Case Law Update: Court of Appeals Explores Issues Relating to Settlement Offer and Acceptance

A recent decision by the Georgia Court of Appeals provides a valuable illustration of how strictly Georgia Courts evaluate the significance of communications leading up to a settlement.  The case of Kolbus v. Fromm, A14A1132 (Ga. Ct. App., June 11, 2014) serves as a reminder to litigants and their attorneys to proceed toward settlement with care in evaluating how to respond to or accept offers of settlement.

In Kolbus, Brian and JoAnn Kolbus, who were pro se, brought suit for breach of contract against Chris and Teresa Fromm.  In determining whether a motion to enforce an oral agreement to settle was appropriately granted by the trial court, the Court of Appeals analyzed the following facts.  While the case was pending, JoAnn Kolbus had a telephone conversation with the Fromm’s lawyer, Brian Carney.  In that call, Kolbus said that she and her husband would settle their breach of contract claim for $966.67.  The parties disputed whether JoAnn Kolbus indicated during this conversation that the offer was intended to leave open an option for the Fromms to file a motion against them for OCGA § 9-15-14 attorney fees.  Importantly, however, Carney asked JoAnn Kolbus to put the settlement demand in writing and email it directly to the Fromms.

Following this conversation, JoAnn Kolbus sent an email to Chris Fromm stating that their “final offer” was “$966.67 . . . to settle all claims.”  Shortly thereafter, Carney emailed the Kolbuses that the Fromms had accepted the offer.  In his email, however, Carney asserted that the Fromms “retain[ed] the right to file any O.C.G.A. § 9-15-14 claims they desire.”  Brian Kolbus emailed Carney back, asserting that their offer was a settlement of all claims, including any attorney fee motions or abusive litigation claims.  He further stated that the offer would remain open until 4:00 p.m. that day.  Neither Carney nor the Fromms responded to this email.  Instead, when the parties appeared in court, the Fromms moved to enforce the settlement agreement.  The trial court granted the Fromm’s motion, and this appeal ensued.

In analyzing these facts, the court noted that the original oral offer by JoAnn Kolbus was later modified by the offer in her email, which occurred before any acceptance was conveyed.  Further, Carney did not immediately accept the alleged oral offer on behalf of the Fromms; instead, he directed Kolbus to email the offer directly to the Fromms for their consideration.  Kolbus did just that, before Carney relayed the Fromms’ acceptance.  The Court noted the longstanding principle that “[a]n offer to contract may be withdrawn [or modified] by the offeror before its acceptance by the offeree.”  In this case, because the various offers were repeatedly modified before any acceptance occurred, there was no settlement, and the Court of Appeals held it was error to enforce the purported settlement agreement.

This case serves as another reminder to litigants to be mindful that modifications to an offer must be viewed as new offers that have to be accepted on their precise terms before a settlement agreement is consummated.  A party always has the ability to modify an offer at any time before acceptance.  Inviting an opposing party to re-state their offer in an email or letter may bring with it additional or modified terms, putting at risk what once was an acceptable settlement offer.

Douglas R. Kendrick