Monday, May 30, 2011

NO SIGNATURE(S) ON A SECURITY DEED = NO NOTICE TO BFPs

If there are no signatures [or missing signatures] on a Security Deed [1] recorded in Georgia, then that Security Deed provides NO CONSTRUCTIVE NOTICE to third parties; the Security Deed may be ignored. [2]  U.S. Bank National Association v. Gordon, Supreme Court of Georgia, Supreme Court Case No. S10Q1564 (March 25, 2011). [3] 

I thought for a very long time about how to write a “shocking” blog article concerning how “shocking,” is this Georgia Supreme Court Opinion.

However, fundamentally, the U.S. Bank, supra, case stands for the proposition that the Georgia Supreme Court overturned, OCGA § 44-14-33 [4] and simply returned Georgia to the old requirement that constructive notice to all, including bona fide purchasers “BFPs”, shall arise from a properly recorded conveyancing documents and no other.

That is the ruling in a nutshell; the rest is commentary.

Hugh Wood
Atlanta, GA







[1]
If you are the Borrower on a Security Deed, don’t assume that you may be relieved of the debt to your lender.  As between the parties to a transaction (without regard to notice to all the world and third parties), you are still obligated to pay your lender.  U.S.Bank, Supra, only affects “constructive notice,” to third parties.
[2]
Be careful of the date on which you rely on this article.  Work is afoot in the Georgia General Assembly to overturn U.S. Bank, Supra.
[3]
U.S. BANK NATIONAL ASSOCIATION v.GORDON.

S10Q1564.

SUPREME COURT OF GEORGIA

Decided: March 25, 2011

        The Honorable Supreme Court met pursuant to adjournment. The following order was passed:

        It appearing that the enclosed opinion decides a second-term appeal, which must be concluded by the end of the April term on April 14, 2011, it is ordered that a motion for reconsideration, if any, must be filed and received in the Clerk's office by 4:30 p.m. on Monday, April 4, 2011.

Page 2

        NAHMIAS, Justice.

        The United States District Court for the North District of Georgia has certified a question to this Court regarding the 1995 Amendment to OCGA § 44-14-33. See Ga. L. 1995, p. 1076, § 1. The question is whether the 1995 Amendment

    means that, in the absence of fraud, a security deed that is actually filed and recorded, and accurately indexed, on the appropriate county land records provides constructive notice to subsequent bona fide purchasers, where the security deed contains the grantor's signature but lacks both an official and unofficial attestation (i.e., lacks attestation by a notary public and also an unofficial witness).

For the reasons that follow, we answer the certified question in the negative.

        1. In October 2005, Bertha Hagler refinanced her residence through the predecessor-in-interest to U.S. Bank National Association (U.S. Bank) and granted the predecessor a first and a second security deed to her residence. The security deeds were recorded with the Clerk of the Fulton County Superior

Page 3

Court in November 2005, but the first security deed was not attested or acknowledged by an official or unofficial witness. According to the district court's certification order:

    Gordon, the Chapter 7 Trustee in Hagler's bankruptcy case, sought to avoid or set aside the valid, but unattested, first security deed to the residence through the "strong-arm" power of Section 544 (a) (3) of the Bankruptcy Code. See 11 U.S.C. § 544 (a) (3). Gordon argued that under the proper interpretation of § 44-14-33 of the Georgia Code, a security deed that is not attested by an official and unofficial witness cannot provide constructive notice to a subsequent purchaser even if it is recorded. U.S. Bank argued, in opposition, that a 1995 amendment to § 44-14-33 changed the law to enable an unattested security deed to provide constructive notice. Gordon argued in response that the 1995 amendment served only to recognize constructive notice from a security deed with a "latently" defective attestation, meaning an irregular attestation that appears regular on its face; a deed with a "patently" defective attestation, meaning an attestation that is obviously defective on its face, would not provide constructive notice.

        The bankruptcy court ruled in Gordon's favor, concluding that, under the 1995 Amendment, a security deed with a facially defective attestation would not provide constructive notice, while a security deed with a facially proper but latently defective attestation would provide constructive notice. See Gordon v. U.S. Bank Natl. Assn. (In re Hagler), 429 BR 42, 47-53 (Bankr. N.D. Ga. 2009). Concluding that the issue involved an unclear question of Georgia law and that

Page 4

no Georgia court had addressed the issue after the 1995 Amendment, the district court certified the question to this Court. We conclude that the bankruptcy court properly resolved the issue.

