                                                     United States Court of Appeals
                                                              Fifth Circuit
                                                           F I L E D
                  UNITED STATES COURT OF APPEALS
                       For the Fifth Circuit              September 9, 2004

                                                       Charles R. Fulbruge III
                                                               Clerk
                           No. 03-10949




                   SCOTTSDALE INSURANCE COMPANY,

                            Plaintiff-Counter Defendant-Appellant,


                              VERSUS


                     KRISTY WILLIAMS; ET AL.,

                                                       Defendants,

                        DAVANSHA SESSIONS,

                         Defendant-Counter Claimant-Appellee.


           Appeal from the United States District Court
                For the Northern District of Texas
                            4:02:CV-316



Before JOLLY, DAVIS and JONES, Circuit Judges.

PER CURIAM:*

      We affirm the judgment of the district court essentially for

reasons stated in the district court’s thorough memorandum opinions

and orders of July 22, 2003 and August 22, 2003.

      AFFIRMED.


  *
   Pursuant to 5TH CIR. R. 47.5, the Court has determined that this
opinion should not be published and is not precedent except under
the limited circumstances set forth in 5TH CIR. R. 47.5.4.
EDITH H. JONES, Circuit Judge, dissenting:

            With due respect to the able district judge and my

colleagues, and realizing that the issue of Texas law I am about to

address is close, I dissent.

            The majority has bound Scottsdale to judgment in a case

concerning    an    injury   inflicted         by    its   insured    a   month    after

Scottsdale terminated insurance coverage, and which judgment was

rendered by default four years post-injury and four more years

before the plaintiff sued Scottsdale to recover.                     I do not accept

Scottsdale’s arguments based on the statute of limitations (since

a   minor   was    involved)    or    on   the       presumption     of   mailing    its

termination notice to the Texas Board of Private Investigators and

Private Security Agencies (“Texas Board” or “Board”). However, the

facts here show no bad faith or even error by Scottsdale when it

refused to defend its insured after it terminated coverage for

nonpayment    of    premiums.        Since      so    much   time    elapsed      before

Scottsdale was sued on the judgment, neither the company, its

agent, nor the Texas Board maintained records to verify the formal

notification to the Board.           Consequently, Scottsdale was deprived,

by the drawn-out nature of events, of the ability to preserve its

termination defense.

            In a recent case, the Texas Supreme Court reiterated

that, “‘[i]n no event . . . is a judgment for plaintiff against

defendant, rendered without a fully adversarial trial, binding on

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defendant’s insurer or admissible as evidence of damages in an

action against defendant’s insurer by plaintiff as defendant’s

assignee.’”   Trinity Univ. Ins. Co v. Cowan, 945 S.W.2d 819, 822

(1996) (quoting State Farm Fire v. Gandy, 925 S.W.2d 696, 714

(l996).   If applied to this case, Trinity means that Scottsdale is

entitled to receive a new trial on the damages suffered by the

plaintiff.    I believe Trinity is controlling, even though the

aforementioned quotation is prefaced by a statement that the state

Supreme Court “do[es] not reach Trinity’s challenge to the amount

of damages . . . except to note that it is controlled by our recent

decision in [Gandy] . . . .     (Tex. 1996) (emphasis added).   The

statement of the law is unequivocal, and the facts in Trinity are

virtually on point with those here — — default judgment rendered

against an insured after the insurer, notified of the claim, sends

notice and refuses to defend.   In Trinity, there is no evidence of

collusion between the insured and the victim, and the fact that the

victim took an assignment of the insured’s rights against Trinity

makes no legal difference. The district court erred, I believe, in

limiting Trinity, and its predecessor Gandy, to cases in which

there is collusion between the insured and the victim.

           Nonetheless, I concede that some Texas cases have held

that when an insurer wrongfully breaches its insurance contract by

refusing to defend, it waives the protection of policy provisions

that bind it to a judgment against the insured only if there was an

“actual trial.”   See e.g., Struna v. Concord Ins. Services, Inc.,

                                 3
11 S.W.3d 355, 359 (Tex. Civ. App. -- Hou. [1st Dist.] 2000); Gulf

Ins. Co. v. Parker Prods. Inc., 498 S.W.2d 676, 679 (Tex. 1973);

First Nat’l Indem. Co. v. Mercado, 511 S.W.2d 354, 358 (Tex. Civ.

App. -- Austin 1974, no writ); Pioneer Cas. Co. v. Jefferson,

456 S.W.2d 410, 413 (Tex. Civ. App. -- Houston [14th Dist.] 1970,

writ ref’d n.r.e.); Gulf Ins. Co. v. Vela, 361 S.W.2d 904, 908

(Tex. Civ. App. -- Austin 1962, writ ref’d n.r.e.). However, these

cases are distinguishable for two reasons.                  First, none of these

cases involves: a bona fide attempt at termination for non-payment

of premiums and a covered “occurrence” a month after termination;

or a total lapse of ten years, during which the evidence critical

to the company’s proving it supplied notice to the state Board was

discarded pursuant to perfectly normal document retention policies.

None,   in    short,     suggests    that     a    waiver    must   follow    from

circumstances    beyond     the     control       and   foreseeability   of    the

insurance company.        Second, there is no evidence of “wrongful”

policy termination by the company, only of ineffective termination

and the company’s failure to prove that the presumption of mailing

applies to it.         Based upon the unusual circumstances here, the

waiver cases do not seem as compelling as Trinity.

             In a normal failure to defend situation, the company

would have been permitted to prove that it, indeed, sent prompt

notice of cancellation to the Board in one of two ways:                  (1) the

insured, having received an adverse judgment only two years after

the occurrence, could have sued, or assigned its suit to the

                                        4
victim; or    (2)   the   victim    could     have      sued       immediately    after

receiving the judgment.         The company would then have been able to

contest, in a timely fashion, not only the judgment, but also the

fact of coverage.     For in such cases, “it is widely held that the

insurer may raise against the claimant any defense which would have

been available against the insured.”               7 COUCH   ON   INS. § 106:5 (citing

American Indem. Co. v. Solomon, 231 F.2d 853 (5th Cir. 1956).

            A 50-year old Texas case, cited by neither the district

court nor the parties, holds that this usual rule did not apply

when a local ordinance required insurance to be issued to taxicab

companies    that   would   inure       to   the     benefit        of   the   victims.

Pan-American Ins. v. Basso, 252 S.W.2d 505, 507 (Tex. Civ. App.--

El Paso 1952, writ ref’d).              However, Basso, has recently been

distinguished because of the municipal ordinance by another Texas

court.   See Jun v. Lloyds and Other Various Insurers, 37 S.W.3d

59, 63 (Tex. App. -- Austin, 2000).            Moreover, there was no ques-

tion of policy termination in Basso, unlike in this case, but only

of the insured’s failure to comply with the policy’s notice and

cooperation provisions.          Basso does not trump the usual rule

enabling the insurance company to raise the defenses it would have

had against the insured.

            Scottsdale    has    been    foreclosed          from    interposing    the

defense that the policy terminated before the injury here was

inflicted.    I regret that a “gotcha”-type exercise of (erroneous)

logic now also forecloses the company from compelling the plaintiff

                                         5
to submit to an adversarial trial on the damages.   I respectfully

dissent.




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