As part of the Georgia Tort Reform package in 2005, the legislature passed a settlement procedure statute meant to put some teeth into settlement negotiations. Now O.C.G.A. § 9-11-68, (a/k/a Rule 68 – Offer of Settlement), allows either party in a tort case to serve the other party with a written offer to settle, so long as the offer is made 30 days after service of the summons and complaint, and so long as it made within 30 days of trial (20 days if it is a counteroffer). The threat of having to pay the other side’s attorneys’ fees and expenses is meant to put more pressure on the other party to accept the offer or risk paying fees.
It works like this; If the defendant makes an offer, which is rejected by the plaintiff, the defendant can collect attorney fees and expenses incurred from the date of the rejection through the entry of judgment if the final judgment is less than 75% of the offer made. On the other hand, if the plaintiff makes an offer, which is rejected by the defendant, the plaintiff can collect attorney fees and expenses incurred from the date of the rejection through the entry of judgment if the final judgment is greater than 125% of the offer made.
So, for example, if the plaintiff sends the defendant an offer of settlement, let’s say for $100,000, defendant has 30 days to accept it and its terms before the accompanying fees and expenses clock begins pursuant to O.C.G.A. sec 9-11-68which states: 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 ($100k x 125% or $125k), 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.
Of course there are plenty of procedural hoops that parties must go through to meet the statute’s requirements. Any offer 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.
If the time runs out on an offer and the party has not responded it is considered a rejection. If a party makes a counter-offer it is considered a rejection. If a party does not fully accept the terms as they are stated in the offer, it is considered a rejection. The party must accept the offer as is with the conditions as they are made or there is no deal. For instance if the defense wants plaintiff to agree to certain release language, a confidential settlement, to pay all medical liens, agree to indemnify and hold them harmless, sign a medical lien affidavit, whatever the case may be, it needs to be stated in the offer. Defendants must be cognizant that if they send an offer of settlement they are likely to get a statutory offer in return.
The award of fees is mandatory, not discretionary by the court, unless it was not made in good faith. A defense verdict alone is not sufficient under the statute to determine that an initial offer was made in good faith. In Great W. Cas. Co. v. Bloomfield, 313 Ga. App. 180, 181, 721 S.E. 2d 173, 175 (2011), one of the defendant trucking companies involved in a two tractor-trailer accident made a $25,000 offer of settlement pursuant to O.C.G.A. § 9-11-68. The plaintiff rejected the offer. At trial, the jury found no liability against the trucking company who had made the offer. However, the trial court denied their motion for attorney fees. The court found that the offer was not made in good faith because the case involved a wrongful death, and the amount offered was not a reasonable offer or a realistic assessment of liability in a wrongful death case. Additionally, the court noted that the defendant’s driver paid the citation he was issued, and at the time the offer was made, defense counsel had never deposed or even interviewed the first arriving police officer on the scene. Furthermore, during trial, the same defendant offered $1 million to settle the case. The Court of Appeals affirmed the trial court’s ruling that the defendant’s offer was not made in good faith.
Nominal offers of judgment are not per se invalid. If the party making a nominal offer of settlement has an informed basis to believe that it has no liability (such as a legal argument that can dispose of the case on a dispositive motion), such an offer will likely be found to have been made in good faith. On the other hand, nominal offers made without any factual or legal basis are unlikely to support an award of fees under sec. 9-11-68. Before making a nominal offer of settlementdefendants and their counsel should carefully analyze whether it has factual or legal basis such that it is being made in good faith. Another thing to consider in making an offer of settlement is whether the other party can pay the fees. If the plaintiff has no means to satisfy an award of attorneys fees you’ll have wasted time and expense of bringing the issue to court.
Finally, a somewhat recent decision allows plaintiff attorneys to be awarded their contingency fees instead of an hourly rate. Georgia Dept. of Corrections v. Couch, 322 Ga. App. 234, 744 S.E. 2d 432 (2013). Awarding plaintiff attorneys contingency fees means that the “clock” is taken out of the equation entirely. In other words they are awarded their entire amount of legal fees and expenses of litigation from the beginning of the case to judgment instead of from the date of rejection of the offer. That means that plaintiffs have the advantage under 9-11-68 in getting their entire contingency fees paid, the most common fee arrangement for plaintiffs in personal injury cases, whereas this arrangement is impossible in the defense of these cases.
About the Author
Maureen O’ Conn0r has over 20 years of experience in the insurance claims industry. Her practice is primarily concentrated in the areas of premises liability defense, personal injury, construction, wrongful death, catastrophic injury, professional negligence, and related litigation. Molly has been with Mabry & McClelland, LLP, since 2008.
About Mabry & McClelland, LLP Mabry & McClelland, LLP is one of the oldest and most respected Civil Litigation Defense firms in Atlanta, celebrating 50 years of service to the Insurance and Business community.
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