You were indeed correct. It's presumably A's turn, A controls
Theater of Horrors, and one of A's opponents has lost life this turn, so A can play cards exiled with
Theater of Horrors, just as the card says. If the Theater was supposed to be limited to only allow playing cards exiled with it that you own, it would have to say that. It doesn't, so its effect carries no such limitation.
There isn't a particular rules backing for this, because it's simply a matter of the card doing exactly what it says it does. In general, cards do (and do only) what they say they do, even if that's not always what would be most convenient for the player who put them in their deck.
Edited Callum Milne (Feb. 9, 2019 08:38:27 PM)