Deadlines to Accept a Settlement

The question today is: Did a Georgia trial court err in finding there wasn’t a valid contract in place because an auto accident victim impermissibly circumvented the time limits established by Georgia law when she imposed a shorter time period in which to perform acts to accept the offer of settlement?

Background of the Accident 

In October 2019, the plaintiff was injured in an auto accident with another motorist. That driver was intoxicated when he struck the plaintiff’s car and injured her. In late October, the plaintiff’s attorney faxed the other driver’s insurer, State Farm, a letter requesting an affidavit regarding the policy limits or a copy of the policy’s declaration page. State Farm sent a “confirmation of coverage” showing the policy limits.

On December 6, 2019, the plaintiff’s attorney sent a demand letter and offer to settle to State Farm. In this letter, The plaintiff listed several requirements for accepting her settlement offer, including:

  • Written acceptance of the offer within 30 days of receipt of the demand letter;
  • Issuance of a settlement check within ten days after acceptance of the offer;
  • An affidavit setting out the policy limits within fifteen days of the demand; and
  • A copy of the declarations page within 15 days of the demand.

Each of these requirements included the statement that “[t]imely receipt … is an essential element of acceptance.”

State Farm received the letter via certified mail, and a week later, the plaintiff’s attorney sent them a fax stating that it considered the offer rejected.

On January 3, 2020, State Farm sent a letter indicating its acceptance of the offer and attaching a check and an affidavit of the insurance coverage policy limits. This communication didn’t include the declarations page, but noted that it would be provided “in the immediate future.” A few days later, the plaintiff’s attorney notified State Farm that it still hadn’t received the declarations page and that it considered the settlement offer rejected. The plaintiff explained that the demand required timely receipt of the document by December 21. Later that day, State Farm faxed a copy of the declarations page to the plaintiff’s attorney. However, the plaintiff returned the settlement check, marked “void,” and filed suit against the other driver.

A few months later, she made an offer of settlement under Georgia Statute OCGA § 9-11-67.1 to the other driver’s insurance carrier, State Farm. When State Farm failed to submit all of the requested documents for settlement by the plaintiff’s deadline, she determined that the other driver had rejected her offer, and she filed suit.

The other driver filed a motion to enforce settlement, which the trial court denied. The other driver appealed that decision, arguing that the plaintiff couldn’t shorten the statutory period in which to accept the offer of settlement.

The other driver moved to enforce the settlement agreement, arguing that OCGA § 9-11-67.1 allowed 30 days in which to accept the settlement offer, and that the plaintiff couldn’t shorten that statutory time frame by imposing a shorter deadline. So, by his calculations, he had until January 17 to accept the offer, and he did so by his timely communications on January 3 and 6. The plaintiff argued that there was no valid contract because State Farm failed to unequivocally accept the offer, and that Georgia Statute § 33-3-28 permits her to ask for a copy of the declarations page within 15 days of the offer.

The trial court denied the motion to enforce the settlement, finding that the offer was clear and unambiguous, and that State Farm failed to accept it within the set time frame.

Appeal of the Trial Court’s Holding

The other driver argued on appeal that the trial court erred in finding that there was no valid contract in place because the plaintiff impermissibly circumvented the time limits set in Georgia Statute § 9-11-67.1 by imposing a shorter time period in which to perform acts to accept the offer of settlement.

Judge Todd Markle of the Georgia Court of Appeals wrote that the court must determine whether § 9-11-67.1 limited the plaintiff’s ability to set a time period of fewer than 30 days in which State Farm could accept the offer and comply with the demands.

OCGA § 9-11-67.1 (a) provides, in relevant part, that any offer to settle shall include five material terms, including:

  • The time period within which such offer must be accepted, which shall be not less than 30 days from receipt of the offer;
  • Amount of monetary payment;
  • The party or parties the claimant or claimants will release if such offer is accepted;
  • The type of release, if any, the claimant or claimants will provide to each releasee; and
  • The claims to be released.

Although the statute requires the inclusion of these five specific items, nothing in the statute precludes the parties from adding other demands. But, under the current version, which took effect on July 1, 2021, a pre-suit offer to settle is limited to the five identified material terms and parties may no longer add other terms unless mutually agreed upon.

Nevertheless, those additional demands “[do] not take the offer beyond subsection (a)’s scope.” Thus, under the plain language of subsection (a), the minimum amount of time in which the offeror may demand acceptance is 30 days, and this time period applies to any other condition of acceptance, including those the plaintiff demanded. To hold otherwise would essentially render the 30-day period in § 9-11-67.1 (a) meaningless, Judge Markle said.

The judge went on to note that this interpretation was consistent with general common law contract principles and to read the statute in this manner was in harmony with the existing laws. Moreover, the Court’s interpretation was also consistent with the statute’s codified purpose of curtailing a claimant’s ability to set up a claim of bad faith against an insurance company by imposing unreasonably short deadlines for accepting an offer. Therefore, Judge Markle and the Court of Appeals held that the 30-day minimum to accept an offer set forth in Georgia Statute § 9-11-67.1 must apply to all terms of the offer, even those not identified as material in the statute, and the trial court erred in concluding otherwise.

Because the trial court based its decision on an erroneous interpretation of the statute, the Court of Appeals vacated the trial court’s order and remanded the case for the trial court to reconsider whether there was an agreement to settle the lawsuit. Anderson v. Jones, 365 Ga. App. 493, 879 S.E.2d 119 (Ga. App. October 3, 2022).

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