The Georgia Court of Appeals recently issued three decisions answering the question of where the line lies between an acceptance and a counteroffer.  All three decisions are important for insurers, because they show that courts should look to the “real world” context of settlement negotiations, rather than impractically holding parties to every minute detail in a settlement offer.

In the most recent case of Hansen v. Doan, the Court of Appeals affirmed a trial court’s decision to enforce a settlement agreement against the plaintiff in a motorcycle injury case.  The plaintiff, Lawrence Hansen was riding his motorcycle on June 22, 2011 when he was struck by a vehicle driven by defendant Laura Doan.  Around two weeks later, plaintiff’s attorney sent a letter of representation to defendant’s insurer, Liberty Mutual, and stated to the insurer that Mr. Hansen’s injuries were serious.

Less than a week later, Liberty Mutual’s claims specialist informed plaintiff’s counsel by telephone that there was only $25,000 in liability coverage, and that given Mr. Hansen’s extensive injuries, she would need “very few” medical documents before she could tender the limits of Ms. Doan’s policy.

On July 11, 2011, plaintiff’s counsel sent Liberty Mutual a time-limited settlement demand letter, asking for the policy limits in exchange for the plaintiff signing a limited release pursuant to O.C.G.A. § 33-24-41.1.  The demand letter also contained the following language: “To be accepted, the O.C.G.A. § 33-24-41.1 Limited Release in favor of [defendant] and Liberty Mutual . . . only (with no indemnity language) and the $25,000 check . . . must be received within twelve days of you receiving this demand.  The offer is automatically withdrawn if these conditions are not complied with within the time limit.”

Ten days later, Liberty Mutual’s claims specialist sent plaintiff’s counsel a letter requesting an interview of the plaintiff and a wage authorization form.  The following day, she had a recorded telephone conversation with plaintiff’s counsel.  During the call, the claims specialist told plaintiff’s counsel that “we have a $25,000 limit and I believe was you sent me is obviously sufficient enough for me to go ahead and pay that limit . . . . I’m looking at your letter here and you wanted a limited release which is . . . obviously not a problem.  Do you have one that you want to use a specific release?”  Plaintiff’s counsel informed her that he did not have a particular release he wanted to use.  As the claims specialist looked for a limited release to use, Plaintiff’s counsel informed her that someone sat down in his office and abruptly ended the conversation.

Later that day, the claims specialist faxed a letter to plaintiff’s counsel confirming their conversation and stating “we are agreeing to pay our policy limits of $25,000 to your client.  We will also agree to a limited release.  You indicated that you did not have a specific release you wanted to use.  I am attaching the only limited release that I have which we can tailor to fit your needs.  If you would please look it over and make your suggestions or any changes you wish to make then we can iron out the details . . . I would like to iron out the details of the settlement today so we can meet your deadlines unless you will agree to let us mail the check to your office.”

After several unsuccessful attempts to reach plaintiff’s counsel, the claims specialist then received a letter saying that the settlement offer had been automatically withdrawn because the insurer did not accept the offer within the specified time and because the limited liability release contained indemnification language.  Plaintiff then filed a lawsuit against the defendant, and the insurer moved to enforce the settlement agreement.

The question before the court was whether the insurer’s delivery of a release that contained indemnification language, contrary to the plaintiff’s settlement demand, constituted an acceptance of the settlement offer.  The court looked closely at the context of the settlement negotiations which occurred between the insurer and the plaintiff’s attorney.  First, the court considered the claims specialist’s request for an interview and additional information about the plaintiff’s medical bills and lost wages to be merely a request for confirmation rather than a counteroffer.  The court also determined that the evidence showed the claims specialist intended to provide a release to plaintiff’s counsel that allowed him to make changes as he felt necessary.  Overall, it was the court’s opinion that the insurer performed the acts necessary to accept the plaintiff’s offer by tendering the policy limits and by providing the plaintiff’s attorney with a release with the clear understanding that the attorney could tailor the release to his demand.

This opinion and the decisions in Arnold v. Neal and Turner v. Williamson are helpful to insurers, as it shows that courts have some flexibility on the question of “the meeting of the minds.”  As long as the insurer makes it clear that they are accepting the essential elements of the plaintiff’s offer, the court is unlikely to treat any minor variance from the settlement offer as a counteroffer.  Hopefully, these opinions will result in fewer bad faith claims against insurers who genuinely want to settle with plaintiffs.

