intent to kill his wife and

step-daughter.

IV.

Fullerton is content to go without coverage. This case

requires us to determine whether his plea counts as full and fair

litigation not for him, but for the Buckners, who hope to receive

proceeds under Fullerton’s policy. Although we recognize the

dangers of formalism tied up in the word “privity,” see Wright,
 

5 We do not discern any difference in Texas courts’

understanding of privity in the contexts of claim preclusion and

issue preclusion. Neel, for example, concerned issue preclusion

and applied privity rules delineated in Amstadt without remarking

that that case concerned claim preclusion. Similarly, CLS

Associates cited Benson to support its privity analysis in spite of

the fact that claim preclusion was at stake in CLS Associates and

issue preclusion was at stake in Benson.

23

Miller & Cooper, 18 Federal Practice & Procedure § 4448 (1981), we

follow Texas courts in continuing to use that label in our inquiry

into whether Texas law allows State Farm to extend the preclusive

effect of the murder conviction from Fullerton to the heirs of

Fullerton’s victims.

“[P]rivity is not established by the mere fact that persons

may happen to be interested in the same question or in proving the

same state of facts.” Benson v. Wanda Petroleum Co., 468 S.W.2d

361, 363 (Tex. 1971). But privity does exist if one party

“deriv[es its] claims through a party to the prior action.”

Amstadt v. U.S. Brass Corp., 919 S.W.2d 644, 653 (Tex. 1996); Neel

v. HECI Exploration Co., 942 S.W.2d 212, 217 n.1 (Tex. App.—Austin

1997, no writ). See also CLS Associates v. A____ B____, 762 S.W.2d

221, 224 (Tex. App.—Dallas 1988, no writ) (“It is sufficient that

the party in the second suit be a successor-in-interest to the

party in the first suit.”).5

State Farm’s assertion of privity would fail if the Buckners

could assert their rights directly against State Farm. A New York

court, for example, has refused to find privity between co-insured

spouses when one spouse has pled guilty to an intentional crime.

Fernandez v. Cigna Property & Cas. Ins. Co., 590 N.Y.S.2d 925 (App.
24

Div. 1992). The court distinguished the rights of insured parties

from the rights of uninsured victims such as the Buckners, who

under New York statute derive their right to sue the insurer from

the rights of the insured. See D’Arata v. New York Central Mut.

Fire Ins. Co., 564 N.E.2d 634, 637 (N.Y. 1990) (“Plaintiff, by

proceeding directly against [the insurer], does so as subrogee of

the insured’s rights and is subject to whatever rules of estoppel

would apply to the insured.”).

The Iowa Supreme Court has held that a direct action statute

defeats privity between an insured who pleads guilty to a criminal

offense and the victim of the crime. In AID Ins. Co. v. Chrest,

336 N.W.2d 437 (Iowa 1983), an insurer argued that a police officer

who was shot by its insured could not bring suit after the insured

pled guilty to assault with intent to kill. But Iowa’s direct

action statute “gives the insured person an interest in the

liability insurance policy adverse to both the insurer and insured

at the time of the injury.” Id. at 440 (quoting Farm & City Ins.

Co. v. Coover, 225 N.W.2d 335, 337 (Iowa 1975)). The purpose of

the direct action statute, according to the court, is to prevent

agreements between the insurer and the insured from compromising a

victim’s ability to force the insurer to pay for the harm caused by

the insured. By making a victim’s rights against an insurer direct

rather than derivative, Iowa law prevents the insurer from using

the insured’s admission as a defense.

Because the Buckners are not themselves insureds, and because

Texas has not enacted a “direct action statute,” see Jilani v.
 

6 We do not understand Dairyland County Mut. Ins. Co. v.

Childress, 650 S.W.2d 770, 773-74 (Tex. 1983), as following a

contrary rule. In Childress, the insurer obtained a declaratory

judgment that its policy did not cover the insured. When the

insurer sought to use this judgment to preclude a suit by third

parties claiming under the policy, the Texas Supreme Court held

that the third parties were not in privity with the insured and

thus that issue preclusion did not apply. The basis for the

holding, however was that the insurer failed to join the third

parties as required by the Uniform Declaratory Judgment Act, which

states that “no declaration shall prejudice the rights of persons

25

Jilani, 767 S.W.2d 671, 675-76 (Tex. 1988) (Mauzy, J., concurring),

the Buckners must win a judgment against Fullerton before claiming

entitlement to insurance proceeds. Fullerton’s policy states

explicitly that “no action with respect to [personal liability] can

be brought against [State Farm] until the obligation of the insured

has been determined by a final judgment or agreement.” When an

insurance contract contains a no-action clause, “a third party’s

right of action against the insurer does not arise until he has

secured such an agreement or a judgment against the insured.”

