Fee Shifting Under the Georgia Rules of Civil Procedure :: 2012 Review of OCGA § 9-11-68

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 and the jury driven homologue to OCGA § 9-15-14, and 4) it will review recent Georgia cases decided under OCGA § 9‑11‑68.  

          This paper will then review some creative moves counsel may use to avoid or mitigate the impact of OCGA § 9‑11‑68; and,

          Then this paper will review separately Rule 68 of the Federal Rules of Civil Procedure: 1) it will review The Rule, 2) it will review that the underlying federal statute must authorize fees, 3) it will review recent Federal (Georgia District) cases, 4) it will review the necessary terms that must be inserted in a federal Offer of Judgment and 5) it will review how OCGA § 9‑11‑68 will be applied in Federal Court.

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.  [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.

          II.      RECENT GEORGIA CASES

INTERPRETING OCGA § 9-11-68

         

A.               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 shocking outcome under OCGA Code § 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. 

B.   Defense Insurance Rejection of Small

Demand for Settlement Results in

Payment of All Plaintiff’s Attorney’s Fees

          The rejection of a low offer of settlement offered by a Plaintiff but rejected by the Insurance Company has resulted in the Defendant (Insurance Company) bearing all the fees associated with the case.

          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.  http://hughwood.blogspot.com/2010/09/georgias-offer-of-settlement-statute.html

          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.  It got hit 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 [4] 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.

Defendant proceeded and lost on a $48,081.30 verdict.  Given the mandatory nature of the award of attorney’s fees, Judge Wong granted the Plaintiff $19,232,52 in attorney’s fees, based on Defendants risk and Defendant’s loss at trial.  Order in Johnson v. Turner, State Court of DeKalb County, State of Georgia Civil Action File No. 08A98178-1, November 22, 2011 at Page 3.  [5] 

C.   Plaintiff’s Rejection of $40,000.00 Offer

Results in $60,291.52 of Defendant’s

Attorney’s Fees

          In O'Leary, et al, v. Whitehall Construction, et al, 288 Ga. 790, 708 SE2d 353 (2011), plaintiffs were saddled with $60,291.52 of defendant's attorney's fees after unsuccessfully trying the case to a defense verdict.  Plaintiffs, homeowners, O'Leary brought a trespass and nuisance action against Whitehall Construction Company alleging that the home Whitehall built next to the O'Leary's home caused excessive storm water runoff.  Apparently, Whitehall corrected the storm water runoff and stopped any form of continuing nuisance.  While the case appears to have been heavily litigated, Whitehall made a $40,000.00 offer pursuant to OCGA § 9-11-68(a) prior to trial. 

          The O'Learys rejected the settlement offer and tried the case to a defense verdict.  After the verdict, Whitehall moved for attorney's fees both under OCGA § 9-15-14(a) and (b) and OCGA § 9-11-68.  The Court, finding that Whitehall had made an appropriate pretrial offer of $40,000.00 and plaintiffs recovered nothing at the trial of the case, awarded defendants its attorney's fees of $60,291.52.  The opinion does not state whether this amount is post-in-time to the rejection of the offer.  Under the terms of the statute, it must be.  Thus, we can assume that there were substantial attorney's fees incurred by the defendant (that were not compensated under OCGA § 9-11-68) from the filing of the Answer to the entry of the Pretrial Order or trial. 

          This case also contains the wicked reminder that the Notice of Appeal must be timely filed.  In the strange world of attorney's fees, the O'Learys filed their Notice of Appeal after the denial of the notice of new trial but it was, unfortunately, too late.  According to the dates in the opinion, defendant obtained a final verdict on October 4, 2007 and the O'Learys moved for a new trial on October 29, 2007.  Then, (apparently within 45 days) Whitehall moved for attorney's fees under OCGA § 9-15-14 and additionally moved for fees under OCGA § 9-11-68.  The court denied the O'Leary's motion for a new trial on March 9, 2009 but did not rule on the attorney's fees issue at that time.  It was not until nine months later that the court issued a ruling on the OCGA 9-15-14 motion and the request for attorney's fees under OCGA § 9‑11‑68.  O'Learys, untimely, filed a Notice of Appeal from the court's ruling on December 31, 2009.  While the court simply referred to the fact that it did not have jurisdiction to review the underlying merits of the case because the Notice of Appeal was untimely pursuant to OCGA § 5-6-38(a), this denial of jurisdiction in an OCGA § 9-11-68 review should remind us all that the filing of post-verdict motions for attorney's fees do not toll the requirement to file a timely Notice of Appeal.  Perhaps, we, as practitioners, are lulled into believing that we need the final order in a case from which to take an appeal.  O'Leary, not only stands for the fact that risking a defense verdict may buy your client $60,000.00 of attorney's fees but also for the wicked reminder that failure to timely file a Notice of Appeal may leave your client with no appellate review. 

D. Courts Struggle With Definition of

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 this Code Section upon us, we must do it.  It is possible that the Georgia Supreme Court will weigh in on this matter in the not too distant future.  

          The most prominent case on point, Great West Cas. Co. v. Bloomfield, ___ S.E.2d ___, No. A11A1454, 2011 WL 6004571 (Ga. Ct. App. , Dec. 1, 2011), is currently pending a determination on a Petition for a Writ of Certiorari, Cert. Appeal No. S12C0624.    If the Supreme Court accepts the case, then expect some guidelines for “in good faith,” and “not in good faith.”  If it declines Certiorari, then expect the morass of confusion to continue in this area.

          I dictated my own version of the Bloomfield, supra, case.  Then I found, Chuck Clay and Michael Paupeck’s version.  While it has a bit of a defense bend, it is quite a masterful overview of the background of how Bloomfield, supra, arrived at the Petition for a Writ of Certiorari.   Thus, I reproduce most of it (not indented) below, as follows:

          “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 Great West Cas. Co. v. Bloomfield, ___ S.E.2d ___, No. A11A1454, 2011 WL 6004571 (Ga. Ct. App. Dec. 1, 2011). 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.” [6]

E.    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 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.  See, Tyler v. Lincoln, 272 Ga. 118, 120-121(1), 527 S.E.2d 180 (2000); Sumitomo Corp. of America v. Deal, 256 Ga.App. 703, 706-707(2), 569 S.E.2d 608 (2002); Baumann v. Snider, 243 Ga.App. 526, 530-531, 532 S.E.2d 468 (2000).

          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. 

F.    A Dismissal Without Prejudice

Does 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.  (Emphasis Supplied).

G.               OCGA § 9-11-68 found 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 Opinion, 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).

          Mr. Justice Carley opined that the Court previously found that OCGA § 9-11-68 may not be applied retroactively in Georgia.

          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.

III.           POTENTIAL CREATIVE SOLUTIONS

TO THE RISK IMPOSED ON

LITIGANTS BY OCGA § 9‑11‑68

                    A.      New Impetus for High/Low Agreements

          It may be that tort cases that generate substantial attorney’s fees on both plaintiff and defendant’s positions pose too must risk to employ any Offer of Settlement pursuant to OCGA § 9-11-68.   That in the minds of counsel some cases will shift too much risk to a proposed jury outcome.  While there appear to be no commentators that have discussed this in the context that OCGA § 9-11-68 in Georgia (because perhaps the statute is too new and was only found constitutional in 2010) a new impetus may develop for the use of “high/low, agreements in the future.  The high/low agreement drafted in the face of an unpleasant OCGA § 9-11-68 Offer of Settlement would (to make any sense under this statute) have to contain the agreement that neither side would pay the other side’s attorney’s fees under a high/low outcome.  That is, the parties would enter in to a garden variety high/low agreement with the caveat that they would pay the high/low agreement and each party would bear its own attorney’s fees. 

          While this author is unaware of any particular statute that authorizes the use of high/low agreements in Georgia, they are clearly discussed and acceptable to the Courts as contracts attempting to settle litigation.  See, Kuhl v. Shepherd, 226 Ga. App. 439, 487 S.E. 2d 68 (1997) referring to the enforceability of a high/low agreement presented to an arbitrator in a personal injury suit.  See also, Dziwura v. Broda, 297 Ga. App. 1, 676 S.E. 2d 400 (2009), allowing for a set-off (previously denied by the trial Court) based on an enforceable high/low agreement entered while jury deliberations were occurring in DeKalb State Court. 

                    B.      Potential Issues of Malpractice

Associated with OCGA § 9-11-68

          OCGA § 9-11-68 Offer of Settlement sets out a new legal malpractice exposure for attorneys practicing in Georgia and representing clients with tort based claims.  The risk of legal malpractice seems, unfortunately, to be more heavily weighted toward plaintiffs counsel’s error than defense counsel error. 

Consider the potential hypothetical where there is a million dollars at risk in a lawsuit.  As the case matures through two years of pretrial discovery and motions both the plaintiff’s attorney and defense attorney have run up $200,000.00 of attorney’s fees respectively.  Assume that offers have been made and refused on behalf of plaintiff and defendant.  Since plaintiff is required to achieve at least 75% percent plus $1.00 of its demand or suffer defendant’s attorney’s fees, plaintiff may be at risk for any type of adverse dismissal causally related to plaintiff’s counsel’s error. 

It would appear (unless we missed something in this analysis) that defendant’s counsel would not be subject to the same risk. 

