Client Alerts


Supreme Court of Georgia Holds Failure to Settle Liability Claim Requires a Valid Settlement Offer
March 22, 2019

In a closely watched case, the Supreme Court of Georgia recently held that an insurer’s duty to settle arises only when the injured party presents a valid offer to settle within the insured’s policy limits. In First Acceptance Insurance Co. of Georgia, Inc. v. Hughes, No. S18G0517, the Court unanimously reversed the Georgia Court of Appeals and re-instated a summary judgment ruling in favor of First Acceptance, finding that the insurer did not act negligently or in bad faith as a matter of law.

The case arose out of a 2008 multi-vehicle collision, caused by First Acceptance’s insured, Ronald Jackson, who was killed in the accident. At least five others were injured, including Julie An and her 2-year-old daughter, Jina Hong, who suffered a traumatic brain injury. Jackson’s policy with First Acceptance had minimum liability limits of $25,000 per person/$50,000 per accident. Recognizing the potential exposure exceeded the available limits, First Acceptance retained counsel to negotiate a settlement with all parties. After First Acceptance’s attorney wrote all parties in January 2009 to suggest a global settlement conference, An and Hong’s attorney sent two letters on June 2, 2009. In the first, the attorney expressed an interest in attending a settlement conference, and, in the alternative, offered to settle An and Hong’s claims for the available policy limits. In the second letter, the attorney requested certain information about the policy within 30 days. First Acceptance did not respond within 30 days, and An and Hong filed suit on July 10. Their attorney then wrote First Acceptance and stated that the offer to settle had been withdrawn because it was not accepted within 30 days. An and Hong later obtained a judgment against Jackson’s estate for more than $5.3 million in damages.

The administrator of Jackson’s estate, Robert Hughes, sued First Acceptance, asserting that the insurer was liable for the entire judgment because its failure to settle An and Hong’s claims within the policy limits led to the excess judgment. The trial court granted summary judgment to First Acceptance, but a panel of the Georgia Court of Appeals reversed in November 2017. The Court of Appeals had found issues of fact existed regarding whether the June 2, 2009 letters offered to settle claims within the policy’s limits and release the insured from further liability, and whether there was a 30-day deadline for a response.

The Supreme Court of Georgia granted certiorari to consider two issues: (1) whether an insurer’s duty to settle arises when it knows or should know settlement within policy limits is possible or only when the injured party presents a valid offer to settle within policy limits; and (2) whether the Court of Appeals correctly held that a jury should decide whether the claimants had made a time-limited settlement offer.

In its unanimous decision, the Court rejected the plaintiff’s argument that an insurer should attempt to settle a claim to protect the interests of its insured even in the absence of a demand, and held that an insurer’s duty to settle arises only when the injured party “presents a valid offer to settle within the insured’s policy limits.”

Applying the rules of contract construction, the Court held that the June 2 letters did offer to settle within the policy limits and to release the insured from further liability, but that the offer did not include a 30-day deadline for acceptance. According to the Court, because the offer in the June 2 letters was not a time-limited settlement demand, First Acceptance was not put on notice that its failure to accept the offer within any specific period would constitute a refusal of the offer. The Court also emphasized that, given that the June 2 letters also communicated an unequivocal desire to participate in the proposed settlement conference, First Acceptance could not have reasonably known that it needed to respond within 41 days or risk that its insured would be subject to an excess judgment. For that reason, the Court reversed the Court of Appeals and held that First Acceptance was entitled to summary judgment on Hughes’s failure-to-settle claim.

The Supreme Court’s decision brings some clarity to Georgia law regarding an insurer’s extra-contractual liability for failure to settle. Georgia law is now clear, unlike some states (including Florida), an insurer cannot be held liable for failure to settle unless and until the injured party presents a valid offer to settle within the insured’s policy limits.

Swift Currie attorneys David Atkinson and Jonathan Kandel authored amicus curiae briefs in the Supreme Court in support of First Acceptance.

If you wish to further discuss this case or have any questions, please contact a Swift, Currie, McGhee & Hiers attorney at 404.874.8800 or via our website, swiftcurrie.com.

The foregoing is not intended to be a comprehensive analysis of the full effect of these changes. Nothing in this notice should be construed as legal advice. This document is intended only to notify our clients and other interested parties about important recent developments. Every effort has been made to ascertain the accuracy of the information contained within this notice.
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Proposed 2019 Georgia Workers' Compensation Legislative Update
March 1, 2019

The Georgia Legislature is currently considering a bill that will have a substantial impact on workers’ compensation benefits in Georgia. The bill, if passed, would result in an increase in the temporary total disability rate to $675 per week and the temporary partial disability rate to $450 per week. Additionally, the bill proposes some limits to the 400-week cap in medical benefits to provide for replacement and maintenance of items such as prosthetics, spinal cord stimulators, pain pumps or certain types of durable medical equipment, provided that the item or service was furnished within 400 weeks of the date of the injury.

These changes are only proposals at this point in time and are subject to further edits or amendments and will not become law until and unless the bill passes both chambers of the Legislature and is signed into law by Governor Kemp.

Please be on the lookout for further updates from us as the bill progresses.

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Daniel v. Bremen-Bowdon Investment Co.
February 28, 2019

The Georgia Court of Appeals has affirmed and relied upon the bright-line rule established in the recent case of Frett v. State Farm Employee Workers’ Compensation, which was litigated by Swift Currie partner Chad Harris through his representation of State Farm. In Frett, the Court of Appeals concluded the ingress/egress rule does not apply to accidents and injuries occurring on regularly scheduled breaks where the employee is free to pursue personal matters. In a decision rendered on Feb. 26, 2019, in Daniel v. Bremen-Bowdon Investment Co., the Court of Appeals applied the ruling in Frett and found the claimant’s injuries are not compensable under the Workers’ Compensation Act.

