Earlier this year, the Georgia Supreme Court was poised to decide whether an insurer was put on sufficient notice of an opportunity to settle a claim within policy limits to trigger a duty to settle. In March, the Court made its decision; however, the decision appears to raise more questions than answers. See First Acceptance Ins. Co. of Georgia, Inc. v. Hughes, 826 S.E.2d 71 (Ga. 2019).
By way of background, in Hughes, certain injured parties obtained a civil judgment against an individual for over $5 million in excess of the individual’s insurance policy limits. The individual passed away, but his estate sued the insurer for negligent or bad faith failure to settle the claim within policy limits because the insurer had not accepted the injured parties’ settlement offer before it was withdrawn. The trial court granted summary judgment in favor of the insurer upon finding that the settlement offer was too vague to constitute sufficient notice of an opportunity to settle. The court of appeals reversed the trial court, holding that the circumstances of the case demonstrated a genuine issue of material fact for trial. The Georgia Supreme Court reversed the court of appeals and affirmed the trial court’s entry of summary judgment in favor of the insurer.
As an initial matter, the Court took the opportunity to confirm that, under Georgia law, “an insurer’s duty to settle arises when the injured party presents a valid offer to settle within the insured’s policy limits.” Id. at 75. Within that legal framework, the Court observed that although “the injured parties presented to the insurer a valid offer to settle within the insured’s policy limits . . . the insurer did not act unreasonably in failing to accept the offer before it was withdrawn by the injured parties.” Id. at 73. The Court further observed that although the offer did not include a deadline for acceptance, when an offer is silent as to the time given for acceptance, it will be construed to remain open for a reasonable time. Id. at 73, 75-77. The Court concluded that “[i]t follows that [the insurer] was entitled to summary judgment” because the settlement offer was not time-limited but expressed a desire to attend a settlement conference, so the insurer could not have reasonably known that it needed to accept within 41 days or risk its insured being subject to a judgment in excess of policy limits. Id.
What the Court did not mention is that a “reasonable time” is typically a question of fact for the jury to decide. See, e.g., Griffith v. Fed. Deposit Ins. Corp., 249 S.E.2d 54, 56 (Ga. 1978); Am. Realty Co. v. Bramlett, 102 S.E. 873 (Ga. Ct. App. 1920), syllabus. With that in mind, one is left wondering whether (a) an insured’s failure to accept a settlement offer within 41 days, where the offer does not contain a deadline but does express an interest in settlement, is reasonable as a matter of law, or (b) the outcome in Hughes is limited to its facts.