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.
I. OCGA § 9-11-68, GEORGIA'S OFFER OF SETTLEMENT STATUTE
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. 
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; 
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. 
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.
II. RECENT GEORGIA CASES INTERPRETING OCGA § 9-11-68
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.
III. IMPORTANT ISSUES IN INTERPRETING 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.
IV. FEDERAL COURT APPLICATION OF OCGA § 9-11-68
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
Atlanta (Tucker), GA 30084
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
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