                                                       United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
                       Revised July 7, 2003
                                                              June 23, 2003
              IN THE UNITED STATES COURT OF APPEALS
                      FOR THE FIFTH CIRCUIT              Charles R. Fulbruge III
                                                                 Clerk

                           No. 02-40524



     AMERICAN INDEMNITY LLOYDS,


                                          Appellant,


          versus


     TRAVELERS PROPERTY & CASUALTY,

                                          Appellee.


                     _______________________

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




Before GARWOOD, JONES, and STEWART, Circuit Judges.

GARWOOD, Circuit Judge:

     In this Texas law diversity case, plaintiff-appellant American

Indemnity Lloyds (AIL) seeks to recover from defendant-appellee

Travelers Property & Casualty (TPC) one-half of the sums AIL paid

in settlement and expended in defense of a personal injury damage

suit against a contractor who was both the named insured in TPC’s

policy and an additional insured in AIL’s policy.          The named

insured in AIL’s policy was the subcontractor whose employee had
brought the underlying suit for on-the-job injuries which were

within the scope of the subcontractor’s agreement to indemnify the

contractor, TPC’s named insured.       AIL appeals the district court’s

summary judgment dismissing its suit with prejudice.       We affirm.

                   Facts and Proceedings Below

     In September 1994 the subcontractor, Elite Masonry, Inc.

(Elite), entered into a subcontract with the contractor, Caddell

Construction Company, Inc. (Caddell), by which Elite agreed to

provide masonry services to Caddell in connection with Caddell’s

work on the construction of a prison in Beaumont, Texas.       Article

XII(a) of the subcontract is an indemnity provision which provides

that:

     “[Elite] agrees to indemnify [Caddell] against and hold
     [Caddell] harmless from any and all claims, demands,
     liabilities, losses, expenses, suits and actions
     (including attorneys fees) for or on account of any
     injury to any person . . . which may arise (or which may
     be alleged to have arisen) out of or in connection with
     the work covered by this Subcontract, even though such
     injury . . . may be (or may be alleged to be)
     attributable in part to negligence or other fault on the
     part of [Caddell] or its officers, agents or employees.
     This obligation to indemnify and hold [Caddell] harmless
     shall not be enforceable if, and only if, it be
     determined by judicial proceedings that the injury,
     death, or damage complained of was attributable solely to
     the fault or negligence of [Caddell] or its officers,
     agents, or employees. [Elite] agrees to defend all claims
     , suits, and actions against [Caddell] (in which
     connection [Elite] shall employ attorneys acceptable to
     [Caddell]) on account of any injury, death or damage and
     shall reimburse [Caddell] for all expenses, including
     reasonable attorney fees, incurred by reason of such
     claim, suit or action or incurred in seeking indemnity or
     other recovery from [Elite] hereunder.”         (emphasis
     added).

                                   2
The subcontract’s Article XII(b) required that Elite “procure at

[its] expense prior to commencement of any work hereunder, and . .

. maintain for the duration of this subcontract, public liability

insurance        and     also     such     employer’s         liability        or     workmen’s

compensation insurance as may be necessary to ensure the liability

of the parties hereto for any injuries to [Elite’s] employees.”

The subcontract has no requirement that Caddell procure or maintain

any insurance.

       On March 16, 1996, Mariano Alas (Alas), an employee                            of Elite,

was injured while performing work pursuant to the subcontract.

Some time in early 1998 Alas, individually and as next friend of

his minor children, filed suit for damages against Elite and

Caddell in respect to the injuries he had thus received, claiming

negligence and gross negligence.

       At the time of Alas’s injury, and when his suit was filed,

Elite was the named insured under a commercial general liability

insurance policy issued by AIL having primary limits of $1,000,000.

Caddell was then an additional insured under this AIL policy.1

Caddell was also then the named insured under a commercial general

liability insurance policy issued by Aetna Casualty & Surety

Company (Aetna) and having primary limits of $1,000,000. Elite was

not an insured, named or otherwise, under the Aetna Policy.                                 There


       1
        The AIL policy provides that an additional insured under the policy would be “Any
person or organization . . . you [Elite] have agreed to name as an additional insured by written
contract or agreement if the contract or agreement is executed prior to loss.”

                                                 3
is no allegation or evidence that prior to Alas’s injury AIL was

aware of the existence of the Aetna policy.                          At some point after

March 16, 1998, TPC, pursuant to its purchase of some or all of

Aetna Casualty lines of insurance, succeeded to all of Aetna rights

and obligations under the Aetna policy.                       Each of the two policies

– the AIL policy and the Aetna/TPC policy – contained identical

“other insurance” clauses.2                The parties do not dispute that the


     2
      These clauses each state:

     “a. Primary Insurance

     This insurance is primary except when b. below applies. If this insurance is
     primary, our obligations are not affected unless any of the other insurance is also
     primary. Then, we will share with all that other insurance by the method described
     in c. below.

     b. Excess Insurance

     This insurance is excess over any of the other insurance, whether primary, excess,
     contingent or on any other basis:

     (1) That is Fire, Extended Coverage, Builder’s Risk, Installation Risk or similar
     coverage for “your work”;

     (2) That is Fire insurance for premises rented to you; or

     (3) If the loss arises out of the maintenance or use of aircraft, “autos” or watercraft
     to the extent not subject to Exclusion g. of Coverage A (Section I).

     When this insurance is excess, we will have no duty under Coverage A or B to
     defend any claim or “suit” that any other insurer has a duty to defend. If no other
     insurer defends, we will undertake to do so, but we will be entitled to the insured’s
     rights against all those other insurers.

     When this insurance is excess over other insurance, we will pay only our share of
     the amount of the loss, if any, that exceeds the sum of:


                                               4
AIL policy’s “insured contract” provisions3 afforded Elite with both


       (1) The total amount that all such other insurance would pay for the loss in the
       absence of this insurance; and

       (2) The total of all deductible and self-insured amounts under all that other
       insurance.

       We will share the remaining loss, if any, with any other insurance that is not
       described in this Excess Insurance provision and was not bought specifically to
       apply in excess of the Limits of Insurance shown in the Declarations of this
       Coverage Part.

       c. Method of Sharing

       If all of the other insurance permits contribution by equal shares, we will follow
       this method also. Under this approach each insurer contributes equal amounts
       until it has paid its applicable limit of insurance or none of the loss remains,
       whichever comes first.

