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AWARDS OF ATTORNEY'S FEES
AND LITIGATION EXPENSES
UNDER OCGA § 9-15-14: A PRIMER
Dwight A. Meredith, Esquire
Wood & Meredith
Atlanta (Tucker), Georgia
This article was written for and presented at the ICLE Seminar:
Abusive Litigation: Federal and State Remedies.
Atlanta Marriott, Atlanta, Georgia. February 6, 1998.
In an effort to provide one remedy for abusive litigation, the Georgia General Assembly enacted OCGA § 9-15-14. That code section provides for an award of "reasonable and necessary" attorney fees and litigation expenses against a party or an attorney who engage in certain abusive litigation conduct.
I. INTRODUCTION
The code section is a powerful tool for deterring abusive litigation practices by requiring the party abusing the process and/or its attorney to pay the attorney fees and litigation costs of the opposing party. The procedure for recovery of such an award is inexpensive and does not involve drawn out proceedings. The statute invests the trial court with significant power to regulate and punish inappropriate litigation tactics and to make the victim of such tactics whole.
The purpose of an award under OCGA § 9-15-14 is not merely to punish or deter litigation abuses, but also to recompense litigants who are forced to expend their resources in contending with claims, defenses or other positions that abusive. Furguson v. City of Doraville, 186 Ga. App. 430, 367 S.E.2d 551, cert. denied, 186 Ga. App. 918, 367 S.E. 2d 551 (1988), overruled on other grounds; Vogtle v. Coleman, 259 Ga. 115, 376 S.E.2d 860 (1989).
OCGA § 9-15-14 does not create a tort. A violation of its provisions may not be pled as a count in a complaint or as a counterclaim. Instead an award of attorney's fees and litigation expenses under the statute may be sought by motion or imposed sua sponte by the court. There is no right to a jury trial in regard to claims under OCGA § 9-15-14. The trial court makes all determination with regard to the award. OCGA § 9-15-14(f).
This paper is intended to act as a primer for the workings of the statute and is presented in five (5) parts. First, the actions to which OCGA § 9-15-14 is or is not will be identified. Secondly, this paper will discuss the procedure for seeking an award under the statute. Third, the elements of the claim will be identified. Fourth, the amount of the award will be discussed. Finally, issues concerning the appeal of an award of attorney's fees and litigation expenses will be explored.
II. SUBSTANTIVE AREAS OF OCGA § 9-15-14
A. Actions to Which The Statute Applies
By its own terms, OCGA § 9-15-14 applies to "any civil action in any court of record of this state..." It applies to contract cases, tort cases, domestic relations cases and any other action at law or equity brought in the Superior or State Courts of Georgia. A recent Supreme Court of Georgia decisions held that § 9-15-14 sanctions are available, in a proper case, in condemnation actions. DOT v. Woods, ______ Ga. _____. ____ S.E.2d _____, (S97G0993) (Decided, December 12, 1997, Sears, J.).
The statute does not apply in Federal District Court where Rule 11 holds controls. Union Carbide Corp. v. Tarancon Corp., 682 F. Supp. 535 (N.D. Ga. 1988); Westinghouse Credit Corp. v. Hall, 144 BankR. 568 (S.D. Ga. 1992); Majik Market v. Best, 684 F. Supp. 1089 (N.D. Ga. 1987); Bruce v. Wal-Mart Stores, Inc., 699 F. Supp. 905 (N.D. Ga. 1988); Thomas v. Brown, 108 F. Supp. 336 (N.D. Ga. 1989); Edwards v. Associated Bureaus, Inc., 128 F.R.D. 682 (N.D. Ga. 1989).
By specific statutory provision, OCGA § 9-15-14 does not apply in magistrate courts, although, in the event that a case is appealed from Magistrate court to Superior Court and the appeal lacks substantial justification, the appellee may seek litigation expenses incurred in the magistrate court proceeding. OCGA § 9-15-14(h).
Similarly, a Superior Court may not award attorney fees and litigation expenses for positions taken in a worker's compensation case before the Board, but may make an award for a frivolous appeal to the Superior Court. Unlike Magistrate Court actions, however, the award may only encompass the attorney fees and litigation expenses of the appeal. Contract Harvesters v. Clark, 211 Ga. App. 297, 439 S.E.2d 30 (1993).
A prosecution for violation of a city or county ordinance is "quasi-criminal" and the provisions of OCGA § 9-15-14 do not apply. Dekalb County v. Gerard, 207 Ga. App. 43, 427 S.E. 2d 36 (1993).
The statute does not focus on pre-litigation activities and the award may only encompass the attorney's fees and litigation expenses reasonable and necessary to the action itself. Cobb County v. Sevani, 196 Ga. App. 247, 395 S.E.2d 572, cert. denied, 196 Ga. App. 907, 395 S.E.2d 572 (1990).
OCGA § 9-15-14 does not apply to litigation in the Court of Appeals or the Supreme Court. The trial court is without authority to require payment of attorney's fees and litigation expenses for proceedings before the appellate courts. DOT v. Franco's Pizza and Delicatessen, Inc., 200 Ga. App. 723, 409 S.E.2d 281, cert denied, 200 Ga app. 895, 409 S.E.2d 281 (1991); Bankhead v. Moss, 210 Ga. App. 508, 436 S.E. 2d 723 (1993); Castro v. Cambridge Square Towne Houses, Inc., 204 Ga. App. 921, 420 S.E.2d 588 (1992). Abusive appeal sanctions are controlled by Supreme Court Rule 8, Court of Appeals Rule 15 and OCGA § 5-6-6.
Finally, it should be noted that an award against an attorney under OCGA § 9-15-14 is considered a sanction within the meaning of an exclusion in an attorney's insurance policy. Dixon v. Home Indemnity Co., 206 Ga. App. 623, 426 S.E.2d 381 (1992).
B. Procedure For Seeking an Award Under O.C.G.A. § 9-15-14
A trial court may award attorney's fees and litigation expenses as a sanction for abusive litigation either upon motion by the aggrieved party or upon its own motion.
