Signing Ceremony for the Georgia Tort Reform Act at the Georgia State Capitol / Image by the Office of the Governor

On April 21, 2025, Governor Kemp signed the much-anticipated SB 68 and SB 69 into law as the Georgia Tort Reform Act. The new law codifying SB 68 contains 8 sections updating the rules of evidence, filing, discovery, and trials in personal injury cases in Georgia courts. Most of the provisions of the new statute are retroactive.  Sections 6 and 7 of the Act, however, are only applicable to causes of action arising on or after April 21, 2025.

The following sections apply retroactively and are therefore applicable to all currently pending tort cases:

Section 1 (Non-economic Damages - revision to OCGA §9-10-184). The Act’s first section limits how and when a party can argue for noneconomic damages before a jury. Noneconomic damages include claims for pain and suffering, loss of enjoyment of life, loss of consortium, etc. To address concerns about arbitrary dollar amounts being used to seek “nuclear” verdicts, this section requires that any evidence concerning noneconomic damages must be tied to actual evidence of a plaintiff’s pain and suffering.

Section 2 (Motion practice - revision to OCGA §9-11-12). This section makes several changes to civil filing procedures. When a defendant files a motion as its first pleading (e.g. a motion to dismiss or motion for more definite statement), the deadline for a defendant to file an answer is postponed until 15 days after the court rules on that motion. Discovery is also put on hold while any pre-answer motion is pending. However, if a defendant files an answer before the court rules on defendant’s motion, the stay on discovery shall immediately terminate.

Section 3 (Limits on Dismissals - revision to OCGA §9-11-41). A plaintiff is still permitted to unilaterally dismiss claims, but they must do so within 60 days of the defendant(s) filing an answer. If a plaintiff wants to dismiss a claim after that time, it must be with the consent of all parties in the lawsuit or upon an order of the court for terms it deems proper. A dismissal of this type will typically be considered “without prejudice,” meaning it is not a dismissal based on the merits of the claims.

Section 4 (Attorney’s Fees - revision to OCGA §9-15-16). A party can only recover attorney’s fees and costs of litigation once based on another party’s statutory violation, even if more than one statute entitles them to the recovery. Additionally, an agreement of a contingency fee is not allowed to be used as evidence when seeking attorney’s fees.

Section 8 (Bifurcation/Trifurcation - creating new code section OCGA §51-12-15). In tort cases, any party can now elect to have a trial split into phases: one phase determining fault, a second phase determining the amount of damages to be awarded to compensate a plaintiff for harm, and a third phase (if applicable) determining the amount of damages to be awarded to punish a defendant and/or allow a party to recover attorney’s fees and costs of litigation. This process is also known as bifurcation (a two-phase trial) or trifurcation (a three-phase trial), and all phases occur back-to-back with the same judge and jury. This new section also defines a couple exceptions that a party can raise to object to bifurcation/trifurcation.

The following sections of the Tort Reform Act only apply to causes of action arising on or after April 21, 2025, the day the Governor signed the Act into law:

Section 5 (Admissibility of Seatbelt Evidence - revision to OCGA §40-8-76). [Edited to add: An amendment to a related bill, SB69, states that the Admissibility of Seatbelt Evidence rule shall not apply retroactively but “only to actions commenced on or after the effective date of this Act” .] Evidence of whether a party was wearing a seatbelt can now be admitted in cases involving motor vehicle accidents. This change is long overdue and will inure to the benefit of many of our clients. Defendants in motor vehicle collisions will now be able to tell the jury that a plaintiff was not wearing a seatbelt and consequently, was injured more severely than if they had chosen to wear a seatbelt. However, seatbelt evidence cannot be used by insurance companies to cancel coverage or increase rates.

Section 6 (Negligent Security - creating new code sections OCGA §51-3-50 through §51-3-57). This statute contains an entirely new Article to regulate negligent security claims. The new law now provides the exclusive remedy in the majority, but not quite all, of the premises liability claims for negligent security where plaintiffs allege injuries caused by the wrongful act of a third party in cases filed against a premises owner, occupier, or security contractor. However, if the wrongful act was committed by an employee, or by another person “under the direction, control, or supervision” of an owner, occupier, or security contractor, then a plaintiff’s cause of action will still arise under pre-existing premises liability law.

