This case arises out of a disagreement between two insurers over their respective duties to indemnify for personal injuries sustained in an automobile accident. Amerisure, the primary insurer, argued that it did not have a duty to indemnify. Navigators, the excess insurer, disagreed, demanding that Amerisure pay the $1 million limit of its policy. The insurers, however, agreed that the personal-injury lawsuit should be settled, and they agreed on the amount of the settlement, $2.35 million. Amerisure paid the $1 million, but reserved its right to seek reimbursement. Navigators and another insurer paid the balance. Amerisure then sought reimbursement from Navigators through equitable and contractual subrogation. On cross-motions for summary judgment, the district court granted summary judgment for Navigators, finding that, although the Amerisure policy did not cover the incident, Amerisure could not recover through equitable or contractual subrogation.
Before us are four issues: (1) whether
Mid-Continent Insurance Co. v. Liberty Mutual Insurance Co.,
BACKGROUND AND PROCEDURAL HISTORY
On October 9, 2003, William Sylvester drove two employees of Texas Crewboats Inc., Captain Dixie Clanton and Deckhand *303 Jimmy Satterfield, from Freeport, Texas to Morgan City, Louisiana where the two were to board and crew the Florida Lilly, one of Texas Crewboats’s vessels. While en route, Sylvester fell asleep at the wheel, thereby causing the vehicle to veer off of the road and flip over. Clanton and Satterfield suffered significant injuries as a result. They sued Texas Crewboats and Sylvester in Louisiana state court, claiming negligence and recklessness against Sylvester and bringing similar claims under the Jones Act against Texas Crew-boats. Clanton and Satterfield claimed that Sylvester was driving in the course and scope of his employment with Texas Crewboats and that Texas Crewboats was vicariously liable. They also sued Texas Crewboats for maintenance and cure benefits.
At the time, Texas Crewboats carried three insurance policies that the incident potentially implicated. Amerisure provided $1 million of primary automobile-liability insurance. Under that policy, Sylvester, who was driving the vehicle with the permission of Texas Crewboats, was also an insured. Fireman’s Fund Insurance Company provided $1 million of primary coverage for marine protection and indemnity. Navigators was the excess insurer, covering up to $9 million. Under this arrangement, if an incident fell within the coverage of any of the primary insurers, that insurer must indemnify the insured up to $1 million, and then, Navigators would cover the remainder up to $9 million.
The Amerisure policy contains three exclusions that are relevant here:
The insurance does not apply to any of the following: ...
3. WORKERS COMPENSATION Any obligation for which the insured or the insured’s insurer may be held liable under any workers compensation, disability benefits or unemployment compensation law or any similar law.
4. EMPLOYEE INDEMNIFICATION AND EMPLOYER’S LIABILITY
Bodily Injury to:
a. An employee of the insured arising out of and in the course of employment by the insured ...
But this exclusion does not apply to bodily injury to domestic employees not entitled to workers compensation benefits or to liability assumed by the insured under an insured contract.
5. FELLOW EMPLOYEE
Bodily injury to any fellow employee of the insured arising out of and in the course of the fellow employee’s employment.
The Amerisure policy also reserves Amerisure’s right to subrogation:
If any person or organization to or for whom we make payment under this Coverage Form has rights to recover damages from another, those rights are transferred to us. That person or organization must do everything necessary to secure our rights and must do nothing after accident or loss to impair them.
The Navigators policy contains a conditional exclusion that reads,
As respects all activities of the Assured (except liability arising out of ownership, charter, use, operation, maintenance, loading, unloading, ship repairing or as a bailee of any watercraft not otherwise excluded or limited herein), this insurance shall be free from liability (unless coverage is provided in an underlying policy scheduled hereon, and then coverage hereunder shall only operate as excess of such coverage):
(a) from operation, ownership, use of any automobile, truck or aircraft ....
*304 Under the circumstances, Texas Crew-boats wanted the case settled, and all of the interested parties, including the insurers, agreed. Following mediation, the parties agreed to the following settlement: Clanton’s claims would be settled for $1,325,000 and Satterfield’s for $1,025,000. The insurers, however, could not agree on which of them should pay. Amerisure argued that only the Fireman’s and Navigators policies applied. Navigators insisted that the incident also fell within the Amerisure policy, and therefore, demanded that Amerisure pay its $1 million limit.
In April 2006, Amerisure moved for summary judgment in Louisiana state court, seeking a declaration that its policy did not cover the incident. On June 15, 2006, Amerisure voluntarily withdrew that motion. Ultimately, Amerisure paid $1 million and Navigators paid $1.35 million, which included sums from Fireman’s. In the settlement agreement, Amerisure reserved its right to seek reimbursement from Navigators through subrogation. During those settlement negotiations, Amerisure filed this subrogation action in the United States District Court for the Southern District of Texas.