        2. OCGA § 44-14-61 provides that "[i]n order to admit deeds to secure debt... to record, they shall be attested or proved in the manner prescribed by law for mortgages." OCGA § 44-14-33 provides the law for attesting mortgages:

    In order to admit a mortgage to record, it must be attested by or acknowledged before an officer as prescribed for the attestation or acknowledgment of deeds of bargain and sale; and, in the case of real property, a mortgage must also be attested or acknowledged by one additional witness. In the absence of fraud, if a mortgage is duly filed, recorded, and indexed on the appropriate county land records, such recordation shall be deemed constructive notice to subsequent bona fide purchasers.

The second sentence of this Code section was added by the 1995 Amendment.

        3. We first address Gordon's contention that the 1995 Amendment does not apply at all to security deeds. He contends that only the first sentence of § 44-14-33, which expressly deals with attestation, is applicable to security deeds through § 44-14-61 and that, because the 1995 Amendment addresses constructive notice, it does not apply to security deeds. We disagree. The

Page 5

General Assembly chose to enact the 1995 Amendment not as a freestanding Code provision but as an addition to a Code provision clearly referenced by § 44-14-61. Moreover, "[t]he objects of a mortgage and security deed... under the provisions of the Code are identical-security for a debt. While recognizing the technical difference between a mortgage and security deed hereinbefore pointed out, this court has treated deeds to secure debts... as equitable mortgages." Merchants & Mechanics' Bank v. Beard, 162 Ga. 446, 449 (134 SE 107) (1926). The General Assembly is presumed to have been aware of the existing state of the law when it enacted the 1995 Amendment, see Fair v. State, 288 Ga. 244, 252 (702 SE2d 420) (2010), so the placement of the amendment makes complete sense. Indeed, no reason has been suggested why the General Assembly would want the same type of recording to provide constructive notice for mortgages but not for security deeds. Accordingly, we conclude that the 1995 Amendment is applicable to security deeds.

        4. Turning back to the certified question, we note that the "recordation" that is deemed to provide constructive notice to subsequent purchasers clearly refers back to "duly filed, recorded, and indexed" deeds. U.S. Bank argues that a "duly filed, recorded, and indexed" deed is simply one that is in fact filed,

Page 6

recorded, and indexed, even if unattested by an officer or a witness. We disagree.

        Particular words of statutes are not interpreted in isolation; instead, courts must construe a statute to give "'"sensible and intelligent effect" to all of its provisions, '" Footstar, Inc. v. Liberty Mut. Ins. Co., 281 Ga. 448, 450 (637 SE2d 692) (2006) (citation omitted), and "must consider the statute in relation to other statutes of which it is part." State v. Bowen, 274 Ga. 1, 3 (547 SE2d 286) (2001). In particular, "statutes 'in pari materia, ' i.e., statutes relating to the same subject matter, must be construed together." Willis v. City of Atlanta, 285 Ga. 775, 776 (684 SE2d 271) (2009).

        Construing the 1995 Amendment in harmony with other recording statutes and longstanding case law, we must reject U.S. Bank's definition of "duly filed, recorded, and indexed." Its definition ignores the first sentence of § 44-14-33, which provides that to admit a security deed to record, the deed must be attested by or acknowledged before an officer, such as a notary public, and, in the case of real property, by a second witness. See OCGA § 44-2-15 (listing the "officers" who are authorized to attest a mortgage or deed). Other statutes governing deeds and mortgages similarly preclude recording and constructive

Page 7

notice if certain requirements are not satisfied. See OCGA § 44-2-14 ("Before any deed to realty or personalty or any mortgage, bond for title, or other recordable instrument executed in this state may be recorded, it must be attested or acknowledged as provided by law."); OCGA § 44-14-61 ("In order to admit deeds to secure debt or bills of sale to record, they shall be attested or proved in the manner prescribed by law for mortgages"). Indeed, U.S. Banks' construction of the 1995 Amendment contradicts OCGA § 44-14-39, which provides that "[a] mortgage which is recorded... without due attestation... shall not be held to be notice to subsequent bona fide purchasers."