Please let us know if we can answer any questions or if you would like a copy of these opinions.

David Sawyer and Michael Rust

On March 13, 2013, the Georgia Court of Appeals found that the Department of Transportation (“DOT”) was entitled to summary judgment in a case where the plaintiff alleged that the DOT negligently designed and maintained a roadway.  Specifically, plaintiff claimed that the DOT failed to provide adequate drainage and that the accident was caused by water accumulation on the road.  The trial court found, and the Court of Appeals agreed, that the plaintiff failed to provide sufficient proof of pooling or standing water.

Phillip DeMarco was sitting in his vehicle in the center turn lane at Georgia Highway 38 and Ben Couch Road near Waycross, Georgia.  Mr. DeMarco was waiting for traffic to clear in order to make a left-hand turn.  As Mr. DeMarco waited to turn, he was struck by an oncoming vehicle which had lost control on a curve.

Continue Reading…

On November 16, 2012 in Bennett v. Department of Transportation, the Georgia Court of Appeals agreed that the Department of Transportation (“GDOT”) was entitled to summary judgment in a case in which the Plaintiffs claimed that the failure to provide proper traffic control devices at an intersection caused the injuries they sustained in a car accident. GDOT was not liable because the evidence established that the accident occurred as a result of the other driver’s admitted disregard of clearly posted stop signs and flashing red lights.

Janice Bennett and Denise Johnson sued GDOT for personal injuries they sustained in a car accident. Another driver, John Ellison, was driving his car northbound on State Road 11 in Lanier County near the intersection of Highway 38. Ms. Bennett and Ms. Johnson were driving westbound on Highway 38. As Ellison approached the intersection, he saw plaintiffs’ car approaching from his right side. The intersection contained two clearly visible stop signs and two overhead flashing red lights indicating that Ellison was required to stop. Ellison saw one of the stop signs and saw Johnson’s vehicle approaching the intersection and was aware that the stop sign directed him to stop but failed to do so. According to Ellison, the other vehicles approaching the intersection appeared to be slowing down so he thought he would able to get through without the need to stop. Upon entering the intersection, Ellison struck the Plaintiffs’ car.

In support of their claims of negligence against GDOT, Johnson and Bennett presented the testimony of an expert traffic engineer who opined that a stop/go light should have been installed to control traffic at the intersection more effectively. The expert further opined that the failure to incorporate a stop/go light amounted to a defective design, caused confusion as to how the intersection worked, and was a contributing cause to the subject accident. The expert acknowledged, however, that the two stop signs and flashing red lights were present and visibly unobstructed at the intersection.

The trial judge granted summary judgment to GDOT and the Court of Appeals agreed. Although the Court of Appeals recognized that there may be more than one proximate cause of an accident, “where a driver missed several indications of a hazard, jurors cannot speculate that putting up a sign about the hazard would have made any difference.” This accident was not caused by GDOT’s failure to post adequate signs or a traffic light, the court wrote, but rather, the accident was caused by Ellison’s admitted disregard of the stop signs and flashing red lights that were posted at the intersection. GDOT’s acts were not the proximate cause of the injuries sustained by Bennett and Johnson. At most, the evidence showed, according to the Court, that GDOT failed to do all that could have been done to assure that drivers on State Road 11 took heed of the stop sign at the intersection. This does not excuse Ellison’s failure to stop where clearly directed to do so by the rules of the road.

This case will be helpful in lawsuits in which the plaintiffs allege, supported by an expert traffic engineer, that additional signage would have prevented an accident. So long as the signage on the roadway is sufficient to notify a driver of his or her obligations, and the driver is or should be aware of those obligations, the lack of “one more sign” cannot be the cause of an accident and a jury should not be allowed to speculate that it might have been.

Please call me if you would like a copy of this opinion or have any questions.

Michael

On September 10, 2012, the Georgia Supreme Court in Smith v. Ellis reestablished the principle that an employee, having previously entered into a settlement approved by the State Board of Workers’ Compensation, is barred from suing a fellow employee for the same injury in tort if the other employee qualifies as an “employee of the same employer.” In this particular case, however, the Supreme Court found that a fact question existed as to whether the fellow employee was acting as an employee of the same employer at the time of the injury.

