A Georgia law firm (the “Firm”) recently challenged a trial court’s order granting attorney fees and litigation expenses under O.C.G.A. § 9-15-14(b) to the sole heir and administratrix of her husband’s estate.
The law firm argued the trial court erred by applying a negligence standard to sua sponte impose sanctions under O.C.G.A. § 9-15-14(b); punishing the Firm when there is a lack of evidence to support sanctions; and imposing an excessive penalty not tailored to the sanctioned conduct.
Background
In January 2012, the plaintiff’s husband was struck and killed by another vehicle while driving his motorcycle in a reversible lane in Atlanta. His wife filed suit against the City of Atlanta and two public works employees: a traffic systems operator (“the operator”) during the time in question and a traffic supervisor. The plaintiff asserted the defendants failed to inspect and maintain a traffic signal governing the flow of traffic in the reversible lane, thus causing or contributing to the accident that killed her husband. The City’s law department and an outside law firm jointly represented all three defendants.
During the discovery process, the plaintiff obtained three service requests on malfunctioning lane lights at the location. The operator created the service requests on September 14, September 15, and December 2, 2011—only months before the fatal collision. The operator was later asked about these specific service requests—and service requests in general—in a deposition. However, she later discovered and told the law firm that she wasn’t at work when two of the service requests were generated. She suggested this might have been the result of fraudulent activity on the City’s computer software.
After the operator’s deposition, the plaintiff requested two years’ worth of time sheets for 16 City employees in the traffic division. The City produced 4500 pages of records, including the operator’s attendance records. These records showed that she wasn’t at work on September 15 or December 2, 2011—two of the three service request dates. About three weeks after the attendance records were produced, the outside law firm that had been representing the defendants was substituted with another law firm.
A New Law Firm Takes Over
More than four years after the Firm took over representation of the defendants, the case was called to trial, but before opening statements, the Firm told the trial court it had just become aware of a conflict that precluded it from continuing to represent all three defendants. Out of concern for client confidentiality, the Firm didn’t give many details about the conflict. But when asked when the conflict arose, the Firm said “the conflict, itself, although we were unaware of it, would have arisen multiple years ago.” The Firm said the information provided was “brand new,” and upon learning of the conflict, the Firm investigated its legal and ethical obligations.
The Firm requested a continuance (so each client could acquire appropriate representation), explaining that it had done its “due diligence and only became aware of this conflict, which is very, very different, just today,” and was unaware of “what could have been done previously to have found out this information beyond what we have done already” because the information it received that morning was entirely new. Nevertheless, the trial court noted that—in the absence of any information about the nature of the conflict—it was unable to determine whether withdrawal was required under the Georgia Rules of Professional Conduct. The court then continued the case for five days and advised it would “entertain a substitution of counsel in the interim period,” though it did not intend to further continue the trial.
Two days later, the Firm filed an emergency motion to withdraw, asserting—without any details—that it “learned of new information from its clients” giving rise to a conflict that precluded its continued representation. When the trial resumed, the trial court held a hearing on the emergency motion. The Firm said only preliminary steps were taken to secure new counsel for the defendants but again refused to disclose the basis for the conflict of interest on the grounds of client confidentiality. The Firm also asked to be heard by the court in camera to provide additional information. The trial court refused this request, claiming that it would “create the possibility that the court might need to be disqualified from a case that has been on my docket since 2016, and that is not going to happen.”
The trial court declared a mistrial, but decided—on its own motion—to “proceed with hearing the issue of repayment of plaintiff’s expenses for preparing for trial against counsel” under O.C.G.A. § 9-15-14(b).
The trial court conducted an evidentiary hearing in October 2022, and explained that the case was rescheduled for trial the following February, but that it would still proceed with considering sanctions under O.C.G.A. § 9-15-14(b). The Firm explained it interpreted the operator’s 2017 deposition testimony regarding the service requests as her saying that it had been “many, many years; I don’t recollect. I’ve got some questions; this looks a little funny I’m not sure,” but she “never at any point … said [‘]I don’t believe I did this. I believe somebody else did it.[‘]” In support, the Firm played the operator’s 2022 video deposition, during which she said that she had no concern someone was using her ID to place false information in service requests until March 2022.
As a result, the Firm maintained it wasn’t until the operator questioned the authenticity of the service requests—the validity of which the City would rely upon in its defense—that an irreconcilable conflict arose. Nevertheless, the trial court decided to sanction the Firm, and then heard testimony from three of the plaintiff’s attorneys as to their fees and litigation expenses.