        Thus, the first sentence of § 44-14-33 and the statutory recording scheme indicate that the word "duly" in the second sentence of § 44-14-33 should be understood to mean that a security deed is "duly filed, recorded, and indexed" only if the clerk responsible for recording determines, from the face of the document, that it is in the proper form for recording, meaning that it is attested or acknowledged by a proper officer and (in the case of real property) an additional witness. This construction of the 1995 Amendment is also consistent with this Court's longstanding case law, which holds that a security deed which appears on its face to be properly attested should be admitted to record, see

Page 8

Thomas v. Hudson, 190 Ga. 622, 626 (10 SE2d 396) (1940); Glover v. Cox, 137 Ga. 684, 691-694 (73 SE 1068) (1912), but that a deed that shows on its face that it was "not properly attested or acknowledged, as required by statute, is ineligible for recording." Higdon v. Gates, 238 Ga. 105, 107 (231 SE2d 345) (1976).

        We note that at the time the 1995 Amendment was considered and enacted, the appellate courts of this State had "never squarely considered" whether a security deed with a facially valid attestation could provide constructive notice where the attestation contained a latent defect, like the officer or witness not observing the grantor signing the deed. Leeds Bldg. Prods. v. Sears Mortg. Corp., 267 Ga. 300, 301 (477 SE2d 565) (1996). [ REPRODUCED INFRA ] The timing of the amendment suggests that the General Assembly was attempting to fill this gap in our law as the Leeds litigation worked its way through the trial court and the Court of Appeals before our decision in 1996. See Gordon, 429 BR at 50. We ultimately decided in Leeds that, "in the absence of fraud, a deed which, on its face, complies with all statutory requirements is entitled to be recorded, and once accepted and filed with the clerk of court for record, provides constructive notice to the world of its existence." 267 Ga. at 302. We

Page 9

noted that Higdon remained good law, because in that case the deed was facially invalid, did "not entitle [the deed] to record," and "did not constitute constructive notice to subsequent purchasers." Leeds, 267 Ga. at 302. Because we reached the same result as under the 1995 Amendment, we did not have to consider whether the amendment should be applied retroactively to that case. See id. at 300 n.1.

        Our interpretation of the 1995 Amendment also is supported by commentators that have considered the issue. See Frank S. Alexander, Georgia Real Estate Finance and Foreclosure Law, § 8-10, p. 138 (4th ed. 2004) (stating that "[a] security deed that is defective as to attestation, but without facial defects, provides constructive notice to subsequent bona fide purchasers"); Daniel F. Hinkel, 2 Pindar's Georgia Real Estate Law and Procedure, § 20-18 (6th ed. 2011) (without mentioning deeds with facial defects, explaining that the 1995 Amendment to § 44-14-33 and Leeds "provide that in the absence of fraud a deed or mortgage, which on its face does not reveal any defect in the acknowledgment of the instrument and complies with all statutory requirements, is entitled to be recorded, and once accepted and filed with the clerk of the superior court for record, provides constructive notice to subsequent bona fide

Page 10

purchasers"); T. Daniel Brannan & William J. Sheppard, Real Estate, 49 Mercer L. Rev. 257, 263 (Fall 1997) (without mentioning deeds with facial defects, stating that the 1995 Amendment to § 44-14-33 resolves "the issue that was before the court in [Leeds]"). As noted by the bankruptcy court, if Hinkel and the law review authors thought that the 1995 Amendment altered longstanding law with regard to deeds containing facial defects as to attestation, they surely would have said so. See Gordon, 429 BR at 52-53.

        Finally, it should be recognized that U. S. Bank's interpretation of the 1995 Amendment to § 44-14-33 "would relieve lenders of any obligation to present properly attested security deeds" and "would tell clerks that the directive to admit only attested deeds is merely a suggestion, not a duty," and this would risk an increase in fraud because deeds no longer would require an attestation by a public officer who is sworn to verify certain information on the deeds before they are recorded and deemed to put all subsequent purchasers on notice. Gordon, 429 BR at 51-52. Moreover, while "it costs nothing and requires no special expertise or effort for a closing attorney, or a lender, or a title insurance company to examine the signature page of a deed for missing signatures before it is filed," U.S. Bank's construction would "shift to the subsequent bona fide

Page 11

purchaser and everyone else the burden of determining [possibly decades after the fact] the genuineness of the grantor's signature and therefore the cost of investigating and perhaps litigating whether or not an unattested deed was in fact signed by the grantor." Id. at 52.

