The Georgia Supreme Court has made another ruling on the scope and availability of the Georgian Allocation Act in its most recent series of cases – OCGA Section 51-12-13. This latest decision, Alston & Bird, LLP vs. Hatcher Management Holdings, LLC, sees two significant holdings:

First, under section 51-12-13, damages cannot be apportioned to non-parties if there is only one named defendant. This restriction also applies if a jury or Trier-of-fact expressly states that a person who is not involved is also at fault. In practice, individual defendants in Georgia litigation may now be required to pay the entire indemnity minus any portion attributable to the fault of the plaintiff, regardless of a nonparty’s liability.

Second, an award of attorney’s fees and litigation costs under Section 13-6-11 of OCGA – which are normally reserved only for cases of bad faith, persistent litigation, or unnecessary trouble and expense – is subject to the allocation under Section 51-12-13.

Georgia’s partition statute

Georgia’s Apportionment Statute, enacted as part of the Tort Reform Act of 2005, regulates the reduction in damages awarded by one jury based on the proportion of the fault attributed to the other. Subsection (a) of the law focuses on the proportion of fault attributed to plaintiffs. Subsection (b) concerns the negligence of non-parties and individuals.

OCGA § 51-12-33 (a) provides:

If one or more persons are sued for personal injury or property damage and the plaintiff is to a certain extent responsible for the alleged damage or damage, the Trier has to determine the total damage to be awarded, if each, determines the percentage of the fault of the plaintiff, and the judge will reduce the amount of any other damages awarded to the plaintiff in proportion to his or her percentage of fault.

OCGA § 51-12-33 (b) provides:

If more than one person is sued for personal injury or property damage, the Trier shall, when determining the total damage that may be awarded after a damage reduction in accordance with paragraph (a) of this code section, if available, its compensation among the liable persons in accordance with the percentage of Divide up the fault of each person. Compensation that is imposed by Trier in accordance with this section of the Code is liable to any person against whom it is awarded, is not a joint and several liability of the persons liable and is not subject to any contribution law.

The Georgia Supreme Court Hatcher Management Decision

Background and trial version

The underlying dispute in Hatcher Management arose out of the commissioning of a non-party to set up a law firm and represent a holding company for the individual’s family assets. The person subsequently served as the holding company’s manager and embezzled significant amounts of corporate funds. The plaintiff holding sued the defendant law firm for legal errors and breach of duty of loyalty after the embezzlement. The plaintiff received a jury award of over $ 2 million including attorney and litigation costs. In accordance with its duty to calculate the debt, the jury indebted the defendant 32%, the plaintiff holding 8% and the non-party individual 60%. The court of first instance then reduced the amount of the damages awarded by 68% by combining the debt attributable to both the plaintiff holding company and the non-party, and thus only sentenced the law firm to pay 32% of the total judgment.

Georgia Court of Appeals

On appeal, the Georgia Court of Appeals overturned the Court of First Instance and ruled that the total award amount should only have been reduced by 8%, equal to the amount of fault attributable to the plaintiff holding company, but not the 60% attributable to the not party. In doing so, the court stated that the damage attributed to a non-party under Section 51-12-13 (b) – such as 60% of the fault found by the jury – could not be reduced by the award if there was only one named defendant. Accordingly, the court of appeal sentenced the defendant law firm to pay 92% of the total damages awarded.

Supreme Court of Georgia

The Georgia Supreme Court granted Certiorari on whether Section 51-12-33 allows for a reduction in damages against a defendant based on the jury’s attribution to a non-party in a single defendant trial. In answering this question in the negative, the court stated that although paragraph (a) of the Distribution Act provides for a reduction in damages in relation to the fault of the plaintiff “[w]here one or more people are sued for personal injury or property damage ”, contains letter b, which regulates similar mitigation of damage in relation to the fault of a non-party, a“ critical text difference ”. Subsection (a) applies “if a lawsuit is filed against. will be charged one or more Persons “, but subsection (b) only applies”[where] a lawsuit will be brought more than one Person. . . . ”

Although the Georgia Supreme Court recognized that “[a]Applying subsection (b) to individual defendants may advance some of the intentions of the Tort Reform Act better than the Act as we interpret it today[,]“However, it must“ follow the path of the text, not the apparently other path of the ‘purpose’ ”. Therefore, the Supreme Court concluded that “the Court of Appeal was correct as to the scope of the subdivision directed”. (b): it applies only in cases where ‘against more than one person’ is brought forward, not in actions involving a single defendant such as this. “

Potential Impact on Future Litigation

The decision in Hatcher Management has important implications for tort defendants, including making strategic decisions about whether to join non-parties and the usefulness of filing a complaint of non-party negligence. According to this decision, individual defendants can now also be made disproportionately liable for the amount of the awarded damages if a jury or the expert expressly determines that a non-involved party is primarily at fault.

A copy of the Hatcher Management decision is available here:

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