How Long Does Settlement Offer Last?

When a litigation settlement offer is “still on the table,” what exactly does that mean and how long does an offer last on “the table” before it expires?

In Moore v. Donegal Mutual Ins. Co. (No. 788) the Maryland Court of Special Appeals (COSA) considers these ponderous questions about the shelf life of settlement offers “on the table.” The COSA held that whether an on-the-table settlement offer had expired after 2 hours and could no longer be accepted was a question of fact for a jury.

Factual Background of Moore v. Donegal Mutual

The plaintiff’s lawyer attempted to accept a settlement offer during a lunch recess at trial. The plaintiff had brought a premises liability action against a hotel in Baltimore County. The insurance carrier for the hotel was Donegal Mutual Insurance Co. (“Donegal”). At some point before trial, Donegal made an $18,000 settlement. Plaintiff balked at the offer and took the case to trial.

At 10:30 in the morning after the first day of trial, Plaintiff’s counsel contacted the claims adjuster for Donegal and advised that they would settle for $21,500. The claims adjuster rebuffed this request but confirmed that Donegal’s $18,000 settlement offer “was still on the table.” The trial continued and the plaintiff closed her case just before lunch. Also before the lunch recess, the defense moved for judgment.

During the lunch recess plaintiff’s counsel attempted to “accept” Donegal’s $18,000 settlement offer. However, the adjuster for Donegal refused,  saying that the $18,000 settlement offer was no longer available. The adjuster for Donegal advised that she had made a mistake earlier in the morning when she told the plaintiff’s counsel that the $18,00 offer was “still on the table.”

The trial continued, despite the plaintiff’s efforts to involve the trial court. Donegal’s motion for judgment was denied, but the jury returned a verdict finding that the defendant was not negligent. Immediately afterward, the plaintiff and her attorneys sued Donegal for breach of contract. Both sides moved for summary judgment.

Plaintiff alleged that Donegal said the $18,000 settlement offer was “still on the table” and that plaintiff’s acceptance of that offer just 2 hours later constituted acceptance within a “reasonable time.” Therefore, according to the plaintiff, a contract was formed.

Donegal argued that no contract was ever formed. Donegal pointed out that although the $18,00 offer was “on the table” at 10:30, there was no evidence that the adjuster said the offer would continue on the table for any period of time thereafter. Moreover, Donegal asserted that things changed drastically in the 2 hours after the offer at 10:30. Specifically, the plaintiff and her lawyers realized that their case was in serious trouble because they had failed to present evidence that the defendant had notice the dangerous property condition. The Circuit Court ruled in favor of Donegal and the plaintiff immediately appealed.

Holding and Analysis

The COSA began its analysis in this case by affirming that settlement agreements in litigation are subject to the general rules of contract law. When a settlement “offer” is made, acceptance of the offer can create a contract. Md. Supreme Corp. v. Blake Co., 279 Md. 531, 539 (1977). The COSA went on the explain, however, that when an offer provides no specified time frame for acceptance, it must be accepted within a “reasonable time” under the circumstances otherwise the offer will lapse.

The Court noted that there was no dispute that Donegal made a settlement offer to the plaintiff at 10:30 am when the adjuster said that the $18,000 offer was “still on the table.” The pivotal issue, in the Court’s view, was whether the plaintiff accepted this offer within a reasonable time. In this instance, the plaintiff attempted to accept the settlement offer just 2 hours after it was made.

Donegal argued that this short time frame between offer and acceptance was irrelevant because the circumstances of the case had changed in the 2-hour window. Donegal argued for the adoption of a firm, bright-line rule that settlement offers automatically lapse whenever the procedural posture of a case changes. The COSA refused to adopt this type of hard-line rule. Instead, the COSA concluded that when a settlement offer is made during a trial, the issue of whether it is accepted in a reasonable time frame should be an issue of fact for the jury to decide.

Based on this rule, the COSA found that the Circuit Court should not have granted summary judgment in favor of Donegal. Rather, the question of whether the offer was accepted within a reasonable time should be decided by a jury. The case was remanded for further proceedings.

How Long Does a Settlement Offer Last?

When a personal injury settlement offer is made it may have a specified time limit. If no time limit is not given and the offer is not withdrawn, then the offer is open for “a reasonable period of time.” What is reasonable in a personal injury case settlement offer is anyone’s guess. Ultimately, as this case underscores, it is a question for the jury.

My Take on Moore v. Donegal Mutual

Like any plaintiff’s lawyer, I would love settlement offers to remain open and “on the table” for as long as possible.  I mean, when they serve my purposes, right?   I think the holding is classic Contract Law 101.

But the idea of litigating these disputes just seems insane to me.  I think we should probably err on the side of saying that a case is like the stock market and once it develops further, the deck is reshuffled.  I would probably prefer a clear rule to follow which is probably the job of the legislature which will (understandably) never focus on something like this.

So, ironically, I think the court should have gone with the bright-line rule advocated by Donegal in which pending settlement offers automatically lapse whenever the procedural posture of a case changes.  This is one of those cases where I don’t necessarily care what the rule is but wish there was a concrete rule we could all follow.


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