Opinion ID: 1671172
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Heading Rank: 1

Heading: Conditional Offers to Pay Policy Limits

Text: Safeway first argues that under the terms of its policy it is not liable for any post-judgment interest because it made two prejudgment offers to pay its policy limits to the plaintiffs. Safeway's policy provides in pertinent part: Our duty to pay [post-judgment interest] ends when we offer to pay that part of the judgment which does not exceed our limit of liability for this coverage. (Emphasis added.) Safeway argues that under this language its liability for post-judgment interest ended when it made the prejudgment offers, even though the offers were conditioned on the release of all claims for damages in excess of the amount of the policy limits. See Farmers Alliance Mut. Ins. Co. v. Bethel, 812 F.2d 412 (8th Cir. 1987); Insurance Co. of Pennsylvania v. Giles, 196 Ga.App. 271, 395 S.E.2d 833, cert. denied, 196 Ga.App. 908 (1990). We disagree. A close examination of the cases cited by Safeway convinces us that these cases do not support Safeway's contention that an offer conditioned on settlement is sufficient to terminate its obligation to pay post-judgment interest. In Farmers Alliance, 812 F.2d at 413, the insurer's counsel made several offers to pay the insurer's policy limits to the plaintiffs. The Court of Appeals for the Eighth Circuit held that these offers, which were not conditioned on the plaintiffs' abandonment of claims for damages in excess of the policy limits, terminated the insurer's liability to pay post-judgment interest. Id. ([The insurer's counsel's] offers were refused through no fault of the insurer.). Similarly, in Giles, 196 Ga.App. at 271-72, 395 S.E.2d at 834, the insurer's counsel made several offers to pay the insurer's policy limits, but the plaintiffs agreed to delay receipt of the insurance proceeds until after final judgments were obtained in several actions so that the insurance proceeds could be prorated among the plaintiffs accordingly. Id. at 273, 395 S.E.2d at 835. The Court of Appeals of Georgia held that the offers, which were not conditioned upon a release of all liability in excess of policy limits, relieved the insurer of its obligation to pay post-judgment interest. Id. at 274, 395 S.E.2d at 836 (citing Farmers Alliance, supra). In contrast to the offers in Farmers Alliance and Giles, supra, every prejudgment and post-judgment offer made by Safeway was expressly conditioned on the Actons and the Williamses' releasing all claims against Dunn in excess of the policy limits. Safeway, thus, did not offer its policy limits, but instead offered something substantially less its policy limits minus all claims for damages in excess of those limits. [2] See Cochran v. Auto Club Ins. Ass'n, 169 Mich.App. 199, 425 N.W.2d 765 (1988) (holding that insurer's offer to pay policy limits, conditioned on a full release of the defendants, was insufficient to stop the running of post-judgment interest); see generally Equitable Life Assurance Soc. of the United States v. Roberts, 232 Ala. 539, 168 So. 569 (1936) (holding that an offer containing material conditions was ineffective to terminate an obligation to pay interest on life insurance proceeds owed to the plaintiff). [3] Thus, we hold that because Safeway imposed a material condition on its offers to pay the policy limits, those offers did not terminate Safeway's contractual liability for post-judgment interest. [4]