A recent Law.com story by Cedra Mayfield, “Lawyers Are Watching as Attorney Fees Slashed Over ‘Value-Added’ Calculation”, reports that a Fulton County State Court judge has rejected a plaintiff firm’s request for a contingency fee-based award of attorney fees under Georgia’s offer-of-settlement statute. After taking issue with Brodhead Law’s approach used to calculate its seven-figure request, Judge John R. Mather opted to adopt defense counsel Webb Daniel Friedlander’s “reasonable hours and rate” proposal, and award plaintiff counsel just over $424,000.
The ruling is now catching the attention of lawyers, as it could have implications on a $549 million fee request based on a similar approach in the unrelated, yet high-profile Hill v. Ford case currently pending in Gwinnett County State Court.
40% Contingency
The underlying auto tort dated to a 2010 injury wreck between plaintiff Joao Junior and defendant Sharon Graham. Represented by Brodhead Law’s Ben Brodhead and Ashley Fournet, Junior sought compensatory damages, punitive damages, attorney fees and litigation costs under OCGA 13-6-11 in an amended complaint. However, prior to trial, plaintiff counsel served the defendant with a document styled “Plaintiff’s Offer to Settle Tort Claim to Defendant Pursuant to OCGA 9-11-68” that proposed to settle their client’s claims against Graham for $600,000.
Robb Cruser and former Cruser, Mitchell, Novitz, Sanchez, Gaston & Zimet colleague R. Russell Grant II handled Graham’s initial defense. Rather than agreeing to the proposed resolution, defense counsel failed to accept the settlement offer within 30 days of its issuance, rendering it rejected by operation of law, per court records.
When the case proceeded to trial before Mather in July 2019, Fulton State Court jurors found in Junior’s favor. The jury awarded the plaintiff $3 million in compensatory damages, $1.2 million in attorney fees and more than $51,500 in litigation expenses pursuant to 13-6-11. The attorney fee award aligned with the plaintiff’s fee agreement with Brodhead Law to pay counsel 40% of any compensatory damages award.
With the awarded compensatory damages exceeding plaintiff counsel’s $600,000 settlement offer by more than 125%, Brodhead Law filed a post-trial motion for attorney fees and litigation expenses under 9-11-68. However, defense counsel opposed the motion on grounds the plaintiff’s settlement offer had not been made in good faith. They also challenged that an award under 9-11-68 would give Junior a prohibited “double recovery.”
Siding with defense counsel, Mather concluded that allowing the plaintiff “a further award of attorney’s fees would permit a double recovery.” The trial judge contended 9-11-68 (b) (2) and 13-6-11 contemplated awards based on different conduct, but that the total of attorney fees and litigation expenses used to measure the awards had been ”incurred as to the same cause of action against the same defendant.”
In addition to concluding that the plaintiff had already been “fully compensated” for the entire amount of attorney fees and litigation expenses incurred in the underlying suit, Mather determined 9-11-68 (b) (2) permitted no additional recovery before denying the plaintiff’s motion. However, Mather did not conduct an evidentiary hearing before issuing his denial, prompting a plaintiff appeal.
Brodhead Law plaintiff counsel teamed with Darrell Hinson of Shiver Hamilton Campbell and Lawrenceville attorney John Wesley Ingram Nichols on appeal. Across the aisle, Cruser Mitchell defense counsel joined forces with Laurie Webb Daniel and Matt Friedlander of Webb Daniel Friedlander.
Junior’s appellant counsel argued the trial court erred in its determination that the jury award under 13-6-11 precluded the imposition of an award under 9-11-68 (b) (2), but the Georgia Court of Appeals affirmed Mather’s ruling, albeit on a different basis. The intermediate appellate court rejected the trial court’s rationale that receiving attorney fee and litigation expenses awards under both statutes in the same proceeding amounted to a double recovery.
However, the panel made up of Presiding Judges Sara Doyle and Christopher McFadden and Judge Kenneth Hodges II concluded the plaintiff could not demonstrate entitlement to an award under 9-11-68 (b) (2). “This is because by the time that Junior filed his motion pursuant to OCGA § 9-11-68 (b), he had no longer ‘incurred’ the $1,251,554.95 in attorney fees for which he was awarded additional damages by the jury—those costs had been compensated,” wrote Doyle in the October 2020 opinion.
