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.
(Orig. Code 1862, §2883; Code 1868, §2891; Code 1873, §2942; Code 1882, §2942;
Civil Code 1895, §3796; Civil Code 1910, § 4392; Code 1933, §20-1404; Ga. L. 1984, p.22, §13. O.C.G.A.
§13-6-11.)
O.C.G.A. §13-6-11 is
Georgia's expression of the American rule for the award of attorney's fees and other
expenses of litigation. [1] The American rule has been that expenses for
defending or prosecuting a suit are generally unavailable unless authorized by a specific
statute.[2]
O.C.G.A. § 13-6-11 is Georgia's general statute providing plaintiff's expense of
litigation.
The Georgia rule, though
complex, may be simply stated as follows:
Each litigant bears its
own litigation expenses unless the defendant has acted badly and the plaintiff wins, in
which case, the defendant must bear the litigation expenses.
The true focus of the
Georgia exception is to punish a defendant who has acted in badly by having to pay the
other side's attorney fees. Jones v. Spindel,
122 Ga. App. 390, 177 S.E.2d 187 (1970), cert. dismissed, 227 Ga. 264, 180 S.E.2d 241
(1971). In all cases where a litigant seeks
to recover attorney fees and expenses of litigation, a litigant must establish a legal
basis for the claim. The legal basis may
arise out of statute or contract. While
statutory exceptions to Georgia’s general rule for attorney fees exist under many
other statutes, this paper focuses on the general rule expressed in O.C.G.A. §13-6-11.
The Code section has a
general rule and an exception, four operative requirements to trigger the exception, and
three clauses describing the conduct of the defendant that triggers the exception:
I.
[General Rule] Each litigant bears its own expenses
II.
[Exception] Unless:
1. [Operative Rule 1]
"Plaintiff has specially pleaded"
2. [Operative Rule 2]
"Plaintiff has made prayer therefor"
3. [Operative Rule 3]
"The defendant has acted"
a. [Conduct clause 1]
"in bad faith,"
b. [Conduct clause 2]
"has been stubbornly litigious, or"
c. [Conduct clause 3]
"has caused the plaintiff unnecessary trouble and expense"
4. [Operative Rule 4]
"the jury may allow them."
Georgia
law is clear that each party bears its own litigation expenses unless the case fits within
some contractual or statutory exception. Judges
cannot simply decide to tax a party's expenses to the other party on a whim or arbitrary
decision to make things fair. For example, a
trial court cannot summarily award attorney fees to a litigant for merely opposing a
motion or litigating a case. Kyle v. King,
138 Ga. App. 612, 226 S.E.2d 767 (1976); Madden v. Bellew, 195 Ga. App. 131, 393 S.E.2d 31
(1990). Attorney fees cannot be awarded as a
punishment for criminal contempt under O.C.G.A. § 13-6-11. General Teamsters Local Union
No. 528 v. Allied Foods, Inc., 228 Ga. 479 at 531, 186 S.E.2d 527 (1971); Ragsdale v.
Bryan, 235 Ga. 58 at 59, 218 S.E.2d 809 (1975).[3] However, attorney fees may be awarded under
O.C.G.A. § 13-6-11 in a civil contempt. G.I.R. Systems, Inc. v. Lance, 228 Ga. App. 329,
491 S.E.2d 530 (1997), Compare, Rolleston v. Cherry, 237 Ga. App. 733, 521 S.E.2d 1 (1999).
The Code section does
not create an independent cause of action. It
is a remedial statute, ancillary to the primary cause of action, and entirely
compensatory. It merely establishes the
circumstances in which a plaintiff may recover the expense of litigation as an additional
element of his damages. Brown v. Baker, 197
Ga. App. 485, 398 S.E.2d 797 (1990). O.C.G.A.
§13-6-11 is available in actions at law and equity including actions in contract and in
tort. C & S Nat. Bank v. Haskins, 254 Ga. 131, 137(4), 327 S.E.2d 192 (1985); Candler
v. Wickes Lumber Co., 195 Ga.App. 239, 393 S.E.2d 99 (1990).
Expenses of litigation
are not recoverable unless other elements of damages are also recoverable or a remedy is
received. Unless the claimant prevails on
some damage claim or remedy, no attorney fees are recoverable. Magnetic Resonance Plus, Inc. v Imaging Systems
International, 543 S.E.2d 32 (Ga. Sup Ct. No. S00G0793 Mar. 2, 2001); Vernon Library
Supplies, Inc., v. Ard, Georgia Court of Appeals No. A01A0571, 550 SE2d 108 (2001);
Connell v. Houser, 189 Ga. App. 158, 375 S.E.2d 136 (1988); Barnett v. Morrow, 196 Ga.
App. 201, 396 S.E.2d 11 (1990). If a
plaintiff brings a dual cause of action and prevails on only one of the two causes, the
only attorney fees recoverable are those based upon the expense of proving the successful
action. In a case where election of remedies
is required, attorney fees are not available based upon the mooted remedy. Barnett v. Morrow, 196 Ga. App. 201, 396 S.E.2d 11
(1990). However, there are some
exceptions to this rule in "bad faith" cases as is explained later in this
paper.
The damages under this
section are compensatory. Bankers Fid. Life
Ins. Co. v. Oliver, 106 Ga. App. 305, 126 S.E.2d 887 (1962). The section is not limited to the recovery of
attorney fees and costs alone. Instead, it
incorporated the broader term, expenses of litigation.
All expenses of the litigation proximately related to the pending claim should be
recoverable, including expenses of in-house counsel and travel necessitated by the
litigation. Salsbury Labs, Inc. v. Merieus
Labs, Inc., 735 F. Supp 1555 (M.D. Ga. 1989, aff'd., 908 F.2d 706 (11th Cir.
1990).
This section is
inapplicable where the attorney fees sought arise out of a separate legal proceeding. Expenses of a prior proceeding cannot be recovered
in a subsequent proceeding under O.C.G.A. §13-6-11.
Randolph v. Merchants & Mechanics Banking & Loan Co., 58 Ga. App. 566, 199
S.E. 549 (1938); Easley v. Clement, 259 Ga. 107, 376 S.E.2d 860 (1989).
With some exceptions
wherein bad faith is involved, expenses of litigation are recoverable only for the amount
attributable to the prevailing claim. Southern
Cellular v. Banks, 209 Ga. App. 401, 433 S.E.2d 606 (1993).
For example, in United Companies Lending Corp. v. Peacock, 267 Ga. 145, 475 S.E.2d
601 (1996), the plaintiff prevailed only on one count of a six-count complaint. The plaintiff proved the lump amount of fees and
expenses incurred to work on all six counts of the complaint, but did not prove the amount
of attorney fees attributable solely to the claim on which they prevailed. The Supreme Court reversed and remanded for a
hearing to limit the award of attorney fees to the amount based upon the prevailing claim. In Huggins v. Chapin, 233 Ga.App. 109, 503 S.E.2d
356 (1998), the Court of Appeals reversed and remanded an attorney fee case arising under
the Georgia Securities Act O.C.G.A. § 10-5-14(a) for additional findings of fact or
another hearing to separate out the attorney fees associated with the prevailing claims.
No section 13-6-11
attorneys fee are recoverable under the Georgia Materialman’s Lien Statute. O.C.G.A.
§ 44-6-361. Bush v. Northside Trucking,
Inc., 252 Ga.App. 729, 556 S.E.2d 909 (2001).
O.C.G.A. §13-6-11 is
not available to the defendant unless the defendant has an independent counterclaim
unrelated to the main claim against the Plaintiff, in which case the defendant may recover
only the expenses of the prevailing counterclaim. Parker
v. Crider Poultry, Inc., Ga. Ct. of Appeals case no. A01A0309, 549 S.E.2d 711 (2001);
Beall v. E. H. H. Construction, Inc., 193 Ga. App. 544, 388 S.E.2d 342 (1989); Davis v.
