Georgia Court of Appeals Holds State Must Pay Attorney Fees Under "Offer of Settlement" Rule

June 21, 2013

In 2005 the Georgia legislature adopted a controversial tort reform law that included an "offer of settlement" provision. Under this rule, either party in a tort action can make a pretrial settlement offer. If the other party rejects they offer, they can be held liable for the offering party's attorney fees depending on the outcome of the subsequent trial. In the case of a plaintiff's offer, the defendant is liable if the jury returns a judgment that is more than 125% of the rejected offer. Conversely, the plaintiff is liable if the jury returns an award that is less than 75% of a rejected defense offer.

A Prisoner Successfully Sues the State

While the offer of settlement rule clearly applies to personal injury lawsuits among private parties, what about torts committed by employees of the State of Georgia? The Georgia Court of Appeals recently addressed this question arising from a lawsuit brought by an inmate at Walker State Prison in Rock Springs. The inmate, David Lee Couch, had volunteered to help paint the prison warden's home. The house was under renovation, and Couch fell through a rotted part of the floor. He said he was never warned about the dangerous condition of the floor before entering the home, which was owned by the Georgia Department of Corrections.

Before trial, Couch invoked the offer of settlement rule and proposed a $24,000 settlement. The Department of Corrections rejected the offer and proceeded to trial. A jury subsequently ruled in favor of Couch and awarded him $104,158.79--well more than 125% of his pretrial offer. In 2011, the Court of Appeals issued an opinion upholding the jury's verdict.

Despite qualifying for an award of attorney's fees under the offer of settlement rule, the Department of Corrections argued the trial court lacked the authority to make such an award. As a general principle of law, a state agency has "sovereign immunity"; that is, a government cannot be sued or held liable in its own courts without its consent. The Georgia legislature must waive sovereign immunity in order for a specific law to apply against the state or its agents. And while the 2005 tort reform law expressly waived sovereign immunity with respect to tort liability, as in Couch's case, the Department maintained there was no such waiver with respect to claims for attorney's fees.

The trial court rejected the Department's argument and awarded Couch $54,324 in legal fees and expenses. The Department appealed.

No Sovereign Immunity from Paying Attorney's Fees

On June 13 of this year, a three-judge panel of the Georgia Court of Appeals unanimously affirmed the trial court's decision and award. Presiding Judge Ann Elizabeth Barnes, writing for the panel, said the legislature's waiver of sovereign immunity with respect to Couch's underlying tort action extended to his subsequent claim for attorney's fees. The claim for fees was not an "independent action" requiring a specific waiver, Judge Barnes noted, merely a consequence of the state's decision to reject an offer made under a state law where immunity was expressly waived. Thus, the appeals court's decision means individuals who bring tort actions against the state have the same rights under the settlement of offer rule as any other plaintiff.