Thursday, December 29, 2016

Mineral Rights May Be Lost In Seven (7) Years

Mineral Rights May Be Lost In Seven (7) Years

By: Hugh Wood

Mineral rights in Georgia are lost if the minerals are not worked (mined) and/or specific taxes on the minerals are not paid within seven (7) years.  This loss does not apply to written mineral leases or licensed mining companies.

I was recently asked to opine concerning any other a minerals reservation in a deed was of such concern so as to generate a specific title exception.

The conveyance in question concerned 300 acres of land for development in north Georgia.  The title is completely clear; however, there is a well defined reservation of the minerals and minerals rights for mining.  No mining had been conducted on the property since, at least 1919, and the question arose whether the mineral and mining reservation constituted an objection to clear and marketable title.

            The specific reservation of mining rights in the deed reads:

All reservation of minerals, mining rights, mineral privileges and rights associated with dams in the Etowah River, including those contained in warranty deeds from [redacted] Trustees for Standard Pyrites Company to [redacted] all being recorded in Cherokee County, Georgia records.

Quick Summary: 

            Since no mining has occurred for more than seven (7) years prior to the conveyance of the property and since no specific ad valorem taxes have been paid to keep the mineral interest alive as a separate fee interest, the mineral interest has been lost (actually lapsed).  The mineral fee has merged (by lapse or adverse possession/prescription) into the surface fee.  OCGA § 44‑5‑168(a).  Because the right to dam the Etowah River is “incidental,” to mining (which has now been lost), the right to dam (and build earthworks) has also been lost.  OCGA § 44-9-73.  

            That is all the explanation needed for the CliffsNotes® summary.

            The extended backstory is as follows:

Owners, who seek development in the future, are concerned about whether their 300 acre acquisition in Cherokee County, Georgia is clear, given that the conveyancing deeds (1919) contain a very specific and very well defined reservation of all minerals for mining.  Additionally, the mineral conveyance contains a reservation to the mining owner to build “dams upon the Etowah River,” which includes by law the building of earthworks, and other structures incidental to mining.

The title question then became: For current and present surface development, does the severance of the mineral rights and mineral title pose a title exception?   Stated another way, does the owners of the surface fee expose his or her commercial developer to risk of mining (or interference) by the owner of the mineral rights fee?


While I don't think that the owners know the background of their property, they walked into one of the more colorful conveyances of minerals in the history of Georgia. 

It appears that the property the owners acquired is a sub‑portion of the old “Standard Mine,” and/or the “Rich Mine” in Cherokee County, Georgia.  Both mines were active pyrite mines in the early part of the 20th Century.   A statement about the property, no doubt unknown to the owners, reads as follows:

[T]he Standard Pyrites Company owns 170 forty acre lots, a total of about 6800 acres of land, lying on the Third District First Section Forsythe County; and in the Third District Second Section Cherokee County.  About 4600 acres of this area is held in fee simple and 2200 acres of the mineral rights are in another company.  The mine is a lot 462 Third District Second Section Cherokee County, 7.3 miles by road southeast of Ball Green, a station of the Louisville & Nashville Railroad.  This property is the site of the Old Franklin or Crighton Goldmine, which was operated for about 75 years.  The goldmining operations have been described in two previous bulletins of the survey.  The last goldmining was done by the Crighton Goldmining Company and the Franklin Gold, Pyrites and Pyrite Company, under the management of Barry Searle.  These companies were reorganized form in the standard Pyrites Company, which has worked the Pyrites.  [1]

The owner’s deed contains Land Lots in ranges that overlap the old Standard Mine. 

The Standard Mine initially mined gold (in the mid to late 1800s) and then later pyrites.  Land lots overlapping and near the current conveyance appear in documents associated with the Standard Mine.  Id.

            After the gold worked out of the area in question, mining commenced (with significant intensity) in pyrites.  [2]  The current land can be mined for pyrite.  One might wonder why pyrites would be mined at all.   In the era at and before World War I pyrites were mined and worked for the purpose of obtaining sulphur and sulphuric acid (H2S04).  Sulphuric acid, at that time, was a main ingredient in agriculture fertilizer.  The largest amount of sulfuric acid – mined in this are in the early 1900s -- was used to make phosphoric acid.  That, in turn, was used to make the phosphate fertilizer.  Thus, the demand for pyrite mining, particularly after World War I was used, in part, to serve the agriculture needs of the United States.

            With regard to clearing the title to the surface, the issue concerns whether this very real mineral presents a problem to conveyance of the surface fee.   It probably does not.   The current Georgia statute in question concerning the loss of the mineral or mineral interest in land is OCGA § 44-5-168.  It provides that if the minerals have not been mined or “worked” within seven (7) years prior to conveyance and no specific ad valorem taxes have been paid (specifically set aside by the tax commissioner­ for the severed mineral interest) the mineral interest is lost (lapsed).   It is deemed to have merged with the surface fee and the surface fee now owns the entire fee, being both the surface fee and mineral fee.

            The statute reads:

OCGA § 44-5-168. Presumptive adverse possession for certain classes of property

(a) Whenever mineral rights are conveyed or whenever real property is conveyed in fee simple but the mineral rights to such property are reserved by the grantor, the owner of the real property in fee simple or his heirs or assigns may gain title to such mineral rights by adverse possession if the owner of the mineral rights or his heirs or assigns have neither worked nor attempted to work the mineral rights nor paid any taxes due on them for a period of seven years since the date of the conveyance and for seven years immediately preceding the filing of the petition provided for in subsection (b) of this Code section.
(b) In order to obtain absolute title to mineral rights in the circumstances described in subsection (a) of this Code section:
(1) The owner of the real property in fee simple or his heirs or assigns may file in the superior court for the county where the land is located a petition requesting relief in the nature of declaratory judgment. The petition:
(A) Shall contain all essential, required paragraphs, including jurisdiction;
(B) Shall contain the name and last known address of the grantor of the property reserving the mineral rights and the names and last known addresses of his heirs or assigns or any other person known by the plaintiff to have an interest in the mineral rights;
(C) Shall show:
(i) That the plaintiff or his predecessors in title were granted and obtained a deed for the property in question;
(ii) That the conveyance reserved mineral rights or that the plaintiff or his predecessors in title conveyed the mineral rights and reserved or retained the fee simple title to the real property; and
(iii) That, for a period of seven years preceding the filing of the petition after the conveyance, the owner of the mineral rights or his heirs or assigns have neither worked nor attempted to work the mineral rights nor paid taxes on them; and
(D) Shall include any and all prayers regarding the land that the plaintiff may desire. Specifically, the petition may pray that the court find that the plaintiff has obtained title to the mineral rights through adverse possession and that the plaintiff be granted title to mineral rights;
(2) Upon a finding in the plaintiff's favor, the court shall issue a judgment and decree declaring that the mineral rights involved have been lost and that the plaintiff has gained absolute title to such mineral rights; and
(3) Service shall be perfected in the same manner as service on defendants in an in rem proceeding, including service by publication.
(c) Nothing in this Code section shall restrict the court from granting further plenary relief, whether legal or equitable; and the failure of the petition in the plaintiff's favor shall not affect the right of the plaintiff to any other relief, legal or equitable, to which he may be entitled.
(d) Any person named in the petition or any person having an interest in the mineral rights shall have the right to intervene in a case brought under this Code section.
(e) In order to maintain the status quo pending the adjudication of the questions or to preserve equitable rights, the court may grant injunctions and other interlocutory extraordinary relief.
(f) Nothing in this Code section shall apply to a lease for a specific number of years nor to an owner of mineral rights who has leased the mineral rights in writing to a licensed mining operator as defined in Part 3 of Article 2 of Chapter 4 of Title 12.

Since the owners state there was no segregated mineral ad valorem tax and a search of the tax records confirms same, we can eliminate the possibility of the mineral fee survival based on the payment of mineral ad valorem taxes.   And, since pyrite has not been mined on the property since, at least 1926, we can determine that the mineral fee cannot have survived by mining or “working,” the minerals.

Thus, pursuant to OCGA § 44‑5‑168(a), it is somewhat conclusive that the titles have merged. [3]  This type of loss or taking has been upheld as constitutional.  [4]   This taking also happens automatically.  The surface owner does not need to do anything for the mineral fee to merge into the surface fee.   [5]   It would appear that (absent additional facts) the surface fee can be commercially developed without worrying whether the owner would face some future economic threat from the “owner” of the mineral fee.  

The owner posed a more nuanced title question.  Does the reservation to build dams on the Etowah River pose a separate or additional exception to title?   The prior deeds contain the right to build a dam on the Etowah River.  [6]  That is, does the reservation of the right to create a dam or earthworks on the Etowah River in any way change the analysis of the merger of the mineral fee into the surface fee?  It would seem to be “no” for a different reason. 

In Georgia law as far back as 1868, the General Assembly determined that the right to mine shall carry with it the incidental right to dam nearby waterways for use in the mine or cut ditches and canals or tunnels necessary for mining.  It is clear though that the creation of dams or earthworks is "incidental" to actual mining.  The statute in question is OCGA § 44‑9‑73.  It concerns: Privileges incidental to mining:  canals; tunnels, flumes and dams. 

It reads in its entirety as follows:

OCGA § 44-9-73. Privileges incidental to mining; canals; tunnels; flumes; dams

(a) The owner of any mine shall have the right to enter upon any land between the mine and the water power upon which the mine is dependent and to cut thereon such ditch, canal, or tunnel or to construct such flume or other aqueduct and to build such dam as may be necessary to control the water power; provided, however, that the mine owner shall first have the damages assessed arising to the owner of the intervening land or to the owner of the land on which the dam is to be erected and shall pay such damages to the owner of the land so intervening or on which such dam is to be erected.
 (b) After giving the owner of the land to be entered upon at least five days' notice of his intention to make such application, the owner of the mine shall present to the judge of the probate court of the county his written application for the right and privilege of cutting such ditch, canal, or tunnel or constructing such flume or aqueduct or erecting such dam.

Thus the reservation to erect dams on the property does not change the analysis that the mineral fee merged into the surface fee that caused the election of dams, canals, flumes is incidental to mining.  When the mineral fee was lost the former owner of the minerals also lost the right to dam the Etowah River. 

