RSR Corp. v. International Insurance

Case: 09-10405 Document: 00511185291 Page: 1 Date Filed: 07/26/2010

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
July 26, 2010

No. 09-10405 Lyle W. Cayce
Clerk

RSR CORPORATION, QUEMETCO, INC.,
QUEMETCO METALS LIMITED, INC. f/k/a
MURPH METALS, INC., and QUEMETCO
REALTY, INC.,

Plaintiffs-Appellants,
v.

INTERNATIONAL INSURANCE COMPANY,

Defendant-Appellee

Appeal from the United States District Court
for the Northern District of Texas

Before GARWOOD, SMITH, and CLEMENT, Circuit Judges.
GARWOOD, Circuit Judge:
From 1972 until 1983, Quemetco, Inc. (Quemetco), a subsidiary of RSR
Corporation, operated a lead smelter on Harbor Island, near Seattle,
Washington. During that time, Harbor Island suffered substantial
environmental damage. In December 1982, the Environmental Protection
Agency (EPA) announced that it planned to place Harbor Island on its National
Priorities List (NPL).1 In 1986, the EPA determined that Quemetco was a

1
Placement of a site on the NPL indicates that the EPA plans to clean up a site and
serves as notice to potentially responsible parties that the EPA may seek to recoup its
 Case: 09-10405 Document: 00511185291 Page: 2 Date Filed: 07/26/2010

potentially responsible party for the pollution. On May 22, 2000, the EPA filed
an action under the Comprehensive Environmental Response, Compensation
and Liability Act (CERCLA) seeking recovery from RSR Corporation for the costs
it had expended in cleaning up Harbor Island, as well as for expected future
costs.
Meanwhile, on February 2, 2000, International Insurance Company
(International) sued RSR Corporation, Quemetco, Quemetco Metals Limited,
Inc., and Quemetco Realty, Inc. (collectively, RSR), seeking a declaratory
judgment that International had no obligations to RSR under four
Environmental Impairment Liability (Environmental) policies which
International’s predecessor in interest had sold to RSR in 1981. An initial jury
trial was held to resolve certain coverage issues, while other coverage and
damages issues were reserved for future resolution. At the conclusion of this
initial trial, the district court entered judgment for RSR, holding that
International’s Environmental policies obligated it to indemnify RSR for
remediation costs incurred by the EPA at Harbor Island, to the extent those
costs were not excluded by the policies. We affirmed the district court’s
judgment on September 19, 2005. Int’l Ins. Co. v. RSR Corp., 426 F.3d 281,
286–89 (5th Cir. 2005).
RSR and International were realigned on July 12, 2007.2 Afterwards,
International raised additional defenses which had been unavailable to it at the
time of the prior judgment or which had been reserved in the initial jury trial.
On October 22, 2008, both parties filed motions for summary judgment. The
district court granted International’s motion and dismissed RSR’s claims,

remediation costs from them.
2
So that RSR became plaintiff and International defendant.

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holding that RSR could not recover from International (1) because an “other
insurance” clause in International’s Environmental policies limited RSR’s
recovery to sums it had already received from settlement agreements with
several other insurance companies and (2) alternatively, because Texas’s “one
recovery” rule barred RSR from collecting money from International when it had
already been fully compensated for its Harbor Island liability through its
settlement agreements with other insurance companies.
RSR now appeals the district court’s grant of summary judgment. For the
following reasons, we affirm.
FACTS AND PROCEEDINGS BELOW
In 1981, the North River Insurance Company (North River) issued four
Environmental policies to RSR, which provided successive layers of coverage up
to $60 million, with a per claim limit of $30 million, subject to certain terms and
conditions. The policies provided coverage for multiple locations, including
RSR’s facilities on Harbor Island. In 1993, International succeeded the interests
of North River in these policies.
Under the Environmental policies, North River agreed to:
“[I]ndemnify the Insured against all sums which the Insured shall
be obligated to pay for compensatory but not punitive or exemplary
damages by reason of the liability imposed upon the Insured by law
on account of: –

(a) Personal Injury, including death at any time resulting
therefrom;

(b) Property Damage;

(c) Impairment or diminution of or other interference with any
other environmental right or amenity protected by law;

