Origin of “Holt” Bad Faith, Time-Limit Demands in Georgia

At this point in time, Georgia law favors bad faith claims against insurance companies who fail to reasonably settle personal injury claims. In the current era of tort reform, this is a welcome relief for injury victims.

The favorable law stems from the 1989 case of Holt v. Southern General Insurance Company, SC89CV13484 (Muscogee State Court). In that case, Southern General was successfully sued for negligently failing to timely settle an automobile injury claim.

In Holt, the plaintiff offered to settle her injury claim for the other driver’s $15,000 policy limits with Southern General. Importantly, the offer was good for only 10 days (subsequently five more days were added to the deadline). Southern General never told its policy holder about the proposal and deadline, and did not respond within the time set by the plaintiff.

Three days after the settlement period expired, Southern General offered to pay the policy limit. The plaintiff rejected the proposal as not being timely and sued. Southern General made two more offers before trial to pay the $15,000. The plaintiff again turned Southern General down, saying she would no longer settle for the policy limits.

On July 19, 1988, a jury returned a verdict of $82,000.00 against the responsible driver.  After Southern General paid its policy limits of $15,000, the responsible driver was left personally liable to the plaintiff for $67,078.00 plus 12% interest. The responsible driver assigned her right to the plaintiff to sue Southern General for failure to settle.

 On July 18, 1990, a jury awarded $208,000.00 to the plaintiff, including $100,000.00 in punitive damages. The jury award was upheld by Georgia appellate courts, insuring insurance companies have a duty to exercise due care in settling claims.

Since Holt, our firm has been successfully making time-limit demands on insurance companies. We will continue to use Holt and other strategies to maximize our clients’ recoveries in every case.

On July 1, 2013, a new law will take effect that will modify the use of Holt demands. In our next blog, we will discuss these modifications and the impact they will have on future injury cases.

Landlords’ Responsibility For Injured Third-Parties in Georgia

A recent Georgia Court of Appeals case examines the issue of a landlords’ liability for injuries to a third-party. The case, Forsh v. Williams, A12A2248 (3/20/2013), involved a non-tenant injured by a tenant’s dogs.

The injured party alleged the landlord was negligent and reckless in failing to adequately screen his tenants, failing to enter into an agreement whereby the tenants were prohibited from having and keeping vicious dogs, failing to adequately inspect the premises, and failing to comply with legal requirements under state and federal law for ownership of rental property. The injured party also alleged the landlord failed to keep the premises in repair – as required under OCGA § 44-7-14 – by not installing an appropriate gate on the deck from which the dogs escaped, and failing to install fencing in the yard after knowing of the presence the dogs.

Under Georgia law, to be liable for injuries to third-parties, out-of-possession landlords are responsible to third-parties for defective construction or for failure to keep the premises in repair.

OCGA § 44-7-14, entitled “Tort liability of landlord,” provides: “Having fully parted with possession and the right of possession, the landlord is not responsible to third persons for damages resulting from the negligence or illegal use of the premises by the tenant; provided, however, the landlord is responsible for damages arising from defective construction or for damages arising from the failure to keep the premises in repair.”

As long as landlord fixes defective construction and keeps the property in repair, presumably, the landlord is immune from claims from the third parties. The allegations referenced above, which include screening tenants and taking other proactive steps, go beyond a landlord’s responsibility in OCGA § 44-7-14.

So what did the court of appeals do? The court focused mostly on procedural issues, reversing the trial court and finding the landlord was not entitled to an outright dismissal at an early stage of the litigation. In favor of the landlord, the court ruled against the injured party on her claim under 42 USCS § 1437 et. seq., commonly referred to as Section 8. The injured party alleged landlord failed to comply with Housing Quality Standards requiring adequate infrastructure to keep the dogs confined either on the deck, in a suitable fence, or otherwise. The court of appeals found this federal statute couldn’t be a basis for liability, and an injured party’s claim is limited to OCGA § 44-7-14.

If you have any questions about Georgia landlord liability for injuries, please call us at 404-382-9994. We have twenty years of experience handling these cases.

Foreclosure Confirmation Victory

Congratulations to the Bloom Sugarman Everett law firm for winning a foreclosure confirmation at trial and having the ruling affirmed by the Georgia Court of Appeals. Eagle GA | SPE LLC v. Atreus Communities of Fairburn Inc., A12A2344 (2/21/2013).

Atreus involved 13-developed lots, which were foreclosed for $155,000. As is typical in these type of cases, this confirmation hearing ended up being a battle of the appraisal experts. Here, the trial court found that $155,000 was less than the fair market value for the subject property and denied confirmation.

The trial court found that the lender’s appraiser failed to consider the sales comparison approach to value the property as required by the Uniform Standards of Professional Appraisal Practice (USPAP), wrongly calculated the tax liability of the property, and admitted the absorption period in his report was a “guestimate.” The trial court also found that the expert’s discounted cash flow model to be unreliable and unsupported.

