Billy Pat McGuire, Petitioners v. Commercial Union Insurance Company of New York, Respondent

Summary

The Texas Supreme Court affirmed the trial court and reversed the Court of Civil Appeals, holding that the compromise settlement and agreed judgment in the Pryor wrongful‑death action did not discharge Commercial Union Insurance Company from its obligations under the liability policy issued to Charles Pryor. The Court found that severance of the McGuire counterclaim did not deprive the insurer of any defense, including a compulsory counter‑claim defense, res judicata, or admissibility of the settlement agreement, and therefore the insurer must continue to defend the McGuire claim. Justice Griffin dissented, adopting the Court of Civil Appeals and arguing that severing a compulsory counter‑claim was an abuse of discretion. The dissent is noted at the end of this summary.