Knight, 195 Ga.App. 726, 394 S.E.2d 634 (1990). If
the counterclaim is an independent claim that either arose separately from the
plaintiff’s claim or arose after the plaintiff’s claim, then a
plaintiff-in-counterclaim may recover expenses of litigation. Sanders v. Brown, 257 Ga. App. 566, 571 S.E.2d 532
(2002). Raza v. Swiss Supply Direct, Inc.,
256 Ga. App. 175, 568 S.E.2d 102 (2002). The
Code section is not available to defendant to convert suit to damages for bringing the
complaint against the plaintiff. The
defendant may use the section to recover attorney fees for a viable counterclaim.
International Indemnity Co. v. Regional Employer Service, Inc., 239 Ga.App. 420, 520
S.E.2d 533 (1999). The defendant cannot
recover for the costs of defending against the plaintiff's complaint, but may only recover
the expenses incurred in prosecuting its independent counterclaims. Eways v. Georgia R.R. Bank, 806 F.2d 991 (11th
Cir. 1986). In considering whether a
defendant is entitled to make a claim for § 13-6-11 attorneys feed, caution should be
exercised because law is not clear as to how “independent” a counterclaim must
be to support an attorney fee award.
In Williamson v. Harvey
Smith Inc., 246 Ga.App. 745, 542 S.E.2d 151 (2000), the Court of Appeals reversed a
$38,000 Award of bad faith attorney fees to defendant on a counterclaim because the
defendant failed to present evidence from which the jury could determine what portion of
the total amount of attorney time and litigation expenses was attributable to the
counterclaim. The defendant had produced
sufficient evidence of a bad faith attorney fee claim on the counterclaim, but sought to
recover all of his attorney fees. Thus,
the defendant lost all fees because counsel failed to produce proper expense records.
To recover expenses of
litigation under O.C.G.A. §13-6-11, the plaintiff must first prevail in the action and
then must prove the defendant has acted improperly in one of the manners described in the
Code section. Plaintiff need only establish
the existence of one of these conditions to recover attorney fees. Any one will do.
Gordon v. Ogden, 154 Ga. App. 641, 269 S.E.2d 499 (1980); National Serv. Indus.,
Inc. v. Hartford Accident & Indem. Co., 661 F. 2d 458 (5th Cir. 1981).
Case law has grouped the
three types of bad acts into two types of cases: Type
1, the "bad faith" cases and Type 2, the "Stubbornly litigious [Conduct
Clause 2] unnecessary trouble and expense" [Conduct Clause 3] cases. There is no real distinction between the treatment
and meaning of the terms in conduct clauses 2 and 3, “stubbornly litigious” and
“unnecessary trouble and expense.” Different
rules apply for type of case. The "bad
faith" cases and the "unnecessary trouble/stubbornly litigious" cases have
a different measure of damages. In the
"unnecessary trouble/stubbornly litigious" cases, only expenses arising out of
the present action may be recovered. Allston
v. Stubbs, 170 Ga. App. 417, 317 S.E.2d 272 (1984). Of
those expenses, only that portion of the attorney fees that are allocable to establish
liability are recoverable. Luller v. Moister,
248 Ga. 287, 282 S.E.2d 889 (1989). On the
other hand, in the "bad faith" cases, all of the expenses of the litigation may
be recovered. "Bad faith" attorney fees are not apportioned. The award of attorney fees is not limited only to
those attorney fees attributable to the claims on which the plaintiffs prevailed. A party acting in bad faith should pay the full
price for losing. Crocker v. Stevens, 210 Ga.
App. 231, 435 S.E.2d 690, U.S. cert. den., 511 U.S. 1053, 114 S.Ct. 1613, 128 L.Ed.2d 340
(1994); Lincoln v. Tyler, 2002 WL 31528442 (Ga. App November 15, 2002). The existence of a bona fide controversy defeats a
“stubbornly litigious / unnecessary trouble and expense” claim. However, if there is bad faith in the underlying
transaction, the existence of a bona fide controversy does not defeat the claim for
attorney fees unless the defendant wins. Fidelity
Nat'l. Bank v. Kneller, 194 Ga. App. 55, 390 S.E.2d 55 (1989); Windermere v. Bettes, 211
Ga. App 177, 438 S.E.2d 406 (1993). The
plaintiff must win something to get any attorney fees.
"Bad faith"
attorney fees are awarded when the defendant acted in bad faith in the transactions out of
which the case arose. "Bad faith"
under this section refers to conduct occurring at a time prior to the institution of the
action. Brannon Enter, Inc. v. Deaton, 159 Ga. App. 685, 285 S.E.2d 58 (1981). "Bad faith" attorney fees cannot be
grounded on the conduct of the defendant in defending the case. Trader's Ins. Co. v. Mann, 118 Ga. 381, 45 S.E.
426 (1903); Brown v. Baker, 197 Ga. App. 466, 398 S.E.2d 797 (1990). The "bad faith" referred to in the
Code section refers solely to the "bad faith" of the defendant in the underlying
transaction. The "bad faith" in this context is not the refusal to pay, but
"bad faith" conduct in the transaction out of which the cause of action arose.
Fine & Block v. Evans, 201 Ga. App. 294, 411 S.E.2d 73 (1991). Evidence of the defendant's conduct subsequent to
the formation and breach of the alleged agreement is irrelevant. Albert v. Albert, 164 Ga. App.723, 298 S.E.2d 612
(1982). Bad faith and misconduct arising out
of the conduct of parties and counsel in litigating the case are exclusively the subject
of the abusive litigation statutes found at O.C.G.A. § 9-15-14 and O.C.G.A. § 51-7-80.[4]
"Bad faith" is
not defined in O.C.G.A. § 13-6-11. There
is no Pattern Jury Instruction defining "bad faith", though the term appears
several times in the Pattern book. The
Georgia definition of "bad faith" is a matter of common law and standard
statutory construction of the plain meaning of the term.
O.C.G.A. §1-3-1. Black Law Dictionary
defines bad faith to mean "the opposite of 'Good Faith', generally implying or
involving actual or constructive fraud, or a design to mislead or deceive another, or a
neglect or refusal to fulfill some duty or some contractual obligation, not prompted by an
honest mistake as to one's rights or duties, but by some interested or sinister
motives." Black's Law Dictionary, Rev. 4th
ed. 1968, p. 176. "Good Faith" is
defined in the analogous abusive litigation chapter or the Code at O.C.G.A. §51-7-80(4):
"Good faith,"
when used with reference to any civil proceeding, claim, defense, motion, appeal, or other
position, means that to the best of a person's or his or her attorney knowledge,
information, and belief, formed honestly after reasonable inquiry, that such civil
proceeding, claim, defense, motion, appeal, or other position is well grounded in fact and
is either warranted by existing law or by reasonable grounds to believe that an argument
for the extension, modification, or reversal of existing law may be successful."
Case law suggests bad
faith is not simply bad judgment or negligence, but it imports a dishonest purpose or some
moral obliquity, and implies conscious doing of wrong, and means breach of known duty
through some motive of interest or ill will. It
may be found in defendant's dealings in carrying out the provisions of the contract, that
is, in how defendant acted in his dealing with the plaintiff. Burlington Air Express v. Ga.-Pacific Corp., 217
Ga.App. 312, 313, 457 S.E.2d 219 (1995). Bad
faith other than mere refusal to pay a just debt is sufficient, provided it is not
prompted by an honest mistake as to one's rights or duties but by some interested or
sinister motive. Citizens & Southern
Trust Co. v. Hicks, 216 Ga.App. 338, 339(2), 454 S.E.2d 207 (1995). Defendants can be held liable for attorney fees if
they committed the breach in bad faith. It
equated this with sinister motive. Bad
faith prompted by some interested motive is also sufficient. Jennings Enterprises, Inc., v. Carte, 224 Ga.App.
538, 481 S.E.2d 541 (1977); Glen Restaurant, Inc., v. West, 173 Ga. App. 204, 325 S.E.2d
781 (1984).
Examples
are helpful in interpreting the boundaries of the term "bad faith. The Court of Appeals found retention of earnest
money by a seller after rescission of a real estate sales contract to be "bad
faith". New York Ins., Co. v. Willett, 183 Ga. App. 767, 360 S.E.2d 37
(1987). A manufacture's actual knowledge
prior to sale to consumer of a product from which it could have reasonably foreseen an
injury of the specific type sustained a "bad faith" award of litigation
expenses. Ford Motor Company v. Stubblefield,
171 Ga. App. 681, 319 S.E.2d 340 (1994). In
an action for trespass and damage to trees, evidence that a power corporation exceeded a
condemnation order by cutting trees outside the right-of-way was sufficient to support a
jury finding of "bad faith" and the award of attorney fees. Oglethorpe Power Corp. v. Sheriff, 210 Ga. App.