In Daniel, the claimant parked in a lot owned by the employer, requiring her to walk down a public sidewalk and cross a street to reach her employer’s place of business. The claimant was provided a regularly scheduled lunch break during which she was free to leave the workplace and pursue personal matters. While on her regularly scheduled lunch break, the claimant was walking to her car to drive home for lunch when she tripped on the public sidewalk and was injured. The Court of Appeals affirmed the Appellate Division of the State Board’s ruling that the claimant’s injury did not arise out of her employment because it occurred on a regularly scheduled lunch break. In reaching this decision, the Court of Appeals applied the ruling in Frett, where the bright-line rule was established that the ingress and egress rule does not extend to employee injuries occurring while leaving and returning to work for a regularly scheduled break. In Daniel and relying upon Frett, the Court of Appeals concluded the claimant’s injury was not compensable under the Workers’ Compensation Act.

The Court of Appeals’ ruling in Daniel and reliance upon Frett affirms the bright-line rule that the ingress/egress rule does not apply or extend coverage to accidents occurring on regularly scheduled breaks where the employer has no control over the employee’s activities for the time period of the break. The Frett case has been recently resolved so the Supreme Court of Georgia will not address it. At this time, it is unclear if the ruling in Daniel will be appealed and, if so, whether the Supreme Court of Georgia will take it under consideration. Accordingly, the bright-line rule established in Frett continues to control and accidents occurring on regularly scheduled breaks are not compensable, regardless of whether the employee is ingressing or egressing.

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Eleventh Circuit Disarms Plaintiffs’ “Shotgun Complaint”
January 22, 2019

A recent ruling by the Eleventh Circuit Court of Appeals held a district court may dismiss a case with prejudice when a plaintiff improperly uses “shotgun pleadings.”

In Jackson v. Bank of America, N.A., 898 F.3d 1348 (11th Cir. 2018), the plaintiffs filed suit against their mortgage lender and loan servicer after the foreclosure of their home. The complaint included 14 causes of action which were vague and not defendant-specific.

The defendants moved for a more definite statement. The plaintiffs did not oppose that motion, and filed an amended complaint, which did little to correct the pleading deficiencies. The defendants moved to dismiss the amended complaint for failure to state a claim; the motion was granted.

Despite the dismissal order, the plaintiffs moved for leave to further amend the amended complaint. The district court denied the request and entered a final judgment against the plaintiffs. They appealed.

The Eleventh Circuit affirmed the district court's judgment on the alternative ground of Plaintiffs’ obstruction of the due administration of justice.

The Eleventh Circuit held the district court should have dismissed the already-amended complaint with prejudice without addressing the merits because “the amended complaint was incomprehensible.” It further held that although, normally, the district court should point out the defects of a pleading to afford the party an opportunity to correct them, it was unnecessary to do so a second time the plaintiffs’ counsel agreed to file an amended complaint to cure the defects.

The Eleventh Circuit also admonished the plaintiffs’ counsel for filing a frivolous appeal and for the delay tactics employed at the trial and appellate levels. In its scathing opinion, the Eleventh Circuit concluded by ordering the plaintiffs’ counsel to show cause why he should not be sanctioned.

Defendants and defense lawyers should take note of the Eleventh Circuit’s disdain for shotgun pleadings illustrated in Jackson. When faced with a shotgun complaint, district courts are instructed to either dismiss the complaint without prejudice or allow one opportunity to cure the deficiencies by way of filing an amended complaint.

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Georgia Court of Appeals Outlines “Clearer Bright-Line Rule” for the Scheduled Break Exception
November 28, 2018

A recent ruling by the Georgia Court of Appeals clarified whether the ingress and egress rule applies to the scheduled break exception. The court previously determined an injury does not arise out of and in the course of an employee’s employment while on a scheduled break where the employee is free to use the time as he chooses even if he remains on the employer’s premises. However, the court also previously established the ingress and egress rule, which indicates an injury occurring within a reasonable period of time while the employee is on the employer’s premises preparing to begin or end work does arise out of and in the course of his employment.

In Frett v. State Farm Employee Workers’ Compensation, the claimant slipped and fell while on a scheduled lunch break as she was leaving the breakroom to go outside to eat her lunch. The Court of Appeals affirmed the Board and Superior Court’s denial of benefits. In its ruling, the court noted a clearer bright-line rule is needed regarding the application of the scheduled break exception and how it intersects with the ingress and egress rule. The court concluded the ingress and egress rule does not apply to the scheduled break exception. The court further disapproved its previous holdings to the contrary where it had extended the ingress and egress rule to cover cases where an employee was injured while leaving and returning from a regularly scheduled break.

However, the Court of Appeals noted within its opinion any decision to apply the ingress and egress rule to the scheduled break exception should be made by the Georgia Supreme Court. Frett has applied for certiorari of the Court of Appeals decision to the Georgia Supreme Court. Unless the Georgia Supreme Court indicates otherwise, the bright-line rule established by Frett is that the ingress and egress rule does not apply to the scheduled break exception. Consequently, an employee injured on a scheduled break on the employer’s premises where he is free to use the time as he chooses is not entitled to workers’ compensation benefits, even if this injury occurs while the employee is departing for or returning from the scheduled break. Chad Harris at Swift Currie is handling this case.

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