A motion for an OCGA § 9-15-14 motion may be brought at any time up to forty-five (45) days after final disposition of the action in the trial court. Until April 5, 1994, any motion could only be brought within a "window of opportunity" that opened upon the final disposition of the action in the trial court and closed forty-five days thereafter. See, Fairburn Banking v. Gafford, 262 Ga. 792, 439 S.E.2d 486 (1994). Based on the law prior to April 5, 1994, there are cases holding that no award may be made if the motion was brought prematurely before the window of opportunity opened upon final disposition. See, for example, Marshall v. Richmar, Inc., 215 Ga. App. 470, 451 S.E.2d 515 (1994); In Re. M.A.K., 202 Ga. App. 342, 424 S.E.2d 288 (1991); Williams v. Clark-Atlanta University, Inc., 200 Ga. App. 51, 406 S.E.2d 559 (1991); Huchinson v. Divorce & Custody Law Center, 207 Ga. App. 421, 427 S.E.2d 784 (1993).
In 1994 the General Assembly Amended subsection (e) to allow an OCGA § 9-15-14 motion to be brought at any time within forty-five days after final disposition. That change in statutory language makes clear that if a party engages in abusive tactics during part of a case, the opposing party may seek sanctions during the pendency of the case. Thus, discovery abuses may be challenged during the pendency of the action and if found to be abusive, may be the basis of an award. It is apparent that the change to allow motion or attorney fees during the pendency of an action gives both the opposing party and the court a powerful weapon to deter dilatory litigation tactics and discovery abuse.
The phrase "final disposition" is synonymous with "final judgment" as that term is used in OCGA § 5-6-34(a)(1). Fairburn Banking Co. v. Gafford, 263 Ga. 792, 439 S.E.2d 482 (1994). In essence, any judgment sufficiently final to give a right of appeal is final for the purpose determining if a OCGA § 9-15-14 motion is timely filed. An OCGA § 9-15-14 motion brought within forty-five (45) days after the decision on appeal of a case is not timely filed and the trial court has no jurisdiction to entertain the motion. Id. Similarly, a motion filed more than 45 days after dismissal of the action but within 45 days of the denial of a motion to set aside the judgment was not timely filed. Gist v. Dekalb Tire, 223 Ga. App. 397, 477 S.E.2d 616 (1996).
When fewer than all the claims of a multi-count complaint are adjudicated and the court expressly finds that there is no just reason to delay entry of final judgment and directs entry of final judgment on fewer than all of the counts under OCGA § 9-11-54(b), then any OCGA § 9-15-14 motion relating to the fully adjudicated claims must be brought within forty-five (45) days of the entry of judgment under OCGA § 9-11-54(b). The prevailing party may not wait until the final disposition of the case as a whole before bringing the motion. Little v. General Motors Corporation, ____ Ga. App. ______, ______S.E.2d ______, (Appeal No. A97A1575; A97A1576)(November 7, 1997).
It should be emphasized that the forty-five day window of opportunity does not begin to run on a dismissed count unless and until the court directs entry of judgment pursuant to Rule 54(b).
A party against whom sanctions are sought has a basic right to confront and challenge the evidence against him, including the reasonableness and necessity of the fees and expenses awarded. Where no such evidentiary hearing was afforded, the award will be reversed and remanded for such a hearing. Cohen v. Feldman, 219 Ga. App. 90, 464 S.E.2d 237 (1995).
USCR 6.2, requiring respondent to file a brief and any evidence within thirty (30) days of the filing of the motion applies to OCGA § 9-15-14 motions; and, if no response is filed, the trial court does not err in refusing to permit testimony at the hearing on the motion. Forest Lakes Home Owners Ass'n v. Green Industries, Inc., 218 Ga. App. 890, 463 S.E.2d 723 (1995).
No fees may be assessed unless the trial judge makes an independent determination of both the reasonableness and necessity of the fees. If no evidence is introduced from which the trial court can make such a determination, no award may issue. Duncan v. Cropsey, 210 Ga. App. 814, 437 S.E.2d 787 (1993).
C. Elements of a Claim Under OCGA § 9-15-14
The language of OCGA § 9-15-14 lays out the elements of a claim for attorney fees and/or litigation expenses explicitly. The statute includes both a mandatory and a permissive award of fees. OCGA § 9-15-14(a) provides as follows:
In any civil action in any court of record of this state, reasonable and necessary attorney's fees and expenses of litigation shall be awarded to any party against whom another party has asserted a claim, defense, or other position with respect to which there existed such a complete absence of any justiciable issue of law or fact that it could not be reasonably believed that a court would accept the asserted claim, defense, or other position. Attorney's fees and expenses so awarded shall be assessed against the party asserting such claim, defense, or other position, or against that party's attorney, or against both in such manner as is just.
Thus an award under OCGA § 9-15-14(a) is mandatory ("shall be awarded") if the court finds that a party has asserted a position "with respect to which there existed such a complete absence of any justiciable issue of law or fact that it could not reasonably be believed that a court," would accept the position. Fabe v. Floyd, 199 Ga. App. 322, 405 S.E.2d 265 (1991).
A permissive award ("the court may ...") of attorney's fees and litigation expenses is available under OCGA § 9-15-14(b) which states as follows:
The court may assess reasonable and necessary attorney's fees and expenses of litigation in any civil action in any court of record if, upon the motion of any party or the court itself, it finds that an attorney or party brought or defended an action, or any part thereof, that lacked substantial justification or that the action, or any part thereof, was interposed for delay or harassment, or if it finds that an attorney or party unnecessarily expanded the proceeding by other improper conduct, including, but not limited to, abuses of discovery procedures available under Chapter 11 of this title, the "Georgia Civil Practice Act." As used in this Code section, "lacked substantial justification" means substantially frivolous, substantially groundless, or substantially vexatious.