299, 436 S.E.2d 14 (1993). Use of sham
documents in the course of a lending transaction with plaintiff borrower was "bad
faith". Crawford v. Crump, 223 Ga. App.
119, 476 S.E.2d 855 (1996). Refusal to
deliver title after purchase of truck was sufficient.
I.M.C. Motor Express, Inc., v. Cochran, 180 Ga. App. 822, 348 S.E.2d 750 (1986). Failure to remedy the seepage of methane from a
landfill to an adjoining property resulted in "bad faith" liability. Warner Robbins v. Holt, 220 Ga. App. 794, 470
S.E.2d 238 (1996). In Parks v. Breedlove, 241
Ga.App. 72, 526 S.E.2d 137 (1999), the Court of Appeals found support for a bad faith
claim wherein a homeowner refused to pay for construction of a new home. The homeowner claimed that the work was not done
properly and refused to pay. After
negotiations, the builder and homeowner agreed that the builder would withdraw from the
project, waive his contractors fee, ensure that the house passed rough inspection, and
provide the homeowner with a list of all subcontractors and suppliers who provided work of
materials for the project in exchange for an agreed upon payment to the builder. The builder then did everything required of him. The homeowner then hired an engineer who found
some problems with the construction. The
homeowner did not have the problems repaired or ask the county inspectors to re-inspect. Instead, they paid the engineer to do redesign for
aesthetic reasons. The Court of Appeals found
these facts sufficient to support an inference by the jury that the homeowner's refusal to
pay the builder was not based on an honest belief that the expenses were not actually or
necessarily incurred or that they had been defrauded.
This was sufficient to support a finding of bad faith.
It may be bad faith
secretly to explore and proceed to negotiate other business transactions inconsistent with
a contract while knowing the other party is proceeding to expend money and time to perform
the contract. DPLM, Ltd. v. J. H. Harvey
Company, 241 Ga.App. 219, 526 S.E.2d 409 (1999); See, Kemira, Inc. v. Williams
Investigative & Security, Inc., 215 Ga. App. 194, 450 S.E.2d 427 (1994).
In a case by a real
estate broker, where the evidence showed that the landlord and the tenant deliberately
excluded the broker from the final lease negotiation to avoid paying commissions, the
Court of Appeals affirmed a finding of bad faith. Centre
Pointe Investments, Inc. v. Frank M. Darby Co., Ga. Appeals Case No. A01A0893, 549 SE2d
435 (2001).
An
example of a case finding acts not to be "bad faith" is Macon-Bibb County Water
& Sewerage Auth. V. Tuttle/White Constructors, Inc., 530 F. Supp. 1048 (M.D. Ga.
1981), where disagreement as to certain terms and conditions of a contractual relationship
was found not sufficient to evidence any bad faith. Failure
to pay a debt because of an honest mistake as to contract terms is not bad faith and is
not stubborn litigiousness. M & H
Construction Co., Inc. v. North Fulton Development Corp., 238 Ga.App. 713, 519 S.E.2d 287
(1999). The failure to abate a nuisance of
excess flow of water and debris from a golf course development constituted bad faith
sufficient to support an award of attorney fees. Foxchase,
L.L.L.P. v. Cliatt, 254 Ga. App. 239, 562 S.E.2d 221 (2002). Similarly, the City of Gainesville was hit with
bad faith attorney fees when the city failed to maintain the drainage system that serviced
their property and caused repeated flooding that constituted an abatable nuisance. City of Gainesville v. Waters, 2002 WL 31630906
(Ga. App. November 22, 2002). Acceptance and
retention of payment for trees wrongfully cut from a neighbor’s land during logging
operations that cut some trees from the neighbor’s land while the landowner was
logging his own land supported an award for bad faith attorney fees. Jones v. Cenza, 287 Ga. App. 806, 572, S.E.2d 362
(2002).
Every intentional tort supports bad faith attorney fees. In Tyler v. Lincoln, 272 Ga. 118,
527 S.E.2d 180, 00 FCDR 819 (Ga., Feb 28, 2000)
(NO. S99G0931), the Georgia Supreme Court reversed the Court of Appeals on an
affirmance of a summary judgment finding that where a intentional tort occurred, there
were genuine issues of fact remaining as to whether developer’s intentionally
tortious actions warranted an award of bad faith attorney fees even when nominal damages
are recovered. An intentional tort will
support a claim for litigation expenses under the theory that the intention evokes that
"bad faith" necessary for recovery under O.C.G.A. §13-6-11. Tanner v. Gilliland, 186 Ga. App. 377, 367 S.E.2d
257 (1988). Conversion supports
bad faith attorney fees. Felker v. Chipley,
246 Ga.App. 296, 540 S.E.2d 285 (2000) .
"Bad Faith"
can be inferred in an action sounding in tort means if there was bad faith in the
transaction out of which the case arose. City
of Atlanta v. Murphy, 194 Ga. App. 652, 391 S.E.2d 474 (1990). Defendants can be held liable for plaintiff's
attorney fees in a breach of contract action if they committed the breach in bad faith. Young v. A. L. Anthony Grading Co., Inc., 225 Ga.
App. 592, 484 S.E.2d 318 (1997). The award of
damages for the intentional tort of conversion alone is sufficient to support attorney
fees under the bad faith prong of section 13-6-11. Infinity
Insurance Company v. Martin, 240 Ga.App. 609,
524 S.E.2d 294 (1999).
Mere negligence is not
bad faith. “Bad Faith,” which would
support an award of attorney fees for bad faith under O.C.G.A. § 13-6-11 is not simply
bad judgment or negligence, but it imports a dishonest purpose or some moral obliquity,
and implies a conscious doing of wrong, and means a breach of a known duty through some
motive of interest or ill will. Rapid Group, Inc. v. Yellow Cab of Columbus, Inc., 253
Ga.App. 43, 557 S.E.2d 420 (2001).
The
case law has essentially merged the conduct of being "stubbornly litigious"
[Conduct Clause 1] and "causing unnecessary trouble and expense" [Conduct Clause
2] into one test of whether or not the defendant forced plaintiff to sue where no bona
fide controversy exists. Jeff Goolsby Homes
Corp. v. Smith, 168 Ga. App. 218, 308 S.E.2d 564 (1983).
It is not the failure to follow a procedure of the following of a particular
procedure in seeking to resolve a legal dispute. Witty
v. McNeal Agency, Inc., 239 Ga. App. 554, 99 F.D.R. 3103, 521 S.E.2d 619 (1999). Recovery for "stubborn litigiousness" is
not authorized where there is a bona fide controversy.
If there is a bona fide controversy, there can be no stubborn litigiousness as a
matter of law. When bad faith is not an
issue, a bona fide dispute as to part of a claim precludes a finding of stubborn
litigiousness. Auto-Owners Insurance Company
v. Crawford, 240 Ga.App. 748, 525 S.E.2d 118
(1999); Gaston v. Mullins, 168 Ga.App.
371, 372(1), 309 S.E.2d 166 (1983). That is a
very practical principle, for were it otherwise, the task of separating out the litigation
expense relating exclusively to the points which should have been conceded without lawsuit
would itself be costly, time-consuming, and frequently impossible. Candler v. Wickes
Lumber Co., 195 Ga.App. 239, 393 S.E.2d 99 (1990). The
denial of plaintiff's summary judgment precludes later stubbornly litigious or unnecessary
trouble and expense attorney fees because it establishes the existence of a bona fide
controversy. Colquitt v. Network Rental,
Inc., 195 Ga. App 244, 393 S.E.2d 28 (1990). Forcing
a plaintiff to litigate when no bona fide controversy exists causes unnecessary trouble
and expense. Rogers v. Georgia Ports Auth.,
185 Ga. App 325, 359 S.E. 2d 855, cert. den. 183 Ga. App. 906, 398 S.E.2d 855 (1987). Clements v. Barnes, 197 Ga. App 120, 397 S.E.2d
560 (1990). Existence of a genuine dispute or
bona fide controversy precludes the award of "unnecessary trouble and expense"
litigation expenses. "It may be assumed that every suit causes the plaintiff some
trouble and expense, but this is not what the statute has in mind. One of the provisions of the Bill of Rights
contained in the Constitution of this State declares that 'No person shall be deprived of
the right to prosecute or defend his own cause in any of the courts of this state, in
person, [or] by attorney, or both.' This is a
privilege to the defendant as well as to the plaintiff.
