Summer 2010 - Swift Currie

The
Timeless Values.
Progressive Solutions.
Tort Report
An Update on Liability Issues
Summer 2010
www.swiftcurrie.com
Name Your Best Price: Offer of
Settlement Statute Upheld as
Constitutional
By Ernessa M. Brawley
At least one provision of the Georgia
Tort Reform Act of 2005 has successfully withstood constitutional challenges,
including the possibility of attorneys’ fee
awards when employed successfully. The
Georgia Supreme Court recently gave an
affirmative nod to O.C.G.A. § 9-11-68,
the Offer of Settlement statute. In Smith v. Salon Baptiste, 2010 Ga.
LEXIS 215 (March 15, 2010), the Georgia Supreme Court reversed
a trial court’s conclusion that O.C.G.A. § 9-11-68 violated multiple
provisions of the Georgia Constitution. Five (one specially concurring)
of the court’s seven justices upheld the constitutionality of the statute,
with two justices vigorously dissenting. With the constitutionality of the
statute upheld, use of the statute may present another valuable tool to
encourage realistic case evaluation at the risk of future attorneys’ fees.
Cheryl and Salon Baptiste (“Plaintiffs/Appellants”) filed a suit against
Chuck Smith and WQXI 790 radio station (“Defendants/Appellees”)
for alleged defamatory statements made on-air by Mr. Smith during
a broadcast on WQXI. Id. at *1. In response to Plaintiffs’ complaint,
Appellees utilized O.C.G.A. § 9-11-68 to offer Baptiste $5,000 to settle
her claims. Baptiste did not respond to the offer and the lack of response
was automatically deemed a rejection under 9-11-68(c). Subsequently,
the appellees were granted summary judgment as to all counts of
Plaintiffs’ complaint. Appellees then moved for attorneys’ fees pursuant
to O.C.G.A. § 9-11-68(b) (1). The trial court denied the motion for
attorneys’ fees on the grounds that O.C.G.A. § 9-11-68 was violative of
the Georgia Constitution.
Specifically, the trial court ruled that O.C.G.A. § 9-11-68 impeded a
party’s access to the courts by diminishing a litigant’s right to pursue
a cause of action. The trial court also found the statute violated the
uniformity clause of the Georgia Constitution because it only applies
to tort claims, not all civil cases. In a well-reasoned opinion, the
Georgia Supreme Court struck down both of these constitutional
challenges. Specifically, the Court held that Art. I, Sec. I, Par. XII of the
Georgia Constitution was never intended to provide a right of access
to courts, but was intended to provide only a right of choice between
self-representation and representation by counsel. Id. at page *9. After
engaging in a discussion of the stenographic report of the proceedings
at the 1877 Constitutional Convention of Georgia and subsequent
versions of the constitutional provision, the majority concluded
Georgia’s constitutional provision was adopted to ensure an individual
had the right of self-representation, not to grant a broad right of access
to the courts. Further, the Court acknowledged differences in Georgia’s
Constitution and constitutional provisions in other states which
specifically address a party’s right of access to the courts. The Court
reversed the trial court’s conclusion that the statute violated the “right
to access” provision of the Georgia Constitution, as it held none exists.
Further, the Court held Georgia’s uniformity clause is not violated by
the statute because it is a general law that applies to all tort cases. “The
clear purpose of this general law is to encourage litigants in tort cases
to make and accept good faith settlement proposals in order to avoid
unnecessary litigation.” Id. at *13. The fact the statute does not apply to
other civil actions does not render it an impermissible special law. As the
law operates uniformly to all tort actions throughout the state, it does
not violate the uniformity clause of the Georgia Constitution.
