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Allstate Insurance Co. v. Scarbrough

United States District Court, N.D. Mississippi, Oxford Division

April 25, 2017




         Now before the Court is Allstate Insurance Company's (“Allstate”) Motion for Partial Summary Judgment as to the Required Underlying Insurance Provision of the Personal Umbrella Policy [129]. The Court previously granted Allstate's motion for partial summary judgment concerning Robert and Denise Scarbroughs' automobile liability policy and now turns to Allstate's motion concerning the couple's umbrella policy. John Scarbrough (“John”) and Rachel and Kimberly Holloway (collectively “the Holloways”) filed responses in opposition to the motion, Allstate filed a rebuttal, and the Holloways filed a surrebuttal.[1] Upon review of these submissions, along with relevant authorities and evidence, the Court is now prepared to rule.

         Relevant Background

         The Court has recited the facts of this case numerous times in ruling on various motions filed by the parties. However, in the spirit of thoroughness, the Court will again provide a summary of the circuitous circumstances that have led the action to its present posture.

         On April 6, 2012, John-a student at Ole Miss-was involved in an automobile accident in Oxford, Mississippi. At the time of the accident, John was driving his white 2004 Toyota Tundra truck, which was titled in his name. Kimberly Holloway, one of John's co-workers at Proud Larry's restaurant in Oxford, and her sister, Rachel Holloway, were passengers in the truck at the time of the accident and allegedly suffered multiple injuries.[2]

         At the time of the accident, John maintained an automobile liability policy issued by GEICO Insurance Company (“GEICO”). Moreover, John's parents, Robert and Denise Scarbrough, maintained two insurance policies with Allstate-an automobile liability policy and an umbrella policy, which were both undisputedly in effect when the accident occurred. Moreover, the Holloways' parents, Lewis and Starlyn Holloway, maintained a policy with State Farm Mutual Automobile Insurance Company (“State Farm”) that provided uninsured motorist coverage for both Lewis and Starlyn, along with any resident relatives.

         About a year later, on April 26, 2013, the Holloways filed an action in state court in Hinds County, Mississippi, attempting to obtain recovery for the injuries they sustained in the accident. In their complaint, the Holloways asserted claims for negligence and gross negligence against John and a claim for negligent entrustment against Robert and Denise-his parents. The Holloways also asserted gross negligence and malicious conduct claims against GEICO and its agent, Dawn Lawson, due to GEICO's failure to provide payment to the Holloways under John's automobile liability policy. In addition, the Holloways asserted claims against State Farm for its failure to provide timely payment for their injuries under the uninsured motorist policy.

         The case was later transferred to the Circuit Court of Lafayette County, Mississippi. At some point thereafter, the Holloways became aware of the Allstate policies that had been issued to Robert and Denise. The Holloways believed that the Allstate policies provided coverage for their injuries and that Allstate had unlawfully attempted to hide the existence of the policies from them. Thus, on July 3, 2015, the Holloways filed a motion to amend their complaint to add Allstate as a defendant.

         On July 8, 2015, Allstate filed a separate action in this Court, requesting that it issue a declaratory judgment that neither of the policies issued to Robert and Denise provided coverage for the Holloways' injuries. Specifically, Allstate asserted that the policies had not been triggered because “various requirements of the policies are not met. For one, the alleged tortfeasor, John Scarbrough, was not a resident of the household of the insureds at the time of the accident.” In the amended complaint, Allstate asserts that it filed this action because “it has become evident that [Rachel and Kimberly Holloway] will seek to invoke the Allstate policies of Robert M. and Denise Scarbrough.” Allstate joined the Holloways as necessary parties to the action, asserting that their rights may be affected by the outcome of the case.

         Thereafter, on July 16, 2015, the Holloways filed their amended complaint in the Lafayette County Circuit Court action adding Allstate as a defendant, seeking a declaration that the Allstate policies issued to Robert and Denise do, in fact, provide coverage for their injuries and further alleging bad faith breach of contract and fraud.

         Returning to the action pending in this Court, on April 4, 2016, the Holloways filed an answer to the amended complaint, a crossclaim against John Scarbrough, a counterclaim against Allstate, and a third party complaint against GEICO, Dawn Lawson, and State Farm. These claims mirror the claims made by the Holloways in the underlying state court action, largely containing language identical to their state court complaint.

         On November 7, 2016, the Court issued an order denying motions to dismiss filed by Allstate and John but granting GEICO and Dawn Lawson's motions to dismiss since those parties were improperly joined in this action pursuant to Federal Rule of Civil Procedure 14. Moreover, the Court also issued an order on December 15, 2016, separating the trials for the Holloways' personal injury claims against John and the claims concerning the coverage issues associated with the Allstate policies. On March 20, 2017, the Court granted Allstate's motion for partial summary judgment concerning the automobile liability policy, finding that coverage did not exist under that policy.

         The Court will now address Allstate's motion for summary judgment regarding the Scarbroughs' umbrella policy. For the reasons set forth hereinafter, the Court finds that summary judgment is appropriate and, thus, that the motion should be granted.

         Standard for ...

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