Where there is a bona fide controversy for the tribunals to settle, and the parties
cannot adjust it amicably, there should be no burdening of one with the counsel fees of
the other, unless there has been wanton or excessive indulgence in litigation." Rogers v. Moore, 207 Ga. 161, 60 S.E.2d 369
(1950). Thus, if the defendant has a
bona fide dispute to the plaintiff's claim, there can be no litigation expense award for
"unnecessary trouble and expense." Where
there is a bona fide controversy and no bad faith, the defendant’s constitutional
right to defend precludes attorney fee award. Bush
v. Northside Trucking, Inc., 252 Ga.App. 729, 556 S.E.2d 909 (2001).
Where a purchaser sues
to recover damages for breach of contract or, in the alternative, to obtain specific
performance, and where there is no bona fide dispute as to the existence of the
indebtedness, but there is a bona fide dispute as to the claim for specific performance,
it cannot be said that the seller has been stubbornly litigious. Gaston v. Mullins, 168 Ga. App. 371, 309 S.E.2d
166 (1983).
No O.C.G.A. § 13-6-11
attorney fees can be recovered for the attorneys fees and expenses incurred during an
appeal or appearance before an appellate court. Kent
v. David G. Brown, P.E., Inc., Ga. App. Case No. A00A2267, 545 S.E.2d 598 (2001). The imposition of damages and penalties for
conduct before an appellate court are covered by O.C.G.A. § 5-6-6.
In contract cases where
O.C.G.A. § 13-6-11 does not apply, if the contract itself has a provision for the payment
of attorney fees, such clauses are generally enforceable.
Syler v. Hodges, 550 S.E. 2d438 (2001); Baylis v. Atlanta Integrity Mortg., Inc.,
253 Ga.App. 110, 558 S.E.2d 429 (2001).
The assessment of
attorney fees for the enforcement of notes and mortgages is determined by O.C.G.A. §
13-1-11. It would appear that the application
of O.C.G.A. § 13-1-11 and O.C.G.A. § 13-6-11 are mutually exclusive, though it appears
that there are no cases directly on point. Both
provisions modify the common law and each fully covers the type of case to which it
applies. Thus, it would seem that no section
13-6-11 are recoverable in a suit upon a note or other evidence of indebtedness. This makes sense because checks, notes and other
evidences of indebtedness under the Uniform Commercial Code are generally unconditional
promises to pay. In cases of default, most
often there is no bona-fide controversy about the debt, only a refusal or inability top
pay and the lender is fully able to provide protection against litigation expenses in the
loan document. To allow O.C.G.A. § 13-6-11
damages in note cases would obviate the limitations provided in O.C.G.A. § 13-1-11
The Supreme Court and
the Court of Appeals are in conflict as to whether the mere refusal to pay a claim results
in attorney fees.
The Supreme Court stated
in Pferdmengs, Preyer & Co. v. Butler Stevens & Co., 117 Ga. 400, 48 S.E. 695
(1903), "The only unnecessary trouble and expense shown by the evidence was the fact
that defendants had refused to pay without suit. If
this would be sufficient to authorize a finding for attorney fees, we see no reason why
the plaintiff in every case should not recover attorney fees. The Code has never been so construed. Where there is no bad faith, there must be
something more than being put to the expense of a suit to authorize the plaintiff to claim
attorney fees as a part of his damages." This
old case has continuing viability. It has
never been reversed and has been cited by the Supreme Court in Town of Cimax v. Burnside,
150 Ga. 556, 104 S.E. 435, 437 (1920); Mallard v. Curran, 123 Ga. 872, 51 S.E. 712 (1905);
and in Latham v. Falulk, 265 Ga. 107, 454 S.E.2d 136 (1995).
The Court of Appeals
cases take a stricter approach, allowing attorney fee awards in cases where there is no
denial of liability where the plaintiff sues. Under
the Supreme Court's view, the mere refusal to pay a disputed claim is not the equivalent
of stubborn litigiousness or the causing of unnecessary trouble and expense. Buffalo Cab
Co. v. Williams, 126 Ga. App. 522, 191 S.E.2d 317 (1972); D. H. Overmeyer Co. v.
Nelson-Brantley Glass Co., Inc., 119 Ga. App 599, 168 S.E.2d 176 (1969); Palmer v. Howse,
133 Ga. App. 619, 212 S.E.2d 2 (1974). For
the Court of Appeals, however, the failure to pay an undisputed claim is the equivalent of
causing the plaintiff unnecessary trouble and expense.
Brannon Enterprises, Inc., v. Deaton, 159 Ga. App. 685, 285 S.E.2d 58 (1981);
Crotty v. Crotty, 219 Ga. App. 408, 465 S.E.2d 517 (1995).
The Court of Appeals did not address the "something more than being put to the
trouble of suit," found in the Georgia Supreme Court Pferdmengs, Preyer & Co. v.
Butler Stevens & Co. line of cases. In
Fresh Floors, Inc., v. Forrest Cambridge Apartments, L.L.C., 257 Ga. App. 270, 570 S,E,2d
570, at 592 (2002), the Court of Appeals reversed a default judgment denying attorney fees
pointing out that “when a case is in default “the
plaintiff is entitled to judgment ‘as if every item and paragraph of the complaint or
other original pleading were supported by proper evidence’” In Fresh Floors, the plaintiff had plead facts
sufficient to support a finding of bad faith.
An unjustified refusal
to pay will support attorney fees. In Graves
v. Diambrose, 243 Ga.App. 802, 534 S.E.2d 490
(Ga.App., May 03, 2000) (NO. A00A0747), a builder’s refusal to make admitted repairs
supported bad faith attorney fee award. In Plemons v. Weaver, 243
Ga.App. 464, 533 S.E.2d 747 (2000), the
Court of Appeals affirmed an award of attorneys fees in a contractor’s action against
a chicken farmer for breach of contract to remove debris following storm damage. The farmer’s refusal to pay according to the
oral agreement was not based on any honest mistake regarding contractual duties, but
rather, constituted breach of contract in bad faith.
Failure to follow fair and reasonable business
practices may also be bad faith. In Wachovia
Bank of Georgia, N.A. v. Reynolds, 244 Ga.App. 1, 533 S.E.2d 743,
00 FCDR 1932 (Ga.App., Apr 12, 2000) (NO. A00A0740) Evidence
of bank’s failure to protect funds of mentally incapacitated depositor’s needs
and failure to honor attorney in fact’s instructions constituted bad faith. In Artzner v. A & A Exterminators, Inc.,
242 Ga.App. 766, 531 S.E.2d 200, 00 FCDR 1386
(Ga.App., Mar 14, 2000) (NO. A00A0620) a summary judgment for attorney
fees in favor of defendant exterminator was reversed.
A jury could infer that the refusal of exterminator to transfer termite contract
was a bad faith breach of contract. In
Hendon v. Superior Roofing Co. of Georgia, Inc., 242 Ga.App. 307,
528 S.E.2d 548, 00 FCDR 703 (Ga.App., Jan 20, 2000)
(NO. A00A0355) spurious claims against roofer to avoid payment constituted bad faith. In Ryland Group v. Daley,
245 Ga.App. 496, 537 S.E.2d 732, 00 FCDR 3289
(Ga.App., Jul 21, 2000) (NO. A00A1656, A00A1657) a builder’s
refusal to do repairs to a new house clearly required under the building contract is
sufficient to support a “bad faith” attorney fee award.
Disregard of a neighbor’s property rights may
also support a bad faith award. In Baumann v. Snider,
243 Ga.App. 526, 532 S.E.2d 468, 00 FCDR 1775
(Ga.App., Mar 24, 2000) (NO. A99A2124), an upstream landowner’s development of property
created increased runoff after disregard of downstream owner’s complaints was
sufficient for bad faith attorney fees.
