Reported / Citable
Background
Kathleen Wood was injured when a Farmers-insured driver rear-ended her car. Her lawyer offered to settle for the available per-person policy limit, stated as $100,000 or less, if Farmers accepted by a stated deadline and provided documentation confirming the limit.
Farmers timely accepted, agreed to pay the actual $15,000 per-person limit, and sent the declarations pages. Wood later learned information about the driver’s assets, refused to sign settlement papers, and sued. Farmers brought a separate action to enforce the agreement. After the trial court denied summary adjudication, Farmers sought writ relief.
The Court’s Holding
The Court of Appeal held that the parties formed a binding settlement when Farmers accepted the demand exactly as written. The offer expressly adjusted downward if the available coverage was below $100,000, so accepting at $15,000 was not a counteroffer. Farmers also performed the requested condition by supplying the policy information before the deadline.
Later formal release documents did not prevent contract formation. When parties agree on essential terms and intend to be bound, an expectation that they will later prepare a more formal writing does not undo the agreement. Wood’s later dissatisfaction with the insured’s asset disclosure likewise did not add a term that was absent from her offer. The court directed the trial court to grant Farmers summary adjudication on declaratory relief.
Key Takeaways
- A policy-limits demand can create an enforceable contract through timely, exact acceptance.
- Language demanding a stated amount “or less” may permit acceptance at the actual lower policy limit.
- Requested policy documentation can be a condition of acceptance, so insurers should satisfy it within the deadline.
- Later releases and settlement paperwork memorialize an agreement when the essential terms were already settled.
Why It Matters
Personal-injury lawyers should draft demands with precision. If asset disclosure, a particular release, payment timing, liens, or other protections are essential, the demand should say so expressly rather than leaving those matters for later documentation.
Insurers evaluating time-limited demands should respond in writing, mirror the offer’s terms, and document timely compliance with every condition. The decision gives both sides a clear reminder that ordinary contract principles—not later second thoughts—control settlement formation.