Spring 2012 - State Bar of Georgia

Vol. XVII Spring 2012 No. 2Bankruptcy-Proofing your Law Judgment:How not to Try theSame Case TwiceSee article on page 4

MARK YOUR CALENDARMarch 15-17, 2012Make plans to attend...THE GENERAL PRACTICE ANDTRIAL SECTION INSTITUTEat theOMNI AMELIA ISLAND PLANTATIONAmelia Island, FloridaIt promises to be a spectacular program -one you won’t want to miss.Chairman Mark F. Dehler

“Georgia’s Largest Law Firm”GENERAL PRACTICE AND TRIAL SECTION STATE BAR OF GEORGIAVol. XVII Spring 2012 No. 2CO-EDITORSR. Walker GarrettDavid A. SleppyEXECUTIVE DIRECTORBetty Simms2011/2012 OFFICERSDarren W. Penn, ChairmanChairmanLaura AustinChair-ElectJames W. Hurt, Jr.Secretary/TreasurerJoseph A. RoseboroughImmediate Past Chair2011/2012 BOARD MEMBERSJohn A. TannerWilliam F. “Trey” Underwood,IIITimothy K. HallRobert S. RegisterJay N. SaddThomas E. CauthornTowanda WilliamsLee BrighamVeronica BrinsonThomas BurnsideKristine Orr BrownRobert O. BozemanKenneth ShigleyDanny GriffinNicholas PieschelDawn M. JonesJanna MartinPaul Painter,IIIARTICLES• Chairman’s CornerDarren W. Penn 2• Bankruptcy-Proofing Your Law Judgment:How Not to Try the Same Case TwiceWilliam L. Rothschild 4• It Is Seldom a Simple ContractKenneth B. Hodges, III, Esq.Alex J. Bartko, Esq. 10• Punitive Damages in Automobile Collision LitigationShawn P. O’Hara 16• Wanted: Clarification Regarding Georgia’sHospital Lien StatuteDavid T. Rohwedder 21• Nicholas C. Moraitakis Acceptance Speech 24TRUSTEESAlbert Fendig, Jr.Paul M. HawkinsJohn C. Bell, Jr.John T. Laney, IIIRobert P. WilsonThomas Wm. MalonePaul D. HermannRudolph PattersonJames B. PilcherJohn E. JamesVerlyn C. BakerPaul W. Painter, Jr.Joel O. Wooten, Jr.J. Sherrod TaylorJohn M. HyattJames H. Webb, Jr.Judge Bonnie OliverWilliam L. Lundy, Jr.William F. Underwood, Jr.Joe A. WeeksMark DehlerJohn W. TimmonsSally AkinsCathy Harris HelmsJefferson “Cal” CallierS. Lester Tate, IIIWright GammonMyles EastwoodMary A. PrebulaAdam MaloneWilliam P. Langdale,IIICalendar Call is the official publication of the General Practice and TrialSection of the State Bar of Georgia. Statements and opinions expressedin the editorials and articles are not necessarily those of the Section of theBar. Calendar Call welcomes the submission of articles on topics of interestto the Section. Submissions should be doublespaced, typewritten on lettersizepaper, with the article on disk or sent via e-mail together with a bio andpicture of the author and forwarded to Co-Editors: R. Walker Garrett, 233 12thSt., Suite #900. The Corporate Center, Columbus, GA, 31901, rwalkergarrett@gmail.com and David A. Sleppy, 649 Irvin St., P.O. Box #689, Cornelia, GA30531, dsleppy@catheyandstrain.com.Published by Appleby & Associates, Austell, Georgia.1

more than a year on HB397 toamend the Open Records laws.Our section members haveworked with Attorney GeneralOlens and generally supportthe bill. However, there wereconcerns about a provisionthat would have precluded litigantsfrom using Open RecordsAct (ORA) requests to securepublic records in the midst oflitigated cases. A compromisewas crafted that permits thecontinued use of ORA requestsbut requires litigants to notifydefense counsel for a governmentagency that is a litigant inpending litigation when thoseadverse parties send that agencyan ORA request during theirpending litigation.6) A bill that would amend theservice of process statute so thata plaintiff could no longer servea corporation by leaving thesummons and complaint with a“secretary, cashier [or] managingagent.” Service would haveto be made either on an officerof the corporation, a registeredagent of the corporation or theSecretary of State.7) HB658 would change the mannerin which the trier of factcould determine the presentvalue of future damages. Thebill would replace the currentmethod of relying on “thebasis of interest calculated at5 percent per annum” withthe use of “expert testimony”regarding the present value“or the actual present cost” ofsuch damages. The bill alsoexpands the types of damageson which the present value canbe calculated from just “earnings,annuity, or amounts”to include “wages, medicalexpenses, living expenses, orother damages.”As members of Georgia’s LargestLaw Firm, you are the expertswhen it comes to these importantlegislative discussions. I encourageeach of you to get involved, talk toyour elected officials and join us atthe state capital to assist the lobbyingeffort. If you’re unsure howto begin, let us know and we’ll getyou plugged in!And, in addition to paying attentionto and working on importantlegislative issues, we need ourmembers to submit articles toCalendar Call, attend seminars andactively participate in the GeneralPractice and Trial Section events.This is an outstanding sectionwith so much to offer.I am regularly humbled by theexpertise and excellence each ofyou brings to the practice of law.If I, or anyone else at the GeorgiaBar, can be of assistance or if youhave suggestions to share, pleaseemail me at darren@hpllegal.com.I hope to see each and every oneof you this spring at the GeneralPractice and Trial Institute March15-17 at the beautiful OmniAmelia Island Plantation!3

