Allstate Insurance Company v. Scarbrough
ORDER granting 135 Motion for Partial Summary Judgment. Signed by District Judge Michael P. Mills on 3/20/2017. (lpm)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF MISSISSIPPI
ALLSTATE INSURANCE COMPANY
Civil Action No.: 3:15-cv-00114-MPM-RP
JOHN ROBERT SCARBROUGH
This matter comes before the Court on Allstate Insurance Company’s (“Allstate”) Motion
for Partial Summary Judgment as to the Automobile Liability Policy of Robert and Denise
Scarbrough . John Robert Scarbrough (“John”) and Kimberly and Rachel Holloway
(collectively “the Holloways”) have responded in opposition to the motion, to which Allstate
filed a reply. Having reviewed the submissions of the parties, in addition to relevant evidence
and authorities, the Court is now prepared to rule.
Factual and Procedural Background
After growing up in Georgia, John Robert Scarbrough began attending the University of
Mississippi in 2006 and eventually received his degree in December 2013. On April 6, 2012,
John 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
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
Taylor Nelson and Margaret Zuckley were also passengers in the truck at the time of the
accident. However, neither of those individuals is involved in this litigation.
Scarbrough, maintained two insurance policies with Allstate—an automobile liability policy and
an umbrella policy. Both policies were undisputedly in effect at the time of the accident.
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 negligence and gross negligence against
John and 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 the hide 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 case’s outcome.
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 present action, 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, this 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.
Allstate has filed two motions for partial summary judgment—one concerning the
automobile liability policy and one concerning the umbrella policy. This order will address
Allstate’s motion as to the automobile liability policy, and the Court will consider the motion as
to the umbrella policy in a separate order. The present motion has been fully briefed by the
parties, and upon due consideration of the parties’ arguments, in addition to relevant case law
and evidence, the Court finds that the motion should be granted.
Summary Judgment Standard
Summary judgment is proper “if the movant shows that there is no genuine dispute as to
any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). A genuine dispute of material fact exists “if the evidence is such that a reasonable jury
could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). At the summary judgment stage, the court must
“draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility
determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Prods., 530 U.S. 133,
150, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000). Once the moving party shows there is no genuine
dispute as to any material fact, the nonmoving party “must come forward with specific facts
showing a genuine factual issue for trial.” Harris ex rel. Harris v. Pontotoc Cty. Sch. Dist., 635
F.3d 685, 690 (5th Cir. 2011). “[A] party cannot defeat summary judgment with conclusory
allegations, unsubstantiated assertions, or ‘only a scintilla of evidence.’ ” Turner v. Baylor
Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007) (quoting Little v. Liquid Air Corp., 37
F.3d 1069, 1075 (5th Cir. 1994)). “If the nonmoving party fails to meet this burden, the motion
for summary judgment must be granted.” Little, 37 F.3d at 1075.
As a preliminary matter, the Court notes that the contract at issue—the Allstate liability
policy—contains a choice of law clause, specifically stating that “any and all claims or disputes
in any way related to this policy shall be governed by the laws of Georgia.” This Court has
previously recognized that when a contract contains a choice of law clause, the law of the chosen
state will be applied to govern the parties’ contractual rights and duties unless: “(1) the chosen
state has no substantial relationship to the parties or the transaction and there is no other
reasonable basis for the parties’ choice, or (2) applying the chosen state’s law would be contrary
to a fundamental policy of a state which has a materially greater interest than the chosen state in
the determination of the particular issue and which, under the rule of § 188, would be the state of
the applicable law in the absence of an effective choice of law by the parties.” Lagrone Const.,
LLC v. Landmark, LLC, 40 F.Supp.3d 769, 777 (N.D. Miss. 2014) (quoting Restatement
(Second) of Conflict of Laws § 187 (1971)).
Applying this standard, the Court finds that Georgia law—the law chosen by the
parties—should govern this dispute. The two policyholders, Robert and Denise, are Georgia
citizens. Additionally, the parties have not identified any fundamental policy of Mississippi that
the application of Georgia law would violate. In fact, none of the parties raise this issue in their
arguments whatsoever. The Court will therefore apply Georgia contract law to the extent that
such law is necessary in deciding this matter but notes that Georgia and Mississippi law appear
to be largely similar in the areas relevant to this case.
Under Georgia law, “[w]hen an insurance contract is deemed to be ambiguous, it will be
construed liberally against the insurer and most favorably for the insured.” State Farm Mut.