          Possible Coming Attractions to Georgia.  There is a legal malpractice case in Connecticut that turned on, partially, a legal malpractice suit against the attorney for failing to assert an “Offer of Judgment,” in Federal Court in Connecticut pursuant to the Connecticut Offer of Judgment Rule, Conn. Gen. Stat. Ann. § 52-192(a).   Connecticut law (which is substantive law to be applied in federal court) allowed the recovery of attorney’s fees.   Since the Connecticut lawyer forgot to make the demand and did not recover the extensive attorney’s fees expended, he got sued.   The client won the legal malpractice case and the lawyer ended up owning the client in excess of the phantom of the $200,000 of  fees not collected in the underlying federal case.   Kregos v. Stone, 88 Conn.App. 459, 872 A.2d 901 (2005).

                    C.      An Agreement Not to Use an OCGA § 9-11-68

Offer of Settlement

          It is unclear where the future of the settlement statutes such as Offer of Settlement will develop in the future in Georgia.   In the discussion on Offers of Judgment presented at the Symposium at Mercer Law School in 2006, the use of offers of judgment may develop into “[A] game of mutual assured destruction (“MAD”).”  The author, Yoon, cites:  Wolfgang, K. H. Panofsky, The Mutual Hostage Relationship Between Russia And America, 52 Foreign Affairs 109 (1973).  57 Mercer L. Rev. 825, 828 (2006).   This discussion is fleshed out in the 2011 paper by this author.  [10].

          If the parties in a significant tort based claim are aware that their use of the Georgia Offer of Settlement rule will become a game of Mutually Assured Destruction unrelated to the merits of the case, it is possible that sane, forthright and able counsel may simply enter into an agreement pre-litigation to not use OCGA § 9‑11‑68 in any portion of the proceeding to be filed. 

                    D.      Reinventing the E&O Paradigm to Mitigate

the Effects of OCGA § 9-11-68

          Like the existing risk of legal malpractice that is presently insured by a handful of E&O carriers in Georgia, OCGA § 9-11-68 the Offer of Settlement rule injects yet another risk into the practice of law.  While there is no particular insurance policy that this author knows of that would particularly or specifically bear the risk associated with OCGA § 9-11-68, it may be that some insurance company will offer some form of coverage against this risk.  Or, it may be that this risk is simply an inherent risk of any current lawyer’s E&O policy.  However, the risk of loss or making an incorrect “bet” on the future is probably not due to the “negligence of counsel.”   It is more akin to the inability of human beings to predict the future outcome of a jury verdict within the parameters established by the Georgia General Assembly (75 % to 125 % of the jury verdict outcome).  Whether this potential risk is currently covered by E&O carriers or whether a secondary market will develop as reinsurance on top of existing E&O carriers is something that the future will reveal.

                    E.      Shifting the Risk of OCGA § 9-11-68 to the Client

          For the first time post the Supreme Court’s finding of OCGA § 9-11-68 both constitutional and enforceable in Smith, et al. v. Baptiste, et al., 287 Ga. 23, 694 S.E. 2d 83 (2010), this author’s firm has included a clause in its firm’s fee agreement specifically shifting the risk of an adverse outcome under OCGA § 9-11-68 to the client.  It would appear that both under the State Bar Rules and current extant case law in Georgia, a law firm is allowed to shift the risk of an adverse outcome of an OCGA § 9‑11‑68 Offer of Settlement as long as all of the parameters are disclosed to the client and (the firm additionally) shifts the burden of an adverse outcome to the client.  While this does nothing to mitigate the potential exposure to the underlying clients with regard to OCGA § 9-11-68, it does, perhaps, limit counsel’s exposure to the effects of OCGA § 9-11-68.

IV.    FEDERAL RULE OF CIVIL PROCEDURE 68:

OFFER OF JUDGMENT

      

The Federal Rules of Civil Procedure replaced the Field Code on September 16, 1938.  Fed. R. Civ. P. 68 or Rule 68, “Offer of Judgment,” appeared in its near current form on December 27, 1946. 

          Originally Rule 68 required that a defendant make an Offer of Judgment at least ten (10) days before the date set for trial.  In a revamp to the entire timing sequence of all Federal Rules, the timing in Rule 68 was changed in sub paragraph (a) to require that an Offer of Judgment must be made at least “14 days before the date set for trial.”  An Offer of Judgment must now be served at least fourteen (14) days before the date set for trial. 

          In a case where liability has already been determined but the extent of liability must still be determined by the trial, the party at risk for liability must serve an Offer of Judgment at least fourteen (14) days before the hearing to determine the extent of the offering party’s liability.  Additionally, the change in the Rule now allows fourteen (14) days for the party receiving the offer to accept the Offer of Judgment by serving a written notice of acceptance.  Silverman and DeFranco, 2009 Amendments to Federal Rules of Civil Procedure, The Checkoff, Florida Bar Labor & Employment Law Section, Vol. 69, No. 3 (January 2010).

A.               The Rule

Fed. R. Civ. P. 68 Offer of Judgment Rule reads as follows:

Title VIII. Provisional And Final Remedies

As amended through December 1, 2010

Rule 68. Offer of Judgment

(a) Making An Offer; Judgment On An Accepted Offer. At least 14 days before the date set for trial, a party defending against a claim may serve on an opposing party an offer to allow judgment on specified terms, with the costs then accrued. If, within 14 days after being served, the opposing party serves written notice accepting the offer, either party may then file the offer and notice of acceptance, plus proof of service. The clerk must then enter judgment.

(b) Unaccepted Offer. An unaccepted offer is considered withdrawn, but it does not preclude a later offer. Evidence of an unaccepted offer is not admissible except in a proceeding to determine costs.

(c) Offer After Liability Is Determined. When one party's liability to another has been determined but the extent of liability remains to be determined by further proceedings, the party held liable may make an Offer of Judgment. It must be served within a reasonable time-but at least 14 days-before the date set for a hearing to determine the extent of liability.

(d) Paying Costs After An Unaccepted Offer. If the judgment that the offeree finally obtains is not more favorable than the unaccepted offer, the offeree must pay the costs incurred after the offer was made.  History. As amended Dec. 27, 1946, eff. Mar. 19, 1948; Feb. 28, 1966, eff. July 1, 1966; Mar. 2, 1987, eff. Aug. 1, 1987; Apr. 30, 2007, eff. Dec. 1, 2007; Mar. 26, 2009, eff. Dec. 1, 2009.

B.               The Underlying Federal Statute Must Authorize Fees

          While this author is somewhat reticent to comment on a United States Supreme Court case that is six (6) pages in the majority and fifty (50) some pages in the Dissent, I will wade into that pond.  The 1985 case of Marek v. Estate of Chesny, 473 U.S. 1, 105 S.Ct. 3012, 87 L.Ed.2d 1 (1985), provides a helpful overview of the workings of Fed. R. Civ. P. 68.

          Marek, supra, concerned the application of an Offer of Judgment where the underlying federal statute provided for an award of attorney’s fees.  That analysis differs with the Georgia Offer of Settlement statute because the Georgia statute applies attorney’s fees to any tort case, whereas the Federal Rule does not.

          In Marek, supra, Petitioner police officers (Marek) answered a domestic disturbance and unfortunately shot and killed Chesny, respondent’s, adult son.  Chesny as Administrator for his son’s estate filed suit in federal district court (Chicago, Illinois) under 42 U.S.C. § 1983 and Illinois state law.  Prior to trial, the police officers offered $100,000.00 and Chesny declined to accept it.  At trial, Chesny recovered approximately $60,000.00 which was $40,000.00 less than the Offer of Judgment made by the police officers.  Since Chesny prevailed at trial, his attorneys filed a request for fees pursuant to 42 U.S.C. § 1988 [Proceeding in Vindication of civil rights which provides for an allowance of attorney’s fees to the successful party].  It was denied by the Illinois Federal District Court but granted by the 7th Circuit.  Chesny v. Marek, 720 F.2d 474 (7th Cir. 1983). 

The Police officers then petitioned United States Supreme Court to determine whether they were required to pay attorney’s fees (couched as “costs” under Rule 68) for the period of time after Chesny rejected the Offer.  The Seventh Circuit found that under 42 U.S.C. § 1988 the police officers were required to pay the prevailing attorney’s fees.   720 F.2d 480.   The United States Supreme Court in Marek, 473 U.S. 1, Chief Justice Burger, reversed and indicated that the attorney’s fees were not part of the costs after the Offer.  473 U.S. at 9 – 12.

          While the mechanics of Rule 68 are obvious to any reasonably skilled practitioner employing them, actually obtaining an award granting attorney’s fees is another matter.  The dissent in Marek, 473 U.S. 14,  is interesting in that it provides a laundry list of 63 federal statutes that specifically include attorney’s fees in the Rule 68 scheme for the collection of “costs.”  Marek, 473 U.S. at 44‑48.  [7]

       Additionally, Marek, 473 U.S. at 48-51, provides, in the dissent, a list of 49 federal statutes that specifically exclude attorney’s fees as part of the costs. [8]

          Thus, while initially one might view the word “costs” as filing fees and perhaps expenses and deposition fees, it may very well include “attorney’s fees” under the particular federal statute.  Unlike the Georgia scheme where all reasonable attorney’s fees would be included in an OCGA § 9-11-68 Offer of Settlement, the federal Rules require the practitioner to look to the specific federal statute and determine whether fees are available to be shifted pursuant to that statute and then apply that fee shifting mechanism through Rule 68.

C.               Federal (Georgia) Rule 68 Cases

          The number of cases interpreting Fed. R. Civ. P. 68 in the 11th Circuit is certainly not expansive.  Unless the research has failed us, there appear to only be 12 cases cited from 1983 to the present focusing on the meaning of Fed. R. Civ. P. 68.

