Associated International Insurance Co. v. Scottsdale Insurance Co.

The rights that flow through a subrogation clause allow an insurer to seek reformation of a contract between its insured and a third party. After Associated paid the portion of the underlying settlement that was in excess of the Westfield policy, Associated sought reimbursement from Scottsdale, an insurer that issued a commercial umbrella policy to Alpha. The Fifth Circuit held that the district court erred in reading reformation’s privity requirement to necessitate a specific connection to the Alpha-Scottsdale insurance policy. Rather, privity in Texas focuses on the relationship to a party. In this case, the subrogation clause in the Associated-Alpha policy provided that connection. Accordingly, the court reversed and remanded. View "Associated International Insurance Co. v. Scottsdale Insurance Co." on Justia Law