Irving insurance lawyers need to be able to discuss with clients when offers of settlement should be accepted and how to accept the claim. A good illustration of this is found in a 2015, Houston Court of Appeals [1st. Dist.] opinion. It is styled, Kamisha Davis v. Texas Farm Bureau Insurance.
Kamisha Davis sued Farm Bureau, asserting several causes of action. The trial court granted summary judgment against Davis in favor Farm Bureau.
On August 26, 2009, Kamisha Davis was involved in a motor vehicle accident with Farm Bureau’s insured. Davis hired attorney Corey Gomel to pursue a personal injury claim arising out of the accident. On April 19, 2011, Gomel sent Farm Bureau a letter, stating that Davis would be willing to settle her personal-injury claims against Farm Bureau’s insured for $37,500. Farm Bureau, through its claims adjuster, Jody Roe, made a counter-offer of $10,000 on May 2, 2011.
Gomel, on behalf of Davis, sent a second settlement offer of $22,500 to Farm Bureau on June 9, 2011. On June 10, 2011, Farm Bureau responded that, “after careful review and evaluation of the information you have submitted, we believe this claim has a value of $12,000.00.” Gomel made a counteroffer of $18,000.00 on June 21, 2011. In response, Farm Bureau sent a letter to Gomel on June 30, 2011, again stating that it valued her claim at $12,000.00.
On July 28, 2011, Davis’s attorney faxed Farm Bureau a Stowers demand. The fax cover sheet stated, “We are withdrawing past June 21 demand. Please see attached.”
The Stowers demand informed Farm Bureau that Davis would settle her claims only if Farm Bureau paid her “the limits of your insured’s policy.” It further stated, “This will be the only correspondence that you will receive prior to us filing suit.” The demand also informed Farm Bureau that the offer to settle for the policy limits expired on August 29, 2011.
Davis never filed a personal injury suit against Farm Bureau or the insured. At some point, Davis retained new counsel. On April 12, 2012, Davis’s new counsel sent a letter to Farm Bureau, which stated, “We have been retained by Corey Gomel to assist . . . in the prosecution of this matter for Ms. Davis. Please be advised our client, Ms. Kamisha Davis, has given us authorization to accept your final offer of $12,000.00. Please forward settlement documents to the address above.”
On April 20, 2012, claims adjuster Roe responded, denying Davis’s claim. Roe informed Davis, “Our offer expired on the two year anniversary from the date of accident 8-26-2009; therefore, we are respectfully declining your client’s claim.”
Davis filed suit against Farm Bureau on April 16, 2013. She alleged as follows:
In an attempt to settle the matter, Farm Bureau offered Davis $12,000.00 to settle Davis’s claims on June 10, 2011. This offer of settlement had neither a designated time period in which Davis had to accept the offer, nor did the offer state that it expired on any date or upon any action or inaction of Davis or that the offer would otherwise be revoked. Farm Bureau never revoked the offer. Furthermore, Davis never rejected the offer. . . . On April 13, 2012, Davis accepted the offer to settle the case and sent the acceptance letter via fax. On April 20, 2012, Farm Bureau denied the offer, stating that the offer expired on the expiration of limitations of the underlying incident. . . . Davis relied on the representations made by Farm Bureau, that being that there was an open ended offer to settle her case for $12,000.00. Farm Bureau never revoked the offer to Davis until after Davis had accepted the offer. . . . Farm Bureau has failed to make the offer of settlement good. Davis relied on Farm Bureau’s promise to Davis’s detriment.
Based on these allegations, Davis asserted claims for breach of contract, promissory estoppel, fraud, and quantum meruit against Farm Bureau.
Here, to prevail on its traditional motion for summary judgment, Farm Bureau had to conclusively establish that no contract existed between it and Davis because Davis’s Stowers demand constituted a counteroffer to Farm Bureau’s $12,000 settlement offer. A counteroffer is an offer made by an offeree to her offeror relating to the same matter as the original offer and proposing a substituted bargain differing from that proposed by the original offer. That is, a counteroffer must itself be an offer capable of being accepted.
A material change in a proposed contract constitutes a counteroffer.
In this case, it is clear from the express terms of the Stowers demand that it related to the same subject matter as Farm Bureau’s $12,000 offer: namely, settlement of Davis’s personal injury claims against Farm Bureau’s insured. Davis’s Stowers demand proposed a different settlement payment from that proposed by Farm Bureau in its June 2011 offer. Farm Bureau had offered to settle Davis’s claims for $12,000. In contrast, Davis’s Stowers demand provided that she would settle her claims only if Farm Bureau paid her “the limits of your insured’s policy.” The summary judgment evidence showed that the policy limits were greater than $12,000.
The terms of the Stowers demand were definite, certain, and capable of being accepted by Farm Bureau. In other words, they were sufficient to create a power of acceptance in Farm Bureau. If it had accepted the terms of the Stowers demand agreement, Farm Bureau could reasonably have expected to be bound by them. The court concluded that Davis’s Stowers demand, when viewed objectively, constituted a counteroffer to Farm Bureau’s June 2011 settlement offer as a matter of law.
“A counteroffer constitutes a rejection, not an acceptance, of the original offer.” Once it has been terminated by the making of a counteroffer, an offeree’s power to accept the original offer cannot be revived by later accepting the offer.
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