(caption unavailable)

* Local Rule 47.5.1 provides: "The publication of opinions that have no
precedential value and merely decide particular cases on the basis of well-
settled principles of law imposes needless expense on the public and burdens
on the legal profession." Pursuant to that rule, the court has determined
that this opinion should not be published.
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_______________
No. 94-10257
Summary Calendar
_______________
FEDERAL INSURANCE COMPANY,
Plaintiff-Counter
Defendant-Appellee,
VERSUS
B.H.P WATER SUPPLY COMPANY,
Defendant-Appellant,
BURT FORMBY,
Individually and as Executor of the Estate of
Bea Formby, d/b/a Formby's KOA Kampgrounds,
Defendant-Counter
Plaintiff-Appellant.
_________________________
Appeal from the United States District Court
for the Northern District of Texas
(3:93-CV-672-X)
_________________________
(October 12, 1994)
Before SMITH, EMILIO M. GARZA, and PARKER, Circuit Judges.
JERRY E. SMITH, Circuit Judge:*
I.
This is a declaratory judgment action by Federal Insurance

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Company ("Federal"), seeking a declaration that it has no
liability or duty to defend B.H.P. Water Supply Corporation
("BHP") in an action brought against it by Burt Formby in his own
behalf and as executor of the estate of Bea Formby d/b/a Formby's
KOA Kampgrounds. The Formbys had a campground that bought water
from BHP. A dispute arose, and BHP imposed conditions for the
continuation of water service, conditions that the Formbys
thought were too onerous.
The Formbys filed a state court suit for an injunction
against BHP. While that suit was pending, Federal issued BHP an
insurance policy. Because of the pending state litigation, an
endorsement was added to the policy with the obvious intent to
exclude from coverage any liability stemming from the subject
matter of that litigation. The endorsement stated, in part, the
following:
3.1 [Federal] shall not be liable under this policy to
make any payment for Loss in connection with any
claim(s) made against any Insured . . .
(H) arising from any litigation, claims, demands,
causes of action, . . . decrees or judgments
against any "Insured(s)", occurring prior to, or
pending as of 8/18/86 . . .;
(I) Arising from any subsequent litigation, claims,
demands, causes of action, . . . decrees or judg ments
against any "Insured(s) arising from, or based
on substantially the same matters as alleged i n
the pleadings of such prior or pending litiga t i o n
. . .; or
(J) Arising from any act of any "Insured(s) which gave
rise to such prior or pending litigation . . . or
judgments against any "Insured(s)."

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A year later, the Formbys dismissed the state suit and, on
the same day, filed a federal suit. BHP called upon Federal for
a defense, which Federal declined. The Formbys and BHP then
entered into an agreement whereby judgment was entered against
BHP for $1,307,957.52. BHP assigned its rights against Federal
to the Formbys in exchange for the Formbys' agreement to delay
execution on the judgment against BHP.
Federal then filed this declaratory judgment action, which
was tried without a jury. The district court entered judgment
for Federal, concluding that the controversy made the subject of
the Formbys federal suit was excluded from coverage by the
endorsement in the policy.
II.
The Formbys argue that their federal suit is not subject to
the exclusion because in that suit they raised new matters not
covered in their prior, state action and that additional parties
were sued. On appeal, the Formbys state that "[t]he outcome of
this case rests in the determination of whether the matters
presented in the Federal Court Suit arose from or were based on
substantially the same matters as alleged in the pleadings of the
State Court Suit."
We easily answer the question posed by the Formbys in the
affirmative. At trial, Formby acknowledged that each of the
items of damage claimed in the federal suit traced back to the
water controversy that began in 1985. BHP's attorney had stated,

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in correspondence, that "the matters in controversy in both suits
are identical" and "arise out of the same factual background."
It is obvious that the Formbys, seeking a deep pocket,
dismissed the state suit and immediately filed the federal suit
in an effort to circumvent the restrictions imposed by the policy
endorsement. It is just as obvious that the two suits involved
"substantially the same matters."
The judgment is AFFIRMED.

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