In Re: Ross, et al

United States Court of Appeals
Fifth Circuit
F I L E D
July 11, 2006
Charles R. Fulbruge III
Clerk
REVISED
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 03-20989
DWAYNE ROSS; MARIA ROSS, individually and as next friend of
Sydney Ross and Johnathon Ross, minor children; SYDNEY ROSS,
minor child; JOHNATHON ROSS, minor child,
Plaintiffs - Appellees,
versus
MATTHEW CURTIS MARSHALL; ET AL,
Defendants,
ALLSTATE TEXAS LLOYDS INSURANCE CO.,
Movant - Appellant.
Appeals from the United States District Court
For the Southern District of Texas
Before HIGGINBOTHAM, DAVIS, and GARZA, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
The Rosses ask us to reconsider our decision allowing Allstate
Texas Lloyds Insurance Company to intervene to challenge on appeal
an adverse liability judgment entered against its insured, Kent
Mathews. The Rosses contend that Allstate does not have a
sufficient interest in the underlying litigation under Federal Rule
of Civil Procedure 24(a). We disagree.
The interest required to intervene as of right is a “direct”
interest.1 By definition, an interest is not direct when it is

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1Fed. R. Civ. Proc. 24(a); New Orleans Pub. Serv., Inc. v. United Gas Pipe
Line Co., 732 F.2d 452, 463 (5th Cir. 1984) (en banc).
2See Restor-A-Dent Dental Labs, Inc. v. Certified Alloy Prods., Inc., 725
F.2d 871 (2d Cir. 1984); Travelers Indemnity Co. v. Dingwell, 884 F.2d 629 (1st
Cir. 1989).
3See Arkwright-Boston Mfrs. Mut. Ins. Co. v. Aries Marine Corp., 932 F.2d
442, 445 (5th Cir. 1991).
4See, e.g., Am. States Ins. Co. v. Bailey, 133 F.3d 363, 371-73 (5th Cir.
1998) (holding that “occurrence” in insurance policy did not include negligent
supervision claim against church official for alleged intentional sexual
misconduct of employees).
5See Intervenor-Appellant Allstate Texas Lloyds Insurance Company’s
Response to Petition for Rehearing En Banc, at 3 n.2.
2
contingent on the outcome of a subsequent lawsuit.2 An insurer who
defends its insured under a full reservation of rights provides a
defense in the liability action, but reserves the right to contest
coverage later.3 When an insurer defends under a full reservation
of rights, their interest in the liability lawsuit is contingent
upon the outcome of the coverage lawsuit. That interest, without
more, is insufficient for intervention.
But that is not the case here. To be sure, Allstate initially
defended Kent Mathews under a full reservation of rights. Allstate
denied coverage over Kent’s negligence on the basis of a line of
cases from our Court that held that the term “occurrence” in an
insurance policy did not cover the insured’s negligence, when that
negligence was premised on the intentional conduct of the insured’s
servant.4 That argument was abandoned after the Texas Supreme
Court’s decision in King v. Dallas Fire Insurance Company.5 There,
the Texas Supreme Court rejected the Fifth Circuit’s approach,

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6King v. Dallas Fire Ins. Co., 85 S.W.3d 185, 188 (Tex. 2002).
7See Intervenor-Appellant Allstate Texas Lloyds Insurance Company’s
Response to Petition for Rehearing En Banc, at 2-3.
3
instead interpreting the term “occurrence” to include coverage for
an insured’s negligence, even when premised on the intentional
conduct of the insured’s servant.6 From that point on, Allstate
defended Kent Mathews under a limited reservation of rights,
accepting coverage for any negligent conduct while denying coverage
for any intentional conduct.7 Once Allstate accepted coverage over
any negligence liability on the part of Kent Mathews, they had a
direct interest in the liability lawsuit. Regardless of whether,
in this case, Allstate’s interest was sufficient to intervene
without the acceptance of coverage, the interest was sufficient
with it.
Treating the petition for rehearing en banc as a petition for
panel rehearing, the petition for panel rehearing is DENIED. No
member of this panel nor judge in regular active service on the
court having requested that the court be polled on Rehearing En
Banc (Fed. R. App. P. and 5th Cir. R. 35), the Petition for
Rehearing En Banc is also DENIED.

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