       If any of the other insurance does not permit contribution by equal shares, we will
       contribute by limits. Under this method, each insurer’s share is based on the ratio
       of its applicable limit of insurance to the total applicable limits of insurance of all
       insurers.”
       3
         The AIL policy’s “Insuring Agreement” provides in part “[w]e will pay those sums that
the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property
damage’ to which this insurance applies. We will have the right and duty to defend any ‘suit’
seeking those damages.” The AIL policy’s “Exclusions” provide in part as follows:

       “This insurance does not apply to:

       ...

       b. Contractual Liability

               ‘Bodily injury’ or ‘property damage’ for which the insured is
               obligated to pay damages by reason of the assumption of liability in
               a contract or agreement. This exclusion does not apply to liability
               for damages:

               (1)     Assumed in a contract or agreement that is an ‘insured
                       contract’, provided the ‘bodily injury’ or ‘property damage’

                                                  5
indemnity and defense coverage for such amounts as Elite might be

obligated, under the indemnity provisions of the subcontract, to

pay Caddell as reimbursement for payments made by Caddell to

discharge or settle the claims made against Caddell in the Alas

lawsuit.       See, e.g., Gibson & Associates, Inc. v. Home Ins. Co.,

966 F. Supp. 468, 475-77 (N.D. Tex. 1997).                             But these “insured

contract” provisions of AIL’s policy at least arguably did not

afford Elite indemnity coverage for such amounts as Elite might be

obligated, under the subcontract’s indemnity clause, to pay Caddell

as reimbursement for attorney’s fees and expenses incurred by

Caddell in defense of Alas’s claims against Caddell in the Alas

lawsuit.

       The parties likewise do not dispute that the Aetna/TPC policy

subrogated        TPC     to    Caddell’s       rights      against       Elite      under     the

subcontract’s indemnity clause to the extent of any payments TPC

would make under its policy to indemnify or defend Caddell in

respect to the claims against Caddell in the Alas lawsuit.4


                        occurs subsequent to the execution of the contract or
                        agreement; . . .”

The AIL policy defines “Insured Contract” as including “That part of any other contract or
agreement pertaining to your business (including an indemnification of a municipality in
connection with work performed for a municipality) under which you assume the tort liability of
another party to pay for ‘bodily injury’ or ‘property damage’ to a third person or organization.”
       4
         The Aetna/TPC policy provides: “If the insured has rights to recover all or part of any
payment we have made under this Coverage Part, those rights are transferred to us. The insured
must do nothing after loss to impair them. At our request, the insured will bring “suit” or transfer
those rights to us and help us enforce them.” Such subrogation would be available to TPC for

                                                 6
       TPC initially undertook the defense of Caddell in the Alas

lawsuit.       Pursuant to demand by TPC, AIL in October 1998 assumed

the defense of and agreed to indemnify Caddell in the Alas lawsuit,

and TPC thereafter withdrew from that representation.5                                   At some

time prior to May 2, 2000 (just when is not reflected in the

record), the Alas plaintiffs nonsuited Elite, leaving Caddell as




amounts it would pay notwithstanding that no such payment was or would actually be made by
Caddell (in the first instance or otherwise). See, e.g., Rushing v. Int. Aviation Underwriters, 604
S.W.2d 239, 243-44 (Tex.Civ.App. Dallas, 1980; n.r.e.); General Star Indem. Co. v. Vista Fire
Ins. Co.,, 173 F.3d 946, 949-50 (5th Cir. 1999) (Texas law); Sharp v. Wausau Ins. Cos., 917
F.2d 885, 890 (5th Cir. 1990).
       5
         On October 13, 1998, AIL wrote TPC’s counsel in respect to Alas’s lawsuit stating in
part as follows:

       “Please accept this letter as our response to your demand that we defend and
       indemnify on behalf of Caddell Construction Company.

       Please note that we have reviewed the language in the contract between Caddell
       Construction Company and Elite Masonry and find that it does not meet the
       standards set forth in the Ethyl case.

       We point out however that Caddell Construction Company is an additional insured
       under our policy. Because of this American Indemnity Group will assume the
       defense and indemnify Caddell Construction Company in the above case.”

It is undisputed that the second sentence in the above quotation relates to the indemnity
agreement in the Caddell-Elite subcontract and reflects AIL’s then position that the indemnity
agreement was invalid because it did not meet the “express negligence” requirement for indemnity
contracts adopted by the Texas Supreme Court in Ethyl Corp. v. Daniel Construction Co., 725
S.W.2d 705, 708 (Tex. 1987).
        In connection with its assumption of the defense of Caddell in the Alas lawsuit, AIL
reimbursed TPC its attorney’s fees and costs incurred to that time in TPC’s defense of Caddell in
that suit.

                                                 7
the sole defendant.6

       After assuming the defense of Alas’s suit, AIL kept TPC

advised of the progress of the case.                     On July 12, 2000, AIL placed

TPC on notice of AIL’s position that the AIL policy and the

Aetna/TPC policy provided concurrent primary coverage for Caddell

in the Alas lawsuit and that AIL took the position that it “has and

retains the right to seek contribution from” TPC for “all amounts

it [AIL] has paid and will pay in defense and settlement of this

claim.”       TPC did not respond, and declined AIL’s invitation to

participate in negotiations to settle the Alas lawsuit.                                 On July

25, 2000, AIL settled the Alas suit for a total of $625,000, the

entirety of which sum was paid by AIL.                        It was stipulated in the

present suit that this was a reasonable settlement and that AIL

reasonably expended $230,163.71 in legal fees and costs in the

defense of Caddell in the Alas suit.                          Following the Alas suit

settlement, AIL demanded that TPC reimburse it half the $625,000

AIL paid to settle the Alas suit and half AIL’s attorneys’ fees and

costs incurred in connection with its defense of Caddell in that


       6
         Plaintiffs’ Fifth Amended Original Petition in the Alas suit (the only document from the
record in that suit copy of which is in this record) is dated May 2, 2000, and Caddell is the only
named defendant therein. It alleges that Caddell was negligent and grossly negligent “in
supervising the site and maintaining a safe work environment” (by, among other things, “failing to
. . . monitor the safety of contractors and subcontractors” and “failing to be observant for unsafe
acts and/or conditions”) and that Caddell “negligently hired, supervised and retained Elite
Masonry, Inc. as a subcontractor at the subject work site” when Caddell “knew, or in the exercise
of reasonable care, should have known that Elite masonry, Inc. was not competent, qualified
and/or capable of safely performing its work duties at the subject work site,” which was “a
proximate cause of Plaintiffs’ injuries.”

