On March 6, 2017, a divided Georgia Supreme Court issued its opinion on a ruling requested by the 11th Circuit Court of Appeals pertaining to a policy limits demand in a fatal 2014 motor vehicle accident. Grange Mutual Casualty Company v. Woodward, et al., 2017 Ga. Lexis 172. The court ruled that O.C.G.A. 9-11-67.1 does not bar a plaintiff from adding conditions necessary to consider a pre-suit settlement demand accepted, including but not limited to a 10-day deadline to pay the policy limits.
This case involved a motor vehicle accident in which the driver of the plaintiff vehicle was injured and his daughter, a passenger, was killed. Plaintiffs' attorney sent the defendant's insurer a demand for $100,000 policy limits with a list of conditions, including that the insurer had 30 days to accept the demand and another 10 days to deliver the settlement drafts. The settlement demand read in pertinent part, "Timely payment is an essential element of acceptance." The insurer agreed to the demand within the 30-day time period; however, the settlement drafts were not received within the 10 days thereafter due to an address issue. Although the insurer reissued the drafts and sent them via overnight mail, plaintiffs' attorney returned them uncashed and advised that no binding settlement agreement had been reached.
The insurer sued the plaintiffs in federal court for breach of contract, and both sides moved for summary judgment pursuant to O.C.G.A. 9-11-67.1, the statute that sets forth the requirements for pre-suit settlement demands in motor vehicle accidents. The code section provides in relevant part:
(g) Nothing in this Code section shall prohibit a party making an offer to settle from requiring payment within a specified period, provided, however, that such period should not be less than 10 days after the written acceptance of the offer to settle.
The trial court granted the plaintiffs' motion for summary judgment, ruling that nothing in the statute barred them from making payment a condition of acceptance. On appeal, the 11th Circuit determined that the statute was ambiguous and certified four questions to the Georgia Supreme Court:
- Did the insurer's acceptance of the plaintiffs' demand create a binding settlement agreement?
- Does Georgia law permit unilateral contracts requiring specific performance of the specific act as part of the contract?
- Did the plaintiffs' demand for timely payment as a condition of acceptance comport with Georgia law?
- If there was a binding agreement, did the insurer breach it?
The Court opined that O.C.G.A. 9-11-67.1 sets forth certain terms that, at a minimum, must be included in a pre-suit demand and how those terms must be accepted, but the statute does not bar a plaintiff from adding additional conditions necessary to consider the demand accepted. Therefore, the statute does not preclude a pre-suit demand from requiring timely payment as a condition of acceptance. The Georgia Supreme Court declined to rule upon the 11th Circuit's questions "to the extent that they call on us to decide the ultimate issues in the case."
This decision expands the array of conditions plaintiff attorneys may impose upon insurers who face potential bad-faith claims if they do not agree to settle within the statutory requirements. We can be sure that plaintiff attorneys will attempt to "set up" insurers for bad faith with Holt demands requiring payment of the policy limits within 10 days of accepting the demand.
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