Plaintiff Smith and Defendant Ellis were both employed by a company that builds and sells new houses. Each was assigned to work at different subdivisions in the Atlanta area. Ellis called Smith to arrange a meeting so that he could borrow one of Smith’s tools for his personal use. Ellis wanted to shoot some new guns he had purchased, including an AR-15 rifle, in an undeveloped field next to the subdivision where Smith worked. The two men met at a house where Smith was working. Ellis made a phone call regarding a problem with the house and then followed Smith through a couple of more houses before going to lunch and returning to the subdivision at 1:00 p.m. where Smith continued to work. Ellis had no work to do and left that part of the property to avoid being seen by one of his supervisors because he was not supposed to be there. At about 2:30 p.m. Smith met Ellis in the undeveloped field, which was a quarter of a mile away from the house where Smith had been working. Ellis began firing his new rifle while Smith organized his work tools next to his truck. The rifle jammed three times. Ellis successfully cleared the first two rounds but accidently shot Smith in the leg when he tried to clear the third round. Smith was seriously injured. The builder/employer fired them both after this incident.
Continue Reading…

On March 23, 2012, the Georgia Supreme Court rejected an argument that the Tort Reform Act of 2005 does not allow for apportionment of fault in cases where the plaintiff is not negligent.  McReynolds v. Krebs.  The Supreme Court also established, unequivocally, that the Tort Reform Act did away with common law cross-claims for contribution and confirmed that in order for apportionment to occur against a non-party there must actually be evidence that the non-party was at fault.
Continue Reading…

In late January, 2012, a Gwinnett County State Court jury awarded $2.3M to a man who was hurt when he slipped in a Kroger grocery store.  Kroger was unable to dispute liability for the incident because the Judge struck its Answer after concluding that Kroger had destroyed a video of the fall.  Judge Iannazzone ruled prior to trial that Kroger had “spoliated evidence” and “acted in bad faith in failing to preserve the evidence and manipulating evidence to excuse its actions.”  Continue Reading…

On December 1, 2011, in Great West Casualty Company v. Bloomfield, a divided whole Court of Appeals affirmed the denial of Great West’s motion for attorney’s fees following a verdict in its favor in a wrongful death case arising out of a series of two automobile collisions, the first of which involved Great West’s insured truck driver.  The Court of Appeals agreed that the trial court had discretion to deny an award of attorney’s fees to Great West in spite of the fact that Great West had made a $25,000 offer of settlement pursuant to the Georgia statute allowing for attorney’s fees to be awarded to the prevailing party after such an offer has been made (O.C.G.A. § 9-11-68).  Based on this opinion, trial courts will now be encouraged to weigh in on whether such an offer was made in “good faith” in deciding whether to award attorney’s fees.
Continue Reading…

On November 1, 2011, the Georgia Court of Appeals found that the pattern jury charge on comparative negligence which required a jury to “reduce the amount of damages otherwise awarded to the plaintiff in proportion to the negligence of the plaintiff compared with that of the defendant” was inappropriate and inconsistent with the Tort Reform Act of 2005.  Under O.C.G.A. § 51-12-33, enacted as part of that Act, the jury is required to determine the percentage of fault borne by the plaintiff and report that percentage to the judge who is assigned the task of reducing the damages awarded.  Clark v. Rush.
Continue Reading…

On March 18, 2011, the Georgia Supreme Court in Rosenberg v. Falling Water, Inc. upheld the application of the Georgia statute of repose for construction defect claims in a case in which the plaintiff claimed that the statute should have been tolled because of fraud on the part of the defendant construction company. The opinion was a close 4-3 decision written by Justice Harold Melton. Chief Justice Carol Hunstein wrote a vigorous dissent joined by Justices Benham and Carley.
Continue Reading…

In JNJ Foundation Specialists, Inc. v. D.R. Horton, Inc., decided July 28, 2011, the Georgia Court of Appeals upheld an indemnification agreement in a construction contract and found that a contractor was required to indemnify a project developer even though the contractor’s work did not necessarily cause the injury which brought the claim about. According to the Court of Appeals, the term arising out of in the contract did not require a finding that the subcontractor’s actions directly or proximately caused the injury.
Continue Reading…