                 United States Court of Appeals,

                          Fifth Circuit.

                          No. 94-20479.

   AMICA MUTUAL INSURANCE COMPANY, Plaintiff-Counter-Defendant,
Cross-Defendant-Appellee,

                                v.

   Donna MOAK, Individually and as Independent Executrix of The
Estate of David Moak and a/n/f of Blake Moak, Et Al., Defendants,

   Donna Moak, Individually and as Independent Executrix of The
Estate of David Moak and a/n/f of Blake Moak, Defendant-Counter-
Plaintiff, Cross-Plaintiff-Appellant,

 Jayson Moak, Joel Moak, Jerome Moak, Dorothy Moffett and Blake
Moak, Defendants-Appellees.

                          June 28, 1995.

Appeal from the United States District Court for the Southern
District of Texas.

Before JONES, DUHÉ and STEWART, Circuit Judges.

     EDITH H. JONES, Circuit Judge:

     This case arises out of an automobile accident that killed

David Moak (David).   In probate court, David's estate and family

members divided one million dollars in insurance proceeds deposited

by the negligent driver's insurance company. At issue in this case

is an additional five hundred thousand dollars in underinsured

motorist proceeds deposited into the court registry by David's

insurer. Interpreting the policy to cover all of David's immediate

family, the magistrate judge held that principles of collateral

estoppel applied and the parties were entitled to recover damages

in the same proportion as in the probate court.      We affirm the

magistrate judge's interpretation of the policy, but reverse the


                                1
finding that the apportionment of damages in the probate court

collaterally estops further litigation on that issue.

                                    BACKGROUND

      On May 8, 1992, David was killed when his car was struck by a

truck driven by David Bohuslav while in the course and scope of his

employment for Bohuslav Trucking, Inc.             David was survived by his

wife Donna, their son Blake, his sons from a previous marriage

Jayson and Joel, and his parents Dorothy and Jerome.               Each of the

survivors brought a wrongful death action against Bohuslav and his

trucking company in probate court.

      Because Truck Insurance Exchange (TIE), Bohuslav's insurer,

was unable to settle the lawsuits, it filed an interpleader action

in the federal court and deposited the one million dollars in

policy proceeds into the registry of the court.                  The claimants

reached an agreement for the division of the proceeds and submitted

the agreement to the probate court.              The probate judge, however,

rejected the proposed distribution and, after hearing evidence,

suggested his own apportionment, which the parties approved and the

interpleader court adopted.

      In addition to the Bohuslav insurance coverage, David and

Donna      had   purchased   five   hundred     thousand   dollars   worth   of

uninsured/underinsured         motorist       coverage   from    Amica   Mutual

Insurance Company (Amica).            Prior to the distribution of the

Bohuslav proceeds, Amica also filed an interpleader action against

all of the claimants and deposited its proceeds into the registry

of   the    court.     Aware   of   the   additional     Amica   proceeds,   the


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claimants did not include any reference to the Amica proceeds in

the Bohuslav settlement.1

     In this case, all claimants brought summary judgment motions

asserting their rights to the Amica proceeds. Donna contended that

she, and possibly Blake,2 were the only individuals entitled to the

Amica money because the others were not "covered persons" under the

policy. The other claimants argued in their motions that they were

"covered    persons"    under     the    policy     and    that   principles    of

collateral estoppel entitled them to recover in the same proportion

as in the earlier Bohuslav case.               The magistrate judge denied

Donna's motion and granted summary judgment in favor of the other

claimants.    Donna now appeals.

                                  DISCUSSION

         Insurance policies are contracts and are governed by the

principles of interpretation applicable to contracts.                  Barnett v.

Aetna Life Ins. Co., 723 S.W.2d 663, 665 (Tex.1987).                   State law

rules of construction govern in diversity cases.                  Ideal Mut. Ins.

Co. v. Last Days Evangelical Ass'n, Inc., 783 F.2d 1234, 1238 (5th

Cir.1986).     The court's role in determining whether to grant

summary judgment       in   a   case    involving    the   construction    of   an

insurance policy is to determine whether there is ambiguity in the

applicable terms of the policy.              Yancy v. Floyd West & Co., 755

     1
      In fact, the record reveals that Donna's agreement to
settle the Bohuslav case was contingent upon her right to demand
payment from Amica.
     2
      Donna and Blake entered into a stipulation prior the
summary judgment motions postponing any determinations as to
which of them were entitled to proceeds from the Amica policy.

