Settlement Resolves All Disputes

It is Not Always Logical to Accept Policy Limits

Policy limit demands are made in almost every serious injury case. They usually result in a settlement. However, when there is underinsured motorist (UIM) coverage available the plaintiff and counsel must be very careful in how they set up the terms and conditions of the settlement.

In James R. Goan et al. v. Billy B. Mills, Slip Copy, Court of Appeals of Tennessee, 2017 WL 1103044 (03/24/2017) plaintiff James R. Goan’s mail delivery vehicle was rear-ended by a vehicle driven by Billy B. Mills as Plaintiff was delivering mail. The Plaintiff and his wife, Judy Goan, sued Mills. During settlement negotiations, Plaintiffs offered to settle for $100,000, the limits of Defendant’s insurance policy. Defendant accepted the offer on December 4, 2013. Over a year later, Defendant filed a motion to enforce the settlement agreement. The Plaintiffs opposed the motion, arguing that there had been no meeting of the minds and no enforceable agreement. The trial court enforced the settlement agreement. The Plaintiffs appeal.


The accident occurred on August 22, 2008. Plaintiffs filed their complaint on August 17, 2009. Settlement negotiations ensued. The record contains correspondence between the lawyers for the parties. On April 26, 2013, Plaintiffs’ counsel sent Defendant’s counsel a letter saying: “I met with Mr. Goan who advised he has been approved for back surgery by workers comp. I believe the original medical bills that we have provided you totaled over $76,000.00. Obviously they have increased. I believe the federal workers comp subrogation was approximately $53,000.00. Obviously it is increasing. I have an agreement with comp that we can settle this case now, save the costs of medical discovery and keep the file open while we are waiting on his surgery…. If there is only $100,000.00 in insurance, I would demand the policy limits primarily because of workers comp.”

On August 23, 2013, Plaintiffs’ counsel sent another letter saying: “We have ordered from workers comp the updated numbers on Mr. Goan. They tell us the total subrogation now is $78,000.00 … Given the $78,000.00, I go back to demanding the limits which I believe is $100,000.00 but as we discussed I need a firm number from you to figure out compromising the comp claim.”

On November 6, 2013, Plaintiffs’ counsel reiterated their offer, stating, “we would renew our demand for the policy limits of $100,000.” This was followed by another letter on December 4, 2013, saying, “[p]er our discussion, my client has reject[ed] the $95,000.00 and renews his demand for the policy limits.”

On December 4, 2013, Defendant’s counsel sent Plaintiffs’ attorney a letter saying: “You have reiterated to me [Plaintiffs’] settlement position that they will accept [Defendant’s] insurance liability limits of $100,000 in full settlement and release of all of their claims and out of which settlement funds all claims, liens and subrogation rights of all persons and entities would be satisfied, including the claim of the United States Postal Service or any related entity for which like benefits have been paid to or on behalf of James Goan, and that no medical expenses have been paid by Medicare, arising out of the August 22, 2008 accident. In reliance upon this representation, this will advise that [Defendant] and his insurer, Tennessee Farmers, accepts the settlement offer.”

Following a hearing on April 15, 2016, the trial court granted the motion to enforce the settlement agreement in an order entered April 28, 2016, stating that “the Court is of the opinion and finds that an enforceable contract was entered into among the parties to settle the plaintiffs’ claim of injuries and damages against the defendant resulting from a motor vehicle accident occurring on August 22, 2008 wherein the plaintiffs, James and Judy Goan, by and through their attorney, offered to settle their claim of injuries and damages against defendant Billy Bruce Mills for Mr. Mills’ insurance liability limits of $100,000 which defendant Mills, by and through his attorney, accepted.”


Plaintiffs argue there was no meeting of the minds, and therefore no valid contract, because Defendant did not provide a copy of the declarations page of his liability insurance policy. Defendant responds that Plaintiffs’ counsel never requested this document before settling the case, and that, in any event, everyone involved knew at all pertinent times that the liability policy limits were $100,000. The record supports Defendant’s assertions.

In short, on December 4, 2013, Defendant sent Plaintiffs a letter stating: “you and I have your case settled.” (Emphasis added.) The judgment of the trial court was affirmed.


By demanding policy limits and settling the entire case for $100,000 the plaintiff’s destroyed his UIM suit and the $100,000 went to pay the government’s workers’ compensation claims leaving the plaintiff with nothing but his benefits. He is not without a remedy unless his lawyer explained the downside of accepting the $100,000 settlement.

ZALMA-INS-CONSULT                      © 2017 – Barry Zalma

This article and all of the blog posts on this site summarize cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 49 years in the insurance business.

Mr. Zalma is the first recipient of theLEGEND-TROPHY-2 first annual Claims Magazine/ACE Legend Award.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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