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Allstate Insurance Co. v. Stack

United States District Court, E.D. Michigan, Southern Division

December 18, 2019

Allstate Insurance Company, Plaintiff,
Michael Stack, et al., Defendants.

          R. Steven Whalen U.S. Magistrate Judge


          Arthur J. Tarnow Senior United States District Judge

         This is a diversity contract dispute between two insurance companies and the estates of two victims of an auto accident. Plaintiff, Allstate Insurance Company, Inc. (“Allstate”) sues for a declaratory judgment that the Personal Umbrella Policy held by insured party Michael Stack, who was at-fault in the accident, excluded coverage for the accident. Defendant AMCO Insurance Company (“AMCO”) argues that the insurance policy held by the company for which Michael Stack worked excluded coverage for the accident. Defendants Thomas McIntyre and Sandy Holewinski, as personal representatives of the estates of the deceased, argue that the policy exclusions of Allstate's Personal Umbrella Policy are inapplicable to this case, and that Allstate is liable for costs arising from the accident.

         Factual Background

         On December 12, 2017, Michael Stack was a sales executive for Penguin Toilets, L.L.C. (Dep. of Michael Stack, Dkt. 41-4, pg.18-22). Penguin Toilets sold toilets with an overflow drainage system. The toilets were manufactured in China, shipped to a warehouse in Taylor, Michigan, and then from there shipped wholesale to various buyers. (Id.). Michael Stack was the Senior Vice President of Sales and Distribution and his job was to coordinate the shipments coming in from China with the purchase orders coming in from buyers. (Id. at 29). Michael Stack was not an employee, however. He filed a K-1 not a W-2 with the IRS. (Id. at 30-31). He owned 3 percent of the company and received guaranteed payment in the amount of $42, 000 per year as compensation for his services. (Id. at 29-30). His brother, Patrick Stack, was his supervisor and the company's managing member. (Id. at 31).

         Michael Stack would go to the warehouse in Taylor “a couple of times a week.” (Id. at 35). It was a 45-minute drive from Pontiac Trail to M-5 to I-275 to Eureka. (Id.). On the morning of December 12, 2017, Stack was heading down to the warehouse because he “had some paperwork to take down there.” (Id.). The paperwork consisted of bills of lading and purchase orders that he needed to give to someone in the warehouse so that the shipment of toilets that came in from China could be shipped out to the buyers. He had received this paperwork by email. His brother, Patrick Stack, testified that there was no need for Michael to go to the warehouse to deliver the paperwork, because he could simply email the paperwork to the warehouse and they would prepare the shipment and put it on the dock. (Dep. of Patrick Stack, Dkt. 41-5, pg. 60-62).

         Michael Stack was also a recovering alcoholic. He had been sober for 25 years prior to 2017, but he relapsed and in January of 2017 checked himself into an inpatient clinic for ten days. (Dep. of Michael Stack pg. 9-13). He also attended Alcoholics Anonymous meetings and took medication for high blood pressure and depression. (Id.).

         On the morning of December 12, 2017, Michael Stack drank. (Dep. of Michael Stack pg. 37; Michigan Department of State Police Report, Dkt. 44-5, pg. 4). The quantity that he drank is disputed and ultimately not relevant to the Court's holding. While he was en route to the Taylor warehouse, Stack also took a business call to discuss sales. At around 10:25 a.m., while driving on I-275, Stack crossed the median and drove his GMC Envoy into incoming traffic at around 75 m.p.h. He continued driving against traffic until his SUV struck an oncoming car. (See Dkt. 60). Michael Stack survived. The two occupants of the car he struck did not.


         Allstate filed suit on September 25, 2018, seeking declaratory relief only. [Dkt. # 1]. On April 16, 2019, Plaintiff moved for Summary Judgment [41]. Defendant Thomas McIntyre moved for Summary Judgment [42] the next day, and, on May 10, 2019, Defendant AMCO moved for Summary Judgment [44]. These motions are fully briefed, and a hearing was held on November 20, 2019. Sandy Holewinski did not file a Motion for Summary Judgment, but she did file a Reply brief [52] that Plaintiff moved to strike [56] as inconsistent with local rules.[1]

         Legal Standard

         When Plaintiff seeks a declaratory judgment, the Declaratory Judgment Act states that “[i]n a case of actual controversy within its jurisdiction ... any court of the United States ... may declare the rights and other legal relations of any interested party seeking such declaration.” 28 U.S.C. § 2201. “The Declaratory Judgment Act was an authorization, not a command. It gave the federal courts competence to make a declaration of rights; it did not impose a duty to do so.” Pub. Affairs Assocs., Inc. v. Rickover, 369 U.S. 111, 112 (1962). “A declaratory judgment, like other forms of equitable relief, should be granted only as a matter of judicial discretion, exercised in the public interest.” Eccles v. Peoples Bank, 333 U.S. 426, 431 (1948). The statute is best read as “enabling act, which confers a discretion on the courts rather than an absolute right upon the litigant.” Green v. Mansour, 474 U.S. 64, 72 (1985). The Sixth Circuit applies the following two-part inquiry in determining whether a declaratory judgment is appropriate.

The two principal criteria guiding the policy in favor of rendering declaratory judgments are (1) when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue, and (2) when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding. It follows that when neither of these results can be accomplished, the court should decline to render the declaration prayed.

Allstate Ins. Co. v. Mercier, 913 F.2d 273, 277 (6th Cir. 1990) (quoting E. BORCHARD, DECLARATORY JUDGMENTS 299 (2d ed. 1941)). Because these motions are for summary judgment, the standards of Rule 56 of the ...

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