A Pennsylvania Court found a settlement existed once policy limits were tendered to a plaintiff.

In Wise v. Hyundai Motor Company, plaintiffs’ daughter died in an automobile accident.  Plaintiffs sued Hyudai Motors (and others). USAA insured the defendants. After commencing the lawsuit in 2010, plaintiffs sent a letter to defense counsel demanding full insurance policy limits.  In response to this demand, in 2012, defense counsel responded with a letter “offering” the policy limits.  After the offer letter was issued, defense counsel was only minimally involved in the litigation, since the products liability action against the car manufacturer had taken precedence.  Four years later, once the plaintiffs and the manufacturer settled, plaintiffs informed defendants they would be now be asserting a bad faith claim against their insurer, USAA, for failing to properly defend defendants in the action.

Defendants countered that plaintiffs’ new claim must fail since the parties entered into a settlement back in 2012, when defendants tendered the policy limits to plaintiffs.

In determining whether plaintiffs and defendants agreed to settle the claim in 2012, the court first looked to the plaintiffs’ 2010 letter.  The court noted that although the letter did not use the word “settlement,” the letter was clearly intended to act as a settlement offer, because plaintiffs had demanded policy limits from defendants.  The court then looked to defendants’ 2012 letter, which, it determined, clearly tendered the policy limits to plaintiffs, despite using the phrase “offering.”  Thus, the court reasoned there had been a meeting of minds, and a settlement had been reached based on the two letters.

Thus, this case illustrates the importance of making sure any offer or demand to opposing counsel expressly states what is being demanded, offered or accepted, to avoid unnecessary motion practice to clarify whether the parties actually intended to settle a matter.

Thanks to Colleen Hayes for her contribution to this post.