Georgia tort reform — puzzling offer of judgment rule

Posted on March 3, 2005 by Ken Shigley

Georgia’s tort reform legislation, Senate Bill 3, includes in Section 5 an offer of settlement / offer of judgment provision that, if carried to its full potential, will be extremely oppressive to middle class plaintiffs and may incur “mutual assured destruction” on both plaintiff and defense bars. Or, if a tacit truce evolves and it is rarely used, it could become the benign encouragement of settlement that its legislative sponsors promised.
Limited to tort cases only, the new OCGA Section 9-11-68(effective 2/16/05, applicable to pending cases) provides that if a party rejects an offer under the code section and does not improve its position 25% at trial, the offeree is required to pay the offeror’s attorney fees and expenses after rejection of the offer. That’s bad enough, but it’s not that simple.

Ken Shigley represents plaintiffs in wrongful death and catastrophic injury cases statewide in Georgia, and in other states subject to the multijurisdictional practice and pro hac vice rules in each state. Ken Shigley was designated as a “Super Lawyer” in Atlanta Magazine and one of the “Legal Elite” in Georgia Trend Magazine. He is President-Elect of the State Bar of Georgia (2011-12), a Certified Civil Trial Advocate of the National Board of Trial Advocacy, Chair of the Southeastern Motor Carrier Liability Institute and former chair of the Georgia Insurance Law Institute. He particularly focuses on cases arising from truck wrecks and accidents (tractor trailers truck wrecks, semi truck wrecks,18 wheeler truck wrecks, big rig truck wrecks, log truck wrecks, dump truck wrecks). He and Sally have been married since 1983, and are the proud parnts of two young adults, Anne Shigley and Ken Shigley, Jr.

  • http://wydd.com Carolyn Dayries

    1. If the parties to a civil action have agreed by contract to the manner in which attorney’s fees and expenses of litigation shall be handled between them in a civil action, then do those terms of the contract apply instead of the Code section? If so, it can become a common practice to serve a contract along with the Complaint on an opposing party so that neither party will make offers of judgments.
    2. What is the status of OCGA 9-15-14(c) which states “no attorney or party shall be assessed attorney’s fees as to any claim or defense which the court determines was asserted by said attorney or party in a good faith attempt to establish a new theory of law in Georgia if such new theory of law is based on some recognized precedential or persuasive authority?

    • http://wydd.com Carolyn Dayries

      1. What happens if the offeree did not have any information or documents to evaluate the claim and the discovery period had not expired before the making of the offer? Shouldn’t it be unfair to force the offeree to pay attorney’s fees for not accepting an offer 2 months into the litigation before he could even have a chance to evaluate that offer?
      2. If the policy of personal injury law and federal income tax law (which does not tax personal injury award earnings) is to “make the plaintiff whole”, then what happens if the offeror gives an offer that does not even cover all of the outstanding medical expenses? If the offer still meets the requirements of 9-11-68(b), should the offeror still obtain attorney’s fees?
      3. Can attorney’s fees exceed the amount of judgment obtained? For example, could Judgment be Awarded for the Plaintiff in a negative amount?

  • http://wydd.com carolyn dayries ayoub

    False Assumptions of the statute include:
    1.The statute assumes that 25% give or take the amount you will obtain in a lawsuit is ALWAYS reasonable. It’s not. Like with personal injury medical expenses, you deserve the amount of your medical bills. Not 25% less.
    2.The statute assumes it’s always reasonable or that a party is always forced to hire an attorney for every tort situation. Some situations have such a small dollar amount in dispute where an attorney should not always be hired. Some families cannot afford attorneys and advice, and in not having an attorney, they might not be able to predict a dollar amount of a judgment or judge whether a certain settlement is reasonable, and would be too poor to pay for someone else’s attorney’s fees. An attorney can charge $5,000 for a $3,000 lawsuit.
    3.The statute assumes that the amount of reasonable attorney’s fees cannot be valued in an amount proportional to the final judgment, but a reasonable settlement can be valued in an amount proportional to the final judgment by a math formula.
    4.The statute assumes that the amount a party will obtain in a judgment is always predictable. So, if you do not accept a judgment of 25% the value of the predicted judgment, you acted in bad faith because you KNEW how much would be awarded to you at judgment. And because you acted in bad faith, you should be penalized by having to pay the opposing side’s attorney’s fees.
    5.The statute assumes that the material part of tort judgments and of settlement offers consist ONLY of money awards. They don’t have other characteristics like “apologies”, of venting frustrations, etc.
    6.The statute assumes that no one is poor and can afford to pay all attorneys
    7.The statute assumes that all trials are costlier than pre-trial settlement negotiations. The statute assumes that settling a case is always better and cost effective no matter what type of tort case is at hand. If you’ve ever watched the People’s Court, you find that sometimes trials are more cost efficient (if attorneys are not hired), and quicker than if the parties are involved in long pre-trial procedures where endless depositions are taken and written discovery is exchanged.
    8.The statute assumes that trials are inherently bad and should be avoided. It assumes that trials don’t have positive characteristics like conflict resolution, giving a forum for parties to air out their frustrations, of giving the parties dignity, instilling respect for our governmental system, or giving people good jobs.
    9.As a corollary to the “all judgment amounts can be predicted”, the statute assumes that no new arguments or new theories of law should be tried in front of a judge to make new precedent. All law is set in stone forever, and thus, this makes all judgment amounts predictable. It assumes that no parties should be awarded for making new theories of law.
    10.since trials are so bad, this provision is supposedly attempting to reduce the length and number of trials. But the statute requires additional hearings that go against these assumptions.
    This statute is trying to say that a party should have to pay opposing side’s attorney’s fees if it does not accept a reasonable settlement. “Reasonable” should not be put down to a formula since it is very situation-specific. “Re asonable” can’t be litigated to a math formula. “Reasonable” is a decision for the judge and jury. The law should be written “if an offeree rejects an offer, and this offer was an offer for judgment that satisfies formal requirements, and if the person was given all the information and time they required to reasonably make or reject this offer, and if the attorney’s fees are reasonable and no more than a portion of the judgment, then attorney’s fees should be awarded to the offeror.” By using the “reasonable” standard, a variety of circumstances can be accounted for on a case-by-case basis.

  • mgorr

    In considering prevailing party and pre-trial offer: 1)Is the amount the jury awards the amount determining or 2)is the amount determined after set off is applied.
    — Good question with no really clear answer!