With the enactment of Senate Bill 3 by the Georgia General Assembly on February 15, 2005, for the first time under Georgia law, an “offer of settlement” rule was created.
With the enactment of Senate Bill 3 by the Georgia General Assembly on February 15, 2005, for the first time under Georgia law, an “offer of settlement” rule was created. The initial version of the law was quickly declared unconstitutional, and the General Assembly responded the following year be enacting House Bill 239. As a result, the constitutional issues were addressed and Georgia’s offer of settlement rule was reinstated. The effect is a law designed to encourage settlements and reduce trials.
Under the new rule, if a defendant makes an offer that is rejected by the plaintiff, the defendant is entitled to attorney fees and costs incurred after the rejection of the offer “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.” O.C.G.A. § 9-11-68(b)(1). Along the same line, if a plaintiff makes an offer that is rejected by the defendant, then the plaintiff is entitled to recover attorney fees and costs incurred after the rejection if “the plaintiff recovers a final judgment in an amount greater than 125 percent of such offer of settlement.” O.C.G.A. § 9-11-68(b)(1).
The statute seems simple when applied to a single plaintiff and a single defendant. However, how, are codefendants to respond to a single, undifferentiated offer made by a single plaintiff? If the offer is rejected, will the trial judge be able to determine the amount of the offer that was attributable to each defendant in order to further determine whether judgment against only one of the defendants was more or less than plaintiff’s offer? As Georgia’s current offer of settlement rule does not provide for this situation, this article will address several considerations that should be taken into account when placed in this position.
The first question to ask is under what theory of liability is plaintiff alleging that defendants are liable. One common possibility is that of joint and several liability. Prior to Georgia’s 2005 Tort Reform Legislation (“tort reform”), Georgia law provided for joint and several liability among joint tortfeasors such that a plaintiff could seek recovery of an entire judgment against any one defendant. The practical effect of joint and several liability was that a plaintiff could bring suit against defendants, who had only a small potential share of liability, but with a greater ability to pay the judgment. Although revised significantly by tort reform, the old joint and several liability system is still important because a case, which arose prior to tort reform, is governed under the old system of joint and several liability. In that situation, defendants receiving an undifferentiated offer of settlement must ask whether the trier of fact will be able and/or willing to apportion fault among the numerous defendants. If, for example, one defendant can easily estimate and establish that he is only responsible for a quarter of plaintiff’s damages, then that defendant would be safe in rejecting an offer.
In the alternative, liability and fault may be highly disputed by one or more defendants, or a trial judge may refuse to allow the jury to apportion damages. In either case, there is a greater risk that a single, unapportioned judgment will be obtained against all defendants. If the judgment exceeds 125% of plaintiff’s offer, there is no precedent directing Georgia courts how to apply the offer of settlement rule. The risk is that because the offer is against all defendants jointly, a trial judge will determine that individually apportioned judgments against each defendant, each exceeding 125% of plaintiff’s offer, are not necessary in order for plaintiff to receive attorney fees and costs. One solution is to properly evaluate the case prior to trial and determine whether fault can easily be apportioned. If it appears that apportioning fault will be a difficult task for the trier of fact and settlement is a desired course, then each defendant should respond to plaintiff’s offer indicating that the offer is unclear as to how much plaintiff is seeking from each defendant. The practical effect is, by responding, realistic settlement negotiations are opened between all parties.
Although commentators are at odds as to whether joint and several liability has been eliminated post tort reform, it is clear that apportionment of fault is now required among defendants. In addition, tort reform also provides for apportionment of liability “regardless of whether the person or entity was, or could have been, named as a party to the suit.” O.C.G.A. § 51-12-31. Although one practical effect of this new law is that it is now easier for defendants to settle separately, as tort reform eliminated the right of contribution among defendants, there is no guidance for how a defendant should respond to an undifferianted offer of settlement. In general, it would be unproductive for a plaintiff to serve an undifferianted offer of settlement on multiple defendants if plaintiff knows that there is a substantial likelihood one or more defendants will have a fraction of liability apportioned at trial. In reality, plaintiffs are likely to serve undifferianted offers of settlement and worry about the practical effects later. As before, each defendant should closely examine the facts of the case and determine how the evidence will play out to the trier of fact. Included in this analysis is how each codefendant will likely attempt to shift the blame at trial. Looking at the case as a whole, each defendant can then determine the likelihood that he or she can establish a level of liability at trial that will avoid judgment against him exceeding 125% of plaintiffs offer. Ultimately, the effect of Georgia’s new version of joint and several liability should be to focus plaintiff’s attention on the defendants with the most culpability, with offers of settlement made reflecting this determination.
A second possibility under which a plaintiff might attempt to hold defendants liable is that of vicarious liability. Unlike joint and several liability, in which both defendants have committed some act which jointly caused damage or injury to plaintiff, vicarious liability holds each defendant completely liable based on one defendant’s relationship with the other defendant. Under vicarious liability, apportionment of an offer of settlement would seem all but impossible since both defendants are being held completely liable for plaintiff’s injury. Moreover, after a judgment is rendered, the trial judge should have no difficulty in determining whether the judgment exceeds plaintiff’s offer by 25%.
The problem with this view is the assumption that vicarious liability is not disputed. If, on the other hand, the defendant being held vicariously liable is faced with an undifferianted offer of settlement, he or she must evaluate the case as a whole, including damages and the likelihood that a jury will find that party vicariously liable. With regard to damages, the vicariously liable defendant must examine the likelihood that plaintiff will obtain a judgment exceeding the offer. Although the vicariously liable defendant might be frustrated by being forced to pay any amount, he must realize that the defendant being held directly liable may be penniless, a judgment against whom would be worthless. In that situation, where the facts strongly establish vicarious liability, the wise decision would be to accept plaintiff’s undifferianted offer, avoiding the risk of paying a larger judgment plus plaintiffs fees and costs later.
In sum, Georgia’s offer of settlement does not allow parties to evaluate an offer as it applies to him or her. To be truly effective, an offer of settlement statute must cause an offeror to structure an offer in such a way that each offeree can adequately assess the offer. Moreover, an offer of settlement statute should permit a trial judge to determine the amount attributable to each party and assess whether judgment against only one of the parties is 25% more or less than the offer. Until clarifications are provided by Georgia courts, wise decisions and proper evaluation of the facts must be made by defendants in order to avoid paying plaintiff’s fees and costs.