Georgia Judge Asked to Reconsider Sanctions in Billing Practices
October 18, 2022
A recent Law 360 story by Kelcey Caulder, “Ga. Judge Asked To Reconsider Sanctions in Billing Row” reports that a Georgia state judge is considering what evidence should be allowed to go before the jury and whether to impose sanctions on Gebo Law LLC in a case in which the firm alleges one of itsrbusiness clients owes it about $600,000 in unpaid legal fees.
The firm's Carl Gebo, through his Atlanta-area practice, sued Cordial Endeavor Concessions of Atlanta LLC, which operates a travel spa in Hartsfield-Jackson Atlanta International Airport, last September seeking reasonable compensation for almost 2,000 hours of time he said he spent representing the Georgia company in various matters between April 2015 and May 2020. Gebo, whose work for Cordial included litigation in New York, claimed his services were worth about $600,000.
But in a hearing before Judge William "Bill" G. Hamrick III, Carl E. Anderson of the Law Office of Carl E. Anderson, who represents Cordial, argued that there is no way to know whether Gebo's services were worth that much because the attorney threw away contemporaneous "scrap notes" and time records that detailed his work for the company and instead submitted one invoice to Cordial in June 2020 that purportedly outlined all work and charges owed.
Anderson argued that Gebo should be sanctioned for spoliation of evidence for getting rid of the notes, saying the attorney had reason to believe litigation would arise from the fee dispute and therefore had a duty to keep them. This, he claimed, is supported by an "extensive" phone call Gebo had with Cordial's managing member Sheila Edwards before submitting the invoice, in which Anderson said Gebo threatened to sue Cordial for his legal fees and informed Edwards that he wouldn't perform any more work for the company until he received a "satisfactory" payment plan for them.
Gebo should've kept the notes as evidence following that conversation, Anderson said, arguing that Cordial is "clearly prejudiced" without them as it can neither use them to verify the invoice nor adequately cross-examine Gebo regarding its accuracy. "No attorney can accurately record time months after the fact, much less after five years, without contemporaneous time entries," Anderson said. "Unless based upon contemporaneous time records, the narratives in the invoices are unreliable at best."
Tyler Dillard of Andersen Tate & Carr PC, who represents Gebo, argued that the attorney hadn't foreseen the possibility of litigation prior to deleting the contemporaneous notes as he assumed that Cordial would pay the firm for its work. There is no evidence suggesting otherwise, Dillard said, beyond what he called Cordial's "completely self-serving claim" that Gebo threatened litigation. According to Dillard, Gebo's decision to get rid of the notes was nothing more than a matter of routine.
"What they're claiming is that Mr. Gebo needed to save his post-it notes or scrap legal pads for five years, where he may have written down a half hour call with someone or something like that," Dillard said. "No lawyer I know keeps their post-it notes or scrap legal pad after putting it into an invoice. No lawyer I know sends those things out with invoices to reiterate what is on the invoices. It doesn't make any sense."
Dillard also noted that former Georgia State-wide Business Court Judge Walter W. Davis declined to sanction Gebo for this same issue in May. While the judge at that time said he would've kept the notes if it were him, he'd also called the invoices "particularly detailed" and found that Gebo hadn't acted in bad faith, Dillard said. All things considered, Dillard argued that the court should consider awarding Gebo fees for having to respond to another sanctions motion related to the same topic.
Donna L. Johnson of Donna L. Johnson PC, who also represents Gebo, further argued that the court should grant Gebo's limine motion asking that Cordial be prohibited from introducing argument or testimony related to the alleged spoliation of the scrap notes. The court should do so, Johnson said, because of the previously denied motion for spoliation sanctions and because no new evidence has been presented showing that Gebo had any duty to preserve the notes.
Also before Judge Hamrick on Wednesday was Gebo's motion seeking to exclude the testimony of Matthew Martin, a rebuttal expert brought in by Cordial to testify about the factors that would go into determining an attorney's hourly rate and to help the jury determine what a reasonable fee would be for Gebo's work. Martin's testimony is necessary, Anderson contended, because Gebo is requesting payment for a $600 hourly rate when his hourly rate had originally been $300 before being increased to more than $400 without Edwards' knowledge or approval in 2017.
According to Anderson, Martin is more than qualified to speak about Gebo's billing practices because he has four decades of experience in commercial litigation and has served as an administrative partner of Jones Day's Atlanta office and was vice chair and client finance partner of Paul Hastings' Atlanta office, among other management roles.
But Dillard argued that Martin's testimony must be excluded because he doesn't offer an opinion of what he believes to be the reasonable value of Gebo's services to Cordial, which is the sole remaining issue to be determined by the jury. And even if he did offer such an opinion, Dillard contended, he doesn't have the necessary knowledge and experience as a government procurement and contracting attorney to assist the jury in actually determining the value of those services.
Dillard further contended that Martin's testimony must be excluded because he didn't take into consideration the rates of other attorneys that typically do work similar to the work Gebo performed or look into surveys of attorneys' hourly rates. "Any expert in this case who is going to offer an opinion has to be able to help the jury decide on the single issue of quantum meruit damages for Gebo's legal services in whatever amount," Dillard said. "If the expert can't provide them with their expertise in answering that question, then they aren't offering anything that's relevant."
Judge Hamrick asked Anderson to clarify what, exactly, Martin's testimony focused on, to which the attorney responded that it would be about the "appropriate way" of reaching an opinion on the reasonableness of fees. "He is assisting the jury in understanding how you establish a reasonable rate for services under the facts of this case," Anderson said. Dillard responded, saying that Cordial could question Gebo's own expert about the methodology he used to find a reasonable rate during cross-examination.
Six additional limine motions were presented during the hearing, including one in which Gebo argued that any argument or evidence concerning Cordial's finances and ability to pay a large award to Gebo should be excluded. Johnson said that, in Georgia, a party's financial status isn't relevant or admissible in determining whether they can or should pay a judgment.
"What we're concerned about is clearly an improper argument," Dillard said. "Which would be them telling the jury that even if they agree with us about the fair value of the services, Cordial isn't able to pay that and would be bankrupt if they had to. That, clearly, based on Georgia case law, is improper. You can't appeal to the jury's sympathy by saying they can't afford it and so an award shouldn't be entered."