State Farm Fire and Cas. Co. v. Fullerton, 96-40078

• Decision Date: 22 July 1997
• Docket Number: No. 96-40078,96-40078
• Citation: 118 F.3d 374
• Parties: STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff-Appellant, v. Virgil L. FULLERTON, et al., Defendants, W. Bryant Buckner, Individually and as Representative of the Estate of Karen Jones, deceased; Jacob Joseph Anslum, Individually and as Representative of the Estate of Karen Jones, deceased; Stephen Paul Buckner, Individually and as Representative of the Estate of Karen Jones, deceased, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 374

118 F.3d 374

STATE FARM FIRE AND CASUALTY COMPANY, Plaintiff-Appellant, v. Virgil L. FULLERTON, et al., Defendants W. Bryant Buckner, Individually and as Representative of the Estate of Karen Jones, deceased; Jacob Joseph Anslum Individually and as Representative of the Estate of Karen Jones, deceased; Stephen Paul Buckner, Individually and as Representative of the Estate of Karen Jones, deceased Defendants-Appellees.

No. 96-40078.

United States Court of Appeals Fifth Circuit.

July 22, 1997.

Paul M. Boyd, Tyler, TX, Michael William Minton, Johnston & Minton, Fort Worth, TX, for Plaintiff-Appellant.

Michael Jacobellis, Tonahill, Hile, Leister and Jacobellis, Beaumont, TX, James Kevin Dutton, Tonahill, Hile, Leister & Jacobellis, Jasper, TX, for Defendants-Appellees.

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

Before KING and HIGGINBOTHAM, Circuit Judges, and LAKE, ^* District Judge.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

This case requires us to surmise how a Texas court would rule on a question that has received diverse answers in those states that have considered it: whether an insured's guilty plea in a prior criminal proceeding can preclude third parties from collecting on the insured's policy. More specifically, we must determine whether Texas law allows the heirs of the victims of a shooting to argue that the shooting was unintentional in spite of the fact that the insured pled guilty to murder.

We hold that the insured's guilty plea satisfies the requisites of issue preclusion. We will reverse the district court's declaration that the policy affords coverage and enter judgment in favor of State Farm.

I.

On July 7, 1992, Virgil L. Fullerton killed his wife, Artie Harris Fullerton, and his step-daughter, Karen Denby Jones, with a shotgun at their rural residence. Fullerton's precise motive has never come to light, but the family had experienced considerable domestic friction. A number of dangerous incidents convinced him that his wife was trying to kill him. At one point, Artie Fullerton considered filing assault charges against her husband, and after her death her relatives asserted that Fullerton treated her cruelly. Whatever the story behind the slayings, Fullerton did not try to escape justice: he immediately called the sheriff's department and went peaceably to jail.

The state of Texas charged Fullerton with two counts of capital murder. His attorney concluded that Fullerton had a good chance of acquittal if he pled not guilty by reason of insanity. But the attorney was reluctant to adopt that strategy because Fullerton was approaching seventy years of age and was in poor health. Unlike an order of commitment to a psychiatric hospital, a conviction on something less than capital murder might allow Fullerton to return home if he entered the last stages of a terminal illness. Based on this advice, Fullerton pled guilty to the lesser offense of simple murder. The court sentenced him to life imprisonment. The judgment of conviction stated that Fullerton was mentally competent, and the issue of his mental competence to form the intent to kill never surfaced before the court. He remains incarcerated.

The heirs of the two victims brought wrongful death actions against Fullerton in state court. At the time of the shooting, Virgil and Artie Fullerton held a homeowners' insurance policy that provided coverage for, among other things, personal liability for bodily injuries. In general, the policy covered injuries "caused by an occurrence" and defined an "occurrence" as "an accident, including exposure to conditions, which results in bodily injury ... during the policy period." It excluded, however, injuries "caused intentionally by or at the direction of the insured." State Farm, the issuer of the policy, provided Fullerton a defense under a reservation of rights and filed this declaratory judgment action in federal court to establish that it has no duty to defend or indemnify Fullerton against the wrongful death claims. Its complaint listed Fullerton and the representatives of Karen Jones's estate as defendants. ¹ Fullerton himself did not answer the suit. He stated by affidavit: "I do not believe that insurance coverage exists for these claims because any action taken by me was intentional and intended to cause harm to Artie Harris Fullerton and Karen Denby Jones." The other defendants--Stephen Paul Buckner, Jacob Joseph Anslum, and W. Bryant Buckner (collectively "the Buckners")--moved for appointment of a guardian ad litem on the grounds that Fullerton is not mentally competent. The court granted the motion over State Farm's objection.