Furthermore, under the old law, a duty was triggered when a third-party’s criminal actions were “reasonably foreseeable.” That is still the case, but the new statute narrows the definition to be more favorable to property owners and occupiers. This new section also details how to apportion fault, specifying that unless all third-party wrongdoers are more than 50% at fault, the court must set aside the verdict and order a retrial.

Section 7 (Medical Bills - creating new code section OCGA §51-12-1.1). In some tort actions, evidence of a plaintiff’s health insurance, including workers’ compensation benefits, may now be admissible at trial.  This evidence will serve to determine the “reasonable value” of medically necessary treatment (i.e., a comparison of the amounts charged by a plaintiff’s medical providers and the amounts actually paid). This will allow our clients to reduce inflated awards for medical expenses, commonly known as “phantom damages.”

The Georgia Tort Reform Act is certain to have an immediate impact on personal injury cases generally, which will only increase as the changes to the negligent security paradigm and limitation on phantom damages begin to take effect as well.  The plaintiffs’ Bar has already launched constitutional challenges to seatbelt admissibility and others are sure to follow.  Georgia judges will certainly have their hands full as these cases start to percolate through our courts. For now, however, defendants can enjoy the more level playing field provided by the new Georgia Tort Reform Act.

You can read the full text of SB68 here.

03/21/25 Update: SB68 has now passed in the House and Senate and is awaiting signature by the Governor.

Senate Bills 68 and 69, two of the largest pieces of tort reform legislation in nearly 20 years, have officially passed the state’s Senate Judiciary Committee in an 8-3 vote. On January 30th, Governor Brian Kemp announced the details of a comprehensive tort reform plan aimed at enhancing fairness in Georgia's legal system and stabilizing insurance costs for both businesses and consumers. According to the U.S. Chamber of Commerce’s Institute of Legal Reform, Georgia’s tort costs reached nearly $20 billion in 2022, which accounts for 2.60% of the state’s GDP. The proposed legislation will make several changes to tort litigation in an attempt to create a more balanced courtroom environment by making significant changes across various titles of the Official Code of Georgia Annotated, specifically Titles 9 (Civil Practice), 13 (Contracts), 40 (Motor Vehicles), and 51 (Torts).

Here are some of the key provisions contain in SB 68 and SB 69:

1. Limitations on Pain and Suffering Testimony: The bill seeks to establish constraints on testimony related to pain and suffering in civil cases, aiming to standardize and potentially reduce subjective assessments of non-economic damages.

2. Revisions to Civil Practice Procedures: SB 68 proposes adjustments to the timing of answers and discovery processes in civil litigation, intending to streamline procedures and enhance efficiency in the judicial system.

3. Provisions for Dismissal of Civil Actions: The bill outlines specific conditions under which civil actions may be dismissed, which could impact the duration and outcome of litigation.

4. Updates to Liability and Damages Calculations, Including Admissibility of Seatbelt Evidence: SB 68 aims to revise existing statutes concerning liability and the assessment of damages in tort cases, potentially affecting how fault and compensation are determined. One major change, which is long overdue, and which will inure to the benefit of many of our clients, will be allowing for evidence of whether a plaintiff was wearing a seatbelt in motor vehicle accident cases. This will put an end to the era where plaintiffs whose injuries were much more severe because they failed to wear their seatbelt can hide that fact from a jury.

The bill has received widespread support from the defense bar as well as local business associations. “This bill will protect both business owners and consumers from frivolous lawsuits, ensuring a more fair legal system,” stated the Georgia Restaurant Association in a LinkedIn post after the Governor’s announcement. “We look forward to collaborating with the governor to advance this critical legislation!” Critics of the bill express concerns for plaintiffs’ rights and skepticism that the reform will create any economic benefit for the average Georgian.

Sources:

1 Governor Kemp Unveils Plan to Tackle Tort Reform and Stabilize Insurance Costs for Hardworking Georgians: https://gov.georgia.gov/press-releases/2025-01-30/gov-kemp-unveils-plan-tackle-tort-reform-and-stabilize-insurance-costs

2 The Growing Burden of Tort Costs on Georgia Households: A Call for Reform: https://instituteforlegalreform.com/blog/the-growing-burden-of-tort-costs-on-georgia-households-a-call-for-reform/

3 The full text of the legislation can be found at: https://www.legis.ga.gov/legislation/69756.

4 https://www.linkedin.com/posts/georgia-restaurant-association_were-standing-with-governor-kemp-for-legal-activity-7290798541273214976-WfrI/?utm_source=social_share_sheet&utm_medium=member_desktop_web

In a recent pair of companion cases, Avis Rent A Car System v. Johnson, 352 Ga.App. 858 (2019) and Avis Rent A Car System v. Smith, 353 Ga.App. 24 (2019), the Georgia Court of Appeals reversed massive jury verdicts totaling $54M on the grounds that an Avis employee’s theft of a rental vehicle cut off Avis’s liability for the employee’s subsequent crash that injured the bystander plaintiffs.