          A search for "Offer of Settlement," in the 11th Circuit and in the F. Supp. will take the reader, generally, to an interpretation of the Florida statute.  The federal court has found that the Florida Offer of Settlement statute, is substantive law and may be applied in federal court.  Menchise  v. Senterfitt, et al., 532 F.3d 1146 (11th Cir. 2008).  The number of Florida citations outnumber Georgia citations (and this is a rule of thumb) approximately 20 to 1.  The Florida statute, while not particularly relevant here, is Florida Statute § 768.79 (Offer of Settlement and Demand for Judgment) and its companion rule Florida Rule of Civil Procedure 1.442 (Proposals for Settlement). That statute and its companion civil rule provide the mechanism in Florida for obtaining legal fees and costs when a party in Florida rejects a formal offer to settle the case. 

Florida Statute § 768.79 is a homegrown minefield.  If you or your client find yourself on either side of a Florida offer for judgment, this author strongly suggest you retain competent counsel familiar with presenting and defending Offers of Judgment in Florida.

1.                 Ekeberg v. Donny Shook (2010)

The language and terms of a federal offer are crucial.  In Ekeberg v. Donny Shook-Brown and Stanley Richardson, Defendants the United States District Court for the Northern District of Georgia – Gainesville Division, Civil Action File No. 2:08‑CV‑0195‑RWS (April 15, 2010), Hon. Richard W. Story struggled with an issue on which there was no 11th Circuit authority.  Ekeberg, supra, concerned a 42 USC § 1983 allegation of a prisoner who alleged she was strip searched and fondled in the Towns County Jail.  Toward the end of discovery, the defendants made a Fed. R. Civ. P. 68 Offer of Settlement.  The offer stated as follows:

COMES NOW the defendants, and, pursuant to Rule 68 of the Federal Rules of Civil Procedure, hereby offer to allow judgment to be taken by plaintiff in the amount of $10,500.00 to discharge all claims against all defendants.  This offer is in compromise of strongly disputed and doubtful claims."  Ekeberg, Order of April 15, 2010 at 1.

          Apparently, the offer was mailed regular mail during a period of time that plaintiff was engaged in a day‑by‑day extensive discovery involving depositions.  The economic difference in attorney's fees between the date the offer was mailed and the date plaintiff eventually accepted the offer was many tens of thousands of dollars of additional attorney's time.  Judge Story struggled with the ambiguity under Fed. R. Civ. P. 68 concerning whether the offer made by the defendants stopped the running of all costs and fees or whether the attorney's fees and costs (which were allowed under 42 U.S.C. §§1983 and 1988) continued through the date of the acceptance of the offer.  Judge Story finally resolved this in favor of the plaintiff by providing reference to the old maxim that, “the drafter of the offer was the master of his offer.”  Since it was ambiguous concerning whether costs and attorney's fees would be extended through the date of acceptance, he found against the drafter concerning the ambiguity.   Id.

                             2.       Utility Automation (2002)

          The specific language included in the drafting of the offer is crucial under Fed. R. Civ. P. 68.  In Utility Automation 2000, Inc., v. Choctawhatchee Electric Cooperative, Inc., et al., 298 F.3d 1238 (11th Cir. 2002), the 11th Circuit appears to have allowed an additional $61,000.00 of attorney's fees on top of an accepted Offer of Settlement under Fed. R. Civ. P. 68 for only $45,000.00.  [Note:  The additional $61,000.00 was remanded for a determination of whether it was reasonable and the record does not show what the District Court did on remand.]

          In Utility Automation 2000, (the organization, “UA 2000”)  sued Choctawhatchee Electric Cooperative for misappropriation of trade secrets, breach of contract and intentional interference with business and contractual relationships.  Near trial, defendants made a Fed. R. Civ. P. 68 Offer of Settlement to UA 2000.  It stated:

Defendants … hereby make the following Offer of Settlement pursuant to Fed. R. Civ. P. 68; that defendants shall pay plaintiff [UA 2000] the sum of $45,000.00 and 00/$100.00 ($45,000.00) with costs accrued, and the defendant, Chelco Services, Inc., shall refrain from competing with the plaintiff for a period of thirty (30) days from the date of acceptance of this offer.  298 F.3d 1239, 1240. 

UA 2000 accepted the offer and then subsequent to the acceptance brought a motion for its attorney's fees on top of the $45,000.00.  Its theory was that the $45,000.00 constituted payment for a violation of the Trade Secret Act and that it was entitled to fees as the "prevailing party" for the $61,000.00 it took to get the $45,000.00 award.  Defendant Choctawhatchee Electric Cooperative took the position that the $45,000.00 included the fees.

          The 11th Circuit said the issue was ambiguous and struggled to determine whether these were or were not included.  The 11th Circuit's analysis is lengthy, however it found that the Defendants' offer did not preclude a review of additional fees to the Plaintiff because the offer didn’t specifically prohibit it.  The 11th Circuit found that it had the authority to review it under Marek v. Estate of Chesny, supra, but it really didn’t want to wade into that issue.  Finally, it found that the Trade Secret Act specifically allowed for attorney's fees by statute and that Plaintiff had successfully pled for that relief.  It further found that by the offer of the $45,000.00 by defendant and acceptance of the $45,000.00 by Plaintiff, Plaintiff became the "prevailing party" under the Trade Secret Act.  Therefore, the 11th Circuit found that the additional attorney's fees or $61,000.00 of attorney's fees necessary to obtain the award should be awarded.  While the "reasonableness," was remanded to the District Court, the 11th Circuit wrote in warning to all practitioners who draft Fed. R. Civ. P. 68 offers of judgment the following:

We note, as have other Courts, that defendants can easily preempt the dispute exemplified here, as well as others, by clearly stating their intent in the Offer of Settlement.  We echo the 7th Circuit in cautioning that '[t] the prudent defendant … will mention [attorney's fees] explicitly, in order to head off the type of appeal that we are wrestling with here.  Nordby, v. Anchor Hocking Packaging Company, 199 F.3d 390, 393 (7th Cir. 1999).  Lastly, we have not had occasion to determine whether the amount UA 2000 requests for attorney's fees – approximately $61,000.00 – is in fact a reasonable sum.  Therefore, in remanding to the District Court, we do so with the expectation the District Court will determine a suitable amount of attorney's fees.  298 F.3d. 1240. 

Both Ekeberg, being only a district order, and Utility Automation 2000, surpa, strongly caution against the drafting of an ambiguous offer in federal Court.  If the practitioner wishes to make an offer that includes attorney's fees and costs in the Fed. R. Civ. P. 68 offer, the United States District Court for the Northern District of Georgia and the 11th Circuit strongly encourage the practitioner to state with specificity the inclusion or non‑inclusion of attorney's fees in its offer.

3.                 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, the Honorable Timothy C. Batten, Sr., 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 Judge Batten 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.  Citing, 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.

D.   11^th Circuit Certifies Florida’s Attorney Fee

Statutes to Florida Supreme Court for Guidance

          While this overview is about Georgia law, it is worth noting that the 11^th Circuit spent months trying to reconcile an Offer under the Florida Offer of Judgment and Demand for Judgment Statute.  Fla. Anno. Stat.  § 768.79 (2003).  [9]   The 11^th Circuit struggled with the fact that the “offer,” seemed to comply with the substance of the law in Florida, but not the procedure.  A federal court, sitting in diversity must apply substance, but may avoid the procedural nuances of the home state. 

          In certifying the case, the 11^th Circuit wrote:

In this diversity case, we certify four questions to the Florida Supreme Court, seeking guidance as to the application of Florida's offer of judgment statute, Fla. Stat. § 768.79, Florida Rule of Civil Procedure 1.442, and the fee-shifting provision of the Florida Deceptive and Unfair Trade Practices Act (" FDUTPA" ), Fla. Stat. § 501.2105.

First, we ask whether an offer of judgment may be viable when it purports to settle " all claims," even though it does not [Page 1256]

explicitly " state whether the proposal includes attorneys' fees and whether attorneys' fees are part of the legal claim" as required by Rule 1.442(c)(2)(F). Second, we ask whether the offer of judgment statute, which applies in " any civil action for damages" but generally does not apply to a case seeking both damages and non-monetary relief, applies to a lawsuit seeking damages or, in the alternative, specific performance. Third, we ask whether the FDUTPA's fee-shifting provision applies to an action with the following procedural history: the plaintiff filed an action alleging a FDUTPA claim and prosecuted that claim for seven months; the district court ruled at summary judgment that he could not pursue the FDUTPA claim because Florida law did not apply, but allowed him to prosecute the action under Arizona's unfair trade practices law instead; then he lost on the Arizona unfair trade practices claim at trial. Finally, if the FDUTPA's fee-shifting provision does apply, we ask whether it applies only to fees incurred during the seven months before the plaintiff's FDUTPA claim was defeated at summary judgment, or also to fees incurred during the subsequent litigation.

We certify these questions because we are unable to find definitive answers in clearly established Florida law as set forth in case law or statutes.  

Alan Horowitch v. Diamond Aircraft Industries, Inc., 645 F.3d 1254 (11th Cir. 2011).

          V.      CONCLUSION

          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 theoretical aspects concerning whether the Offer of Settlement statute  and has reviewed its 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.

          This paper has also reviewed the similar Offer of Judgment rule in federal court:  Fed. R. Civ. P. 68.  It has contrasted the Georgia rule to the Federal Rule and shown that while attorney’s fees may be recovered in federal court the recovery in federal court may turn on the federal statute in litigation in federal court as opposed to merely using the federal Offer of Judgment.   Finally, the paper has shown that the Georgia Offer of Settlement has been determined to be substantive law in the federal court and it has reminded practitioners of the importance of being accurate in making a federal Offer of Judgment. [10]

          Hugh Wood, Esq.