A permissive award against a party or an attorney is authorized if one of three criteria is met:
1) the action brought or defended, or any part thereof lacked substantial justification. A position lacks substantial justification if it is "substantially frivolous, substantially groundless or substantially vexatious;"
2) the action, or any part thereof, was interposed for delay or harassment; or,
3) the party or attorney unnecessarily expanded the proceedings by discovery abuse or otherwise.
It should be noted that any aggrieved party may recover such an award. The statute is meant to deter frivolous or abusive defenses the same as frivolous or abusive claims. In addition, an award against a prevailing party is authorized if the prevailing party improperly expanded the proceedings or otherwise violated the statute. Betallic, Inc. v. Deavours, 263 Ga. 796, 439 S.E.2d 643 (1994).
A party is not entitled to an award of attorney's fees simply because it prevailed in the case. In order to receive an award, it must be found that there was "no justiciable issue of law or fact" under OCGA § 9-15-14(a) or that one of the three criteria of OCGA § 9-15-14(b) has been met. Thus, a prevailing party is not perforce entitled to an award, Hyre v. Denise, 214 Ga. App. 552, 449 S.E.2d 120 (1994), nor does the fact that summary judgment was granted to a party entitled that party to an award of attorney fees and litigation expenses. Brown v. Kinser, 218 Ga. App. 385, 461 S.E.2d 564 (1995).
Even the court§s power to make an award sua sponte is limited by the requirement that the conduct sanctioned meet one of the requirements of OCGA § 9-15-14(b). Hardwick-Morrison Co. v. Mayland, 206 Ga. App. 426, 425 S.E.2d 416 (1992).
Indeed, an award of attorney's fees is not justified where there is arguable support for the position taken. Ellis v. Johnson, 263 Ga. 514, 435 S.E. 2d 923 (1993). In Ellis, losing candidates in an election brought an action contesting the results of an election contending that there was error in the vote count. The contest was based on a statutory provision that had never been interpreted by the court. The trial court found against the contest and awarded attorney fees under OCGA § 9-15-14(a). The Supreme Curt reversed finding that the plaintiff's interpretation of the election contest statute was arguable and that no award of attorney fees was justified.
The amount of legal authority necessary to support an action is unclear. In the context of OCGA § 51-7-80, a recent Court of Appeals decisions found that the complaint was not "without substantial justification" despite the fact that a previous Court of Appeals decision, based on indistinguishable facts, ruled contrary to plaintiff's position. Owens v. Generali, 224 Ga.App. 290, 480 S.E.2d 863 (1997). The Court of Appeals opinion noted that in the indistinguishable case, Liberty Mutual Ins. Co. v. Clark, 165 Ga.App. 299 S.E.2d 76 (1983), one judge had concurred in the judgment only, thereby making Clark physical precedent only and therefore non-binding. On the distinction between binding and physical precedent the Court of Appeals found that Generali's complaint did not lack substantial justification. In the Generali opinion, it appears that the Court, instead of asking whether there was any authority for the allegedly frivolous position, asked whether indistinguishable binding authority precluded the position taken. If the Generali analysis is followed in other cases, it appears that cases will be without substantial legal justification only if binding indistinguishable precedent bars the claim or position. It seems unlikely to this commentator that the Generali opinion will be widely followed.
Settlement bars OCGA § 9-15-14. The section does not apply and an award may not issue once a case is settled by mutual dismissals pursuant to a negotiated agreement. Hunter v. Schroeder, 186 Ga. App. 799, 368 S.E.2d 561 (1988). See also, Kluge v. Renn, ____ Ga. App. _____, ____ SE 2d _____, (Appeal No. A97A0148, A97A0505, A97A0506) (May 27, 1997) 1997 WL 275319 (Ga.App. 1997) holding that a consent order bars frivolous litigation claim in a OCGA § 51-7-80 context.
An award under the code section is to "any party" against whom the abusive position has been asserted. Thus, only parties to the action may seek such an award. An expert witness may not seek to compel the payment of his fees after the dismissal of the action but must proceed by separate suit. Ramos v. Vourtsanis, 187 Ga. App. 69, 369 S.E.2d 344 (1988).
Similarly, the award may be made against only parties or the attorney of the parties. Thus, an insurance company that controls the defense of a personal injury action may not be sanctioned under OCGA § 9-15-14 for abusive litigation. Allstate Insurance Company v. Reynolds, 210 Ga. App. 318, 436 S.E.2d 57 (1993).
Finally, since sanctions may only be awarded against a party or its attorney, the trial court is without authority to impose the sanctions of attorney fees or litigation expenses against an alleged "alter ego" of a corporate plaintiff. Steven E. Marshal, Bldr., Inc. v. Scherer, 206 Ga. App. 156, 424 S.E.2d 841 (1992).
The threat of sanctions for abusive litigation has the potential to chill actions that push the limits of the law. The General Assembly was aware that the law is never static and that only by bringing of actions or defenses not heretofore recognized can the law evolve and improve. In order to prevent stagnation of the law, therefore, the General Assembly included section (f) which states as follows:
An award of reasonable and necessary attorney's fees or expenses of litigation under this Code section shall be determined by the court without a jury and shall be made by an order of court which shall constitute and be enforceable as a money judgment.
Thus, neither a party nor an attorney will be sanctioned for "pushing the envelope" as long as the theory of law is supported by "precedential or persuasive" authority. While cases interpreting what constitutes precedential or persuasive authority are scarce, it would seem that the following would apply:
1) a dissent by one or more members of the Georgia Court of Appeals or the Georgia Supreme Court advancing the position asserted;
2) cases from Federal Court applied to Georgia procedural questions or to analogous substantive questions;
3) cases from other States, particularly when a trend in the development of the law is shown; and
4) positions taken by commentators in law review articles, books or other legal papers.
In order to avoid sanctions under the "law development" provision of OCGA § 9-15-14(f), it may be helpful to acknowledge to the trial court early in the proceeding that the action is an attempt to expand, alter or create new law or legal theory in Georgia.
