Associated International Insurance Co. v. Scottsdale Insurance Co.

GREGG COSTA, Circuit Judge:

Subrogation clauses are common in insurance policies. They transfer rights from the insured to the insurer, allowing the latter to recover funds it paid to cover the former’s loss. We decide whether the rights that flow through a subrogation clause allow an insurer to seek reformation of a contract between its insured and a third party.

I

This Texas insurance case arose from an assault in an apartment complex owned by VDC-Matthew Ridge, Ltd. The plaintiff in that lawsuit sought recovery from Matthew Ridge and the property manager of the complex, Alpha-Barnes Real…