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GEORGIA COURT OF APPEALS ENFORCES SETTLEMENT AGREEMENT

Posted by H. Lee Pruett

The Georgia Court of Appeals recently issued an opinion which should assist defendants seeking to enforce settlement agreements. In Smith v. Hall, Case No. A11A1042 (Ga. Ct. App., July 21, 2011), the plaintiff’s attorney sent a letter to the defendant’s attorney demanding insurance policy limits of $25,000 by a certain date. The letter also stated that any deviation or delay in the acceptance would be considered a rejection. Defendant’s attorney wrote back within the deadline, stating the demand was accepted, and including a check for $25,000 along with a release, affidavit of no liens, and an attorney certificate of no liens. Defendant’s attorney wrote that the general release pertained to his client and his client’s insurer, that he understood there were no other parties or insurance involved, but if there were, they would consider a limited release so Plaintiff could pursue any other insurance. Plaintiff’s attorney returned the check and said the response was a rejection of the demand/offer. Defendant filed a motion to enforce the settlement agreement. The trial granted the motion, and Plaintiff appealed.

The Court of Appeals affirmed. Plaintiff argued that there was no acceptance because it included a general release which sought to release parties other than Defendant. The Court rejected this argument and agreed with Defendant that the settlement documents included with the letter “were not a mandatory element.” Defendant unequivocally accepted the demand by stating, “we hereby accept your demand for settlement.” Defendant’s “inclusion of a general release was merely a suggestion of how to terminate the lawsuit.” To effectively accept the offer to settle, it was not necessary for Defendant to present a release “in a form acceptable to plaintiff.” The Court distinguished Johnson v. Martin, 142 Ga. App. 311 (1977), in which the Court held there was no settlement where the defendant’s acceptance of the offer came with a release which included parties other than the defendant. By contrast, in Smith, Hall was the only named defendant, and “she was willing to discuss the terms of a release so that Smith could pursue his claims to the extent there was other insurance.”

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