When Can an Insurance Settlement Agreement be Enforced?

When Can an Insurance Settlement Agreement be Enforced?

After an auto accident, the plaintiffs sued another motorist for negligence and damages. The defendant appealed from the trial court’s order denying his motion to enforce the settlement agreement, arguing that, pursuant to O.C.G.A. § 9-11-67.1.

Background

In May 2022, the plaintiffs were injured when their car was rear-ended by a vehicle driven by the defendant, causing their car to leave the roadway, roll over, and land on its roof. At the time of the accident, the defendant was insured under an Allstate policy. In November of that year, Allstate, on behalf of the defendant, offered to settle the plaintiffs’ bodily injury claims by tendering settlement checks for the $ 30,000 policy limits made payable to each plaintiff in exchange for their limited liability releases, pursuant to O.C.G.A. § 33-24-41.1. Allstate also included the defendant’s affidavit, as well as an affidavit from Allstate’s claims representative, indicating the defendant had no additional insurance coverage.

In response, the plaintiffs’ rejected Allstate’s offer, returned the settlement checks, and extended their own offer of settlement pursuant to O.C.G.A. § 9-11-67.1. The plaintiffs’ offer provided that if Allstate required the plaintiffs to sign a release, they’d only release their bodily and personal injury claims against the defendant. The plaintiffs further indicated that they’d consider it a rejection of their offer if the settlement payment or any other documents Allstate submitted included any additional terms or conditions not expressly referenced in the plaintiffs’ offer or that conflicted with the terms and conditions stipulated by the plaintiffs.

In January 2023, Allstate sent a letter to the plaintiffs’ attorney accepting the plaintiffs’ offer. The letter indicated that the settlement checks would be issued once their counsel advised how they should be made out. The letter also said that Allstate had drafted two limited liability releases for the plaintiffs to sign, although they weren’t enclosed. The letter expressly indicated that it was not a counteroffer, but an acceptance. The plaintiffs’ counsel sent instructions on how to make out the checks. The next day, Allstate’s counsel mailed the settlement checks and the limited liability releases, asking that the plaintiffs review, sign, notarize, and return them, and to call with any questions or concerns. The releases included language:

  • Discharging the defendant, Allstate, and the policy holder from the plaintiffs’ bodily and personal injury claims;
  • Acknowledging that the policy limit was sufficient compensation; and
  • Stating the defendants denied all liability for the accident.

But in March 2023, the plaintiffs filed suit against the defendant. When Allstate’s attorney asked why, the plaintiffs’ attorney said that they saw the releases as a counteroffer, without specifying the nonconforming terms, saying generally that the releases contained additional terms and conditions that weren’t part of the plaintiffs’ offer. In later communications, Allstate reiterated its intent to accept the plaintiffs’ offer and even included proposed releases for the plaintiffs to edit and revise as appropriate. The plaintiffs again responded, insisting that Allstate had made a counteroffer.

The defendant then moved to enforce the settlement, arguing that Allstate, on his behalf, had timely accepted and met the material terms of the plaintiffs’ offer, and that the provision of any nonconforming proposed releases didn’t constitute a counteroffer. The plaintiffs argued that there was no meeting of the minds because their counteroffer to Allstate’s initial offer to settle required the insurance company to perform certain acts to accept it, and because it hadn’t performed those acts, it had made a counteroffer to which the plaintiffs hadn’t agreed. Specifically, the plaintiffs asserted the following:

  • They hadn’t agreed to release anyone other than the defendant;
  • They hadn’t acknowledged that the settlement would fully compensate them; and
  • They didn’t agree that the defendants could deny all liability for the accident.

After oral argument, the trial court denied the defendant’s motion, finding that there was no enforceable agreement because the insurance company failed to conform its acceptance to the exact terms of the plaintiffs’ offer. The trial court specifically found that, although Allstate’s releases didn’t amount to counteroffers under O.C.G.A. § 9-11-67.1, neither were they acceptances because they contradicted the terms of the plaintiffs’ offer.

On appeal, the defendant argued the trial court erred by denying his motion to enforce the settlement because Allstate accepted the plaintiffs’ counteroffer pursuant to O.C.G.A. § 9-11-67.1, and the proposed releases didn’t constitute counteroffers.

The Opinion of the Court of Appeals

Judge Todd Markle of the Georgia Court of Appeals wrote in his opinion that O.C.G.A. § 9-11-67.1, as amended in 2021, includes the following pertinent language:

(a) Prior to the filing of an answer, any offer to settle a tort claim for personal injury, bodily injury, or death arising from the use of a motor vehicle and prepared by or with the assistance of an attorney on behalf of a claimant or claimants shall be in writing and: (1) Shall contain the following material terms: (A) The time period within which such offer must be accepted, which shall be not less than 30 days from receipt of the offer; (B) Amount of monetary payment; (C) The party or parties the claimant or claimants will release if such offer is accepted; (D) For any type of release, whether the release is full or limited and an itemization of what the claimant or claimants will provide to each releasee; and (E) The claims to be released[.]