While this author believes that the loss of the mineral fee by the former owner is so clear as not require the further complication of obtaining a Judge’s Order confirming same.  However, if the grantee or owner needs a further level of confidence in the title and/or the commercial title insurance company will not insure ever this opinion, then and in that event the statute provides a solution.  That method is that the Superior Court in which the property is located may issue "a judgment and decree declaring that the mineral rights involved have been lost and the plaintiff is deemed absolute title to such mineral rights" OCGA § 44‑5‑168(d).  [7]

The action for the judgment concerning the mineral rights is fundamentally petitioned for as a declaratory judgment on the title.  The petition declares jurisdiction; all of the former owners that can be found and title (relevant title) are served (good luck with that when your base title is 1919) a Lis Pendens is filed against the property.  A hearing is eventually held by the Superior Court concerning whether the mineral fee has merged with the surface fee.  If the Court finds the fees have merges it issues a Court Order to that effect and the Order is recorded in the case and upon the land records of the County.  The cross-reference of that Order into the title chain forever eliminates the risk of hostile activity by the mineral owner.  


The development of 300 Acres in Cherokee County, Georgia seems to be free from any risk of the mineral fee.  The mineral fee conveyance has been lost by the former mineral owner by its failure to mine or pay taxes on the mineral interest for seven (7) years prior to the conveyance.  Additionally, all rights to build earthworks and dams on the property have been lost, because they are deemed to be only “incidental,” to the working of mines.   The property seems to be free and clear of the severed mineral fee.

Hugh Wood, Esq.
Wood & Meredith, LLP
3756 LaVista Road
Suite 250
Atlanta (Tucker), GA 30084
Phone: 404-633-4100
Fax: 404-633-0068



Shearer, H.K. and Hull, J.P.D. The Pyrites Deposits of Georgia, Index Printing Company, State Printers, Atlanta, Georgia (1918) at 164.


The gold worked out and is presently not economical to mine.


See also, Hinkle, Daniel F., 2Ga. Real Estate Law & Procedure § 12:68 (7th Ed.) (2016).


This type of a statutory taking has been held constitutional.  Many years ago multiple cases arose over whether this type of loss of mineral rights was a “taking” without due process.  In a case arising out of the 20‑year lapse statute in Indiana, Ind. Code 32‑5‑11‑1 through 8 reached the United States Supreme Court.   In that case, Texaco, Inc. v. Short, 454 U.S. 516, 102 S.Ct. 781, 70 L.Ed.2d 738 (1982), the United States Supreme Court upheld the constitutionality of (fundamentally) all mineral loss statutes across the United States.  While Georgia refers to its mineral rights statute as “adverse possession” or prescription, much of the remainder of the country refers to these acts as the "dormant mineral" acts.  They are constitutional.


The owner of the surface fee does not need to take any act or do anything for the mineral fee to merge into the surface fee.  "[The] surface owner who conveyed mineral rights did not have to assert any acts of dominion over the surface estate in order to make claim under the statute, but only allege that he had to deed the property an issue, the mineral rights had been severed from the fee simple estate, and make the requirement of non‑use and non‑pay of taxes had been satisfied."  Headnote.  Mixon v. One Newco, Inc., 863 F.2d. 846 (1989).  “[N]otwithstanding these references to “adverse possession,” our analysis of OCGA § 44-5-168 and Georgia cases construing it convinces us that the statute actually is a “lapse” statute rather than a traditional “adverse possession” law.”  Mixon, supra at 848.  Thus, in our current analysis the owner of the Cherokee fee need only assert that he held the surface fee for more than 7 years.  (And that may be extended by tacking to a prior owner).


No doubt the drafters in 1919 were unaware of the problems this would present in the modern age of getting approval to build a dam from the US Army Corps of Engineers, EPA and the Georgia Dept. of Natural Resources.


Note:  If the minerals are owned by a “licensed mining company,” in Georgia there are special exceptions to loss of mineral rights which go beyond the scope of this note.  Also, a recorded mining lease changes this analysis and stops the loss of minerals as described in this note. 


Friday, November 18, 2016

Showdown on “Excess Funds” from Tax Sales Is Headed to the Georgia Supreme Court

Hugh C. Wood, Esq.

Which entity is entitled to the excess funds from a tax sale?  We shall know (with legal certainty) in a few months.

The Georgia Supreme Court has accepted certiorari of a Georgia Court of Appeals case that will settle or resolve which creditor (or the owner) has the priority of claim to the “excess funds” that are generated from a tax sale.  [1]

In the most simplistic terms the appeal concerns, who is entitled to the claim the excess funds?   Is it the owner of the property who lost the property at tax sale and/or the first mortgage holder entitled to the excess proceeds?  Or, is the redeeming creditor (after the tax sale) first in line to claim the excess proceeds?   

This confusing question is set to be resolved (finally) by the supreme court.   A long time ago, those of us who worked this area of the law just assumed (perhaps inartfully) that the owner or the holder of the first security deed on the property was first in line and entitled to the excess proceeds.    [2]

As this method of investing (buying tax sale property) continued to mature (and accelerated after the real estate crash of 2008 - 2011) very real disputes began to arise concerning which entity was entitled to claim the excess proceeds that remained after a forced tax sale on the courthouse steps.  Did the owner have a priority claim to the funds?   Did the bank which held the legal title (the first security deed) and to whom the owner was indebted have a priority claim to the excess funds?   Or, in creditor redemption, did the redeeming creditor have both title to the property and the first priority claim to the excess proceeds? 

This continuing uncertainty to the ownership (by priority) to the excess funds caused the Georgia General Assembly to enact the Interpleader statute for this issue in 2006.  OCGA § 48-4-5.  [3]
The outcome of this pending writ of certiorari [1] is going to establish a bright line for priority of claims to excess funds.   If the case on appeal is upheld, then the date of the tax sale and priority established on the day of the tax sale becomes “the date,” from which all claims are established.  If the case on appeal is overturned, then Wester, infra, and United Capital, infra, will be reinstated and a redeeming creditor will have a priority claim to the excess funds. 

Both sides have sound policy arguments on appeal.  [4] [5]  While I personally think the “super lien,” is somewhat harsh to the defaulted owner (because it allows the loss of the property, the shortening of the potential one (1) year right to redeem and the loss of the excess proceeds), the interpretations of the statute by Wester [6] and United Capital [7] are both logical and sound.   However, I welcome a supreme court decision that will settle and resolve this muddy corpus of claims to excess funds in tax redemption cases.

We will know in a few months whether the date of the tax sale is “the” date by which practitioners are to calculate all priority claims to excess funds.  Or, we will learn whether we are to go back to the Wester [6] and United Capital [7] methods of calculation. 

Hugh Wood, Esq.
Wood & Meredith, LLP
3756 LaVista Road
Suite 250
Atlanta (Tucker), GA 30084
Phone: 404-633-4100
Fax: 404-633-0068




“Did the Court of Appeals err in its determination that a redeeming creditor after a tax sale does not have a first priority claim on excess tax funds? See Wester v. United Capital Financial of Atlanta, LLC, 282 Ga. App. 392 (638 SE2d 779) (2006) and United Capital Financial of Atlanta v. American Investment Assoc., 302 Ga. App. 400 (691 SE2d 272) (2010).” Grant of Cert on September 16, 2016 in DLT List, LLC et al. v. M7ven Supportive Housing & Development Group, 335 Ga.App. 318, 779 S.E.2d 436 (2015). 


[E]xcess funds shall be distributed by the superior court to the intended parties, including the owner, as their interests appear and in the order of priority in which their interests exist.   OCGA § 48-4-5(b).


OCGA § 48-4-5. Payment of Excess [Interpleader]
(a)  If there are any excess funds after paying taxes, costs, and all expenses of a sale made by the tax commissioner, tax collector, or sheriff, or other officer holding excess funds, the officer selling the property shall give written notice of such excess funds to the record owner of the property at the time of the tax sale and to the record owner of each security deed affecting the property and to all other parties having any recorded equity interest or claim in such property at the time of the tax sale. Such notice shall be sent by first-class mail within 30 days after the tax sale. The notice shall contain a description of the land sold, the date sold, the name and address of the tax sale purchaser, the total sale price, and the amount of excess funds collected and held by the tax commissioner, tax collector, sheriff, or other officer. The notice shall state that the excess funds are available for distribution to the owner or owners as their interests appear in the order of priority in which their interests exist.
(b)  The tax commissioner, tax collector, sheriff, or other officer may file, when deemed necessary, an interpleader action in superior court for the payment of the amount of such excess funds. Such excess funds shall be distributed by the superior court to the intended parties, including the owner, as their interests appear and in the order of priority in which their interests exist. The cost of litigation of such an interpleader action, including reasonable attorney's fees, shall be paid from the excess funds upon order of the court.
(c)  After five years have elapsed from the tax sale date, the tax commissioner, tax collector, sheriff, or other officer holding excess funds shall pay over to the department any excess unclaimed funds and for which no action or proceeding is pending in a claim for payment. Once excess funds are placed in the possession of the department, only a court order from an interpleader action filed in the county where the tax sale occurred, by the claimant for the funds, shall serve as justification for release of the funds.


Brief of Appellant.  Design Acquisition, LLC


Brief of Appellee.  M7ven Supportive Housing & Development Group, Inc.     


Wester v. United Capital Financial of Atlanta, LLC, 282 Ga. App. 392, 638 S.E.2d 779 (2006).