. . . caused by Environmental Impairment in connection with the

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Business of the Insured . . . and in respect of which a claim has been
made against or other due notice has been received by the Insured
during the Policy Period.”
The policies defined “Environmental Impairment” as:
“(a) the emission, discharge, dispersal, disposal, seepage, release
or escape of any liquid, solid, gaseous or thermal irritant,
contaminant or pollutant into or upon land, the atmosphere
or any watercourse or body of water;

(b) the generation of smell, noises, vibrations, light, electricity,
radiation, changes in temperature or any other sensory
phenomena but not fire or explosion

arising out of or in the course of the Insured’s operations,
installations or premises . . . .”
However, Condition 8 of each policy provided that:
“This Policy shall not be called upon in contribution and no liability
shall attach hereunder for any injury, loss, damage, costs or
expenses recoverable under any other insurance insuring to the
benefit of the Insured except as regards any excess over and above
the amounts collectible under such other insurance; provided always
that this clause shall not apply to any policy that is specifically
arranged by the Insured to cover limits in excess of those stated in
this Policy.”
Additionally, each Environmental policy excluded coverage for liability resulting
from a “sudden and accidental happening” or a “fire or explosion.”
RSR also purchased Comprehensive General Liability (CGL) insurance
policies from many other insurance companies that covered multiple sites,
including the Harbor Island site. Some of those CGL policies contained
exclusions for environmental claims, with exceptions to the exclusions for
“sudden and accidental” events. Other CGL policies excluded environmental
claims, but had exceptions to those exclusions for hostile fires. And other CGL
policies did not exclude environmental claims, but only covered accidents and

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occurrences.
In 1993, RSR sued fifty-three of its CGL insurance providers in the 71st
District Court for the Judicial District of Harrison County, Texas. In that action,
RSR asserted claims against the CGL insurers for refusing to cover
environmental cleanup costs and personal injury claims relating to more than
twenty-five sites, including the Harbor Island site. In 2001, several CGL
insurers made International a cross-claim defendant in the Harrison County
action and sought contribution. RSR also asserted claims against International
in the Harrison County action for breach of the Environmental policies,
violations of the Texas Insurance Code, and recovery of attorney’s fees.
In the Harrison County action, RSR asserted that the CGL insurers were
obligated to reimburse it for environmental costs because the pollution had been
accidental. RSR argued that accidental pollution satisfied the CGL policies’
“sudden and accidental” exception to the exclusion of environmental claims.
Although the CGL insurers contested this assertion by arguing that the “sudden
and accidental” exception could only be triggered by pollution that was both
sudden and accidental, the Harrison County court adopted RSR’s reading of the
policies in a letter ruling dated March 19, 2003.
Between 1993 and 2005, RSR entered into thirty-six separate settlement
agreements with its CGL insurers, from which it received an aggregate payment
of $76,006,501.00. It dismissed the rest of its CGL insurers from the Harrison
County action. It also dismissed International. Following the execution of the
last of the settlements, RSR non-suited the Harrison County action.
In the meantime, International had initiated the present action in federal
court in February 2000, seeking a declaratory judgment that it had no
obligations to RSR under the Environmental policies in connection with the
Harbor Island site or with another site in West Dallas, Texas. In August 2001,

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RSR and International tried certain coverage issues relating to the Harbor
Island claim before a jury, while reserving unripe coverage and damages issues
for future resolution. Issues relating to the West Dallas site were severed into
a separate trial and were later settled.3 After the jury returned its verdict on the
Harbor Island issues, the district court entered judgment for RSR, declaring that
International was:
“contractually obligated to indemnify RSR for any remediation costs
and expenses that RSR is or becomes obligated to pay to the United
States Environmental Protection Agency (“EPA”) with respect to the
EPA’s remediation activity at the Harbor Island site . . . to the
extent such remediation costs and expenses are covered by [the] EIL
Policies . . . and are not otherwise excluded by the terms of the
policies . . . .”
The district court also determined that the EPA had made a claim against RSR,
that RSR had not waived its right to coverage with respect to the Harbor Island
site, that RSR’s Harbor Island lawsuit against International was not barred by
the statute of limitations, and that RSR should take nothing on its common law
bad faith and Texas Insurance Code claims against International. We affirmed
this judgment on September 19, 2005. Int’l Ins. Co., 426 F.3d at 286–89.
In March 2006, RSR moved to reopen the same federal district court case
under 28 U.S.C. § 2202. Subsequently, International requested leave to amend
its complaint to assert new coverage and damages defenses which had not been
ripe at the time of the 2001 trial. In February 2007, the district court granted
both motions. International then amended its complaint to assert new defenses,
among them that Condition 8 of its policies, an “other insurance” clause,
precluded coverage of RSR’s Harbor Island claims because RSR had already been