The statute further provides that:

(b)(1) Unless otherwise agreed by both the offeror and the recipients in writing, the terms outlined in subsection (a) of this Code section shall be the only terms which can be included in an offer to settle made under this Code section. (2) The recipients of an offer to settle made under this Code section may accept the same by providing written acceptance of the material terms outlined in subsection (a) of this Code section in their entirety. (c) Nothing in this Code section is intended to prohibit parties from reaching a settlement agreement in a manner and under terms otherwise agreeable to both the offeror and recipient of the offer. (d) Upon receipt of an offer to settle set forth in subsection (a) of this Code section, … if a release is not provided with an offer to settle, a recipient’s providing of a proposed release shall not be deemed a counteroffer.

Judge Markle explained that the law favors compromise, and when parties have entered into a definite, certain, and unambiguous agreement to settle, it should be enforced. Finally, quoting an earlier case, the judge wrote:

When we consider the meaning of a statute, we must presume that the General Assembly meant what it said and said what it meant. To that end, we must afford the statutory text its plain and ordinary meaning, we must view the statutory text in the context in which it appears, and we must read the statutory text in its most natural and reasonable way, as an ordinary speaker of the English language would. … Applying these principles, if the statutory text is clear and unambiguous, we attribute to the statute its plain meaning, and our search for statutory meaning is at an end.

In this case, by letter dated December 12, 2022, the plaintiffs offered to compromise their claims for the $30,000 policy limits, and they indicated that if Allstate required them to sign a release, they’d only release their bodily and personal injury claims against the defendant. Their offer was made pursuant to O.C.G.A. § 9-11-67.1 and included the material terms set forth in the statute. In subsequent letters, Allstate explicitly accepted the plaintiffs’ offer to settle for the policy limits, and delivered the settlement checks made payable as directed by the plaintiffs. Although the limited liability releases included parties other than the defendant, Allstate didn’t object to any of the terms stipulated by the plaintiffs or impose any additional requirements upon them.

Importantly, the language of the releases didn’t constitute a counteroffer. Thus, once the insurance company sent its letter accepting the plaintiffs’ offer, a settlement had been reached as to all material terms under the statute. Judge Markle noted:

From that moment on, the presentation of a proper release in a form acceptable to [the plaintiffs] may have been a condition of Allstate’s performance but [it] was not an act necessary to acceptance of [the plaintiffs’] offer to settle for the policy limits. Moreover, since the agreement to terminate the controversy already had been created, Allstate’s subsequent proffer of release form which [the plaintiffs] believed was not in compliance with the understanding of the parties was not a rejection of the previously accepted offer.

Notably, in their offer of settlement, the plaintiffs didn’t require Allstate to submit a release. Rather, Allstate drafted proposed limited liability releases as the plaintiffs didn’t prepare their own, and it didn’t condition its acceptance of the plaintiffs’ offer upon the execution of those releases. In fact, in its initial letter, Allstate stated that it had drafted two limited liability releases but that it was “in no way an attempt to make a counteroffer, and that counsel should ”call or email … with any questions or concerns.”

The Court said that this language showed Allstate’s intent to accept the offer and that the prepared releases were merely proposed.

Moreover, its subsequent communications invited the plaintiffs to edit and revise the proposed releases as appropriate. Judge Markle wrote that an objectively reasonable person would understand by this precatory language that Allstate was seeking the plaintiffs’ approval, not objecting to the terms of the offered release agreement. Given Allstate’s clear intent to accept the offer, the Court and Judge Markle couldn’t say the releases were a rejection of the material terms of the plaintiffs’ offer, and this conclusion was consistent with O.C.G.A. § 9-11-67.1(d).

Accordingly, the Court of Appeals concluded that a binding contract was formed between the parties to accept the plaintiffs’ offer, and thus it reversed the trial court’s judgment. Diaz v. Thweatt, 2024 Ga. App. LEXIS 402 (Ga. App. October 16, 2024).

Questions about a Settlement Offer from an Insurance Company in Your Case?

As evidenced in this case, settlement offers and counteroffers can be complicated. Work with the pros. Contact an experienced Atlanta personal injury lawyer Atlanta residents trust. We are happy to answer your questions. We offer free consultations to all prospective clients. Contact an Atlanta personal injury attorney at Tobin Injury Law 24 hours a day, 7 days a week by calling 404-JUSTICE (404-587-8423).