Columbia National Insurance agreed to pay $10.5 million to resolve claims stemming from an incident involving a man driving under the influence of prescription medication when he hit a family walking in the parking lot of a Gainesville Walmart.

The defendant driver, who was in a company vehicle at the time, was subsequently hit with an $11.5 million jury verdict, but Columbia—which initially refused to defend him in court—maintained it was not responsible for paying the judgment.

The driver and injured family sued the insurer, arguing it should have settled the policy within its $4 million limits. Trial was set to begin Feb. 3 in the U.S. District Court for the Northern District of Georgia's Gainesville division when the parties reached a settlement at a pretrial conference. The case was dismissed Wednesday.

"This case is a testament to the patience and perseverance of a family and their team of attorneys who stood by them in the face of a national insurance company's monumental resistance," said a statement from plaintiff's attorney Mark Alexander, who represents James and Amy Dunn, and their daughter. 

"This was a horrific, life-altering event for this family," said Alexander of Stewart, Melvin & Frost, who co-counseled Dan Sammons of Sammons & Henneke. Both firms are in Gainesville.

Slappey & Sadd partner Richard Dolder Jr., who represents the defendant driver along with firm partner Jay Sadd, said their his client "feels that the process vindicated him. Although he has great remorse for the harm he caused the Dunn family, he is gratified that a huge judgment is off his back."

"This case included a variety of cutting-edge insurance issues, and we are grateful that Judge Story worked so hard on addressing each one in his lengthy and well-reasoned opinion," Dolder added. 

Columbia is represented by John Bonnie and Stephen Rapp of Weinberg, Wheeler, Hudgins, Gunn & Dial. They did not respond to requests for comment. 

As detailed in court filings, the accident happened in 2013 when Ronald Patterson was driving a pickup truck belonging to his employer, Lawson Air Conditioning & Plumbing. All three of the victims suffered serious injuries and sued Patterson and his employer in Hall County State Court.

Patterson, whom Dolder said was taking prescription pain medication at the time, was charged and pleaded guilty to driving under the influence.

Lawson carried two policies with Columbia: $1 million in primary coverage and a $3 million umbrella policy.  

Columbia's adjuster denied coverage after investigating the accident, telling Patterson he was "not a permissive driver at the time of the accident" under the policies' terms.

The insurer retained counsel for Lawson but did not hire a lawyer for Patterson or file a declaratory judgment action as to its obligations to him. Patterson did not respond to the suit and was declared in default.

More than nine months after the suit was filed, Columbia moved to intervene in the litigation but the trial court refused to allow it. 

The Dunn family settled with Lawson for $125,000 in 2016, and their claims proceeded against Patterson.

Columbia hired lawyers to defend Patterson and sent him "reservation of rights" letters, and filed an entry of appearance in the Hall County suit. Patterson rejected their defense offer and refused to meet with them, although they continued to defend the case.

The Dunns offered to settle their claims for $1.125 million in mid-2016, but Columbia declined.

The trial court ordered Columbia's attorneys off the case in 2017, ruling they could not show Patterson gave them authority to represent him, and he proceeded without counsel, and the case went to trial in June 2017.

As a sanction for failing to appear for a deposition and court hearing, Hall County State Court Judge Larry Baldwin forbid Patterson to "question witnesses, put forth argument, present an opening statement at trial, or otherwise oppose plainittfs' showing as to damages."

The jury subsequently awarded $11.5 million, including $5 million in punitive damages. 

Patterson and the Dunns jointly sued Columbia in federal court in November 2017, with Patterson asserting claims for breach of contract for Columbia's failure to defend him and settle the underlying suit within its $4 million limits and the Dunns seeking to hold the insurer liable for the claims they held against Patterson. 

Columbia argued Patterson breached his contractual duties to cooperate and assist in his defense and to mitigate his damages by accepting its offer to defend him. All sides moved for summary judgment.

In a September order, Judge Richard Story agreed with Patterson that Columbia breached its duty to defend him, writing that his complaint showed "potential or arguable coverage" and that the insurer had "blatantly ignored Georgia's strong policy preference for defending possible insureds while filing a declaratory judgment action to clarify coverage."

Story rejected Columbia's arguments that Patterson was not a permissive driver of the truck, writing that evidence showed he was routinely given permission to drive it for personal use and that Columbia had even handled a prior claim when he was involved in another accident.

"It is difficult to understand why Columbia would defend Patterson in that suit but failed to even seek a declaratory judgment to coverage for the case currently before the court," Story said. 

The judge also rejected the insurer's argument that Patterson had a duty to cooperate.

"As Patterson asserts and Columbia fails to contradict, once an insurer wrongfully denies coverage and refuses to defend, the insured will no longer be obligated to comply with his or her own obligations under the policy," Story wrote.

Story also declined to grant the insurer summary judgment on Patterson's bad faith failure to settle claims, writing that, "while Columbia was representing Patterson under a unilateral reservation of rights, plaintiffs in the underlying suit offered to settle their claims against him for $1,125,000, well within the policy limits of $4 million."

When a jury awarded $11.5 million at trial, the "seemingly exorbitant award should not have come as a surprise," Story wrote. "Patterson admitted fault immediately, and the Dunns were entitled to both past and future medical expenses, as well as compensatory damages such as past and future pain and suffering."

On the issue of damages, Story said "a jury must decide whether Columbia negligently or in bad faith failed to settle the claims against Patterson.