Visibly upset, the man said he was very, very drunk, was semi-conscious and had his eyes closed during the incident, which ended when his daughter shouted "stop, stop dad, it's me".
The 39-year-old male pleaded not guilty before Blanchardstown District Court to the sexual assault of his daughter at their home in west Dublin.
Defence lawyer said the man thought he was having consensual foreplay with his long-term partner, and was so drunk he didn't realise he was in his daughter's bed.
The man, who cannot be named to protect his daughter, was found not guilty by a judge of sexual assault.
The judge found the man did not intend to assault the teenager, and thought he was indulging in foreplay with his partner, which is a lawful act.
Garda Conor Mohan said the incident took place on September 7, 2008 at the family home in west Dublin.
In a cautioned statement, the defendant told the garda he and his partner had an argument that day, and he left to go drinking. He bought two bottles of wine in Tesco, and drank them, before having six or eight more glasses of wine in Dublin city centre.
He awoke the next morning alone and in his daughter's bed.
He said he tried to ring his daughter, and his partner, to find out what happened but neither were answering their phones.
The defendant said his sister then came round to his house, saying that he'd sexually assaulted his daughter. He claimed he laughed at this, as it seemed absurd.
The man said he was "scared and confused", and he went back into Dublin to think and to try and remember the night.
He said he remembers going into his daughter's room to check on her. He went to sleep, and he partly awoke to feel someone in a fleece lying against him.
He turned around, said "why did you come back" as he thought his partner had come back to his bed.
The man said he then put his hands on her breasts and nuzzled her neck. He also put his hand on her private parts.
He said his daughter then shouted "dad, dad it's me".
The man said he had a very good relationship with his daughter but it had broken down due to this incident.
His daughter said her father has a very bad drink problem and she is disgusted by his behaviour. She said he often came into her bedroom when he was drunk, and would start rambling on to her.
She acknowledged that her father thought she was her mother.
The state solicitor said being drunk is not a defence for sexual assault but the man's legal team said he did not intend to commit the act, and thought what he was doing was lawful.
Judge Patrick McMahon said the case was a sad one, but in his opinion the defendant thought he was touching his partner, and did not have the mental element to commit the offence. He dismissed the charge.
The judge said he hoped and prayed that there can be some reconciliation for the family.
He also told the father the incident wouldn't have occurred if he'd not been drinking.