In First General Realty Corp. v. Maryland Casualty Co., 981 S.W.2d 495 (Tex. App.--Austin 1998, pet. denied), a group of subdivision homeowners sued several developers for damages to their homes related to a series of floods. Id. at 496. Fireman's Fund Insurance Company ("Fireman's") insured the developers, while Maryland Casualty Company ("Maryland") provided primary and excess coverage for the developers for some of the claims. Id. Fireman's assumed the developers' primary defense. Id. Maryland participated in some "joint defense meetings and settlement discussions with the developers and homeowners," but ultimately did not provide the developers with a defense against the homeowners and made no payment toward settlement of the homeowners' claims. Id. at 497. The homeowners and developers eventually entered into an agreement that released the developers from liability except for a certain period of time, and the developers assigned the homeowners all of their claims and causes of action against their insurers, specifically Maryland. Id. A district court later rendered judgment in the homeowners' favor for approximately $9 million as actual damages. Id. The developers brought a declaratory-judgment action against Maryland requesting a determination that coverage under Maryland's policies existed and that Maryland was obligated to provide a defense in the underlying lawsuit. Id. The homeowners intervened. Id. The trial court held, inter alia, that: (1) Maryland did not meet the test set out in Gandy to invalidate the assignment between the developers and the homeowners; and (2) the judgment and findings in the underlying suit were not binding. Id. The Austin Court of Appeals held that "an agreed judgment between a plaintiff and a defendant is not binding on the insurer because an insurer's liability to a plaintiff who is the insured's assignee should be determined by 'the strength of plaintiff's claims rather than the generosity of defendant's concessions.'" Id. at 499. In First General Realty Corp. v. Maryland Cas. Co., the insurer offered the insured a conditional defense. The court held the tender of a conditional defense was not a refusal to defend. Id. at 501. The insured in that case relied upon the Restatement of Judgments for the general rule that when an insurer has an obligation to defend its insured and is given reasonable notice and an opportunity to defend the suit, the insurer is estopped from disputing evidence of the insured's liability to the injured party. RESTATEMENT (SECOND) OF JUDGMENTS 58 (1982). Obviously, if there is no coverage under a policy, there is no duty to defend and it cannot be said that an insurer must offer a defense with a reservation of rights or waive the application of the very exclusions that preclude coverage in the first place. The rule is one of collateral estoppel: if the insurer fails to defend its insured, it is bound by the amount of damages found against the insured in the underlying litigation. Id. This rule of issue preclusion does not apply if the underlying judgment is rendered without a full adversarial trial. Gandy, 925 S.W.2d at 714.