Georgia Supreme Court Justice John Ellington/photo by John Disney/ALM Justice John Ellington, Supreme Court of Georgia (Photo: John Disney/ALM)

First Acceptance Insurance Co. won a ruling from the Georgia Supreme Court Monday tossing a potential $5.3 million bad faith lawsuit.

Justice John Ellington wrote that the insurance company did not miss a deadline to settle for policy limits because no deadline was clearly specified in the demand. The unanimous decision effectively limits the company’s liability to the policy limits of $25,000 per person and $50 per accident for a multiple vehicle crash that killed the First Acceptance-insured at-fault driver and severely and permanently injured a 2-year-old child.

According to the court, on Aug. 29, 2008, Ronald Jackson caused a chain-reaction, multiple-vehicle collision. He was killed. Five others were hurt, including Julie An and her 2-year-old daughter, Jina Hong, who sustained a traumatic brain injury.

“It’s a big deal for insurers,” J. Stephen Berry said of the decision. Berry worked on the case for nearly five years with Dentons and recently left to become GC for Builders Insurance Group. Andrew J. Tuck, Kyle G.A. Wallace, and Cari K. Dawson of Alston & Bird represented First Acceptance in the Supreme Court along with Berry and Robin N. Johnson of Dentons. Tuck made the oral argument before the high court.

“A lot of people are watching this,” Berry added. He said the decision provides important clarification for the insurance industry and guidelines for so-called Holt demands, named for the Southern General v. Holt decision. Holt demands are used to trigger bad-faith actions when an insurance company fails to meet a time-limited demand.

April Savoy, First Acceptance’s chief legal officer, shared a statement through her counsel at Alston & Bird.

“First Acceptance is pleased to receive this long-awaited confirmation from the Georgia Supreme Court regarding our good faith claims management efforts in this case,” Savoy said.  “We thank everyone who supported the Company in bringing this case to conclusion, and are gratified that claimants and companies can collectively benefit from the clarified case law in the state.”

The other side was represented by Brandon Cathey and Brent Steinberg of Swope Rodante in Tampa. Steinberg said Monday they were in trial on another case and could not be available for comment.

In January 2009, First Acceptance sent a letter to the attorneys representing all the injured parties seeking to schedule a settlement conference, according to Ellington’s opinion. On June 2, 2009, An’s and Hong’s attorney faxed two letters to the insurance company’s counsel. One sought payment and a settlement conference. The second letter requested that First Acceptance provide insurance information within 30 days and said “settlement will be conditioned upon receipt of all the requested insurance information.” After 41 days passed with no response, An’s and Hong’s attorney informed the insurance company that the offer to settle had been withdrawn, and he filed a personal injury lawsuit in DeKalb County State Court against Jackson’s estate.

In February 2010, First Acceptance offered to settle Hong’s claims for $25,000, but An’s and Hong’s attorney rejected the offer, Ellington said. First Acceptance later offered to settle both An’s and Hong’s claims for $50,000, but their attorney rejected that offer as well. In July 2012, the lawsuit proceeded to a jury trial, which resulted in an award of $5.3 million for Hong’s injuries.

In June 2014, Robert Hughes Jr., administrator of Jackson’s estate, sued First Acceptance, claiming that the insurance company had negligently failed to settle Hong’s insurance claim, Ellington said. Hughes sought to recover the $5.3 million judgment plus punitive damages and attorney fees. DeKalb County State Court Judge Mike Jacobs ruled in the insurance company’s favor, granting summary judgment to First Acceptance.

But the Georgia Court of Appeals reversed Jacobs’ ruling, finding that the June 2 letters created genuine issues of fact, to be decided by a jury, as to whether An’s and Hong’s attorney offered to settle Hong’s claims within Jackson’s policy limits and whether the offer included a 30-day deadline.

“We conclude that, through the June 2 letters, An and Hong offered to settle their claims within the insured’s available policy limits and to release the insured from further liability, except to the extent other insurance coverage was available, but that the offer did not include a 30-day deadline for acceptance,” Ellington said.

He added, “First Acceptance’s failure to promptly accept An’s and Hong’s offer was reasonable, as an ordinarily prudent insurer could not be expected to anticipate that, having specified no deadline for the acceptance of their offer, An and Hong would abruptly withdraw their offer and refuse to participate in the settlement conference. First Acceptance was entitled to summary judgment in its favor, and the Court of Appeals erred when it reversed the trial court’s grant of that motion.”

The case is First Acceptance v. Hughes, No. S18G0517.