          Atlanta, GA

          January , 2012

ENDNOTES

[1]

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.

[2]

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.  

[3]

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.

[4]

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.”

[5]

[ A search in January of 2012 does not show an Appeal of this case.]

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]

[6]

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.

[7]

A.      Attorney's Fees Referred to as "Costs"

        1. Freedom of Information Act, 5 U.S.C. §§ 552(a)(4)(E) and (F).

        2. Privacy Act of 1974, 5 U.S.C. §§ 552a(g)(2)(B), 552a(g)(4)(B)

        3. Government in the Sunshine Act, 5 U.S.C. § 552b(i).

        4. Commodity Exchange Act, 88 Stat. 1394, as amended, 7 U.S.C. §§ 18(d) and (e).

        5. Packers and Stockyard Act of 1921, 42 Stat. 166, as amended, 7 U.S.C. § 210(f).

        6. Perishable Agricultural Commodities Act of 1930, 46 Stat. 534, as amended, 7 U.S.C. § 499g(b).

        7. Agricultural Fair Practices Act of 1967, 82 Stat. 95, 7 U.S.C. §§ 2305(a) and (c).

        8. Home Owners' Loan Act of 1933, 48 Stat. 132, as amended, 12 U.S.C. § 1464(q)(3).

        9. Bank Holding Company Act Amendments of 1970, 84 Stat. 1767, 12 U.S.C. § 1975.

        10. Clayton Antitrust Act, 38 Stat. 731, as amended, 15 U.S.C. §§ 15(a) and (b). 

        11. Hart-Scott-Rodino Antitrust Improvements Act of 1976, 90 Stat.

1394, 1396, as amended, 15  U.S.C. §§ 15c(a)(2), 26.

        12. Unfair Competition Act of 1916, 39 Stat. 798, 15 U.S.C. § 72.

        13. Securities Act of 1933, 48 Stat. 82, as amended, 15 U.S.C. § 77k(e).

        14. Trust Indenture Act of 1939, 53 Stat. 1171, 1176, 15 U.S.C. §§ 77ooo(e), 77www(a).

        15. Securities Exchange Act of 1934, 48 Stat. 890, 898, as amended, 15 U.S.C. §§ 78i(e), 78r(a).

        16. Jewelers Hall-Mark Act, 34 Stat. 262, as amended, 15 U.S.C. §§ 298(b)-(d).

        17. Consumer Product Safety Act, 86 Stat. 1218, 1226, as amended,

15 U.S.C. §§ 2060(c) and (f), 2072(a), 2073.

        18. Hobby Protection Act, 87 Stat. 686, 15 U.S.C. § 2102.

        19. Export Trading Company Act of 1982, 96 Stat. 1243, 15 U.S.C. §§ 4016(b)(1) and (4).

        20. National Cooperative Research Act of 1984, 98 Stat. 1817,

 15 U.S.C. §§ 4304(a) and (b)(1982ed., Supp. III).

        21. National Historic Preservation Act Amendments of 1980, 94 Stat. 3002, 16 U.S.C. § 470w-4.

        22. Endangered Species Act of 1973, 87 Stat. 897, as amended, 16 U.S.C. § 1540(g)(4).

        23. Public Utility Regulatory Policies Act of 1978, 92 Stat. 3129, 16 U.S.C. §§ 2632(a) and (b).

        24. Copyright Act of 1976, 90 Stat. 2586, 17 U.S.C. § 505.

        25. Semiconductor Chip Protection Act of 1984, 98 Stat. 3353,

17 U.S.C. § 911(f) (1982 ed., Supp. III).

        26. Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1964(c).

        27. Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. § 2520.

        28. Jury System Improvement Act of 1978, 28 U.S.C. § 1875(d)(2).

        29. Rehabilitation Act of 1973, 92 Stat. 2982, 29 U.S.C. § 794a(b).

        30. Surface Mining Control and Reclamation Act of 1977, 91 Stat. 503, 30 U.S.C. § 1270(d).

        31. Deep Seabed Hard Mineral Resources Act, 94 Stat. 573, 30 U.S.C. § 1427(c).

        32. Federal Oil and Gas Royalty Management Act of 1982, 96 Stat. 2458, 30 U.S.C. § 1734(a)(4).

        33. Federal Water Pollution Control Act, 86 Stat. 888, 33 U.S.C. § 1365(d).

        34. Marine Protection, Research, and Sanctuaries Act of 1972, 86 Stat. 1057, 33 U.S.C. § 1415(g)(4).

        35. Deepwater Ports Act of 1974, 88 Stat. 2141, 33 U.S.C. § 1515(d).

        36. Act to Prevent Pollution from Ships, 94 Stat. 2302, 33 U.S.C. § 1910(d).

        37. Safe Drinking Water Act, 88 Stat. 1690-1691, as amended,

42 U.S.C. §§ 300j-8(d), 300j-9(2)(B)(i) and (ii).

        38. Voting Rights Act of 1965, 79 Stat. 445, as amended, 42 U.S.C. § 19731(e).

        39. The Civil Rights Attorney's Fees Awards Act of 1976,

90 Stat. 2641, 42 U.S.C. § 1988.

        40. Civil Rights of Institutionalized Persons Act, 94 Stat. 350-351, 42 U.S.C. §§ 1997a(b), 1997c(d).

        41. Title II of the Civil Rights Act of 1964, 78 Stat. 244, 42 U.S.C. § 2000a-3(b).

        42. Title III of the Civil Rights Act of 1964, 78 Stat. 246, 42 U.S.C. § 2000b-1.

        43. Title VII of the Civil Rights Act of 1964, 78 Stat. 261, 42 U.S.C. § 2000e-5(k).

        44. Privacy Protection Act of 1980, 94 Stat. 1880, 42 U.S.C. § 2000aa-6(f).

        45. Noise Control Act of 1972, 86 Stat. 1244, 42 U.S.C. § 4911(d).

        46. Comprehensive Older Americans Act Amendments of 1978,
              92 Stat. 1555, 42 U.S.C. § 6104(e)(1).

        47. Energy Policy and Conservation Act, 89 Stat. 930, 42 U.S.C. § 6305(d).

        48. Resource Conservation and Recovery Act of 1976, 90 Stat. 2826, 42 U.S.C. § 6972(e).

        49. Clean Air Act, 84 Stat. 1686, 1706-1707, 42 U.S.C. §§ 7413(b), 7604(d), 7607(f).

        50. Clean Air Act Amendments of 1977, 91 Stat. 784, 42 U.S.C. § 7622(e)(2).

        51. Powerplant and Industrial Fuel Use Act of 1978, 92 Stat. 3335, 42 U.S.C. § 8435(d).

        52. Ocean Thermal Energy Conversion Act of 1980, 94 Stat. 990, 42 U.S.C. § 9124(d).

        53. Outer Continental Shelf Lands Act Amendments of 1978, 92 Stat. 657, 43 U.S.C. § 1349(a)(5).

        54. Railway Labor Act of 1926, 44 Stat. 578, as amended, 45 U.S.C. § 153(p).

        55. Shipping Act of 1916, 39 Stat. 737, as amended, 46 U.S.C. § 829.

        56. Merchant Marine Act of 1936, 49 Stat. 2015, as amended, 46 U.S.C. § 1227.

        57. Shipping Act of 1984, 98 Stat. 3132, 46 U.S.C.App. § 1710(h)(2) (1982 ed., Supp. III).

        58. Communications Act of 1934, 48 Stat. 1072, 1095, 47 U.S.C. §§ 206, 407.

        59. Cable Communications Policy Act of 1984, 98 Stat. 2779,

47 U.S.C. §§ 553(c)(2), 605(d)(3)(B) (1982 ed., Supp. III).

        60. Natural Gas Pipeline Safety Act, 90 Stat. 2076, as amended, 49 U.S.C.App. § 1686(e).

        61. Hazardous Liquid Pipeline Safety Act of 1979, 93 Stat. 1015, 49 U.S.C.App. § 2014(e).

        62. Interstate Commerce Act, 49 U.S.C. §§ 11705(d)(3), § 11710(b).

        63. Foreign Intelligence Surveillance Act of 1978, 92 Stat. 1796, 50 U.S.C. § 1810(c).

[8]