Bankruptcy-Proofing Your Law Judgment:How Not to Try the Same Case TwiceWilliam L. RothschildBill Rothschild is a member of the law firm of Ogier, Rothschild, Rosenfeld &Ellis-Monro, P.C. in Atlanta, GA. A native Atlantan, he received his B.A. degree(1970) from Yale and his J.D. degree (1974) from Harvard. He has practicedbankruptcy law since 1982, representing all major parties in chapter 11 and inchapter 7 cases, including debtors in possession, trustees, creditors’ committees,buyers of estate assets, and avoidance defendants. He regularly takes cases involvingunsettled or novel bankruptcy and state law issues on appeal to Georgiaand federal courts. Bill is also an ordained rabbi. He provides pro bono counselto the Central Conference of American Rabbis, and is a permanent guest teacherof Bible at the Westminster Schools in Atlanta. He regularly writes and speakson bankruptcy and related topics.IntroductionGreetings to trial lawyers – or aswe call you, “real litigators” – fromthe bankruptcy bar. Here is an issuethat we get asked about, sometimestoo late:You get a judgment against somebodythat may be nondischargeableif the judgment debtor flees to bankruptcycourt, because it arose fromfraud, conversion, or the like. Whenthe debtor does file a bankruptcycase, how do you make your judgmentnondischargeable without havingto try your underlying case allover again?The issue here is collateral estoppel,i.e., giving preclusive effect ina later case to a fact or issue determinedin an earlier case, so that thereis no opportunity to retry that fact orissue. The short answer is that youmust take the right steps in the statecourt case to give collateral estoppeleffect to the facts that constitute theelements needed to deny dischargeabilityof a debt in a bankruptcy case.This article explains those steps.Let me begin with bankruptcy itself.Most human beings (called “individuals”in the bankruptcy code)file bankruptcy to get a discharge oftheir debts. The debt remains in existencefor a number of purposes, forinstance, to keep liens on any securedproperty alive. “Discharge” meansthat the individual can no longer beheld personally liable for it, e.g., noseizure of unsecured property, andno garnishment of future wages.As a public policy matter, Congresshas excepted certain debts from discharge,if proper procedures are followed.Three types of nondischargeabledebts concern you most and providethe bulk of collateral estoppel issues:11 U.S.C. § 523(a) (2) (A) (“falsepretenses, a false representation, oractual fraud”); § 523(a)(4) (“fraud ordefalcation while acting in a fiduciarycapacity, embezzlement, or larceny”);and § 523(a)(6) (“willful and maliciousinjury by the debtor to another entityor to the property of another entity”).Debts falling in these three categoriesare discharged unless the creditortimely files a proceeding in the bankruptcycourt to obtain a ruling thatthe debt in question is not discharged.That is, you must file what amounts4