[Copyright material removed]
Attorneys and Law Firms
**779 Thomas C. Sanders, for appellant.
**780 Mason B. Rountree, William T. Cable, Jr., Willie C. Carouthers, Vinson, Talley, Richardson & Cable, for appellee.
BLACKBURN, Presiding Judge.
*392 In this interpleader action to distribute excess funds ($73,275.15) received by the county from a tax sale of certain real property, Thomas A. Wester as a judgment lienholder on the property appeals summary judgment granted to a fellow lienholder (United Capital Financial of Atlanta, LLC), who for $97,200 had redeemed the property from the tax sale. Wester argues that because his judgment lien on the property was prior in time to the judgment lien of United Capital, he should be entitled to the excess funds before any are distributed to United Capital. We hold that as the redeemer of the property, United Capital is entitled to the excess funds to the extent of its redemption payment before any other entity or interest. Accordingly, we affirm summary judgment in favor of United Capital.
Summary judgment is only proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law.1 A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant. Matjoulis v. Integon Gen. Ins. Corp.2
The undisputed facts show that in February 2000 in Paulding County Superior Court, Wester obtained a judgment against a Paulding County real property owner and had a writ of fi. fa. in the amount of $59,508.95 entered on the county general execution docket. Another creditor of the property owner obtained a judgment in May 2000 (a subsequent term of court) and had a writ of fi. fa. in the amount of $5,135.53 entered on the county general execution docket at that time. This later judgment and fi. fa. were subsequently assigned to United Capital.
To collect past due taxes, the Paulding County tax commissioner sold the real property at a tax sale in February 2005 for $81,000 to a tax sale purchaser. United Capital paid $97,200 to the tax sale purchaser to redeem the property, resulting in the tax sale purchaser conveying the property back to the property owner in a properly recorded quitclaim deed. After satisfying the tax debt, the tax commissioner had $73,275.15 left over from the tax sale, which the tax commissioner interpleaded into Paulding County Superior Court, *393 naming the property owner, Wester, and United Capital as defendants. Wester and United Capital both moved for summary judgment.3 Denying Wester's motion, the court granted United Capital summary judgment and ordered that the funds in the court registry be paid to United Capital, giving rise to this appeal.
OCGA § 48-4-5 governs the distribution of excess funds from a tax sale. Subsection (b) provides that the tax commissioner may file an interpleader action in superior court for the payment of the amount of such excess funds and instructs that “[s]uch excess funds shall be distributed by the superior court to the intended parties, including the owner, as their interests appear and in the order of priority in which their interests exist.” If the only interests of Wester and United Capital were as judgment lienholders, then the timing of the obtaining and recording of those liens would be dispositive in determining their relative rights to the funds. Cf. NationsBank, N.A. v. Gibbons4 (“the relative position of judgment liens is determined by seniority; an older Georgia judgment has priority over a newer judgment”).
But United Capital's primary interest in this matter is its status as the redeemer of the property. OCGA § 48-4-43 provides:   When property has been redeemed, the effect of the redemption shall be to put the **781 title conveyed by the tax sale back into the defendant in fi. fa., subject to all liens existing at the time of the tax sale. If the redemption has been made by any creditor of the defendant or by any person having any interest in the property, the amount expended by the creditor or person interested shall constitute a first lien on the property and, if the quitclaim deed provided for in Code Section 48-4-44 is recorded as required by law, shall be repaid prior to any other claims upon the property.
Thus, in its status as redeemer of the property, United Capital has a first lien on the property in the amount of the $97,200 it paid to redeem the property (which lien is in addition to its more subordinate judgment lien for $5,135.53), which first lien “shall be repaid prior to any other claims upon the property.” Id. As stated by the Supreme Court of Georgia in Nat. Tax Funding v. Harpagon Co.,5 “[i]f a creditor of the original taxpayer redeems the property, the amount paid by the *394 redeeming creditor becomes a first lien on the property. The redeeming creditor then has first priority to repayment-a ‘super-lien’ for the redemption price.” Wester's assertion that United Capital is only entitled to priority on the real property per se and not on the excess funds is without foundation. United Capital's right to repayment, whether from the excess tax sale funds or from any foreclosure it may pursue on the property, takes priority over any other claims on the property.
Accordingly, the trial court properly held that United Capital's interest as the redeeming creditor took priority over Wester's and the property owner's interests and that therefore United Capital should be granted summary judgment. Because the amount of United Capital's interest exceeded the amount held in the registry of the court, the trial court correctly ordered that the entire amount be paid to United Capital.
Judgment affirmed.
MIKELL and ADAMS, JJ., concur.
All Citations
282 Ga.App. 392, 638 S.E.2d 779, 06 FCDR 3399
1OCGA § 9-11-56(c).
2Matjoulis v. Integon Gen. Ins. Corp., 226 Ga.App. 459(1), 486 S.E.2d 684 (1997).
3Due to a bankruptcy consent order with the property owner arising out of the property owner's bankruptcy, Wester asked that the first $21,200 be paid to the property owner as an exempt asset and that Wester receive the remainder.
4NationsBank, N.A. v. Gibbons, 226 Ga.App. 610, 611, 487 S.E.2d 417 (1997).
5Nat. Tax Funding v. Harpagon Co., 277 Ga. 41, 42(1), 586 S.E.2d 235 (2003).


United Capital Financial of Atlanta v. American Investment Assoc., 302 Ga. App. 400, 691 S.E.2d 272 (2010).
[copyright material removed]
Attorneys and Law Firms
**273 Richard C. Bellows, for appellant.
Michael A. Petersen, for appellee.
DOYLE, Judge.
*400 United Capital Financial of Atlanta, LLC, and American Investment Associates, Inc., asserted competing claims to the excess funds from the tax sale of certain property belonging to David W. Fletcher. Following a bench trial, the trial court awarded the excess funds to American Investment. United Capital appeals, and we reverse because United Capital, as the creditor who redeemed Fletcher's property from the purchaser at the tax sale, held a first priority lien *401 against the property.
The record shows that Keith Echols, in his capacity as tax commissioner for Hall County, filed a complaint for interpleader against Fletcher, Consolidated Lien Services, LLC, United Capital, and others alleging that certain property belonging to Fletcher had been sold on October 2, 2007, for the purpose of paying Hall County and State of Georgia property taxes for the year 2006. According to the complaint, the property was sold to Consolidated Lien for $21,100, leaving an excess of $20,495.61 after payment of overdue taxes, penalties, interest, and costs of sale. The complaint further showed that United Capital redeemed the property from Consolidated Lien for the redemption amount of $25,320, and that Consolidated Lien then conveyed the property back to Fletcher through a quitclaim deed.
United Capital and American Investment each filed a claim for the excess funds. In light of the conflicting claims to the funds, the tax commissioner paid the excess funds into the registry of the court and prayed that the court order the defendants to interplead the action. Following a bench trial, the trial court awarded the excess funds to American Investment, and United Capital appeals.
“In a bench trial[,] the court sits as the trier of fact[,] and his findings shall not be set aside unless clearly erroneous.... However, the court's judgment in a non-jury trial will be reversed where it is apparent that it rests on erroneous reasoning or on an **274 erroneous legal theory.”1 United Capital did not file a transcript of the trial. “[A]bsent a transcript, we must presume that the trial court's findings of fact are correct.”2
As applicable to this appeal, the trial court found that    United Capital ... became a creditor of ... Fletcher via an assignment of a debt for $71.00 from Dynamic Recovery Services, a collection agency, on the day of the tax sale. United Capital ... had never obtained a judgment or a lien for this debt by the time it redeemed the property.
Further, Defendant American Investment ... obtained a judgment against ... Fletcher on March 12, 1992 for $6,669.87 plus interest, and Writ of Fi. Fa. was issued on July 14, 1992. The *402 amount due pursuant to this judgment as of October 2, 2007, the date of the tax sale, was $29,000.23.
1. After a tax sale, if there are any excess funds after paying taxes, costs, and expenses of the sale, the tax commissioner is authorized to file an interpleader action in superior court for payment of such excess funds, which “shall be distributed by the superior court to the intended parties, including the owner, as their interests appear and in the order of priority in which their interests exist.”3 The trial court awarded the excess funds to American Investment in this case because its judgment was first in time and because United Capital failed to establish a first lien under OCGA § 48–4–43. United Capital contends that the trial court erroneously construed other statutes to deny it the first priority lien established by OCGA § 48–4–43, contrary to controlling authority legislative intent, and principles of equity. We agree that the trial court misapplied OCGA § 48–4–43.
OCGA §§ 48–4–40 through 48–4–48 address the redemption of property sold for taxes. Pursuant to OCGA § 48–4–40, if property is sold under an execution issued for the collection of state and certain local taxes, “the defendant in fi. fa. or any person having any right, title, or interest in or lien upon such property may redeem the property from the sale....” “If the property is redeemed, the tax sale is essentially rescinded and a quitclaim deed is executed by the tax sale purchaser back to the owner of the property at the time of levy and sale.”4 OCGA § 48–4–43 provides that if the redemption has been made by “any creditor of the defendant or by any person having any interest in the property,” then the amount expended by the creditor or interested person constitutes a first lien on the property, and “shall be repaid prior to any other claims upon the property,” so long as the quitclaim deed to the defendant in fi. fa. is recorded as required by law.5
We have previously analyzed the first or “super-lien”6 established by OCGA § 48–4–43 in the context of competing claims to excess funds from a tax sale. In Wester v. United Capital Financial of Atlanta7 we concluded that, notwithstanding the general rule that the timing of the obtaining and recording of judgment liens is *403 dispositive in determining competing lienholders' rights,8 the appellee's status as the redeemer of the property afforded it a first priority lien in the amount it paid to redeem the property.9 Accordingly, we found that the trial court correctly directed that the excess funds held in the registry of the court be paid to the **275 redeeming creditor.10 United Capital argues that Wester controls here.
Unlike the appellee in Wester, United Capital was not a lienholder with respect to the property at the time of the redemption, nor did the trial court find it had any other interest in the property. The trial court found United Capital's lack of a lien or interest in the property controlled for purposes of OCGA § 48–4–43, concluding that “the statutory scheme seems to be that a judgment[ ] or lienholder may redeem the property to create a super-lien, not that merely any creditor of the taxpayer may redeem the property to create a super-lien,” and that United Capital, as a creditor without a lien, had not otherwise satisfied the condition of OCGA § 48–4–41 contemplating a sale of the property after redemption under a judgment in favor of the creditor.
“Laws of this state governing the right to redeem are to be construed liberally and most favorably to persons allowed by the statute to redeem.”11 Under OCGA § 48–4–43, the first priority lien for the redemption price arises as to “any creditor of the defendant [in fi. fa.]” who redeems the property. The trial court found as a matter of fact that United Capital was Fletcher's creditor. “Well-established principles of statutory construction require that the literal meaning of the words of a statute must be followed unless the result is an absurdity, contradiction, or such an inconvenience that it is clear that the legislature must have intended something else.”12 It follows that, based on a literal interpretation of the statute, United Capital had a first lien for the amounts expended for the redemption.
There are some apparent inconsistencies in the statutory scheme, but we conclude that none requires a reinterpretation of the literal language of OCGA § 48–4–43. Notably, OCGA § 48–4–40 suggests that the only persons who may redeem property sold in a tax sale include “the defendant in fi. fa. or any person having any right, title, or interest in or lien upon such property,” which would appear to exclude a creditor without a lien, right, title, or interest in the property from exercising a right of redemption. Nevertheless, and *404 pretermitting whether it was required to do so, the purchaser at the tax sale permitted United Capital to redeem the property, which the purchaser quitclaimed back to Fletcher. By virtue of OCGA § 48–4–41, which contemplates the redemption of a creditor without a lien, and OCGA § 48–4–43, which governs the effect of a redemption, including that by “any creditor,” the law necessarily allowed United Capital to redeem the property.
As between OCGA §§ 48–4–41 and 48–4–43, OCGA § 48–4–41 provides that “[i]f the property is redeemed by a creditor of the defendant in fi. fa. who has no lien,” the creditor has a claim against the property for the amounts advanced to redeem the property if “[t]here is any sale of the property after the redemption under a judgment in favor of the creditor.” OCGA § 48–4–41 does not address, however, the priority of this claim and whether it constitutes a separate lien, which are matters addressed by OCGA § 48–4–43. There is not such an absurdity, contradiction, or inconvenience in the application of OCGA § 48–4–43, as written, to require us to interpret “any creditor” to mean other than what it says. It follows that the effect of the redemption was to return title to the property to Fletcher, subject to all liens existing at the time of the tax sale,13 but that United Capital had a first priority lien for the amounts it expended to redeem the property. Under Wester, the first priority of United Capital's lien entitled it, as the redeeming creditor, to priority over American **276 Investment in the distribution of the excess funds to the extent of the redemption price.14
2. American Investment contends that the trial court erred in holding that United Capital became Fletcher's creditor via an assignment of a debt from Dynamic Recovery Services. But American Investment did not assert its claim of error through a cross-appeal. Further, its claim is not supported by reference to the record, but by the argument that United Capital failed to present certain evidence at trial, notwithstanding the lack of a transcript before this court.15 Viewing American Investment's claim as material to the claims of error asserted by United Capital, and thus reviewable notwithstanding the lack of a cross-appeal,16 American Investment *405 nevertheless does not present any basis for this court to find that the trial court erred in its finding that United Capital was Fletcher's creditor.
Judgment reversed.
BLACKBURN, P.J., and ADAMS, J., concur.
All Citations
302 Ga.App. 400, 691 S.E.2d 272, 10 FCDR 480
1(Citation and punctuation omitted.) CRS Sirrine v. Dravo Corp., 213 Ga.App. 710, 721(4), 445 S.E.2d 782 (1994).
2State of Ga. v. Davis, 292 Ga.App. 387, 389, 665 S.E.2d 350 (2008). The lack of a transcript is not fatal to the appeal because at issue are questions of law. Vance v. Vance, 246 Ga. 456, 459(4), 271 S.E.2d 853 (1980).
3OCGA § 48–4–5.
4Nat. Tax Funding v. Harpagon Co., 277 Ga. 41, 42(1), 586 S.E.2d 235 (2003).
5OCGA §§ 48–4–43; 48–4–44. The trial court found that in this case the quitclaim deed was recorded as required by law.
6Nat. Tax Funding, 277 Ga. at 42(1), 586 S.E.2d 235.
7282 Ga.App. 392, 638 S.E.2d 779 (2006).
8See OCGA § 48–4–5.
9Wester, 282 Ga.App. at 393, 638 S.E.2d 779.
10Id. at 394, 638 S.E.2d 779.
11Dixon v. Conway, 262 Ga. 709, 710, 425 S.E.2d 651 (1993).
12(Citation and punctuation omitted.) Effingham County Bd. of Tax Assessors v. Samwilka, Inc., 278 Ga.App. 521, 522, 629 S.E.2d 501 (2006).
13See OCGA § 48–4–43 (“When property has been redeemed, the effect of the redemption shall be to put the title conveyed by the tax sale back into the defendant in fi. fa., subject to all liens existing at the time of the tax sale.”).
14See Wester, 282 Ga.App. at 393–394, 638 S.E.2d 779.
15See Davis, 292 Ga.App. at 389, 665 S.E.2d 350 (trial court's findings of fact presumed correct in absence of a transcript).
16See Brady v. Elevator Specialists, 287 Ga.App. 304, 306, 653 S.E.2d 59 (2007) (“[A] ruling that becomes material to an enumeration of error urged by an appellant may be considered by the appellate court without the necessity of a cross-appeal.”) (punctuation omitted).