O.C.G.A. § 9-11-68 provides an important litigation tool to assist
litigants as they fully evaluate each case. While each case is different,
a party presented with an appropriate offer may later be required to
reimburse the other party at the conclusion of trial or after a grant of
summary judgment. So, when is it time to name your best price under
the statute? O.C.G.A. § 9-11-68 provides specific requirements which
must be met to start the clock running under the statute. A party may, at
any time over 30 days after the service of a summons and complaint, but
not less than 30 days (20 days counteroffer) before trial, serve another
party a written offer to settle a tort claim for a specific amount indicated
in the offer. The party is not required to file the written offer with the
court. The party is required to file a certificate of service indicating the
offer was made. The offering party should strictly comply with the
information statutorily required to be contained in the offer language.
The effect of an offer of settlement may have large implications on a
party receiving and rejecting the offer. Under the statute, if a defendant
makes an offer of settlement and the plaintiff rejects it, the defendant is
entitled to reasonable attorneys’ fees and expenses from the date of the
rejection of the offer if: 1) the final judgment is one of no liability, or
2) the final judgment for the plaintiff is less than 75% of the offer of
settlement. If a plaintiff makes an offer of settlement which is rejected
by the defendant, and the plaintiff recovers a final judgment more than
125% of the offer, the plaintiff will be entitled to recover attorneys’ fees
and expenses incurred on his behalf. Both amounts are calculated from
the date of the rejection of the offer.
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The Tort Report | Summer 2010
The statute essentially provides a 25% gap for both parties. For example,
Plaintiff files a lawsuit alleging $60,000 in damages in the complaint (or
by prior demand). At some point during discovery, or within 30 days
prior to trial, Defendant sends Plaintiff an offer of settlement for
$20,000 pursuant to O.C.G.A. § 9-11-68 and Plaintiff rejects the offer.
If Plaintiff loses the case on summary judgment, loses the case at trial or
recovers less than $15,000 (75% of Defendant’s offer), Plaintiff may
then be required to pay attorneys’ fees from the time of rejection until
the time of the award. Conversely, if the same plaintiff sends Defendant
an offer for $60,000 which is rejected, Plaintiff will be entitled to attorneys’ fees if he/she recovers more than $75,000 (125% of Plaintiff’s
offer). In short, if the price is right, parties should seriously consider an
offer to avoid potential attorneys’ fees.
They Give and They Take Away:
Recent Decisions in Medical
Malpractice Cases
By C. Whitfield Caughman and
Jennifer M. Guerra
For medical malpractice defendants, the
Georgia Legislature’s 2005 Tort Reform was
like a big present after years of acquiescence.
Two of these gifts took the shape of: (1) a
reduced standard of care for emergency
room physicians, and (2) caps on jury
awards for non-economic damages in all
medical malpractice actions. See O.C.G.A. §
51-1-29.5 and O.C.G.A. § 51-13-1.
In the five years since, the plaintiffs’ bar has
played Scrooge in every attempt to utilize
these shiny new tools. In the past couple
of months, the Georgia Supreme Court
has deemed which ones defendants may
keep and which they must live without.
They Give
The first law requires medical malpractice plaintiffs to produce clear
and convincing evidence that an emergency room physician committed
gross negligence. This evidentiary burden is heavier than the normal civil
standard, “a preponderance of the evidence” or “more likely than not.”
Moreover, the statute substantially changes the duty of care in ER cases.
Georgia law defines “gross negligence” as the failure to exercise even a
slight degree of care.
In a recent case, the Georgia Supreme Court upheld the statute, dismissing
several challenges that the law was unconstitutional. See Gliemmo v.
Cousineau, 2010 Ga. LEXIS 218 (March 15, 2010). In Gliemmo, the
plaintiff/appellants brought a medical malpractice claim against an
emergency room physician, his employer and a hospital. The plaintiffs
contended the statute was unconstitutional because it sets forth a gross
2 | www.swiftcurrie.com
negligence standard of liability only for certain emergency care providers
while other providers were held to the standard of ordinary negligence.
