A payment of the policy limits is not always enough to settle a vehicle accident. The insurer must also agree to all other requirements in a settlement offer for an agreement to be enforceable, the Georgia Court of Appeals has decided.
In Ligon vs. Hu, the appeals court reversed the trial court and found that despite the insurer writing a check for $100,000, the matter was not resolved and a negligence lawsuit may continue.
Motorist Li Na Hu was insured by American Standard Insurance Co. After the accident, in which Hu allegedly struck bicyclist Robert Ligon and crushed his leg, Ligon’s attorney made a settlement offer: $100,000 from American Standard – but with the stipulation that the insurer must comply precisely with the offer. The settlement agreement should include a release, along with signature lines only for Ligon and his wife.
Most importantly, the returned agreement must include an affidavit stating that no other insurance coverage was available, Ligon’s offer stated.
Instead, American Standard delivered a check, but the release documentation included more signature lines and did not include the affidavit. Ligon promptly returned the check and filed suit against Hu. Hu’s lawyers then asked the trial court to enforce the settlement offer and to dismiss Ligon’s complaint.
The trial court in 2020 sided with Hu and her insurer. Ligon appealed. The appeals court in its March 11 decision noted that Georgia statutes and case law mandate that settlement agreements must meet the same requirements of enforceability as do other contracts.
“An acceptance must comply with the requirements of the offer as to the performance to be rendered,” the appeals court wrote, quoting from previous court decisions. “An offeree’s failure to comply with the precise terms of an offer is generally fatal to the formation of a valid contract.”
Attorneys for the insurance company could not be reached for comment Tuesday. But Ligon’s lawyer, Ben Brodhead of Atlanta, said that the insurer’s attorneys should have known what they were getting into.
“The defense attorneys took a frivolous position by filing a motion to enforce a settlement that they know never occurred,” Brodhead said. “This topic is literally covered in the first five minutes of law school: for a contract to form, the acceptance must be ‘identical’ to the offer.”
Brodhead, known for winning a number of major injury verdicts in recent years, said he did not know why the insurer changed the settlement agreement and left out the affidavit. But he said it raises the possibility that Hu may have had other applicable insurance coverage that could have been tapped to help compensate the victim.
Ligon’s leg injury was so severe that, years later, his doctors are still talking about amputation, and the $100,000 policy limit was not enough to cover the man’s needs, Brodhead said. The insurer’s request for two notary signatures on the settlement agreement would have meant unnecessary time, pain and expense for the injured Ligon, the lawyer said.
Many personal injury attorneys have long argued that insurance companies sometimes look for seemingly minor acts or omissions by policyholders, or a lack of strict adherence to policy exclusions, to justify a claim denial or to limit a settlement.
“Unfortunately, insurance companies often play games by attempting to change the terms of a claimant’s offer and then attempting to force the claimant into a contract that is different from the claimant’s offer,” Brodhead said. “Here, the insurance company refused to include all of the consideration in the release.”
Some insurers might argue that, in this case at least, a plaintiff’s attorney was the one who rejected a policy-limits settlement offer because of the exact wording of a document.
Ligon’s negligence lawsuit against Hu will now proceed. If Ligon prevails, Hu may owe far more than the insurance policy would have paid, and she may end up suing her carrier to cover the damages, Brodhead said.
The appeals court decision was written by Presiding Judge Christopher McFadden. He pointed out that the strict contract adherence was required by Georgia statutes that have since been altered by the state legislature. The current law, as amended in 2021, may not shine so favorably on plaintiffs demanding that insurers hue closely to the terms of a settlement offer.
The law “was changed in a way that creates tremendous ambiguity and uncertainty,” Brodhead said.
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