Friday, July 22, 2016

Georgia's Offer of Settlement Statute: OCGA § 9-11-68 (2015 Revisions) :: Shifting Attorney's Fees to the Loser in Litigation

Hugh C. Wood, Attorney

 This paper will: 1) review the mechanics of OCGA § 9-11-68, 2) it will review the subparts of the statute, 3) it will review the “good faith” portion of the statute, 4) it will review the jury driven homologue to OCGA § 9-15-14 and 5) it will review recent Georgia cases decided under OCGA § 9-11-68.  
      A. The Offer of Settlement Statute: OCGA § 9-11-68
OCGA § 9-11-68. Offer of Settlement
(a) At any time more than 30 days after the service of a summons and complaint on a party but not less than 30 days (or 20 days if it is a counteroffer) before trial, either party may serve upon the other party, but shall not file with the Court, a written offer, denominated as an offer under this Code section, to settle a tort claim for the money specified in the offer and to enter into an agreement dismissing the claim or to allow judgment to be entered accordingly. Any offer under this Code section must:
(1) Be in writing and state that it is being made pursuant to this Code section;
(2) Identify the party or parties making the proposal and the party or parties to whom the proposal is being made;
(3) Identify generally the claim or claims the proposal is attempting to resolve;
(4) State with particularity any relevant conditions;
(5) State the total amount of the proposal;
(6) State with particularity the amount proposed to settle a claim for punitive damages, if any;
(7) State whether the proposal includes attorney´s fees or other expenses and whether attorney´s fees or other expenses are part of the legal claim; and
(8) Include a certificate of service and be served by certified mail or statutory overnight delivery in the form required by Code Section 9-11-5.
(b)(1) If a defendant makes an Offer of Settlement which is rejected by the plaintiff, the defendant shall be entitled to recover reasonable attorney ´s fees and expenses of litigation incurred by the defendant or on the defendant ´s behalf from the date of the rejection of the Offer of Settlement through the entry of judgment if the final judgment is one of no liability or the final judgment obtained by the plaintiff is less than 75 percent of such Offer of Settlement.
(2) If a plaintiff makes an Offer of Settlement which is rejected by the defendant and the plaintiff recovers a final judgment in an amount greater than 125 percent of such Offer of Settlement, the plaintiff shall be entitled to recover reasonable attorney ´s fees and expenses of litigation incurred by the plaintiff or on the plaintiff ´s behalf from the date of the rejection of the Offer of Settlement through the entry of judgment.
(c) Any offer made under this Code section shall remain open for 30 days unless sooner withdrawn by a writing served on the offeree prior to acceptance by the offeree, but an offeror shall not be entitled to attorney´s fees and costs under subsection (b) of this Code section to the extent an offer is not open for at least 30 days (unless it is rejected during that 30 day period). A counteroffer shall be deemed a rejection but may serve as an offer under this Code section if it is specifically denominated as an offer under this Code section. Acceptance or rejection of the offer by the offeree must be in writing and served upon the offeror. An offer that is neither withdrawn nor accepted within 30 days shall be deemed rejected. The fact that an offer is made but not accepted does not preclude a subsequent offer. Evidence of an offer is not admissible except in proceedings to enforce a settlement or to determine reasonable attorney´s fees and costs under this Code section.
(d)(1) The Court shall order the payment of attorney ´s fees and expenses of litigation upon receipt of proof that the judgment is one to which the provisions of either paragraph (1) or paragraph (2) of subsection (b) of this Code section apply; provided, however, that if an appeal is taken from such judgment, the Court shall order payment of such attorney ´s fees and expenses of litigation only upon remittitur affirming such judgment.
(2) If a party is entitled to costs and fees pursuant to the provisions of this Code section, the Court may determine that an offer was not made in good faith in an order setting forth the basis for such a determination. In such case, the Court may disallow an award of attorney´s fees and costs.
(e) Upon motion by the prevailing party at the time that the verdict or judgment is rendered, the moving party may request that the finder of fact determine whether the opposing party presented a frivolous claim or defense. In such event, the Court shall hold a separate bifurcated hearing at which the finder of fact shall make a determination of whether such frivolous claims or defenses were asserted and to award damages, if any, against the party presenting such frivolous claims or defenses. Under this subsection:
(1) Frivolous claims shall include, but are not limited to, the following:
(A) A claim, defense, or other position that lacks substantial justification or that is not made in good faith or that is made with malice or a wrongful purpose, as those terms are defined in Code Section 51-7-80;
(B) A claim, defense, or other position with respect to which there existed such a complete absence of any justiciable issue of law or fact that it could not be reasonably believed that a Court would accept the asserted claim, defense, or other position; and
(C) A claim, defense, or other position that was interposed for delay or harassment;
(2) Damages awarded may include reasonable and necessary attorney´s fees and expenses of litigation; and(3) A party may elect to pursue either the procedure specified in this subsection or the procedure specified in Code Section 9-15-14, but not both. History. Amended by 2006 Ga. Laws 589, §1, eff. 4/27/2006.
Added by 2005 Ga. Laws 1, §5, eff. 2/16/2005.
      B. The Mechanics of the Statute
      OCGA § 9-11-68(a): The statute applies only to tort cases. While this author is certain that some creative practitioners will attempt to expand the scope of this charming statute to probate, hybrid-contract actions and other actions, it by its language, presently only applies to “tort” actions. Thus, your case must have the prerequisite of a tort claim to be able to make an Offer of Settlement. [1]
      With regard to timing, the offer may only be made thirty (30) days after the service of the summons and complaint (Note: it does not refer to the Answer, but only service) and not less than thirty (30) days before trial.
      Assuming that your case has a tort claim and the offer is made within the proper timing parameters (thirty (30) days after service or thirty (30) days before trial) then it must contain the following elements:
      OCGA § 9-11-68(a)(1): It must be in writing and it must specifically state that it is made under the Offer of Settlement statute 9-11-68;
      OCGA § 9-11-68(a)(2): It must particularly identify which parties are making the offer [assuming that there are multiple parties in addition to a simply plaintiff and defendant]; it must also identify the target of the offer;
      OCGA § 9-11-68(a)(3): It must identify, generally, the claim or claims concerning which the Offer desired to settle; [2]
      OCGA § 9-11-68(a)(4): The offer must “state with particularity any relevant conditions.” What is the legal meaning of “relevant conditions?” This definition escapes this author.
      OCGA § 9-11-68(a)(5): The offer must state the total dollar ($) amount of the proposal.
      OCGA § 9-11-68(a)(6): The offer must state with particularity the amount that offeror proposes to settle any punitive damage claim;
      OCGA § 9-11-68(a)(7): The offer must state specifically whether it includes “attorney’s fees” and/or other expenses and whether attorney’s fees or other expenses are part of the underlying legal claim;
      OCGA § 9-11-68(a)(8): The offer must include a certificate of service and be served by certified or statutory overnight delivery (read that UPS or FedEx) in the form required by OCGA § 9-11-5.
      Under Section OCGA § 9-11-68 (c) any offer made must remain open for Thirty 30 days unless withdrawn in writing served on the Offeree prior to acceptance. [3]
      OCGA § 9-11-68(b). Liability for a Rejected Offer. It is somewhat difficult to state the liability for a rejected offer, however:
      If defendant makes an Offer and it is rejected, plaintiff must beat the offer at trial by, at least, 75% of the rejected offer or pay defendant’s attorney’s fees.
      If plaintiff makes an Offer and it is rejected, defendant is not liable for plaintiff’s attorney’s fees unless plaintiff beats the rejected offer by 125% of the amount of the offer.
       C. The Good Faith Defense
       The statute appears to allow the trial Court, upon motion of the non prevailing party under an Offer of Settlement, to request that the Court find that Offeror knew that Offer of Settlement was not made “in good faith”. OCGA § 9-11-68(d)(2). If the Court finds the offer was not made in good faith, then the Offer of Settlement is just considered either void or null.
       D. The Jury Version Homologue of OCGA § 9-15-14
       OCGA § 9-11-68(e). The 1987 enactment of OCGA § 9-15-14 motion for attorney’s fees for frivolous litigation and claims was supposed to be the remedy enacted by the legislature which merged all common law claims of malicious abuse and malicious use of prosecution into one statute. However, since the enactment of OCGA § 9-15-14, we have seen the enactment of OCGA § 51-7-80 through 85 and now a jury-driven version of OCGA § 9-15-14. Under subparagraph (e) of OCGA § 9-11-68 a prevailing party at the end of a jury trial may move the Court to allow the jury (then impaneled) to hear a bifurcated discussion of whether the claims advanced by the non prevailing party were frivolous, lacked substantial justification or were not made in good faith.
       If the jury finds that those claims were made during trial were frivolous then and in that event the jury may proceed to award damages against the non-prevailing party pursuant to OCGA § 9-11-68(e). It is possible that a motion under subparagraph (e) may be made to the judge; however, it is clear that the General Assembly wanted to give the prevailing party the opportunity to present frivolous claims to the jury then impaneled.
       A prevailing party may not use both OCGA § 9-15-14 and OCGA § 9-11-68(e) for the same factual conduct by the non-prevailing party.
A. 2015 Cases   
1. Alessi v. Cornerstone Associates, Inc., 334 Ga.App. 490, 780 S.E.2d 15 (2015).
    No OCGA § 9 11 68 awards in Arbitration.  The case involved homeowners purchasing a house from Cornerstone Associates Inc. in Locust Grove, Georgia.  The contractor purchase indicated that binding arbitration would be conducted before an arbitrator named by Cornerstone.  The year before the arbitration Cornerstone offered the homeowners an OCGA § 9 11 68 offer of $3,000.00 to settle the claim.  The homeowners proceeded to binding arbitration pursuant to the contract and recovered nothing as did Cornerstone.  Both sides received nothing in arbitration.  Based upon the fact that homeowner did not exceed or meet the $3,000.00 by 75 percent at the arbitration, Cornerstone brought a motion in the trial court for the $67,268.41 it had spent in defending the case.  The Superior Court of Paulding County awarded the attorney's fees pursuant to OCGA § 9 11 68 and homeowner appeal.  The Court of Appeals and apparently what appears to be a case of first impression determined that OCGA § 9 11 68 attorney's fees applies only in the context of court driven civil litigation.  The Court of Appeals reasoned that the statute should be granted in strict construction and 9 11 68 that the general assembly made no reference to alternative dispute resolution in the statute.  Also, by the use of the word trial, the general assembly must have intended to exclude Award in arbitration.  Thus, 9 11 68 does not apply in arbitration.  [The underlying case was discussed last year at Alessi, et al. v. Cornerstone Associates, Inc., 329 Ga.App. 420, 765 S.E.2d 630 (2014).]
2. Tiller v. RJJB Associates, LLP, 331 Ga.App. 622, 770 S.E.2d 883 (2015).
      Award Reversed for Vagueness.  The Court of Appeals reversed a grant of OCGA § 9 11 68 to a shopping center mall operated that housed anchor store J. C. Penney in the amount of $24,696.28.  While the corporation for the mall obtained summary judgment against a slip and fall plaintiff and the slip and fall plaintiff recovered nothing, the Court of Appeals held that the offer was too vague to be unenforceable.  Particularly, the movant under OCGA § 9 11 68 sent an OCGA § 9 11 68 of settlement which referred to provisions of the complaint.  Because the slip and fall plaintiff had filed a lengthy amended complaint the Court of Appeals held that the offer could not be accepted as written.  This is yet another case that describes the importance of confirming the OCGA § 9 11 68 letter to the exact facts of the case in order to be enforced. 
3. Bell v. Waffle House, Inc., 331 Ga.App. 443, 771 S.E.2d 132 (2015)
    No Fee Hearing Required if not Requested.   In an OCGA § 9 11 68 award of attorney's fees in favor of Waffle House in the amount of $27,276.37, the Court of Appeals affirmed the award even though no evidentiary hearing was held.  Generally under OCGA § 9 11 68 (as is required under OCGA § 9 15 14 (a hearing is required pursuant to OCGA § 9 11 68 (e)).  The Court of Appeals affirmed because the plaintiff Bell (against whom the award was made) failed to formally request a hearing in his moving papers and waived it by the language of his motion.  Thus, the fee award was affirmed without a necessity of a hearing.
B. 2014 Cases
       In Couch II, infra, the Supreme Court applied OCGA § 9-11-68 to the State of Georgia and held that sovereign immunity was waived as to an attorney fee application against the State.  In Crane Composites, infra, the court held that OCGA § 9-11-68 may be applied when the injury occurred before the date of the statute but the action was filed after the date of the statute.  And in the second appearance of Canton Plaza, infra, again reveals that to obtain an OCGA § 9-11-68 award that will survive appeal requires segregation of attorney’s fees to the negligence report claim on which the losing party failed to accept the tendered offer.