The two plaintiffs’ respective cases arose from the same incident where an Avis employee stole a rental SUV after hours from a downtown Atlanta branch and then later fled from the police before crashing into a brick wall where both plaintiffs were sitting. The plaintiffs suffered significant injuries and filed suit against Avis, a regional security manager, the operator of the Avis location, the operator’s owner, and the operator’s employee who stole the vehicle.

At the trial court level, the juries found that Avis was vicariously liable for the employee’s negligence in causing the crash and, in the Smith case, found that Avis was also vicariously liable for the fault that was apportioned to the operator and its owner. Avis filed a motion for a judgment notwithstanding the verdict or, in the alternative, for a new trial; the trial court denied the motions.

Avis appealed the holdings and last year the Georgia Court of Appeals reversed the verdicts and held that only the car thief employee could be held liable for the plaintiffs’ injuries. In both appeals cases, the Court of Appeals held that the at-fault employee’s criminal acts – namely, his after hours theft of the vehicle and high-speed flight from the police some five hours later – were intervening acts that severed Avis’s liability for the incident. The Court further recognized Georgia’s long line of appellate decisions holding that a car thief’s criminal acts were the sole proximate cause of plaintiffs’ injuries in those cases 

Further, in the Smith case, the Court found that Avis, the operator, and its owner could not be liable for negligent hiring and retention of the car thief employee because the employee was not acting under the color of his employment when the theft and subsequent accident occurred.

However, the two cases did not end at the Court of Appeals, as the Georgia Supreme Court granted certiorari and heard oral argument last December. The Supreme Court’s pending holding could very well dramatically alter the landscape of vicarious liability law in Georgia, so we encourage you to keep an eye on this space for further analysis once the Supreme Court issues its ruling.

The Georgia legislature recently passed a bill designed to shield healthcare facilities and other business entities from civil liability related to the spread of COVID-19. On August 5, 2020, Governor Brian Kemp signed the “Georgia COVID-19 Pandemic Business Safety Act,” which provides businesses with a general shield against civil tort lawsuits brought by members of the public, customers, or employees who alleged that they contracted or were exposed to the virus while on the premises.

Although the text of the Act is focused on healthcare providers, it applies to any “healthcare facility, healthcare provider, entity, or individual,” which, consequently, encompasses almost any business in Georgia. The Act shields businesses from COVID-19-related lawsuits except in cases where a business acted with “gross negligence, willful and wanton misconduct, reckless infliction of harm, or intentional infliction of harm.”

Additionally, businesses that provide a written warning are further protected by a rebuttable presumption that the person bringing the lawsuit assumed the risk of contracting COVID-19 by entering the business. To qualify for this additional protection under the Act, businesses must post the statutorily-prescribed warning either (1) on a sign at the business premises’ point of entry, or (2) on a receipt or as part of a proof of purchase for entry. Notably, these presumptions and written warning requirements are in addition to, and do not limit, the overall legal immunities created under the Act.

It is important to note that while the Act provides a defense against virus-related tort claims, it does not preclude claimants from bringing claims or filing lawsuits against Georgia businesses – meaning businesses will still incur the costs of defending these actions even if the Act ultimately shields them from liability. Further, the Act only protects Georgia businesses for claims arising from exposures to COVID-19 that occur up through July 14, 2021.

As Georgia business owners certainly know, the COVID-19 pandemic has created a complicated environment filled with uncertainty. While the Act provides businesses with a layer of protection for virus-related claims, owners and managers are encouraged to coordinate their reopening plans with legal counsel to ensure that they are optimally protected.