Damages
in the nature of expenses of litigation must be especially pleaded and prayed for. Davis v. Macon Tel. Publishing Co., 93 Ga. App.
633, 92 S.E.2d 619 (1956); Carroll v. Johnson, 144 Ga. App. 633, 242 S.E.2d 296 (1978);
Williams v. Binnion, 227 Ga. App. 893, 490 S.E.2d 217 (1997). Plaintiff must make out a
proper case for litigation expenses, which must be supported by evidence. Davis v. Foman, 144 Ga. App. 14, 240 S.E.2d 383
(1979). The best practice is clearly to
allege the facts that constitute the bad faith. The
prayer should state the amount of the relief sought.
A general prayer for "such other just and equitable relief as the court may
deem proper" is not sufficient to state a claim for attorney fees. Preferred Risk Ins. Co. v. Boykin, 174 Ga. App.
269, 329 S.E.2d 900, cert. den. 254 Ga. 349, 331 S.E.2d 879 (1985). In Daniels v. Price Communications Wireless, Inc.,
254 Ga. App. 559, 562 S.E.2d 844, the Court of Appeals affirmed the denial of Section
13-6-11 attorney fees for failure of pleading. The
plaintiff had include the a paragraph in the prayer reading “[a]ttorney fees and
costs of litigation.” A general request
for attorney fees without reference to O.C.G.A. § 13-6-11 and the pleading of the facts
supporting the criteria required by the statute is insufficient to support an attorney fee
award. An award of attorney fees is
“clearly erroneous” where the plaintiff fails to plead with the requisite
specificity.
The
failure to plead for attorney fees in the complaint may be fatal to a claim.
O.C.G.A. §
9-11-8(a)(2)(B) requires a demand for judgment for the relief to which the pleader deems
himself or herself entitled. The claim for
attorney fees must be carried over and included in the pretrial order or it will be lost.
O.C.G.A. §9-11-16(b). Fussell v. Carl E.
Jones Development Co., Inc., 207 Ga. App. 521, 428 S.E.2d 426 (1993). Likewise, in order to obtain a proper jury
instruction, the requested charge must be timely submitted.
Uniform Superior Court Rule 103, Parkside Center, Ltd. v. Chicagoland Vending,
Inc., Ga. Ct. Appeals case no. A01A0461, 552 S.E.2d 557 (2001).
When suing a municipal
corporation protected by O.C.G.A. § 36-33-5,
the proper ante-litem notice must be given or the case will be dismissed. Dover Realty Co v. City of
Jackson, 243 Ga.App. 464, 533 S.E.2d 747 (2000).
The
jury must be charged on the issue. The
Pattern Jury charge is:
The
expenses of litigation are not generally allowed as a part of the damages. But, if the defendant has acted in bad faith or
has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and
expense, you may allow them. You should
determine from the evidence the attorney fees (or other expense) if any, as will be
allowed.
O.C.G.A. §13-6-11
(Suggested Pattern Jury Instructions, Volume I: Civil Cases, Third Edition, p. 93.)
Though proper, this
charge seems substantially worthless in presenting the jury with a meaningful
understanding of the nuances of the law on attorney fees.
Good practice would be to create additional charges to refine the issues of the
particular case, emphasizing definitions of the terms in the charge. In particular, a defendant should include a charge
to the effect that the existence of a bona fide controversy precludes the
"unnecessary trouble and expense and stubbornly litigious" award. In a "bad faith" case, the law applying
to bad faith should be given. A definition of
"bad faith" should be given. After
that an appropriate charge explaining the application of "bad faith" conduct to
entitlement to attorney fees in a "bad faith" contract case would be the holding
in Young v. A. L. Anthony Grading Co., 225 Ga. App. 592, 593, 484 S.E.2d 318 (1997):
Bad faith warranting an
award of attorney fees must have arisen out of the transaction on which the cause of
action is predicated. It may be found in
carrying out the provisions of the contract, that is, in how defendant acted in his
dealing with the plaintiff. Bad faith other
than mere refusal to pay a just debt is sufficient, provided it is not prompted by an
honest mistake as to one's rights or duties but by some interested or sinister motive. So, defendants can be held liable for attorney
fees if they committed the breach in bad faith.
In an intentional tort
case, a charge to the effect that the intent involved in the commission of an intentional
tort constitutes sufficient bad faith to support an award under the "bad faith"
prong of the statute. A proper charge would
be, "Every intentional tort entitles a person so wronged to recover the expenses of
litigation including attorneys fees. " See,
Stargate Software International, Inc. v. Rumph, 224 Ga. App.873, 878, 482 S.E.2d 498, 503
(1997) and Bibb Distributing Co. v Stewart, 238 Ga.App. 650, 519 S.E.2d 455 (1999).
In addition, charges
should be submitted concerning any defenses to the claim such as unclean hands of the
plaintiff if fitted to the facts.
Defense
summary judgment and motions for directed verdict are also appropriate when the facts and
law show the existence of real disputes. Williams
Tile & Marble Co., Inc. v. Ra-Lin & Assoc., 206 Ga. App.750, 752, 426 S.E.2d 598
(1992). It is not improper for a judge to
refuse to submit an "unnecessary trouble and expense and stubbornly litigious"
issue to the jury when a real controversy exists.
As
a matter of timing of the trial of the attorney fees issue, the issue should be part of
the trial of the main case and the issue submitted to the jury. A ruling on attorneys fees is premature prior to
the time the issue of damages goes to the jury. See,
East Beach Properties, Ltd., v. Taylor, Ga. App. Case No. A01A0030, 552 S.E.2d 103 (2001).
The evidence of attorney
fees must be presented as a part of the Plaintiff's primary case and must be proven by
evidence showing that the fees are attributable to the claim forming the basis of the
recovery. A plaintiff in a non-bad-faith case
can only recover the fees attributable solely to the presenting of the plaintiff's main
claim and may not recover for the expense of defending a counterclaim. Lineberger v.
Williams, 195 Ga. App. 186, 189, 393 S.E. 2d 23, 26 (1990).
The Reasonableness of fees may be shown through testimony of another attorney who
examined the file. Miner v. Harrison, 205 Ga. App. 523, 422 S.E.2d 899 (Ga.App. 1992). Damage awards must be supported by trial evidence. See, e.g., Tri-State Systems v. Village Outlet,
135 Ga.App. 81, 85(2), 217 S.E.2d 399 (1975). The
allowance of attorney fees must be supported by evidence as to the amount of the fees and
cannot be based upon guesswork. Wahnschaff
Corp. v. O. E. Clark Paper Box Co., 166 Ga. App. 242, 394 S.E.2d 91 (1983). When a defendant is entitled to attorney fees for
a viable counterclaim, the defendant is entitled to recover the fees attributable solely
to prosecuting the counterclaim by separating them out from the other fees in the case.
International Indemnity Co. v. Regional Employer Service, Inc., 239 Ga.App. 420, 520
S.E.2d 533 (1999). Compare Lineberger v.
Williams, 195 Ga. App. 186, 189, 393 S.E. 2d 23, 26 (1990).
Counsel may present
their attorney fees by "stating them in their place" as long as the opposing
party does not object. It has long been the
law that "[w]here counsel [make] statements in their place, they may be received
without verification unless the same is required by the opposing party at the time." Caldwell v. McWilliams, 65 Ga. 99, 101(3) (1880). See also Cross v. Cook, 147 Ga.App. 695, 696(3),
250 S.E.2d 28 (1978), in which it was stated that "[a]ttorneys are officers of the
court and their statements in their place, if not objected to, serve the same function as
evidence. [Cits.]" It is however, error
not to allow the opposing side to cross-examine the attorney. Georgia Bldg. Services, Inc. v. Perry, 193 Ga.App.
288, 387 S.E.2d 898, (Ga. App. 1989). Care,
however, must be taken by the attorney stating the attorney fees in his place to fully
cover the evidentiary pre-requisites of the claim, including the amount of time spent, the
nexus and apportionment between the time spent and the prevailing claims, and most
importantly that the fees are reasonable and necessary.