D. The Amount of the Award
An award under OCGA § 9-15-14 may not exceed the amounts which are reasonable and necessary for defending or asserting the rights of a party. OCGA § 9-15-14(d). The Code section may not be used to seek an award for damages other than attorney's fees and litigation expenses. If damages other than fees and expenses are to be sought, a litigant should avail himself of the provisions of OCGA § 51-7-80, et seq. OCGA § 9-15-14, however, is the exclusive remedy for abusive litigation when the only damages sought or incurred are litigation expenses and attorney fees. OCGA § 51-7-83.
A party against whom a motion for attorney's fees and litigation expenses is filed has a right to challenge the reasonableness and necessity of the fees and expenses. Cohen v. Feldman, 219 Ga. App. 90, 464 S.E.2d 237 (1995).
What is reasonable and necessary will, of course, depend on the nature and facts of the individual case, the degree of work required by the assertion of the frivolous position, and the skill, and experience of the attorney performing the work (and therefore the reasonableness of the fee charged).
It should be noted, however, that personal time spent by attorney/defendants was not recoverable in an award under OCGA § 9-15-14 when the attorneys were defendants, did not appear as attorneys of record in the case, and had hired outside counsel to represent them. Moore v. Harris, 201 Ga. App. 248, 410 S.E.2d 804 (1991).
The General Assembly has recently amended OCGA § 9-15-14(d) to make clear that an aggrieved party may seek, as part of a OCGA § 9-15-14 award, the fees and expenses reasonably necessary to the prosecution of the motion. The new OCGA § 9-15-14(d) now includes the following language:
Attorney's fees and expenses of litigation incurred in obtaining an order of court pursuant to this Code section may also be assessed by the court and included in its order.
E. Appellate Issues
The most salient appellate issue regarding OCGA § 9-15-14 is that one does not have the right to appeal the award as a matter of right. By statute, OCGA § 5-6-35(a)(10), awards of attorney's fees and litigation expenses are subject to the two step discretionary appeal process. The size of the award has no effect on the requirement that the OCGA § 5-6-35 procedure be followed.
Where a direct appeal, as a matter of right under OCGA § 5-6-34 has been properly filed, a party aggrieved by an OCGA § 9-15-14 award may also seek relief from that award on the direct appeal. Rolleston v. Huie, 198 Ga. App. 49, 400 S.E.2d 349 (1990). See, OCGA § 5-6-34(d).
With a modicum of planning, the party seeking an award under OCGA § 9-15-14 may make the order appealable as a matter of right. The planning involves sending the appropriate notice of intent to seek abusive litigation damages as required under OCGA § 51-7-84. Assuming such notice is sent, the party seeking an award of attorney fees and litigation expenses should file an OCGA § 9-15-14 motion and simultaneously file a motion seeking fees and expenses under OCGA § 51-7-83(b). OCGA § 51-7-83(b) provides that when the only damages sought in an abusive litigation suit are for attorney fees and litigation expenses "the procedures provided in Code Section 9-15-14 shall be utilized." The ruling on the OCGA § 51-7-83 motion is directly appealable. Since the decision on the OCGA § 51-7-83 motion is directly appealable as a matter of right, the decision on the OCGA § 9-15-14 motion is also appealable as it "attaches" the appeal as a matter of right. The procedure outlined above was explicitly approved in Hallman v. Emory University, 225 Ga. App. 247, 438 S.E. 362 (1997). The key to bootstrapping the right to a direct appeal by attaching the OCGA § 9-15-14 motion to an OCGA § 51-7-83 motion is that OCGA § 9-15-14 awards are "court-imposed sanction for misconduct in litigation" while OCGA § 51-7-80, et. seq. is "an independent cause of action." Id. The direction of OCGA § 51-7-83(b) to utilize the procedures of OCGA § 9-15-14 "does not change an action under OCGA § 51-7-80, et. seq. to damages imposed as a sanction ..., but merely directs which procedures shall be followed under such circumstances." Id.
The standard of review of awards under OCGA § 9-15-14 depend on whether the award was based on the mandatory provision of (a) or the discretionary provisions of (b). In either case, the trial court's ruling is entitled to great deference. That deference is justified because the trial court is most familiar with the underlying litigation, the tactics employed, the positions asserted, as well as the reasonableness of the fee request.
If the award is made pursuant to the mandatory provisions of OCGA § 9-15-14(a), then the standard of review on appeal is whether there is "any evidence" to support the award. Gibson v. Southern General Insurance Co., 199 Ga. App. 776, 406 S.E.2d 121 (1991). If the award is based on discretionary provisions of OCGA § 9-15-14(b), however, the standard on review is whether the trial court "abused its discretion" in making the award. Haywood v. Aerospec, Inc., 193 Ga. App. 479, 388 S.E. 2d 367 (1989).
Regardless of the section on which the award is based, the trial court§s order must include findings of fact that support the award. Porter v. Felker, 261 Ga. 421, 405 S.E.2d 31 (1991); Bill Parker & Associates v. Rahr, 216 Ga. App. 838, 456 S.E.2d 221 (1995); Katz v. Harris, 217 Ga. App. 287, 457 S.E. 2d 239 (1995). If the order does not include findings of fact that the allegedly abusive position presented, "a complete absence of any justiciable issue of law or fact that it could not reasonably be believed that a court would accept the position," then no award under OCGA § 9-15-14(a) is authorized. Similarly, if the order does not include a finding of fact of at least one of the criteria of OCGA § 9-15-14(b) (lacked substantial justification, interposed for delay or harassment, unnecessarily expanded proceedings), then no award under that provision is justified. Under either provision, the court's order must find as a fact that the amount awarded was reasonable and necessary.
III. CONCLUSION
The use of OCGA § 9-15-14 to shift the cost of attorney§s fees and litigation expenses to the abusive litigator is a useful deterrent to frivolous actions, defenses and litigation tactics. The statute gives the trial court broad powers to sanction abusive litigators and their clients. One can only hope that the use of such sanctions will reduce or eliminate the unprofessional practice of taking frivolous positions in civil litigation.