        For these reasons, we answer the certified question in the negative.

        Certified question answered. All the Justices concur.


[4]

OCGA § 44-14-33.   In order to admit a mortgage to record, it must be attested by or acknowledged before an officer as prescribed for the attestation or acknowledgment of deeds of bargain and sale; and, in the case of real property, a mortgage must also be attested or acknowledged by one additional witness. In the absence of fraud, if a mortgage is duly filed, recorded, and indexed on the appropriate county land records, such recordation shall be deemed constructive notice to subsequent bona fide purchasers.

&&&&&&&&&&&&&&&&&&


---------
477 S.E.2d 565 (Ga. 1996)
267 Ga. 300
LEEDS BUILDING PRODUCTS, INC.
v.
SEARS MORTGAGE CORP. et al.
LEEDS BUILDING PRODUCTS, INC.
v.
WEIBLEN.
Nos. S96G0544, S96G0545.
Supreme Court of Georgia.
November 12, 1996
Page 566
[267 Ga. 302] Mark L. Golder, Lynn Lowry Carroll, Seigel & Golder, P.C., Atlanta, for Leeds Building Products, Inc.
[267 Ga. 303] Glen E. Stinson, Dallas, Robert E. Stagg, Jr., Perrie, Buker, Stagg & Jones, Atlanta, for Sears Mortgage Corporation et al.
Larry H. Chesin, Kirwan, Parks, Chesin & Remar, P.C., George E. Butler, II, Carol V. Clark, McCalla, Raymer, Padrick, Cobb, Nichols & Clark, Atlanta, for Amicus Appellant in Nos. S96G0544, S96G0545.
Stuart F. Clayton, Jr., William H. Willson, Jr., Lamberth Bonapfel Cifelli Willson & Stokes, Atlanta, for Amicus Appellee.
Robert E. Stagg, Jr., Perrie, Buker, Stagg & Jones, Atlanta, Glen E. Stinson, Dallas, Robert L. Bunner, Perrie, Buker, Stagg & Jones, P.C., Atlanta, for Albert G. Weiblen.
William H. Dodson, II, Dodson, Feldman & Dorough, Atanta, for Amicus Appellee in No. S96G0545.
THOMPSON, Justice.
These consolidated cases are before the Court from the grant of certiorari to the Court of Appeals in Sears Mtg. Corp. v. Leeds Bldg. Products, Inc., 219 Ga.App. 349, 464 S.E.2d 907 (1995). We hold that a security
Page 567
deed which has no facial defects as to attestation is entitled to be recorded, and once filed, provides constructive notice to subsequent bona fide purchasers. [1]
Sears Mortgage Corporation and other plaintiffs, including Albert Weiblen (collectively "plaintiffs"), purchased or financed purchases of homes from Peach Communities, Inc. ("Peach"), a residential builder. Peach purchased construction materials on credit from Leeds Building Products, Inc. ("Leeds"), and executed security deeds on each of the properties as collateral for the materials. It is without dispute that the deeds were improperly attested or acknowledged because in each instance the person whose signature appears as the unofficial witness to the instrument never observed Peach's representative sign the deeds. Instead, the witness placed her signature on the instruments after they were actually executed. Leeds' attorney duly recorded the deeds. Because a title search failed to disclose the existence of Leeds' security deeds, they were not satisfied when plaintiffs closed on their respective properties.
After Peach filed a Chapter 7 bankruptcy, Leeds alleged a default by Peach as to the deeds to secure debt, and demanded satisfaction from plaintiffs. The present complaints seeking damages for wrongful declaration of default and attempt to foreclose, fraud, and expenses of litigation, were filed after Leeds stated its intention to [267 Ga. 301] foreclose the security deeds if payment in full was not made from the plaintiffs.
The parties in both actions filed cross motions for summary judgment. The trial court granted summary judgment to Leeds and denied plaintiffs' motions. The Court of Appeals affirmed in part and reversed in part, holding that the trial court correctly found no evidence of fraud, [2] but that the court erred in granting summary judgment to Leeds as to its claim for wrongful foreclosure. In that regard, the Court of Appeals ruled that the deeds were not properly attested or acknowledged, and although recorded and regular on their face, they did not provide constructive notice and lost whatever priority they may have had over plaintiffs' title. Sears Mtg., supra.
1. OCGA § 44-2-1 requires that a deed conveying land be recorded in the office of the clerk of the superior court in which the land is located. "A deed may be recorded at any time; but a prior unrecorded deed loses its priority over a subsequent recorded deed from the same vendor when the purchaser takes such deed without notice of the existence of the prior deed." Id. Thus, the filing and recordation of an instrument provides constructive notice to subsequent purchasers of the existence of a prior interest in the property. OCGA § 44-2-2(b).