The parties filed cross-motions for summary judgment before the district court in 2006. The motions focused on three issues: (1) whether the three exclusions in the Amerisure policy applied, (2) whether the conditional exclusion in the Navigators policy applied, and (3) whether Amerisure could recover through contractual and equitable subrogation. Over two years later, in January 2009, the district court issued its opinion, addressing only the first and third issues.
Amerisure Ins. Co. v. Navigators Ins. Co.,
04:06-CV-2069, op. at 1-4 (S.D.Tex. Jan. 7, 2009). It decided the former for Amerisure, finding that all three exclusions “equally apply to deny coverage.”
Id.
at 2. Nonetheless, the court denied reimbursement because it found that Amerisure could not pursue contractual- or equitable-subrogation claims against Navigators.
See id.
at 3. With respect to contractual subrogation, the court held that Navigators had been released from liability as a party to the settlement.
See id.
It also held that, under
Mid-Continent Insurance Co. v. Liberty Mutual Insurance Co.,
STANDARD OF REVIEW
The court reviews,
de novo,
a district court’s award of summary judgment, applying the same standard as the district court.
Ford Motor Co. v. Tex. Dep’t of Transp.,
*305 DISCUSSION
I. Contractual Subrogation and Mid-Continent
The first issue that we must address is one of first impression for this court: whether
Mid-Continent Insurance Co. v. Liberty Mutual Insurance Co.,
In Texas, parties create contractual-subrogation rights by agreement or contract, granting the right to pursue reimbursement from a third party in exchange for payment of a loss. See id. at 774. When the insurer seeks to recover through contractual subrogation, it “stands in the shoes of the insured, obtaining only those rights held by the insured against a third party, subject to any defenses held by the third party against the insured.” Id.
The Texas Supreme Court, in Mid-Continent, elaborated on the contractual-subrogation doctrine when this court presented the following certified question:
Two insurers, providing the same insured applicable primary insurance liability coverage under policies with $1 million limits and standard provisions (one insurer also providing the insured coverage under a $10 million excess policy), cooperatively assume defense of the suit against their common insured, admitting coverage. The insurer also issuing the excess policy procures an offer to settle for the reasonable amount of $1.5 million and demands that the other insurer contribute its proportionate part of that settlement, but the other insurer, unreasonably valuing the case at no more than $300,000, contributes only $150,000, although it could contribute as much as $700,000 without exceeding its remaining available policy limits. As a result, the case settles (without an actual trial) for $1.5 million funded $1.35 million by the insurer which also issued the excess policy and $150,000 by the other insurer.
In that situation is any actionable duty owed (directly or by subrogation to the insured’s rights) to the insurer paying the $1.35 million by the underpaying insurer to reimburse the former respecting its payment of more than its proportionate part of the settlement?
Id. at 768. Both policies included pro rata clauses, limiting each insurer’s exposure to the lesser of (1) the limit of the policy that it issued and (2) its proportion of the settlement. Id. at 772. The Texas Supreme Court held that,
in the context presented, ... a fully indemnified insured has no right to recover an additional pro rata portion of settlement from an insurer regardless of that insurer’s contribution to the settlement. Having fully recovered its loss, an insured has no contractual rights that a co-insurer may assert against another co-insurer in subrogation.
Id. at 772, 775-76. From this, the court concluded that, “after being fully indemnified, [the insured does not have] any contractual rights remaining against Mid-Continent. Because [the insured] has no rights to which Liberty Mutual may be subrogated, Liberty Mutual has no right of reimbursement through subrogation.” Id. at 777.
District courts in this circuit have differed on the impact that Mid-Continent has had on contractual subrogation. Two courts, including the district court here, have broadly construed Mid-Continent to preclude contractual subrogation whenever the insured is fully indemnified or defended:
*306 Because the men fully recovered their losses in the settlement, they no longer have contractual rights against either co-insurer — even where not all of them contributed to the men’s recovery. Without a claim against an insurer, Amerisure has no contractual right to be subrogated. Mid-Continent Ins. Co. v. Liberty Mut. Ins. Co.,236 S.W.3d 765 , 776 (Tex.2007).
Amerisure Ins. Co. v. Navigators Ins. Co.,
04:06-CV-2069, op. at 3 (S.D.Tex. Jan. 7, 2009) ;
see also Trinity Univ. Ins. Co. v. Employers Mut. Cas. Co.,
The majority of courts, however, have cabined
Mid-Continent
to its facts.
