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Posts Tagged ‘Rule 68’

Insuring Against Rule 68 Offers of Settlement

Posted on: June 28th, 2018

By: Matt Grattan

One tool defense lawyers in Georgia frequently use to induce settlements is an offer of settlement under O.C.G.A. 9-11-68.   Rule 68 allows either party to a tort action to serve a written offer to settle the claim, so long as the offer is made within a certain time and satisfies several other elements under the statute.  If a Rule 68 offer is properly made by a defendant and rejected, that code section allows a defendant to recover its post-rejection attorney’s fees and expenses from a plaintiff in the event the plaintiff does not recover at least 75% of the offered amount at trial.

It is easy to see how the fee-shifting provision in Rule 68 can provide defense attorneys with leverage during settlement negotiations.  Simply put, it forces plaintiffs to put some skin in the game.  Because paying the defendant’s attorney’s fees and costs can significantly reduce or even eliminate a plaintiffs’ award at trial (and in turn a plaintiffs’ attorneys’ fees), plaintiffs may be more inclined to settle rather than face such risks at trial.

The fee-shifting benefit from Rule 68, however, could potentially be diminished by companies like LegalFeeGuard.   Established in Florida in 2012 to combat that state’s offer of settlement statute, LegalFeeGuard has recently started offering insurance policies in Georgia that cover attorney’s fees and costs under O.C.G.A. 9-11-68.  LegalFeeGuard offers no-deductible policies with limits as low as $10,000 and as high as $250,000.   Policies are triggered by a judgment in a bench trial or the return of a verdict in a jury trial, and are available to plaintiffs and defendants for a wide array of cases, including personal injury, breach of contract, and intentional torts.

What does the availability of fee-shifting insurance mean for defense lawyers and their clients?  LegalFeeGuard recently launched in Georgia (and the author is unaware of any other similar companies), so it is tough at this point to determine what kind of impact fee-shifting insurance will have on litigation in Georgia.  But this is certainly a development for lawyers to keep an eye on (particularly since LegalFeeGuard claims on its website to have sold over 1,000 policies in Florida) as such insurance may persuade more plaintiffs to roll the dice and take their case to trial knowing the downside risk of paying fees and costs is reduced, if not altogether eliminated.

If you have any questions or would like more information, please contact Matt Grattan 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

 

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.