The Georgia Court of Appeals has held that a trial court erred granting the defendant’s motion to enforce a settlement because the evidence did not show that the plaintiff’s law firm unequivocally accepted the counteroffer and communicated the acceptance to the defense counsel.
Background of the underlying injury case
The plaintiff injured his hip and knee when the defendant’s automobile struck his vehicle. He was transported to the hospital and required several surgeries. While he was still in the hospital, his mother researched attorneys, and the plaintiff hired a law firm.
At some point after the accident, the plaintiff’s law firm sent a demand letter to the defendant’s insurer. In the letter, the law firm offered to settle all bodily injury and property damage claims for the insurance policy limits. The demand also required the insurance company to submit an affidavit verifying coverage, as well as an affidavit from the defendant that he had no other available insurance. The insurance company then retained counsel on the defendant’s behalf for purposes of negotiating a settlement.
In response to the law firm’s letter, the defense lawyer sent a letter offering to tender the policy limits for bodily injury only, in exchange for a limited liability release, and attached a proposed release form that excluded any property damage claims. The letter also referenced the affidavits the law firm had requested, stating that it should have them soon. Over the next few weeks, the law firm continued to communicate with defense lawyer about the affidavits, but it made no mention of the proposed release form.
The defendant’s attorney sent the counteroffer and proposed release on February 19. Two days later, the law firm emailed the defense lawyer asking about the affidavits. He responded that they were working on it. The firm sent another inquiry regarding the affidavits on March 1, and the defense lawyer forwarded the affidavits that same day. No other communication between the attorneys happened until March 11, when the law firm notified the defendant’s attorney that the plaintiff had terminated the representation. By the end of February, the insurance company had issued the check for the policy limit of $100,000, and shortly thereafter defense counsel forwarded the requested affidavits by e-mail. The firm never deposited the check.
On February 22, the law firm sent the plaintiff’s mother a text message with the terms of the proposed settlement. There apparently was no other communication between the plaintiff and the law firm, and the plaintiff knew nothing about the demand or settlement until the text message. After his mother received the text, the plaintiff met with someone at the law firm, who instructed him to sign the release because the law firm had settled his case. the plaintiff refused to sign and terminated the representation. After obtaining new counsel, the plaintiff filed the instant suit against the defendant.
In his answer, the defendant asserted the defenses of release and settlement. The plaintiff then moved for partial summary judgment to establish that there was no settlement agreement. The defendant filed a cross-motion for summary judgment, seeking to enforce the settlement agreement.
At the hearing, the plaintiff admitted that the law firm had apparent authority to enter into a settlement, but he argued that there was no valid contract because there was no evidence the law firm communicated acceptance of the counteroffer to defense counsel.
The Decision of the Court of Appeals
Judge Todd Markle of the Court of Appeals wrote that it’s well settled that, unless the opposing party has knowledge otherwise, an attorney of record has apparent authority to settle a case on the client’s behalf, and the client will be bound by the settlement agreement. Here, according to the plaintiff, the evidence showed the settlement was never consummated. In response, the defendant pointed to email correspondence between defense counsel and the law firm to show that there was a valid acceptance based on course of conduct. The trial court concluded that there was evidence the law firm accepted the counter offer and, thus there was a valid settlement. The trial court granted the defendant’s motion to enforce the settlement. The plaintiff appealed.
The plaintiff contended that, given his refusal to sign the release form, there was no valid settlement because there was no objective acceptance communicated to defense counsel regarding its counter offer. He noted that it was irrelevant whether the law firm told him the case had been settled; what is relevant is whether the acceptance was communicated to defense counsel, and there was no evidence it was. The Court of Appeals agreed. Judge Markle noted:
Under Georgia law, an agreement alleged to be in settlement and compromise of a pending lawsuit must meet the same requisites of formation and enforceability as any other contract. In this regard, it is well settled that an agreement between two parties will occur only when the minds of the parties meet at the same time, upon the same subject matter, and in the same sense. An answer to an offer will not amount to an acceptance, so as to result in a contract, unless it is unconditional and identical with the terms of the offer. To constitute a contract, the offer must be accepted unequivocally and without variance of any sort. No contract exists until all essential terms have been agreed to, and the failure to agree to even one essential term means there is no agreement to be enforced. In determining if parties had the mutual assent or meeting of the minds necessary to reach agreement, courts apply an objective theory of intent whereby one party’s intention is deemed to be that meaning a reasonable person in the position of the other contracting party would ascribe to the first party’s manifestations of assent.
The parties in this dispute conceded that there was no acceptance of the initial demand letter and that defense counsel made a counter offer to tender the policy limit in exchange for a limited liability release. But they disputed whether the law firm accepted the counter offer.
When is an Offer Accepted?
The judge explained that in Georgia, “an offer may be accepted either by a promise to do the thing contemplated therein, or by the actual doing of the thing. And if an offer calls for an act, it can be accepted only by the doing of the act.” Moreover, quoting a 2015 decision, Judge Markle said,
The circumstances surrounding the making of the contract, such as correspondence and discussions, are relevant in deciding if there was a mutual assent to an agreement. A contract may arise through a course of conduct[,] and mutual acquiescence in such course of conduct may constitute sufficient consideration for that contract.
Applying an objective theory of intent, the judge found that the communications between the law firm and defense counsel wouldn’t lead defense counsel to believe the plaintiff’s law firm had accepted the counter offer. Instead, the law firm’s communications continued to inquire into the whereabouts of the requested affidavits, leading to the conclusion that the counter offer was still being considered.
Additionally, the law firm’s communications didn’t make any reference to the terms of the proposed release, and the law firm never negotiated the settlement check. The only evidence aside from the emails was the plaintiff’s concession that the law firm told him it had reached a settlement. But discussions between an attorney and the client has never been sufficient to establish acceptance, and there was nothing showing that the law firm communicated the plaintiff’s acceptance to the defense counsel. Notably, there were no affidavits from the insurance company’s representative, defense counsel, or from the law firm, and there was no acknowledgment that the counter offer had been accepted. Simply put, Judge Markle said that the scant evidence didn’t establish as a matter of law that the law firm unequivocally accepted the counter offer and communicated such acceptance to defense counsel. As a result, the trial court’s order to enforce the settlement was vacated. Grove s v. Gibbs, 2023 Ga. App. LEXIS 216 (Ga. App. May 24, 2023).