The Court held the legislature’s intent to promote affordable malpractice
insurance was a “legitimate” purpose and the statute did not deprive
a plaintiff of the fundamental right to a jury trial. Furthermore, it is
“entirely logical” to assume care in an emergency room is distinct from
care in other hospital settings and the court reasoned that establishing a
gross negligence standard of care reduces liability and helps to achieve the
legislature’s legitimate goals.
They Take Away
The damage caps came before the same court not a month later in
Atlanta Oculoplastic Surgery, P.C. v. Nestlehutt, 286 Ga. 731 (2010). This
law capped non-economic damages for pain and suffering in medical
malpractice cases. In March of this year, the Supreme Court of Georgia
affirmed a trial court’s ruling that these caps were an unconstitutional
violation of a plaintiff’s right to a jury trial.
As enacted in 2005, O.C.G.A. § 51-13-1 separated defendants into
healthcare providers (personnel) and medical facilities (hospitals).
The statute capped a plaintiff’s non-economic damages from a single
healthcare provider or a single medical facility at $350,000. A plaintiff
could not recover more than $350,000 from healthcare providers – even
if Plaintiff named several. In contrast, the statute capped a plaintiff’s
aggregate recovery from all medical facilities at $700,000. Thus, even
in multi-defendant litigation, a plaintiff could never recover more than
$1,050,000.00 for these damages.
The Georgia Legislature intended the damage caps to address a “crisis
affecting the provision and quality of health care services in this state.”
Ga. L. 2005, p. 1, § 1. Specifically, it found increasing costs of liability
insurance negatively affected healthcare providers and facilities. These
problems in the liability insurance market could potentially reduce
Georgia citizens’ access to healthcare services, degrading overall health
and well-being.
In January 2006, Dr. Harvey Cole performed a full facelift and other
procedures on Betty Nestlehutt. Complications arose, resulting in
disfigurement; Nestlehutt sued Cole for malpractice. At trial, the
jury returned a verdict that included $900,000 in damages for Ms.
Nestlehutt’s pain and suffering. Plaintiff then moved to have O.C.G.A.
§ 51-13-1 declared unconstitutional to prevent the judge from reducing
her award. The trial court granted the motion and entered judgment in
the full amount.
On appeal, the Supreme Court upheld the trial court’s ruling, relying
on the Georgia Constitution. It cited long-standing principles of jury
sovereignty, pronouncing “[t]he determination of damages rests peculiarly
within the province of the jury.” Nestlehutt, 286 Ga. at 731-734. The court
continued, “[n]oneconomic damages have long been recognized as an
element of total damages in tort cases, including those involving medical
negligence.” Id. at 735.
With this foundation, the Court eventually held that, to reduce a damage
award “determined by a jury that exceeds the statutory limit, O.C.G.A.
§ 51-13-1 clearly nullifies the jury’s findings of fact regarding damages
The Tort Report | Summer 2010
and thereby undermines the jury’s basic function.” Id. Justice Nahmias’
special concurrence recognized that the legislature had “broad authority”
to address problems with healthcare costs and availability. However, in
doing so, “the legislature’s discretion is bounded by the fundamental
rights enshrined in our Constitution.” Id. at 740.
Post-Ruling Developments
The Atlanta Journal-Constitution’s Bill Rankin reported on the immediate response to the emergency room decision. Michael Terry, attorney
for the plaintiffs, pronounced that, “[a]n ER doctor is now the one
professional who is free to be negligent without legal repercussion.”
Rankin also quotes Darrell Grimes, president of MAG Mutual
Insurance Co., who called the ruling “a victory for all emergency
medicine physicians as well as patients” because it encourages
affordable insurance.
Striking the damage caps had an immediate and expensive impact. Only
four days after the March 22 opinion, a Coffee County jury awarded
an already disabled and unemployed man $1.5 million in pain and
suffering damages when an IV needle leaked into tissue, causing him
to lose his thumb. See Jackson v. Coffee Regional Medical Center, Coffee
County Superior Court, Civil Action File No. 2207S04-387. The man
sued both the hospital and the nurses, alleging nurse malpractice. His
medical expenses totaled $53,026.
