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Georgia Appeals Court Distinguished Between Contract and Counteroffer

Dealing with insurance companies is one of the many unpleasant consequences of a motor vehicle accident. Insurers often look to dispose of claims quickly. And while that may also be in the victim’s interest, it’s important not to get railroaded by an overzealous insurer. A recent decision by the Georgia Court of Appeals highlights one such insurer who insisted there was a settlement when, in fact, there was not.

Kemper v. Brown

The victim in this case was driving her motorcycle in March 2012. She was hit by another vehicle. The other driver was clearly at fault–he had been drinking and driving recklessly.
The victim sent the other driver’s insurance company a demand letter. She offered to sign a limited release in exchange for the maximum value of the driver’s policy, which was $25,000. The demand was unconditional.

A few weeks later, the insurance company’s claims administrator, Statewide, sent the victim a response. Enclosed was a $25,000 check and a limited release form. The accompanying letter stated that “we are entrusting that you place money in an escrow account in regards to any and all liens pending.”

The victim considered the request to place the check in an escrow account to be a counteroffer. After all, her initial demand was for unconditional payment of the $25,000 in exchange for the release. Statewide didn’t see it that way. Both parties went to court.
Statewide asked the trial court to “enforce the purported settlement agreement” between it and the victim. The court granted the motion. The victim appealed.

The Court of Appeals sided with the victim and reversed the trial judge’s decision. Judge M. Yvette Miller, writing for a three-judge panel of the appeals court, said it was clear there was no mutual agreement between the parties that gave rise to a binding contract. “Statewide’s response did not merely inquire about the existence of liens against [the victim’s] causes of action,” Judge Miller wrote. “Rather, by using the term ‘demand,’ Statewide clearly expressed a condition that [the victim] was required to satisfy for Statewide’s acceptance to be effective.”

The questions of liens arose because of the victim’s medical treatment. Although she had health insurance to cover her hospital stay following the accident, Judge Miller noted that the hospital could still, in theory, file a lien to recover “any unpaid expenses.” As long as the possibility of a lien existed, Statewide had a basis for requesting the settlement check be placed in escrow–and, once again, that made its response a counteroffer rather than an acceptance of the victim’s original demand.