                                         3
S.W.2d 914, 917 (Tex.Ct.App.1988, writ denied).           When the terms of

an insurance policy are unambiguous, a court may not vary those

terms.      Royal   Indem.   Co.   v.   Marshall,   388   S.W.2d   176,   181

(Tex.1965).     We review determinations of law de novo.           We agree

with the magistrate judge that the terms of the policy are not

ambiguous.

         The key provision of the policy reads:

     INSURING AGREEMENT:

     We will pay damages which a covered person is legally entitled
     to recover from the owner or operator of an uninsured motor
     vehicle because of bodily injury sustained by a covered
     person, or property damage, caused by an accident.

     The policy also includes the following definition:

     "Covered Person' as used in this part means:

     1. You or any family member;3

     2. Any other person occupying your covered auto;

     3. Any person for damages that person is entitled to recover
     because of bodily injury to which this coverage applies
     sustained by a person described in 1. or 2. above.

     Blake, Jayson, Joel, Dorothy, and Jerome are "covered persons"

as defined in category 3.      Under the Texas wrongful death statute,

they are persons entitled to recover damages because of bodily

injury sustained by David, who is a person described in category


     3
      The policy provides:

             "Family member' means a person who is a resident of
             your household and related to you by blood, marriage or
             adoption. This definition includes a ward or foster
             child who is a resident of your household, and also
             includes your spouse even when not a resident of your
             household during a period of separation in
             contemplation of divorce.

                                        4
1.4   Blake is also a "covered person" under category 1., because he

was a resident of David's household at the time of the accident.

Donna's arguments to the contrary are unconvincing.

      The    crux   of   Donna's   argument   is   that   the   definition   of

"covered persons" is exclusionary in nature acting as a limitation

on persons covered.         She contends that any blood relative not

included in category 1. is forever excluded and thus cannot be a

"covered person" under any other category.            The plain language of

the policy belies such a strained reading. An individual need only

be included in one of the three categories to achieve "covered

person" status.      Donna cites Liberty Mut. Ins. Co. v. Am. Ins. Co.,

556 S.W.2d 242, 244 (Tex.1977), as support for the proposition that

the other claimants are excluded from coverage.                  However, her

reliance on Liberty is misplaced because, unlike Liberty, the

definition of "covered person" here at issue is not an exclusion or

limitation of liability, but a recitation of those who are included

under the policy.        The Amica policy at issue contains within the

Uninsured Motorist portion of the policy separate sections entitled

"Exclusions" and "Limit of Liability," neither of which excludes or

limits in any way coverage of the other claimants.

          Donna next argues that no one other than David sustained a

"bodily injury" because loss of consortium and mental anguish are

not "bodily injuries" under Texas law.             See McGovern v. Williams,

741 S.W.2d 373, 374-75 (Tex.1987).            However, this contention is

      4
      "An action to recover damages [for wrongful death] is for
the exclusive benefit of the surviving spouse, children, and
parents of the deceased." Tex.Civ.Prac. & Rem.Code § 71.004.

                                       5
without consequence because the language of the policy does not

require the other claimants to have suffered bodily injury.     The

policy only requires them to be entitled to damages because of

bodily injury sustained by a person described in category 1. or 2.

Since David is described in category 1. and the bodily injury to

David entitles them to recover damages under Texas wrongful death

law, under the policy it is irrelevant that they themselves did not

sustain bodily injury.

      Donna next contends that the language in the policy agreeing

to transfer a named insured's interest in the policy upon death to

that person's spouse evidences that only she is entitled to the

proceeds.    However, this provision does not mention or suggest in

any way that it pertains to distribution of the proceeds.     It is

merely the mechanism to change the named insured upon death of an

insured.    This contention has no merit.

     Donna also argues that category 3. applies only to providers

of emergency services, i.e., doctors, hospitals, ambulances, etc.

