Facts
In the case of Groves v. Gibbs, the trial court granted the at-fault driver defendant’s motion for summary judgment, which argued that a valid settlement agreement existed prior to the injured party filing a lawsuit. The injured party appealed. The Court of Appeals vacated the trial court’s order and remanded the case for further proceedings, holding that the injured party’s firm never communicated acceptance of the Defendant’s counteroffer.
The Plaintiff was injured after being involved in a motor vehicle collision with the Defendant. Plaintiff hired a firm to represent him for his injuries. The firm sent a demand letter to Defendant’s insurance company, offering to settle all bodily injury and property damage claims for the insurance policy limits. The demand also required the insurer to submit an affidavit verifying coverage and required Defendant to submit an affidavit that he had no other available insurance. The insurer retained counsel to represent Defendant for purposes of negotiating a settlement.
Defense counsel responded to the firm’s demand letter offering to tender the policy limits for bodily injury only in exchange for a limited liability release. Defense counsel attached a proposed release to its response, excluding the property damage claims and provided a letter that it would have the requested affidavits shortly. After the firm continued to follow up on the requested affidavits, the insurance company issued a check for policy limits and forwarded the requested affidavits via email. The firm never deposited the check.
Although the firm never deposited the check, it did have conversations with Plaintiff that the case had settled and attempted to have Plaintiff sign the release. Plaintiff refused to sign the release, terminated the representation, and hired new counsel.
Plaintiff’s new counsel filed a lawsuit against Defendant. Defendant raised the defense of release and settlement. Therefore, Plaintiff filed a Motion for Partial Summary Judgment to establish that there was no settlement agreement while Defendant filed a Cross-Motion for Summary Judgment to enforce the settlement agreement.
The trial court granted Defendant’s Motion. The trial court agreed that the Defendant’s response to the initial demand was a counteroffer, but it concluded that Plaintiff’s counsel did accept the counteroffer from the defense, despite the firm never communicating acceptance of defense counsel’s counteroffer. This appeal followed.
Issues & Holdings
All parties agreed that defense counsel made a counteroffer to Plaintiff’s initial demand. The parties disagreed about whether the defense’s counteroffer was accepted.
The key issue was did the Plaintiff’s firm accept Defendant’s counteroffer? The court held that the Plaintiff’s attorney did not accept the counteroffer.
Reasoning
Under Georgia law, to constitute a contract, the offer must be accepted unequivocally without variance of any sort; there must have been mutual assent or a meeting of the minds. To determine whether the parties had the mutual assent or meeting of the minds necessary to reach an agreement, courts apply an objective theory of intent between one party’s intention and the meaning that a reasonable person in the position of the other contracting party would give to the first party’s “manifestations of assent.” Wright v. Nelson, 358 Ga. App. 871, 874 (2021); see also Barnes v. Martin-Price, 353 Ga. App. 621, 623-624 (1) (2020). It should be noted though that there is an acceptance of settlement when counsel takes the action of depositing a settlement check. See Nugent v. Myles, 350 Ga. App. 442, 448-449 (2) (2019).
Applying the objective theory, the Court of Appeals reasoned that there were no communications between Plaintiff’s counsel and Defendant’s counsel that would lead defense counsel to believe the firm had accepted the counteroffer.
First, the Court reasoned that Plaintiff’s counsel’s communications with Defendant’s attorney inquiring about the status of the affidavits did not establish an acceptance. All that it showed was that the defense’s counteroffer was still being considered.
Second, the Court reasoned that none of the Plaintiff’s firm’s communications referenced the terms of the proposed release, and the firm never deposited the settlement check.
The only other evidence that existed was testimony that Plaintiff’s counsel told the Plaintiff himself that the case had settled. However, the Court of Appeals concluded that discussions between an attorney and the client have never been enough to establish acceptance. It is only communications between the negotiating parties that can establish an acceptance. In the record, there was nothing showing that the Plaintiff’s attorney communicated an acceptance to defense counsel.
Conclusion
Groves serves as a reminder that an enforceable settlement agreement does not exist, unless there is evidence that the offer was accepted unequivocally. Communications between the Plaintiff and their attorney are not sufficient as the inquiry focuses on the communications between the offeree and the offeror.
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Citation:Groves v. Gibbs, No. A23A0587 (Ga. Ct. App. May 24, 2023)
