In Birdsall v. Helfet, the California Court of Appeal issued a significant decision for insurers and defense counsel confronting policy-limits settlement demands designed as potential "bad faith set-ups." The case arose from a serious rear-end collision on the Bay Bridge that left plaintiff Gary Birdsall permanently injured. Before suit was filed, Birdsall's attorney issued a time-limited policy-limits demand to the defendant's insurer.
USAA unequivocally accepted the demand, tendered the $100,000 policy limit, and delivered the requested documents, only to have its acceptance challenged because the initial release mistakenly listed Pamela Birdsall as a releasee instead of a releasor. Although USAA promptly corrected the clerical error, the plaintiffs rejected the settlement and pursued litigation, eventually securing a multi-million-dollar verdict.
On appeal, the court reversed. It held strict compliance with every condition of a time-limited demand is not conclusive as to whether the parties formed a settlement agreement. Instead, the key inquiry is whether the insurer's outward manifestations, its words and acts, demonstrated mutual intent to settle. That determination, the court emphasized, is for the jury.
Background and Procedural History
On August 13, 2020, Gary Birdsall was stopped in traffic on the Bay Bridge when his Ford Econoline cargo van was rear-ended at high speed by a Mercedes- Benz driven by Barton Helfet. The force of the collision pushed Birdsall's van into another vehicle, causing both to spin against the bridge, Birdsall suffered serious injuries, including fractures to his neck and back, a degloving injury to his arm, and a mild but permanent traumatic brain injury. His wife, Pamela, brought a derivative claim for loss of consortium.
The California Highway Patrol determined that Birdsall was not wearing a seatbelt, a fact documented in photographs showing the belt in the stored position. Nevertheless, liability was quickly apparent, and the Birdsalls' attorney, Jacob Shapiro, initiated settlement discussions with Helfet's insurer, USAA.
On March 19, 2021, Shapiro issued a policy limits settlement demand of $100,000, the per-person bodily injury limit under Helfet's policy. The demand specified strict conditions for acceptance: (1) delivery of a standard bodily injury release executed by both Gary and Pamela Birdsall, (2) a $100,000 settlement draft payable to the Birdsalls and Shapiro's firm, and (3) certified proof of the policy limits. The deadline was April 19, 2021, at 3:00 p.m.
Six days before the deadline, USAA faxed a letter labeled "CLAIM SETTLEMENT," unequivocally accepting the offer, enclosing a release, and providing certified proof of coverage. The next day, it overnighted the $100,000 check. Four days before the deadline, USAA confirmed by fax that all conditions had been met and invited clarification if anything further was required.
The enclosed release, however, mistakenly listed Pamela as a releasee rather than a releasor. USAA corrected this clerical error and faxed a revised release on April 19 at 4:05 p.m., which was 65 minutes after the deadline. The next day, Shapiro rejected the settlement, returning the check and claiming that acceptance had failed because the corrected release was untimely.
The Birdsalls proceeded to file suit against Helfet. In his answer, Helfet raised two key defenses: (1) that the claims were extinguished by settlement, and (2) comparative negligence based on Harry's failure to wear a seat belt. The Birdsalls/ plaintiffs moved for summary judgment adjudication of the settlement defense, which the trial court granted. At trial, the court also excluded evidence of seat belt nonuse and refused Helfet's proposed instructions on the issue.
After a seven-day trial, the jury awarded Gary more than $4.6 million and Pamela $550,000. On appeal, Helfet challenged the summary adjudication order barring his settlement defense and the exclusion of the seat belt evidence. The Court of Appeal agreed with both arguments and reversed.
Summary Adjudication was Improper
Under California law, a settlement agreement is a contract, requiring mutual consent determined by objective, not subjective, manifestations of intent. Monster Energy Co. v. Schechter (2019) 7 Cal.5th 781, 789. Whether an offer has bene accepted is generally a question of fact, judged by what a reasonable person would have understood from the parties' outward conduct. Guzman v. Visalia Community Bank (1999) 71 Cal.App.4th 1370.