In a dissenting opinion in Lawrence v. Direct Mortgage Lenders Corp., 254 Ga. App.
672, at 685, 563, S.E.2d 533 at 543 where attorney fees were allowed. Judge Eldridge
pointed out that [P}laintiff’s counsel testifies about the hours worked, the amount
per hour, and what the work was for but failed to testify that the attorney fees were
reasonable, such attorney fees are not recoverable.”
This dissent should be taken as a warning that the plaintiff’s counsel must
fully state all of the facts necessary to support an attorney fee award when he states his
fees. If the plaintiff’s attorney fails
in this task. A motion by the defendant is
appropriate after the close of the evidence. If
the defense attorney fails to raise the issue of whether a proper evidentiary showing has
been made at trial during the trial, the issue cannot be considered on appeal. Owens v. McGhee & Oxford, 238 Ga.App. 497, 518
S.E.2d 699 (1999).
In Hall v. Robinson, 165
Ga. App. 410, 300 S.E.2d 521 (Ga.App. 1983), the Court of Appeals affirmed a case, finding
that there was competent evidence establishing the reasonable value of appellee's attorney
fees. Appellee's counsel stated in her place
the amount of time she had put in the case and her hourly rate, which she felt to be
reasonable for an attorney of her experience. Appellant
did not cross-examine appellee's counsel or challenge her testimony in any other manner. The Court of Appeals found her testimony
sufficient to establish the reasonable value of appellee's attorney fees under Altamaha
Convalescent Center v. Godwin, 137 Ga.App. 394, 397, 224 S.E.2d 76.
On an award of $35,000
attorney fees on a judgment with actual damages of $278,622, and punitive damages of
$500,000, the Court of Appeals found an award of attorney fees supported by the evidence
upon testimony from the Plaintiff and the statement in place by counsel. Counsel had stated
"that through almost ten years of protracted litigation and the earlier appeal
process, Plaintiff has incurred $35,000 in attorney fees." Scriver v. Lister, Ga. Court of Appeals,
A98A1414 (FCDR January 11, 1999.)
In
First Bank v. Dollar, 159 Ga. App. 815, 285 S.E.2d 203 (1981), the Court of Appeals
reversed an attorney fee award based solely on the testimony of the Plaintiff/Appellee. Appellant did not contest the sufficiency of
the evidence of the statutory prerequisite to an award of attorney fees (bad faith,
stubborn litigiousness, causing appellee unnecessary trouble and expense), but maintained
that appellee's testimony that he had agreed to pay his attorneys "[a] third on
contingency on the tax", was not
sufficient proof of the legal fees to support an award.
The court held that "An attorney cannot recover for professional services
without proof of their value," citing Price v. Mitchell, 154 Ga.App. 523(6), 268
S.E.2d 743. Generally, a party will
proffer the opinion testimony of his present counsel as well as that of other attorneys in
an effort to show what constitutes a reasonable attorney fee in light of the litigation
history of the case. See, Bankers Health Life
Ins. Co. v. Plumer, 67 Ga.App. 720(2), 21 S.E.2d 515.
A party's testimony as to the "approximate" cost of legal fees is
insufficient. Price v. Mitchell, supra. Inasmuch as appellee's testimony alone did not
give the jury sufficient basis upon which to award a reasonable amount for attorney fees,
it was error to enter judgment on the jury's award of attorney fees.
While
the trial court is authorized to award reasonable attorney fees based on its expertise,
there must be some evidence to support the court's award.
Sheppard v. Sheppard, 229 Ga. App. 494, 229 S.E.2d 240 (1997).
An
award of attorney fees is determined upon evidence of the reasonable value of the
professional service underlying the claim for attorney fees. A court may consider a contingent fee agreement
and the amount it would have generated as evidence of usual and customary fees in
determining both the reasonableness and the amount of an award of attorney fees. The court may determine the amount of the award of
attorney fees on the basis of hourly rates. The
trial court is not bound by the fee contract between the parties. Southern Cellular v. Banks, 209 Ga. App. 401, 433
S.E.2d 606 (1993).
In
Smith v. Travis Pruitt & Associates, P.C., 265 Ga. 347, 455 S.E.2d 586 (Ga. 1995), the
Supreme Court reversed a case in which Appellee's counsel stated in his place that fees in
the case "will exceed ten thousand dollars."
Although counsel proposed submitting to the trial court documentation of what has
been done in the case and how that figure was arrived at, no such documentation was
present in the record and there was no evidence of the number of hours spent on the case
or the hourly fee charged, no testimony from other attorneys or other evidence to show
what constituted a reasonable attorney fee in light of the litigation history of the case. "In short, the conclusory testimony of
[appellee's] counsel is the only evidence of attorney fees, and it is insufficient." Hughes v. Great Southern Midway, Inc., 265 Ga.
94(1), 454 S.E.2d 130 (1995)".
Good
billing records are essential to proof of attorney fees. Good objections and cross
examination may prevent introduction of bad billing records. Billing records are subject to the same rules as
any other evidence. Billing records are
subject to the hearsay rule. There must be a
proper foundation laid for the records, either based upon the personal knowledge of their
preparer or qualification as a business record. The
business record exception the hearsay rule (O.C.G.A. §44-3-14) will not automatically
make a billing statement into evidentiary support for the proof of the reasonableness and
necessity of an attorney work. Confusion
results in this area based upon at least one previous case concerning an award of attorney
fees which indicates that a supervisor's testimony as to the amount, necessity, and
reasonableness of the time spent by his employees is sufficient to establish the amount of
the attorney fee award. See, Santora v.
American Combustion, Inc., 225 Ga. 771, 485 S.E.2d (1997).
Conversely, other cases indicate that it is not sufficient for only the lead
attorney on a case to testify as to the time spent by the others who worked on the case. See e.g., Southern Company v. Hamburg, 220 Ga.
App. 834, 470 S.E.2d 467 (1996); Southern Cellular Telecom v. Banks, 209 Ga.App. 401, 433
S.E.2d 606 (1993). The question that
arises is whether it was the intention of the court in Santora to carve a new exception to
the hearsay rule in cases such as this, or whether the facts of the Santora case indicated
to the court that the supervisor worked so closely on every part of the case that he or
she actually had personal knowledge of the time spent by other employees. The cases do not clearly state how much hearsay is
allowable in these attorney fee cases. Elbow
to elbow work may equate to personal knowledge of another's work.
Under
common time-keeping practices, attorneys prepare paper time slips that are later edited,
collated, and summarized into billing reports and bills.
Under this practice, the time slips are the true business record of original entry.
The bills and reports are only summaries. Under
the rules of evidence, summaries are admissible only if the underlying records are present
in court. The issue of the admission and
evidentiary value of summaries of time records recording the time of attorneys other than
the witness has been raised in several cases. In
Southern Company v. Hamburg, 220 Ga. App. 834, 470 S.E.2d 467 (1996) and Southern Company
v. Hamburg, 231 Ga. App. 685, 500 S.E.2d 1 (1998), it was determined that such summaries
constitute nothing more than hearsay as to the amount of time spent when the expenses
listed on such summaries were generated by persons who did not testify at the attorney
fees hearing. Hamburg, 470 S.E.2d at 474. Billing sheets, expense reports and
summaries recording time and expenses recorded by persons (primarily attorneys) who are
not proffered to authenticate their work constitute nothing more than "hearsay, and
hearsay, even when admitted into evidence without objection, lacks probative value to
establish any fact. Southern Company v. Hamburg, 231 Ga. App. 685, 500 S.E.2d 1 (1998);
Howell Mill/Collier Assoc. v. Pennypacker's, 194 Ga.App. 169, 171(2), 390 S.E.2d 257. Mitcham v. Blalock, 214 Ga.App. 29, 31(2), 32 [447
S.E.2d 83].' Citadel Corp. v. All-South Subcontractors, 217 Ga.App. 736, 737(1), 738, 458
S.E.2d 711. Southern Company v. Hamburg, 220
Ga.App. 834, 842(5), 470 S.E.2d 467.
