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Georgia Dep't of Corrections v. Couch

June 16, 2014

GEORGIA DEPARTMENT OF CORRECTIONS
v.
COUCH



The opinion of the court was delivered by: Nahmias, Justice.

David Lee Couch filed a tort lawsuit against the Georgia Department of Corrections. After the Department rejected Couch's offer to settle the case for $24,000, the case proceeded to trial, where the jury returned a verdict for Couch in the amount of $105,417. Based on Couch's 40% contingency fee agreement with his attorneys, the trial court ordered the Department to pay Couch $49,542 in attorney fees—40% of his total recovery, after appeal, including post-judgment interest—as well as $4,782 in litigation expenses, pursuant to the "offer of settlement" statute, OCGA § 9–11–68(b) (2). The Court of Appeals upheld that award. See Ga. Dept. of Corrections v. Couch, 322 Ga.App. 234, 744 S.E.2d 432 (2013). This Court then granted certiorari to address two questions:

1. Did the Court of Appeals err when it held that the sovereign immunity of the Department was waived by the Georgia Tort Claims Act as to Couch's attorney fees?

2. If the sovereign immunity of the Department was waived as to Couch's attorney fees, did the Court of Appeals err by failing to prorate the 40% contingency fee to reflect that some of the fees were incurred before the settlement offer was rejected?

For the reasons discussed below, we hold that the sovereign immunity of the Department was waived as to the attorney fees award under OCGA § 9–11–68(b), but that the trial court did not properly calculate the amount of the award. We therefore affirm the judgment of the Court of Appeals in part, reverse it in part, and remand the case with direction.

1. (a) The Court of Appeals summarized the basic facts of this case as follows:

[In July 2004,] Couch was part of a team of Walker State Prison inmates who were painting the warden's house. While he was working, a dry-rotted joist gave way, causing him to fall and land with his legs straddling a joist. As a result of the fall, Couch suffered a severed urethra. Couch filed a premises liability action against the Department for damages for physical injuries he sustained, and the jury returned a verdict in favor of Couch in the amount of $105,417.

Before the trial, Couch made a written offer of settlement in the amount of $24,000, which the Department rejected. After the verdict, which was greater than 125 percent of the offer of settlement, Couch moved for attorney fees and expenses pursuant to OCGA § 9–11–68, the offer of settlement statute, in the amount of $104,158.79, based on an hourly rate, despite a contingency fee arrangement for 40 percent of the final recovery. The Department subsequently moved to dismiss Couch's claim for attorney[ ] fees based on lack of subject matter jurisdiction. It maintained that the Georgia Constitution only permits recovery of damages against a state entity resulting from a tort as provided in the [Georgia Tort Claims Act], and that there is no express waiver contained in the GTCA authorizing the award of attorney fees.

322 Ga.App. at 235, 744 S.E.2d 432 (footnote and citations omitted).*fn1 After holding an evidentiary hearing, the trial court issued an order denying the Department's motion to dismiss, ruling that the State had waived sovereign immunity with regard to attorney fees awarded under OCGA § 9–11–68(b). Relying on the 40% contingency fee agreement, the court then awarded Couch $49,542 in attorney fees, calculated as 40% of his "ultimate recovery," after appeal, of $123,855.65, which included post-judgment interest and court costs. The court also awarded Couch $4,782 in litigation expenses, for a total award of $54,324. As noted previously, the Court of Appeals affirmed that award, and we granted certiorari.

(b) OCGA § 9–11–68, commonly called the "offer of settlement" statute, was originally added to Georgia's Civil Practice Act (CPA) as part of tort reform legislation that became effective on February 16, 2005, see Ga. L.2005, p. 1, § 5, and was then amended effective April 27, 2006, see Ga. L.2006, p. 446, § 1.*fn2 As this Court explained in upholding OCGA § 9–11–68 against a variety of constitutional challenges, the "clear purpose" of the statute "is to encourage litigants in tort cases to make and accept good faith settlement proposals in order to avoid unnecessary litigation," thereby advancing "this State's 'strong public policy of encouraging negotiations and settlements.' " Smith v. Baptiste, 287 Ga. 23, 29, 694 S.E.2d 83 (2010) (citation omitted).

The statute applies to a written offer to settle a tort claim made more than 30 days after the service of the summons or complaint but not less than 30 days before trial (or 20 days for a counteroffer). See OCGA § 9–11–68(a) (enumerating the requirements for such an offer), (c) (discussing additional procedures and interpretive rules for offers and their acceptance or rejection). The subsection of the statute directly at issue in this case, subsection (b), explains when a defendant or plaintiff is entitled to an award:

(1) If a defendant makes an offer of settlement which is rejected by the plaintiff, the defendant shall be entitled to recover reasonable attorney's fees and expenses of litigation incurred by the defendant or on the defendant's behalf from the date of the rejection of the offer of settlement through the entry of judgment if the final judgment is one of no liability or the final judgment obtained by the plaintiff is less than 75 percent of such offer of settlement.

(2) 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, 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.

OCGA § 9–11–68(b). Subsection (d) then directs that, unless the trial court determines "that [the] offer was not made in good faith in an order setting forth the basis for such a determination," the court must order such an award "upon receipt of proof that the judgment is one to which ... subsection (b) of this Code section appl[ies]; provided, however, that if an appeal is taken from such judgment, the court shall order payment of such attorney's fees and expenses of litigation only upon remittitur affirming such judgment." OCGA § 9–11–68(d).

There is no question that the preconditions for an award of attorney fees and litigation expenses under OCGA § 9–11–68(b) were satisfied in this case. On November 14, 2007, two years after filing his tort suit, Couch made an indisputably good-faith offer to settle for just $24,000. The Department did not respond within 30 days, rendering the offer rejected pursuant to OCGA § 9–11–68(c). As a result, Couch had to continue pretrial litigation for another 16 months and then try the case before a jury for three days in April 2009. The trial resulted in a verdict and judgment for Couch of $105,417, far greater than 125% of his rejected offer, and that judgment was sustained despite the Department's appeal. Thus, this would seem to be a clear case for an award of attorney fees and litigation expenses to the plaintiff under OCGA § 9–11–68(b)(2). The Department argues, however, that sovereign immunity protects it against any such award, and that even if an award was permissible, the trial court erred in calculating it. We turn to the sovereign immunity question first.

2. Under Georgia law today, sovereign immunity has constitutional status, and that immunity may be waived only by an act of the General Assembly or by the Constitution itself. See Ga. Dept. of Natural Resources v. Center for a Sustainable Coast, Inc., 294 Ga. 593, 597–598, 755 S.E.2d 184 (2014) (reviewing the history of sovereign immunity in Georgia). As amended in 1991, the Georgia Constitution says:

(a) The General Assembly may waive the state's sovereign immunity from suit by enacting a State Tort Claims Act, in which the General Assembly may provide by law for procedures for the making, handling, and disposition of actions or claims against the state and its departments, agencies, officers, and employees, upon such terms and subject to such conditions and limitations as the General Assembly may provide....

(e) Except as specifically provided in this Paragraph, sovereign immunity extends to the state and all of its departments and agencies. The sovereign immunity of the state and its departments and agencies can only be waived by an Act of the General Assembly which specifically provides that sovereign immunity is thereby waived and the extent of such waiver.

Ga. Const. of 1983, Art. I, Sec. II, Par. IX.

To accompany the 1991 constitutional amendment, the General Assembly enacted the Georgia Tort Claims Act (GTCA), OCGA §§ 50–21–20 to 50–21–37, which ...


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