In Reid v. Morris, Case No. S20A0107 (Ga. S. Ct., June 29, 2020), the Supreme Court of Georgia held that under Georgia’ s punitive damages statute, a defendant may be subject to unlimited punitive damages if he commits a tort while intoxicated—even if the tort does not involve driving under the influence. In this case, the two defendants, Stroud and Morris, were drinking together, and though Stroud knew Morris was drunk, had no license, and was known to be reckless, he gave Morris his car keys and let him drive. The plaintiff was injured when his vehicle was struck by the vehicle driven by Morris.

The plaintiff sued both Morris and Stroud. He alleged that Stroud negligently entrusted the vehicle to Morris, and he sought punitive damages against both defendants. The trial court ruled that under O.C.G.A. § 51-12-5.1(f), only an “active tortfeasor” could be liable for punitive damages, which would only be the impaired driver. The Georgia Supreme Court vacated this part of the trial court’s judgment and remanded the case to determine whether Stroud was an “active tortfeasor” and thereby subject to punitive damages.

Construing O.C.G.A. § 51-12-5.1(f), the Court held that an “’active tort-feasor,’ as used in the statute, is not necessarily limited to drunk drivers.” Instead, the statute imposes unlimited punitive damages when “the defendant was intoxicated to the degree that his judgment was substantially impaired” and his “positive acts of negligence” were the proximate cause of the plaintiff’s injury.

Now, after Reid v. Morris, Defendants and liability insurers must consider the potential for unlimited punitive damages in all cases in which alcohol or drugs are involved, not just those involving DUI drivers. For example, if a homeowner has a few too many drinks before deciding to pressure wash the sidewalk in front of his house on a sub-freezing day, a resulting slip and fall accident with minor injuries could subject the homeowner to unlimited punitive damages under O.C.G.A. § 51-12-5.1(f). Thus, defendants and their counsel should anticipate that plaintiffs’ attorneys will now seek to develop evidence of possible intoxication in most every case.

Property owners and their insureds take note: a Court of Appeals’ decision will make it much more difficult for property owners to get summary judgment in cases where plaintiffs slip in rain tracked into a building.

In Duff v. Bd. Of Regents of the Univ. Sys. Of Georgia, (hereafter, the “Trial Court Order”), the Plaintiff, a student at Georgia Perimeter College (“GPC”), exited a classroom and slipped and fell on rainwater tracked in by hundreds of students entering the building. It was undisputed that it had not been raining when Plaintiff first entered the building or that she had seen any rain on the floor on her way to class.

the Plaintiff testified that she slipped on “standing water,” but could not describe the depth, width, or quantity of water. She also testified that her clothing was wet when she got up.  A professor who assisted her after the fall testified that Plaintiff fell on a very thin layer of water analogous to the amount of water left after you take “a wet paper towel and wiped it across a surface.” The professor also testified that at the time she fell, students were standing outside of the classroom waiting to get in wearing wet clothes and carrying dripping umbrellas.

The trial court granted GPC’s motion for summary judgment, relying on Georgia precedent that rainwater is not in and of itself a hazardous condition unless plaintiff can demonstrate that there is an “unreasonable accumulation of water.”  Relying on a 2013 Court of Appeals’ case (Season All Flower Shop, Inc. v. Rorie, 323 Ga. App. 529), the trial court also held that summary judgment was appropriate even though the Plaintiff fell in an interior hallway as opposed to an entrance. Specifically, quoting the Appeals Court in Season All Flower, the trial court held that “‘water is apt to be found in any area frequented by people coming in from the rain outside, and not just at the ‘threshold’ of an entrance door.’” 

In a decision that must not be taken lightly by property owners and their insureds, the Court of Appeals reversed. The Court held that Plaintiff’s self-serving testimony regarding “standing water” (despite her inability to describe the dimensions of that water) created a question of fact and precluded summary judgment. Relying on Dickerson v. Guest Svcs. Co., 282 Ga. 771 (2007), the Court of Appeals wrote that although it is “common knowledge that the ground outside gets wet on rainy days, it cannot properly be applied to a portion of an interior space where [people] have no reason to expect water to accumulate on the floor.”

Our insured property owners and managers must take note of the Court of Appeals’ decision in Duff, as it appears to create a duty to continuously monitor during rain, particularly in buildings with heavy foot traffic. As the trial court warned, “[a] departure from the rainy day case law here [could] result in premises owners having to ‘continuously mop during a shower’ each time it rains simply because it is possible that one [person] does not know it is raining outside. This result would essentially eviscerate the protections that are afforded to premises owners on rainy days.” 