B.      Attorney's Fees Not Referred to as "Costs"

        1. Privacy Act of 1974, 5 U.S.C. § 552a(g)(4)B.

        2. Plant Variety Act, 84 Stat. 1556, 7 U.S.C. § 2565.

        3. Bankruptcy Act of 1978, as amended, 11 U.S.C. §§ 303(i), 362(h), 363(n), 523(d).

        4. Home Owners' Loan Act of 1933, 48 Stat. 132, as amended, 12 U.S.C. § 1464(d)(8)(A).

        5. National Housing Act, 48 Stat. 1260, as amended, 12 U.S.C. § 1730(m)(3).

        6. Federal Credit Union Act, 84 Stat. 1010, as amended, 12 U.S.C. 1786(p).

        7. Federal Deposit Insurance Act, 64 Stat. 879, as amended, 12 U.S.C. § 1818(n).

        8. Real Estate Settlement Procedures Act of 1974,

88 Stat. 1728, as amended, 12 U.S.C. § 2607(d)(2)(b).

        9.  Right to Financial Privacy Act of 1978, 92 Stat. 3708, 3789, 12 U.S.C. §§ 3417(a)(4), 3418.

        10. Securities Exchange Act of 1934, 48 Stat. 899, as amended, 15 U.S.C. § 78u(h)(8).

        11. Trademark Act, 60 Stat. 439, as amended, 15 U.S.C. § 1117.

        12. National Traffic and Motor Vehicle Safety Act of 1966, 80 Stat. 724, 15 U.S.C. § 1400(b).

        13. Truth-in-Lending Act, 82 Stat. 157, as amended, 15 U.S.C. § 1640(a).

        14. Consumer Leasing Act, 90 Stat. 259, 15 U.S.C. § 1667b(a).

        15. Consumer Credit Protection Act, 84 Stat. 1134, 15 U.S.C. §§ 168m(3), 1681o(2).

        16. Consumer Credit Protection Act, 88 Stat. 1524, 15 U.S.C. § 1691e(d).

        17. Consumer Credit Protection Act, 91 Stat. 881, 15 U.S.C. § 1692k(a).

        18. Electronic Fund Transfer Act, 92 Stat. 3737, 15 U.S.C. §§ 1693m(a) and (f).

        19. Interstate Land Sales Full Disclosure Act, 82 Stat. 595, as amended, 15 U.S.C. § 1709(c).

        20. Motor Vehicle Information and Cost Savings Act,

86 Stat. 955, 963, as amended, 15 U.S.C. §§ 1918(a), 1989(a)(2).

        21. Toxic Substances Control Act, 90 Stat. 2039, 2041-2042,

15 U.S.C. §§ 2618(d), 2619(c)(2), 2020(b)(4)(C).

        22. Petroleum Marketing Practices Act, 92 Stat. 331, 15 U.S.C. §§ 2805(d)(1) and (3).

        23. Condominium and Cooperative Abuse Relief Act of 1980,

94 Stat. 1677, 1679, 15 U.S.C. §§ 3608(d), 3611(d).

        24. Alaska National Interest Lands Conservation Act, 94 Stat. 2426, 16 U.S.C. § 3117(a).

        25. Navajo and Hopi Indian Relocation Amendments Act of 1980,

 94 Stat. 934, 25 U.S.C. § 640d-27(b).

        26. Tax Reform Act of 1976, 90 Stat. 1665, 26 U.S.C. § 6110(i)(2).

        27. Judicial Code, 28 U.S.C. § 1927.

        28. Equal Access to Justice Act, 28 U.S.C. § 2412(b).

        29. Norris-LaGuardia Act, 47 Stat. 71, 29 U.S.C. § 107.

        30. Fair Labor Standards Act of 1938, 52 Stat. 1069, as amended, 29 U.S.C. § 216(b).

        31. Labor-Management Reporting and Disclosure Act of 1959, 73 Stat. 524, 29 U.S.C. § 431(c).

        32. Age Discrimination in Employment Act of 1967, 81 Stat. 604, as amended, 29 U.S.C. § 626(b).

        33. Employee Retirement Income Security Act of 1974,

88 Stat. 891, as amended, 29 U.S.C. § 1132(g).

        34. Multiple Mineral Development Act, 68 Stat. 710, 30 U.S.C. § 526(e).

        35. State and Local Fiscal Assistance Act of 1972, 86 Stat. 919, as amended, 31 U.S.C. § 6721(c).

        36. Longshoremen's and Harbor Workers' Compensation Act,

44 Stat. 1438, as amended, 33 U.S.C. § 928(a).

        37. Patent Infringement Act, 66 Stat. 813, 35 U.S.C. § 285.

        38. Servicemen's Group Life Insurance Act, 72 Stat. 1165, 38 U.S.C. § 784(g).

        39. Social Security Act, 49 Stat. 624, as amended, 42 U.S.C. § 406(b).

        40. Atomic Energy Act of 1954, 68 Stat. 946, 42 U.S.C. § 2184.

        41. Legal Services Corporation Act, 88 Stat. 381, as amended, 42 U.S.C. § 2996e(f).

        42. Fair Housing Act of 1968, 82 Stat. 88, 42 U.S.C. § 3612(c).

        43. Mobile Home Construction and Safety Standards Act,

88 Stat. 706, as amended, 42 U.S.C. § 5412(b).

        44. Comprehensive Environmental Response, Compensation,

and Liability Act of 1980, 94 Stat. 2792, 42 U.S.C. § 9612(c)(3).

        45. Outer Continental Shelf Lands Act Amendments of 1978,

92 Stat. 658, 682, 43 U.S.C. §§ 1349(b)(2), 1818(c)(1)(C).

        46. Alaska National Interest Lands Conservation Act,

94 Stat. 2430, 43 U.S.C. § 1631(c).

        47. Act of Mar. 2, 1897, 29 Stat. 619, 48 U.S.C. § 1506.

        48. Interstate Commerce Act, 49 U.S.C. § 11708(c).

        49. Household Goods Transportation Act of 1980,

94 Stat. 2016, as amended, 49 U.S.C. §§ 11711(d) and (e).

[9]

Florida Annotated Statutes § 768.79 (2003)

§ 768.79: Offer of judgment and demand for judgment

(1) In any civil action for damages filed in the courts of this state, if a defendant files an

offer of judgment which is not accepted by the plaintiff within 30 days, the defendant shall be entitled

to recover reasonable costs and attorney's fees incurred by her or him or on the defendant's behalf

pursuant to a policy of liability insurance or other contract from the date of filing of the offer if the

judgment is one of no liability or the judgment obtained by the plaintiff is at least 25 percent less than

such offer, and the court shall set off such costs and attorney's fees against the award. Where such

costs and attorney's fees total more than the judgment, the court shall enter judgment for the defendant

against the plaintiff for the amount of the costs and fees, less the amount of the plaintiff's award. If a

plaintiff files a demand for judgment which is not accepted by the defendant within 30 days and the

plaintiff recovers a judgment in an amount at least 25 percent greater than the offer, she or he shall

be entitled to recover reasonable costs and attorney's fees incurred from the date of the filing of the

demand. If rejected, neither an offer nor demand is admissible in subsequent litigation, except for

pursuing the penalties of this section.

(2)           The making of an offer of settlement which is not accepted does not preclude the

making of a subsequent offer. An offer must:

(a)           Be in writing and state that it is being made pursuant to this section.

(b)           Name the party making it and the party to whom it is being made.

(c)           State with particularity the amount offered to settle a claim for punitive

damages, if any.

(d)           State its total amount.

The offer shall be construed as including all damages which may be awarded in a final

judgment.

(3)           The offer shall be served upon the party to whom it is made, but it shall not be filed

unless it is accepted or unless filing is necessary to enforce the provisions of this section.

(4) An offer shall be accepted by filing a written acceptance with the court within 30 days

after service. Upon filing of both the offer and acceptance, the court has full jurisdiction to enforce the

settlement agreement.

(5)           An offer may be withdrawn in writing which is served before the date a written

acceptance is filed. Once withdrawn, an offer is void.

(6)           Upon motion made by the offeror within 30 days after the entry of judgment or after

voluntary or involuntary dismissal, the court shall determine the following:

(a)           If a defendant serves an offer which is not accepted by the plaintiff, and if the

judgment obtained by the plaintiff is at least 25 percent less than the amount of the offer, the defendant

shall be awarded reasonable costs, including investigative expenses, and attorney's fees, calculated in

accordance with the guidelines promulgated by the Supreme Court, incurred from the date the offer

was served, and the court shall set off such costs in attorney's fees against the award. When such costs

and attorney's fees total more than the amount of the judgment, the court shall enter judgment for the

defendant against the plaintiff for the amount of the costs and fees, less the amount of the award to the

plaintiff.

(b)           If a plaintiff serves an offer which is not accepted by the defendant, and if the

judgment obtained by the plaintiff is at least 25 percent more than the amount of the offer, the plaintiff

shall be awarded reasonable costs, including investigative expenses, and attorney's fees, calculated in

accordance with the guidelines promulgated by the Supreme Court, incurred from the date the offer was

served.

For purposes of the determination required by paragraph (a), the term "judgment

obtained" means the amount of the net judgment entered, plus any postoffer collateral source payments

received or due as of the date of the judgment, plus any postoffer settlement amounts by which the

verdict was reduced. For purposes of the determination required by paragraph (b), the term "judgment

obtained" means the amount of the net judgment entered, plus any postoffer settlement amounts by

which the verdict was reduced.

(7) (a) Ha party is entitled to costs and fees pursuant to the provisions of this section,

the court may, in its discretion, determine that an offer was not made in good faith. In such case, the

court may disallow an award of costs and attorney's fees.

(b) When determining the reasonableness of an award of attorney's fees pursuant

to this section, the court shall consider, along with all other relevant criteria, the following additional

factors:

1.             The then apparent merit or lack of merit in the claim.

2.             The number and nature of offers made by the parties.

3.             The closeness of questions of fact and law at issue.

4.             Whether the person making the offer had unreasonably refused to

furnish information necessary to evaluate the reasonableness of such offer.

5.             Whether the suit was in the nature of a test case presenting questions

of far-reaching importance affecting nonparties.

6.             The amount of the additional delay cost and expense that the person

making the offer reasonably would be expected to incur if the litigation should be prolonged.

(8)           Evidence of an offer is admissible only in proceedings to enforce an accepted offer or

to determine the imposition of sanctions under this section.

Florida Rule of Civil Procedure 1.442

Rule 1.442: Proposals for Settlement

(a) Applicability. This rule applies to all proposals for settlement authorized by Florida

law, regardless of the terms used to refer to such offers, demands, or proposals, and supersedes all other

provisions of the rules and statutes that may be inconsistent with this rule.