OCGA § 44-14-61 requires that a deed to secure debt be attested in the same manner as a mortgage in order for the deed to be eligible for recordation. That is, the instrument must be attested by or acknowledged before an officer as prescribed for the attestation or acknowledgment of deeds, and in the case of real property, it must also be attested or acknowledged by an additional witness. OCGA § 44-14-33. Such interests take effect only from the time they are filed for record in the clerk's office. OCGA § 44-2-2(b).
This Court has never squarely considered the effect of a recorded instrument which, although defectively acknowledged, shows no such defect on its face. However, our appellate courts have by implication determined that such a deed constitutes constructive notice. See Glover v. Cox, 137 Ga. 684(3), 73 S.E. 1068 (1912); Nalley Chevrolet, Inc. v. Calif. Bank, 100 Ga.App. 197(3)(a), 110 S.E.2d 577 (1959), overruled on other grounds, Whitehead v. Southern Discount Co., 109 Ga.App. 126(2), 135 S.E.2d 496 (1964). The substance of the notice required must be sufficient to "place a [person] of ordinary prudence fully upon his guard and induce serious inquiry." Gardner v. Granniss, 57 Ga. 539, 557(10) (1876). "It is the
Page 568
published assertion, and not the truth of it, which constitutes notice. When notice is given, [267 Ga. 302] then the deed is good for just what it is worth according to the truth of the case." Johnson v. Johnson, 184 Ga. 783, 784(2), 193 S.E. 345 (1937).
A majority of jurisdictions have recognized that a defect in the acknowledgment of an instrument required for recordation, which is not apparent on the face of the instrument, does not prevent the recordation from providing constructive notice to subsequent bona fide purchasers. See Anno: Record Notice--Acknowledgment, 59 ALR2d 1316, § 25. This rule comports with Georgia's statutory recording scheme, the purpose of which is to protect third parties acting in good faith and without notice who have acquired an interest in the same property. OCGA § 44-2-2(b). The majority rule is also consistent with and better serves modern commercial practice. Thus, we conclude that in the absence of fraud, a deed which, on its face, complies with all statutory requirements is entitled to be recorded, and once accepted and filed with the clerk of court for record, provides constructive notice to the world of its existence.
Higdon v. Gates, 238 Ga. 105, 231 S.E.2d 345 (1976), relied upon by the Court of Appeals, is factually distinguishable and does not compel a contrary result. The critical distinction is that the deed in Higdon showed on its face that a then necessary transfer tax had not been paid to entitle it to record. The deed, which was facially invalid, did not constitute constructive notice to subsequent purchasers.
To the extent that any former cases imply that a latently defective attestation will destroy the constructive notice of an otherwise properly recorded deed, such cases are expressly overruled and will no longer be followed. See e.g., White v. Magarahan, 87 Ga. 217, 13 S.E. 509 (1891); Propes v. Todd, 89 Ga.App. 308, 79 S.E.2d 346 (1953), and their progeny.
2. Weiblen is in no better position because he closed on his property after the Leeds deed was filed with the clerk of court, but before the deed was indexed. Under OCGA § 15-6-66, once a deed is filed, the clerk is required to index it on the grantor-grantee index. " '[A] deed takes effect, as against the interests of third persons without notice, from the time it is "filed for record in the clerk's office; ..." [A]ll that is required of the grantee and all that he can do is to file his deed for record.' " Willie v. Hines-Yelton Lumber Co., 167 Ga. 883, 891, 146 S.E. 901 (1929).
Judgments affirmed in part, and reversed in part.
All the Justices concur.
---------
Notes:
[1] In light of our holding, we need not consider whether the 1995 Amendment to OCGA § 44-14-33 (Ga.L. 1995, p. 1076, § 1.), is to be applied retroactively to these cases.
[2] Affirmance by the Court of Appeals of the trial court's ruling on the absence of fraud is not the before this Court. Accordingly, that aspect of the Court of Appeals' decision is affirmed.
---------
END