                                                 8
case.    TPC did not respond to those demands.

     In June 2001, AIL filed this suit against TPC in the district

court below, predicating jurisdiction on diversity of citizenship.

It sought declaratory judgment that it was entitled to recover from

TPC one-half the sums AIL had paid to settle and to defend Caddell

in the Alas lawsuit; it also sought a money judgment against TPC

for those sums.       AIL alleged it was entitled to such relief based

on the “other insurance” provisions common to its policy and the

Aetna/TPC policy (see note 2, supra).

     At a pretrial conference, the parties and the district court

agreed that each party would file a summary judgment motion after

an initial discovery period and that the case would be decided on

the basis of those motions.           AIL's motion relied upon the “other

insurance”      clauses,    whereas    TPC's   motion   was    based   on   the

subcontract’s indemnity provision. As indicated above, most of the

relevant facts were stipulated, including the provisions of the

subcontract and the fact “there was no judicial determination of

fault or negligence in the Alas lawsuit.”           TPC took the position

that “[t]here was no adjudication of fault” respecting the Alas

injury “prior or subsequent to settlement” of the Alas lawsuit.

AIL at no time alleged that there had ever been, in the Alas

lawsuit or otherwise, any judicial determination of fault in

respect to Alas’s injury alleged in the Alas lawsuit, nor did AIL

allege   that    it   had   ever   previously    sought   to    have   such   a



                                        9
determination made; nor did it seek to have any such determination

made in the instant suit.   Rather, AIL took the position below that

“the issue of fault as to Caddell, Elite and the plaintiff in the

underlying case is not before this court.    Because the underlying

case was settled, a determination of fault at this stage is

impossible” and “the issue of fault, as a practical matter, cannot

be determined at this point.”

     The district court granted TPC's motion for summary judgment.

On its appeal to this Court AIL argues that the district court

erred in holding that the indemnity provision was controlling.

                             Discussion

     As the material facts are not in genuine dispute and only

questions of law are presented on this appeal, our review is de

novo.   Mowbray v. Cameron County, Texas, 274 F.3d 269, 278-79 (5th

Cir. 2001).

     AIL contends that by virtue of the identical “other insurance”

clauses in each policy (see note 2 supra) under which each policy

provided primary coverage to Caddell (the named insured in the

Aetna/TPL policy; an additional, unnamed insured in the AIL policy)

respecting the Alas lawsuit, and because AIL paid the entire cost

of settlement and defense of the claims against Caddell in that

suit, AIL is entitled to recover from TPL half the amount AIL so

expended, and that this result is not changed by virtue of the

indemnity provisions of the subcontract between Alas’s employer


                                 10
Elite (the named insured in AIL’s policy) and Caddell or that fact

that Elite’s obligation thereunder to hold Caddell harmless from

Alas’s claims was covered by the “insured contract” provisions of

the AIL policy.           TPC relies on the indemnity agreement in Elite-

Caddell subcontract and its status as an “insured contract” under

AIL’s policy.7

       Both parties agree that Texas law controls, but neither cites

any case applying Texas law which they contend to be directly in

point.      Nor has our independent research disclosed any such case.

We are accordingly required to follow the rule we believe the Texas

Supreme Court would adopt, and in making that Erie “guess”, we

consider, among other sources, “treatises, . . . decisions from

other jurisdictions . . . and the ‘majority rule’.”                                See, e.g.,

Jackson v. Johns-Mansville Sales Corp., 781 F.2d 394, 398 (5th Cir.

1986); Texas Employers Ins. v. Underwriting Members, 836 F. Supp.

398, 406 (S.D. Tex. 1993).

Other Insurance Clauses

       The general rule appears to be that, as AIL contends, where

each of two liability insurance policies issued by different



       7
          The district court ruled that the indemnity agreement was valid and enforceable according
to its terms under Texas law, which is concededly applicable, and met all the requirements of the
Texas express negligence and conspicuousness doctrines as set forth in Ethyl Corp. v. Daniel
Const. Co., 725 S.W.2d 705, 708 (Tex. 1987); Enserch Corp. v. Parker, 794 S.W.2d 2, 8, 9
(Tex. 1990); and, Dresser Industries, Inc. v. Page Petroleum, Inc., 853 S.W.2d 505, 510-11
(Tex. 1993). The district court’s holdings in this respect are plainly correct and AIL does not
challenge them on this appeal.

                                                11
insurers provides primary coverage to the same insured in respect

to the claim in question and contains mutually consistent “other

insurance” provisions similar to those in the policies here, the

insurer paying more than its share (generally either one half or

the fraction that the limits of its policy is of the total of the

limits of both policies) of the claim is ordinarily entitled to

recover from the other insurer for the excess so paid.                            See, e.g.,

Employers Casualty Company v. Employers Commercial Union Insurance

Co., 632 F.2d 1215, 1218 (5th Cir. 1981) (Alabama law); Aviles v.

Burgos, 783 F.2d 270 (1st Cir. 1986).                     This likewise appears to be

the general rule in Texas. See, e.g., Texas Employers Ins. at 404,

n. 5 & 6 and cases cited.                Under Texas law such recovery is not

based on the theory that the separate policies create any contract

between the two insurance companies issuing them to a common

insured,      nor    upon       common    law        contribution,     but     rather     upon

conventional or equitable subrogation to the rights of the common

insured      against      the    nonpaying       insurer.         See,    id.;     Employers

Casualty Co. v. Transport Ins. Co., 444 S.W.2d 606, 610 (Tex.

1969).8

Indemnity Exception

       However, the foregoing general rule is subject to an equally

widely recognized exception for cases in which the policy of the


       8
         Such subrogation recovery would normally be subject to the nonpaying insurer’s policy’s
limits and other relevant policy provisions.

                                                12
insurer seeking to invoke the “other insurance” clauses also covers

another insured who is liable to indemnify the insured in the

policy of the other insurer.          Thus, a well recognized commentator

observes:   “an   indemnity    agreement      between    the   insureds   or   a

contract with an indemnification clause, such as is commonly found

in the construction industry, may shift an entire loss to a

particular insurer notwithstanding the existence of an ‘other

insurance’ clause in its policy.”            15 Couch on Insurance (3rd Ed.

1999; Russ & Segalla) § 219.1 at 219-7.