Great American Ins. Co. v. Murray, 437 S.W.2d 264, 265 (Tex. 1969).

See also Angus Chemical Co. v. IMC Fertilizer, Inc., 939 S.W.2d 138

(Tex. 1997) (per curiam). In other words, State Farm’s duty is to

pay its insured; third parties can recover proceeds under the

policy only insofar as their rights derive from Fullerton’s right

to recover proceeds.

Thus, although Texas courts have not yet decided specifically

whether tort plaintiffs who seek insurance funds are in privity

with an insured who pleads guilty to murder, we hold that under

Texas law the Buckners are in privity with Fullerton because of the

derivative nature of their recovery under the policy.6
not parties to the proceeding.” Id. at 774; Tex. Rev. Civ. Stat.

Ann. art. 2524-1 § 11 (Vernon 1965) (current version codified at

Tex. Civ. Prac. & Rem. Code § 37.006(a) (West 1997)). Unlike

Childress, Fullerton’s case does not present an insurer that failed

to obtain declaratory relief against all interested parties. Cf.

Opheim v. Interamerican Ins. Exchange, 430 N.W.2d 118, 121 (Iowa

1988) (distinguishing Childress based on Iowa’s declaratory

judgment act, which does not require joinder of all interested

parties).

26

This result places Texas among the bulk of other jurisdictions

that have considered the question. See, e.g., Aetna Cas. & Sur.

Co. v. Jones, 596 A.2d 414, 421, 425 (Conn. 1991) (holding that

“[w]hen the victim of an insured defendant derives her rights to

collect insurance proceeds directly from the rights of the insured

defendant,” they are in privity by virtue of “shar[ing] a legal

interest”); Tradewind Ins. Co. v. Stout, ___ P.2d ___, ___, 1997 WL

222335, at *9 (Haw. Ct. App.) (giving a criminal conviction

preclusive effect against the insured’s victim because “any ‘right’

which [the victim] has to the proceeds of the insurance policy

derive[s] solely from [the insured’s] right to coverage under the

policy”), cert. denied, 937 P.2d 922 (Haw. 1997); Safeco Ins. Co.

of America v. Yon, 796 P.2d 1040, 1044 (Idaho Ct. App. 1990)

(“[T]he wrongful-death claimants’ rights are only as good as the

rights that [the convicted insured] can assert against Safeco under

the insurance contract.”); State Mut. Ins. Co. v. Bragg, 589 A.2d

35 (Me. 1991) (affirming a declaratory judgment that an insured had

no duty to defend where its insured murdered family members and was

sued by the victims’ personal representative); Aetna Life & Cas.

Ins. Co. v. Johnson, 673 P.2d 1277, 1280-81 (Mont. 1984) (giving a

criminal conviction preclusive effect against a third party because
27

the third party’s rights derived from the convicted insured’s

insurance and because of an identity of interest at the time of the

criminal trial); New Jersey Manufacturers Ins. Co. v. Brower, 391

A.2d 923, 926 (N.J. Super. Ct. App. Div. 1978) (finding privity in

part because the victim “stood in the shoes” of the insured for the

purposes of recovering proceeds); In the Matter of Nassau Ins. Co.,

577 N.E.2d 1039, 1040 (N.Y. 1991) (following D’Arata’s holding that

criminal convictions bar third parties from claiming insurance

proceeds); State Farm Fire & Cas. Co. v. Reuter, 700 P.2d 236, 241

(Or. 1985) (holding that the victim of a sexual assault was in

privity with her assailant because of “her status as a claimant and

potential judgment creditor” of the convicted insured).

Decisions to the contrary are both less numerous and less

recent. See Clemmer v. Hartford Ins. Co., 587 P.2d 1098, 1103

(Cal. 1978) (refusing to apply issue preclusion to the holders of

a wrongful death judgment where the convicted insured may have

withdrawn a plea of insanity for strategic reasons); Massachusetts

Property Ins. Underwriting Assoc. v. Norrington, 481 N.E.2d 1364,

1367-68 (Mass. 1985) (“Allowing the application of issue preclusion

against the insured, but not against the injured person, does no

violence to the substantive principle that an injured party

succeeds only to the insured’s rights against the insurer.”). See

also Prudential Property & Cas. Ins. Co. v. Kollar, 578 A.2d 1238,

1241 (N.J. Super. Ct. App. Div. 1990) (“[A]n innocent third-party

victim . . . should not be estopped from effectively recovering
28

against a defendant and his insurer when the defendant, for

whatever reason, elects to enter a plea of guilty.” (dicta)).