After challenging the intermediate appellate affirmation, plaintiff counsel received a decision from the Supreme Court of Georgia in March 2022. After assessing whether 9-11-68 (b) (2) required the trial court “to deduct from the sanction any amount awarded by the jury as damages under OCGA § 13-6-11,” justices issued a 20-page opinion reversing the Court of Appeals’ affirmation.
“Contrary to the decision of the Court of Appeals, we hold that the statutory schemes at issue do not provide for or compel any such set-off because they address different conduct of the defendant despite using a similar measure—attorney fees and litigation expenses—to calculate their respective amounts,” read the decision written by Justice Charles Bethel. “Accordingly, we reverse the decision of the Court of Appeals and remand this case with direction that the case be remanded to the trial court for reconsideration of the plaintiff’s claim for attorney fees and litigation expenses pursuant to OCGA § 9-11-68 (b) (2) in a manner consistent with this opinion.”
‘Value-Added’ Model
Upon the reversal and remand traveling down from the Court of Appeals to the trial court, Maher held a hearing on plaintiff counsel’s motion for attorney fees on Sept. 22. After considering supplemental briefs from opposing counsel, Mather issued an order rejecting plaintiff counsel’s motion for attorney fees under 9-11-68. In determining on remand whether plaintiff counsel made its $600,000 settlement offer in good faith, the trial judge said he couldn’t make a definite determination.
“[T]he Court is unable to say that this offer was not made in good faith. The amount of Plaintiff’s special damages alone exceeded the amount of available coverage. While the Court’s visibility into the subjective motivations of Plaintiff are limited on the present record, he was permanently impaired and his ability to continue in his career was severely impacted. In relation to the damages actually suffered, it therefore appears that $600,000 was objectively reasonable,” Mather’s order read. “Further, while Defendant contends that the offer was beyond her financial capability to meet, the operative language of the statute gives no indication that the financial circumstances of the parties may be considered in determining whether an offer is made in good faith.”
Mather determined that an award is not precluded by a lack of good faith under 9-11-68(d)(2) but concluded plaintiff counsel had failed to provide “a reasonable basis” for its submitted attorney fee award calculation.
“Plaintiff advances a method of calculation that calculates his contingency percentage, 40 percent, based on the amount ultimately recovered—less the amount offered by either Plaintiff or Defendant pursuant to the procedure of O.C.G.A. § 9-11-68. Under this ‘value added’ calculation, the contingency rate would be applied against either $4,379,066.87 or $4,879,066.87—which represents a subtraction from the amount ultimately recovered either by the amount offered by Defendant ($100,000) or the amount offered by the Plaintiff ($600,000),” Mather wrote. “The problem with Plaintiff’s value added model is that this calculation does not necessarily bear any relation to the amount of work actually expended in the case between the time of the settlement rejection and judgment. Further, while Plaintiff’s counsel testified that ‘roughly a few thousand’ hours were required and pointed to twelve thousand electronic files generated during litigation, these metrics are too imprecise to determine what was reasonably expended during the relevant period.”
Based on testimony from a defense expert, Mather concluded plaintiff counsel had “reasonably spent” 780 hours in its prosecution of the case ”at a reasonable rate of $495 per hour.” “With expenses of $37,936.46, the amount hereby awarded by the Court is therefore $424,036.46,” Mather ordered.
‘Direction From the Supreme Court Is Needed’
When reached for comment about the trial ruling, plaintiff counsel Brodhead noted the disparate trial and appellate court rulings. “This case again shows that direction from the Supreme Court is needed. Rulings from the trial courts and the Court of Appeals are inconsistent,” Brodhead told the Daily Report. “Here, the defense argued for, and the trial court followed, the Lodestar method of multiplying hours times rates to reach its decision. Georgia law, however, specifically disapproves the use of that method.”
He reiterated that 9-11-68(b) “required the fees to be measured by the fees ‘incurred’ by the plaintiff.” “In this case, the ruling from the trial court did not follow the methodology mandated by the statute, and the judgment bears no resemblance to the actual fees that were incurred by Plaintiff Junior,” Brodhead said. “Plaintiff Junior did not incur fees based on an hourly rate at all; he incurred fees based on a contingency, and those fees, which have already been paid, exceeded $2,000,000.”
He maintained that the plaintiff should be entitled to the recovery of the attorneys’ fees he incurred after the defendant rejected his offer of settlement. “We believe that, if presented to the Supreme Court, the Supreme Court would mandate that the plain language of the statute be followed,” Brodhead told the Daily Report. “We believe clear direction from the Supreme Court would help provide consistency in the application of the law.”