3
The Harbor Island and West Dallas sites are the only sites on which RSR has
made unsatisfied claims on International on the Environmental policies.

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fully compensated for this liability through its settlements with the CGL
insurers in the Harrison County state court case. International also asserted
that, even if the “other insurance” clause did not encompass the CGL policies,
no recovery could be had on the Harbor Island claims, due to the Texas common
law “one satisfaction” rule, because the CGL settlements had fully compensated
RSR for its losses.
On July 12, 2007, the parties were realigned. RSR filed its original
complaint on March 7, 2008, seeking approximately $13.1 million as its allegedly
remaining liabilities on the Harbor Island claims, and International filed its
answer on April 3, 2008. On October 22, 2008, RSR and International filed
motions for summary judgment. The district court held that the terms of
Condition 8 of the Environmental policies prevented RSR from recovering from
International, because it had already recovered fully for the cleanup costs of the
Harbor Island site from its settlements with its CGL insurers. Alternatively, the
district court found that the Texas common law “one satisfaction” rule also
barred recovery, due to the fact that RSR had been fully compensated for its
liabilities at the Harbor Island site. Accordingly, the district court granted
International’s motion for summary judgment on March 23, 2009, and entered
a take-nothing judgment in its favor. RSR timely filed its notice of appeal.
DISCUSSION
RSR argues that the district court erred by granting summary judgment
to International (1) because, as a matter of law, the “other insurance” clause in
International’s policy cannot properly be read to bar recovery based on the
settlements with the CGL insurers, and (2) because the common law “one
satisfaction” rule is inapplicable outside of tort cases in Texas. We need not
address the applicability of the “one satisfaction” rule to an insurance contract,
because we agree with the district court that International’s “other insurance”

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clause deprived RSR of any right to recover more than it had already obtained
from its settlements with the CGL insurers.
I. Standard of Review
We review a district court’s grant of summary judgment de novo.
Goodman v. Harris County, 571 F.3d 388, 393 (5th Cir. 2009), cert. denied, 130
S.Ct. 1143, 130 S.Ct. 1146 (2010). Summary judgment is appropriate where “the
pleadings, the discovery and disclosure materials on file, and any affidavits show
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)(2). “[T]here is no
material fact issue unless ‘the evidence is such that a reasonable jury could
return a verdict for the nonmoving party’.” Douglass v. United Servs. Auto.
Ass’n, 79 F.3d 1415, 1429 (5th Cir. 1996) (en banc) (quoting Anderson v. Liberty
Lobby, Inc., 106 S.Ct. 2505, 2510 (1986)).
We must view all evidence and reasonable inferences therefrom in the
light most favorable to the party opposing the motion. Scott v. Harris, 127 S.Ct.
1769, 1774–75 (2007). However, conclusory statements, speculation, and
unsubstantiated assertions cannot defeat a motion for summary judgment.
Douglass, 79 F.3d at 1429. The court has no duty to search the record for
material fact issues. Ragas v. Tenn. Gas Pipeline Co., 136 F.3d 455, 458 (5th
Cir. 1998). Rather, the party opposing the summary judgment is required to
identify specific evidence in the record and to articulate precisely how this
evidence supports his claim. Id.
Our jurisdiction in this case is based on the diversity of the parties.
International’s insurance policies are governed by Texas law. Int’l Ins. Co., 426
F.3d at 291. Therefore, we must apply the substantive insurance law of Texas
to interpret the Environmental policies. Id. In doing so, we are bound by the