     As noted in Wal-Mart Stores Inc. v. RLI Ins. Co., 292 F.3d

583, 588-94 (8th Cir. 2002), the clear majority of jurisdictions

recognizes the foregoing exception and gives controlling effect to

the indemnity obligation of one insured to the other insured over

“other insurance”    or    similar     clauses    in    the   policies   of   the

insurers,   particularly      where    one   of   the   policies   covers     the

indemnity obligation.      We believe Texas would follow this well

recognized exception to the general rule.           We note some of the many

decisions that have done so.

     In Wal-Mart Stores, an Arkansas law diversity case, Cheyenne

agreed to supply Wal-Mart with halogen lamps which Wal-Mart sold at

retail.     This agreement required Cheyenne to carry liability

insurance and also to indemnity Wal-Mart from any liability arising

from its sale of the lamps.             One of these sold by Wal-Mart

misfunctioned, causing a fire and personal injury to Jasmine


                                       13
Boykin, who sued Wal-Mart and Cheyenne in state court.                Cheyenne

had procured insurance covering itself and Wal-Mart from both St.

Paul, which provided $1 million primary coverage, and RLI, which

provided $10 million excess coverage over the St. Paul coverage.

The    RLI    policy   additionally     covered      Cheyenne’s     contractual

indemnity obligation to Wal-Mart. Wal-Mart was also covered by its

own $10 million policy with National Union, which did not cover

Cheyenne.     The Boykin suit was settled for $11 million, $1 million

of    which   was   paid   by   St.   Paul,   whom   all   agreed    was   fully

responsible for that payment, and the entire remaining $10 million

was paid by RLI under a reservation of rights.                    Wal-Mart and

National Union sued RLI in federal court for declaratory judgment

that neither was obligated for any part of the settlement; RLI

counterclaimed seeking contribution for all or part of the $10

million it had paid.       The RLI policy provided that it was excess to

any non-scheduled policy and the National Union policy was not

scheduled in the RLI policy.          The National Union policy provided

that it was primary (with certain specified exceptions all of which

the Court of Appeals assumed, arguendo, were inapplicable).                 The

Eighth Circuit held that National Union was not obligated to

contribute anything to the Boykin settlement (and neither was Wal-

Mart).

       Relying in part of the above quoted passage from Couch on

Insurance, see Wal-Mart Stores at 588, the court held that “when we


                                       14
analyze the parties obligations under both the insurance contracts

and    the   indemnity   agreement,       we     conclude   that    the     indemnity

agreement controls the outcome of this case.”                     Id. at 589.     The

court rejected RLI’s argument that the indemnity agreement should

not control because Cheyenne had not been found liable to Wal-Mart

and was not a party to the federal case.                    Id.     The court also

observed that “[w]e fail to see why RLI deserves the benefit of

being ‘excess’ to National Union, an insurer it knew nothing about”

and “RLI has introduced no evidence that it knew whether Wal-Mart

had other insurance to cover liability from the sales of the

halogen lamps, or the extent of any such coverage.”                      Id. at 592,

593.     And, the court further concluded that allowing RLI any

recovery      from   National     Union        (or   Wal-Mart)     “would     produce

circuitous     litigation    that    would       still   result     in    RLI   being

ultimately liable for the $10 million.”               Id. at 593.     If RLI could

require National Union to pay it, then National Union would be

subrogated     to    Wal-Mart’s   contractual         indemnity    rights     against

Cheyenne and RLI “would have made its insured [Cheyenne] liable to

itself, an insurer, for a covered loss”, while “[i]f Cheyenne

succeeded in getting RLI to cover the $10 million claim resulting

from the enforcement of the indemnity provisions, the parties would

be back in the situation they were in before this action was

brought–RLI is liable for the $10 million Boykin settlement.”                     Id.

at 594.      The court concluded by stating:


                                          15
     “We think this potential circuity of action is
     significant, in that it reveals the true nature of the
     parties’ obligations and relationships with each other.
     RLI will ultimately be liable for the $10 million because
     of Cheyenne’s promise to indemnify Wal-Mart and RLI’s
     contractual-liability coverage in its policy covering
     Cheyenne. To prevent such wasteful litigation and to
     give effect to the indemnification agreement between the
     parties, we hold that RLI cannot recover against National
     Union . . .” Id.

The holding and reasoning of the well considered Wal-Mart Stores

opinion is fully applicable here.

     Another similar case to that now before us is J. Walters

Const. Inc. v. Gilman Paper Co., 620 So.2d 219 (Fla. App. 1993).

There, Walters contracted with Gilman to perform construction work

at a Gilman plant.   The contract provided that Walters would hold

Gilman harmless from any claims for injury arising from the work

and would procure liability insurance covering Gilman in respect to

the work. Walters procured insurance with CNA in which Walters was

named insured and Gilman was an additional insured.     Gilman also

procured its own policy written by Liberty Mutual (in which Walters

was apparently not an insured).   An employee of Walters was injured

on the job and sued Gilman, which settled and sued to recover from

CNA the entire amount paid in settlement.     Both the CNA and the

Liberty Mutual policies covered Gilman in respect to the employee’s

suit and “both policies” had similar “other insurance” clauses “to

the effect that if other coverage is available, then coverage for

only half of the claim will be provided.”     Id. at 220-21 & n.1.

The court, applying Georgia law, held that CNA was obligated for

                                  16
the entire amount paid in settlement of the Walters employee’s suit

against Gilman, and Liberty Mutual did not have to share any part

of that, because “to apply the ‘other insurance’ provisions to

reduce CNA’s liability would serve to abrogate the indemnity

agreement between Walters and Gilman” and the agreement “that

Walters would hold Gilman harmless and that Walters would secure

insurance” reflected “their mutual intent to have any claim arising

out of the contracted work paid exclusively by the insurance

procured by Walters, without contribution by Gilman’s insurer,

Liberty Mutual.”          Id. at 221.9

       Another leading case in this area is Rossmoor Sanitation Inc.

v. Pylon Inc., 119 Cal. Rptr. 449, 13 Cal. 3rd 622, 532 P.2d 97

(Cal.      1975).       There,     Pylon     had    contracted        with    Rossmoor       to

construct a pump station and sewer lines for Rossmoor.                                 In the

contract Pylon agreed to indemnify Rossmoor for all claims for

damages arising out of the work, including attorneys’ fees and

expenses incurred in defending damage suits, and Pylon also agreed

to obtain liability insurance for itself and to name Rossmoor as an

additional insured.              Pylon procured insurance with U.S. Fire

covering Pylon and designating Rossmoor as an additional insured.

