Opinion ID: 152248
Heading Depth: 2
Heading Rank: 1

Heading: St. Paul's Subrogation Rights

Text: Mid-Continent argues that St. Paul lacked the legal capacity to bring the underlying liability suit as HOC's subrogee and, therefore, there is no coverage for the damages awarded against Bay Rock. The district court found that the issue of St. Paul's right of subrogation was litigated in the state court action and that Mid-Continent was barred from re-litigating it. Under Texas law, a party's legal authority to sue or be sued, is an issue that cannot be attacked in a separate proceeding. See Presley v. Republic Energy Drilling, L.L.C., No. 2-07-225-CV, 2008 WL 4053002, at - (Tex.App.-Fort Worth Aug. 29, 2008, no pet.). [3] Nevertheless, Mid-Continent argues that it is not collaterally estopped from re-litigating St. Paul's subrogation right because it was not in privity with Bay Rock. We disagree. An insurer in a coverage case will be barred from re-litigating a particular issue from the underlying liability case if: (1) the issue raised in the coverage suit was raised and determined in the liability suit; (2) the issue determined in the liability suit was essential to the judgment in the liability suit; and (3) the necessary requirement of privity exists between the insurer and the insured. See Getty Oil Co. v. Ins. Co. of N. Am., 845 S.W.2d 794, 802 (Tex.1992); Columbia Mut. Ins. Co. v. Fiesta Mart, Inc., 987 F.2d 1124, 1127 (5th Cir.1993). The requisite degree of privity between an insurer and its insured can exist if: (1) the insurer controlled the insured's defense in the liability suit; and (2) the insurer and the insured do not hold conflicting positions with respect to the issue determined in the liability suit. See State Farm Lloyds v. Borum, 53 S.W.3d 877, 886-88 (Tex.App.-Dallas 2001, pet. denied) (showing that privity can be established if the insurer controls an insured's litigation and is not in conflict with the insured as to the particular issue to be relitigated); see also Benson & Ford, Inc. v. Wanda Petroleum Co., 833 F.2d 1172, 1174 (5th Cir.1987) (citing a liability insurer assum[ing] control of a defense as an example of the control necessary to find privity). Mid-Continent controlled Bay Rock's defense, and its position with respect to St. Paul's subrogation right is the same as Bay Rock's position. Accordingly, we conclude that Mid-Continent was in privity with Bay Rock, and, as a result, Mid-Continent is collaterally estopped from re-litigating St. Paul's right of subrogation. [4]