Bad faith litigation is all but certain after a Fulton County State Court jury recently awarded an injured motorist $113 million in a case where the insurer unintentionally declined a $50,000 policy limits demand.
In a prior iteration of the case, Claxton v. Adams, 357 Ga. App. 762 (2020), the Georgia Court of Appeals considered whether the carrier had accepted the claimant’s pre-suit policy limits demand. The claimant offered to settle for $50,000 to be paid by “check.” The insurer attempted to accept the demand, delivering a release, settlement documents, and a bank draft for limits. However, when the claimant attempted to cash the bank draft, the bank told the claimant that a bank draft was different than a check and needed to be deposited rather than cashed, which would take nine days. The claimant then argued, and the trial court and Court of Appeals agreed, that the delivery of the bank draft was a counter-offer rather than an acceptance, and the insurer had declined the policy limits demand.
After the case was remanded, a trial was held. The claimant had been a construction worker working alongside an expressway when the insured veered into the construction zone, striking the claimant, who suffered serious injuries and permanent disfigurement. The jury awarded the claimant ~$60 million in compensatory damages, ~$40 million in attorney’s fees, $3.5 million in fees for presenting frivolous defenses, and ~$10 million in pre-judgment interest.
The lesson for insurers operating in Georgia is that they must be extremely careful when attempting to accept policy limits demands. While the Georgia Court of Appeals has recently issued opinions chipping away at attempts by plaintiffs’ lawyers to bring bad faith claims, the Claxton case highlights that Georgia remains a dangerous state for insurers. In particular, insurers should retain experienced counsel to respond promptly and appropriately to policy limits demands.
If you would like to speak to an attorney about this verdict or other policy limits demands, a bad faith claim, or other matter, or if you have questions about the content of this update, please contact Seslee Smith or Ryan Burke.
