Texas res judicata and co-insurer defense costs contribution

In Truck Ins. Exchange v. Mid-Continent Casualty Co., No. 03-08-00526-CV (Tex. App. 3d Aug. 27, 2010), insured contractor DCI was sued by the project owner seeking damages for defective construction.  DCI tendered its defense to its CGL insurers Truck and Mid-Continent.   Truck agreed to defend while Mid-Continent denied a defense.  While the underlying suit was pending, Mid-Continent sued DCI, but not Truck, and obtained a judicial declaration of no duty to defend or indemnify DCI in the underlying suit.  After settling the underlying suit, Truck sued Mid-Continent seeking contribution towards defense costs and indemnity payments.   The state trial court entered summary judgment for Mid-Continent. The intermediate appellate court affirmed.  The court held that, because Truck and DCI were in privity, the judicial declaration of no coverage obtained by Mid-Continent in its suit against DCI was res judicata as to Truck, meaning Truck was bound by that determination and could not relitigate Mid-Continent’s duty to defend or indemnify DCI.    In admitted dicta, the court went on to state that, even assuming Truck was not bound by the prior determination, Truck’s defense costs contribution claim was precluded by Mid-Continent Ins. Co. v. Liberty Mutual Ins. Co., 236 S.W.3d 765 (Tex. 2007).  The court expressly disagreed with the U.S. Court of Appeals for the Fifth Circuit Erie-guess in Trinity Universal Ins. Co. v. Employers Mut. Cas. Co., 592 F.3d 687  (5th Cir. 2010) that Mid-Continent applied only to a co-insurer’s claim for contribution towards indemnity and did not apply to a claim for contribution towards defense costs.