Offer, Acceptance, and Lapse
October 16, 2020
by Emily F. Belanger
In the recent case of Moore v. Donegal Mutual Insurance Company, the Court of Special Appeals of Maryland was faced with the issue of whether a settlement offer lapsed or if the offer was accepted within a reasonable amount of time. 2020 Md. App. LEXIS 944 (September 30, 2020).
Plaintiff Moore filed a personal injury suit against Belmont Hospitality Inc. (hereinafter “Belmont”) arising from a claim of negligence. Trial began on May 16, 2018. Donegal Mutual Insurance Company (hereinafter “Donegal”) was the insurer of Belmont. Prior to Trial, Donegal offered Plaintiff Moore $18,000.00 to settle her personal injury claim. On May 17, 2018, Counsel for Plaintiff Moore called Donegal and demanded $21,500.00 to settle the case; Donegal offered $18,000.00 and stated that the offer was “still on the table.”
Trial continued on May 17, 2018. After Plaintiff Moore ended her case-in-chief, and prior to the lunch recess, Belmont moved for judgment arguing that there was no evidence of negligence by Belmont. During the recess, Counsel for Plaintiff advised Counsel for Belmont that Plaintiff Moore would accept $18,000.00. Counsel for Belmont spoke to Donegal and Donegal advised that the offer was no longer available.
The issue of the settlement offer was brought to the trial court’s attention but the court refused to address it. At the close of trial, Belmont again moved for judgment and the court denied the motion. On May 18, 2018, the jury returned a verdict finding that Belmont was not negligent.
Plaintiff Moore filed a new complaint against Donegal alleging breach of the settlement agreement. Both parties filed for summary judgment. The court granted summary judgment in favor of Donegal and stated:
Specifically, I find that the offer had lapsed after a reasonable amount of time. A passage of time is not just about hours, minutes and seconds ticking by on a clock, the context matters. And in this case the context for the timing was that the trial had advanced to a different procedural posture, and I find that that is the time at which the offer had lapsed. So the Motion for Summary Judgment made by Donegal Mutual Insurance Company is granted, and the Court will enter judgment in favor of Donegal Mutual Insurance Company and against the Plaintiff Moore.
Moore appealed and argued that Donegal “made an open-ended offer with no restrictions to settle [the] tort claim,” which she accepted, “thereby creating a settlement contract between” her and Donegal. Moore further argued that the offer was accepted within a reasonable amount of time when it was given within two hours from when she was told that the offer was “still on the table.” Donegal argued that the offer to settle lapsed as Moore failed to accept the offer before trial resumed.
On appeal, the Court reversed the trial court’s grant of summary judgment in favor of Donegal concluding that the determination of the reasonable amount of time is an issue of fact to be determined by a jury. The Court held:
When an offer that does not specify a time for acceptance is pending while trial is still proceeding, however, the issue whether the offer was accepted in a reasonable amount of time generally is an issue of fact to be determined by the trier of fact.
Based on the decision in Moore, best practices require that when offers are made they should be accompanied by a reasonably expiration date and/or time. This practice becomes even more important the closer a case gets to trial.