At the very least, the Court of Appeals’ decision will make it much more difficult for property owners to get summary judgment in cases where plaintiffs slip in rain tracked into a building, regardless of whether management places mats at the entrance. It all comes down to location. Business owners may feel pretty confident in his/her chances of getting out on a motion for summary judgment when a plaintiff’s slip and fall occurs at the entrance of the premises on a rainy day.  However, after Duff, plaintiffs will have an easier time creating a question of fact when they slip and fall on rain tracked into the interior of the building, which would preclude summary judgment.

In Aldredge v. Byrd, No. A17A0281, 2017 WL 1180469 (Ga. Ct. App. Mar. 30, 2017) the Georgia Court of Appeals held that a landlord was not liable for the collapse of a deck on his rental property.  The renters hosted a barbeque in the house they were renting from the landlord, Aldredge.  The injured renters and guests sued Aldredge for money damages.

Over twenty (20) years prior to the incident, Aldredge had hired a carpenter to remove the existing back deck and build a new one.  Aldredge did not supervise the building of the deck, but he was aware that the carpenter had attached the deck to the house using nails and nut bolts.

Around the time he rented the property to the plaintiffs, Aldredge replaced several deck boards, inspected the deck and did not notice any rot or defects. The renters and their guests were injured when the deck broke away from the house and fell to the ground, because the joist that attached the deck to the house was rotten and damaged.  Aldredge inspected the deck after it collapsed, and noticed that the joist appeared to have rotted.

Aldredge moved for summary judgment, stating that there was no evidence that the deck collapsed because of faulty construction, and no evidence that he knew that the premises was in need of repair.   The trial court denied the motion, holding that an issue of fact existed as to whether Aldredge had constructive knowledge (he should have known) that there was a need for repair and failed to do so.

Aldredge appealed the denial, and the Court of Appeals reversed the trial court’s ruling, dismissing the claims against Aldredge.  The Court held that, pursuant to O.C.G.A. § 44-7-14, Aldredge, as an out-of-possession landlord could only be liable for a third party’s damages that resulted either from faulty construction of the premises or from his failure to repair the premises. The record reflected that Aldredge had no role in the construction of the deck.  Additionally, during the time they were living there, plaintiffs did not inform Aldredge that any maintenance needed to be done on the deck.  The Court found that plaintiffs had failed to present any evidence that Aldredge had actual or constructive knowledge that the deck was in need of repair.

As the Court held, landlords are not insurers of their tenants’ safety, and liability only arises where the landlord is on notice of a defect and therefore the necessity for repair.  Aldredge follows a line of cases which protect out-of-possession landlords from liability except in limited circumstances.   Once landlords have fully parted with possession and the right of possession of premises they own, courts do not want to hold them to the higher standards required of landowners who live on the property.   Instead, the responsibility is on the on-site renter to keep the landlord informed about the need for repairs.

In West v. City of Albany, 2017 WL 875033 (Ga. March 6, 2017), the Georgia Supreme Court addressed whether an injured party was required to provide notice of intent to sue a city when the alleged wrongdoing was intentional rather than negligent. In an historic decision, the Court unanimously held that the ante litem (pre-suit) notice required for bringing suit against a municipality applies only to allegations of negligence, not to intentional acts.

The case involved a lawsuit against the City of Albany by an individual who claimed to have been fired pursuant to the Georgia Whistleblower’s Act (O.C.G.A. § 45-1-4). The plaintiff, Ms. West, sued the city for money damages, alleging that she had been the victim of retaliation after she reported financial irregularities in the city’s utility department.

The City of Albany moved to dismiss the lawsuit because Ms. West failed to comply with the pre-suit requirements set forth in O.C.G.A. § 36-33-5 (b). In pertinent part, the statute requires that “[W]ithin six months of the happening of the event upon which a claim against a municipal corporation is predicated, the person, firm, or corporation having the claim shall present the claim in writing to the governing authority of the municipal corporation for adjustment, stating…the negligence which caused the injury.” The Court held that the six month pre-suit requirement does not apply to whistleblower cases, because a clear reading of the statute limits the notice prerequisite to negligence cases.