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decisions of the Supreme Court of Texas. See United Teacher Assocs. Ins. Co. v.
Union Labor Life Ins. Co., 414 F.3d 558, 565–66 (5th Cir. 2005). While the
decisions of the intermediate Texas courts of appeals provide guidance, they do
not necessarily bind us. Id. If the Supreme Court of Texas has not ruled on an
issue before us, we must determine, to the best of our ability, what it would
decide under the same circumstances. Id.
Texas courts interpret insurance policies according to the rules of
contractual construction. Int’l Ins. Co., 426 F.3d at 291 (citing Kelley–Coppedge,
Inc. v. Highlands Ins. Co., 980 S.W.2d 462, 464 (Tex. 1998)). Texas courts give
contractual terms “their plain, ordinary, and generally accepted meaning unless
the instrument shows that the parties used them in a technical or different
sense.” Heritage Resources, Inc. v. NationsBank, 939 S.W.2d 118, 121 (Tex.
1996). Unambiguous contracts are enforced as written. Id. Whether or not a
contract is ambiguous is a question of law for the court. Id.
II. “Other Insurance”
Where a liability covered by the Environmental policies is also covered by
“other insurance,” Condition 84 prevents recovery unless the other insurance has
been exhausted, in which case the Environmental policies can serve as excess
insurance. Condition 8 is triggered where “any injury, loss, damage, costs or
expenses [are] recoverable under any other insurance insuring to the benefit of

4
The entire text of Condition 8 is:

“This Policy shall not be called upon in contribution and no liability shall attach
hereunder for any injury, loss, damage, costs or expenses recoverable under any
other insurance insuring to the benefit of the Insured except as regards any
excess over and above the amounts collectible under such other insurance;
provided always that this clause shall not apply to any policy that is specifically
arranged by the Insured to cover limits in excess of those stated in this Policy.
Nothing herein shall be construed to make this Policy subject to the terms,
conditions and limitations of any other insurance.”

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the Insured.” Thus, for Condition 8 to have been applicable in this case, (1) RSR
must have had “other insurance” insuring to its benefit, and (2) RSR must have
been able to recover under this other insurance for the same “injury, loss,
damage, costs or expenses” it sought to recover from International.
The district court held that RSR’s CGL policies were “other insurance”
under which RSR successfully recovered for the full amount of its Harbor Island
liabilities pursuant to its settlement agreements with the CGL insurers.
Therefore, it concluded that Condition 8 of International’s Environmental
policies barred any further recovery. RSR argues that the district court erred
because its CGL policies were not “other insurance” within the meaning of
Condition 8 for two major reasons. First, RSR argues that a payment pursuant
to a settlement agreement is not “insurance” and therefore does not qualify as
“other insurance” under the plain language of the policy. Second, it argues that,
even if a settlement payment could be considered insurance, Condition 8 would
only apply if the Environmental policies issued by International covered the
same liabilities as the CGL policies. RSR contends that the Environmental
policies and the CGL policies covered different liabilities. The district court held
that RSR was judicially estopped from making this argument, because RSR had
argued successfully in the Harrison County action that the CGL and
Environmental policies covered the same liabilities. RSR argues that the district
court abused its discretion by finding that judicial estoppel was appropriate.
A. Settlement Payments as “Other Insurance”
RSR contends that the district court erred by holding that a payment
pursuant to a settlement agreement could be “other insurance” within the
meaning of Condition 8. See generally E.R. Squibb & Sons, Inc. v. Accident &
Cas. Ins. Co., No. 82 Civ. 7327(JSM), 1997 WL 251548, at *1 (S.D.N.Y. May 13,
1997), aff’d, 241 F.3d 154 (2d Cir. 2001) (holding that “settlement agreements