In
Paul v. Destito, 550 S.E.2d 739, Ga. App. Case No. A01A0186 (2001), the Court of appeals
reversed and remanded a j.n.o.v. of a $90,000 attorney fee award that was not properly
supported by detailed testimony and billing records sufficient for a jury to reasonably
calculate the litigation expenses and to separated the expenses associated with the claim
and the counterclaim. The Court of Appeals
found that even if the jury had no basis to reasonably calculate litigation expenses,
defendants were not entitled to judgment on the claim.
The proper remedy is for the trial court to conduct a hearing on the issue of
attorney fees and expenses. The Court of
Appeals reversed and remanded for the attorneys fee hearing.
Careful
attention should be paid to the Best Evidence Rule. O.C.G.A.
§24-5-4 provides that the best evidence which exists of a writing sought to be proved
shall be produced, unless its absence shall be satisfactorily accounted for. If the only record brought to the court is a copy
of the client's bill summarizing the time slips, the document should be rejected under the
Best Evidence Rule unless a satisfactory explanation for the absence of the underlying
documents is made. A similar issue to this
arose in White v. Dillworth, 178 Ga. App. 226, 342 S.E.2d 709 (1986). In that case, a dentist sought to introduce into
evidence a purported summary of information concerning his patients and their payment
status. The summary was compiled from daily
work logs which in turn were created from the records of the individual patients. White, 342 S.E.2d at 710-711. The trial court sustained a best evidence
objection to these records. Determining that
the original patient records were the primary source of the information contained in the
summaries which the dentist sought to introduce, the Court of Appeals determined that the
summaries were indeed secondary evidence and inadmissible absent a showing that the
primary evidence was inaccessible. Attention
should also be paid to O.C.G.A. §§ 24-5-25 and 24-5-26 that state the rules for
introducing copies of records.
The
requirement that the plaintiff prove the necessity and reasonableness of the attorney fees
sought necessitates testimony from plaintiff’s counsel. Only the attorney who did or closely supervised
the work has true personal knowledge of whether the work was necessary. Likewise, unless two attorneys are working
literally elbow to elbow, only the attorney doing the work has personal knowledge of his
own work.
This testimonial
necessity places the attorney in a difficult practical and ethical position, that of being
both advocate and witness. It also gives the
adversary attorney a good chance to discredit plaintiff’s counsel if the attorney can
be impeached in any way. This is a great time
for the defendant’s attorney to use plaintiff’s billing records, correspondence,
and pleadings to highlight unreasonable positions, excessive fees, and unclean hands of
the plaintiff perpetrated by the plaintiff’s attorney.[5]
At the same time, the defendant’s attorney intimate knowledge of the rationale
for the defense may make the defense attorney a key witness for the defense to justify a
litigation strategy and to prove the existence of a bona fide controversy. All attorneys must be wary of the statutes and
Canons of Ethics relating to attorneys taking the witness stand.
On appeal the "any
evidence" rule applies to factual determinations.
Spring Lake Property Owners Ass'n. v. Peacock, 260 Ga. 80, 390 S.E.2d 21 (1990). "When a trial court sits as both judge and
jury, the court's findings of fact are binding on appeal, and, unless wholly unsupported
or clearly erroneous, will not afford a basis for reversal.
On appeal, this court must not substitute its judgment for that exercised by the
trial court when there is some support for the trial court's conclusion. Our duty is not to weigh evidence de novo, but
[merely to] determine if there is any evidence that supports the judgment below. Even in the face of conflicting evidence, the
trial court's judgment will be upheld as long as there is 'any evidence' to uphold the
lower court's determination." (Citations
and punctuation omitted.) Edwards v. Wilson,
185 Ga.App. 514, 515(1), 364 S.E.2d 642." Jennings Enterprises, Inc., v. Carte, 224
Ga.App. 538, 481 S.E.2d 541 (1977).
Make sure the case is reported if you think you may lose and
have to appeal. In Performance Mechanical Co.
v. Heat Transfer Control, Inc., 247 Ga.App. 436, 543 S.E.2d 808 (2000), the Losing
defendant contended there was insufficient evidence of bad faith to support claim of
attorney fees. There was no trial transcript. The Court of Appeals affirmed because it must
assume in the absence of a trial transcript that the evidence supports the verdict.
Lack of clean hands on
the plaintiff's part authorized the trial court to exercise its inherent discretion and
decline to award attorney fees. If the
plaintiff has acted in bad faith, has been stubbornly litigious, or has caused unnecessary
trouble and expense, such factor may be considered by the trial court and will, either
standing alone, or in conjunction with other operable facts, constitute some evidence to
support a denial of the request for attorney fees. Crotty v. Crotty, 219 Ga. App. 408, 465
S.E.2d 517 (1995).
Attorney fees cannot be
awarded in a declaratory judgment action because the purpose of the action is "to
settle and afford relief from uncertainty and insecurity with respect to rights, status
and other relations." O.C.G.A. §9-4-1. Thus,
the plaintiff must plead the fact that “a bona fide controversy exists” as the
foundation of the action. The existence of
that controversy in a declaratory judgment action precludes plaintiff from seeking
attorney fees under O.C.G.A. §13-6-11. General
Hospitals of Humana, Inv. v. Jenkins, 188 Ga. App. 825, 374 S.E.2d 739 (1989).
A great disparity
between the amount sought by the plaintiff and the actual recovery may preclude a recovery
under O.C.G.A § 13-6-11.
Counties are subject to
O.C.G.A. § 13-6-11 and are not immune. In
Unified Government of Athens-Clark County, Ga. App. Case No. A01A0724, 551 S.E.2d 798
(2001, cert. den. 11/30/2001), the Court of Appeals affirmed a bad faith attorney fee
award arising out of a contract between Athens-Clark County and a developer in which the
County failed timely to build a road to a water plant because the county staff was
attending to “day to day” matters they deemed to be more pressing, without
telling developer and thereby purposefully breached the contract. Counties that act in bad faith are subject to
having to pay attorney fees. Irwin County v.
Owens, 256 Ga. App. 359, 568 S.E.2d 578 (2002).
In
trying the issue of attorney fees, the issue of reasonableness of attorney fees may be
affected by the settlement posture of the case. It
may be important to the jury to know if one side has made settlement offers that
reasonably should have ended the case earlier. A
plaintiff's unreasonable refusal to settle may make taxing of subsequent fees
unreasonable. Conversely, the defendant's
refusal to settle on any terms may be proof of the necessity and reasonableness of
plaintiff's fees. Even in a "bad
faith" case, the O.C.G.A. §24-2-37 normally prevents the introduction of
negotiations seeking a compromise of a dispute from being admissible in evidence. The Code section states:
O.C.G.A. §24-3-37. What admissions not proper evidence.
Admissions
obtained by constraint, by fraud, or by drunkenness induced for the purpose of admissions
or propositions made with a view to a compromise are not proper evidence.
The
purpose of this Code section is to encourage settlements and protect parties who freely
engage in negotiations directed toward resolution of lawsuits. Computer Communications Specialists, Inc. v. Hall,
188 Ga. App. 545, 373 S.E.2d 630 (1988). There
is a distinction between an offer or proposition to compromise a doubtful or disputed
claim under this section and an offer to settle upon certain terms a claim that is
unquestioned. The offer of compromise is
protected and the offer of settlement is not. An
admission made in an offer to settle will be admissible while one made in an offer to
compromise will not be admissible. Charter
Mtg. Co v. Arouse, 165 Ga. App. 497, 300 S.E.2d 328 (1983).
Evidence
of offers of compromise may be admitted by necessity.
"In all cases where the object sought to be proved can be proved without
violation of a rule of evidence designed to prohibit prejudice, it should be done so, or
where the merit of the evidence clearly outweighs its prejudice." Fred F. French Mfg.
Co. v. Long, 169 Ga. App. 702, 314 S.E.2d 666 (1984). "However
where the evidence is necessary for some permissible purpose, and the object is not
provable by some available means, it is not error to allow other inadmissible
evidence." Gordon v. Gordon, 133 Ga.App.
520(1), 211 S.E.2d 374 (1974). If the
proffered evidence of negotiations meets these tests, it should be admitted. Holbrook Contracting, Inc. v. Tyner, 181 Ga. App.