On the other hand, the bulk sales comparison used by the borrower’s appraiser was found to be credible. This approach resulted in an appraisal of $228,000.

The Georgia Court of Appeals agreed with the trial court because the record showed the lender’s appraiser failed to support his opinions with reliable facts, and failed to consider the more reliable bulk sales comparison. The Court of Appeals noted that the trial court is entitled to weigh the evidence and judge the credibility of both experts. Because the record contained evidence to support the trial court’s ruling, the Court of Appeals was not in a position to second-guess the trial court.

Next, the lender contended that the trial court erred in not ordering a resale of the property under OCGA Sec. 44-14-161(c). The Court of Appeals found that a lender is not entitled to a resale simply because there may have been a flawed appraisal; and, moreover, the decision to order a resale is wholly at the discretion of the trial court.

At Gomez & Golomb LLC, we have handled many foreclosure confirmation hearings, both for the lender and for the borrower. If you have any questions, please call us at (404) 382-9994.

Medicaid Reimbursement Claims for Minors

As personal injury lawyers, our main duty to our clients is to maximize each clients’ net recovery. So, while it’s great to get a big settlement, such a settlement is much smaller when a large portion must be repaid to a health insurance company or to Medicaid. At our firm, we work hard dealing with and extinguishing any reimbursement claims not allowed under Georgia law.

An example is when a minor is injured. In these situations, often PeachCare pays the medical bills and claims a lien against future settlements. Our interpretation of Georgia and federal law is PeachCare is not entitled to be reimbursed out of any settlement with a minor. We therefore fight these reimbursement claims tooth and nail.

In Georgia, an injured child has a claim for pain and suffering only. This was discussed in Southern Guaranty Ins. Co. v. Sinclair, 228 Ga. App. 386 (1997). In that case, the Court held that minor child has no claim for medical expenses because that obligation rests with the parents. This makes sense because until a minor child reaches the age of 18, he or she cannot be bound under contract. A minor child is therefore neither incapable of being held liable for medical expenses, nor able to make a claim for reimbursement of medical expenses.

PeachCare/Medicaid can only claim a lien against that part of an injured person’s recovery that was money received for medical expenses. Arkansas Dept. of Health and Human Services v. Ahlborn, 547 U.S. 268; 126 S. Ct. 1752 (2006). Ahlborn establishes that Medicaid/PeachCare can only reach settlement monies paid as reimbursement of medical bills.

When Sinclair and Ahlborn are read together, the result is that Medicaid/PeachCare cannot claim a lien against a minor child’s settlement proceeds. To ensure any settlement is shielded from Medicaid/Peachcare, it is important to structure the settlement so it is between the wrongdoing party and the minor child, and that the settlement clarifies it only covers pain and suffering.

If you have a question about these issues, please call Gomez & Golomb LLC at 404-382-9994.

Recorded Statements In Personal Injury Cases

In almost every personal injury case, the insurance company asks for a recorded statement. The insurance adjustor will say the recorded statement is a required as part of the investigation. This is a trap. Recorded statements are voluntary and not required to make a claim.

In this blog, we consider when and under what circumstances (if any) to give a recorded statement to an insurance adjuster.

One approach (paraphrased from Winston Churchill) is “Never, ever ever ever ever [give a recorded statement to an insurance company].” At the risk of disagreeing with Mr. Churchill, the better answer is it depends.

If the claim is against another party’s insurance company (also known as a third-party claim), then our firm’s policy is not to give a recorded statement. If the claim is against our client’s own insurance company (for example, in an uninsured motorist claim), then we are contractually obligated to give a statement to the insurance company.

We prefer not to allow recorded statements in third-party cases because, in our experience, the true (and only) purpose is for the insurance companies to find reasons to deny the claim or to pay less on the claim. Just like criminal lawyers tell their clients not to say anything, the same applies in personal injury cases; the less said the better.

As mentioned above, when the other party does not have insurance and we are making an uninsured motorist claim, we must follow the terms of the insurance policy, which include giving a recorded statement. These are called examinations under oath (EUO’s). In these situations, we spend significant time preparing our clients for the recorded statement.

If we must give a recorded statement, we request a copy of the recorded statement and we read the following before every recorded statement: “This statement is being given for the sole purpose of providing [name of insurance company] and its adjuster, [name of adjuster], who is acting as an agent of its insured, [name of defendant], with information that may assist them in evaluating and compromising this claim.  This statement is being given under O.C.G.A. § 24-4-408(b) and it is agreed by everyone that this statement is not evidence nor is it discoverable or admissible at trial including impeachment, should this claim proceed to litigation.”

If you are ever in the situation where you are being asked to give a recorded statement in a personal injury case, please consider calling an attorney to discuss your options.