(b) Service of Proposal. A proposal to a defendant shall be served no earlier than 90 days

after service of process on that defendant; a proposal to a plaintiff shall be served no earlier than 90 days

after the action has been commenced. No proposal shall be served later than 45 days before the date set

for trial or the first day of the docket on which the case is set for trial, whichever is earlier.

(c)           Form and Content of Proposal for Settlement.

(1)           A proposal shall be in writing and shall identify the applicable Florida law

under which it is being made.

(2)           A proposal shall:

(A)          name the party or parties making the proposal and the party or parties

to whom the proposal is being made;

(B)          identify the claim or claims the proposal is attempting to resolve;

(C)          state with particularity any relevant conditions;

(D)          state the total amount of the proposal and state with particularity all

nonmonetary terms of the proposal;

(E)           state with particularity the amount proposed to settle a claim for

punitive damages, if any;

(F)           state whether the proposal includes attorneys' fees and whether

attorneys' fees are part of the legal claim; and

(G)          include a certificate of service in the form required by rule 1.080(0.

(3) A proposal may be made by or to any party or parties and by or to any

combination of parties properly identified in the proposal. A joint proposal shall state the amount and

terms attributable to each party.

(d)           Service and Filing. A proposal shall be served on the party or parties to whom it is

made but shall not be filed unless necessary to enforce the provisions of this rule.

(e)           Withdrawal. A proposal may be withdrawn in writing provided the written withdrawal

is delivered before a written acceptance is delivered. Once withdrawn, a proposal is void.

(f)            Acceptance and Rejection.

(1)           A proposal shall be deemed rejected unless accepted by delivery of a written

notice of acceptance within 30 days after service of the proposal. The provisions of rule 1.090(e) do

not apply to this subdivision. No oral communications shall constitute an acceptance, rejection, or

counteroffer under the provisions of this rule.

(2)           In any case in which the existence of a class is alleged, the time for acceptance of

a proposal for settlement is extended to 30 days after the date the order granting or denying certification

is filed.

(g) Sanctions. Any party seeking sanctions pursuant to applicable Florida law, based on

the failure of the proposal's recipient to accept a proposal, shall do so by serving a motion in accordance

with rule L525.

(h)           Costs and Fees.

(I) If a party is entitled to costs and fees pursuant to applicable Florida law, the

court may, in its discretion, determine that a proposal was not made in good faith. In such ease, the court

may disallow an award of costs and attorneys' fees.

(2) When determining the reasonableness of the amount of an award of attorneys'

fees pursuant to this section, the court shall consider, along with all other relevant criteria, the following

factors:

(A)          The then-apparent merit or lack of merit in the claim.

(B)          The number and nature of proposals made by the parties.

(C)          The closeness of questions of fact and law at issue.

(D)          Whether the party making the proposal had unreasonably refused to

furnish information necessary to evaluate the reasonableness of the proposal.

(E)           Whether the suit was in the nature of a test case presenting questions

of far-reaching importance affecting nonparties.

(F)           The amount of the additional delay cost and expense that the party

making the proposal reasonably would be expected to incur if the litigation were to be prolonged.

(i)            Evidence of Proposal. Evidence of a proposal or acceptance thereof is admissible only

in proceedings to enforce an accepted proposal or to determine the imposition of sanctions.

(j)            Effect of Mediation. Mediation shall have no effect on the dates during which parties

are permitted to make or accept a proposal for settlement under the terms of the rule.

[10]

In my previous overview of this statute, OCGA § 9-11-68, I wrote extensively on whether OCGA § 9-11-68 is, in fact, a gaming statute, whether it is “fair,” since no one can control its application, whether it and similar statutes reduce litigation and what empirical studies (including Nevada’s day to day real life study) show about OCGA § 9-11-68 and similar statutes.  If the reader is interested, 30 or 40 additional pages review these aspects of OCGA § 9-11-68 may be found in the 2010 ICLEGA Article I wrote on OCGA § 9-11-68, but that are not again reproduce herein.  

END

OCGA Sec. 13-6-11 Attorney's Fees Are Generally for A Jury

In the land of attorney’s fees, the Georgia Supreme Court held that attorney’s fee sought for by a litigant under OCGA § 13-6-11 may not be awarded by the Court, sitting without a jury, IF the issue associated with the OCGA § 13-6-11 attorney’s fees is a pure jury issue.  If the issue is a mere bench trial issue (where the trial court may sit as the trier of fact) the Court may rule upon and issue OCGA §13-6-11 attorney’s fees.   This provides a significant new defense against challenges for attorney's fees, if the issue is a pure jury fact issue on which fees are sought.
See:

696 S.E.2d 649 (Ga. 2010)
287 Ga. 445
COVINGTON SQUARE ASSOCIATES, LLC
v.
INGLES MARKETS, INC.
No. S10G0459.
Supreme Court of Georgia.
June 28, 2010
Page 650
Michael A. Kessler, Alpharetta, for appellant.
Adam N. Struletz, Atlanta, for appellee.
CARLEY, Presiding Justice.
Covington Square Associates, LLC (Covington) leased space in a
shopping center to Ingles Markets, Inc. (Ingles). After selling the
shopping center in 2004, Covington brought suit against Ingles for
damages allegedly resulting from its failure to pay a portion of the
cost to hire a security guard. In December 2005, Ingles mistakenly
sent a check for its portion of real estate taxes to Covington instead
of the new landlord. Ingles notified Covington of the mistake and
demanded return of the funds. However, Covington retained the funds as
partial payment of the claimed security costs. Ingles then filed this
action for conversion, attorney fees pursuant to OCGA § 13-6-11, and
punitive damages, which was stayed pending the outcome of the other
litigation. That litigation ended when the Court of Appeals affirmed
the grant of Ingles' motion for summary judgment, ruling that the
lease did not require payment of security guard expenses. Covington
Square Assoc. v. Ingles Markets, 283 Ga.App. 307, 641 S.E.2d 266
(2007).
Thereafter, the trial court in the case at bar granted partial summary
judgment in favor of Ingles, ruling that Covington wrongfully asserted
dominion or control over Ingles' property and that Ingles is entitled
to attorney fees and punitive damages, but leaving for trial
determination of the amounts thereof. The trial court based its
attorney fees ruling on the fact that Covington refused to refund the
money despite the outcome of the other litigation and caused Ingles
the unnecessary trouble and expense of bringing suit where no bona
fide controversy existed.
The Court of Appeals affirmed the trial court's rulings as to the
conversion claim and attorney fees, but reversed as to punitive
damages. With respect to attorney fees, the Court of Appeals held that
they can be awarded on summary judgment if the movant is entitled to
them as a matter of law and that, " [a]pplying the any evidence
standard under these circumstances, [cit.] the trial court did not err
in ruling that Ingles was entitled to attorney fees as a matter of
law...." Covington Square Assoc. v. Ingles Markets, 300 Ga.App. 740,
744(2), 686 S.E.2d 359 (2009). Having granted certiorari to review
this holding, we conclude that the language of OCGA § 13-6-11 prevents
a trial court from ever determining that a claimant is entitled to
attorney fees as a matter of law.
[287 Ga. 446] In its entirety, OCGA § 13-6-11 provides as follows:
The expenses of litigation generally shall not be allowed as a part of
the damages; but where the plaintiff has specially pleaded and has
made prayer therefor and where the defendant has acted in bad faith,
has been stubbornly litigious, or has caused the plaintiff unnecessary
trouble and expense, the jury may allow them.
For many years, the Court of Appeals has recognized that " [t]he
intent of the law, as shown by the words, ‘ the jury may allow them,’
is to leave the matter of expenses of litigation to the jury trying
the case. [Cit.]" Taylor v. Estes, 85 Ga.App. 716, 719(2), 70 S.E.2d
82 (1952). See also Hyde v. Gill, 236 Ga.App. 729, 734(3), 513 S.E.2d
278 (1999); American Medical Transport Group v. Glo-An, 235 Ga.App.
464, 467(3), 509 S.E.2d 738 (1998); J.M. Clayton Co. v. Martin, 177
Ga.App. 228, 232(6), 339 S.E.2d 280 (1985); Brannon Enterprises v.
Deaton, 159 Ga.App. 685, 687, 285 S.E.2d 58 (1981); Sapp v. Howe, 79
Ga.App. 1, 3(4), 52 S.E.2d 571 (1949); Patterson & Co. v. Peterson, 15
Ga.App. 680, 684(4), 84 S.E. 163 (1915).
As a result, " ‘ it has long been held ... that in suits where the
expenses of litigation might be recovered as part of the damages, it
is error for the trial court to direct a verdict therefor. The matter
of such expenses is left solely to the jury. (Cits.)’ [Cit.]" Polma,
Inc. v. Coastal Canvas Products Co., 199 Ga.App. 616, 618(7), 405
S.E.2d 531 (1991). See also Tab Sales v. D & D Distrib., 153 Ga.App.
779, 780(2), 266 S.E.2d 558 (1980); Patterson & Co. v. Peterson,
supra. Whether a plaintiff has " met any of the preconditions for an
award of attorney fees and litigation expenses set forth in OCGA § 13
-6-11[is] solely a question for the
Page 651
jury. [Cit.]" City of Atlanta v. Broadnax, 285 Ga.App. 430, 440(6),
646 S.E.2d 279 (2007) (affirming judgment on jury verdict in favor of
defendant). " [S]uch an award under this statute necessitates jury
determination. [Cits.]" Fontaine Condo. Assn. v. Schnacke, 230 Ga.App.
469, 471(3), 496 S.E.2d 553 (1998) (vacating trial court's award of
attorney fees after it denied jury trial thereon).
Consistent with this precedent, the Court of Appeals has correctly
held that, because both the liability for and amount of attorney fees
pursuant to OCGA § 13-6-11 are solely for the jury's determination, a
trial court is not authorized to grant summary judgment in favor of a
claimant therefor. Hyde v. Gill, supra; American Medical Transport
Group v. Glo-An, supra; Page v. HSI Financial Svcs., 218 Ga.App. 283,
286(5), 461 S.E.2d 239 (1995), rev'd on other grounds, Henderson v.
HSI Financial Svcs., 266 Ga. 844, 471 S.E.2d 885 (1996); [287 Ga. 447]
Joseph Camacho Assoc. v. Millard, 169 Ga.App. 937, 939(2), 315 S.E.2d
478 (1984); Fountain v. Burke, 160 Ga.App. 262, 264(3), 287 S.E.2d 39
(1981); Pritchett v. Rainey, 131 Ga.App. 521, 522, 206 S.E.2d 726
(1974).
Ingles argues that the Court of Appeals, citing City of Marietta v.
Holland, 252 Ga. 299, 304(3), 314 S.E.2d 97 (1984), has stated that "
[e]xpenses of litigation under OCGA § 13-6-11 can be awarded on
summary judgment, but the movant must be entitled to them as a matter
of law. [Cit.]" Rivergate Corp. v. BCCP Enterprises, 198 Ga.App. 761
(2), 403 S.E.2d 65 (1991) (reversing summary judgment). See also
Rasmussen v. Nodvin, 174 Ga.App. 203, 205(4), 329 S.E.2d 541 (1985)
(reversing summary judgment). However, the Holland opinion does not
state that litigation expenses under the statute can be awarded on
summary judgment. Instead, this Court examined whether there was any
genuine issue of material fact as part of its determination that the
trial court not only erroneously granted plaintiff's motion for
summary judgment, but also erred in denying summary judgment in favor
of the defendants. Therefore, rather than authorizing summary judgment
for a claimant under OCGA § 13-6-11, Holland is explained by the
proposition that " [o]nly in the rare case where there was absolutely
no evidence to support the award of expenses of litigation would the
trial court be authorized to grant summary adjudication on such
issues." American Medical Transport Group v. Glo-An, supra. See also
Brito v. Gomez Law Group, 289 Ga.App. 625, 628(2), 658 S.E.2d 178
(2008). Other cases relied on by Ingles, as well as statements that
determination of the preconditions in the statute is " generally" for
the jury, are also explained by the simple proposition quoted above
from American Medical Transport Group v. Glo-An, supra. Merlino v.
City of Atlanta, 283 Ga. 186, 191(4), 657 S.E.2d 859 (2008); Tyler v.
Lincoln, 272 Ga. 118, 122(2), 527 S.E.2d 180 (2000); Stargate Software
Intl. v. Rumph, 224 Ga.App. 873, 878(4), 482 S.E.2d 498 (1997);
Webster v. Brown, 213 Ga.App. 845, 846(2), 446 S.E.2d 522 (1994).
Both Ingles and the Court of Appeals relied on D & H Constr. Co. v.
City of Woodstock, 284 Ga.App. 314, 318-319(2), 643 S.E.2d 826 (2007)
and Graves v. Diambrose, 243 Ga.App. 802, 803-804(2), 534 S.E.2d 490
(2000). However, neither decision states that summary judgment can be
granted in favor of a claimant under OCGA § 13-6-11. Furthermore,
contrary to Ingles' argument and the Court of Appeals' opinion here,
it is not at all clear that the trial court in either case granted
summary judgment on the claim for attorney fees. The Court of Appeals'
application of the " ‘ any evidence’ standard of review" in D & H
Constr. Co. v. City of Woodstock, supra at 319(2), 643 S.E.2d 826, as
well as its determination that the trial court " could have properly
found" a statutory basis for attorney fees in [287 Ga. 448] Graves v.
Diambrose, supra at 804(2), 534 S.E.2d 490, was entirely inconsistent
with any such grant of summary judgment. Indeed, we note that, even if
attorney fees could be awarded pursuant to OCGA § 13-6-11 on summary
judgment, the Court of Appeals still erred in this case by utilizing
the " any evidence" standard. " Although the trial court may grant
attorney fees or litigation expenses under OCGA § 13-6-11 where it
sits as the trier of fact, [cit.], it is not a trier of fact on a
motion for summary judgment." Page v. HSI Financial Svcs., supra. See
also Rasmussen v. Nodvin, supra. Compare
Page 652
Artzner v. A & A Exterminators, 242 Ga.App. 766, 773(4), 531 S.E.2d
200 (2000) (where Court of Appeals looked for any evidence showing
that the grant of summary judgment to defendant was error).
Accordingly, the trial court erred by awarding expenses of litigation
pursuant to OCGA § 13-6-11 to Ingles on its motion for summary
judgment. American Medical Transport Group v. Glo-An, supra; Joseph
Camacho Assoc. v. Millard, supra. The judgment of the Court of Appeals
must therefore be reversed to the extent that it affirms the trial
court's grant of summary judgment in favor of Ingles with respect to
its claim for attorney fees. Our holding does not affect the remaining
rulings of the Court of Appeals.
Judgment affirmed in part and reversed in part.
All the Justices concur.
Overruling the 13-6-11 portion of the Court of Appeals Holding in:
686 S.E.2d 359 (Ga.App. 2009)
300 Ga.App. 740
COVINGTON SQUARE ASSOCIATES, LLC
v.
INGLES MARKETS, INC.
No. A09A2145.
Court of Appeals of Georgia.
November 3, 2009
Page 360
Michael A. Kessler, Cumming, for appellant.
Hartman, Simons, Spielman & Wood, Samuel R. Arden, Jill R. Johnson,
Atlanta, for appellee.
MIKELL, Judge.
Ingles Markets, Inc. (" Ingles" ) sued Covington Square Associates,
LLC (" Covington" ), for conversion, unjust enrichment, attorney fees,
and punitive damages arising out of its refusal to return a check
Ingles alleged it paid by mistake. The trial court granted partial
summary judgment to Ingles on its
Page 361
claims for conversion, attorney fees, and punitive damages, ruling
that Covington wrongfully asserted dominion or control over Ingles's
property; that Ingles is entitled to attorney fees and punitive
damages; and that the amounts of those damages are to be determined at
trial. Covington appeals these rulings. For the following reasons, we
affirm the trial court's ruling as to the claims for conversion and
attorney fees, but reverse as to the claim for punitive damages.
Our review of the grant of summary judgment is de novo.[1]
To prevail at summary judgment, the moving party must demonstrate that
there is no genuine issue of material fact and that the undisputed
facts, viewed in the light most favorable to the nonmoving party,
warrant judgment as a matter of law. Where the movant is the
plaintiff, she has the burden of presenting evidence to support her
claim and the burden of piercing the defendant's affirmative
defenses.[2]
So viewed, the record reflects that in 1987, Ingles and a prior owner
of Covington Square Shopping Center in DeKalb County (the " Shopping
Center" ) entered into an agreement for Ingles to lease certain space
in the Shopping Center (the " Lease" ). Under the terms of the Lease,
Ingles paid a portion of the real estate taxes for the Shopping
Center. In 1994, Covington purchased the Shopping Center and became
Ingles's landlord. According to Ron Freeman, Ingles's chief financial
officer, Ingles fully paid all real estate tax charges to [300 Ga.App.
741] Covington during the time it owned the Shopping Center. Ingles
also paid a portion of the cost to hire a security guard for the
