The Court of Appeals recently interpreted the 2021 version of OCGA 9-11-67.1, in Diaz v. Thweatt, No. A24A1062, 2024 WL 4500692, (Ga. Ct. App. Oct. 16, 2024). The Court’s opinion has significant implications for recipients of demands in Georgia for tort claims arising from the use of a motor vehicle and should provide additional protection for insurers from bad faith claims. In what appears to be a significant shift from its interpretation of the prior version of the statute, the Diaz Court held that an offeree’s written acceptance of an offer was sufficient to create a binding and enforceable settlement agreement even when his proposed release included additional terms beyond those included in the offer. Put more simply, the Court separated acceptance of an offer from performance.

The relevant facts are that following a car accident, Daria and Delhi Thweatt extended an offer of settlement to Alexander Diaz pursuant to OCGA 9-11-67.1 (2021). The Thweatts’ offer specified the parties and claims to be released and indicted that they would consider it a rejection of their offer if Allstate included any additional terms or conditions. The Thweatts’ offer did not include a release, but indicated that if Allstate required them to execute a release it had to be consistent with the terms of their offer or else they would consider it a counteroffer.

Allstate then sent a letter to the Thweatts’ attorney accepting their offer in its entirety. The letter also indicated that Allstate had drafted proposed releases for the Thweatts to sign and invited the Thweatts to edit or revise the proposed releases. Instead, the Thweatts filed suit, contending that they viewed Allstate’s releases as a counteroffer because they contained additional terms and conditions which were not part of the Thweatts’ offer. Specifically, the Thweatts asserted they had not agreed to release anyone other than Diaz (Allstate had added itself and the policy holder as released parties); they had not acknowledged that the settlement would fully compensate them; and they did not agree the defendants could deny all liability for the accident. The trial court denied Diaz’s motion to enforce the settlement because “Allstate had failed to conform its acceptance to the exact terms of the Thweatts’ offer.”

The Court of Appeals reviewed the trial court’s ruling and found that Allstate accepted the Thweatts’ offer under OCGA 9-11-67.1 (2021), and that its proposed releases did not constitute a counteroffer under OCGA 9-11-67.1(d).

In reaching this conclusion, the Court of Appeals found that the Thweatts’ offer was made pursuant to OCGA 9-11-67.1 (2021) and included the required material terms outlined in OCGA 9-11-67.1(a). The Court held that Allstate accepted the Thweatts’ offer because its written acceptance did not object to any of the terms stipulated by the Thweatts or impose any additional requirements upon them.

Importantly, the Court separated acceptance of the offer from performance. It found that OCGA 9-11-67.1(d) precluded Allstate’s proposed releases from constituting a counteroffer even if they included additional terms and releasees than the Thweatts’ offer. The key takeaway from Diaz is that “once Allstate sent its letter accepting the Thweatts’ offer, a settlement had been reached as to all material terms under the statute.” Thus, the Court of Appeals found that a binding contract was formed and reversed the trial court’s denial of Diaz’s motion to enforce settlement.

Diaz is only the second case to be decided by the Court of Appeals under the 2021 version of OCGA 9-11-67.1. Under the 2013 version of the statute, the Georgia Supreme Court held in Grange Mut. Cas. Co. v. Woodard, 300 Ga. 848, 797 S.E.2d 814 (2017) and its progeny that “the statute permits unilateral contracts whereby the offer may demand acceptance in the form of performance.” Thus, the Court routinely analyzed offers and acceptances under common law contract principles including the “mirror image” rule – essentially that a purported acceptance of an offer that varies even one term of the original offer is a counteroffer. This led the Court to find that no settlement agreement existed under OCGA 9-11-67.1 (2013) if, for example, a settlement check was delivered too early (Pierce v. Banks, 368 Ga. App. 496 (2023)) or an offer said the insurer could only communicate in writing and an insurer instead called and left voicemails with counsel (White v. Cheek, 360 Ga. App. 557 (2021)).

The Diaz opinion does not explicitly hold that OCGA 9-11-67.1 (2021) preempts an offeror’s ability under common law to offer unilateral contracts demanding acceptance in the form of performance. However, that argument was raised in appellee’s briefing and the fair interpretation of Diaz is that an offeree need only accept, in writing, the material terms outlined in OCGA 9-11-67.1(a). Once that happens, a binding settlement agreement is formed. Thus, issues related to the subsequent performance of the terms of the agreement, including the execution of an appropriate release, will not undo the settlement agreement itself.

Diaz should go a long way toward addressing what the Court of Appeals has long recognized: “It has become clear that, to a plaintiff whose injuries greatly exceed the available coverage, a policy-limits settlement can be less valuable than a rejected offer and consequent bad-faith claim — however dubious the claim. Wright v. Nelson, 358 Ga. App. 871, 876, (2021) (McFadden, C.J. concurrence). While a new version of the statute went into effect on April 22, 2024, it will likely be some time before any appellate decisions interpret it. So, for now, as the Court of Appeals’ most recent interpretation of OCGA 9-11-67.1 (2021), Diaz demonstrates a significant move toward the Legislature’s true intent as first analyzed in Chief Justice Melton’s dissent in Woodard, which is that an offeror is only the master of his or her offer to the extent permitted by OCGA § 9-11-67.1 and performance cannot be a condition precedent to acceptance. Thus, recipients can enforce settlement agreements when they have accepted the material terms of an offer specified in OCGA 9-11-67.1(a), and a purported deficiency in the performance of the terms of the agreement will not invalidate the settlement agreement itself.