A Policy-Limits Demand Under Georgia Law May Require Timely Payment as a Condition of Settlement

In Grange Mutual Casualty Co. v. Woodard, 2017 WL 2819729 (11th Cir. June 30, 2017), the Eleventh Circuit applied the Georgia Supreme Court’s holding in Grange Mutual Casualty Co. v. Woodard, 797 S.E.2d 814 (Ga. 2017), to hold that an insurer’s failure to deliver payment within the time required by a policy-limits demand meant that there was no binding settlement between the parties.

The dispute arose after a car accident. One of the parties, Woodard, made a policy-limits demand on the other’s insurer, Grange Mutual.  Woodard’s demand recited a list of items that “must be noted and fully and strictly complied with in order to accept this offer”; one of them was that payment be made payable to the plaintiff and his attorney within 10 days of the insurer’s written acceptance of the offer to settle.  “Timely payment,” said the offer, “is an essential element of acceptance.”

The insurer sent a timely notice of acceptance, but its checks did not arrive within 10 days, apparently due to a computer error in printing the mailing address. The question in the resulting litigation, filed in federal court, was whether there was a binding settlement between the parties.

The district court concluded that there was no binding settlement agreement, because timely payment had been a condition of acceptance of the settlement offer and had not been made. On appeal, the Eleventh Circuit found that Georgia’s statute governing policy-limits demands, O.C.G.A. § 9-11-67.1, was arguably ambiguous as to whether the portion of the statute providing that “[t]he 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” left room for an offer to impose additional requirements—like payment within a specified time—as a condition to formation of a binding agreement.  The Eleventh Circuit certified four questions to the Supreme Court of Georgia, including whether O.C.G.A. § 9-11-67.1 permits “unilateral contracts whereby offerors may demand acceptance in the form of performance before there is a binding, enforceable settlement contract.”  The Supreme Court of Georgia answered that question in the affirmative and sent the case back to the Eleventh Circuit to apply the law to the facts of the case.

In an opinion written by Judge Hull and joined by Judge Black and Judge Moreno visiting from the Southern District of Florida, the Eleventh Circuit held that Woodard had, in fact, made timely payment a condition of the offer: the offer “contained multiple clear statements that fulfillment of all eleven conditions was necessary for acceptance.”  Moreover, the offer’s requirement of “payment” “requires the ‘delivery’ of money, and ‘delivery’ requires an actual transfer.  Thus, payment is complete only when the money changes hands.”  This had not happened within the time allowed, a fact unchanged by the “mailbox rule,” because the checks had been improperly addressed and thus not within the rule.  As a result, there was no binding settlement between the parties.

Posted by Valerie Sanders.