Wednesday, May 4, 2011

OCGA § 9-11-68 Low Offer of Settlement Bites Defendant Insurance Company

 


            Apparently, Georgia has at least one Order supporting my prediction of September 26, 2010.

            In my article "Georgia's Offer of Settlement Statute, OCGA § 9‑11‑68.  The Curious Anomaly of a Low Plaintiff's Offer," I predicted these types of outcomes could happen to Defendants who refuse settle.

            Judge Alvin T. Wong, State Court of DeKalb County, chided the Defendant and its insurance company for proceeding to a jury trial in the face of a $12,000.00 Plaintiff’s offer.  The Defendant got spanked by the jury for a $48,081.30 verdict.  In the face of Defendant's rejection of Plaintiff's offer to settle of $12,000.00, Judge Wong noted that the Plaintiff’s exceeded the Defendant's offer by more than 125 percent (as now required by the new Offer of Settlement Statute in Georgia OCGA § 9‑11‑68) and obtained a judgment almost four times that of Defendant's offer.

             Referencing the famous words of David Glasgow Farragut at the Battle of Mobile Bay [1] Judge Wong reminded the Defendant that there was a price to pay for a legal strategy he referred to as "damn the torpedoes, full speed ahead." 

The purpose of O.C.G.A. §9-11-68 is to provide a hammer against a litigant who insists on going forward when everything before him or her, or her counsel, or her insurance carrier says settle it, resolve it. During the morning of the motion hearing, in response to the Court's question, counsel for Plaintiff stated in open court that he would waive the 9-11-68 attorney's fees if the Defendant would simply pay the judgment. Defendant's counsel made phone calls but nothing was offered except to proceed ahead.

Order in Johnson v. Turner, State Court of DeKalb County, State of Georgia Civil Action File No. 08A98178-1, March 14, 2011 at Page 3.  [2] 

While this firm has counseled more than one losing Plaintiff (being Plaintiffs who failed to achieve at least 75 percent plus a dollar of Defendant's offer to settle and had attorney's fees awarded against them), it is refreshing to see that the Statute has, in fact, two sharp edges to this sword. 

A more complete overview of the Offer of Settlement Statute is contained in our publication dated February 4, 2011:  Georgia's Offer of Settlement Statute (OCGA § 9‑11‑68):  Does It Foster Settlements or Encourage "Betting The Line?".

http://hughwood.blogspot.com/2011/02/georgias-offer-of-settlement-statute.html


Hugh Wood, Esq.
Wood & Meredith, LLP
3756 LaVista Road
Suite 250
Atlanta (Tucker), GA 30084
www.woodandmeredith.com
hwood@woodandmeredith.com
www.hughwood.blogspot.comtwitter: USALawyer_
Phone: 404-633-4100
Fax: 404-633-0068

[1]

David Glasgow Farragut (July 5, 1801 – August 14, 1870) was the commander-in-chief of the U.S. Navy during the American Civil War. He was both the first vice admiral and full admiral of the Navy. He is remembered in popular culture for his famous order at the Battle of Mobile Bay.   Not that facts would get in the way of emotions, Farragut’s strategy of “damn the torpedoes,” actually worked at the Battle of Mobile Bay.  Farragut overwhelmed the much smaller Confederate fleet led by Admiral Franklin Buchanan and took Mobile on August 5, 1864.  The actual historical quote was, “Damn the Torpedoes.  Go Ahead.”  However, it is generally cited as “Damn the Torpedoes. Full Speed Ahead.”

