Supreme Court of Georgia Examines Applicability of Offer of Settlement Statute in Negligence Case

Under the “American Rule” for attorneys’ fees, each party is responsible for paying for his or her own legal fees, irrespective of which party is ultimately victorious. However, certain federal and state laws do permit the shifting of attorneys’ fees in certain circumstances. Many of these statutes are designed to incentivize those with clearly meritorious claims to vindicate their rights without worrying about the cost of legal services. However, some fee-shifting statutes incentivize a plaintiff to settle with a willing defendant or risk being held liable for the defendant’s attorneys’ fees should he or she lose at trial. One such “offer-of-settlement” statute, O.C.G.A. § 9-11-68 (b)(1), is the principal topic of discussion in a recent decision from the Georgia Court of Appeals, Crane Composites, Inc. v. Wayne Farms, LLC, in which the court needed to determine whether the statute applied to a negligence claim that had accrued prior to the effective date of the legislation.
The statute generally provides that if a defendant makes an offer of settlement and the plaintiff rejects that offer, the plaintiff will be accountable for paying the defendants’ reasonable attorneys’ fees from the date the offer is rejected until the entry of judgment if the judgment is a finding of no liability for the defendant, or the amount recovered by the plaintiff is less than 75% of the offer of settlement amount.

The statute as currently drafted applies to negligence lawsuits and became effective on April 27, 2006. The key question on appeal is whether the statute applies to negligence suits brought after the effective date of the statute but involving alleged acts of negligence that occurred prior to passage of the provision. In the current case, the plaintiff, Wayne Farms, owned and operated a chicken processing plant in Oakwood, Georgia. A fire occurred at the plant on May 19, 2003, and about three years later Wayne Farms sued Crane Composites, Inc., which manufactured the interior panels used at the plant. The plaintiff argued that Crane’s negligence in making the panels caused the fire to spread extensively. Enactment of the revised version of the statute occurred between the time of the fire and the filing of the suit. In March 2009, Crane made a formal offer of settlement to Wayne Farms, which Wayne Farms did not accept. More than three years later, on May 30, 2012, the jury returned a verdict in Crane’s favor. Crane then moved for attorneys’ fees pursuant to the offer of settlement statute. The trial court denied the request, holding that the statute could not be applied in a negligence suit in which the underlying injury occurred prior to the effective date of the statute. Crane appealed, and a divided Court of Appeals transferred the case to the Supreme Court of Georgia.
Generally, law that effectuates procedural or evidentiary changes may operate retrospectively, but law that alters substantive rights may only operate prospectively. Fowler Properties v. Dowland, 282 Ga. 76, 78 (2007). Since the offer of settlement statute affects the rights of the parties by imposing an obligation to pay an opposing party’s fees under certain circumstances, it is substantive in character. Id. Accordingly, the statute may only operate prospectively.
In L.P. Gas Industrial Equipment Co. v. Burch, on which the trial court in this case relied to reach its determination, the Georgia Court of Appeals errantly held that because the statute is substantive in nature it could not applied to a negligence action arising from injuries that occurred prior to the effective date of the statute, since such application would be retroactive in character. 701 S.E.2d 602, 604-05 (2010). However, the Supreme Court of Georgia corrected this misapplication of the law. Although the offer of settlement statute created substantive rights, the Supreme Court noted that the rights created by the statute relate to the conduct of litigation. Thus, “the statute is acting prospectively … when applied to litigation commenced after the effective date.” The date of the injury leading to the negligence suit is, therefore, not of importance with respect to the question of retroactive application. Instead, the statute would only be impermissibly acting retroactively if it were applied to litigation commenced prior to the statute’s effective date. In the Fowler decision cited above, both the injury leading to litigation and the filing of the case occurred prior to the effective date of the statute. However, the filing of the current case occurred after the effective date. Thus, the trial court should have applied the offer of settlement statute.
Although the plaintiff in this action had already lost by the time of this appeal, the Supreme Court of Georgia decision acts as a further blow, especially when one considers that these attorneys’ fees may arguably include fees associated with the appeals. Since this offer-of-settlement provision applies to all negligence actions, a plaintiff should take any possible settlement offers seriously and enlist competent counsel with experience handling this form of litigation. The Atlanta negligence attorneys at the Law Office of Terrence R. Bethune have many years of litigation experience in Georgia state courts, including competence with properly weighing settlement offers. If you have recently been injured, the Atlanta personal injury attorneys at the Law Office of Terrence R. Bethune are prepared to help guide you through the litigation process. Feel free to contact us if you are interested in a free case consultation.