Rossmoor also had independent coverage under a policy (which did

not cover Pylon) previously issued by its own insured, INA.                                The



       9
       The opinion does not, however, suggest that the CNA policy insured Walters’s liability to
Gilman under the indemnification provisions of the construction contract.

                                              17
U.S. Fire and INA policies each purported to provide Rossmoor

primary coverage, and each had identical other insurance clauses

providing for apportionment of loss if the insured has other

insurance covering the claim.                     Two Pylon employees were injured

while performing work under the contract and sued Rossmoor.                                      INA

paid the resulting judgment against Rossmoor and bore the costs of

defense.        Thereafter, Rossmoor sued Pylon and U.S. Fire seeking

indemnity; “U.S. Fire cross-complained against INA, seeking an

apportionment of the sums between the carriers pursuant to the

‘other insurance’ clauses.”                 Id., 532 P.2d at 99.             The trial court,

relying on the construction contract’s provisions, ruled that “as

the U.S. Fire policy was part of the consideration for the job, it

provided primary coverage to Rossmoor; that the INA policy was

merely excess; and that neither Pylon nor U.S. Fire was entitled to

any benefits or setoffs by reason of the INA coverage.”                                          Id.

(emphasis added). The California Supreme Court affirmed.10 It held


       10
          The trial court also held that the indemnity agreement validly obligated Pylon to
indemnify Rossmoor because Rossmoor’s negligence was merely passive, namely “failing to
discover that Pylon employees intended to enter an unshored trench.” Id. at 99. The California
Supreme Court affirmed this ruling. It noted that under its decisions “an indemnity agreement
may provide for indemnification against an indemnitee’s own negligence, but such an agreement
must be clear and explicit and is strictly construed against the indemnitee. (citation). If an
indemnity clause does not address itself to the issue of an indemnitee’s negligence, it is referred to
as a ‘general’ indemnity clause. (citation). While such clauses may be construed to provide
indemnity for a loss resulting in part from an indemnitee’s passive negligence, they will not be
interpreted to provide indemnity if an indemnitee has been actively negligent.” Id. It went on to
hold that
        “[s]ince the agreement does not state what effect Rossmoor’s negligence will have
        on Pylon’s obligation to indemnify, the clause is a ‘general’ indemnity provision,

                                                 18
that the identical “other insurance” clauses in the U.S. Fire and

INA policies, which each purported to provide Rossmoor primary

coverage, did not control or relieve U.S. Fire of the obligation to

fully reimburse INA for the entire amount of the judgment in

underlying suit.           The court stated:

       “It appears that both INA and U.S. Fire calculated and
       accepted premiums with knowledge that they might be
       called upon to satisfy a full judgment.      There is no
       evidence that either company knew there was or would be
       other insurance when they issued the policies. The fact
       that there is other insurance is a mere fortuitous
       circumstance. We view one factor as compelling, however:
       to apportion the loss in this case pursuant to the other
       insurance clauses would effectively negate the indemnity
       agreement and impose liability on INA when Rossmoor
       bargained with Pylon to avoid that very result as part of
       the consideration for the construction agreement.      We
       therefore conclude that the rights of indemnity and
       subrogation must control, and are persuaded the trial
       court was correct in finding that because the U.S. Fire
       policy was part of the consideration for the construction
       job, it must be viewed as primary insurance under the
       facts of this case and that INA was subrogated to the
       rights of Rossmoor.” Id. at 104-05 (emphasis added).11

       A decision of this court is in accordance with the foregoing

principles.        In Aetna Ins. Co. v. Fidelity & Cas. Co. of New York,

483 F.2d 371 (5th Cir. 1973), American Insulation contracted to

perform certain work at a Winn Dixie warehouse and one of the


       and under existing case law Rossmoor may not benefit from the agreement if it is
       deemed actively negligent as Pylon and U.S. Fire claim. The trial court has found,
       however, that Rossmoor was at most passively negligent. We are not persuaded
       that this determination was erroneous.” Id. at 104.
       11
           Like the situation in J. Walters Const. Inc. (see note 9, supra), there is nothing in the
Rossmoor opinion to indicate that the U.S. Fire policy provided coverage to Pylon for its potential
liability to Rossmoor under the construction contract’s indemnity clause.

                                                19
American Insulation’s employees was injured while performing that

work and recovered a $68,500 judgment against Winn Dixie, which was

found negligent.      The contract required American Insulation to

indemnify Winn Dixie for any claim arising from the presence or

activity of American Insulation on Winn Dixie premises, even though

caused by Winn Dixie’s negligence.         Winn Dixie paid the judgment

against it and thereafter, in a separate suit, recovered judgment

against American Insulation based on the indemnity agreement for

$84,116.79, being the $68,5000 awarded in the employee’s suit plus

interest, costs and attorneys’ fees. Aetna, which insured American

Insulation, paid all this $84,116.79 judgment and then brought the

present suit against Winn Dixie’s liability insurer, Fidelity &

Casualty Company, seeking to recover half of that payment.               The

court   (apparently   applying   Florida    law)   held   that   Aetna   was

entitled to no recovery whatever because “[t]he Indemnity Agreement

. . . controls all the rights and obligations of the parties and

their privies (the insurers)”, id. at 473, and accordingly the

precise terms of the Aetna and the Fidelity & Casualty company

insurance policies were “immaterial.”          Id. at 472.        The same

approach was taken in Chubb Ins. Co. of Canada v. Mid-Continent

Cas. Co., 982 F. Supp. 435 (S.D. Miss. 1997).        There Coho, insured

by Chubb under a $1 million general liability policy, was sued for

$5.5 million by employees of Smith Brothers who were injured while

performing Smith Brothers’ work-over contract with Coho.                 The


                                   20
contract required Smith Brothers to indemnify Coho for all claims

and related attorney’s fees arising out of the work.                                     Smith