1. Ga. Department of Corrections v. Couch, 295 Ga. 469, 759 S.E.2d 804 (2014) (Couch II ) reversing Ga. Department of Corrections v. Couch, 322 Ga.App. 234, 744 S.E.2d 432 (2013).
      Sovereign Immunity Waived OCGA § 9-11-68.  David Lee Couch filed a tort lawsuit against the Georgia Department of Corrections. After the Department rejected Couch's offer to settle the case for $24, 000, the case proceeded to trial, where the jury returned a verdict for Couch in the amount of $105, 417. Based on Couch's 40% contingency fee agreement with his attorneys, the trial court ordered the Department to pay Couch $49,542 in attorney fees – 40% of his total recovery, after appeal, including post-judgment interest – as well as $4,782 in litigation expenses, pursuant to the "offer of settlement" statute, OCGA § 9-11-68 (b) (2). [The contingent award was reversed on appeal.  It consisted in part of fees on appeal which are not within the statute.  It seems somewhat unclear whether a contingent fee may stand (alone) for an award under OCGA § 9-11-68.] 

      This Supreme Court then granted certiorari to address sovereign immunity.
      1.     Did the Court of Appeals err when it held that the sovereign immunity of the Department was waived by the Georgia Tort Claims Act as to Couch's attorney fees?
      2.     If the sovereign immunity of the Department was waived as to Couch's attorney fees, did the Court of Appeals err by failing to prorate the 40% contingency fee to reflect that some of the fees were incurred before the settlement offer was rejected?
   For the reasons discussed below, we hold that the sovereign immunity of the Department was waived as to the attorney fees award under OCGA § 9-11-68 (b).

2. Crane Composites, Inc. v. Wayne Farms, LLC, et al., 296 Ga. 271, 765 S.E.2d 921 (2014) 
      The question for decision in this case is whether OCGA § 9-11-68, can be applied to a negligence action in which the injury occurred prior to the effective date of the statute, but in which the action was filed after that date.  The Court answered this question affirmatively and, in so doing, they overruled L. P. Gas Industrial Equipment Co. v. Burch, 306 Ga.App. 156, 701 S.E.2d 602 (2010).
3. McCarthy, et. al. v.  Yamaha Motor Man. Corp., 994 F.Supp.2d 1329 (N.D.Ga. 2014).
    In an unusual case the United States District Court for the Northern District of Georgia applied Georgia's fee shifting statute under OCGA § 9-11-68 to a personal injury claim that occurred in Queensland, Australia.  The plaintiff was severely injured, with spinal injuries, in a Yamaha WaveRunner™ accident in Queensland.  The Yamaha WaveRunner™ was manufactured by Yamaha in Newnan, Georgia.
    The plaintiff chose to sue in the United States District Court for the Northern District of Georgia instead of the Commonwealth Courts in Queensland, Australia.  The Court accepted the claim based on diversity pursuant to 28 U.S.C. § 1332 and retained the case.  While the Court's order only proceeds through the application of which law shall apply, the parties struggled concerning whether to apply the legal standards of Australia or Georgia. 
      For simplicity Georgia tends not to apply fixed caps to products liability claims or punitive damages whereas the Commonwealth Courts in Queensland apply a cap of approximately $230,000.00 (AUD) to compensatory damages (general damages including emotional distress, pain and suffering and other economic damages and Australia provides a $274,000.00 (AUD) cap on strict liability claims.)  Australia also capped lost income.  The plaintiffs argued for the application of Georgia law even though the injury occurred in Australia and the Court eventually applied Australian law.  The plaintiff was unable to show that the public policy of Georgia was such that Australian caps on damages and punitive damages should not be applied.
    However, the determination of attorneys' fees was decided by the Court to apply Georgia law.  Australian expert affidavits showed that Queensland would apply the "English rule," that generally provides the winner of the lawsuit is able to shift the attorneys' fees to the loser.  Georgia, instead, applies statutory fee shifting including, which the Court discussed at some length.  Because the Australia law was general common law in Georgia had specific statutes on point, including OCGA  § 9-11-68, the Court decided to apply the specific Georgia statute instead of the general common law of Australia on attorneys' fees.
    The resolution of the case is not revealed in the published Order.
      4.    Weinberg, Wheeler, Hudgins, Gunn & Dial, LLC v. Teledyne Technologies, Inc., 090913 GANDC, 1:12-cv-0686-JEC
    OCGA § 9 11 68 is mentioned as part of an Order in case by an Atlanta law firm to collect its fees.  The law firm prevailed on the collection of fees.   However, the Order contains a discussion of the denial of the application of OCGA § 9 11 68.
    In the underlying case (which generated the fee litigation based on losing Defendant’s nonpayment of the law firms fees) Plaintiff’s (in the underlying case) asked the jury for $17,000,000.00.  The jury returned $1,700,000.00.  Defendant offered $3,000,000.00 prior to trial to settle, apparently within OCGA § 9 11 68(a).  The Court refused to apply the fee shifting statute citing the offer as 5 days late.  While perhaps obvious on the application of the statute, this Order again shows the rigid application of this statute and how every part of the offer must come within the four (4) corners of the statute.
C. 2013 Cases