AND LITIGATION EXPENSES
UNDER OCGA § 9-15-14: A PRIMER
Dwight A. Meredith, Esquire
Wood & Meredith
Atlanta (Tucker), Georgia
This article was written for and presented at the ICLE Seminar:
Abusive Litigation: Federal and State Remedies.
Atlanta Marriott, Atlanta, Georgia. February 6, 1998.
In an effort to provide one remedy for abusive litigation, the Georgia General Assembly enacted OCGA § 9-15-14. That code section provides for an award of "reasonable and necessary" attorney fees and litigation expenses against a party or an attorney who engage in certain abusive litigation conduct.
I. INTRODUCTION
The code section is a powerful tool for deterring abusive litigation practices by requiring the party abusing the process and/or its attorney to pay the attorney fees and litigation costs of the opposing party. The procedure for recovery of such an award is inexpensive and does not involve drawn out proceedings. The statute invests the trial court with significant power to regulate and punish inappropriate litigation tactics and to make the victim of such tactics whole.
The purpose of an award under OCGA § 9-15-14 is not merely to punish or deter litigation abuses, but also to recompense litigants who are forced to expend their resources in contending with claims, defenses or other positions that abusive. Furguson v. City of Doraville, 186 Ga. App. 430, 367 S.E.2d 551, cert. denied, 186 Ga. App. 918, 367 S.E. 2d 551 (1988), overruled on other grounds; Vogtle v. Coleman, 259 Ga. 115, 376 S.E.2d 860 (1989).
OCGA § 9-15-14 does not create a tort. A violation of its provisions may not be pled as a count in a complaint or as a counterclaim. Instead an award of attorney's fees and litigation expenses under the statute may be sought by motion or imposed sua sponte by the court. There is no right to a jury trial in regard to claims under OCGA § 9-15-14. The trial court makes all determination with regard to the award. OCGA § 9-15-14(f).
This paper is intended to act as a primer for the workings of the statute and is presented in five (5) parts. First, the actions to which OCGA § 9-15-14 is or is not will be identified. Secondly, this paper will discuss the procedure for seeking an award under the statute. Third, the elements of the claim will be identified. Fourth, the amount of the award will be discussed. Finally, issues concerning the appeal of an award of attorney's fees and litigation expenses will be explored.
II. SUBSTANTIVE AREAS OF OCGA § 9-15-14
A. Actions to Which The Statute Applies
By its own terms, OCGA § 9-15-14 applies to "any civil action in any court of record of this state..." It applies to contract cases, tort cases, domestic relations cases and any other action at law or equity brought in the Superior or State Courts of Georgia. A recent Supreme Court of Georgia decisions held that § 9-15-14 sanctions are available, in a proper case, in condemnation actions. DOT v. Woods, ______ Ga. _____. ____ S.E.2d _____, (S97G0993) (Decided, December 12, 1997, Sears, J.).
The statute does not apply in Federal District Court where Rule 11 holds controls. Union Carbide Corp. v. Tarancon Corp., 682 F. Supp. 535 (N.D. Ga. 1988); Westinghouse Credit Corp. v. Hall, 144 BankR. 568 (S.D. Ga. 1992); Majik Market v. Best, 684 F. Supp. 1089 (N.D. Ga. 1987); Bruce v. Wal-Mart Stores, Inc., 699 F. Supp. 905 (N.D. Ga. 1988); Thomas v. Brown, 108 F. Supp. 336 (N.D. Ga. 1989); Edwards v. Associated Bureaus, Inc., 128 F.R.D. 682 (N.D. Ga. 1989).
By specific statutory provision, OCGA § 9-15-14 does not apply in magistrate courts, although, in the event that a case is appealed from Magistrate court to Superior Court and the appeal lacks substantial justification, the appellee may seek litigation expenses incurred in the magistrate court proceeding. OCGA § 9-15-14(h).
Similarly, a Superior Court may not award attorney fees and litigation expenses for positions taken in a worker's compensation case before the Board, but may make an award for a frivolous appeal to the Superior Court. Unlike Magistrate Court actions, however, the award may only encompass the attorney fees and litigation expenses of the appeal. Contract Harvesters v. Clark, 211 Ga. App. 297, 439 S.E.2d 30 (1993).
A prosecution for violation of a city or county ordinance is "quasi-criminal" and the provisions of OCGA § 9-15-14 do not apply. Dekalb County v. Gerard, 207 Ga. App. 43, 427 S.E. 2d 36 (1993).
The statute does not focus on pre-litigation activities and the award may only encompass the attorney's fees and litigation expenses reasonable and necessary to the action itself. Cobb County v. Sevani, 196 Ga. App. 247, 395 S.E.2d 572, cert. denied, 196 Ga. App. 907, 395 S.E.2d 572 (1990).
OCGA § 9-15-14 does not apply to litigation in the Court of Appeals or the Supreme Court. The trial court is without authority to require payment of attorney's fees and litigation expenses for proceedings before the appellate courts. DOT v. Franco's Pizza and Delicatessen, Inc., 200 Ga. App. 723, 409 S.E.2d 281, cert denied, 200 Ga app. 895, 409 S.E.2d 281 (1991); Bankhead v. Moss, 210 Ga. App. 508, 436 S.E. 2d 723 (1993); Castro v. Cambridge Square Towne Houses, Inc., 204 Ga. App. 921, 420 S.E.2d 588 (1992). Abusive appeal sanctions are controlled by Supreme Court Rule 8, Court of Appeals Rule 15 and OCGA § 5-6-6.
Finally, it should be noted that an award against an attorney under OCGA § 9-15-14 is considered a sanction within the meaning of an exclusion in an attorney's insurance policy. Dixon v. Home Indemnity Co., 206 Ga. App. 623, 426 S.E.2d 381 (1992).
B. Procedure For Seeking an Award Under O.C.G.A. § 9-15-14
A trial court may award attorney's fees and litigation expenses as a sanction for abusive litigation either upon motion by the aggrieved party or upon its own motion.