Brothers’s liability to Coho under the indemnity agreement was

covered by its $1 million liability policy with Mid-Continent.                                In

a declaratory judgment suit between these two insurers, Mid-

Continent, relying on the identical “other insurance” clauses

(essentially the same as those present here) in its and Chubb’s

respective policies, contended that Chubb was responsible for half

of any liability and defense costs in the employees’ suit.                                  The

court assumed arguendo that the terms of Mid-Continent and Chubb

policies each purported                to provide Coho primary coverage for

purposes of the other insurance clauses, id. at 437 n.5, but held

that the Mid-Continent “coverage must be exhausted before Chubb, as

Coho’s primary insurer, must provide any coverage or pay any

portion of any award . . . against Coho” because “Smith Brothers is

obligated to defend and indemnify Coho . . . consequently, Smith

Brothers’ insurers necessarily have the primary obligation to

defend Coho        relative       to   those     claims,      without      regard      to   any

insurance which Coho might have.”                   Id. at 437.       “To hold otherwise

would render the indemnity contract between the insureds completely

ineffectual . . . .”           Id. at 438.          The court relied on Rossmoor and

J. Walters Const. Inc. and on our decision in Aetna Ins. Co.12

       12
          Other authorities likewise support the same result. Continental Cas. Co. v. Auto Owners
Ins. Co., 238 F.3d 941 (8th Cir. 2000), was a declaratory judgment action to determine which
insurer was liable for funds paid to settle a personal injury suit brought against Burlington

                                               21
       In Reliance National Indemnity v. General Star Indemnity, 72

Cal. App. 4th 1063, 85 Cal Rptr. 2d 627 (Cal. App. 1999), two


Northern by an employee of Fitzsimmons injured while performing Fitzsimmons’s contract with
Burlington Northern. That contract required Fitzsimmons to indemnify Burlington Northern
against all claims arising out of the contract work; it also required Fitzsimmons to pay for liability
insurance covering Burlington Northern in respect to such claims. The policy procured pursuant
to this provision was that of Interstate Fire and Casualty which named Burlington Northern as an
insured (but did not cover Fitzsimmons, although Fitzsimmons paid for it). Fitzsimmons was
insured under a CGL policy issued by Auto Owners Insurance Company which included coverage
of sums Fitzsimmons became obligated to pay as damages for bodily injury by virtue of the
indemnity provisions of its contract with Burlington Northern. The court, apparently applying
Minnesota law, noted that “both Interstate and Auto Owners covered the amount Burlington
Northern agreed to pay under the settlement,” id. at 944, and held that “Interstate, being
subrogated to Burlington Northern’s rights, can reach Fitzsimmons and, through it, Fitzsimmons’s
CGL carrier, Auto Owners. . . . we hold that Auto Owners is obligated to bear the entire loss.”
Id. at 945. See, also: Pacific National Ins. Co. v. Transport Ins. Co., 341 F.2d 514, 516, 520
(8th Cir. 1965) (Transport insured Superior, lessee of truck driven in Superior’s business by Fred,
an employee of the lessor; Transport paid the entire judgment against Superior for injury to a third
party caused by Fred’s negligence in connection with truck; Pacific insured the lessor and Fred.
Transport was held entitled to recover the full amount of judgment from Pacific without any
proration on the basis of the respective limits of the Pacific and Transport policies, and without
regard to the co-insurance, excess or pro rata provisions of Pacific’s policy, because Superior,
whose liability was entirely vicarious, was entitled to common law indemnity from Fred, and
Transport was subrogated to Superior’s rights against Fred and Pacific as Fred’s insurer; it was
immaterial that there was no prior judgment awarding Superior indemnity against Fred); Carolina
Cas. Ins. Co. v. Transport Indemnity Co., 488 F.2d 790, 794 (10th Cir. 1973) (the Carolina
policy covered the truck’s lessor, its lessee, Ringsby, and its driver, Freeze, but provided that
while the truck was leased coverage was excess over any other applicable insurance; the
Transport policy covered only Ringsby; with respect to a third party tort suit against lessor, lessee
and driver, arising out of Freeze’s operation of the truck while leased to Ringsby, “Ringsby’s
liability, if any, is vicarious [of Freeze]; if Ringsby should be found liable it would have the right
to proceed by indemnification against Freeze. As Ringsby’s subrogee, Transport could sue
Freeze, a permissive user under Carolina’s policy, ultimately recovering against Carolina. Based
on the above, and to avoid a circuity of action, we hold Carolina’s policy to be primary;”
emphasis added); Maryland Cas. Co. v. Employers Mut. Liability Ins. Co., 208 F.2d 731 (2d Cir.
1953).
         Aviles v. Burgos, 783 F.2d 270 (1st cir. 1986), is not to the contrary. There, Travelers,
insurer of the lessor-indemnitee, could not avoid sharing liability with CIS, insurer of the lessee-
indemnitor, because the lessee was an additional insured in Travelers’s policy, so Travelers could
not subrogate against the lessee, and because the CIS policy expressly excluded coverage of
liability assumed by contract. Id. at 279-81.

                                                 22
liability insurance companies, Reliance and General Star, disputed

the share each should bear of sums paid in settlement of an

underlying personal injury suit against Lollapalooza and Law by

patrons injured at a concert performed by Lollapalooza pursuant to

a contract with Law.          The contract (governed by California law)

required Law to procure liability insurance protecting Lollapalooza

from such claims and also required Law to indemnify Lollapalooza

from   any    such    claim   which    “does   not   result   from   the   active

negligence of” Lollapalooza.            Reliance insured Lollapalooza (but

not Law) under a $1 million primary policy, with “other insurance”

provisions similar to those present in the AIL and TPC policies

here, and also under a $1 million excess policy.              Lollapalooza was

also covered as an additional insured under two policies naming Law

and procured by it pursuant to the contract, namely a $1 million

primary policy issued by Gulf and a $10 million excess policy

issued by General Star.         The underlying suit was settled, without

a determination of fault on the part of either defendant or of

whether      Law     was   obligated    to     indemnify   Lollapalooza,     for

$2,142,858, $1 million paid by Gulf, $1 million by Reliance under

its primary policy and $71,429 by Reliance under its excess policy,

and $71,429 by General Star under its excess policy.                  Reliance,

invoking the decision in Rossmoor, claimed it was entitled to have

Gulf and General Star bear the entire loss because Lollapalooza,

Reliance’s sole insured, was entitled to indemnity from Law, an



                                         23
insured of Gulf and General Star.            Reliance settled with Gulf and

sued General Star. The Court of Appeals affirmed the trial court’s

summary judgment that Reliance was entitled to no recovery from

General    Star,    because   the   General      Star    policy     was   expressly

entirely “excess to all other insurance.”               Id., 72 Cal. App. 4th at

1076.    The Court of Appeals distinguished Rossmoor stating “under

both the relevant policies, Reliance’s obligation was primary and

General    Star’s    was   excess   .   .    .   .      This   is   a     materially

distinguishing characteristic between the present litigation and

Rossmoor” and that was “particularly true in this case because

General Star’s policy specifically states: ‘Nothing herein shall be

construed to make this Policy subject to the terms, conditions and

limitations of other insurance, reinsurance or indemnity’.” Id. at

1081.     The court went on to note that “[t]he risks involved in

providing primary coverage are different from those involved in

issuing an excess policy.       These differences are reflected in part

in the premium costs.”        Id. at 1082.