Here, USAA's actions plainly indicated acceptance. Its April 13 letter, prominently labeled "CLAIM SETTLEMENT," opened with the words "We accept your offer" and enclosed both a standard form release and certified proof of policy limits. The settlement draft followed the next day. Thus, USAA delivered all three required items before the deadline.
The Birdsalls' sole objection was that the initial release mistakenly listed Pamela as a releasee rather than a releasor. Yet the acceptance letter itself referenced Pamela's signature as required, and USAA promptly corrected the clerical error with a revised release. The insurer did not seek to impose any new terms, it never intended to release Pamela, and indeed corrected the mistake before any dispute escalated.
The plaintiffs and trial court relied on Panagotacos v. Bank of America (1998) 60 Cal.App.4th 851, which held that the terms of an offer must be accepted, "exactly, precisely, and unequivocally." But Panagotacos involved prospective buyers who attempted to alter essential payment terms of a real estate transaction. By contrast, USAA's release error was not the addition of a term, but a scrivener's mistake inconsistent with its own stated intent.
Even plaintiffs' briefing tacitly conceded as much, acknowledging that the release could be read to suggest Pamela was preserving claims against Helfet personally, which was an interpretation no party intended. As the Court of Appeal emphasized, this very dispute underscores that intent, and thus consent, presented a triable issue of fact inappropriate for summary adjudication.
Finally, the court underscored California's strong public policy favoring settlements. Pretrial compromises are "highly favored as productive of peace and goodwill" McClure v. McClure (1893) 100 Cal.339, and courts should enforce reasonable settlements absent fraud or bad faith.
Seat Belt Defense: Excluding Evidence was Error
Helfet also challenged the trial court's refusal to admit evidence or instruct the jury on Gary Birdsall's failure to wear a seatbelt. The Court of Appeal agreed, holding that the ruling improperly prevented the jury from considering a valid comparative fault defense.
One of Helfet's pleaded defenses was that Birdsall was comparatively negligent because he did not use his seat belt. CACI No. 712, Affirmative Defense- Failure to Wear a Seat Belt, requires proof that:
- A working seat belt was available.
- A reasonably careful person in the plaintiff's situation would have used it; and
- The plaintiff's injuries would have been avoided or less severe if the seat belt had been used.
The defense also sought a companion damages instruction, CACI No, 713, which permits a jury to reduce damages in proportion to the harm caused by not wearing a seatbelt.
The record contained ample support for giving these instructions. A CHP officer testified that Birdsall's seatbelt was in the stored position at the time of the collision, and photographs confirmed this fact. Expert testimony also indicated that Birdsall's ejection from his seat contributed to the severity of his injuries.
By excluding this evidence and refusing the requested instructions, the trial court effectively prevented Helfet from presenting a viable comparative negligence defense. California law has long permitted juries to consider a plaintiff's nonuse of a seat belt when it contributes to the extent of injuries. To deny a jury the opportunity to weigh that evidence was reversible error.
Conclusion
Birdsall v. Helfet is a reminder that California courts will not allow plaintiffs to convert clerical mistakes into multimillion dollar "bad faith set-ups." The decision reaffirms that settlements, like all contracts, turn on mutual consent assessed by objective evidence. Where an insurer unequivocally accepts a demand, tenders payment, and demonstrates intent to resolve the claim, the question of settlement formation is for the factfinder, not for summary adjudication.
Equally important, the court emphasized the validity of the seat belt defense, holding that juries must be permitted to consider evidence of a plaintiff's failure to use available restraints when assessing comparative fault and damages.
For insurers and defense counsel, the ruling provides a measure of protection against opportunistic tactics while reinforcing the importance of documenting clear acceptance and promptly addressing errors. Going forward, the decision underscores two principles: settlement demands should be treated with precision and urgency, but plaintiffs cannot weaponize technical missteps to create windfalls untethered to the parties' true intent.
