When the plaintiff wins, the defense pays money. When the defense wins . . .

When the defense wins, why should the defendant and insurer have to eat the defense bill? Why doesn’t the plaintiff who loses the case have to pay the defense fees and expenses? Is that fair?

Well, thanks to a recent appellate court ruling in one of our cases, a strategically secured defense win may require that losing plaintiff to pay!

Last week the U.S. Supreme Court rejected a plaintiff’s final appeal challenging our right to recover back our defense fees and expenses. We had won summary judgment for the defense and then convinced the judge to allow our client (and insurer) to recoup defense fees and expenses from the plaintiff.

We secured this award for defense costs by timely and strategically using GA’s loser pays statute, O.C.G.A. §9-11-68. That law allows a defendant to offer an amount in settlement of a case to a plaintiff, to remain open for acceptance for 30 days, and if the plaintiff rejects the offer and then fails to win a judgment of at least 75% of the offer, the trial court may award the defendant its fees and expenses (incurred following the time of rejection of the offer).

Cohen v. Alfred and Adele Davis Academy, Inc., 310 Ga. App. 761, 714 S.E.2d 350 (2011), is the case at issue, and we represented the defendant school. Once we vetted the plaintiff’s claims of defamation, tortuous interference, fraud, misrepresentation, undue influence, RICO and intentional infliction of emotional distress, we made a nominal offer of $750 to settle the case. Plaintiff rejected the offer. We thereafter defended the case as necessary, developed all of the evidence to support a summary judgment motion and filed it. The trial judge granted us summary judgment, and since plaintiff failed to secure at least 75% of our prior offer of settlement we filed a Rule 68 motion for an award of our defense fees and expenses. The judge then granted that motion and awarded the defense over $84,000.

Plaintiff’s argument on appeal was that our offer of $750 was not made in “good faith” as required by Rule 68 and thus the defense should not recover its fees and expenses incurred in the defense of the case. After a hearing on the matter, the trial court rejected that argument. The appellate court affirmed and held that just because a defendant makes a settlement offer of “nominal value does not demand a finding that its offer was made in bad faith.” The appellate court further held that just because a defendant incurs substantial fees and expenses to defend a case “does not preclude a finding of good faith” as to a settlement offer of nominal value.

Cohen is the first reported appellate case in GA to uphold a Rule 68 award of defense costs following summary judgment for the defense after a “nominal” offer by the defense to settle. We will use Cohen as precedent as we timely and strategically employ Rule 68 against plaintiffs following summary judgment or defense verdict. It is time for the loser to pay!

As always, please feel free to call us to talk further about this matter, or any other matter of importance to you.

Matt Moffett and Wayne Melnick – for the defense