Opening the Flood Gates to More Condition-Laden Holt Demands
In Simmons v. Bates (January 13, 2023), the Georgia Court of Appeals noted the settlement offer “was 39 pages long and contained 30 footnotes” and expressed “…concern that this lengthy and unnecessarily convoluted offer appears to be intentionally difficult to accept…”
In Pierce v. Banks (June 28, 2023), by dismissing arguments that some demand conditions are “immaterial” to settlement contract formation, the same Court has ensured future demands, particularly as to performance conditions, will get longer and more condition laden. The lowlights permitted by the court include:
- Payment delivery within a 24-hour window. In Pierce, the offer demanded payment on the “15th day after acceptance.” The problem: the settlement check was sent too early as it was included with the purported written acceptance. Translation: Holt Demands can play games on the check delivery dates and times. Under Pierce, what prevents the demand from seeking payment delivery to be performed between 2:00 p.m. and 4:00 p.m. on the 11th day after written acceptance, which may be a Sunday? Reality: the tight payment delivery window knocks out using the U.S. Postal Service or even FedEx. Insurers will need have same-day couriers on standby to ensure same-day check delivery.
- “Void after 180 days” on settlement check. In Pierce, the settlement check had on its face, “void after 180 days,” which allegedly “added a restriction on the settlement check.” Despite the reality that the settlement check would be cashed months before the 180 days, the Court found such marking did not meet the offer terms, barring contract formation.
- Missing comma in payee name. In Pierce, the offer required payment to “Aaron Pierce and Brooks Injury Law, LLC.” But the settlement check left out the comma. Was the missing comma an immaterial condition, not barring contract formation? Would the Court of Appeals give insurers (and their insureds) that much? Nope. It punted in Footnote 9 saying, “Given our conclusions above, we need not address the other two alleged deficiencies with Appellees’ acceptance of Appellant’s offer, namely that counsel for Trexis merely announced that a settlement was “authorized” rather than actually accepting the offer and that the missing comma invalidated the acceptance.”
Bottom Line: This is a significant defeat for insurers (and their insureds) as Pierce presented an opportunity to clarify that some terms within a Holt demand are immaterial or trivial (such as a missing comma), and still permit an enforceable settlement agreement, which, in turn, eliminates any bad faith claim down the road. But the Court refused to do so, doubling down on the mirror-image concept requiring performance be “identical” and “without variance of any sort.” The natural result is Pierce incentivizes future Holt demands to be longer with more conditions, particularly as to performance.
The Pierce concurring opinion seems to recognize the floodgates remain open and warns against “gamesmanship,” concluding that additional terms on the offeree “should not be unduly restrictive.” Nice words. We’ve been hearing similar nice words for 32 years since the infancy of Georgia’s current third-party bad-faith law, when, in 1991, the Georgia Supreme Court in Southern General v. Holt warned, “Nothing in this decision is intended to lay down a rule of law that would mean that a plaintiff’s attorney under similar circumstances could ‘set up’ an insurer for an excess judgment merely by offering to settle within the policy limits and by imposing an unreasonably short time within which the offer would remain open.”
In 1991, the judiciary created the modern day third-party bad-faith law and warned against insurer set ups. In 2023, bad-faith claims rage on and the judiciary still warns against gamesmanship. Not much has changed.
Good luck to insurance adjusters doing their best to accept demands on behalf of insureds. Pierce just made your job harder.