Court Opinion

ID: 2752097
Source: CourtListenerOpinion
Date Created: 2014-11-17 15:07:15.558799+00
Date Added: 2024-06-11T10:03:56.669298
License: Public Domain

In the Supreme Court of Georgia

                                             Decided: November 17, 2014

S14A1680. CRANE COMPOSITES, INC. v. WAYNE FARMS, LLC et al.

      THOMPSON, Chief Justice.

      The question for decision in this case is whether OCGA § 9-11-68, a tort

reform, fee-shifting statute, can be applied to a negligence action in which the

injury occurred prior to the effective date of the statute, but in which the action

was filed after that date. We answer this question affirmatively and, in so doing,

we overrule L. P. Gas Industrial Equipment Co. v. Burch, 306 Ga. App. 156 (701

SE2d 602) (2010).

      Wayne Farms owned and operated a chicken processing plant in Oakwood,

Georgia. A fire broke out at the plant on May 19, 2003. Roughly three years

later, Wayne Farms and its insurers filed suit against Crane Composites, Inc.

(“Crane”), which manufactured interior panels used in the plant, alleging Crane’s

negligence caused the fire to spread extensively. In the meantime, the legislature

enacted OCGA § 9-11-68 (b) (1), which reads, in part:
             If a defendant makes an offer of settlement which is rejected
             by the plaintiff, the defendant shall be entitled to recover
             reasonable attorney's fees and expenses of litigation incurred
             by the defendant or on the defendant's behalf from the date of
             the rejection of the offer of settlement through the entry of
             judgment if the final judgment is one of no liability or the final
             judgment obtained by the plaintiff is less than 75 percent of
             such offer of settlement.1

      On March 4, 2009, in the midst of litigation, Crane made a formal offer of

settlement for $500,000; appellees did not accept the offer within 30 days and it

was deemed rejected.2 On May 30, 2012, a jury returned a verdict in Crane’s

favor, absolving Crane of liability. Crane then sought to recover attorney fees

and costs from Wayne Farms. The trial court denied Crane’s request, relying on

L. P. Gas, supra, which held that OCGA § 9-11-68 could not be applied in a

negligence case where the underlying injury occurred prior to the effective date

of the statute. Crane appealed and an equally divided Court of Appeals

      1
       This statute, which was effective April 27, 2006, amended Ga. L. 2005, p. 1, § 5,
which provided:
      When [a] complaint sets forth a tort claim for money, if the offeree rejects or
      does not accept the offer and the judgment finally obtained by the offeree was
      not at least 25 percent more favorable than the last offer, the offeree shall pay
      the offeror's reasonable attorney's fees and costs incurred after the rejection of
      the last offer.

      2
          See OCGA § 9-11-68 (c).

                                             2
transferred the case to this Court pursuant to Article VI, Section V, Paragraph V

of the Georgia Constitution of 1983.

      In Fowler Properties v. Dowland, 282 Ga. 76 (646 SE2d 197) (2007),

plaintiff sued defendants for damages she allegedly sustained as a result of a slip

and fall in defendants’ parking lot. The suit was filed in 2002. In 2005,

following the enactment of OCGA § 9-11-68, defendants made an offer to settle

the case for $20,000. Plaintiff rejected the offer and the case went to trial. After

the jury rendered a verdict in favor of defendants, defendants moved for attorney

fees pursuant to OCGA § 9-11-68. The trial court denied the request, finding the

code section unconstitutional. On appeal, this Court affirmed, ruling as follows:

      legislation which involves mere procedural or evidentiary changes
      may operate retrospectively; however, legislation which affects
      substantive rights may only operate prospectively. Enger v. Erwin,
      245 Ga. 753, 754 (267 SE2d 25) (1980). The distinction is that a
      substantive law creates rights, duties, and obligations while a
      procedural law prescribes the methods of enforcing those rights,
      duties, and obligations. Polito v. Holland, 258 Ga. 54 (3) (365 SE2d
      273) (1988). When Dowland instituted her tort action on December
      18, 2002, the possibility that she may be responsible for paying the
      opposing party's attorney fees and expenses of litigation by rejecting
      an offer of settlement did not exist because OCGA § 9-11-68 did not
      take effect until more than three years later. OCGA § 9-11-68 (b) (1)

                                         3
       does not merely prescribe the methods of enforcing rights and
       obligations, but rather affects the rights of parties by imposing an
       additional duty and obligation to pay an opposing party's attorney
       fees when a final judgment does not meet a certain amount or is one
       of no liability. By creating this new obligation, the statute operates
       as a substantive law, which is unconstitutional given its retroactive
       effect to pending cases like this one.

Id. at 78 (emphasis supplied).

       Thereafter, in L. P. Gas, supra, a majority of the Court of Appeals held that

Fowler was applicable in a negligence case in which, like the case at bar, the

underlying injury occurred prior to the effective date of OCGA § 9-11-68, but

suit was filed after the effective date. In so doing, the appellate court reasoned

that the offer-of-settlement statute could not be applied retroactively because the

statute acts as a substantive law and the substantive rights of the parties were

fixed when the injury occurred. This was incorrect because when OCGA § 9-11-

68 is applied, the substantive rights of the parties are not fixed before the lawsuit

is filed.3

       It is true that OCGA § 9-11-68 created substantive rights and that,

        3
       We granted a petition for a writ of certiorari in that case, L. P. Gas, 306 Ga. App. 912
(2011 Ga. LEXIS 325); however, the petition was withdrawn. L. P. Gas, 2011 Ga. LEXIS
770.

                                              4
therefore, it cannot be applied retroactively. However, the rights created by the

statute pertain to attorney fees and expenses arising out of litigation, not damages

stemming from injury. See generally Georgia Department of Corrections v.

Couch, 295 Ga. 469, 476 (759 SE2d 804) (2014) (“attorney fees awarded under

the offer-of-settlement statute are wholly dependent upon the parties' conduct

during the underlying tort action and may be sought only in connection with such

an action”).      In other words, the offer-of-settlement statute operates

substantively, but only insofar as it imposes an obligation to pay an opposing

party’s attorney fees and expenses of litigation. Thus, it cannot be said that the

statute operates retroactively upon substantive rights simply because the injury

occurred before the effective date of the statute. Rather, because the rights

created by the statute pertain to the conduct of litigation, the statute is acting

prospectively, not retroactively, when applied to litigation commenced after the

effective date.

      Looking back at Fowler, it held only that the statute could not be applied

retroactively in that case because the plaintiff filed suit three years before the

statute became effective. But the statute could have been applied in Fowler if the

                                         5
lawsuit had been filed after the effective date, notwithstanding the fact that the

injury occurred prior to the effective date.

      Turning now to this case, we find that, although the underlying injury

occurred before the effective date of OCGA § 9-11-68, the offer-of-settlement

statute properly applies prospectively because the lawsuit was commenced after

the effective date.

      Judgment reversed. Hines, P. J., Benham, Hunstein, Melton, Blackwell,

JJ., and Judge A. Gregory Poole concur. Nahmias, J., disqualified.

                                        6