In 2005, the Georgia Legislature gave two gifts to medical malpractice
defendants. As with other promises of the Tort Reform package that
have been stricken, it was good while it lasted.
Franchisor Liability in
Premises Litigation
By Yoon J. Ettinger
A recurring issue in Swift Currie’s
premises liability practice is a franchisor’s
liability to a plaintiff for the negligence
of a franchisee. Franchisors are frequent
targets of plaintiffs seeking to maximize
their potential recovery. Most often,
plaintiffs name franchisors along with
franchisees as defendants in premises cases involving hotels, restaurants
and gas stations. No matter what type of business the franchise is
engaged in, where a franchisor with no liability has been named, a
summary judgment motion is a useful tool for obtaining dismissal.
Georgia courts have generally been favorable to franchisors that have
been able to prove their franchisor status. To impose liability on a
franchisor for the acts of a franchisee, a plaintiff is required to show: (1)
that the franchisor has obligated itself to pay the debts of the franchisor,
or (2) that the franchisee is a mere agent or alter ego of the franchisor.
Summit Automotive Group, LCC v. Clark, 298 Ga. App. 875, 681 S.E.2d
681 (2009); Pizza K, Inc. v. Santagata, 249 Ga. App. 36, 547 S.E.2d 405
(2001); Anderson v. Turton Development, Inc., 225 Ga. App. 270, 483 S.E.2d
597 (1997); McGuire v. Radisson Hotels International, Inc., 209 Ga. App. 740,
435 S.E.2d 51 (1993). A defendant franchisor may obtain summary
judgment under the first test by tendering the franchise agreement
into the record. Most franchise agreements usually contain explicit
provisions stating each party to the contract is liable for its own debts.
Clark, 298 Ga. App. at 883 (2009). Affidavits from a representative of
the franchisor and a representative of the franchisee stating each is liable
for its own debts will lend further support to the summary judgment
motion. Once it is established that the franchisor has not obligated itself
to pay the debts of the franchisee, in order to impose liability on the
franchisor, the plaintiff must show the franchisee is an agent or alter
ego of the franchisor.
Summary judgment under the second test presents a more difficult
challenge due to the special nature of a franchise. A franchise agreement
typically contains multiple provisions requiring the franchisee adhere to
specific standards including, but not limited to, using certain products
or equipment in the operation of the business, holding certain business
hours, providing certain uniforms for employees and displaying certain
signs. The agreements may also require franchisees to attend training
sessions at a time and place determined by the franchisor. Additionally,
franchise agreements usually grant the franchisor the right to enter
the premises to conduct inspections at reasonable times, the right to
inspect business records and, in some instances, the right to terminate
a franchisee for noncompliance. A popular tactic with plaintiffs is to
point to these provisions as evidence that the franchisee is acting as an
agent of the franchisor. Georgia courts, however, recognize the special
relationship between a franchisor and a franchisee: “[A] franchisor is
faced with the problem of exercising sufficient control over a franchisee
to protect the franchisor’s national identity and professional reputation,
while at the same time foregoing such a degree of control that would
make it vicariously liable for the acts of the franchisee and its employees.”
McGuire, 209 Ga. App. at 742.
The historical test of agency applied by the courts is whether the
“contract gives, or a [franchisor] assumes, the right to control the time
and manner of executing the work, as distinguished from the right
merely to require results in conformity to the contract.” Clark, 298
Ga. App. at 883 (2009). Although a franchise agreement may contain
very specific and even strict requirements concerning operation of the
franchise, a franchisee is not automatically rendered an agent of the
franchisor. It is well-established that “reserving the right to inspect or
evaluate a franchisee’s compliance with the franchisor’s standards and
to terminate the franchise for noncompliance is not the equivalent of
retaining day-to-day supervisory control of the franchisee’s business
operations as a matter of law.” Schlotzsky’s, Inc. v. Hyde, 245 Ga. App.
