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Can You Accept a Car Accident Settlement Three Years Later?

It is common practice following a Georgia car accident for the victim to negotiate a settlement with the negligent driver’s insurance company. Typically, the insurer agrees to settle for the policy limits in exchange for a “release of all claims” arising from the accident. Either party may also impose a deadline for the other to accept the terms of the settlement.

DeMarco v. State Farm Mutual Automobile Insurance Company

The Georgia Court of Appeals recently examined an unusual case involving the widow of a deceased accident victim who attempted to enforce a settlement agreement three years after the fact. The accident itself occurred 11 years ago, in July of 2007. The victim’s car was knocked by one vehicle into a third vehicle. The victim subsequently sued the owner and driver of the third vehicle for damages.

The owner held an insurance policy on the vehicle with State Farm. (There was also a second policy with another insurer that is not a party to this case.) In March of 2008, State Farm offered to pay the victim the limits of the policy–$25,000–in exchange for a signed release of all outstanding claims. More than two years later, in November of 2010, the victim’s attorney informed State Farm it would accept the offer.

State Farm replied by enclosing a check for $25,000 and a copy of the release form to sign and return. The victim and his wife never cashed the check or signed the release. Tragically, the victim died in April of 2011, about five months after State Farm sent the check. The widow subsequently filed a second lawsuit–this one alleging wrongful death–against the insured owner and driver in Georgia state court in late 2011, but she voluntarily dismissed the case a year later.

In March 2014, roughly three years after State Farm sent the check and release, the widow’s attorney requested the insurer re-issue the check. The attorney indicated the widow “had an extremely tough time” following her husband’s death and never took the time to execute the original settlement agreement. Even at this juncture, she failed to sign and return the release demanded by State Farm as a condition of the settlement.

When State Farm declined to issue a new check without first receiving the release, the widow sued the insurer, seeking a court order to enforce the purported settlement. But both the trial court and the Court of Appeals held that the widow “failed to perform” her part of the alleged contract “within a reasonable period of time.” While determining what constitutes a “reasonable period” in the absence of a specific deadline is normally a question for a jury, in this case the Court of Appeals said the widow’s three-year delay was “unreasonable as a matter of law.” Furthermore, the fact she actually filed a lawsuit–albeit one she later withdrew–after agreeing to State Farm’s terms effectively “deprived” the insurance company of the “benefit of its bargain to settle.”