Dunn v. Columbia Nat'l Ins. Co., CIVIL ACTION NO. 2:17-CV-0246-RWS

• Decision Date: 30 September 2019
• Docket Number: CIVIL ACTION NO. 2:17-CV-0246-RWS
• Parties: Amy DUNN, individually and as the natural parent of Danielle Demonbreun, James Dunn, and Ronald Curtis Patterson, Plaintiffs, v. COLUMBIA NATIONAL INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Georgia

418 F.Supp.3d 1192

Amy DUNN, individually and as the natural parent of Danielle Demonbreun, James Dunn, and Ronald Curtis Patterson, Plaintiffs,

v.COLUMBIA NATIONAL INSURANCE COMPANY, Defendant.

CIVIL ACTION NO. 2:17-CV-0246-RWS

United States District Court, N.D. Georgia, Gainesville Division.

Signed September 30, 2019

Daniel Jackson Sammons, Office Daniel Jackson Sammons, Mark William Alexander, Stewart Melvin & Frost, LLP, Gainesville, GA, James N. Sadd, Richard English Dolder, Jr., Slappey & Sadd, LLC, Atlanta, GA, for Plaintiffs.

Stephen James Rapp, John C. Bonnie, Weinberg Wheeler Hudgins Gunn & Dial, LLC, Atlanta, GA, for Defendant.

ORDER

RICHARD W. STORY, United States District Judge

This case is before the Court on Plaintiff Ronald Curtis Patterson's Partial Motion for Summary Judgment [59]; the Dunn Plaintiffs' Motion for Summary Judgment [70]; and Defendant's Motion for Summary Judgment [85]. Also before the Court is a Motion for Leave to File Supplemental Brief Regarding Pending Motions [100], which was filed in support of Patterson's Motion for Summary Judgment. After reviewing the record, the Court enters the following Order.

Background

This is an insurance coverage dispute where the insurance company did not bring a declaratory judgment action. As a result, the Court must now determine coverage, as well as whether Columbia National Insurance Company ("Columbia") breached its duty to defend and negligently failed to settle the underlying case. The below facts are undisputed.

On June 7, 2013, Patterson hit members of the Dunn family with a truck as they were walking out of a Walmart in Gainesville, Georgia. (Patterson's SMF, Dkt. [59-28] ¶ 44.) Surveillance video recorded the events, Patterson was fully at fault, and each Dunn Plaintiff suffered bodily injury as a proximate result of the accident. (Id. ¶¶ 45-48.) At the time of the accident, Patterson was driving a Chevy pickup truck owned by Lawson Air Conditioning and Plumbing, Inc. ("Lawson"), his employer. (Id. ¶¶ 1, 49, 50.)

Lawson was covered by two liability insurance policies with Columbia, a "Primary Policy" with limits of $1 million and an "Umbrella Policy" with limits of $3 million. (Id. ¶ 52.) Patterson's truck is a "covered auto" under the Primary Policy. (Id. ¶ 53.) The Primary and Umbrella Policies define an insured as "[a]nyone else while using with your permission a covered auto you own." (Id. ¶ 54; Insurance Policy, Dkt. [24-4] at 47, 75.) The Primary Policy also provides that Columbia has "the right and duty to defend any ‘insured’ against a ‘suit’ asking for [ ] damages ..." (Def.'s SMF, Dkt. [85-1] ¶ 16; Insurance Policy, Dkt. [24-4] p. 47.) Accordingly, Lawson promptly reported the accident to Columbia and otherwise complied with all conditions precedent to coverage. (Patterson's SMF, Dkt. [59-28] ¶ 54.) After opening an investigation into Lawson's claim on June 11, 2013, Columbia's adjuster sent a letter to Patterson on August 22, 2013, denying coverage on the sole basis that he was "not a permissive driver at the time of the accident." (Id. ¶¶ 58, 80; August Denial of Coverage Letter, Dkt. [59-16].)

On April 7, 2014, the Dunn family filed a lawsuit in the State Court of Hall County, Georgia against Patterson and Lawson ("underlying lawsuit"), of which Columbia received prompt and actual notice. (Id. ¶¶ 87-88.) In response, Columbia retained counsel to defend Lawson but did not retain counsel for Patterson or file a declaratory judgment action. (Id. ¶¶ 92-93.) Patterson went into default because he did not file an answer. (Def.'s SMF, Dkt. [85-1] ¶ 37.)

