Opinion ID: 480273
Heading Depth: 1
Heading Rank: 2

Heading: The $107,913.82 Award for Litigation Expenses

Text: 5 The district court awarded $102,804.51 for attorney's fees and expenses and $5,109.31 for overhead incurred by the Bank in its effort to collect Eways' debt. Eways concedes that pursuant to a 1977 guaranty he owes 15% of the first $500.00 of principal and interest awarded in this case, plus 10% of such principal and interest in excess of $500.00. 1 Applying this formula, we compute that Eways concedes that he owes $54,711.57 under the guaranty. 6 According to the Bank, the district court properly awarded $107,913.82 for expenses of litigation. The Bank argues that this full award can be justified on two grounds (a) the 1977 guaranty whereby Eways promised to pay all collection costs, and (b) the bad faith and stubborn litigiousness provision (i.e., section 13-6-11). 7 An award of attorney's fees in excess of $54,711.57 cannot, however, be justified by the 1977 guaranty. The amount that can be awarded under the guaranty is limited by O.C.G.A. sec. 13-1-11(a)(2). Under sec. 13-1-11(a)(2), an obligation for attorney's fees in a note or other evidence of indebtedness, where such obligation does not specify that the attorney's fees will equal a certain percent of the principal and interest, is only enforceable up to 15% of the first $500.00 of principal and interest, and 10% of the principal and interest in excess of $500.00. The maximum award permitted by section 13-1-11 in this case is $54,711.57--the amount which Eways concedes he owes under the 1977 guaranty. 8 Any award for litigation expenses--attorney's fees, expenses and overhead--in excess of $54,711.57 must therefore be justified, if at all, under the bad faith and stubborn litigiousness statute (i.e., section 13-6-11). Based on the district court's laconic orders and the rest of the record, this Court cannot determine whether such an additional award is justifiable under section 13-6-11. 9 We affirm the $107,913.82 award for litigation expenses only to the extent of $54,711.57--the amount Eways concedes he owes under the guaranty. We vacate the $107,913.82 award to the extent that it exceeds $54,711.57, and remand for a determination of whether an award for expenses of litigation in excess of $54,711.57 can be justified under section 13-6-11. Furthermore, we instruct the district court to observe the following guidelines when determining whether an additional award based on section 13-6-11 is proper. 10 1. No expenses of litigation incurred in other lawsuits can be awarded pursuant to section 13-6-11. Only expenses of litigation incurred in the present lawsuit can be awarded under this section. Alston v. Stubbs, 170 Ga.App. 417, 419, 317 S.E.2d 272, 274 (1984); Liberty Mutual Insurance Co. v. Coburn, 132 Ga.App. 859, 862, 209 S.E.2d 655, 657 (1974); Randolph v. Merchants & Mechanics Banking & Loan Co., 58 Ga.App. 566, 573, 199 S.E. 549, 553-54 (1938). 11 2. The Bank cannot recover under section 13-6-11 for the costs of defending against Eways' complaint. Rather, the Bank can recover only the expenses incurred in prosecuting its independent counterclaims. See Ballenger Corp. v. Dresco Mechanical Contractors, Inc., 156 Ga.App. 425, 274 S.E.2d 786, 792-94 (1980). 12 3. Bad faith damages otherwise allowable under section 13-6-11 must be reduced, if necessary, to avoid a double award for the same litigation expenses. If the Bank has incurred $54,711.57 or more in collection efforts in other lawsuits after the confirmation of Eways' Chapter 11 reorganization plan in 1982, then the $54,711.57 which Eways concedes he owes under the guaranty can be attributed to these other lawsuits. In that event, any award for expenses of litigation in the present lawsuit pursuant to section 13-6-11 would not represent a double award. 13 If, however, the Bank has incurred less than $54,711.57 in collection efforts in other lawsuits subsequent to the confirmation of Eways' bankruptcy plan, then not all of the $54,711.57 which Eways concedes he owes under the guaranty can be attributed to other lawsuits. In that event, the remainder of the $54,711.57 amount owing under the guaranty must be attributed to the expenses incurred in the present lawsuit; consequently, a potential for double recovery exists. To avoid a double recovery, an award pursuant to section 13-6-11 can be made only to the extent that the total collection costs of the Bank, in all of its lawsuits subsequent to confirmation of the bankruptcy plan, exceeds $54,711.57. 2