See Arrowood Indem. Co. v. Gulf Underwriters Ins. Co.,
No. EP-08-CV-285-DB,
Most recently, Judge Lee Rosenthal, in a well-reasoned opinion, rejected the argument that
Mid-Continent
automatically precludes subrogation claims whenever the insured is fully indemnified.
See Employers Insurance Co. of Wausau v. Penn-America Insurance Co.,
would make statutory or contractual indemnification in Texas unavailable to the insurer of a seller asserting that its acts or omissions did not cause the underlying plaintiffs injury if the seller’s insurer assumed the insured’s defense and paid to settle the claim. This reading is not supported by the Texas Supreme Court’s statements after Mid-Continent. See Frymire Eng’g Co. v. Jomar Int’l, Ltd,259 S.W.3d 140 , 145 (Tex.2008) (“[The allegedly responsible party’s] argument that [the settling party] cannot assert equitable subrogation because its indemnity payment was under a voluntary contract would, if accepted *307 and applied to other contracts, be a radical departure from long-settled Texas subrogation law. For instance, insurance policies are contracts, too, and if the hotel’s property insurer had paid the hotel for the cost of repairs pursuant to a policy agreement, it would certainly be able to assert an equitable subrogation claim against [the allegedly responsible party].”).
Id.
at 709,
We agree with the majority of courts that have examined this issue and we reject the overly broad view of
Mid-Continent’s
subrogation exclusion. That view would effectively end contractual subrogation in Texas. This cannot be so, particularly in light of the Texas Supreme Court’s most recent contractual-subrogation decision in
Texas Health Insurance Risk Pool v. Sigmundik,
Although
Sigmundik
does not specifically address the reach of
Mid-Continent,
it is nonetheless instructive. There, the insurer had fully indemnified the insured for his medical expenses ($336,874.71) arising out of injuries sustained in an oil-field explosion.
See id.
at 13-14,
We will be subrogated to all rights of recovery which any person may have against another party for all benefits paid by the Pool which were incurred by the Insured Person as a result of the negligence or misconduct of another party. Our right to repayment shall be a lien against any recovery by the Insured Person whether it be by judgment, settlement, or otherwise.
Id.
The negligence action settled for $800,000, and the court explained that, through contractual subrogation, the insurer stepped into the shoes of the insured (the estate) and has a valid claim to recover the $336,874.71 from the settlement.
See id.
at 14-16,
Since
Mid-Continent,
the Texas Supreme Court has not specified the precise boundaries of its holding as it applies to contractual subrogation when the insured is fully indemnified. Nor do we attempt to do so here. Instead, our decision here is an
Erie
guess, and in making an
Erie
guess, we must determine how the Texas Supreme Court would resolve the issue under the specific circumstances presented.
See Chaney v. Dreyfus Serv. Corp.,
Our inquiry does not end here, however, as we still must determine whether
Mid-Continent
precludes contractual subrogation in this case. It does not. In
Mid-Continent,
the insured was fully protected because both insurers acknowledged their duties to defend and indemnify.
See
The district court provided an additional basis for dismissing Amerisure’s contractual-subrogation claim. It held that, “[a]l-though Amerisure purchased the right to pursue the mens’ claims against third parties, Navigators has been released from liability as a party to the settlement.”
Amerisure Ins. Co. v. Navigators Ins. Co.,
04:06-CV-2069, op. at 3 (S.D.Tex. Jan. 7, 2009). This overlooks how contractual subrogation places Amerisure in the shoes of its insureds, Texas Crewboats and Sylvester.
See Mid-Continent,
II. Coverage under the Amerisure Policy
Although Amerisure has a contractualsubrogation right, that right only entitles it to reimbursement if Amerisure did not have a duty to indemnify its insureds, Texas Crewboats and Sylvester. Amerisure contends that three exclusions in its policy preclude its duty to indemnify. These exclusions relate to workers’ compensation, employee indemnification, and injuries to fellow employees, which we will describe in greater detail below. In order to determine Amerisure’s duty to indemnify, we must examine how each of these exclusions applies to each insured. That is because Section V.D. of the Amerisure policy requires that, “[ejxcept with respect to the Limit of Insurance, the coverage afforded applies separately to each insured who is seeking coverage or against whom a claim or suit is brought.” Amerisure has no duty to indemnify if any one of the exclusions applies to each insured. Put differently, Amerisure must indemnify if none of the exclusions discharges its duty to indemnify Texas Crewboats and Sylvester.
