On March 6, 2017, a divided Georgia Supreme Court held that an insured is not precluded from demanding timely payment as a condition of acceptance of a pre-suit settlement offer. Grange Mutual Casualty Company v. Woodard, 2017WL875034 (Ga. 2017). The ruling expands the array of conditions that may be imposed upon insurers. An insured will not be barred from adding other conditions necessary to consider an offer accepted and the insurers may face bad-faith claims if they do not comply with the contractual requirements of the imposed conditions.
This ruling results from a case involving a 2014 fatal motor vehicle accident in which a car driven by Thomas Dempsey hit a pickup truck driven by Boris Woodard, injuring Woodard and killing his daughter, a passenger. Woodard sent Dempsey’s insurer, Grange Mutual Casualty Company (“Grange”), a demand for the policy limits with a condition that Grange had thirty days to accept the offer and another ten days to deliver the money. Woodard further emphasized that "timely payment is an essential element of acceptance." One day before the offer expired, Grange notified Woodard via email, stating that it accepted the offer and that the check would be issued that day. After two weeks, the check had not arrived and Woodard’s attorney notified Grange that no settlement agreement had been reached. Grange blamed the delay on an incorrect address and resent the check; however, Woodard returned the check un-cashed. Grange then sued Woodard and his wife for breach of contract.
Both sides moved for summary judgment pursuant to O.C.G.A. § 9-11-67.1, which lays out the requirements for pre-suit settlement demands in motor vehicle actions. "Nothing in this code section shall prohibit a party making an offer to settle from requiring payment within a specified period," the statute says, "provided, however, that such period shall be not less than ten days after the written acceptance of the offer to settle." The statute also says that nothing in it "is intended to prohibit parties from reaching a settlement agreement in a manner and under terms otherwise agreeable to the parties." On appeal, the 11th Circuit observed that the statute seemed ambiguous, because it "appears to contemplate that an offeree will accept an offer in writing, such that payment would be a term of contract performance, not contract formation." However, the Georgia Supreme Court found that the law "arguably permits the parties to reach an agreement as they see fit, including 'by contracting around' the procedure" laid out in the statute. Therefore, the law does not bar an insured from including additional conditions necessary for acceptance of an offer. This holding requires insurers to strictly comply with conditions set out in settlement offers or face potential bad-faith claims. Insurers should keep updated records for all of their claims to avoid issues such as this case.