1. Canton Plaza, Inc. et al. v. Regions Bank, Inc., 325 Ga.App. 361, 749 S.E.2d 825 (2013)
      Bank failed to segregate the fees and expenses associated with prosecuting its counterclaims, tort and contract.  Fee award reversed.  Canton Plaza, Inc. and Chaim Oami (" the plaintiffs" ) appeal from an award of attorney fees and expenses in favor of Regions Bank, Inc. (" the Bank" ) under OCGA § 9-11-68, Georgia's offer of settlement statute. The plaintiffs contended that the trial court erred in awarding the Bank its attorney fees and expenses because the Bank failed to segregate its recoverable fees and expenses from those which were non-recoverable; and, because the award, as against plaintiff Oami, was inappropriate.  Fee award reversed and remanded for hearing on segregated fee claims.
2. Graham, et al. v. HHC FT Simons, Inc., 322 Ga.App. 693, 746 S.E.2d 157 (2013).
    OCGA § 9-11-68 offer must be accepted according to its strict terms or will be vacated.  This OCGA § 9-11-68 case seems to turn more on the ordinary rules concerning offer, acceptance and consideration than the specifics of OCGA § 9-11-68.  In Graham, supra, the father (Graham, Sr.) brought a wrongful death action against a mental health facility at Saint Simons Island for the wrongful discharge of his son.  His son killed himself eight hours after he was discharged.
    In the interplay of offer, acceptance and consideration, the defendant mental health facility sent an OCGA § 9-11-68 offer of compromise offering $100,000.00 in exchange for the standard dismissal and other events associated with the OCGA § 9-11-68 offer.  Within the 30 days Graham rejected the offer and requested $200,000.00 by counter-offer.  In what can only be derived between the lines as bad drafting, the mental health facility rejected the $200,000.00 counteroffer and "reiterated" its $100,000.00 offer.  Graham purportedly tried to accept, during that period of time the court granted summary judgment to the mental health facility and the mental health facility stood on the dismissal and refused to pay the $100,000.00 settlement.
    On appeal the Court of Appeals found that the OCGA § 9-11-68 reiteration offer required that the plaintiff do certain things including dismiss the action.  Even though the language of the second reiteration was murky, the plaintiff may have been able to accept if it had dismissed but it did not.  Since the case remained pending while it attempted to accept there was no clear acceptance pursuant to the specific rule of OCGA § 9-11-68 did not apply to the reiteration. 
3. Eaddy v. Precision Franchising, LLC, 320 Ga.App. 667, 739 S.E.2d 410 (2013)
      Settlement agreement between franchisor and franchisee's liability insurer did not prevent franchisor from seeking an award of attorney fees from individual pursuant to the offer of judgment statute.   Eaddy v. Precision Franchising, LLC, supra, shows that a successful plaintiff can face attorneys’ fees by one defendant on an OCGA § 9-11-68 motion despite a relatively successful conclusion in the outcome.
    The opinion doesn’t seem to state all of the necessary facts to understand what occurred in the trial court; however, Eaddy was apparently beaten up at an automobile service business (that is not named in the case) for which Precision Franchising, LLC was the franchisor.
    Eaddy apparently sued the local automobile establishment, the individual who actually hit him and its franchisor Precision Franchising, LLC.  The disclosed insurance company, Central Mutual Insurance Company, refused to provide a defense for Precision (franchisor) and Precision apparently provided its own attorneys paid for out of its pocket.
    Eaddy’s damages must have been significant.  Early on in the litigation Precision Franchising (not the local store but the national franchising company) made a $1,000.00 offer to settle pursuant to OCGA § 9-11-68.  Eaddy rejected this by refusal to respond within 30 days.  Shortly thereafter, the trial court granted summary judgment only as to the franchisor, Precision Franchising, LLC’s claims against Eaddy.
    Eaddy appealed the grant summary judgment.  While that appeal was pending, Eaddy settled with Central Mutual and eliminated all claims against the remaining defendants including  the local store.  The settlement took out any potential liability Precision would have if the appeal was reversed.  Thus, Eaddy achieved $200,000.00 for the altercation based on that settlement.
    Meanwhile Precision sued Central Mutual for nonpayment of its attorneys’ fees in defending the claim and was able to extract $118,000.00 over Central Mutual’s refusal to pay for attorneys to defend Precision during the lawsuit.
    As if matters can’t get stranger in the world of OCGA § 9-11-68 after all of the settlements are completed but the claims remained pending in the trial court, Precision moved on its OCGA § 9-11-68 Motion (for which it had originally only offered $1,000.00 to clear Eaddy off a claim that he eventually recovered $200,000.00) for the attorneys’ fees necessary to obtain the grant of summary of judgment against Eaddy.  Recall, Precision Financing (the parent franchisor) was successful in eliminating Eaddy’s claims despite the fact if Eaddy eventually settled with the other defendants.  A hearing was held on Precision Franchisor’s OCGA § 9-11-68 claim against Eaddy and the trail court awarded $28,656.37 of attorneys’ fees against Eaddy to the parent franchisor.  That amount was affirmed on appeal.
    This case shows how OCGA § 9-11-68 continues to play out in unusual circumstances.  Despite the fact that Eaddy recovered a substantial amount against the local defendants, he did not recover against the national franchisor.  The national franchisor (apparently having ultimately no liability to anyone) was able to recover $28,000.00 from Eaddy under OCGA § 9-11-68 even though it would appear at the outset that Eaddy was reasonable in rejecting the $1,000 offer of settlement. 
4. Gowen Oil Company v. Biju Abraham, et al., 511 F. App’x, 930, 936 (11th Cir. 2013).

