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Posts Tagged ‘Georgia Court of Appeals’

LOL (Limitation of Liability) Clauses in A&E Contracts: He who laughs last, laughs best

Posted on: October 11th, 2017

By: Cheryl H. Shaw

It’s no coincidence that the abbreviation for “Limitation of Liability” is LOL. That’s the reaction design professionals often get when they include an LOL clause in a contract proposal. LOL or “exculpatory” clauses limit the designer’s liability for future claims—usually to the cost of services or a fixed dollar amount. Clients frequently balk at these clauses, but since the client reaps the bulk of the rewards for a successfully completed project (vs. the designer who’s “reward” is limited to his fee), shouldn’t the client also shoulder the bulk of the risk?

In Georgia, design professionals can contractually limit their liability for negligence. However, the LOL clause must be narrowly drafted so it does not violate Georgia’s anti-indemnity statute1. This means, among other things, that the clause should limit the designer’s liability to his client only, and not to third-parties who are “strangers” to the contract. Attempts to avoid liability to third-parties may render the entire clause unenforceable even if the claim is actually asserted by the client.

Additionally, because an LOL clause contemplates satisfaction of future claims and waives substantial rights, it must be “explicit, prominent, clear and unambiguous” in the contract. In determining if a clause is sufficiently prominent, Georgia courts consider several factors, including whether the clause is contained in a separate paragraph; whether the clause has a separate heading; and whether the clause is distinguished by features such as font size.

In one case, the Georgia Court of Appeals found an LOL clause unenforceable where it was “camouflaged” in the same font as the surrounding contract provisions and was listed under the heading “miscellaneous” instead of having its own separate paragraph. Conversely, an LOL clause contained entirely in its own paragraph, in bold and underlined text, and announced in a heading that clearly informed the reader of the clause’s content was sufficiently prominent.

A well-crafted LOL clause can be an effective tool to cap exposure in the event a lawsuit is filed and should be considered when negotiating contracts for professional services. If the client does, in fact, “laugh out loud” in response to your proposal, one strategy is to provide the option: You can either perform the services without an LOL clause for one fee, or you can lower the fee if the client will accept the clause.

FMG’s Construction Law practice group is here to assist you in drafting these important contact provisions. If you have questions or would like more information, please contact Cheryl H. Shaw at [email protected].

New Georgia Court of Appeals Case Sheds Light on the Interplay Between Summary Judgment and Rule 68 Offers of Settlement

Posted on: July 12th, 2013

By: Wayne S. Melnick

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Since they came into existence as part of the 2005 Tort Reform Act, Rule 68 Offers of Settlement have become an effective weapon in the defense attorney’s arsenal.  Pursuant to O.C.G.A. § 9-11-68, these offers allow a party to tort litigation in Georgia to make an offer of settlement to the opposing side.  If that Rule 68 Offer is rejected and if the rejecting party does not achieve a judgment in an amount equal to or greater than a certain percentage of that offer, then the rejecting party is responsible for all its oppositions attorney’s fees and expenses of litigation from the date of the rejection.  In the case of an offer made from a defendant to a plaintiff, if the plaintiff rejects the offer, he must obtain a verdict that is equal to or greater than 75% of the offer.

By statute, Rule 68 offers must remain open for thirty days to be valid.  The offer can be revoked prior to the thirty days, but if it is, then the party that made the offer cannot later seek to recover attorney’s fees and litigation expenses under that Code section.  If the offer remains open for the full thirty days but is not accepted during that time, then the offer is deemed rejected by operation of statute.

A recent case highlights the importance of the defense understanding the status and timing of its offers relative to other action in the case.  In Graham v. HHC St. Simons, Inc., 2013 WL 3358030 (Ga. Ct. App. Case No. A13A0454, decided July 5, 2013), the Georgia Court of Appeals was faced with a situation where competing Rule 68 Offers were made and summary judgment was granted.  In Graham, while the defense’s summary judgment motion was pending, the defense made a Rule 68 Offer of $100,000.00.  Plaintiff then made a counter-Rule 68 offer of $200,000.00, which, by operation of statute, automatically rejected the defense’s $100,000.00 Rule 68 Offer.  The defense then rejected plaintiff’s counter-Rule 68 Offer and sent a fax to plaintiff that “reiterate[d its] previous offer of $100,000.00.”  Twenty days after that fax was sent, the trial court granted summary judgment to the defense. The next day, the plaintiff faxed a purported acceptance of the $100,000.00 offer and later filed a motion to enforce settlement.

The Georgia Court of Appeals affirmed the trial court’s denial of the motion to enforce settlement. In doing so, the appellate court found the “reiterated” $100,000.00 offer was not a Rule 68 Offer but merely a common law settlement offer that was revoked upon the granting of summary judgment because the granting of summary judgment concluded the “reasonable time” the offer was required to remain open under common law.

Graham is important to all defendants, insurers and defense counsel because it highlights the importance of being aware of the status of the case with regard to any Rule 68 Offers of Settlement.  Had Graham determined the offer in question was a Rule 68 Offer, then the offer would have been required to have remained open for thirty days unless explicitly revoked by the offering party.  See O.C.G.A. § 9-11-68(c).  If that were the case, then the granting of summary judgment would not have acted to revoke the offer and the defense would have been stuck paying the settlement that was timely accepted by the plaintiff.

It is incumbent upon the defense to ensure that if a Rule 68 Offer is outstanding when summary judgment is granted, that the Rule 68 Offer immediately be revoked in writing as required by Rule 68(c).  If no revocation is quickly and timely made, then plaintiff still has the full thirty days to accept the offer even if summary judgment is granted against it.

Georgia Court of Appeals Decides Rare Case on Electronic Discovery

Posted on: June 27th, 2013

By: Bart Gary

iStock_000017197899_SmallOn June 18, 2013, the Georgia Court of Appeals decided a case involving electronic discovery.  In a business dispute, and in response to about 100 unique requests for production of documents from the plaintiff, defendants scanned all paper documents in their files in the form and order in which they were keep in the file cabinets; and extracted electronic documents from hard drives and messages from the email accounts.  The documents “were processed into images” and Bates-stamped in the order they were found.  The defendants then produced the about 156,000 pages of documents in digital format.  In response to plaintiff’s motion to compel, the trial court order the defendants “to designate by Bates-stamp number each document responsive to each request for production served on each defendant.”  It rejected the defendants’ argument that it satisfied the discovery rules by having produced documents as they were kept in the ordinary course of business.  The Court of Appeals refused to disturb the trial court’s discretion and affirmed the order. The decision imposes a substantial burden upon the defendants in document-intensive cases. Ordinarily it is sufficient for a party to produce documents in the form and manner in which they are and were maintained.    The Court of Appeals also affirmed the trial court’s sanctions, plaintiff’s attorney’s fees, imposed on defendants for failing to act in good faith in designating documents “highly confidential,” that did not meet the criteria of the protective order.  Eighty percent (80%) of the documents produced were so designated.