888, 889, 538 S.E.2d 561 (2000). If the franchisee is left to freely run
the day-to-day operations of the business without interference from the
franchisor, summary judgment is appropriate. Santagata, 249 Ga. App.
at 39. Evidence that the franchisee hires and fires its own employees,
is responsible for maintenance of the premises and is responsible for
keeping financial records and paying bills are all evidence of supervisory
control over its day-to-day operations. A clause within the franchise
agreement stating no agency relationship exists between the franchisor
and franchisee further strengthens the summary judgment motion.
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The Tort Report | Summer 2010
Franchisors have always been popular targets for plaintiffs seeking deep
pockets. Although at first glance a franchise agreement may appear to
contain provisions allowing a franchisor to exercise significant control
over the franchisee, Georgia courts recognize that the franchise agreement
simply serves as a means to attain a desired level of uniformity and quality
within the franchise system. Promulgating standards for quality control
is not the equivalent of retaining day-to-day control of the franchisee’s
business to impose liability as a matter of law. Where a franchisor has
no liability under the franchise agreement and has taken no actions to
assume liability for any negligence of the franchisee, summary judgment
may provide an effective and efficient option for a franchisor.
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Summary Judgment: Examining
the Evidentiary Burden
By Nichole L. DeVries
The Georgia Court of Appeals recently
reversed a trial court’s denial of summary
judgment on the question of whether
a driver was negligent in causing a
pedestrian’s death based on evidence
from an accident reconstruction expert.
In Hunsucker v. Belford, 2010 Ga.
App. LEXIS 457 (May 14, 2010), the court acknowledged issues of
negligence are generally left to the jury, but also said in cases where
“the alleged negligent conduct is susceptible to only one inference, the
question becomes a matter of law for the court to determine.” Based
upon the undisputed evidence, the court found this to be such a case.
Jamie Ray Hunsucker left his son’s birthday party around 8:00 p.m on
a misty February evening to drive three children home. As Hunsucker
was cresting a hill traveling at about 45 miles-per-hour, the applicable
speed limit, he “caught a glimpse” of a pedestrian. The car struck
Randy Belford, killing him. The plaintiff, Belford’s widow, introduced
photographs of the road taken after the accident as evidence of
Hunsucker’s negligence and otherwise relied on Hunsucker’s deposition
testimony to maintain issues of fact remained as to whether Hunsucker
was negligent in driving too fast for conditions, failing to keep a proper
lookout and hitting Belford. Hunsucker introduced evidence showing
he was driving the speed limit and that he had very little time to react
once he saw Belford in the road. Hunsucker’s accident reconstruction
expert testified that Hunsucker would have had 0.576 seconds to react
after seeing Belford due to the light conditions that evening. The expert
testified this was not enough time to avoid the collision.
The trial court denied Defendant’s motion for summary judgment. The
Georgia Court of Appeals, however, reversed the trial court, holding
the plaintiff did not offer evidence “affording a reasonable basis to
conclude that negligent driving caused the collision.” This case provides
an excellent example of a proactive defense defeating generalized charges
of negligence and affirmative expert testimony winning the day.
Hunsucker v. Belford, 2010 Ga. App. LEXIS 457 (May 14, 2010).
4 | —www.swiftcurrie.com
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ALL RIGHTS RESERVED.
1355 Peachtree Street, NE • Suite 300 • Atlanta, Georgia 30309
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Swift, Currie, McGhee & Hiers, LLP, offers these articles for informational
purposes only. These articles are not intended as legal advice or as an
opinion that these cases will be applicable to any particular factual issue
or type of litigation. If you have a specific legal problem, please contact a
Swift Currie attorney.
If you have any comments or questions regarding the material in this
issue, please contact Brad Wolff at [email protected], Jim
Johnson at [email protected] or Yoon Ettinger at yoon.
[email protected].