The district court found that all three *309 exclusions deny coverage. 3 Navigators disputes this, urging us to hold, as an alternative ground for affirmance, that none of the exclusions apply. In addition, Navigators contends that, under the conditional-exclusion clause of its policy, if the Amerisure policy did not cover Sylvester, its policy also would not. In that situation, Navigators argues that Amerisure may not recover its contribution.
With respect to Texas Crewboats, we conclude that only the employee-indemnification exclusion applies. With respect to Sylvester, the only exclusion that could potentially apply is the fellow-employee exclusion, but there is a genuine issue of material fact regarding this question. Hence, the issue of Amerisure’s duty to indemnify survives summary judgment. Finally, we conclude that the conditional exclusion of the Navigators policy does not apply.
A. Interpreting Insurance Policies in Texas
“Under Texas Law, insurance policies are construed as are contracts generally, and must be interpreted to effectuate the intent of the parties at the time the contracts were formed.”
Mid-Continent Cas. Co. v. JHP Dev., Inc.,
An insurer has two responsibilities relating to coverage — the duty to defend and the duty to indemnify.
See D.R. Horton-Texas, Ltd. v. Market Int’l Ins. Co.,
The eight-corners rule, however, does not govern the duty to indemnify.
See D.R. Horton-Texas,
B. The Amerisure Exclusions
i. Workers’-Compensation Exclusion
The workers’ compensation exclusion does not preclude coverage for Texas Crewboats or Sylvester.
a. Texas Crewboats
Clanton and Satterfield sued Texas Crewboats for negligence under the Jones Act. This exclusion precludes coverage for “[a]ny obligation for which the insured or the insured’s insurer may be held liable under any workers compensation ... or any similar law.” The issue, therefore, is whether the Jones Act is “similar” to workers’ compensation. It is not.
The Texas Supreme Court has not addressed this precise question, and we have located only one published decision that is directly on point,
Sanders v. Home Indemnity Insurance Co.,
Furthermore, the operative phrase here, “any similar law,” is ambiguous with respect to the Jones Act claims. In light of this ambiguity, the court must interpret the term so that it does not exclude coverage.
See Mid-Continent Cas. Co. v. Swift Energy Co.,
b. Sylvester
This exclusion does not apply to Sylvester. Clanton and Satterfield charged Sylvester with negligent and reckless driving. Because Sylvester was not Clanton or Satterfield’s employer, such claims, if proven, would not create “obligation^] for which [Sylvester] or [his] insurer may be held liable under any workers compensation, disability benefits or unemployment compensation law or any similar law.”
ii. Employee-Indemnification Exclusion
This exclusion precludes coverage for Texas Crewboats, but not for Sylvester.
a. Texas Crewboats
The parties agree that the accident involved “bodily injury to ... employee[s] of [Texas Crewboats] arising out of and in the course of employment by [Texas Crew-boats] ....” Navigators, however, contends that the exclusion is inapplicable under the subsection of the exclusion that
*311
states, “[t]his exclusion does not apply to bodily injury to domestic employees not entitled to workers compensation benefits ....” According to Navigators, the term “domestic employees” does not refer to “butlers and chambermaids,” but rather to employees who work in the United States as opposed to those who work abroad. This interpretation is unreasonable, and therefore, does not defeat the otherwise applicable exclusion.
Cf. Barnett v. Aetna Life Ins. Co.,
Navigators admits that it was only able to locate one decision to support its interpretation,
Carroll v. Castillo,
No. 13-99-006-CV,
The Texas Supreme Court has not resolved this question. Nor does it appear that any Texas court has resolved this issue in a published opinion. Thus, we consult decisions from other jurisdictions and the “majority rule” in making this
Erie
guess.
See SMI Owen Steel Co. v. Marsh USA, Inc.,
This domestic-employee exception to the exclusion is inapplicable for another reason — it only applies to those domestic employees who are not entitled to workers’compensation benefits. Clanton and Satterfield were entitled to such benefits because Texas Crewboats was a workers’compensation subscriber. In sum, the employer-indemnification exception barred coverage for Texas Crewboats.
b. Sylvester
This exception does not apply to Sylvester because he was not Clanton or Satterfield’s employer: “This insurance does not apply to ... bodily injury to ... [a]n employee of the insured .... ” Sylvester is the “insured.” Clanton and Satterfield suffered bodily injuries. In order for this exclusion to apply, they must be employees of Sylvester. Neither party has claimed this, nor is there any basis in the record for this conclusion.
iii. Fellow-Employee Exclusion
The fellow-employee exclusion does not preclude coverage for Texas Crewboats, *312 but it may preclude coverage for Sylvester if he was an employee of Texas Crewboats.
