An insurance company is not entitled to sue a manufacturer for subrogation after the insured has already been compensated for the same claim by another manufacturer. Wausau Underwriters Insurance Company v. General Electric Company, No. 01-02-00895-CV, Court of Appeals of Texas, First District, Houston, July 1, 2004.

Clifton Hall, a minor, was injured while visiting his grandparents, Charles and Sherry Horn, when their house caught on fire. He was severely and permanently injured in the fire. The Horns sued several extension cord manufacturers and Wal-Mart, alleging that the fire was caused by defects in an extension cord they purchased from Wal-Mart. The Horns settled, and the insurer, Wausau, paid $15 million in settlement; $10 million was paid on behalf of one manufacturer (Woods) and $5 million was paid on behalf of Wal-Mart. After the settlement, Hall reached majority and commenced an action against General Electric (GE), alleging that GE – and not Woods – was the manufacturer of the defective extension cord. Hall and Wausau entered into an agreement whereby Wausau would pay Hall’s legal expenses and Hall would agree to share any part of a recovery from GE with Wausau. Wausau brought a subrogation action against GE, “as real party in interest for Wal-Mart,” alleging that GE – not Woods – manufactured the defective extension cord. GE argued that even if Wausau was entitled to bring a subrogation claim, that claim must fail because Wal-Mart could not recover the full amount of its damages from two different manufacturers.

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