A motion for an OCGA § 9-15-14 motion may be brought at any time up to forty-five (45) days after final disposition of the action in the trial court. Until April 5, 1994, any motion could only be brought within a "window of opportunity" that opened upon the final disposition of the action in the trial court and closed forty-five days thereafter. See, Fairburn Banking v. Gafford, 262 Ga. 792, 439 S.E.2d 486 (1994). Based on the law prior to April 5, 1994, there are cases holding that no award may be made if the motion was brought prematurely before the window of opportunity opened upon final disposition. See, for example, Marshall v. Richmar, Inc., 215 Ga. App. 470, 451 S.E.2d 515 (1994); In Re. M.A.K., 202 Ga. App. 342, 424 S.E.2d 288 (1991); Williams v. Clark-Atlanta University, Inc., 200 Ga. App. 51, 406 S.E.2d 559 (1991); Huchinson v. Divorce & Custody Law Center, 207 Ga. App. 421, 427 S.E.2d 784 (1993).
In 1994 the General Assembly Amended subsection (e) to allow an OCGA § 9-15-14 motion to be brought at any time within forty-five days after final disposition. That change in statutory language makes clear that if a party engages in abusive tactics during part of a case, the opposing party may seek sanctions during the pendency of the case. Thus, discovery abuses may be challenged during the pendency of the action and if found to be abusive, may be the basis of an award. It is apparent that the change to allow motion or attorney fees during the pendency of an action gives both the opposing party and the court a powerful weapon to deter dilatory litigation tactics and discovery abuse.
The phrase "final disposition" is synonymous with "final judgment" as that term is used in OCGA § 5-6-34(a)(1). Fairburn Banking Co. v. Gafford, 263 Ga. 792, 439 S.E.2d 482 (1994). In essence, any judgment sufficiently final to give a right of appeal is final for the purpose determining if a OCGA § 9-15-14 motion is timely filed. An OCGA § 9-15-14 motion brought within forty-five (45) days after the decision on appeal of a case is not timely filed and the trial court has no jurisdiction to entertain the motion. Id. Similarly, a motion filed more than 45 days after dismissal of the action but within 45 days of the denial of a motion to set aside the judgment was not timely filed. Gist v. Dekalb Tire, 223 Ga. App. 397, 477 S.E.2d 616 (1996).
When fewer than all the claims of a multi-count complaint are adjudicated and the court expressly finds that there is no just reason to delay entry of final judgment and directs entry of final judgment on fewer than all of the counts under OCGA § 9-11-54(b), then any OCGA § 9-15-14 motion relating to the fully adjudicated claims must be brought within forty-five (45) days of the entry of judgment under OCGA § 9-11-54(b). The prevailing party may not wait until the final disposition of the case as a whole before bringing the motion. Little v. General Motors Corporation, ____ Ga. App. ______, ______S.E.2d ______, (Appeal No. A97A1575; A97A1576)(November 7, 1997).
It should be emphasized that the forty-five day window of opportunity does not begin to run on a dismissed count unless and until the court directs entry of judgment pursuant to Rule 54(b).
A party against whom sanctions are sought has a basic right to confront and challenge the evidence against him, including the reasonableness and necessity of the fees and expenses awarded. Where no such evidentiary hearing was afforded, the award will be reversed and remanded for such a hearing. Cohen v. Feldman, 219 Ga. App. 90, 464 S.E.2d 237 (1995).
USCR 6.2, requiring respondent to file a brief and any evidence within thirty (30) days of the filing of the motion applies to OCGA § 9-15-14 motions; and, if no response is filed, the trial court does not err in refusing to permit testimony at the hearing on the motion. Forest Lakes Home Owners Ass'n v. Green Industries, Inc., 218 Ga. App. 890, 463 S.E.2d 723 (1995).
No fees may be assessed unless the trial judge makes an independent determination of both the reasonableness and necessity of the fees. If no evidence is introduced from which the trial court can make such a determination, no award may issue. Duncan v. Cropsey, 210 Ga. App. 814, 437 S.E.2d 787 (1993).
C. Elements of a Claim Under OCGA § 9-15-14
The language of OCGA § 9-15-14 lays out the elements of a claim for attorney fees and/or litigation expenses explicitly. The statute includes both a mandatory and a permissive award of fees. OCGA § 9-15-14(a) provides as follows:
In any civil action in any court of record of this state, reasonable and necessary attorney's fees and expenses of litigation shall be awarded to any party against whom another party has asserted a claim, defense, or other position with respect to which there existed such a complete absence of any justiciable issue of law or fact that it could not be reasonably believed that a court would accept the asserted claim, defense, or other position. Attorney's fees and expenses so awarded shall be assessed against the party asserting such claim, defense, or other position, or against that party's attorney, or against both in such manner as is just.
Thus an award under OCGA § 9-15-14(a) is mandatory ("shall be awarded") if the court finds that a party has asserted a position "with respect to which there existed such a complete absence of any justiciable issue of law or fact that it could not reasonably be believed that a court," would accept the position. Fabe v. Floyd, 199 Ga. App. 322, 405 S.E.2d 265 (1991).
A permissive award ("the court may ...") of attorney's fees and litigation expenses is available under OCGA § 9-15-14(b) which states as follows:
The court may assess reasonable and necessary attorney's fees and expenses of litigation in any civil action in any court of record if, upon the motion of any party or the court itself, it finds that an attorney or party brought or defended an action, or any part thereof, that lacked substantial justification or that the action, or any part thereof, was interposed for delay or harassment, or if it finds that an attorney or party unnecessarily expanded the proceeding by other improper conduct, including, but not limited to, abuses of discovery procedures available under Chapter 11 of this title, the "Georgia Civil Practice Act." As used in this Code section, "lacked substantial justification" means substantially frivolous, substantially groundless, or substantially vexatious.