a. Texas Crewboats
This exclusion does not apply to Texas Crewboats because it is Clanton and Satterfield’s employer, not their fellow employee. The exclusion only applies to “[b]odily injury to any fellow employee of the insured .... ”
b. Sylvester
Amerisure and Navigators contest whether Sylvester was an employee of Texas Crewboats when the incident occurred. If he was, the exclusion applies, but if he was not, the exclusion does not apply. There is a genuine issue of material fact on this point. Navigators submitted the Declaration of James Travis, the Operations Manager of Texas Crewboats, explaining that Sylvester was not an employee, but rather, an independent contractor. Amerisure disputes this, pointing to deposition testimony from Clanton indicating that Sylvester was an employee. This court must consider the declaration and the deposition testimony when determining an insurer’s duty to indemnify.
See D.R. Horton-Texas, Ltd. v. Market Int’l Ins. Co.,
C. The Conditional Exclusion of the Navigators Policy
Navigators contends that, if Amerisure does not have a duty to indemnify Sylvester, then Navigators also does not have such a duty under its conditional exclusion, which provides, “this insurance shall be free from liability ... unless coverage is provided in an underlying policy scheduled hereon, and then coverage hereunder shall only operate as excess of such coverage ----” According to Navigators, “[because Amerisure deliberately declined to include an allocation in its settlement agreement for Amerisure’s release versus Sylvester’s release, no part of the settlement amount is subject to its subrogation.”
This conditional exclusion does not apply when the liability “arisefs] out of ... [the] ownership, charter, use, operation, [or] ... loading ... of any watercraft not otherwise excluded or limited herein .... ” The vessel at issue, the Florida Lilly, appears on the schedule of covered vessels. So the issue is whether the incident arose out of the ownership, charter, use, operation, or loading of the Florida Lilly.
In
Utica National Insurance Co. of Texas v. American Indemnity Co.,
Applying this broad definition of “arising out of,” we find that there is a causal connection or incidental relationship between the incident and the ownership, use, or operation of the Florida Lilly. Texas Crewboats had assigned Clanton and Satterfield to operate the Florida Lilly as captain and deckhand respectively. The incident occurred as Texas Crewboats was transporting them from Freeport, Texas, where Texas Crewboats has offices, to Morgan City, Louisiana, where the Florida Lilly was docked. Texas Crew-boats transported them in a company car and provided a driver and a company credit card for food and gas during the trip. Furthermore, Texas Crewboats began paying them for their services as soon as they departed from Freeport. The sole purpose of the trip was to transport these crewmen to the Florida Lilly, where they were to board and operate the vessel. Under these circumstances, we hold that (1) transporting the operators of a vessel (2) to that vessel (3) by the owners of the vessel (4) for the sole purpose of operating that vessel, has an incidental relationship to the ownership, use, or operation of that vessel. Moreover, insofar as the language of this exclusion is “ambiguous or inconsistent, the construction that would afford coverage to the insured must govern.”
Mid-Continent Cas. Co. v. Swift Energy Co.,
CONCLUSION
For the reasons set forth above, we VACATE the grant of summary judgment, dismissing the contractual-subrogation claim, and we REMAND for the determination of Amerisure’s duty to indemnify. 5 Amerisure may seek reimbursement through contractual subrogation if the fellow-employee exclusion precludes coverage for Sylvester. This, in turn, rests on the determination as to whether Sylvester was an independent contractor or an employee of Texas Crewboats.
Notes
. Navigators has not argued for affirmance on this basis.
. In so holding, we recognize that one could reasonably interpret the plain language of Mid-Continent to support such a broad exclusion of subrogation. We also note that the district court did not have the benefit of Sigmundik.
. The district court, in one sentence and without analysis, found that the employee-indemnification and fellow-employee exclusions apply: "The second and third exclusions equally apply to deny coverage.” Amerisure Ins. Co. v. Navigators Ins. Co., 04:06-CV-2069, op. at 2 (S.D.Tex. Jan. 7, 2009). In addition, the district court did not separately evaluate coverage for each insuréd, as the policy requires.
. In making an Erie guess, this court may consult the decisions of other jurisdictions so long as the highest court of the forum state has not addressed the issue. See SMI Owen Steel Co. v. Marsh USA, Inc., 520 F.3d 432, 437 (5th Cir.2008) (citation omitted).
. Because Amerisure’s entitlement to recovery remains unresolved, Amerisure's request for attorney's fees under Texas Civil Practice & Remedies Code § 38.001 is premature.
See Green Int’l., Inc. v. Solis,