The holding in West is significant because historically, Georgia courts have applied this municipal six month pre-suit notice to claims alleging both negligent and intentional acts. In West, the Court held that the “statute’s plain language demonstrates it applies only to damages caused by negligence, not intentional acts.”

One of the purposes of the ante litem statute is to preserve public funds by limiting municipal exposure for monetary damages. Now that the Court has narrowly interpreted the statute, the Georgia legislature may move to amend O.C.G.A. § 36-33-5 (b) to comport with the manner in which it has long been interpreted: requiring notice for allegations of both negligent and intentional wrongdoing. Otherwise, going forward, plaintiffs need only provide the statutory ante litem notice to municipalities for allegations of negligence.

In Cullara v. Building & Earth Sciences, Inc., Case No. A16A1735 (Ga. Ct. App., Dec. 8, 2016), the Georgia Court of Appeals seems to raise as many questions as it answers concerning an employer’s duty to investigate an employee before entrusting the employee with a company vehicle. In this case, a prospective employee at Building & Earth Sciences (“BES”) stated in his application that his criminal history consisted of only a prior conviction for possession of cocaine. BES did a background check on the employee, including his employment history, credit history, Social Security information, criminal history, and motor vehicle record. His driving record was clean, and the federal criminal history showed no convictions. One Saturday, a few months after the employee was hired, his supervisor allowed him to borrow a company truck to move a personal item to the employee’s new home. Several beers later, the employee collided with Plaintiff. The employee pled guilty to DUI.

The ensuing lawsuit included a claim against BES for negligent entrustment. In his deposition, the employee gave inconsistent testimony concerning an interview he had with BES prior to being hired. He testified again and again that he could not remember whether he told GES in the interview anything about his criminal history other than the cocaine conviction and a DUI conviction in 2002. He did have several prior DUI convictions, however, and in other parts of his deposition, he testified that he told the GES interviewers about all of his criminal history, including the prior DUIs. The trial court granted BES’s Motion for Summary Judgment, based on a finding that the employee reported only the prior cocaine conviction and the one prior DUI, and that such evidence was insufficient to support a claim of negligent entrustment. The Court of Appeals reversed, ruling the trial court improperly failed to consider the contrary evidence in the light most favorable to the plaintiff, the non-movant. The Court also rejected BES’s argument that an employer could rely solely on an investigation into an employee’s criminal history and driving record.

Given the conflicting evidence concerning the employer’s knowledge of the employee’s habitual recklessness, the Court’s decision is not surprising. The opinion, however, raises other unanswered questions. First, although the plaintiff also argued the trial court “failed to consider whether BES voluntarily assumed a duty to investigate the former employee’s driving background,” the Court reversed summary judgment only on the basis that there was an issue of fact concerning the employer’s knowledge of the multiple prior DUI convictions. The Court discussed neither the duty to investigate nor the sufficiency of any such investigation. The Court did give hints that the employer’s investigation fell short, however, pointing out the motor vehicle report “searched only for violations in the preceding three years,” and by dropping a footnote that said, while the employer conducted a federal criminal search on the employee, “[t]here is no explanation why BES did not order a state criminal background report.” Second, the Court leaves unexplained its statement that “the issue is whether BES knew or should have known that [the employee] was a high risk driver.” (Emphasis added.) This statement flatly contradicts established law and the Court’s own prior statement in the same case that to prove negligent entrustment, the plaintiff must show that the vehicle owner entrusted the vehicle to another “with actual knowledge that the driver is incompetent or habitually reckless.” (Emphasis added.) Can it be assumed that the Court’s inclusion of constructive knowledge is an inadvertent misstatement of the law on negligent entrustment, or is the Court attempting to establish an employer’s duty to investigate potential employees’ driving records?

What should business owners do before allowing employees to drive company vehicles? If you do a background check, do a thorough job. Get both the federal and state criminal records, and get a seven-year motor vehicle record, not just a three-year. Document any pre-hire interviews. You will not only increase your chances of getting summary judgment in claims of negligent entrustment, you will potentially keep an unsafe driver off the roads.

In Hughes v. First Acceptance Ins. Co. of Georgia, Case No. A17A0735 (Ga. Ct. App., Nov. 2, 2017), the Georgia Court of Appeals held that a jury must decide whether two inexplicit letters sent simultaneously to the defendant insurance company’s counsel constituted a 30-day settlement demand for liability coverage limits. The result of this case underscores the extreme caution and diligence a liability insurance carrier must exercise in reviewing any communications whatsoever from Plaintiff’s attorneys.