Shopping Center.[3] IN 2004, NORTHEAST ENTERPRISES, INC. (" NORTHEAST
ENTERPRISES" ) purchased the Shopping Center from Covington.
On November 15, 2005, Ingles received a real estate tax statement from
Northeast Enterprises for the amount of $32,584.85, to cover 2005
county property taxes. On December 20, 2005, Ingles mistakenly sent a
check in the amount of $32,584.85 to Covington, its former landlord,
rather than Northeast Enterprises. According to Freeman, the check
represented Ingles's payment of its 2005 property taxes for the
Shopping Center.[4] Covington cashed the check, and Ingles had to
issue another check in the amount of $32,584.85 to Northeast
Enterprises to satisfy its property tax obligation. On February 3,
2006, Ingles notified Covington of its mistake and demanded return of
the funds. On February 13, 2006, Covington notified Ingles that it
would retain the funds as partial payment of the unpaid security costs
at issue in the DeKalb litigation.
Ingles filed the instant action on February 24, 2006. The trial court
stayed the case pending the outcome of the appeal in the DeKalb
litigation, and on December 14, 2007, following our ruling in the
DeKalb litigation, Ingles again demanded return of the funds. There is
no evidence in the record that Covington has returned the funds.
1. Covington contends that the trial court erred in granting summary
judgment to Ingles because " [t]he mistaken payment by Ingles amounts
to nothing more than an overpayment under the Lease. Therefore,
Ingles' claim to recover the payment sounds in contract and not in
tort or conversion." Covington does not dispute that Ingles is
entitled to a refund due to the DeKalb litigation,
Page 362
but disputes that there was a conversion. Covington relies on Kline v.
Atlanta Gas Light Co. [5] and Levenson v. Word, [6] to support its
argument.
[300 Ga.App. 742] With regard to Kline, the trial court correctly
distinguished that case because the excess payment was used to pay an
undisputed outstanding debt; [7] here, the alleged outstanding debt
was in dispute, and Covington specifically sued Ingles in the DeKalb
litigation to recover the disputed amount. Levenson is likewise
distinguishable and does not require reversal. In that case, there was
no dispute that the criminal defendant owed the retainer fee to the
defendants, and the plaintiff could not prove that the defendants'
exercise of dominion over the funds was wrongful. [8] Since any
outstanding debt in this case was in dispute at the time Ingles
mistakenly mailed the check to Covington, Kline and Levenson are
inapplicable.
Conversion consists of an unauthorized assumption and exercise of the
right of ownership over personal property belonging to another, in
hostility to his rights; an act of dominion over the personal property
of another inconsistent with his rights; or an unauthorized
appropriation. Any distinct act of dominion wrongfully asserted over
another's property in denial of his right, or inconsistent with it, is
a conversion. It is unnecessary to show that the defendant applied it
to his own use, if he exercised dominion over it in defiance of the
owner's right, or in a manner inconsistent with it.[9]
One way to prove that a defendant has exercised unauthorized dominion
over the property and has thereby converted the property is to present
evidence that " a defendant, who has lawfully come into possession of
the plaintiff's property, unlawfully refuses to return the plaintiff's
property after the plaintiff demands its return." [10] In this case,
Ingles mistakenly mailed to Covington a check intended for its current
landlord to cover its property tax bill. When Ingles realized the
error, it immediately notified Covington of the clerical error,
expressly noted that it had intended to submit the payment to its
current landlord, and demanded return of the check. The elements of
conversion have been satisfied.
We find Covington's arguments on this issue disingenuous. Covington
filed the DeKalb litigation specifically because the " Common Area"
costs for security charges were in dispute and because [300 Ga.App.
743] Ingles refused to pay Covington for these costs. In the face of a
disputed debt embroiled in litigation and an immediate demand letter,
it strains credulity for Covington to argue that it is guilty of
merely failing to refund an overpayment, and not guilty of conversion.
The trial court did not err in ruling that Covington converted the
check.[11]
2. Covington next contends that the trial court erred in granting
summary judgment to Ingles on its claim for attorney fees under OCGA §
13-6-11 because this issue must be resolved by a jury. The trial court
found that " [Ingles] is entitled to [attorney] fees based on
Covington's refusal to refund the money in spite of the outcome of the
DeKalb litigation and causing [Ingles] to bear the unnecessary expense
of bringing suit where no bona fide controversy exists" and ruled that
the amount of attorney fees is to be determined at trial. We affirm
this ruling.
OCGA § 13-6-11 provides that:
Page 363
The expenses of litigation generally shall not be allowed as a part of
the damages; but where the plaintiff has specially pleaded and has
made prayer therefor and where the defendant has acted in bad faith,
has been stubbornly litigious, or has caused the plaintiff unnecessary
trouble and expense, the jury may allow them.
While questions of bad faith, stubborn litigiousness, and unnecessary
trouble and expense are generally for the jury to decide, expenses of
litigation under this Code section can be awarded on summary judgment,
provided the movant is entitled to them as a matter of law.[12] The
amount of the award of attorney fees as damages, however, is to be
determined by a jury.[13]
In D & H Constr. Co., [14] a case very similar to this case, we
affirmed the trial court's grant of summary judgment to the plaintiff
on its claim for attorney fees, where the appellant retained a
duplicate payment to which it had no rightful claim. As in D & H
Constr. Co., the record here reflects that Covington accepted a [300
Ga.App. 744] payment from Ingles that was intended for Ingles's
current landlord and applied it to security costs, knowing that Ingles
disputed the security costs debt; that Covington refused to return the
check even after Ingles informed it of the mistake; and that Ingles
was forced to bring this lawsuit to recover the mistaken payment.
Additionally, as discussed in Division 1, supra, Covington's defense
was unreasonable and incredible. Applying the any evidence standard
under these circumstances,[15] the trial court did not err in ruling
that Ingles was entitled to attorney fees as a matter of law, and we
do the same here.[16] THE TRIAL COURT WAS also authorized to allow a
jury to determine the amount.
3. Covington contends that the trial court erred in granting summary
judgment to Ingles on its claim for punitive damages because this
issue must be resolved by a jury. We agree.
OCGA § 51-12-5.1(b) provides that:
Punitive damages may be awarded only in such tort actions in which it
is proven by clear and convincing evidence that the defendant's
actions showed willful misconduct, malice, fraud, wantonness,
oppression, or that entire want of care which would raise the
presumption of conscious indifference to consequences.
Subsection (d) of that Code section further provides:
(1) In any case in which punitive damages are claimed, the trier of
fact shall first resolve from the evidence produced at trial whether
an award of punitive damages shall be made. This finding shall be made
specially through an appropriate form of verdict, along with the other
required findings. (2) If it is found that punitive damages are to be
awarded, the trial shall immediately be recommenced in order to
receive such evidence as is relevant to a decision regarding what
amount of damages will be sufficient to deter, penalize, or punish the
defendant in light of the circumstances of the case. It shall then be
the duty of the trier of fact to set the amount to be awarded
according to subsection (e), (f), or (g) of this Code section, as
applicable. [17]
This Code section expressly provides that a jury must determine [300
Ga.App. 745] whether a complainant is entitled to punitive damages and
if so, the amount to be awarded. Although a trial court-and the
appellate courts-must consider whether there is any evidence to
support an award of punitive damages, the question of whether to
impose such an award is
Page 364
for the trier of fact.[18] Because we have found no authority and
Ingles cites to none holding that a trial court can grant summary
judgment to a claimant on its claim for punitive damages, we reverse
that portion of the trial court's order granting summary judgment to
Ingles on its claim for punitive damages and affirm the portion of the
order ruling that a jury must determine the amount of punitive
damages.
Judgment affirmed in part and reversed in part.
JOHNSON, P.J., and ELLINGTON, J., concur.
---------
Notes:
[1] Smith v. Gordon, 266 Ga.App. 814(1), 598 S.E.2d 92 (2004).
[2] (Footnotes omitted.) Id.
[3] See Covington Square Assoc. v. Ingles Markets, 283 Ga.App. 307,
641 S.E.2d 266 (2007) (" Covington Square I " or the " DeKalb
litigation" ). This is the second appearance of these parties before
this Court. As explained in Covington Square I, shortly after selling
the Shopping Center in 2004, Covington sought to collect unpaid
portions of security guard costs it billed to Ingles. When Ingles
refused to pay, Covington sued Ingles for breach of contract seeking
damages for unpaid rents under the Lease. Id. at 308, 641 S.E.2d 266.
We affirmed the trial court's grant of summary judgment to Ingles,
ruling that the Lease did not require Ingles to pay security guard
costs. Id. at 311(1), 641 S.E.2d 266.
[4] Although we cannot tell from the poor copy included in the record
on appeal, Freeman avers that the check indicates on its face that it
was for payment of Ingles's 2005 property taxes. In its order, the
trial court also notes that the check indicates on its face that it
was for payment of Ingles's 2005 property taxes.
[5] 246 Ga.App. 172, 538 S.E.2d 93 (2000).
[6] 294 Ga.App. 104, 668 S.E.2d 763 (2008).
[7] Kline, supra at 173-174, 538 S.E.2d 93.
[8] Levenson, supra at 106-107(1), 668 S.E.2d 763.
[9] (Citations and punctuation omitted.) Maryland Cas. Ins. Co. v.
Welchel, 257 Ga. 259, 261(1), 356 S.E.2d 877 (1987).
[10] (Citation and footnote omitted.) Williams v. Nat. Auto Sales, 287
Ga.App. 283, 285(1), 651 S.E.2d 194 (2007).
[11] See, e.g., D & H Constr. Co. v. City of Woodstock, 284 Ga.App.
314, 643 S.E.2d 826 (2007) (summary judgment on conversion claim
proper where evidence showed that plaintiff tendered to defendant
duplicate check; that plaintiff notified defendant of error and
demanded return of the check; and that defendant refused to return the
check); Rivergate Corp. v. BCCP Enterprises, 198 Ga.App. 761(2), 403
S.E.2d 65 (1991).
[12] See D & H Constr. Co., supra at 318-319(2), 643 S.E.2d 826. See
also Graves v. Diambrose, 243 Ga.App. 802, 803(2), 534 S.E.2d 490
(2000).
[13] See American Med. Transport Group v. Glo-An, Inc., 235 Ga.App.
464, 466(3), 509 S.E.2d 738 (1998).
[14] Supra.
[15] MDC Blackshear, LLC v. Littell, 273 Ga. 169, 174(5), 537 S.E.2d
356 (2000) (" [a]n award of fees and expenses [under OCGA § 13-6-11]
must be affirmed if there is any evidence to support it" ) (footnote
omitted).
[16] D & H Constr. Co., supra at 319(2), 643 S.E.2d 826.
[17] OCGA § 51-12-5.1(d)(1) & (2).
[18] Morales v. Webb, 200 Ga.App. 788, 790, 409 S.E.2d 572 (1991);
Petrolane Gas Svc. v. Eusery, 193 Ga.App. 860, 862(1), 389 S.E.2d 355
(1989). See also Wal-Mart Stores v. Forkner, 221 Ga.App. 209, 210, 471
S.E.2d 30 (1996) (following bench trial on damages, trial court
awarded plaintiff punitive damages).
---------
End
Hugh Wood, Esq.
Wood & Meredith, LLP
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