      A frivolous case can generate a massive fee claim.   In the 2013 overview of this area of the law, Gowen Oil Company v. Biju Abraham, et al, stands out as the poster-child for an OCGA § 9-11-68 award of attorney's fees in Federal court.
    In that convoluted legal malpractice case where Abraham asserts that his former counsel Greenberg Traurig, LLP preferred some of his existing clients over Abraham and caused him damages based on the sale of convenience stores in south Georgia, his action to sue Greenberg Traurig backfired significantly in attorney's fees.  As stated in the Southern District of Georgia trial court, Greenberg Traurig offered $63,000.00 early on to settle the claim and be done with it.  The case continued for a number of months whereupon the Southern District of Georgia granted summary judgment in favor of Greenberg Traurig and awarded in excess of $300,000.00 of attorney's fees (primarily generated by Rogers & Harden of Atlanta) against Plaintiff.
    The trial court found that the case was without merit, that the attorney's fees were appropriate, that it really didn't make any difference whether they used Atlanta attorney's fees or Brunswick-based attorney's fees because the amounts were similar based on a 10 percent discount, that paralegal fees were recoverable and (more specifically) that defendant is entitled to determine how many paralegals and lawyers it intends to use to defend the case within reason and the fact that plaintiff used only two lawyers and two paralegals did not control what resources Greenberg Traurig felt were necessary to defend itself.
    Perhaps one of the more cogent arguments is that appellant argued Greenberg Traurig should not be entitled to attorney's fees because those fees were covered by an insurance policy for legal malpractice.  The court rejected that argument and did not weigh into the possibility of a double recovery where the attorney's fees were recovered despite the fact they'd been paid for by insurance.  The court simply said that OCGA § 9-11-68 is designed to encourage settlements and it refused to look at whether the fact that fees were covered by insurance.  Malpractice insurance did not insulate Gowen from the payment of legal fees and expenses under OCGA § 9-11-68.  
A. Paying A Big Firm's Fees In A Plaintiff's Loss; Gowen Oil Company
    A plaintiff in the Southern District of Georgia ended up paying a large firms attorneys' fees of $300,000.00 for a loss on a Motion for Summary Judgment in a complex case.
    Plaintiff Gowen Oil Company, Inc. ("Gowen") sued Greenberg Traurig for legal work done by Greenberg Traurig for its previous client Biju Abraham.  While the facts are somewhat complex, Gowen asserted that Greenberg Traurig conspired with its prior client Abraham to interfere with Gowen's contractual rights to purchase a number of filling stations in Georgia.  Gowen Oil Company, Inc., v. Biju Abraham; Greenberg Traurig, LLP, United States District Court for the Southern District of Georgia, CV-210-157 (March 30, 2012).
    Gowen asserted that Greenberg Traurig tortuously interfered with Gowen's Right of First Refusal with regard to a pending sale of the filling stations.  Gowen asserted violations of Georgia's Bulk Transfer Act in Superior Court.  Greenberg Traurig (or perhaps another defendant) removed the case to the Southern District of Georgia based on diversity jurisdiction.
    According to the Court, the case was complex, involved extensive discovery and substantial motion practice.  Both parties sought extended discovery due to the large number of parties and witnesses and some discovery was necessary outside of the United States. 
    This case is particularly instructive for the application of Georgia's OCGA § 9-11-68 attorney's fees statute when applied in federal court.  At least at the district level, OCGA § 9-11-68 has been found to be substantive law.  Given that it's substantive, a federal court sitting in diversity must apply it as the rule of decision.
    Greenberg Traurig hired outside counsel of Rogers & Hardin in Atlanta and while discovery was pending Rogers & Hardin sent an OCGA § 9-11-68 offer of settlement.  While the amount is not referred to in the case, a review of the docket on Pacer shows that the offer to settle, including attorneys' fees and punitive damages was set at $63,000.00.  Gowen neither accepted nor rejected but went silent, which under the statute is a rejection.  Two months later Greenberg Traurig filed a Motion for Summary Judgment.  The Motion for Summary Judgment on all the substantive claims was granted and some months thereafter Greenberg Traurig filed a Motion for its attorney’s fees under 9-11-68.
    Gowen's initial claim made out a claim for $35 million and by the time Greenberg Traurig had succeed in obtaining a dismissal of all of the claims and asserting its request for fees, it was entitled to fees in excess of $300,000.00.  Due to various withdrawals of certain claims and voluntary reductions on behalf of Greenberg Traurig's part, the Court granted fees in the amount of $281,000.00 and Court costs of $35,000.00.
    The case is instructive for a number of reasons.
    The Court sided with Greenberg Traurig that given the potential exposure, $35 million, plaintiff was not well grounded in its assertion that plaintiff used two lawyers and a few paralegals while Greenberg Traurig employed eight lawyers and five support staff.  The Court found that Greenberg Traurig had a reasonable explanation for each attorney and each paralegal and therefore granted fees for them all at a slightly reduced rate.
    On a practice level, the case also provides a clear exhibit that was used by Greenberg Traurig, prepared by Rogers & Hardin, from which a fairly clear OCGA § 9-11-68 demand letter may be crafted.  Exhibit A.
    Additionally, the Motion prepared by Rogers & Hardin on behalf of Greenberg Traurig is a fairly good form for use in federal court (and could be easily modified for Superior Court).  It is attached hereto as Exhibit B.
    Gowen was affirmed in Gowen Oil Company vs. Greenberg Traurig, et al., United States Court of Appeals for the 11th Cir. (December 13, 2011) (Unpublished).
B. Potential Bad Press Associated With Seeking Attorney's Fees: Hall v. 84 Lumber
    In an Order in Charles D. Hall, Plaintiff v. 84 Company; Darren Richardson; Keith Conner; Robert Venal; Robert C. Venal, Inc., Defendants, United States District Court for the Southern District of Georgia Savannah Division, Judge William T. Moore, (March 28, 2012), Judge Moore “encouraged” the Defendants not to seek fees.  Judge Moore, while finding the OCGA § 9-11-68 Motion was hyper technically not ripe, cautioned the Defendants concerning whether they should seek attorneys' fees of in excess of $250,000.00 from the Plaintiff who lost his case. 
      The Court, in Hall v. 84 Lumber, supra, stated that:
Mr. Hall is not some deep pocket corporate entity.  Rather, he was simply an unfortunate delivery driver who suffered an injury when one of defendant's employees ran over his foot with a forklift.  Mr. Hall brought a legitimate claim before this Court:  whether defendants qualified as statutory employers under Georgia law and, as a result, were shielded from liability for his injury.   In this Court's opinion, defendants need to ask themselves whether the mere fact that Mr. Hall's counsel failed to convince this Court that his client was meritorious should result in saddling an injured blue collar worker with not only the fallout from his injury but also $271,000.00 of fees and expenses.  This Court wonders whether this is truly a position that a customer-service oriented business like 84 Lumbar should take.  Perhaps the limited and general partners of defendant 84 Lumbar should ask themselves the same question." 
Hall v. 84 Lumber, supra at 5.  (Order of March 28, 2012).
    A review of the docket sheet concerning Southern District Case No.  4:09-CV-00057-WTM-GRS shows that 84 Lumber dismissed the motion with prejudice and did not refile it.
      C. Small Jury Verdict for Plaintiff Equals Judgment for the Defendant
      Abraham v. Hannah, 306 Ga.App. 735, 702 S.E.2d 904 (2010), is a case that has a fairly shocking outcome under OCGA § 9-11-68. While Abraham was reversed on appeal because the plaintiff did not have notice of the OCGA § 9-11-68 hearing, it shows how a plaintiff may win and then lose under OCGA § 9-11-68.
      Abraham (Plaintiff) recovered $850.00 in a jury verdict (this author admits that it's in a tiny sum); however, prior to the jury verdict Hannah (defendant) had offered $2,500.00 to Abraham to settle the case. After the jury verdict in Abraham's favor of $850.00, the trial Court held a hearing and granted attorney's fees, pursuant to OCGA § 9-11-68, to Hannah in the amount of $2,425.00. Once the jury verdict of $850.00 was subtracted from that amount the defendant (though the defendant lost at trial) had a judgment in its favor against the successful plaintiff, Abraham, of $1,575.00.
      While this case was reversed for lack of notice, it displays in stark contrast the painful reality of an unaccepted offer in the face of a small jury verdict.
      D. Punitive Damages Count Toward the 75% - 125%
      In Wildcat Cliffs Builders, LLC v. Hagwood, 229 Ga. App. 244, 663 S.E.2d 818 (2008), (This case was decided under prior law), plaintiff in the underlying action, Hagwood, recovered a $90,000.00 compensatory award, $100,000.00 punitive damage award and $14,688.56 in OCGA § 9-11-68 attorney’s fees.
      The facts most favorable to Hagwood showed that Wild Cliffs Builders knowingly encroached upon Hagwood’s property, built a retaining wall, refused to remove it and then offered Hagwood only $10,000.00 in an effort to purchase an easement and a complete release of liability. A jury awarded to Hagwood the amounts stated above. Though decided under prior law, an interesting nuance out of the Wildwood Builders case is that defendant/appellant’s took the position on appeal that punitive damages should not be counted in calculating the OCGA § 9-11-68 award. Although it is unclear whether the Georgia Court of Appeals simply said that they would or would not consider the inclusion of punitive damages, they held that it was “moot” once they affirmed the punitive damage award. Wildcat Cliffs, at 822.
      In sum, the evidence showed that Wildcat had no interest in remedying or lessening the run-off problem or compensating Hagwood for the property damage he had sustained. Rather, it was amenable only to paying Hagwood for an easement and a release from all liability arising from the retaining walls it had constructed on Hagwood's property. The foregoing evidence was sufficient to authorize the jury's conclusion that, after it learned of its trespass onto Hagwood's property and its creation of a continuing nuisance thereon, Wildcat acted with a conscious indifference to the consequences of its conduct.
      Hagwood requested and received attorney fees and expenses pursuant to OCGA § 9-11-68(b)(2). Prior to trial, Hagwood offered to settle the case for $110,000. After the jury awarded him a total of $190,000 in damages, he was, therefore, statutorily entitled to recover his attorney fees and expenses.
      On appeal, Wildcat argued that this award must be overturned, because, in the absence of the punitive damages award, Hagwood did not recover greater than 125% percent of his Offer of Settlement. The Court of Appeals held that since it sustained the award of punitive damages, that argument is moot.
      It affirmed the entry of judgment against Wildcat in favor of Hagwood, including the award of $100,000 in punitive damages and $14,688.56 in attorney fees and expenses.
      E. A Dismissal Without Prejudice Did Not Trigger the Award
      In McKesson Corporation, et al. v. Green, et al., 286 Ga. App. 110, 648 S.E.2d 457 (2007), (decided under prior law), the Court of Appeals declined to award OCGA § 9-11-68 attorney’s fees where a demand had been made but plaintiff took a dismissal without prejudice (OCGA § 9-11-41) prior to proceeding to trial. While the McKesson case turned on complex issues associated with stockholdings, RICO allegations concerning stockholdings and plaintiff’s apparent lack of an expert immediately prior to trial, the OCGA § 9 11-68 issue was resolved by the Court of Appeals in that a voluntary dismissal does not constitute the type of judgment or final judgment which will invoke liability under the OCGA § 9-11-68 statute. The Court of Appeals wrote in that regard as follows:
McKesson contends that the trial Court erred in denying its motion for attorney’s fees under OCGA § 9-11-68(b)(1). That code section provides that a defendant whose settlement offer is rejected shall recover attorney’s fees and expenses of litigation “if the final judgment is one of no liability or the final judgment obtained by the plaintiff is less than 75 percent of such Offer of Settlement.” The trial Court in this case entered no final judgment within the meaning of the statute, and therefore did not err in denying this motion. A right to dismiss voluntarily without prejudice would be meaningless if doing so would trigger the payment of defendant’s attorney’s fees. Without explicit language establishing that the legislature intended to excise a plaintiff’s right to dismiss in this manner, this Court will not engraft such an intention into the statute.
McKesson, at 462.
      F.  Courts Struggle With “Offers Not Made in Good Faith”
    The trial courts and Georgia Court of Appeals have struggled with the defining what constitutes and Offer not made in “good faith.”  It is, somewhat, like trying to put a subjective concept into an objective box.   However, given that the General Assembly has foisted O.C.G.A. § 9-11-68 upon us, we must do it.  The most prominent case on point is, Great West Cas. Co. v. Bloomfield, 313 Ga.App. 180, 721 S.E.2d 173 (2011). 
    A masterful overview of Bloomfield, at the trial level is found at: Clay, Jr., Charles "Chuck" and Paupeck, Michael, Recent Decision Highlights Additional Issues with Georgia's Tort Reform Act, Weinburg, Wheeler, Hudgins, Gunn & Dial, December 29, 2011.  I reproduce it below (without indentions).
      “On December 1, 2011 the Georgia Court of Appeals issued an opinion that complicates efforts by defendants and their insurers to obtain fees and costs, particularly in large damages cases.  See, Bloomfield, supra. This appeal was taken from a trial court’s denial of a motion for fees and costs pursuant to O.C.G.A. § 9-11-68, Georgia’s offer of settlement statute. This statute is quite specific regarding the procedure and essential terms of the written offer. If complied with, the statute states that a defendant shall be entitled to recover reasonable attorney’s fees and expenses of litigation incurred from the date an offer was rejected through entry of judgment, if the final judgment is one of no liability or less than 75 percent of such offer of settlement. That is, unless the trial judge determines that the offer was not made in “good faith.”
    In Bloomfield, Judge Patsy Porter of the Fulton County State Court ruled that the Great West Defendants’ $25,000.00 offer of settlement did not constitute a “good faith” offer in a wrongful death trucking case, and, thus, she disallowed an award of $69,000.00 in fees and costs to which these defendants were otherwise entitled under the statute. The trial judge’s ruling and the ultimate decision on appeal were somewhat surprising because these defendants won at trial and their written offer, in all technical aspects, complied with the requisites of O.C.G.A. § 9-11-68. Moreover, in June of 2011, the Court of Appeals held that a $750 offer was not made in bad faith in a slander case and, therefore, upheld a $84,000.00  award of fees and expenses. The Bloomfield decision makes clear that winning at trial does not guarantee a recovery of attorneys’ fees and costs.     Unfortunately, it provides limited explanation as to exactly why the particular offer was deficient and creates ambiguous precedent.
    The underlying case in Bloomfield involved two separate collisions. In the first collision, the tractor-trailer driver insured by Great West struck another vehicle while changing lanes, causing an accident. Subsequently, the vehicle in which Mrs. Bloomfield was a passenger slowed while approaching the original wreck and was struck from behind by a second tractor-trailer, the driver of which admitted fault and was ultimately assessed 100% liability. A Fulton County jury awarded $10.4M compensatory damages and $44M in punitive damages (which were capped at $250,000.00 by statute) against the defendants associated with the second tractor-trailer.
    The specific issue on appeal was whether the trial court had abused its discretion pursuant to subsection (d)(2) of O.C.G.A. § 9-11-68 in disallowing the fees and costs to which the Great West Defendants were otherwise entitled. Subsection (d)(2) reads, “If a party is entitled to costs and fees pursuant to the provisions of this Code section, the court may determine that an offer was not made in good faith in an order setting forth the basis for such a determination.” (emphasis added). The trial court initially denied the motion for fees without providing the statutorily required basis, so the Court of Appeals first vacated that order and remanded the case back with instructions to explain the basis for finding bad faith. See Great West Cas. Co. v. Bloomfield, 303 Ga. App. 26, 693 S.E.2d 99 (2010); cf Cohen v. Alfred and Adele Academy, Inc., 310 Ga. App. 761, 714 S.E.2d 350 (2011) (trial courts are not required to make written findings of fact or conclusions of law should they find that an offer was made in good faith). On remand, the Bloomfield trial court supported its denial by stating: 1) $25,000.00 was not a reasonable offer or realistic assessment of liability in a wrongful death case; 2) the subject truck driver paid a traffic ticket fine for improper lane change; 3) defense counsel made the offer without having even deposed a police officer on the scene who later testified at trial; and 4) that the Great West Defendants eventually made a $1M offer during trial, which Plaintiff rejected.
    The case then went to the Court of Appeals a second time. Initially, it was assigned to a three-judge panel which included Judges Anne Elizabeth Barnes, Harris Adams and Keith Blackwell. They split 2-1 in favor of reversing the trial court on the grounds that it had failed to justify the finding of bad faith. Because there was a split, an expanded seven-judge panel was employed to resolve the split. Judge Barnes apparently convinced the additional panel members to side with her, and in a 5-2 decision focusing heavily upon the abuse of discretion standard of review, the majority upheld the trial court’s denial of fees and costs.
      While upholding the trial court’s ruling, the Court of Appeals’ majority opinion offered almost no analysis of the trial court’s four-part rationale for finding a lack of good faith. The dissent raised frustration with that approach and then proceeded to delve into a more detailed analysis in which they challenged each of Judge Porter’s four reasons. Instead, the majority broadly stated that the trial court’s determination of the reasonableness of an offer “is a factual determination, based on the trial court’s assessment of the case, the parties, the lawyers, and all of the other factors that go into such determination, which the trial court has gathered during of the case.” They did not address: 1) whether the $25,000 offer was per se unreasonable in a wrongful death case; 2) whether the fact that the subject truck driver paid a traffic ticket fine for improper lane change properly supported a finding of bad faith; or 3) whether defense counsel’s failure to depose a police officer on the scene who later testified at trial was indicative of bad faith. The Court of Appeals did analyze the trial court’s fourth factor and held that the trial court properly considered the fact that Great West made a $1M settlement offer during trial.”
      G. OCGA § 9-11-68 is Constitutional
      Smith et al. v. Baptiste, et al., 287 Ga. 23, 694 S.E.2d 83 (2010), stands for the proposition that the Supreme Court of Georgia found OCGA § 9-11-68 to be constitutional.
      The Baptistes filed a complaint for damages against Chuck Smith and the radio station WQXI 790 AM after WQXI broadcast defamatory statements about the Baptistes. While the case was pending and pursuant to OCGA § 9-11-68(a), Smith and WQXI offered to settle the case for $5,000.00. The Baptistes did not respond to the offer which was deemed a rejection under OCGA § 9-11-68(c). The Court granted summary judgment.
      Smith and WQXI moved for attorney’s fees pursuant to OCGA § 9-11-68(b)(1); however, after a hearing, the trial Court denied Smith and WQXI’s motion for attorney’s fees and found that the scheme enacted under OCGA § 9-11-68 was unconstitutional and violated various provisions of the Georgia constitution.
      In the Baptiste, supra, Mr. Justice Carley sketched out the background of OCGA § 9-11-68. He wrote that OCGA § 9-11-68 was enacted as part of the Tort Reform Act of 2005. The scheme enacted under OCGA § 9-11-68(a) specifies that in a tort claim either party may serve on the other party a written demand or offer to settle that tort claim. If the settlement demand or offer is rejected, that party may be entitled to recover attorney’s fees pursuant to OCGA § 9-11-68(b).
      The Georgia Supreme Court overturned the trial Court on the finding that OCGA § 9-11-68 violated the “uniformity” clause of the Georgia constitution. The trial Court apparently found that OCGA § 9-11-68 was non-uniform in that it applied only to tort cases and not to civil cases including contract claims or other claims. That is, because it did not apply to the entire class of civil cases but only to tort claims inside civil cases it was therefore (in the trial Court’s opinion) unconstitutional.
      The Georgia Supreme Court wrote that “our state Constitution only requires a law to have uniform operation across all laws.” Baptiste, at 88.
      Because the Supreme Court found that OCGA § 9-11-68 applied uniformly across the state to all similarly situated tort claims, it was a general law and was therefore uniform across those types of claims. It was therefore constitutional. Id.
      OCGA § 9-11-68 is Substantive Law in Federal Court.
      Wheatley v. Moe's Southwest Grill, LLC, et al. 580 F. Supp. 2d 1324 (N.D. Ga. 2008), sheds light on some of the difficulties of the enforcement of OCGA § 9-11-68 (the Georgia Offer of Settlement) in Federal Court. While many parts of this long and messy case go beyond a simple discussion of OCGA § 9-11-68, it turned on an offer of 50,000 shares of stock in Moe's and related corporations [Mama Fu's Noodle House, Inc. and Raving Brands Holding, Inc.] when Plaintiff, Wheatley, was promoted from employee to company vice president with an equity share. When Wheatley resigned from the corporation, she sought the 50,000 shares by written certificate. Because of the lack of writing and ambiguity, litigation arose concerning whether the shares had to be issued.
      An award of OCGA § 9-11-68 attorney's fees may not be had for the attorney's fees incurred from an appeal from the District Court through the 11th Circuit and on remittitur back to the District Court. Attorneys for Moe's Southwest moved for $49,000.00 of attorney's fees incurred while the case was appealed from the District Court through the 11th Circuit and back on remand to District Court. The United States District Court for the Northern District of Georgia, gave a short shrift to the request for attorney's fees on appeal in federal Court and wrote: "The motion that seeks attorney's fees and expenses of litigation incurred on appeal is meritless. The statute expressly limits the award of attorney's fees and expenses to those incurred from the date of the rejection of the Offer of Settlement to the date of entry of judgment … " 580 F. Supp. 2d 1326.
      It is unclear, from Wheatley and similar cases, how practitioners are to deal with cases that are a combination of contract claims, tort claims and hybrid claims. In Wheatley, the Plaintiffs contended they were suing on contract for the 50,000 shares. The defendants contended that it was a meritless tort suit, suit on breach of fiduciary duties, conversion and other counts. The federal Court struggled with the question concerning whether an OCGA § 9-11-68 Offer of Settlement could properly be made to a case that had some contract claims buried in amongst tort claims. 580 F. Supp. 2d 1325 1327.
      While the trial court did not resolve this area of the law, he found that the statute applied to any suit that involved a "tort claim" in the action. Thus, perhaps reading between the lines, one can make an Offer of Settlement if any portion of Plaintiff's complaint includes a well-defined "tort" claim. 580 F. Supp. 2d 1327. Perhaps the most important determination out of Wheatley, supra, is that the Court specifically and unequivocally held that OCGA § 9-11-68 offers apply as substantive law in federal Court. While the Plaintiff argued that the Georgia statute was merely procedural and could not be applied in federal Court, the Court found otherwise.   The Court cited, Erie Railroad Company v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L. Ed. 1188 (1938) and its progeny, the Court found that it could (and perhaps was obliged to) apply state substantive law on this particular issue. Id.
      The Wheatley case goes on to show that it certified three (3) questions to the Georgia Supreme Court. Research reveals that while the record was transferred to the Georgia Supreme Court and the issues were placed before the Supreme Court, the parties settled their claims and the Supreme Court allowed the case to return to the District Court on remittitur without answering the certified questions posed in Wheatley. See, the Order of the Supreme Court of Georgia dated April 28, 2009 and Wheatley, returning the file to the United States District Court for the Northern District of Georgia without an answer. Document 173 in United States District Court Northern District of Georgia Case. No. 1:05 CV 02174 TCB.
      The Georgia Offer of Settlement statute OCGA § 9-11-68 is a powerful tool to shift an opponent off the status quo and toward a resolution of the case. This paper has shown that the drafter of the Offer must carefully follow the statute. A plaintiff must recover more than 75% percent of a rejected offer or bear the defendant's fees and a defendant must be confident that a plaintiff can recover no more than 125% percent of a rejected offer or risk paying plaintiff’s counsel’s fees. This paper has reviewed the statute’s potential for legal malpractice if an Offer is not made or not employed correctly. It has reviewed the recent finding of constitutionality of the statute and looked at additional recent cases.
Hugh Wood, Esq.
Wood & Meredith, LLP
3756 LaVista Road
Suite 250
Atlanta (Tucker), GA 30084
Phone: 404-633-4100
Fax: 404-633-0068

