Moving in the Wright Direction: Case Law Developments on Responding to Time-Limited Demands Made Pursuant to O.C.G.A. § 9-11-67.1
By: Lauren Kamensky
Handling time-limited demands for policy limits, especially those under O.C.G.A. § 9-11-67.1, can create headaches for even the most seasoned defense attorneys. These demands have become playgrounds for plaintiffs to impose conditions of acceptance and performance that are, arguably, meant to elicit a rejection of the demand (and trigger potential excess exposure), rather than to resolve the claim for policy limits. It is common for these demands to require the insurer (or its counsel) to comply with various conditions of acceptance and performance, and plaintiffs often improperly conflate conditions of performance with conditions of acceptance. However, the Court of Appeals of Georgia recently issued an opinion that appears to be a step in the right direction for insurers and their counsel when responding to time-limited demands made under this code section.
In Wright v. Nelson, the Court of Appeals of Georgia examined whether the inclusion of a proposed release by a defendant’s insurer, after the defendant and the insurer accepted the material terms of the plaintiff’s demand, constituted a rejection fatal to entering into a binding settlement agreement. 2021 WL 926131 (Ga. Ct. App. March 11, 2021). There, the plaintiff sent the defendant’s insurer an offer to settle the plaintiff’s claims for the defendant’s insurance policy limits. Id. at *3. The demand, which referenced O.C.G.A. § 9-11-67.1, stated the plaintiff would accept the policy limits in exchange for a limited liability release “as that term is used and contemplated under Georgia law” and also included nine other conditions on which the demand was contingent. Id. Notably, the plaintiff’s offer to settle did not include a specific proposed release. The defendant’s insurer accepted the plaintiff’s demand in writing, tendered its policy limits and advised that it would contact the plaintiff’s counsel regarding a release. Id. A few weeks later, the defendant’s insurer provided the plaintiff with a proposed release and the plaintiff unilaterally deemed it a counteroffer and rejection of his time-limited demand. Id.
The Court of Appeals rejected the plaintiff’s argument that the insurer’s proposed release constituted a counteroffer because the court reasoned the defendant’s insurer had accepted the essential terms of the plaintiff’s demand in writing (which did not add any conditions to its agreement to pay the policy limits or make any objection to the release terms requested by the plaintiff) and had tendered its policy limits. Id. Most critically, the Court of Appeals held that: (1) a plaintiff is free to explicitly make presentation of a specific, acceptable release a condition of acceptance in the demand, but in the absence of such a condition, a proposed release is not deemed a counteroffer; and (2) once a settlement is formed, subsequent exchange of release proposals does not constitute a rejection of the previously accepted demand. 2021 WL 926131 at *3 (quoting Herring v. Dunning, 213 Ga. App. at 699). See also, Turner v. Williamson, 321 Ga. App. 209, 213, 738 S.E.2d 712 (2013); Sherman v. Dickey, 322 Ga. App. 228, 744 S.E.2d 408 (2013); Hansen v. Doen, 320 Ga. App. 609, 612, 740 S.E.2d 338, 342 (2013). The court also noted that the insurer provided the proposed release with precatory language seeking the plaintiff’s approval of the release, and later correspondence showed the insurer attempted to capture the plaintiff’s specified release terms. 2021 WL 926131 at *3.
The holding in Wright clarifies the distinction between a condition of acceptance and condition of performance. Under Wright, plaintiffs will now have to explicitly state that a presentation of, or other agreement to, a specific release is a condition of acceptance in order for the subsequent exchange of proposed releases to constitute a counteroffer. As Chief Justice McFadden addressed in a concurring special opinion, it is the reality that “plaintiffs sometime structure offers not to reach settlements, but rather to elicit rejections.” This concurrence signals that the judiciary may also be growing wary of time-limited “demands” that may as well be called “invitations to respond with a rejection.”
Even though the holding in Wright is a positive sign for insurers, it remains critical to comply with all conditions of acceptance to make sure there is a binding settlement agreement with the plaintiff. Only time will tell, but Wright, along with upcoming revisions to O.C.G.A. § 9-11-67.1, should make it less difficult for insurers to respond to, and attempt in good faith, accept time-limited demands.
Attorney Contact Info
Lauren Kamensky
lauren.kamensky@swiftcurrie.com
470.639.4866