The Trial Court’s Ruling on Attorney’s Fees
The case soon settled, and the trial court issued its ruling on the O.C.G.A. § 9-15-14(b) fees. The court concluded that the operator’s 2017 deposition “shows that it was plainly contemplated by the operator in 2017 that she was uncertain as to the origin of entries that appear to have been created under her name,” and her testimony “goes beyond mere uncertainty … and clearly raised a significant question as of September … 2017, as to whether the operator created the two service requests.” The court further noted that the Firm had the facts and documents underlying the conflict since its entry into the case in 2018. As a result, the conflict “plainly could and should have been discovered prior to trial.”
In ruling against the Firm, the trial court explicitly noted that the disclosure of the conflict wasn’t what it found improper, but was instead the “overall conduct surrounding the disclosure.” Specifically, the court took issue with the Firm’s failure to timely disclose an apparent conflict to the point of a mistrial because the necessary disclosure occurred after a jury was selected. And the court ultimately concluded that the failure to disclose the conflict prior to trial “constituted a failure to act with a minimum level of diligence,” amounting to improper conduct that unnecessarily expanded the proceedings.
The court awarded the plaintiff $584,000, which covered all of the fees and costs associated with trial preparation and the O.C.G.A. § 9-15-14 motion. The Firm appealed.
The Opinion of the Court of Appeals
Presiding Judge Stephen Dillard wrote that the Georgia Supreme Court has explained that if a lawyer has a conflict of interest, he or she “must (at a minimum) disclose it to his client, and in some instances, he must withdraw from the representation.” Also, under Georgia’s Rules of Professional Conduct, a lawyer shall not “continue to represent a client if there is a significant risk that the … lawyer’s duties to another client … will materially and adversely affect the representation of the client,” except if the client provides informed consent that is confirmed in writing. But these rules also say that informed consent isn’t permissible if the representation “includes the assertion of a claim by one client against another client represented by the lawyer in the same or substantially related proceeding.”
Here, the Firm maintained that a conflict of interest arose in March 2022, for which informed consent wasn’t permissible; and because continued representation would violate the Rules of Professional Conduct, it immediately sought to withdraw. Importantly, there was no contention that the Firm wasn’t required to immediately withdraw from representation or that there was a waivable conflict of interest.
The Award of Attorney’s Fees Under O.C.G.A. § 9-15-14(b)
Judge Dillard explained that O.C.G.A. § 9-15-14(b) authorizes an award of attorney fees when, among other things, a party “unnecessarily expanded the proceedings through improper conduct or acted to cause delay.” And an award of damages under this code section is “intended not only to sanction or deter litigation abuses but also to recompense litigants who are forced to expend their resources in contending with abusive litigation.” So, when considering whether to award fees under the statute, “the conduct of the party against whom an award is sought, and the conduct of that party’s counsel, are considered along with the impact of that conduct on the attorney fees incurred by the opposing party.”
An award under O.C.G.A. § 9-15-14(b) is directed at, inter alia, addressing abusive litigation or, as the statute plainly says, “improper conduct.” To that end, Judge Dillard said that the Court of Appeals has affirmed awards under O.C.G.A. § 9-15-14 (b) for unnecessarily expanding proceedings through improper conduct when
- A witness disregards repeated trial court instructions to avoid mention of a particular topic in testimony;
- Counsel and a party prolong litigation so as to deprive another party of property in the interim;
- A party turns “simple litigation into a complex one” by, inter alia, filing repeated motions to dismiss, sending overwhelming discovery requests, threatening criminal prosecution, and taking other actions that abuse the litigation process; and
- A public official or government entity forces a citizen into court unnecessarily.
But the judge explained that there’s no improper conduct sufficient to support an award under O.C.G.A. § 9-15-14(b) when:
- A pro se litigant operates more slowly than an attorney would in litigating a case, and
- A party maintains a defense from the outset, which results in appellate proceedings by the other party based on the trial court’s erroneous ruling as to that defense.
It was clear from both the plain language of O.C.G.A. § 9-15-14 (b) and Georgia caselaw that even if the Firm had discovered a conflict existed prior to March 2022, this wasn’t conduct rising to the level of warranting fees under the statute for “improper conduct.” The judge concluded that it might very well be different if there was evidence the Firm knew a conflict existed but deliberately waited until the day of trial to withdraw as a means of prolonging litigation, but that wasn’t what the evidence showed or what the trial court found happened.
The Court of Appeals held that the trial court’s findings of fact amount to, at most, potential negligence by the Firm and didn’t satisfy the standard used to award sanctions under O.C.G.A. § 9-15-14(b)—unnecessarily expanding the proceedings through improper conduct. As a result, the Court of Appeals reversed the trial court’s judgment on the award of attorney’s fees. Scrudder, Bass, Quillian, Horlock, Lazarus v. Barken, 2024 Ga. App. LEXIS 201 (Ga. App. May 24, 2024).
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