     We conclude that Reliance does not support AIL’s position here

for two reasons: first, AIL’s policy is unquestionably a primary

policy, while General Star’s policy in Reliance was expressly an

excess    policy;   second,    AIL’s    policy       expressly    covers    Elite’s

liability to Caddell under the subcontract’s indemnity provision,




                                        24
while General Star’s policy excluded such coverage.13

No Determination of Caddell’s Fault

       AIL argues that Elite’s agreement to indemnify Caddell is not

enforceable because it has not been determined, in this case or

otherwise, that Alas’s injury was not solely due to Caddell’s

negligence or fault.14                 However, such a determination is not

necessary to the enforceability of the subcontract’s indemnity

provision.         On the contrary, the agreement by its express terms

“shall not be enforceable if, and only if, it be determined by

judicial proceedings that the injury, death, or damage complained

of was attributable solely to the fault or negligence of” Caddell

(emphasis added).            Since it is undisputed that there has been no

such determination and since the “only” circumstance in which the

agreement “shall not be enforceable” thus does not exist, the

agreement is enforceable.                AIL argues that it is unfair to impose

on it the obligation to procure a judicial determination that

Caddell was solely at fault because it could not do so in, or

during the pendency of, the Alas litigation for fear of prejudicing

the rights of its additional insured Caddell. However that may be,



       13
          In Wal-Mart Stores, the court noted this latter factor as one making “Reliance
unpersuasive authority for the present case.” Wal-Mart Stores at 592. We also note that Wal-
Mart Stores concluded that “Reliance is in the minority” and conflicts with Rossmoor, which “is
better reasoned.” Wal-Mart Stores at 591, 592.
       14
         AIL does not otherwise question that the Alas suit and its settlement falls within the
terms of the subcontract’s indemnity provision.

                                                25
AIL could certainly have instituted a declaratory judgment action

against TPC at least as soon as the Alas suit settled.                                  Instead,

AIL waited to do so for nearly a year, despite having known of the

indemnity agreement for at least a year and a half (if not longer)

before the Alas suit settled (see note 5 supra).                                    And, in the

present suit AIL has never sought a determination that Alas’s

injury was solely due to Caddell’s fault.                        In this connection, AIL

relies on Travelers Cas. & Surety Co. v. American Equity Ins. Co.,

93 Cal. App. 4th 1142, 113 Cal. Rptr. 2d 613 (Cal. App. 2001).

There,      Travelers,        following         its    settlement        of    an    underlying

lawsuit, sought contribution from American Equity for defense costs

based on the “other insurance” clauses present in both policies.

American Equity, on the other hand, asserted that the indemnity

agreement was controlling.                 The California Court of Appeals held

that Travelers had a right to equitable contribution from American

Equity under the “other insurance” clauses, despite the indemnity

clause.         American       Equity      is    not    controlling        because,        unlike

California law, Texas law does not require that a finding of fault

be made.15      The indemnification agreement in American Equity called

for the property manager to be indemnified and did not contain an

exception for cases in which the manager was negligent.                               The court


       15
          See, e.g., Rossmoor, 13 Cal.3d at 628 (noting that “while such clauses may be construed
to provide indemnity for a loss resulting in part from an indemnitee’s passive negligence, they will
not be interpreted to provide indemnity if an indemnitee has been actively negligent”). See also
note 10, supra.

                                                 26
in    American    Equity    distinguished       Rossmoor      in   part     based    on

California’s law requiring a determination that the indemnitee was

not actively negligent:

       “More importantly, subrogation of the insurer to the
       rights of the insured presupposes the insured, Preferred
       Capital, has a right to indemnity from the receiver or
       from Lakeview under the indemnity agreement.         This
       determination was never made below and those parties (the
       receiver, Lakeview and Preferred Capital) are not parties
       to this action. Were Preferred Capital to seek indemnity
       directly from the receiver or from Lakeview under the
       agreement, it might be shown that Preferred Capital was
       not entitled to indemnity on the grounds that it was
       actively or intentionally negligent in causing the
       victim’s injury.” American Equity Ins. Co., 93 Cal. App.
       4th at 1157.

Thus, absent such a finding, the default position in California

favors the party seeking to avoid indemnification.                    In contrast,

Texas law only requires that the express negligence doctrine and

conspicuousness requirement be met.             See note 7, supra.          As Texas

law does not demand such a finding of active-passive negligence, we

default instead to the language of the indemnity provision, which,

as    above     noted,    makes   it    clear       that,    absent    a    judicial

determination of sole fault or negligence on the part of Caddell,

indemnification is required.           Further, in American Equity it does

not    appear    that    the   Travelers      policy        covered   any    of     the

indemnitor’s obligations under the indemnity agreement.

       We reject Alas’s contentions in this regard.

AIL’s defense costs

       AIL’s    final    contention    is    that    TPC    should    at    least   be


                                        27
obligated to share its expenses in defending the Alas litigation

since, according to AIL, the “insured contract” provisions of its

policy   (see   note   3   supra)   did    not   insure   Elite   against   its

liability under the indemnity agreement to reimburse Caddell for

Caddell’s expenses and attorneys’ fees in defending the Alas suit

(although AIL recognizes that its policy did insure Elite against

its liability under the agreement to reimburse Caddell for sums

Caddell might pay the Alas plaintiffs to discharge or settle the

claims against Caddell in the Alas suit).             We assume, arguendo,

that AIL is correct in its above stated analysis of the scope of

the “insured contract” coverage which its policy afforded Elite,

but we nevertheless reject its contention that this entitles AIL to

recover from TPC half its (AIL’s) attorneys’ fees and related costs

in defending Caddell in the Alas suit, and we conclude that Texas

courts would likewise reject that contention.

     We note to begin with that many of the above cited cases which

have ruled in favor of the indemnitee’s insurer, and against the

indemnitor’s insurer, have done so without any indication that the

indemnitor’s     insurer’s     policy      covered   to    any    extent    the

indemnitor’s contractual indemnity obligation to the indemnitee.