As authority, Donna cites Government Employees Ins. Co. v. United

States, 376 F.2d 836, 837 (4th Cir.1967).        This case is not

inconsistent with our holding, rather it supports our view that

category 3. has broad application.

     Therefore, because Jayson, Joel, Donna, Jerome, and Blake are

entitled to recover damages for wrongful death as a result of the

bodily injury sustained by David in the accident, they are "covered




                                  6
persons" under the policy.5        Our holding comports with the purpose

underlying uninsured/underinsured motorist protection as declared

by the Texas Supreme Court:

     By purchasing this coverage along with basic liability
     coverage, the insured has expressed an intent not only to
     protect others from his or her own negligence but also to
     protect that person's own family and guests from the
     negligence of others.

Stracener    v.   United   Serv.    Auto   Ass'n,    777   S.W.2d   378,   384

(Tex.1989).

     As each of the claimants is a "covered person" under the Amica

policy, it is yet to be resolved who gets how much of the proceeds.

Each of the claimants except Donna contends that the apportionment

proposed by the probate court and adopted by the district court in

the Bohuslav case is binding upon this case.

         In determining the preclusive effect of a prior state court

judgment, federal courts must apply the law of the state from which

the judgment emerged.      J.M. Muniz, Inc. v. Mercantile Texas Credit

Corp., 833 F.2d 541, 543 (5th Cir.1987).            Under Texas law, "[f]or

the doctrine [of collateral estoppel] to apply, a party must

establish that (1) the facts sought to be litigated in the second

action were fully and fairly litigated in the prior action, (2)

those facts were essential to the judgment in the first case, and

(3) the parties were cast as adversaries in the first action."             Id.

at 544 (citing Bonniwell v. Beech Aircraft Corp., 663 S.W.2d 816,

     5
      We place no reliance on the affidavit of Richard S. Geiger
submitted by Amica offering an interpretation of the language of
the policy and of Texas case law. The interpretation of a
contract is a question of law for the court. Any reliance on
this "expert" opinion by the court below was misplaced.

                                      7
818 (Tex.1984)).

         In the prior action, filed in the probate court against the

tortfeasor Bohuslav, the claimants reached an agreed judgment

dividing the proceeds of the Bohuslav policy.             The probate judge

rejected the apportionment and conducted an evidentiary hearing.

After this hearing, the claimants agreed to a revised apportionment

which was approved by the probate judge and then implemented in the

insurer's interpleader action.

         The   magistrate   judge   held   that   this    chain   of   events

collaterally estops Donna from relitigating the amount of damages

each claimant is entitled to recover under the Amica policy.               We

disagree.      The issue to be decided in this case is how much money

each claimant is entitled to collect on the Amica policy.              Under

the single satisfaction rule, a plaintiff is only entitled to

recover the amount of damages proven.        See Stewart Title Guaranty

Co. v. Sterling, 822 S.W.2d 1, 7 (Tex.1991). Therefore, before the

Amica proceeds can be distributed by the court, each claimant must

establish the amount of his or her damages.              This issue was not

actually litigated or necessary to the agreed judgment in the prior

proceeding.6

     6
      To illustrate, the money interpled in the Bohuslav case was
a one million dollar pie that was sliced into different size
pieces and served to the claimants. However, had the pie been
fifty percent larger (including the Amica proceeds), there is no
indication that the pie would have been sliced in exactly the
same proportion. Absent an indication in the judgment that the
Bohuslav proceeds were distributed in direct proportion to the
amount of damages suffered by each claimant, we cannot conclude
that the issue in this case was fully litigated or necessary to
the prior judgment. For example, we are unable to determine
whether the $37,500 received by David's mother Dorothy under the

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                            CONCLUSION

     We AFFIRM the magistrate's judge's legal determination that

Jayson, Joel, Dorothy, Jerome, and Blake are "covered persons"

under the Amica policy.     We REVERSE the court's holding that

collateral estoppel obviates the need for each claimant to prove

his or her damages and precludes further litigation on the issue of

damages.   Therefore, we REMAND this case for further proceedings

consistent herewith.

     AFFIRMED in Part, REVERSED and REMANDED in Part.




agreed judgment fully compensated her for her damages. If so,
Dorothy would not be entitled to any further proceeds from the
Amica policy.

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