UNITED STATES COURT OF APPEALS
                              FIFTH CIRCUIT

                              _______________

                                No. 95-20566

                            (Summary Calendar)
                              _______________


                  FIRST STATE INSURANCE COMPANY,

                                           Plaintiff-Appellee,

                  versus

                  NORTH RIVER INS CO,

                                           Defendant-Appellant.


           _______________________________________________

             Appeal from the United States District Court
                  For the Southern District of Texas
                              (93-CV-3497)
           _______________________________________________
                           December 14, 1995

Before HIGGINBOTHAM, DUHÉ, and EMILIO M. GARZA, Circuit Judges.

PER CURIAM:*

      Defendant    North   River    Insurance    Company    ("North   River")

appeals the district court's order granting Plaintiff First State

Insurance Company's ("First State") motion for summary judgment.

We affirm.

                                       I

      First State issued a $2,000,000 malpractice insurance policy

to Smith, Fankhauser, Voigt & Watson ("Smith Fankhauser"), an


     *
            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opinion should not be published.
accounting firm in McAllen, Texas.         First State's policy covered

claims which were (1) based upon Smith Fankhauser's acts, errors,

or omissions during the five-year period prior to March 22, 1985,

and (2) filed during the three-year period after March 22, 1985.

The First State policy contains the following "other insurance"

condition:

     This Insurance does not cover any claim which is insured,
     or would, but for the existence of this insurance, be
     insured by any other existing policy or policies except
     in respect of any excess beyond the amount which would
     have been payable under such policy or policies had this
     insurance not been effected.

North River issued a separate $1,000,000 malpractice insurance

policy to Smith Fankhauser.       North River's policy covered claims

which were   (1)   based   on   Smith    Fankhauser's   acts,   errors,    or

omissions after March 22, 1983, and (2) filed during the one-year

period after March 22, 1986.      The North River policy contains the

following "other insurance" provision:

     If there is other insurance applicable to a claim covered
     by this policy, this policy shall be deemed excess
     insurance over and above the applicable limits of all
     such insurance.

The North River policy also contains the following exclusion, which

states that coverage does not apply

     to any claim arising out of any act, error or omission
     occurring prior to the effective date of this policy if
     there is other insurance applicable, or the Insured at
     the effective date knew or could have reasonably foreseen
     that such act, error or omission might be expected to be
     the basis of a claim or suit.

     One of Smith Fankhauser's clients, a bank, was declared

insolvent in May, 1986.     Minority shareholders filed suit against

the bank's former officers and directors in November, 1986.               The

                                   -2-
officers and directors then filed a third-party action against

Smith Fankhauser,        alleging    malpractice        liability    arising    from

financial work performed by Smith Fankhauser.               The Federal Deposit

Insurance   Corporation      filed    a    separate      lawsuit    against    Smith

Fankhauser, alleging malpractice liability arising from an audit of

the bank performed by Smith Fankhauser for the year ending December

31, 1984.   Smith Fankhauser settled the FDIC lawsuit for $900,000.

      First State paid the settlement amount in full, and then filed

an action in district court to have the rights of First State and

North River declared with regard to the two insurance policies.

The   district   court    granted    First       State's   motion    for   summary

judgment, awarded First State $300,000 plus interest in connection

with the FDIC settlement, and ordered North River to pay one third

of the litigation expenses in the third-party action.                   North River

timely filed its notice of appeal.

                                          II

                                           A

         North   River   argues     that       the   district   court   improperly

interpreted the language of the insurance policies.                     A district

court's interpretation of an insurance policy presents a question

of law, which we review de novo.                     Old Republic Ins. Co. v.

Comprehensive Health Care Assoc., Inc., 

, 107 (5th Cir.

1993).

      Under Texas law, when the terms of an insurance policy are




                                       -3-
unambiguous, courts must give effect to their plain meaning.1

Puckett v. U.S. Fire Ins. Co., 

, 938 (Tex. 1984).

However, conflicts between the policy provisions of concurrent

insurance   policies    are   resolved     by   ignoring   the   conflicting

provisions and prorating the liability "'between the two insurance

companies in proportion to the amount of insurance provided by

their respective policies.'"       Hardware Dealers Mut. Fire Ins. Co.

v. Farmers Ins. Exch., 

, 590 (Tex. 1969) (quoting

United States Auto. Ass'n v. Hartford Accident & Indem. Co., 

, 841 (Tenn. 1967)). Texas courts determine whether such

a conflict exists according to the following rule:

     When, from the point of view of the insured, she has
     coverage from either one of two policies but for the
     other, and each contains a provision which is reasonably
     subject to a construction that it conflicts with a
     provision in the other concurrent insurance, there is a
     conflict in the provisions.

Hardware 

.

     We must first determine, from the point of view of the

insured, whether Smith Fankhauser had coverage from either one of

the two policies at issue "but for" the other policy.               Both the

third-party action and the FDIC suit were based on alleged acts,

errors, or omissions of Smith Fankhauser during the five-year

period prior to March 22, 1985, and both claims were made during

the three-year period after March 22, 1985. Thus, Smith Fankhauser

would be covered by the First State policy "but for" the operation


      1
            Both sides agree that Texas law applies to this diversity action.
See Ranger Ins. Co. v. Estate of Mijne, 

, 243 n.9 (5th Cir. 1993)
(noting that Texas rules of insurance policy interpretation apply to diversity
actions brought in district courts in Texas).