838, 354 S.E.2d 22 (1987). In Progressive
Life Ins. Co. v. Smith, 71 Ga. App. 157, 30 S.E.2d 411 (1944), the Court held that a
conversation between an attorney for the beneficiary and a proper official of the company
is admissible for the purpose of illustrating the good or bad faith of the company in
refusing to pay the amount claimed, where the evidence negates a claimed effort to
compromise. In Fenters v. Fenters, 238 Ga.
131, 231 S.E.2d 741 (1977). In U-Haul Co. v.
Ford, 171 Ga. App. 744, 320 S.E.2d 868 (1984), evidence that the plaintiff, in attempting
to discuss her claims arising out of an automobile collision, could not get a response
from the defendant insurer, though not proper evidence under O.C.G.A. § 24-3-37, were
properly admitted under O.C.G.A. § 13-6-11 to show that the defendant acted improperly.
The trier of fact for
the main case determines the attorney fees issues along with the plaintiff's main case. In a jury case, the issue of attorney fees is a
question of fact and must be presented to the jury before the jury is authorized to grant
any fees. Stargate Software International, Inc. v. Rumph, 224 Ga. App.873, 878, 482 S.E.2d
498, 503 (1997). The question of whether a
refusal to pay a debt constitutes bad faith is a jury issue. Kent v. Brown, 274 Ga. 849, 561 S.E.2d 89 (1999), p 6. The plaintiff must request the fees and the court
must charge the statute or the elements of recovery set forth in the statute before the
court is authorized to submit the issue of attorney fees under O.C.G.A. §13-6-11 to a
jury. MTW Investment Co. v. Alcovy
Properties, Inc., 228 Ga. App., 491 S.E.2d 460 (1997).
Code sections 13-6-11,
9-15-14, and 51-7-81 are all mechanisms for moving the burden of attorney fees to another
party. O.C.G.A. §13-6-11 applies only to
conduct occurring prior to the litigation. Conduct
occurring during the litigation is covered by O.C.G.A. §9-15-14 (a) and (b). Stone v. King, 196 Ga. App. 251, 395 S.E.2d
45 (1990). By the practical operation of the
statute that requires that the trier of fact assess attorney fees as a part of the main
case, section 13-6-11 can only collect attorney fees for the time up to the evidence phase
of the trial. Sections 9-15-14 and 51-7-81
are decided later so they may cover time for post trial work. Thus, there is overlap between the fees that may
be captured. The damages in all of these
sections are compensatory and it is simple logic that one can only recover the same
damages once from the defendant even if there are multiple grounds under which the fees
may be captured.
There is also a
liability coverage overlap between O.C.G.A. § 13-6-11 and the abusive litigation
sections. The "stubbornly litigious /
unnecessary trouble and expense" "no bona fide controversy" prong of
O.C.G.A. § 13-6-11 seems to cover some of the same conduct as the "complete absence
of any justiciable issue" language of O.C.G.A. § 9-15-14 for the instant when the
case is first filed. The conduct may, under
certain facts, include the "without substantial justification" conduct described
in O.C.G.A. §51-7-81(2). No court has yet
addressed the interaction between these provisions with respect to a case with no defense
or a default. Does the submission of evidence
of attorney fees and award or denial of an award under O.C.G.A. §13-6-11 collaterally
estop a later claim in the case for the same fees under O.C.G.A. §9-15-14 or O.C.G.A.
§51-7-81? In Walker v. McLarty, 199 Ga.App.
460, 405 S.E.2d 294 (Ga.App. 1991), the Court of Appeals affirmed a summary judgment
denying a claim for abusive litigation in a prior case because the trial judge found that
the denial of a summary judgment in the earlier case resulted in a collateral estoppel of
appellant's claim in the case at bar. Considering
Walker with O.C.G.A. §§51-11-5 and 9-2-44,[6] collateral estoppel and res judicata are
affirmative defenses and must be properly raised in the pleadings and pretrial order.
O.C.G.A. §9-11-8(c); O.C.G.A. §9-11-9(e), and , O.C.G.A. §9-11-16.
O.C.G.A.
§33-4-6 provided a remedy to provide a penalty and to recover attorney fees when an
insurer acts in bad faith and denies to pay a claim.[7]
The remedy is the exclusive remedy for bad faith denial of benefits so that litigation
expenses under O.C.G.A. §13-6-11 are not recoverable. McCall v. Allstate Ins. Co., 251
Ga. 869, 310 S.E.2d 513 (1984); Howell v. Southern Heritage Ins. Co., 214 Ga. App. 536,
448, S.E.2d 275 (1994); United Services Automobile Association v. Carroll, 226 Ga. App.
144, 486 S.E.2d 613 (1997).
O.C.G.A.
§§51-12-5, 5.1, and 6 provide the remedies of punitive and exemplary damages. Attorney
fees and expenses of litigation are not punitive or exemplary damages but stand alone and
are regulated by § 13-6-11. Dodd v. Slater, 101 Ga. App. 358, 114 S.E.2d 167 (1960). Individual damage items, such as punitive damages
awarded as additional damages or expenses of litigation, do not provide the requisite
support for each other. They are recoverable
only in cases where other elements of damages are recoverable. Cleary v. Southern Motors
of Savannah, Inc., 142 Ga. App. 163, 235 S.E.2d 623 (1977).
Adjudication of O.C.G.A.
§ 13-6-11 requires careful attention to procedure, the statute, and the rules of
evidence. Read the statute. The issue should not be considered lightly. Errors on the issue of attorney fees result in a
surprising number of reversals and remands each year at the appellate level. Most of the reversals are caused by a failure of
the judge to handle the evidentiary issues, either by improperly granting a summary
judgment or by failing to require proper adherence to the rules of evidence. Several cases have been remanded for more complete
findings of fact on bench trials.
At the beginning of the
trial, the court should determine whether the issue is properly before the court. Are sufficient facts alleged in the Complaint or
Counterclaim to raise the issue of attorney fees? Does
the ad damnum clause contain a proper prayer for attorney fees?
Is
the issue properly set forth in the pretrial order?
Is
there a special attorney fee statute for the cause of action? If so, is the special statute the sole remedy? See, Cagle v. State Farm Rire & Casualty
Company, 236 Ga. App. 726, 512 S.E.2d 717 (1999).
In the evidentiary phase
of the trial, care must be taken that the defendant has an adequate opportunity to
cross-examine the plaintiff's evidence. Often
attorneys are hesitant to cross-examine their opposing counsel and do not take their
opportunity to do so. It is good practice for
the judge to inquire if the defendant wishes to cross-examine the evidence and make any
waivers explicit and on the record to prevent later claims that the defendant was not
allowed to cross-examine.
Very special care must
be made to make sure that the attorney fee claims are supported by first hand evidence and
not by hearsay. The cases are clear that
unless an attorney worked elbow to elbow with another attorney on a case, an attorney
cannot testify as to time spent by another attorney or as to the reasonableness or
necessity of another's work without falling afoul of the hearsay rules. Attention must be given to the best evidence rule. A good practice would be to let everyone know at
the pretrial conference that the judge will require strict adherence to the rules of
evidence on attorney fees so everyone can be prepared to have all of the necessary
attorney witnesses in the courtroom at the appropriate time.
Facts
supporting the statutory basis of the claim must be presented by proper evidence. What conduct is the basis for the action? Is it Bad Faith, no bona fide defense, or both? When did the predicate conduct occur? Be careful to exclude evidence of conduct
that occurred after the filing of the case. Such
conduct is simply irrelevant and is punished by the sanctions against abusive litigation,
not O.C.G.A. § 13-6-11.
If the case is bench
tried, use the statute to formulate the findings of fact.
Make a specific finding for each clause and rule.
Remember that O.C.G.A. § 13-6-11 is a statute that punishes misconduct. If there is no misconduct, no fees should be
granted. Be sure to list the specific
acts that constitute the predicate misconduct. List
the evidence proving the acts.
If
the case is tried before a Jury, charge the statute.
The issue must be decided as a part of the main case and the jury verdict. Solicit additional charges that conform to the
facts of the case. Insure that there are
proper verdict forms suited to the issues
O.C.G.A.
§ 13-16-11 can be a minefield for both judges and litigants. Often attorney fees can be the lion's share of a
verdict. The Code section is highly technical
and requires careful attention if the facts of