Note:  The 2012 Version of this paper extensively reviewed OCGA § 9-11-68 as a statutory scheme of “Betting the Spread,” in game theory.  That paper also reviewed academic statistical reviews of whether Offers of Settlement statutes (throughout the United States) do, in fact, reduce litigation?
Prior versions of this Paper, 2011 to 2014, reviewed the application of Fed.R.Civ.P. 68 to case.  Those prior versions are available from ICLEGA, Athens, GA

In 1989 the Georgia General Assembly, in its wisdom, gave us OCGA §§ 51-7-80 through 51-7-85. In that abusive litigation/malicious prosecution scheme we, as practitioners, had to stay within the confines of two paragraphs of OCGA § 51-7-84 to write a cogent and enforceable notice by certified mail to be able to enforce a claim after the end of the suit. The General Assembly, in its wisdom, has now given us twenty-three (23) paragraphs under OCGA § 9-11-68 to make an appropriate Offer of Settlement during a case.
What if the Complaint, is part in tort and part in contract? May one submit an OCGA § 9-11-68 Offer of Settlement for the tort portions of the action? The United States District Court, Northern District of Georgia struggled with this issue in Wheatley v. Moe’s Southwest Grill, LLC, et al., 580 Fed. Supp. 2d 1324 (2008). Unfortunately, there is no clear answer from that case. The Federal Court certified the question to the Georgia Supreme Court; however, the case then settled without an answer. Wheatly, supra, contains and interesting “chart,” delineating “tort,” causes of action from “contract,” causes of action. 586 Supp. 2d 1324, 1326. This author’s personal opinion, though is that this expands litigation and makes the offers unwieldy and unfair, but “yes,” one can make Offers of Settlement to the tort claims (inside) a larger complaint or petition.
There are substantial nuances in the concerning the making of an Offer of Settlement with regard to a counter-offer and nuances with regard the effect of the withdrawal of an Offer on the collection of on attorney’s fees. These are beyond the scope of this article.

Exhibits A & B are located in the Scribd download