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Posts Tagged ‘personal injury’

Court of Appeals Breathes New Life into Joint and Several Liability in Georgia

Posted on: April 4th, 2013

By: Phil Savrin

For many years, the rule in Georgia was that tortfeasors could be liable jointly and severally for bodily injury or death, without apportionment unless the plaintiff was found to be some part at fault. If a plaintiff was not partly at fault, then he could collect the entire judgment from any one of the tortfeasors who would then have contribution claims among them for payment of equal shares. So, for example, a property owner who was only 1 percent at fault for an assault as compared to the assailant could nevertheless be responsible for 100 percent of a judgment.

The Georgia Legislature changed these rules measurably when it enacted the Tort Reform Act of 2005. As the name of the Act states, the statutes were intended to stem the tide of liabilities from being imposed on businesses who had become easy marks for lawsuits. In one part of the Act, the Legislature amended O.C.G.A. § 51-12-33 to require the trier of fact to apportion liability among joint tortfeasors whether or not the plaintiff was partly at fault. The statute was amended even further to allow a defendant to include culpable nonparties on the verdict form for purposes of apportionment by the jury. Consistent with these new rules, the Legislature amended O.C.G.A. § 51-12-32, which had allowed for contribution among tortfeasors who jointly caused the plaintiff’s harm. As amended, the statute provides that contribution may be enforced against joint tortfeasors as if an action had been brought against them jointly, “except as provided in Section 51-12-33.” Because that statute requires apportionment, many lawyers, judges and commentators assumed that joint and several liability had been abolished.

To paraphrase the late Mark Twain, the reports of the demise of joint and several liability may have been exaggerated. In Zurich American Insurance Company v. Heard, in a decision issued March 28, 2013, the Court of Appeals reversed a trial court’s ruling and found that a tortfeasor that settled a claim for more than another tortfeasor could sue for contribution so that each tortfeasor pays an equal share of the total amount paid. The Court found that Section 51-12-33 requires apportionment only if the tortfeasors are sued jointly. If that occurs and the jury actually apportions damages, then (and then only) would contribution be precluded. If that does not occur, however, then the “old” contribution rules of Section 51-12-32 remain in effect.

In practical terms, this latest construction of the statutes has the following implications. Unless a lawsuit is filed and it proceeds to judgment in which the jury actually apportions the liabilities, whoever pays a claim can pursue other parties for contribution in equal shares regardless of the degrees of fault the parties may have. Because any degree of fault suffices to show contribution, the defense of such a claim may be very limited and impossible to show if a payment was in fact made. In addition, there is case law that might allow a defendant to bring a third party claim against another tortfeasor prior to the main claim being resolved. If the matter proceeds to judgment, the plaintiff can then apportion liability to the third party. Alternatively, if the defendant settles, it might then pursue a contribution claim against the third party defendant. Theoretically, therefore, a defendant might be able to bring a settling party back into the case.

Depending on the circumstances of the case, indemnity by the plaintiff could provide some protection to a settling party, especially if the indemnity includes cost of defending a contribution claim. There is a chance the Supreme Court of Georgia will review the Court of Appeals’ construction of these statutes, with contribution claims among joint tortfeasors being relegated once again to the annals of Georgia jurisprudence. Unless and until that occurs, litigants and their insurers are encouraged to consider the ramifications of settling claims that may not extinguish all of the exposures presented.

Stranger Danger: Georgia Joins Minority View and Allows Assignability of Legal Malpractice Claims

Posted on: April 2nd, 2013

By: Dana Maine

Legal malpractice carriers be aware that you will now be on the hook for defending your insureds in actions brought by strangers to any attorney-client relationship. The Georgia Supreme Court just answered the question on the minds of Georgia attorneys and legal malpractice practitioners across the country – legal malpractice claims are assignable in Georgia, as long as they are not presented in the nature of a personal injury. Villanueva v. First American Title Insurance Company, 2013 WL 1092589 (March 18, 2013). A unanimous Georgia Supreme Court, with seemingly little difficulty, determined that Georgia’s assignability statute (O.C.G.A. § 44-12-24) unequivocally directed the outcome of this case.

The facts of the case are not unusual. The defendant-attorney, Derick Villanueva, began working with the Moss Firm in January 2007. Three months later, he opened a new firm, Moss & Villanueva, with his boss George Moss. Shortly thereafter, in May 2007, Villanueva acted as the closing attorney and settlement agent for a mortgage refinance. As part of that transaction, Villanueva signed closing instructions issued by Homecomings Financial, LLC, which was replacing two prior mortgages on the property, totaling almost $1.2 million. As part of the closing instructions, Villanueva acknowledged that he was to pay off the earlier mortgages.

As part of the closing activities, Homecomings wired the refinance funds to an escrow account used by Villanueva’s old firm, because the account for the new firm had not been established at the time of the closing. Unfortunately, a non-lawyer who had access to the escrow account withdrew funds from the account and the previous mortgages were not paid in full.

Homecomings’ title insurer, First American Title Insurance Company, paid off the balances on the previous mortgages. Thereafter, First American filed suit against Villaneuva accusing him of committing malpractice by failing to pay off the mortgages. First American based its malpractice claim on its right as assignee from Homecomings, which was included in the closing protection letter First American issued to Homecomings.

In reaching its decision, the Georgia Supreme Court cited to the general rule that permits assignment of a right of action “if it involves, directly or indirectly, a right of property,” while “[a] right of action for personal torts or for injuries arising from fraud to the assignor may not be assigned.” O.C.G.A. § 44-12-24. The Court held that the damage involved in the case involved financial loss which is akin to injury to property; therefore, the malpractice claims are assignable. Discounting the public policy concerns relied upon by the majority of state courts to bar the assignment of legal malpractice claims, the Georgia Court said the legislature has not seen fit to amend the Georgia statute to prohibit the assignment of these claims. Therefore, the Court saw no reason to read the prohibition into the statute.

The vast majority of legal malpractice claims involve financial loss and will now be assignable in Georgia. The pool of potential plaintiffs for legal malpractice claims has just expanded exponentially. Insurers can be expected to cover the increased risk with a corresponding increase in premiums. As a practical matter, in these difficult economic times, malpractice insurance now represents an additional source of funds from which a disgruntled litigant can seek recompense.