V.

Texas courts have also recognized that at bottom issue

preclusion is driven by equitable principles. Therefore, they

reserve the discretion to decline to apply it when the results

would be unfair. Scurlock Oil Co. v. Smithwick, 724 S.W.2d 1, 7

(Tex. 1986). The relevant fairness factors derive from Parklane

Hosiery Co. v. Shore, 439 U.S. 322, 330-31 (1979):

1. Whether the use of collateral estoppel will reward

a plaintiff who could have been joined in the earlier

suit but chose to “wait and see.” . . .

2. Whether the defendant in the first suit had the

incentive to litigate that suit fully and vigorously.

. . .

3. Whether the second suit will afford the defendant

procedural opportunities available in the first suit

that could cause a different result. . . .

4. Whether the judgment in the first suit is

inconsistent with any other earlier decision. . . .

Finger v. Southern Refrig. Serv., 881 S.W. 2d 890, 896 (Tex. App. -

Houston [1st Dist.] 1994, writ denied). Of these, only the second

suggests that preclusion might be unfair. We have already decided

that the first proceeding included a full and fair litigation of

Fullerton’s intent. The state’s agreement to forego the death

penalty gave Fullerton less incentive to litigate vigorously. But

he still had a strong incentive to defend himself insofar as the

facts permitted. The second of these four factors may not be as

decisive as it could be, but we do not think that would convince a
29

Texas court to exercise its discretion to refuse to apply issue

preclusion.

The Texas Supreme Court has isolated three goals of issue

preclusion: the conservation of judicial resources, the protection

of defendants from repetitive lawsuits, and the prevention of

inconsistent judgments. Sysco Food Services, Inc. v. Trapnell, 890

S.W.2d 796, 803-04 (Tex. 1994). See also Finger, 881 S.W.2d at

894-95 (citing Benson v. Wanda Petroleum Co., 468 S.W.2d 361, 363

(Tex. 1971)). Although the second of these is not relevant, the

first and third counsel in favor of giving Fullerton’s plea

preclusive effect. Treating the question of intent as resolved

will not only cut short declaratory judgment suits such as this

one; it will also expedite the adjudication of victims’ suits

against an insured who has admitted his responsibility for a

criminal act. As the results in the trial court here demonstrate,

the danger of inconsistent judgments looms large. We recognize

that criminal defendants sometimes enter guilty pleas for reasons

other than the truth of the charges against them. But it is

disquieting when a judicial system tolerates the continued

incarceration of those defendants and at the same time awards civil

damages based on findings that those defendants did not commit all

the elements of the crimes for which they are being punished.

Texas issue-preclusion policies indicate that we should avoid that

result if possible.

Although the Buckners do not raise the issue, we recognize

that the Due Process Clause places limits on the use of offensive,
30

non-mutual issue preclusion. “It is a violation of due process for

a judgment to be binding on a litigant who was not a party or a

privy and therefore has never had an opportunity to be heard.”

Parklane Hosiery, 439 U.S. at 327 n.7 (citing Blonder-Tongue

Laboratories, Inc. v. University of Ill. Found., 402 U.S. 313, 329

(1971)). We cannot say, however, that the operation of Texas law

in this case intrudes on the Buckners’ due process rights. Perhaps

there could be circumstances in which state law definitions of

“full and fair opportunity to litigate” and “privity,” see Hardy v.

Johns-Manville Sales Corp., 681 F.2d 334, 338 (5th Cir. 1982), lead

to results that are constitutionally intolerable. But this is not

such a case. The Buckners’ inability to recover insurance proceeds

does not deprive them of a legal remedy. They can still win

damages from Fullerton, although Fullerton may not be able to

satisfy the judgment fully. Within the structure of Texas

insurance law, Fullerton’s plea did not deprive the Buckners of

their day in court, for they never had a legal right to assert

against State Farm. Finding a violation of due process here would

mean requiring Texas to alter an insurance-entitlement system that

has been in place for decades in many states. We are not prepared

to say that Texas’s efforts to protect insurance companies from

suits by third parties interferes with third parties’ rights to

assert claims to proceeds.

The judgment in favor of the Buckners is REVERSED, and

judgment is RENDERED in favor of State Farm.