A permissive award against a party or an attorney is authorized if one of three criteria is met:
1) the action brought or defended, or any part thereof lacked substantial justification. A position lacks substantial justification if it is "substantially frivolous, substantially groundless or substantially vexatious;"
2) the action, or any part thereof, was interposed for delay or harassment; or,
3) the party or attorney unnecessarily expanded the proceedings by discovery abuse or otherwise.
It should be noted that any aggrieved party may recover such an award. The statute is meant to deter frivolous or abusive defenses the same as frivolous or abusive claims. In addition, an award against a prevailing party is authorized if the prevailing party improperly expanded the proceedings or otherwise violated the statute. Betallic, Inc. v. Deavours, 263 Ga. 796, 439 S.E.2d 643 (1994).
A party is not entitled to an award of attorney's fees simply because it prevailed in the case. In order to receive an award, it must be found that there was "no justiciable issue of law or fact" under OCGA § 9-15-14(a) or that one of the three criteria of OCGA § 9-15-14(b) has been met. Thus, a prevailing party is not perforce entitled to an award, Hyre v. Denise, 214 Ga. App. 552, 449 S.E.2d 120 (1994), nor does the fact that summary judgment was granted to a party entitled that party to an award of attorney fees and litigation expenses. Brown v. Kinser, 218 Ga. App. 385, 461 S.E.2d 564 (1995).
Even the court§s power to make an award sua sponte is limited by the requirement that the conduct sanctioned meet one of the requirements of OCGA § 9-15-14(b). Hardwick-Morrison Co. v. Mayland, 206 Ga. App. 426, 425 S.E.2d 416 (1992).
Indeed, an award of attorney's fees is not justified where there is arguable support for the position taken. Ellis v. Johnson, 263 Ga. 514, 435 S.E. 2d 923 (1993). In Ellis, losing candidates in an election brought an action contesting the results of an election contending that there was error in the vote count. The contest was based on a statutory provision that had never been interpreted by the court. The trial court found against the contest and awarded attorney fees under OCGA § 9-15-14(a). The Supreme Curt reversed finding that the plaintiff's interpretation of the election contest statute was arguable and that no award of attorney fees was justified.
The amount of legal authority necessary to support an action is unclear. In the context of OCGA § 51-7-80, a recent Court of Appeals decisions found that the complaint was not "without substantial justification" despite the fact that a previous Court of Appeals decision, based on indistinguishable facts, ruled contrary to plaintiff's position. Owens v. Generali, 224 Ga.App. 290, 480 S.E.2d 863 (1997). The Court of Appeals opinion noted that in the indistinguishable case, Liberty Mutual Ins. Co. v. Clark, 165 Ga.App. 299 S.E.2d 76 (1983), one judge had concurred in the judgment only, thereby making Clark physical precedent only and therefore non-binding. On the distinction between binding and physical precedent the Court of Appeals found that Generali's complaint did not lack substantial justification. In the Generali opinion, it appears that the Court, instead of asking whether there was any authority for the allegedly frivolous position, asked whether indistinguishable binding authority precluded the position taken. If the Generali analysis is followed in other cases, it appears that cases will be without substantial legal justification only if binding indistinguishable precedent bars the claim or position. It seems unlikely to this commentator that the Generali opinion will be widely followed.
Settlement bars OCGA § 9-15-14. The section does not apply and an award may not issue once a case is settled by mutual dismissals pursuant to a negotiated agreement. Hunter v. Schroeder, 186 Ga. App. 799, 368 S.E.2d 561 (1988). See also, Kluge v. Renn, ____ Ga. App. _____, ____ SE 2d _____, (Appeal No. A97A0148, A97A0505, A97A0506) (May 27, 1997) 1997 WL 275319 (Ga.App. 1997) holding that a consent order bars frivolous litigation claim in a OCGA § 51-7-80 context.
An award under the code section is to "any party" against whom the abusive position has been asserted. Thus, only parties to the action may seek such an award. An expert witness may not seek to compel the payment of his fees after the dismissal of the action but must proceed by separate suit. Ramos v. Vourtsanis, 187 Ga. App. 69, 369 S.E.2d 344 (1988).
Similarly, the award may be made against only parties or the attorney of the parties. Thus, an insurance company that controls the defense of a personal injury action may not be sanctioned under OCGA § 9-15-14 for abusive litigation. Allstate Insurance Company v. Reynolds, 210 Ga. App. 318, 436 S.E.2d 57 (1993).
Finally, since sanctions may only be awarded against a party or its attorney, the trial court is without authority to impose the sanctions of attorney fees or litigation expenses against an alleged "alter ego" of a corporate plaintiff. Steven E. Marshal, Bldr., Inc. v. Scherer, 206 Ga. App. 156, 424 S.E.2d 841 (1992).
The threat of sanctions for abusive litigation has the potential to chill actions that push the limits of the law. The General Assembly was aware that the law is never static and that only by bringing of actions or defenses not heretofore recognized can the law evolve and improve. In order to prevent stagnation of the law, therefore, the General Assembly included section (f) which states as follows:
An award of reasonable and necessary attorney's fees or expenses of litigation under this Code section shall be determined by the court without a jury and shall be made by an order of court which shall constitute and be enforceable as a money judgment.
Thus, neither a party nor an attorney will be sanctioned for "pushing the envelope" as long as the theory of law is supported by "precedential or persuasive" authority. While cases interpreting what constitutes precedential or persuasive authority are scarce, it would seem that the following would apply:
1) a dissent by one or more members of the Georgia Court of Appeals or the Georgia Supreme Court advancing the position asserted;
2) cases from Federal Court applied to Georgia procedural questions or to analogous substantive questions;
3) cases from other States, particularly when a trend in the development of the law is shown; and
4) positions taken by commentators in law review articles, books or other legal papers.
In order to avoid sanctions under the "law development" provision of OCGA § 9-15-14(f), it may be helpful to acknowledge to the trial court early in the proceeding that the action is an attempt to expand, alter or create new law or legal theory in Georgia.