Auto Ins. Co. v. Staton, 685 S.E.2d 263, 265 (2009). However, the court “may not strain the
construction of the policy so as to discover an ambiguity.” Id. at 265-66 (quoting Shaw v. State
Farm Mut. Ins. Co., 129 S.E.2d 85 (1962)). The rule of liberal construction cannot be used to
create an ambiguity where one does not exist, and “where the language fixing the extent of
liability of an insurer is unambiguous and but one reasonable construction is possible, the court
must expound the contract as made.” Id. at 266 (quoting Cotton States Mut. Ins. Co. v. Bowden,
221 S.Ed.2d 832 (1975)).2
With these principles in mind, the Court now turns to the contract in dispute. The
relevant portion of the policy provides that it “protects an insured person from liability for
damages arising out of the ownership, maintenance or use, loading or unloading of an insured
auto.” Thus, in order for coverage to exist, the accident must involve an “insured person” and an
“insured auto,” making the definitions of those terms critically important. The contract provides
the following definition for “insured persons”:
While using your insured auto:
b) any resident; and
c) any other person using it with your permission.
While using a non-owned auto:
a) you; and
b) any resident relative using a four wheel private passenger auto or utility
Any other person or organization liable for the use of an insured auto if the
auto is not owned or hired by this person or organization provided the use
is by an insured person under (1) or (2) above.
The Court notes that these principles mirror Mississippi law on this point. Under Mississippi
law, “[a]mbiguous terms in an insurance contract are to be construed most strongly against the
preparer, the insurance company.” South Carolina Ins. Co. v. Keymon, 974 So.2d 226, 230
(Miss. 2008); see also State Farm Mut. Auto. Ins. Co. v. White, 2016 WL 4702372, at *2 (S.D.
Miss. Sept. 7, 2016) (“Ambiguous language should be construed against the insurer, as the
drafter of the policy, and in favor of the insured.”) (internal citation omitted). However,
“[a]lthough ambiguities in an insurance policy are construed against the insurer, a court must
refrain from altering or changing a policy where terms are unambiguous, despite resulting
hardship on the insured.” Id. (citing State Farm Mut. Auto. Ins. Co. v. Scitzs, 394 So.2d 1371,
1373 (Miss. 1981)).
For the purposes of this policy, “you” refers to Robert and Denise Scarbrough—the named
Regarding “insured autos” the contract states:
Any auto described on the Policy Declarations and the four-wheel private
passenger auto or utility auto you acquire during the policy period as a
An additional four-wheel private passenger auto or utility auto you acquire
ownership of during the policy period. This auto will be covered if we
insure all other private passenger autos or utility autos you own. You
must, however, notify us within 60 days of acquiring the auto and pay any
A substitute four-wheel private passenger auto or utility auto, not owned
by you or a resident, being temporarily used while your insured auto is
being serviced or repaired, or if your insured auto is stolen.
A non-owned four wheel private passenger auto or utility auto used by you
or a resident relative with the permission of the owner. This auto must not
be available or furnished for the regular use of an insured person.
The Court notes that the “Definitions” section of the contract provides that “Resident or
Reside means the physical presence in your household with the intention to continue living
there. Unmarried dependent children while temporarily away from home will be considered
residents, if they intend to continue to live in your household.” Relying on this language, in its
order issued on September 19, 2016, the Court stated that the issue of whether John was a
resident hinged upon his intent, namely whether he intended to continue to live in his parents’
household. The Court further held that this determination is a fact question for a jury to decide.
Allstate asserts that it is entitled to summary judgment regardless of whether John is
considered a “resident” because “John was not operating an ‘insured auto’ within the definition
of the policy at the time of the loss[.]” As quoted above, the “Insured Autos” section has four
subparts. Allstate asserts that none of those sections are applicable, making coverage
nonexistent. In opposition, John and the Holloways argue that the contractual language is
ambiguous and should, therefore, be construed in favor of coverage. In accordance with the
analysis set forth hereinafter, the Court agrees with Allstate’s position.
As set forth above, the first subsection for “Insured Autos” includes “[a]ny auto described
on the Policy Declarations and the four-wheel private passenger auto or utility auto you acquire
during the policy period as a replacement.” The policy declaration only includes a 2004 Cadillac
Escalade and a 2004 Lexus LS430. Moreover, John’s truck was not a replacement auto for either
of those two autos. Accordingly, the first subsection is not applicable.