After discovery was underway, on December 9, 2014, Columbia's outside coverage counsel filed a Motion for Entry of Appearance as Counsel for Columbia in the underlying lawsuit, which the trial court denied. (Patterson's SMF, Dkt. [59-28] ¶¶ 97, 99; Def's Resp. to Patterson's SMF, Dkt. [68-1] ¶ 97.) Thereafter, on January 22, 2015, Columbia moved to intervene in the underlying lawsuit, which the trial court also denied. (Id. ¶ 100, 102.) About a year later, the Dunn family settled their claim against Lawson for $125,000 through mediation. (Id. ¶¶ 103-4; Def.'s SMF, Dkt. [85-1] ¶¶ 38-39.) At the mediation, Columbia considered settling the claims against Patterson but did not. (Def.'s SMF, Dkt. [85-1] ¶ 39.) Ultimately, the suit proceeded with Patterson as the sole defendant. (Patterson's SMF, Dkt. [59-28] ¶¶ 104.)

Columbia then hired attorneys for Patterson in January 2016 and sent him two reservation of rights letters on February 26, 2016, and March 1, 2016. (Id. ¶¶ 105-6; Def.'s SMF, Dkt. [85-1] ¶ 42.) The letters reserved the right "to assert additional grounds for denial of coverage, should it be determined, at any time, for any reason, the policy does not provide coverage for you," and "to file a declaratory judgment action to obtain the judicial determination of the coverage issues involved." (Id. ¶¶ 109, 111; ROR Letter, Dkt. [59-21].) They also stated that "[n]othing which Columbia National Insurance Company may have done prior to this Notice of Reservation of Rights, and nothing that Columbia National Insurance Company does hereafter should be construed as a waiver of any right or defense of Columbia National Insurance Company under the policy." (Id. ¶ 113.) Attorneys filed an Entry of Appearance stating they were retained to defend Patterson on February 29, 2016. Patterson, however, rejected Columbia's defense and did not meet with the attorneys, as requested. (Id. ¶¶ 107, 119-120.)

Despite Patterson's rejection, Columbia continued to defend him until they were removed by the trial court for lack of authority to appear on behalf of Patterson on May 12, 2017. (State Court Order, Dkt. [68-8] ("Because the evidence before the Court suggests there is no authority for counsel's representation of [Patterson], and because counsel has been unable to produce or prove the authority under which they appear, Counsel for [Patterson] shall be removed.")) In the meantime, on August 18, 2016, plaintiffs in the underlying action offered to settle the claims against Patterson for $1,125,000. (Def.'s SMF, Dkt. [85-1] ¶ 48.) Patterson was informed of the offer, but Columbia ultimately rejected it. (Id. ¶¶ 49, 53.)

Trial did not proceed well for Patterson. As a sanction for failing to attend his deposition and a court-ordered hearing, Patterson was not "permitted to question witnesses, put forth argument, present an opening statement at trial, or otherwise oppose the Plaintiff's showing as to damages." (Id. ¶¶ 55, 58; State Court Order, Dkt. [68-10] at 11.) The jury returned a verdict against Patterson for $11,500,000. (Def.'s SMF, Dkt. [85-1] ¶ 62.)

Patterson now alleges Columbia breached its contractual duty to defend him in the underlying suit and negligently failed to settle the claims against him. As co-Plaintiffs, the Dunns bring a judgment creditors direct action claim against Columbia for payment on the judgment they hold against Patterson, whom they argue is an insured under Lawson's policies. As affirmative defenses, Columbia argues Patterson breached his contractual duty to cooperate and that he failed to mitigate damages. Patterson now moves for summary judgment on his breach of contract claim, as well as Columbia's mitigation and cooperation defenses. The Dunns move for summary judgment on their claim. Finally, Columbia moves for summary judgment on Patterson's breach of contract and failure to settle claims, as well as the Dunns' claim.

Discussion

I. Summary Judgment Standard

Federal Rule of Civil Procedure 56 requires that summary judgment be granted "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." "The moving party bears ‘the initial responsibility of informing the ... court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.’ " Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir. 2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). Where the moving party makes such a showing, the burden shifts to the non-movant, who must go beyond the pleadings and present affirmative evidence to show that a genuine issue of material fact does exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The applicable substantive law identifies which facts are material. Id. at 248, 106 S.Ct. 2505. A fact is not material if a dispute over that fact will not affect the outcome of the suit under the governing law. Id. An issue is genuine when the evidence is such that a reasonable jury could return a verdict for the non-moving party. Id. at 249-50, 106 S.Ct. 2505.

Furthermore, in resolving a motion for summary judgment, the court must view all evidence and draw all reasonable inferences in the light most favorable to the non-moving party. Patton v. Triad Guar. Ins. Corp., 277 F.3d 1294, 1296 (11th Cir. 2002). But, the court is bound only to draw those inferences that are reasonable. "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial." Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ). "If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted." Anderson, 477 U.S. at 249–50, 106 S.Ct. 2505 (internal citations omitted); see also Matsushita, 475 U.S. at 586, 106 S.Ct. 1348 (once the moving party has met its burden under Rule 56(a), the nonmoving party "must do more than simply show there is some metaphysical doubt as to the material facts").

Finally,...