Policy-Limits Demands and Careful Understanding of Conditions for Acceptance

Policy-Limits Demands and Careful Understanding of Conditions for Acceptance

Campbell v. Pfeifer, No. 1 CA-CV 18-0534 (September 5, 2019) – Memorandum Decision

When plaintiff’s counsel sends a policy-limits demand, it usually encloses an affidavit of no other insurance. Does this automatically mean that acceptance of the demand requires the execution of the affidavit of no additional assets? In Campbell v. Pfeifer, the Arizona Court of Appeals, Division One, reiterated that an executed affidavit of no additional insurance is dependent upon the construction of the language in the policy-limits demand.

In November 2015, Courtney Ann Campbell (“Campbell”) and Tammy Pfeifer (“Pfeifer”) were involved in an automobile collision. State Farm Mutual Automobile Insurance Company (“State Farm”) provided automobile insurance to Pfeifer when the collision occurred. On July 26, 2017, Campbell’s counsel sent State Farm a policy-limits demand letter which expressly stated:

“[W]e hereby make a policy limits demand. Our offer can only be accepted with certification of policy limits and an affidavit of no other applicable insurance.” (Emphasis added.)

Within the imposed 20 day time limit, State Farm faxed Campbell’s counsel a response stating it accepted the offer and it was enclosing a certified copy of the subject policy along with an executed affidavit of no other insurance.  After receiving State Farm’s fax, Campbell’s counsel sent a letter to State Farm declaring the acceptance deficient and withdrawing the settlement offer because counsel’s office did not receive the executed affidavit which was an explicit requirement.

State Farm responded it had sent the affidavit and confirmed receipt with staff at opposing counsel’s office. State Farm also enclosed the executed affidavit, which Campbell’s counsel stated it did not receive.

In October 2017, Campbell’s counsel filed a negligence action against Pfeifer. Pfeifer’s counsel answered and filed a counterclaim seeking enforcement of State Farm’s settlement agreement. Pfeifer moved for summary judgment on the complaint and counterclaim. She argued an enforceable settlement agreement was formed in State Farm’s original response which accepted the policy-limits demand within the imposed 20 day time limit. Campbell responded that State Farm could not have accepted her offer without providing the affidavit. The trial court granted Pfeifer’s motion and entered a final judgment from which Campbell appealed.

In Arizona, settlement agreements are favored and generally governed by common-law contract principles. Emmons v. Superior Court, 192 Ariz. 509, 512 (App. 1998). For a contract to be enforceable, it requires an offer and acceptance. K-Line Builders, Inc. v. First Fed. Sav. & Loan Ass’n, 139 Ariz. 209, 212 (App. 1983). The issue in dispute on appeal was whether or not the offer placed conditions on acceptance. The Arizona Court of Appeals concluded the offer did not impose conditions as a matter of acceptance.

The Court of Appeals found the offer requested State Farm to respond within twenty days, which it did. Beyond that condition, the offer did not require State Farm to do anything additional to make the offer binding. The Court of Appeals rejected Campbell’s argument that the provision of a no other insurance affidavit was required because of the language construction of the offer. By stating the offer could “only be accepted with” – not by – “certification of policy limits and an affidavit of no other applicable insurance,” and no time limit for providing those documents, State Farm’s production of those documents was only a condition precedent to Campbell’s release of the claim and not acceptance of the offer. (Emphasis added). Cf. Hays v. Fisher, 161 Ariz. 159, 163 (App. 1989). The acceptance by State Farm within 20 days was binding on the parties.


The natural instinct upon receiving a policy-limits demand is to evaluate and assess the supporting documentation to determine if the demand should be accepted or not.  However, it is also important to analyze what must be done to ensure acceptance of the policy-limits demand is binding. Here at Tyson & Mendes, LLP, we are happy to assist you in evaluating a policy-limits demand and determine the appropriate steps to assure a potential acceptance is binding.

Keep Reading

More by this author