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are not contracts of insurance”). This argument is beside the point. By its plain
language, the triggering of Condition 8 requires only (1) the existence of “other
insurance” insuring to RSR’s benefit and (2) overlapping coverage between that
other insurance and International’s Environmental policies. The means by
which actual recovery might be achieved under the other insurance in question,
whether by settlement agreement or by judgment, is irrelevant to Condition 8’s
applicability. The existence of other insurance that covers the same liability as
the Environmental policies is what triggers the condition, whether or not
recovery under this other insurance is actually sought.
There is no dispute that RSR’s CGL policies were insurance. Thus, the
relevant question for the purposes of determining Condition 8’s applicability in
this case is not whether RSR’s settlements were “insurance.” The relevant
question is whether RSR sought to recover for liabilities under its
Environmental policies that were also “recoverable” under its CGL policies.
B. “Recoverable” Under Other Insurance
RSR also argues that the district court erred by finding that Condition 8
barred recovery under the Environmental policies, because it asserts that the
CGL and Environmental policies covered different liabilities. If this assertion
were correct, Condition 8 would be inapplicable, since one of its triggering
requirements is that “other insurance” cover the same “injury, loss, damage,
costs or expenses” for which recovery is sought under the Environmental
policies. However, the district court held that RSR was judicially estopped from
asserting that the CGL and Environmental policies covered different liabilities,
because it had argued successfully in the Harrison County action that the CGL
and Environmental policies covered the same liabilities at Harbor Island. RSR
argues that this application of judicial estoppel was an abuse of discretion.
“The doctrine of judicial estoppel prevents a party from asserting a

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position in a legal proceeding that is contrary to a position previously taken in
the same or some earlier proceeding.” Ergo Science, Inc. v. Martin, 73 F.3d 595,
598 (5th Cir. 1996). Although Texas law governs substantive matters in this
case, we apply federal principles of judicial estoppel. Hall v. GE Plastic Pac.
PTE Ltd., 327 F.3d 391, 395–96 (5th Cir. 2003). For a party to be judicially
estopped from asserting a position, two requirements must be met. Ahrens v.
Perot Systems Corp., 205 F.3d 831, 833 (5th Cir.2000). “First, it must be shown
that ‘the position of the party to be estopped is clearly inconsistent with its
previous one; and [second,] that party must have convinced the court to accept
that previous position.’” Hall, 327 F.3d at 396 (quoting Ahrens, 205 F.3d at 833)
(brackets in original). We review a district court’s application of judicial estoppel
for abuse of discretion. Id. A district court abuses its discretion if it misapplies
the law or bases its decision upon erroneous findings of fact. Latvian Shipping
Co. v. Baltic Shipping Co., 99 F.3d 690, 692 (5th Cir. 1996); McGary v. Scott, 27
F.3d 181, 183 (5th Cir. 1994).
Some of RSR’s CGL policies excluded coverage for environmental
liabilities, with the exception of environmental liabilities resulting from “sudden
and accidental” events or “hostile fires,” while the other CGL policies did not
exclude environmental liability claims, but only covered accidents and
occurrences. International’s environmental policies only covered environmental
liabilities, but excluded coverage for liabilities resulting from “sudden and
accidental happening[s]” or “fire[s] or explosion[s].” Thus, a plain reading of the
terms of the CGL and Environmental policies supports RSR’s assertion that
their coverage did not overlap.
However, in the Harrison County action, RSR took a very different
position. There, RSR argued that the CGL policies’ exception for “sudden and

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accidental” occurrences could be satisfied by an occurrence that was not sudden,
so long as it was accidental. RSR argued that the CGL policies covered “all
forms of emissions causing pollution liabilities, except for those resulting from
intentional pollution.” (Emphasis in original.) It urged the Harrison County
district court to hold that the CGL policies covered “all damages from
unexpected and unintended releases, discharges, dispersals, and/or escapes of
pollution.” In a letter ruling dated March 19, 2003, the Harrison County district
court granted RSR’s request and held that “the ‘sudden and accidental’ exception
provides coverage for all unexpected and unintended pollution.”
In the present case, RSR attempted to avoid judicial estoppel by arguing
that the Environmental policies covered “routine” environmental pollution, while
the CGL policies covered “non-routine” pollution. The district court rejected this
argument for two reasons. The first was that the terms “routine” and “non-
routine” do not appear in either set of policies. The second reason was that RSR
has never alleged that the pollution at Harbor Island was expected or intended.
We decline to find an abuse of discretion in the district court’s holding for
the same reasons. The Environmental policies have nothing to do with whether
or not the pollution in question can be characterized as “routine.” Their
exclusions are triggered only where pollution occurred in a manner that was
both sudden and accidental. See Primrose Operating Co. v. Nat’l Am. Ins. Co.,
382 F.3d 546, 554 (5th Cir. 2004) (“{U}nder Texas law, the [sudden and
accidental] clause contains a temporal element in addition to the requirement
of being unforeseen or unexpected. The sudden and accidental requirement
unambiguously exclude[s] coverage for all pollution that is not released quickly
as well as unexpectedly and unintentionally.” (quoting Guar. Nat’l Ins. Co. v. Vic
Mfg. Co., 143 F.3d 192, 193–94 (5th Cir. 1998)) (internal quotation marks and
citation omitted) (material in braces added; material in brackets in original)).