to a separate case within the bankruptcycase, to which a set of bankruptcyrules will apply that mirrorthe Federal Rules of Civil Procedure.And there is a very strict bar date thatoccurs early in the bankruptcy case.The dischargeability of a debt isa matter of federal law. It is not theclaim you tried in state court, althoughit may come close (see belowconcerning fraud, for example). Sores judicata, a/k/a claim preclusion,does not apply from a state court action.But through a series of decisionstoward the end of the 20 th century, theUnited States Supreme Court establishedthat collateral estoppel, a/k/aissue preclusion, may apply. 1The rule now is this: in nondischargeabilityproceedings, the bankruptcycourt must apply the collateralestoppel rule of the jurisdictionin which the earlier judgment wasrendered.How helpful is this rule? First, it appliesto punitive damages as well ascompensatory damages. Cohen v. DeLa Cruz, 523 U.S. 213 (1998), held thatall liability from the bad act, includingpunitive damages, rises or fallswith the act itself. The eleventh circuithad reached the same conclusionfive years earlier with this suitablefor-framingaphorism: “the maleficdebtor may not hoist the BankruptcyCode as protection from the full consequencesof fraudulent conduct.” St.Laurent v. Ambrose (In re St. Laurent),991 F.2d 672, 680 (11 th Cir. 1993). Therule likewise applies to attorneys’ feesawards. If the underlying act creates anondischargeable debt, and the attorneys’fees flow from the underlyingact, then the attorneys’ fees are nondischargeableas well; and attorneys’fees from bad conduct within the casemay be nondischargeable even if theunderlying claim is fully dischargeablein bankruptcy. 2This article has three parts: thefirst discusses Georgia’s collateralestoppel rule, as bankruptcy judgesformulate it; the second discusseshow Georgia substantive law fitswithin the federal nondischargeabilityprovisions; and the third discusseshow to construct your state courtcase with the defendant’s later bankruptcycase in mind.A.GEORGIA’S COLLATERALESTOPPEL RULEThe Georgia rule on collateral estoppelis based on O.C.G.A. §§ 9-12-40 and -42. 3 Georgia state courts varyin their expressions of the Georgiarule, so Georgia bankruptcy courtsdo as well. You may see it stated inanywhere from three to five separateelements. 4I believe that the best and mostcurrent statement belongs to JudgeDavis in Hebbard v. Camacho (In reCamacho), 411 B.R. 496 (Bankr. S.D.Ga. 2009). In a well-researched opinion,he assumes the identity of parties(usually requirement 1), and thenrecites the next three requirementson the five requirement list:Under Georgia law, a party mayonly assert the doctrine of collateralestoppel if the issue was (1) raisedin a prior proceeding, (2) actuallylitigated and decided, and (3)necessary to final judgment.411 B.R. at 501 (Georgia SupremeCourt citations omitted).Judge Davis questions the vitalityof others’ additional requirement,namely, the “full and fair opportunityto litigate the issues.” In hisfootnote 2, Judge Davis traces theorigin of that requirement to a 1996bankruptcy case, and shows that thetwo Georgia Court of Appeals caseswhich led to the requirement werelater overturned. He then writes inthe body of the opinion:Because of the origins of thatelement as noted in footnote 2, thatelement is not applied in this Orderexcept to this extent. It shouldbe self evident that the collateralestoppel could only arise out of aproceeding in which fundamentaldue process was accorded. Thatshould always be an unspokenelement for application of collateralestoppel. To the extent that courtshave articulated the “full and fairopportunity” standard, I find thatit requires nothing more than noticeand an opportunity to be heard.411 B.R. at 501 (emphasis added).In practice, the “full and fair opportunity”requirement appears tomorph into the “actually litigated”part of requirement (3). The issuecalls for further review when thedefendant bails out of the earlier litigationat any time before judgment.See section C.4 below.Of course the state court judgmentmust itself be in effect to have collateralestoppel effect, and it must be“final” in the sense of being the trialcourt’s last word on the matter, i.e.,not “interlocutory.” But must it befinal in the sense of being no longersubject to appeal? In law school, theanswer to that question is this: thelaw is unclear, but the better argumentis that a judgment even underappeal, as long as it is not stayed, hascollateral estoppel effect. 5 In practice,the answer is this: timely file youradversary proceeding in the bankruptcycase to deny dischargeabilityof the judgment debt, and then askthe bankruptcy court to stay the adversaryproceeding pending completionof all appeals to that judgment.What tribunals qualify for collateralestoppel? Georgia bankruptcycourts have recognized courts ofrecord including probate court, 6 anarbitrator’s report, 7 an auditor’s report,8 and a settlement memorializedin a consent judgment, discussed insection C.3 below. 9 B.FITTING THE STATELAW CLAIM INTOTHE FEDERALNDISCHARGEABILITYELEMENTSAs noted above, federal law appliesto the nondischargeability adcontinuedon next page5