                                     -4-
of the policy's "other insurance" provision and the existence of

the North River policy.     Likewise, since both the third-party

action and the FDIC suit were based on alleged acts, errors, or

omissions of Smith Fankhauser after March 22, 1983, and both claims

were made during the one-year period after March 22, 1986, Smith

Fankhauser would be covered by the North River policy "but for" the

operation of the policy's "other insurance" provision and the

existence of the First State policy.

     Next, we must determine, from the point of view of Smith

Fankhauser, whether each of the policies at issue contains a

provision which is reasonably subject to an interpretation that

conflicts with a provision in the other policy.   According to the

First State policy's "other insurance" provision, First State's

coverage is limited to the excess of the policy limits of other

applicable policies.   According to the North River policy's "other

insurance" provision, North River's coverage is limited to the

excess of the policy limits of other applicable policies.

     North River argues that these provisions do not conflict

because of the operation of the exclusion provision in the North

River policy.   According to that provision, if there is another

policy applicable to the claim, the North River policy excludes

coverage of claims arising out of any act, error, or omission prior

to the "effective date" of the North River policy.     North River

argues that the "effective date" of its policy is March 22, 1986.

March 22, 1986 is designated in the North River policy as the first

date in the "policy period."    "Policy period" is defined in the


                                -5-
policy as the time elapsing between the "inception date" and the

date of termination.           Thus, though March 22, 1986, may be the

"inception date" of the policy, there is no indication that it is

also the "effective date."            The term "effective date" is not

defined by the policy.         While one reasonable interpretation would

make the "effective date" March 22, 1986 (the date after which all

claims covered      by   the    policy    must    have     been   filed),   another

reasonable interpretation would make the "effective date" March 22,

1983 (the date after which all acts, errors, or omissions covered

by the policy must have occurred).             According to Hardware Dealers,

an   insurer     does    not     escape        liability     just    because     its

interpretation is reasonable; a conflict between policies exists

whenever an interpretation that the provisions at issue conflict is

not unreasonable.2       Hardware 

.                  Since

none of the acts, errors, or omissions alleged in either the third-

party action or the FDIC lawsuit occurred prior to March 22, 1983,

the exclusion provision in the North River policy may be reasonably

interpreted so as not to apply to the claims at issue in this case.

      The "other insurance" provision in the First State policy and

the "other insurance" provision in the North River policy stand in

direct conflict with each other.               Therefore, in accordance with


      2
            This result is consistent with Texas law on the interpretation of
insurance policies generally.     When a term in an insurance policy may be
reasonably interpreted in more than one way, it is ambiguous. Entzminger v.
Provident Life & Accident Ins. Co., 

, 535 (Tex. App.)) Houston [1st
Dist.] 1983, no writ). Ambiguous terms should be interpreted strictly against
the insurer, so as to provide maximum coverage to the insured. Gulf Chemical &
Metallurgical Corp. v. Associated Metals & Minerals Corp., 

, 369 (5th
Cir. 1993); National Union Fire Ins. Co. v. Hudson Energy Co., 

,
555 (Tex. 1991).

                                         -6-
Texas     law,   the   conflicting   provisions       must   be   ignored,   and

liability must be prorated in proportion to the amount of insurance

provided by the respective policies.             Hardware 

.     Since the aggregate limit on the First State policy is

$2,000,000, and the aggregate limit on the North River policy is

$1,000,000,      the   district   court       correctly   allocated   two-thirds

liability to First State and one-third liability to North River.

                                          B

      North River also argues that the district court erred in

granting summary judgment without first joining Smith Fankhauser as

a necessary party.3      A person should be joined as a necessary party

in an action if "in the person's absence complete relief cannot be

accorded among those already parties."              FED. R. CIV. P. 19(a)(1).

First State paid the $900,000 settlement amount in the FDIC lawsuit

and has incurred litigation expenses in the third-party action.

Under Texas law, First State is both contractually and equitably

subrogated to the rights of Smith Fankhauser against North River.

See Southwestern Indemnity Co. v. National Surety Corp., 

, 549 (5th Cir. 1960) (holding that insurance company was

contractually subrogated to the rights of insured in seeking

contribution from other insurer for settlement amount paid by

insurance company); Liberty Mut. Ins. Co. v. General Ins. Corp.,

, 797 (Tex. Civ. App.))Tyler 1974, writ ref'd n.r.e.)


      3
            We review a district court's decision relating to the joinder of
necessary parties for abuse of discretion.     See Broussard v. Columbia Gulf
Transmission Co., 

, 889 (5th Cir. 1968) (reviewing district court's
decision to dismiss for failure to join a necessary party for abuse of
discretion).

                                      -7-
(holding that insurance company was equitably subrogated to the

rights of insured in seeking contribution from other insurer for

settlement amount if contractual language was insufficient to

support contractual subrogation).           Thus, since complete relief can

be accorded between First State and North River, Smith Fankhauser

is not a necessary party.4       Accordingly, the district court did not

abuse its discretion by granting summary judgment without joining

Smith Fankhauser.

                                      III

      For the foregoing reasons, we AFFIRM the district court's

order granting First State's motion for summary judgment.




      4
             A person may also be a necessary party if "the person claims an
interest relating to the subject of the action" and meets certain other criteria.
FED. R. CIV. P. 19(a)(2). However, the record contains no evidence that Smith
Fankhauser has claimed an interest relating to the subject of this lawsuit.

                                      -8-