The insurer timely gave the settlement check to UPS for overnight delivery to meet the payment terms of an offer. UPS then lost the check. Too bad for the insurer as the Court of Appeals concluded that “giving the payment to UPS for overnight delivery” was not enough to form an enforceable settlement agreement per the terms of the offer.
The question becomes: Can an insurer be susceptible to a negligent failure to settle (i.e., “bad faith”) claim based on its act of timely giving a check to UPS for overnight delivery which, if delivered the next day, would have formed an enforceable settlement agreement? Isn’t the use of UPS for overnight delivery evidence of good faith? Perhaps Judge McFadden left a hint in his opinion, saying, “But it remains undisputed that State Farm, regardless of its good faith or intentions, did not do an act necessary to accept the plaintiff’s offer on behalf of the defendant.” Id.
The claimant may have won the battle (Defendant’s motion to enforce settlement denied) but may still lose the war (no conduct by the insurer sufficient to support a “negligent failure to settle” claim). Time will tell.
Read more: de Paz v. de Pineda