On June 23, 2016, the Eleventh Circuit in Grange Mutual Casualty Co. v. Woodward, No. 15-3295, 2016 WL 2332242 (11th Cir. 2016), certified questions to the Georgia Supreme Court regarding interpretation of Georgia’s Motor Vehicle Settlement Demand Statute, O.C.G.A. § 9-11-67.1. The Georgia Supreme Court’s findings could have a significant impact on how settlement demands are handled in Georgia.

Grange involves a dispute over the existence of a settlement agreement under O.C.G.A. § 9-11-67.1, a statute that was enacted in 2013 in response to concerns that plaintiffs presented settlement offers with impossible deadlines in order to expose insurance companies to potential bad faith claims when they were unable or unwilling to abide by the terms of the offers. Since the statute was enacted, there have been no published state or federal cases interpreting its provisions.

In Grange, a driver insured by Grange Mutual Casualty Company was at fault in a serious auto collision with Boris and Anna Woodard. Shortly after the collision, the Woodards’ attorney mailed a settlement demand containing 11 requirements, including one providing that payment must be made within 10 days of acceptance of the settlement demand. Grange’s adjuster mailed a letter accepting the settlement demand and, within 10 days, ordered settlement checks to be mailed to the Woodards’ attorney. However, the attorney did not receive the checks due to a processing glitch. The Woodards’ attorney subsequently notified the Grange adjustor that he had not received the checks and took the position that the parties never reached a binding settlement agreement. Although the adjuster offered to reissue new checks for overnight delivery, the Woodards’ attorney refused to accept them.

Grange then filed the underlying suit alleging breach of the settlement contract. The Woodards moved for summary judgment on the grounds that no settlement contract was formed because Grange did not send payment within the time limits. Grange cross-moved for summary judgment, arguing that its written acceptance of the offer sufficed to form a contract under O.C.G.A. § 9-11-67.1. The district court granted the Woodards’ motion for summary judgment, concluding that the parties never formed a contract.

The Eleventh Circuit analyzed O.C.G.A. § 9-11-67.1 and noted the statute was ambiguous as to its requirements. For example, the terms of the statute appear to contemplate payment being a term of contract performance, but also expressly permits parties to contract as they see fit. Because of this ambiguity, the Eleventh Circuit certified questions of interpretation of O.C.G.A. § 9-11-67.1 to the Georgia Supreme Court. The Georgia Supreme Court’s response to these questions could have far-reaching consequences on how insurance companies can protect themselves from allegations of bad faith.   Nall & Miller will continue to monitor the outcome of this case.