The second subsection provides coverage for additional autos acquired during the policy
period. The policy period was January 19, 2012 to July 19, 2012. Both John and Robert testified
that John purchased the truck from Robert well before the policy period.4 Therefore, John’s
truck was not acquired during this time period, and this subsection is also inapplicable.
The third subsection provides coverage for a replacement auto being used while an
insured auto is being repaired, serviced, or if it is stolen. This section is also inapplicable to the
case at hand, as John’s truck was not a replacement auto. In fact, he had been driving the truck
since approximately 2006.5
The final subsection provides coverage for “[a] non-owned four wheel private passenger
auto or utility auto used by you or a resident relative with the permission of the owner. This auto
must not be available or furnished for the regular use of an insured person.” This subsection
creates the basis of the parties’ dispute.
Arguing that this subsection does not provide coverage, Allstate asserts that:
In their depositions, both John and Robert testified that John “purchased” the truck from
Robert. However, John testified that he didn’t pay anything for the truck, and Robert testified
that he cannot remember the price. Nevertheless, it is undisputed that John acquired the truck
from Robert—regardless of the price—well before the policy period.
The Court notes that neither John nor the Holloways seriously dispute that the first three
subsections do not apply in this case.
If John is considered a resident relative, which Allstate alleges he is not, the
inquiry goes no further: no coverage is afforded pursuant to this subsection. If
John is not considered a resident relative, there remains no coverage afforded
under this policy because the truck unquestionably was available for his regular
use. In fact, the truck was his main form of transportation and was his “every
Thus, Allstate avers that this subsection does not provide coverage, regardless of whether
John is considered a “resident.” On the other hand, John avers that:
[T]he language upon which Allstate bases its denial of coverage is highly
ambiguous. While the vehicle in question was available to John for his regular
use, it was unavailable to either of his parents, Robert or Denise. This has the
effect of making the vehicle unavailable for the use of insured persons Robert and
Denise Scarbrough, meaning that it would fit within the definition of “nonowned” vehicle. Further, the two sentences—one extending coverage to usage of
non-owned vehicles, the other excluding coverage of non-owned vehicles—
appear to make a distinction between the terms “resident relative” and “insured
person.” In either case, Allstate’s interpretation of the clause that it excludes
John’s vehicle from coverage is not the only reasonable interpretation.
While the Court appreciates John’s attempt to portray the contract language as
ambiguous, it is unpersuaded. In the Court’s view, the language at issue clearly does not provide
coverage. As quoted above, the relevant language defines an “insured auto” as “[a] non-owned
four wheel private passenger auto or utility auto used by you or a resident relative with the
permission of the owner. This auto must not be available or furnished for the regular use of an
Presuming that John is an “insured person” under the contract, this subsection is
inapplicable as any auto furnished for the regular use of an “insured person” is excepted.
According to the deposition testimony, John’s truck has been available and regularly used by
him for many years, making coverage inapplicable. However, the contract also precludes
coverage if John is not considered an “insured person” because the first sentence requires that the
auto be used by a policyholder or a resident relative. The Court is not persuaded by John’s
attempt to create an ambiguity between the terms “resident relative and “insured person.” The
“Insured Persons” section, which the Court quoted above, clearly states that a relative is included
in the definition of an “insured person” for the purposes of the contract. Therefore, it appears
clear to this Court that the policy’s language of “resident relative” in one sentence followed by
“insured person” in the next does not create an ambiguity such that the contract must be
construed in favor of John.
The Court rejects John’s efforts to characterize the contractual language as ambiguous.
See Staton, 685 S.E.2d at 266 (“[T]he rule of liberal construction of an insurance policy cannot
be used to create an ambiguity where non, in fact, exists.”); Keymon, 974 So.2d at 230
(“Although ambiguities in an insurance policy are construed against the insurer, a court must
refrain from altering or changing a policy where terms are unambiguous, despite resulting
hardship on the insured.”).
Relying on this analysis, the fourth subsection—like the previous three—does not
provide coverage. Therefore, as asserted by Allstate, regardless of whether John is considered an
“insured person,” he was not operating an “insured auto” at the time of the accident. Therefore,
the automobile liability policy does not provide coverage and Allstate is entitled to summary
judgment as to that policy.
Accordingly, it is hereby, ORDERED that Allstate’s Motion for Partial Summary
Judgment as to the Automobile Liability Policy of Robert and Denise Scarbrough  is
SO ORDERED, this the 20th day of March, 2017.
/s/ MICHAEL P. MILLS
UNITED STATES DISTRICT JUDGE
NORTHERN DISTRICT OF MISSISSIPPI
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