See, e.g., J. Walters Construction Inc.; Rossmoor.

     Further, AIL does not cite any cases holding that where two

liability insurers cover a suit against a given insured, and as

between the two insurers one is obligated for the entire amount


                                      28
paid in settlement of the claim, that nevertheless the insurer so

obligated is entitled to recover from the other insurer any part of

the costs of defending the action.        Nor are we aware of any such

holding.   It appears to us that to so hold would run counter to the

general rule, well established in Texas, that “the excess liability

insurer is not obligated to participate in the defense until the

primary limits are exhausted.”          Keck, Mahin & Cate v. National

Union Fire Ins. Co., 20 S.W.3d 692, 700 (Tex. 2000) (internal

quotation marks omitted); Schneider National Transport v. Ford

Motor Co., 280 F.3d 532, 538 (5th Cir. 2000); Texas Employers Ins.

v. Underwriting Members, 836 F. Supp. 398, 404 (S.D. Tex. 1997).

This is so even though the lawsuit is one for an amount in excess

of the primary limits, so long as it is settled (or results in a

judgment which is discharged) for an amount not in excess of the

primary policy limits.     Keck at 701; Texas Employers Ins. at 408-

09.   See also Signal Companies Inc. v. Harbor Ins. Co., 27 Cal. 3d

359, 612 P.2d 889, 19 A.L.R. 4th 75, 83 (Cal. 1980) (“where there

is excess coverage, whether by virtue of an excess clause in one

policy or otherwise, it is the primary insurer which is solely

liable for the costs of defense if the judgment does not exceed

primary    coverage”,   emphasis   added);    Bettenburg   v.   Employers

Liability Assurance Corp., 350 F. Supp. 873, 877-78 (D. Minn. 1972)

(for these purposes policy deemed excess, even though not so by its

own terms or other insurance clauses, where it provided only


                                   29
general coverage and other policy provided only specific coverage

of the particular risk at issue).                     Here, by virtue of the indemnity

agreement obligating Elite to pay Caddell any amount Caddell paid

the Alas plaintiffs to settle the Alas suit or discharge any

judgment therein, and by virtue of AIL’s $1 million policy insuring

Elite against such liability to Caddell, AIL may not recover from

TPC, which insured only Caddell and would be subrogated to its

rights against Elite, any portion of the $625,000 which AIL, whose

policy named Elite as insured and Caddell as an additional insured

(as required by the subcontract), paid the Alas plaintiffs to

settle the suit.16           That being the case, it is proper, for purposes

of determining whether AIL is entitled to have TPC bear a portion

of the defense costs in the Alas lawsuit or whether as between AIL

and TPC all such costs should be borne by AIL, to regard AIL as

having the primary coverage, and TPC only excess coverage over that



       16
          That such result would obtain even if AIL’s policy, though generally covering Elite, did
not cover any of Elite’s contractually assumed liability to Caddell, is indicated by the decisions in
J. Walters Construction Inc. and Rossmoor. We need not, and do not, decide that question
however, because AIL’s policy does insure Elite against liability to Caddell under the indemnity
agreement for sums Caddell would pay the Alas plaintiffs in settlement of,or to discharge a
judgment in, the Alas lawsuit (whether or not AIL’s policy also insures Elite’s indemnity
agreement obligation to reimburse Caddell for expenses incurred by Caddell in defending the Alas
suit). If TPC, as Caddells’ insurer (under a policy not covering Elite), were required to pay AIL
half the $625,000 that AIL paid the Alas plaintiffs to settle their suit against Caddell, then TPC,
being subrogated to Caddell’s rights, could by virtue of the indemnity agreement recover
judgment against Elite for that $312,500, and Elite in turn, or TPC as Elite’s judgment creditor,
could then recover that $312,500 back from AIL by virtue of AIL’s policy insuring Elite against
that liability, all with the ultimate result that AIL would bear 100% of all the money ($625,000)
paid to the Alas plaintiffs to settle their suit against Caddell and TPC would bear no portion
thereof.

                                                 30
of AIL, respecting the Alas suit.                       As stated in Wal-Mart Stores

“the labels ‘primary’ and ‘excess’ are shorthand for priority of

payment obligations,” id. at 592, and

       “[w]hether the parties are termed ‘primary’ or ‘excess’
       depends on who is required to pay first, and that is the
       question presented here . . . . RLI cannot avoid
       liability for the settlement by pointing to language in
       its policy calling itself ‘excess.’ RLI is ‘excess’ to
       National Union only if we determine that National Union
       is liable first, and, as explained above, we do not do so
       because we believe the indemnity agreement governs.” Id.
       at 590.

That language applies a fortiori here because the AIL policy does

not purport to be an “excess” policy but rather purports to provide

primary coverage to Caddell (as well as to Elite).17                                    See also

Rossmoor supra at 99, 105 (affirming trial court holding that the

indemnitee’s policy “was merely excess” and stating that “the trial

court was correct in finding that” the indemnitor’s policy “must be

viewed as primary insurance;” emphasis added); Carolina Cas. Ins.

Co., supra at 794, “to avoid a circuity of action, we hold

Carolina’s [indemnitee’s] policy to be primary;” emphasis added).

For all these reasons, we conclude that AIL is not entitled to

recover from TPC any portion of the costs of defending the Alas

lawsuit.18


       17
         Accordingly, we need not and do not generally decide whether or under what
circumstances it is proper to treat as “primary” a policy which expressly purports to be only an
excess policy. Cf. Reliance.
       18
         This result also has the further advantage of avoiding a multiplicity of suits (if TPC, as
Caddell’s insurer, were required to pay AIL a portion of AIL’s costs of defending the Alas suit,

                                                 31
                                         Conclusion

       The district court correctly granted summary judgment denying

AIL any recovery from TPC.                The judgment is accordingly

                                          AFFIRMED.




then TPC, subrogated to the rights of its insured Caddell under the indemnity agreement, could
recover the amount so paid by suing Elite, whom TPC did not insure), and also avoiding a
situation where AIL, by recovering part of its defense costs from TPC, has caused those costs to
be ultimately borne by the named insured (Elite) in AIL’s own policy which Elite procured and
paid for pursuant to the subcontract (an arguably unusual result even though we assume,
arguendo, that AIL’s policy did not cover such a defense cost liability of Elite under the
indemnity agreement).

                                               32
