Agreement To Accept Tender Of Policy Limits To Settle All Claims Is Unconditional Contract
One of the things that I enjoy about being a lawyer is dealing with and learning new things every day. This weekend I learned that using the word “tender” as opposed to “offer” and being very careful in making certain that insurance proceeds were paid to the correct party was expensive for an insurer in Kansas.
Fajardo v. Safeco Insurance Co., from the US District Court for Kansas, was an action to enforce a settlement – not a wrongful death action, although the underlying claim arose following the death of Mr. Fajardo in an auto accident. Plaintiff-heirs claimed they were entitled to interest on the policy limits as they had not been paid within thirty days after they had agreed to a settlement with the other driver’s insurance company. (Payment within thirty days after an insurance settlement is a Kansas statutory requirement. If payment is not made, interest begins to accrue at 18%.) The insurer countered that it was not required to pay the funds within thirty days because the statute did not apply, and because the payment was not due until the court had apportioned the settlement, which is required for a wrongful death recovery in Kansas.
Decision was in favor of the plaintiffs. The 30-day payment requirement applied and, because a settlement is not a “recovery”, apportionment was not necessary. Therefore, there was a settlement at the time that the plaintiffs accepted the tender:
“The parties have stipulated that the Defendant "tendered" (a stronger term than ‘offered’) policy limits to settle all claims stemming from decedent's death, and that Plaintiffs accepted the tender on the same terms. This was an ‘unconditional and positive acceptance’ which formed a contract.”
This is Kansas law and I’m not a Kansas lawyer, and there are some puzzling facts in the decision, but, the fact that a court would see a difference between being offered policy limits and being tendered policy limits got my attention. Presumably, a claimant might find him/herself irrevocably bound after indicating acceptance of a tender. In any event, it is something to think about when making an offer, or accepting one.
