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Cotton States Mutual Insurance Company v. Brightman In Cotton States Mutual Insurance Company v. Brightman, decided on June 10, 2002, the Georgia Court of Appeals issued a dangerous ruling for insurers in dealing with time limited demands. James Brightman, plaintiff, sued Lynn Martin and Gregory Cumbo, to recover for injuries he sustained in an automobile collision between a vehicle he owned and operated and a van owned by defendant Martin and operated by defendant Cumbo. There were two applicable insurance policies for the defendants. Cotton States issued a policy with $300,000.00 limits to Martin and State Farm issued a policy with $100,000.00 in limits to Cumbo. Defendant Cumbo, the driver, allegedly failed to yield the right-of-way to the plaintiff and Marijuana was found in his blood and he was charged with DUI and with speeding. Those traffic charges were dismissed. As a result of the collision, plaintiff suffered permanent debilitating brain injuries and incurred hundreds of thousands of dollars in medical expenses. Before suit was filed, plaintiff's attorney extended an offer to Cotton States to settle his claims against Martin and Cumbo for the $300,000.00 Cotton States policy limits. Cotton States refused the offer, taking the position that the sole proximate cause of the accident was the plaintiff's improper left-hand turn in front of defendant Cumbo. Cotton States also maintained that its insured was opposed to settling the case. A suit was then filed and State Farm's policy issued to Cumbo was discovered. Evidence of increased speed on the part of Cumbo as well as the possible presence of Marijuana in the van was also discovered. A non-binding court mandated arbitration resulted in a $2,000,000.00 award for plaintiff. In January of 1995, plaintiff extended another offer to Cotton States to settle the case for its $300,000.00 policy limits conditioned on State Farm also paying its limit of $100,000.00. The offer was left open for ten days. Cotton States did not accept the offer and requested an extension of time to respond to which plaintiff did not agree. Cotton States continued to maintain that its insured did not want to settle but the insured later indicated that he was not opposed to settling. At trial, a verdict in the amount of $1,787,500.00 was given to plaintiff and both Cotton States and State Farm at that time tendered their policy limits which was rejected. The plaintiff obtained an assignment of defendant Martin's claims against Cotton States and in a second trial a jury returned a verdict awarding plaintiff the principal sum of the difference between the Cotton States policy limits and the verdict in the original case. Interest was also awarded against Cotton States. The Court of Appeals affirmed the verdict against Cotton States. The Court of Appeals stressed the following facts which should be kept in mind in dealing with a time-limited demand: 1. The insurer has an affirmative duty to engage an injury in discussions regarding an initial settlement demand in excess of policy limits; 2. Even if the insured had been opposed to settlement, it would not have barred the suit against Cotton States inasmuch as Cotton States had the right to settle the lawsuit without the consent of its insured; and 3. Under Georgia law, the insured is allowed to assign the cause of action against his or her insurer to the holder of an excess liability judgment in exchange for an agreement by the plaintiff not to collect against the insured's personal assets. Cotton States argued at trial that it could not have accepted the second policy limits demand from the plaintiff because it was contingent upon the actions of State Farm. The Court of Appeals found, however, that by failing to respond and only asking for an extension, Cotton States could have been found negligent in failing to negotiate. The more proper response by Cotton States would have been to tender its own limits at that time and indicate that it had no control over State Farm. Instead, Cotton States asked only for an extension of time to respond to the demand and did nothing else. In a special concurrence by Judge Andrews, he noted that under the present State of Georgia law if an insured, fully informed of the progress of settlement negotiations and the risk involved, adamantly opposes settlement and insists that the suit be tried, this constitutes informed acquiesce in the refusal to settle and bars a claim by the insured that the insurer is liable for an excess verdict because it failed to accord the insurer the same consideration it gave its own interest. In this case, the insured maintained at the second trial that he was not opposed to settlement so a jury could have found that this was not a factor. It is likely that this question will arise again given more analysis by either the Georgia Court of Appeals or the Supreme Court.  Print This Page
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