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Thus, the Environmental policies covered pollution that was accidental, but not
sudden.
RSR clearly alleged in state court that its CGL policies covered all
accidental pollution, whether or not it was sudden. RSR has not alleged that
any of its pollution at Harbor Island was intentional.5 Therefore, by implication,
all of the pollution at Harbor Island was alleged to be accidental. Because RSR’s
original interpretation of the CGL and Environmental policies allowed
accidental pollution to be covered under both policies, and because the only
pollution alleged to have occurred at Harbor Island was accidental, we hold that
the district court did not abuse its discretion by holding that RSR was estopped
from arguing that the CGL and Environmental policies covered different
liabilities.
C. Possible Excess
If RSR’s Harbor Island liabilities were only partially covered by its CGL
settlements, Condition 8 would allow the Environmental policies to serve as
excess insurance for the uncovered portion. Thus, the final issue we must
confront in our analysis of the district court’s dismissal under Condition 8 is
whether or not the CGL settlements compensated RSR fully for its Harbor
Island liabilities. RSR argues that it was not fully compensated for these
liabilities by the CGL settlements. International responds that, even if this were
true, it was RSR’s burden under Texas law to allocate the settlement proceeds.

5
This is not surprising, since intentional pollution at Harbor Island would likely be
excluded from the Environmental policies under Exclusion 4 (“Liability for Environmental
Impairment, arising out of the Insured’s noncompliance with any valid and applicable
statute, regulation or written instruction relating to Environmental Impairment issued by
competent authority . . . .”) or Exclusion 13 (“Liability arising from the deliberate and
intentional dumping or disposal of toxic or radioactive substances in the open sea.”). An
admission by RSR that its pollution at Harbor Island was intentional also might have led
to new difficulties with the EPA.

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Because RSR failed to do this, International argues that Texas law presumes
that the full amount of the CGL settlements must be allocated to liabilities that
would also be covered under the Environmental policies. International collected
over $76 million from its settlements with the CGL insurers. It only seeks $13.1
million from International for its Harbor Island liabilities. Therefore, if
International is correct about Texas’s presumptive allocation, then there is no
excess to be covered under Condition 8, and we must affirm the district court’s
take-nothing judgment.
While the Supreme Court of Texas has not confronted the precise issue
before us, we conclude that its opinion in Mobil Oil Corp. v. Ellender, 968 S.W.2d
917 (Tex. 1998), indicates how it would rule in this case. In Ellender, the family
members of an independent contractor who died from exposure to benzene sued
multiple parties whom they believed were responsible for his death. Id. at 920.
All of the defendants except Mobil settled. Id. The jury returned a verdict for
the plaintiffs. Id. At issue on appeal was the proper amount of the settlement
credits that had to be subtracted from this verdict. Id. at 926. Specifically, the
Supreme Court of Texas had to determine which side bore the burden of
allocating the settlement amounts between actual and punitive damages.6 Id.
The court began its analysis of the issue by noting that “settling plaintiffs
are in a better position than nonsettling defendants to insure that the settlement
award is allocated between actual and punitive damages.” Id. at 928. It
expressed concern that “[w]ithout an allocation, Mobil, who was not a party to
the settlement, had almost no ability to prove which part of the settlement
amount represented actual damages. Nonsettling parties should not be

6
This allocation was important because a defendant cannot receive credit for
settlement amounts representing punitive damages. Ellender, 968 S.W.2d at 927 (citing
Tex. Civ. Prac. & Rem. Code § 33.002(c)(2)).