State Farm moved for summary judgment on the theories that Fullerton's conviction collaterally estops the Buckners from litigating Fullerton's intent and that the evidence that Fullerton shot his wife and Jones intentionally leaves no genuine issue of material fact. In support, it attached transcripts and other documents from the criminal proceedings. The court denied the motion without explanation. It similarly denied State Farm's motion for judgment as a matter of law at the close of evidence. ²

At trial, the Buckners presented expert opinion that Fullerton was "severely mentally ill" at the time of the shooting because he was suffering from a "delusional disorder" that caused him to believe that the victims wanted to kill him. The jury credited this testimony and found that the killings were unintentional. State Farm appeals and asserts a number of errors, including evidentiary and instructional errors. Because we agree with State Farm's assertion that the Buckners are precluded from litigating the issue of Fullerton's intent, we do not reach any other issues presented on appeal.

II.

Our inquiry into the preclusive effect of Fullerton's guilty plea is governed by Texas law. Angel v. Bullington, 330 U.S. 183, 191-93, 67 S.Ct. 657, 661-662, 91 L.Ed. 832 (1947); In the Matter of King, 103 F.3d 17, 19 n. 2 (5th Cir.1997), cert. denied, --- U.S. ----, 117 S.Ct. 2454, 138 L.Ed.2d 212 (1997); Cleckner v. Republic Van & Storage Co., 556 F.2d 766, 768-69 (5th Cir.1977). "A party seeking to assert the bar of collateral estoppel must establish that (1) the facts sought to be litigated in the second action were fully and fairly litigated in the first action; (2) those facts were essential to the judgment in the first action; and (3) the parties were cast as adversaries in the first action." Sysco Food Services, Inc. v. Trapnell, 890 S.W.2d 796, 801 (Tex.1994). The third requirement, however, is subject to an important qualification: "[t]o satisfy the requirements of due process, it is only necessary that the party against whom the doctrine is asserted was a party or in privity with a party in the first action." Id. at 802 (emphasis in original).

The second requirement need not detain us. Fullerton pled guilty to a violation of Tex. Penal Code § 19.02. By entering this plea, he admitted that he intended to kill his victims or at least knew that his actions would cause their deaths. ³ In other words, his convictions were valid because he admitted that the deaths were not accidents. The convictions are inconsistent both with the Buckners' suggestion that Fullerton's delusions made the shootings acts of self-defense and with their contention that he was legally insane during the incident. If the criminal proceedings decided anything, it was that the shootings were not "occurrences." See Dinnery v. State, 592 S.W.2d 343, 352-54 (Tex.Crim.App.1979) (holding that a judicial confession in a guilty plea is itself sufficient evidence to support the crime charged).

The first and third requisites for issue preclusion require more searching analysis. We first take up the question of whether a guilty plea counts as "full and fair litigation" under Texas law. Then we ask whether the preclusive effect of Fullerton's plea extends to the Buckners; in the traditional language of collateral estoppel, we must determine whether the Buckners are in privity with Fullerton.

III.

If Fullerton had been convicted on the murder counts after a full trial, there would be no question that the jury's factual finding that he killed intentionally would satisfy the full-and-fair-litigation prong of the test for issue preclusion. Texas law collaterally estops an insured who has suffered a conviction for murder before a jury from arguing in a subsequent coverage dispute that the killing was not willful. Francis v. Marshall, 841 S.W.2d 51, 54 (Tex.App.--Houston 1992) (imposing sanctions for frivolous litigation on an insured who sought to recover benefits after a murder conviction). See also United States v. Thomas, 709 F.2d 968, 972 (5th Cir.1983) ("Because of the existence of a higher standard of proof and greater procedural protection in a criminal prosecution, a conviction is conclusive as to an issue arising against the criminal defendant in a subsequent civil action.").

Unfortunately, Texas courts have not decided whether a guilty plea produces similarly preclusive effects in subsequent coverage litigation. We are thus in the uncomfortable position of speculating how a Texas court might answer a close question of first impression. We may consult a variety of sources in making an Erie-guess: dicta in Texas court decisions, the general rule on the issue, and the rules in other states that Texas might look to, as well as treatises and law journals. Hill v. London, Stetelman, & Kirkwood, Inc., 906 F.2d 204, 207 (5th Cir.1990). After reviewing case law from other jurisdictions, which is divided roughly evenly on the question, we have concluded that Texas would most likely follow the rule that a valid guilty plea serves as a full and fair litigation of the facts necessary to establish the elements of the crime and thus that a Texas court would preclude Fullerton from contesting State Farm's assertion that he acted intentionally.

A.

A survey of the...