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The 5th U.S. Circuit Court of Appeals has held that an insurer can intervene post-judgment in a suit against its insured, because the insured abandoned his appeal. Dwayne Ross v. Matthew Curtis Marshall, No. 03-20989. The decision reverses a $10 million judgment awarded to an African-American family victimized by a cross-burning incident in 2000. The judgment was awarded against the father of one of the perpetrators. Writing on behalf of the panel, Judge Patrick Higginbotham said that Allstate Texas Lloyds Insurance Co. had a right to intervene in the suit to challenge the judgment against its insured, a father whom the trial court had held vicariously liable for his son’s act of “racial terrorism.” On June 18, 2000, Kent Mathews’ son, Wayne, a 20-year-old college student; Matthew Curtis Marshall; and several of their friends built a wooden cross using materials from the Mathews’ garage, and burned it in front of the Ross family home. Wayne Mathews pleaded guilty to one charge of conspiracy to commit civil rights violations, and was sentenced to 15 months in a federal prison. The Rosses then filed a civil rights suit against Wayne Mathews, Marshall and their friends. They also named as defendants Wayne Mathews’ parents, who owned an Allstate homeowner’s insurance policy, on the ground that they “knew or should have known that their properties and household effects were being used in a reckless and negligent manner.” U.S. District Judge Kenneth Hoyt of Houston presided over the suit. Allstate provided an attorney to defend Wayne Mathews’ parents and filed a declaratory judgment suit asking the judge to find that the insurance company had no obligation under the homeowner’s policy to indemnify or defend the parents against the Rosses’ suit. At trial, the jury found Wayne Mathews and his friends liable for $10 million in damages, and also ruled that Kent Mathews was negligent when he delegated authority over the Mathews’ property to his son. But it found that the negligent delegation of authority did not cause the cross-burning. Hoyt, however, ruled that as a matter of law, the father was vicariously liable for the son’s conduct. Kent Mathews, through an attorney hired by Allstate, filed a notice of appeal. Allstate also filed a notice of appeal and a motion to intervene in the case. Kent Mathews filed a motion to amend Hoyt’s judgment. Hoyt denied the insurer’s motion to intervene and Kent Mathews’ motion to amend the judgment. After reaching an agreement with the Ross family, Mathews agreed to assign his rights against Allstate to the Rosses. Allstate then appealed to the 5th Circuit, which held that Hoyt erred in denying Allstate’s motion to intervene. The 5th Circuit also held that Hoyt abused his discretion when he amended the judgment to hold Kent Mathews vicariously liable for his son’s conduct. The 5th Circuit remanded the case with instructions that the Rosses take nothing in their suit against Kent Mathews. According to Higginbotham, “Allstate’s interest in minimizing its potential liability is aligned with [Kent] Mathews’ interest in avoiding a $10 million judgment.” Also, the Rosses have made Allstate “the central focus of their collections efforts” by agreeing to delay executing on Kent Mathews’ property in exchange for the assignment of his rights against the carrier. According to the opinion, that agreement transferred to the Rosses Mathews’ right to collect from Allstate.

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