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penalized for events over which they have no control.” Id. It then examined the
hazards inherent in the opposite rule:
“When the settlement agreement does not allocate between actual
and punitive damages, requiring a nonsettling party to prove the
agreement’s allocation before receiving a settlement credit not only
unfairly penalizes the nonsettling party but also allows settling
parties to abrogate the one satisfaction rule. . . . Settling parties
could prevent nonsettling parties from receiving settlement credit
by refusing to allocate between actual and punitive damages in
settlement agreements. . . . The better rule is to require a settling
party to tender to the trial court, before judgment, a settlement
agreement allocating between actual and punitive damages as a
condition precedent to limiting dollar-for-dollar settlement credits
to settlement amounts representing actual damages.” Id.
The court concluded that, where a settling party failed to allocate its settlement,
the nonsettling party was entitled to a credit equaling the entire settlement
amount. Id.
In our view, the situation in this case is analogous to the situation in
Ellender. Just as Mobil was not a party to any of the plaintiffs’ settlements in
Ellender, here International was not a party to any of RSR’s settlement
agreements or negotiations with its CGL insurers. Just as the lack of an
allocation could have led to a double recovery in Ellender, the lack of allocation
could lead to a double recovery respecting the Harbor Island liabilities in this
case. International was unable to request, let alone require, that the CGL
settlement agreements allocate the proceeds amongst RSR’s various liabilities.
International should not be penalized for the fact that no allocations were made.
Nor should RSR be rewarded for failing to track each of its liabilities diligently
through to the end of its negotiations. Therefore, just as the Supreme Court of
Texas placed the burden of uncertainty on the party to the settlement
agreements in Ellender, so will we place it on the party to the settlements in this

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case.
RSR argues that Ellender is inapplicable to this case because its logic
relies on the vindication of the one satisfaction rule, which RSR argues is
inapplicable outside of tort cases. See CTTI Priesmeyer v. K & O Ltd.
Partnership, 164 S.W.3d 675, 684 (Tex. App.—Austin 2005, no pet.) (holding that
the one satisfaction rule cannot be applied to breach of contract claims). But see
Galle, Inc. v. Pool, 262 S.W.3d 564, 573–74 (Tex. App.—Austin 2008, pet. denied)
(applying the one satisfaction rule in a case involving breach of contract claims);
Osborne v. Jauregui, Inc., 252 S.W.3d 70, 75 (Tex. App.—Austin 2008, pet.
denied) (en banc) (holding that the application of the one satisfaction rule “is not
limited to tort claims”). It argues that, on the facts of this case, the court would
adopt the rule used in Washington, which places the burden of uncertainty on
the nonsettling party. See generally, Weyerhaeuser Co. v. Commercial Union Ins.
Co., 15 P.3d 115, 126 (Wash. 2000). We disagree. The overall structure of the
Texas Supreme Court’s reasoning in Ellender indicates that the impact of its
decision on the one satisfaction rule was a secondary consideration. The court’s
primary concerns were the disparity of information and the resulting unfairness
inherent in requiring a litigant to bear the burden of allocating the proceeds of
a settlement to which it had not been a party.
The solution the Supreme Court of Texas reached on this issue was far
from novel. See, e.g., McCormick on Evidence 950 (3d ed., Edward W. Cleary
ed.,1984) (stating that a party often must carry the burden of proof on an issue
when the facts with regard to the issue lie peculiarly within the knowledge of
that party). As the court noted in Ellender, it is a result we have reached under
similar circumstances. 968 S.W.2d at 928 (citing McFarland v. Leyh, 52 F.3d
1330, 1340 (Texas Gen. Petroleum Corp.) (5th Cir. 1995) (reasoning that a

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 Case: 09-10405 Document: 00511185291 Page: 18 Date Filed: 07/26/2010

plaintiff that is a party to the settlement agreement is in a better position than
a nonsettling defendant to allocate damages in the settlement)). Because the
settlement agreements in this case present the same disparities in information,
we think the Supreme Court of Texas would apply the Ellender presumption to
RSR’s settlements with its CGL insurers. The CGL settlements yielded over $76
million in proceeds, all of which must be allocated to the Harbor Island liabilities
before RSR could collect on its Environmental policies. Because the Harbor
Island alleged liabilities only totaled $13.1 million, RSR can take nothing under
the Environmental policies. Therefore, we hold that the district court did not err
in finding that Condition 8 barred all recovery on the Environmental policies.
CONCLUSION
For the foregoing reasons, we affirm the take-nothing judgment of the
district court.
AFFIRMED.

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