The case arose from a five-vehicle accident in which the insured driver was killed and others injured, including Jina Hong, a minor who sustained a traumatic brain injury. Evidently, liability on the part of the insured driver was clear. The driver was insured by First Acceptance with minimum limits of $25,000 per person, $50,000 per accident. The attorney for the minor and the minor’s mother contacted First Acceptance and stated that “he looked forward to working with the insurer to resolve the matter and that he would forward a settlement demand when his clients had finished treatment.” Some months later, the attorney for First Acceptance wrote the attorneys for all of the injured parties, including Jina Hong, stating that he wanted to schedule a settlement conference.

Four months later, Jina Hong’s attorney faxed two letters dated June 2, 2009, to the attorney for First Acceptance. The first letter stated they “were ‘interested in having their claims resolved within your insured’s policy limits, and in attending a settlement conference.’” (Emphasis added.) The letter mentioned the plaintiffs’ uninsured motorist coverage, that the amount paid from available liability coverage must be determined, and “[o]nce that is determined,” they would need to execute a limited liability release. The letter went on to state:

In fact, if you would rather settle within your insured’s policy limits now, you can do that by providing that release document with all the insurance information as requested in the attached [second letter], along with your insured’s available bodily injury liability insurance proceeds.

The second letter simply asked that First Acceptance provide the insurance coverage information within 30 days, and that “’any settlement will be conditioned upon the receipt of all the requested insurance information.”

On July 10, 2009, thirty-eight days after the two letters, the plaintiffs filed suit against the estate of the deceased insured driver. The plaintiffs’ attorney then wrote the attorney for First Acceptance to inform him that a clear 30-day offer to settle within policy limits had been made, there had been no response, and now the offer to settle was withdrawn. Now scrambling, the attorney for First Acceptance quickly scheduled a settlement conference, but counsel for the minor plaintiff did not participate. The case went to a jury trial, and the court entered judgment in favor of the minor plaintiff for $5,334,220.

Robert Hughes, the administrator of the insured’s estate, subsequently sued First Acceptance for negligent and bad faith refusal to settle. Hughes sought the excess amount of the underlying judgment, attorney’s fees, and punitive damages. Both sides moved for summary judgment. The trial court granted summary judgment in favor of First Acceptance and against Hughes. The Court of Appeals affirmed the denial of Hughes’ motion, and affirmed the grant of summary judgment in favor of First Acceptance as to the claims for attorney’s fees and punitive damages. The Court held that, although liability for attorney’s fees and punitive damages are generally questions for the jury, Hughes essentially abandoned his claim for attorney’s fees, and there was an absence of evidence that First Acceptance engaged in willful or wanton conduct which would authorize punitive damages.

Incredibly, however, the Court also held that a jury must decide whether the two letters sent by the plaintiffs’ attorney constituted a time-limited settlement offer, and whether First Acceptance reasonably responded to it. Quoting Cotton States Mutual Ins. Co. v. Brightman, 276 Ga. 683 (2003), the Court laid out the familiar legal standard applicable in these cases: “’An insurance company may be liable for the excess judgment entered against its insured based on the insurer’s bad faith or negligent refusal to settle a personal claim within the policy limits,’” and ‘”the insurer is negligent in failing to settle if the ordinarily prudent insurer would consider choosing to try the case created an unreasonable risk.’” The Court noted that whether the insurer was in fact “ordinarily prudent” or took an “unreasonable risk” is usually a question for the jury. The Court further noted that it was immaterial that First Acceptance was faced with multiple claims and could not know whether the claims could be settled within its limits, because a liability insurer may in good faith settle with one or more claimants to the detriment of the others. With no further analysis, however, the Court simply concludes that “[i]t is apparent from a review of those letters that they, at the very least, create genuine issues of material fact as to whether Hong offered to settle her claims within the insured’s policy limits and to release the insured from further liability, and whether the offer included a 30-day deadline for a response.”

The clear lesson from this unfortunate result is that claims professionals and counsel for insurers must carefully scrutinize every communication received from plaintiffs’ attorneys. Any mention of a deadline should immediately raise a red flag. Where any ambiguity exists, get clarification. A timely response, even if it is just a request for the attorney to say what he means, is better than no response at all.