D. The Amount of the Award
An award under OCGA § 9-15-14 may not exceed the amounts which are reasonable and necessary for defending or asserting the rights of a party. OCGA § 9-15-14(d). The Code section may not be used to seek an award for damages other than attorney's fees and litigation expenses. If damages other than fees and expenses are to be sought, a litigant should avail himself of the provisions of OCGA § 51-7-80, et seq. OCGA § 9-15-14, however, is the exclusive remedy for abusive litigation when the only damages sought or incurred are litigation expenses and attorney fees. OCGA § 51-7-83.
A party against whom a motion for attorney's fees and litigation expenses is filed has a right to challenge the reasonableness and necessity of the fees and expenses. Cohen v. Feldman, 219 Ga. App. 90, 464 S.E.2d 237 (1995).
What is reasonable and necessary will, of course, depend on the nature and facts of the individual case, the degree of work required by the assertion of the frivolous position, and the skill, and experience of the attorney performing the work (and therefore the reasonableness of the fee charged).
It should be noted, however, that personal time spent by attorney/defendants was not recoverable in an award under OCGA § 9-15-14 when the attorneys were defendants, did not appear as attorneys of record in the case, and had hired outside counsel to represent them. Moore v. Harris, 201 Ga. App. 248, 410 S.E.2d 804 (1991).
The General Assembly has recently amended OCGA § 9-15-14(d) to make clear that an aggrieved party may seek, as part of a OCGA § 9-15-14 award, the fees and expenses reasonably necessary to the prosecution of the motion. The new OCGA § 9-15-14(d) now includes the following language:
Attorney's fees and expenses of litigation incurred in obtaining an order of court pursuant to this Code section may also be assessed by the court and included in its order.
E. Appellate Issues
The most salient appellate issue regarding OCGA § 9-15-14 is that one does not have the right to appeal the award as a matter of right. By statute, OCGA § 5-6-35(a)(10), awards of attorney's fees and litigation expenses are subject to the two step discretionary appeal process. The size of the award has no effect on the requirement that the OCGA § 5-6-35 procedure be followed.
Where a direct appeal, as a matter of right under OCGA § 5-6-34 has been properly filed, a party aggrieved by an OCGA § 9-15-14 award may also seek relief from that award on the direct appeal. Rolleston v. Huie, 198 Ga. App. 49, 400 S.E.2d 349 (1990). See, OCGA § 5-6-34(d).
With a modicum of planning, the party seeking an award under OCGA § 9-15-14 may make the order appealable as a matter of right. The planning involves sending the appropriate notice of intent to seek abusive litigation damages as required under OCGA § 51-7-84. Assuming such notice is sent, the party seeking an award of attorney fees and litigation expenses should file an OCGA § 9-15-14 motion and simultaneously file a motion seeking fees and expenses under OCGA § 51-7-83(b). OCGA § 51-7-83(b) provides that when the only damages sought in an abusive litigation suit are for attorney fees and litigation expenses "the procedures provided in Code Section 9-15-14 shall be utilized." The ruling on the OCGA § 51-7-83 motion is directly appealable. Since the decision on the OCGA § 51-7-83 motion is directly appealable as a matter of right, the decision on the OCGA § 9-15-14 motion is also appealable as it "attaches" the appeal as a matter of right. The procedure outlined above was explicitly approved in Hallman v. Emory University, 225 Ga. App. 247, 438 S.E. 362 (1997). The key to bootstrapping the right to a direct appeal by attaching the OCGA § 9-15-14 motion to an OCGA § 51-7-83 motion is that OCGA § 9-15-14 awards are "court-imposed sanction for misconduct in litigation" while OCGA § 51-7-80, et. seq. is "an independent cause of action." Id. The direction of OCGA § 51-7-83(b) to utilize the procedures of OCGA § 9-15-14 "does not change an action under OCGA § 51-7-80, et. seq. to damages imposed as a sanction ..., but merely directs which procedures shall be followed under such circumstances." Id.
The standard of review of awards under OCGA § 9-15-14 depend on whether the award was based on the mandatory provision of (a) or the discretionary provisions of (b). In either case, the trial court's ruling is entitled to great deference. That deference is justified because the trial court is most familiar with the underlying litigation, the tactics employed, the positions asserted, as well as the reasonableness of the fee request.
If the award is made pursuant to the mandatory provisions of OCGA § 9-15-14(a), then the standard of review on appeal is whether there is "any evidence" to support the award. Gibson v. Southern General Insurance Co., 199 Ga. App. 776, 406 S.E.2d 121 (1991). If the award is based on discretionary provisions of OCGA § 9-15-14(b), however, the standard on review is whether the trial court "abused its discretion" in making the award. Haywood v. Aerospec, Inc., 193 Ga. App. 479, 388 S.E. 2d 367 (1989).
Regardless of the section on which the award is based, the trial court§s order must include findings of fact that support the award. Porter v. Felker, 261 Ga. 421, 405 S.E.2d 31 (1991); Bill Parker & Associates v. Rahr, 216 Ga. App. 838, 456 S.E.2d 221 (1995); Katz v. Harris, 217 Ga. App. 287, 457 S.E. 2d 239 (1995). If the order does not include findings of fact that the allegedly abusive position presented, "a complete absence of any justiciable issue of law or fact that it could not reasonably be believed that a court would accept the position," then no award under OCGA § 9-15-14(a) is authorized. Similarly, if the order does not include a finding of fact of at least one of the criteria of OCGA § 9-15-14(b) (lacked substantial justification, interposed for delay or harassment, unnecessarily expanded proceedings), then no award under that provision is justified. Under either provision, the court's order must find as a fact that the amount awarded was reasonable and necessary.
III. CONCLUSION
The use of OCGA § 9-15-14 to shift the cost of attorney§s fees and litigation expenses to the abusive litigator is a useful deterrent to frivolous actions, defenses and litigation tactics. The statute gives the trial court broad powers to sanction abusive litigators and their clients. One can only hope that the use of such sanctions will reduce or eliminate the unprofessional practice of taking frivolous positions in civil litigation.
