325 Ga. App. 806
Ga. Ct. App.2014Background
- Kemper was seriously injured when Brown struck her motorcycle; Brown faced traffic and DUI charges. Brown’s auto insurer (Equity) assigned the claim to Statewide Claims Services (Statewide).
- While hospitalized, Kemper sent a demand to Statewide seeking Brown’s policy limits ($25,000) and offered to sign a limited release with no obligation to reimburse Brown or insurer; she required payment by a set date.
- Statewide replied with a June 5 letter enclosing a $25,000 check and a limited-release form, but the letter "demanded" that Kemper place settlement funds into an escrow account to protect potential lien interests and the release contained indemnification language.
- Kemper (through counsel) rejected Statewide’s response as a counteroffer because of the escrow demand and later sued Brown; Brown moved to enforce the settlement and the trial court granted the motion.
- The court of appeals reviewed de novo, treating the motion like summary judgment on formation of a settlement; it held Statewide’s reply was a counteroffer because the escrow "demand" imposed a new, mandatory condition, so no binding settlement existed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Statewide’s reply unconditionally accepted Kemper’s settlement demand | Kemper: reply varied terms by demanding escrow/indemnity, so it was a counteroffer; no mutual agreement | Brown/Statewide: the reply settled for policy limits and thus accepted; escrow language was not a mandatory new condition | Held: Reply was a counteroffer because the escrow "demand" imposed a new, mandatory condition, so no enforceable settlement formed |
| Whether conditional language asking about or addressing liens converts acceptance to counteroffer | Kemper: conditioning settlement on lien handling alters offer and creates a counteroffer | Brown: addressing liens was protective, not a prerequisite to acceptance | Held: Conditioning settlement on lien resolution or escrow is a new term that transforms acceptance into a counteroffer |
| Whether precatory wording can avoid counteroffer characterization | Kemper: mandatory wording here was not merely precatory | Brown: might argue language was precatory or permissive | Held: Language used ("demand"/mandatory phrasing) is not precatory and imposed a required condition, so it is a counteroffer |
| Whether confirmation that plaintiff had health insurance removes escrow concern | Kemper: health insurance does not preclude hospital liens, so escrow demand remains a new condition | Brown: confirmation of insurance eliminates likelihood of liens, rendering escrow demand moot | Held: Even if liens were unlikely, the inclusion of the escrow demand still added a new condition and thus made the reply a counteroffer |
Key Cases Cited
- Johnson v. DeKalb County, 314 Ga. App. 790 (standard on motions to enforce settlement analogous to summary judgment)
- Torres v. Elkin, 317 Ga. App. 135 (precatory vs. mandatory language; lien conditions can create counteroffer)
- Anderson v. Benton, 295 Ga. App. 851 (acceptance must be unequivocal to form contract)
- Butler v. Household Mtg. Svcs., 266 Ga. App. 104 (any variance in acceptance creates a counteroffer)
- McReynolds v. Krebs, 290 Ga. 850 (inquiries about liens differ from imposing lien-resolution conditions)
- Frickey v. Jones, 280 Ga. 573 (conditioning settlement on resolution of medical liens prevents formation of binding settlement)
- Herring v. Dunning, 213 Ga. App. 695 (definition and effect of precatory words)
- MCG Health, Inc. v. Kight, 325 Ga. App. 349 (existence of health insurance does not necessarily preclude hospital liens)