Obtaining attorney fees from the opposing party is a desirable, but difficult task under Georgia law.
Obtaining attorney fees from the opposing party is a desirable, but difficult task under Georgia law. One strategy is to use O.C.G.A. § 9-11-68 to make an offer of settlement, which nearly amounts to placing a bet on what the case is worth. O.C.G.A. § 9-11-68 was passed as part of the Tort Reform Act of 2005. If the plaintiff makes an offer of settlement that is rejected by the defendant, then the plaintiff is entitled to recover attorney fees if the final judgment is an amount greater than 125 percent of the plaintiff’s offer. Conversely, if the defendant makes an offer of settlement that is rejected by the plaintiff, then the defendant is entitled to recover attorney fees if the final judgment is an amount less than 75 percent of the defendant’s offer. In either case, the attorney fees are calculated from the date of the rejection, which means that a later offer may have less of a bite than an earlier offer. Under O.C.G.A. § 9-11-68, either the plaintiff or the defendant may make an offer as early as 30 days after the service of a summons and complaint, and no later than 30 days before trial or 20 days before trial for a counteroffer. The timing of the offer of settlement and its effect on recovery was addressed in a recently published opinion of the Court of Appeals of Georgia.
The holding by the Court of Appeals of Georgia in Harris v. Mahone provides a cautionary tale to carefully follow the plain language of the statute for an offer under O.C.G.A. § 9-11-68 even if some outcomes of the statute seem untenable to the party. 340 Ga. App. 415, 797 S.E.2d 688, 690 (2017). The facts of the case involved a car accident where the plaintiff was rear-ended by the defendant, causing serious injuries. On September 8, 2015, a few weeks prior to trial, the Defendant sent Plaintiff an offer for $15,000, which provided that the offer would be deemed rejected if it was not accepted within 30 days. A few days later, on September 11, 2015, Plaintiff responded with a counteroffer to settle the case for $22,000, and similarly indicated that it would remain open for 30 days. In order to comply with the provisions of O.C.G.A. § 9-11-68, the offeror is required to keep the offer open for 30 days if the party desires that their offer qualify with the force of the statute. The offer must remain open for at least 30 days for the silence of the opposing party to be considered a rejection. The jury trial commenced on October 5, 2015. On October 8, 2015, the jury found in Plaintiff’s favor, awarding him $35,000 in damages. On November 1, 2015, the trial court issued a final order approving the jury verdict.
On November 18, 2015, the Plaintiff filed a motion for attorney fees under OCGA § 9-11-68 asserting that he was entitled to such fees because he received a monetary judgment more than 125 percent of his $22,000 pre-trial counteroffer. Defendant countered that the Plaintiff was not entitled to attorney fees because he never rejected the counteroffer in writing. Defendant also argued that the Plaintiff had already been compensated for his attorney fees, because after trial, the jury foreman informed both parties that the jury increased the original award by 44 percent to account for the Plaintiff’s attorney fees.
The trial court held a hearing on Plaintiff’s motions for attorney fees. The court issued an order finding that under O.C.G.A. § 9-11-68, Plaintiff was entitled to any attorney fees he incurred from October 11, 2015 through November 1, 2015, but awarded him no fees because he failed to show that he had incurred any fees for that time period. The trial court denied plaintiff’s requests for attorney fees under OCGA § 9-11-68. Plaintiff appealed, arguing that the trial court misconstrued OCGA § 9-11-68 in finding that, although he was entitled to attorney fees under the statute, he did not incur any fees during the applicable time period. Plaintiff argued that the outcome of the case was “bizarre” when provisions “a” and “c” of the statute are strictly construed.
The Court of Appeals of Georgia reviewed the issue de novo. Under O.C.G.A. § 9-11-68 (b)(2), the plaintiff is entitled to recover reasonable attorney fees and expenses of litigation incurred by the plaintiff “from the date of the rejection of the offer of settlement through the entry of judgment.” O.C.G.A. § 9-11-68(b)(2). The Plaintiff was only able to recover attorney fees beginning 30 days after the counteroffer was made, because the attorneys fees are only awarded from the date that the offer is deemed rejected. The plaintiff allowed his counteroffer to remain fully open for the 30 day time period. Plaintiff’s own counteroffer could have undermined his own favorable jury verdict if Defendant accepted the Plaintiff’s counteroffer. Defendant could have seized this opportunity to accept the counteroffer for $22,000 after the unfavorable verdict of $35,000, which was still open at the close of trial. The defendant could have also avoided the 9-11-68 argument for attorney fees by accepting the 9-11-68 offer.
Here, the Plaintiff was disappointed by the reading of the statute, which considerably dampens the usefulness of a counteroffer under O.C.G.A. § 9-11-68 when it is less than 30 days before trial because most of the expenses will have already been incurred by the time the rejection occurs at the 30 day mark (unless the offer is foolishly rejected sooner). Any counteroffer made within 30 days of trial should be carefully withdrawn to avoid its acceptance if the end result is more favorable for the offeror. The decision made by the Georgia Court of Appeals shows that the Court will not save a party for assuming that the statute will be construed in their favor when some of the provisions of the statute create a situation that would almost always be undesirable. The plain language of the statute allows a counteroffer to be made close enough to trial that 30 days after the counteroffer would come after the trial-eliminating the chance to get any meaningful award of attorney fees because a majority of the attorney fees would have already been incurred.
Based on this ruling, there is little reason for a party to outright reject a counteroffer made less than 30 days before trial. It is better for the offeree to wait for the outcome of trial and consider whether it ought to race to accept the offer should the offer be more advantageous than the judgment. In addition, the party considering whether to accept the offer is wise to leave the offer open until after the conclusion of trial. The attorney fees only begin to rack up after the trial, and it is likely that the opponent will not have many fees after trial, at least very little in comparison to the costs of attorney fees during trial. Any party considering making a counteroffer less than 30 days before trial should also consider whether there will be any actual attorney fees they can fight for after the trial. An offer under O.C.G.A. § 9-11-68 can be useful stick to encourage settlement, but loses its bite too close to trial. Parties should be careful not to assume that just because the statute allows a counteroffer 20 days before trial, it may not actually incentivize settlement or allow much of an award for attorney fees in most cases.