[2]

IN THE STATE COURT OF DEKALB COUNTY
STATE OF GEORGIA
URSULA JOHNSON, Plaintiff
vs.        CIVIL ACTION
PAUL TURNER,       FILE, NO.: 08A981784
Defendant.      )
ORDER
Re: Plaintiff's Motion. To Award Attorney's Fees Against Defendant Pursuant To O.C.G.A.§ 9-11-68, filed November 19, 2010, heard 3/10/2011.
In this personal injury action, the jury returned a verdict for $48,081.30 on November 8, 2010, and the Court entered judgment on November 22, 2010. Plaintiff had given the Defendant an offer of judgment of $12,000 pursuant to O.C.G.A. § 9-11-68 on or about July 13, 2010. The offer included settlement of any claims for punitive damages, attorney's fees or expenses. By letter dated August 13, 2010, Defendant rejected the offer and counter-offered $5,000. Because the jury returned a verdict 125% more than Plaintiff's offer of settlement of $12,000, Plaintiff demands attorney's fees in the full amount of the contingency fee contract of 40%. Alternatively, Plaintiff seeks hourly fees totaling $8,875 for Plaintiff's lead counsel and an attorney assisting in the case. The hourly fees claimed were for work done on behalf of the Plaintiff from the date of the rejection of the offer of settlement which was August 13, 2010, through the entry of judgment.
Under O.C.G.A. 911-68, a trial court has the ability to deny an award of attorney's fees if the court finds the offer of judgment was not made in good faith. Although the Defendant argued the offer to settle in the amount of $12,000 was not made in good faith, Defendant failed to articulate the basis for such an argument and did not submit any evidence in support thereof.
Contrary to this assertion, a demand of $12,000 when special damages are in excess of $10,000 seems quite reasonable, Therefore, as a matter of law, Plaintiff is entitled to an award of attorney's fees. The sole question before this Court is how much.
As a matter of law, an attorney cannot collect a contingency fee until the contingency occurs. Typically in personal injury cases, a plaintiff’s attorney is entitled to the contingency attorney's fees when a case is settled or when it is tried to a verdict. Ellerin & Associates v. Bralwey, 263 Ga. App. 860, 861 (2003). Moreover, if the lawyer was discharged by his client before the contingency occurs, absent contractual provisions addressing the payment of fees, the attorney is only entitled to the equitable remedy of quantum meruit under which the attorney can claim reasonable attorney's fees for services rendered on behalf of the client. Amstead v. McFarland, 279 Ga. App. 765, 770-771 (2006).
This is a case where the Defendant did not contest liability. In other words, the Defendant admitted fault in causing the accident. The Defendant was also made aware that medical expenses involved in this case exceeded $10,000 as early as filing of the complaint. It should be noted in defending this case where the only contest is causation of damages, the Defendant failed to put up any medical evidence that Plaintiff was not injured or injured to the extent she contends.
The purpose of O.C.G.A. §9-11-68 is to provide a hammer against a litigant who insists on going forward when everything before him or her, or her counsel, or her insurance carrier says settle it, resolve it. During the morning of the motion hearing, in response to the Court's question, counsel for Plaintiff stated in open court that he would waive the 9-11-68 attorney's fees if the Defendant would simply pay the judgment. Defendant's counsel made phone calls but nothing was offered except to proceed ahead.
There is no reason in this case for the Court not to exercise its discretion and award attorney's fees in the, full amount of the contingency of $19,232,52. The Court recognizes that it has the discretion to award hourly fees of $8,875 which was hourly work done from the date the offer of settlement was rejected until the date the verdict was returned. However, it is well settled law that a plaintiff's attorney is not entitled to a fee until the contingency occurs. This case was tried to a verdict There is no reason the Plaintiff should not recover the full statutory benefit of O.C.G.A. 9-11-68. There is a price for "damn the torpedoes, full speed ahead." The Court orders the Defendant to pay attorney's fees under O.C.G.A. § 9-11-68 in the amount of $19,232.52.

SO ORDERED, this  14- day of March 2011.
ALVIN T. WONG
State Court of DeKalb County

Copy To:
Jason T. Schneider, Esq., [For Plaintiff]
Allison M. McDonald, Esq., [For Defendant]

END