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‘Holt’ Demands: An Advancement, But Not a Categorical Solution

Plaintiffs frequently avail themselves of what has been labeled ‘Holt demands’ as was established in S. General Ins. Co. v. Holt, 262 Ga. 267 (1992). In Georgia, liability insurance providers owe a duty to an insured to act in good faith in settling their liability. ‘Holt’ demands are a means plaintiffs, through their attorneys, can set up and bring bad faith claims against their insurer if the insurer does not pay policy limits within the time specified in the pre-suit demand. Should the insurer not pay the policy limit demand within the deadline and the verdict ultimately exceeds the policy limit, the insured could file or assign the right to file an action for the entire amount of the judgment plus interest. This reality necessarily eradicates a defendant’s policy limits. In bad faith cases, juries determine whether the insurer acted in “bad faith” in rejecting the plaintiff’s pre-suit demand, consequently exposing the insured to a potential excess judgment.

Plaintiffs utilize a plethora of strategies to maximize the utility of ‘Holt’ demands. Deadlines for settlements are often masterfully crafted to include weekends and holidays, producing confusion as to the exact expiration date. As a result, insurers unintentionally miss this arbitrarily imposed deadline thereby subjecting them to potential bad faith liability. Making matters worse, recent Georgia Appellate Court rulings established that strict compliance with ‘Holt’ demand terms is necessary to avoid bad faith liability. Plaintiffs sometimes stipulate abstruse conditions within their demands. These ambiguous conditions often involve release language, release form or payment delivery and are concealed in fine print or within lengthy and verbose demands. Even if insurers agree to pay the requested policy limits, this action can be legally construed as a counter-offer and, consequently, a rejection of the plaintiff’s demand. Again, this inadvertent rejection exposes insurers to bad faith claims.

In an attempt to curb the dilemmas associated with pre-suit demands, plaintiff and defense lawyers collaboratively drafted and passed House Bill 336, which effectively codified ‘Holt’ demands and enumerated the requirements for valid pre-suit time demands. This new code section is O.C.G.A. 9-11-67 and applies only to automobile wrecks occurring after July 1, 2013. O.C.G.A. 9-11-67 requires that demands be in writing, sent by either certified mail or statutory overnight mail, return receipt requested and contain the following material information:

(1) Time period within which such offer must be accepted, which shall be not less than 30 days from offer receipt;

(2) Amount of monetary payment;

(3) Party or parties the claimant will release if offer is accepted;

(4) The type of release, if any, the claimant or claimants will provide to each releasee; and

(5) The claims to be released.

Significantly, 9-11-67 states that the insurer “shall have the right to seek clarification regarding terms, liens, subrogation claims, standing to release claims, medical bills medical records and other relevant facts.” An attempt to seek reasonable clarification shall not be deemed a counteroffer.

Although limited in scope, 9-11-67 provides the necessary structure and transparency for partially addressing the shortcomings associated with ‘Holt’ demands. Going forward, both the defense and plaintiff’s bar will likely petition for the expansion or contraction of 9-11-67. Given that 9-11-67 is presently limited to injuries resulting from automotive cases, defense counsels and insurance carriers must maintain vigilance in evaluating a plaintiff’s pre-suit demands. Improper adherence to a demand’s conditions could subject an insurer to bad faith liability and, correspondingly, a lawyer to a malpractice claim.

Efforts on behalf of plaintiff and defense lawyers could ameliorate these suboptimal outcomes. Plaintiff’s attorneys should clearly and conspicuously enumerate the conditions of pre-suit demands. Additionally, defense lawyers should carefully read the pre-suit demands and seek clarification from plaintiffs’ attorneys as to the demand’s conditions. Should this conversation not fully reveal the precise demand conditions, defense lawyers should request an extension of time and document the assent to this request.

With O.C.G.A 9-11-67, Georgia has made a positive step regarding the clarity, consistency, and structuring of pre-suit demands. Despite this advance, problems remain that can be mitigated by proper practice techniques by plaintiff and defense counsel. Given the prevalence and impact of ‘Holt’ demands in Georgia, it is likely that ardent lobbying will take place seeking to change existing Georgia law on pre-suit demands. In the meanwhile, outside of automobile cases, the fluidity of pre-suit demand practice rests with the counsels involved.

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