Bankruptcy-Proofing Your Law Judgmentcontinued from previous pageversary proceeding. What trips up“real litigators” most after they’vealready won their state court judgmentis that common terms such as“fiduciary” or “willful and maliciousinjury” have different meaningsin state law, which you used towin your judgment, and in the federalbankruptcy statute, where youmust prove them again to deny thedischarge of your judgment debt.Let me begin with the most litigatedsimilarities and differences betweenGeorgia law and 11 U.S.C. § 523.1. Fraud and Misrepresentationunder 11 U.S.C. § 523(a)(2). First, thegood news: fraud is fraud. Section523(a)(2) denies discharge “from anydebt . . . for money, property, services,or an extension, renewal, or refinancingof credit, to the extent obtainedby . . . false pretenses, a falserepresentation, or actual fraud, otherthan” financial statements, whichhave additional requirements under§ 523(a)(2)(B). The tort of fraudunder Georgia law does meet the requirementof “fraud” in 11 U.S.C. §523(a)(2). 102. Fraud or Defalcation whileacting in a fiduciary Capacity, etc.under 11 U.S.C. § 523(a)(4). Now,the bad news. Section 523(a)(4) deniesdischarge “from any debt . . . forfraud or defalcation while acting in afiduciary capacity, embezzlement, orlarceny.” The section raises severaldefinitional issues.First, “fiduciary” has a narrowerdefinition in this section than inGeorgia law. Here “fiduciary” islimited to an express trust, i.e., a preexistingcontract of some sort, andan express, pre-existing res, i.e., trustproperty. By contrast, “fiduciary” inGeorgia law may extend to impliedtrusts or resulting trusts, i.e., fiduciaryrelationships inferred after thefact. 11A “guardian” under Georgia lawis a “fiduciary” under 11 U.S.C. §523(a)(4). 12 “Defalcation” generallymeans the failure of the fiduciary toaccount for the money he received inhis fiduciary capacity. 13 It is a lesserstandard than fraud or conversion.You need only prove a wrongful expenditure,not an accompanying intentto deceive or to harm.Finally, “[t]o establish larcenyunder Section 523(a)(4), it must beshown that Debtor unlawfully tookand carried away property belongingto another with intent to permanentlydeprive the owner of same. To proveembezzlement, it must be establishedthat Debtor, with fraudulent intent,appropriated property he did notown, but of which he was rightfullyin possession, for a use other thanthat for which such property hadoriginally been entrusted to Debtor.”Tower Oak, Inc. v. Selmonosky (Inre Selmonosky), 204 B.R. 820, 828(Bankr. N.D. Ga. 1996) (J. Brizendine)(internal citations omitted).3. Willful and Malicious Injuryunder 11 U.S.C. § 523(a)(6). This sectiondenies discharge “from any debt. . . for willful and malicious injury bythe debtor to another entity or to theproperty of another entity.” Again,beware. “Willful and malicious injury”means “a deliberate or intentionalinjury, not merely a deliberate orintentional act that leads to injury.”Kawaauhau v. Geiger, 523 U.S. 57, 61(1998) (emphasis original) (medicalmalpractice liability was not per senondischargeable where the surgeon(of course!) intended to cut, but didnot intend to cut wrongly).Section 523(a)(6) addresses onlythose situations in which a debtordesired the injury caused by hisconduct. It does not reach a debtor’sfailure to meet a duty of carethat results in injury to someoneelse. In Henderson v. Woolley (In reWoolley), 288 B.R. 294, 302 (Bankr.S.D. Ga. 2001), Judge Davis quoteda fifth circuit case for the most concisedefinition: “‘An injury is ‘willfuland malicious’ where there is eitherobjective substantial certainty ofharm or subjective motive to causeharm.’ Miller v. J. D. Abrams, Inc. (Inre Miller), 156 F.3d 598, 606 (5th Cir.1998).”In Stinson v. Morris (In re Morris),2005 Bankr. LEXIS 2865 (Bankr. N.D.Ga. 2005), Judge Massey defined the“willful and malicious injury” requirementby quoting In re Walker,48 F.3d 1161, 1163-1164 (11th Cir.1995):We have interpreted “willful” torequire a showing of an intentionalor deliberate act, which is notdone merely in reckless disregardof the rights of another. As usedin section 523(a)(6), “malicious”means “’wrongful and withoutjust cause or excessive even in theabsence of personal hatred, spite orill-will.” Malice may be impliedor constructive. (Constructiveor implied malice can be found ifthe nature of the act itself impliesa sufficient degree of malice.). Inother words, a showing of specificintent to harm another is notnecessary.2005 Bankr. LEXIS 2865 *5 - *6(original footnote omitted in Morrisopinion; internal quotations and citationsomitted here).Accordingly, any Georgia tort thatbroadens its intent requirement, suchas “knowingly or recklessly,” “knewor should have known,” does not perse lead to collateral estoppel underthis section. Two examples are conversion14 and defamation. 15 Thatdoes not mean you must always retryyour entire case; rather, you mustmake sure that the record of the caseincludes findings of fact that showthe federally-required intent; seeSection C below.C.CREATING YOUR STATECOURT RECORDWhen determining a summaryjudgment motion based on collateralestoppel, the bankruptcy court is notlimited to a review of the judgment6

itself, but may review anything elsein the earlier case, including not onlypleadings and pretrial orders, butjury charges, 16 jury verdicts, 17 andtrial transcripts 18 as well.The bankruptcy court may alsodecide a collateral estoppel motionin pieces. For example, the courtmay grant summary judgment onthe claim itself but leave for trial theamount of damages attributable tothat claim, because there was alsoa dischargeable claim, and the recordwas unclear on the division ofdamages between them. 19 The courtmay grant summary judgment onthe amount of damages but not onthe nondischargeability of the claimitself. 20 Or the court may grant summaryjudgment on the nondischargeabilityof one claim and leave anotherfor trial. 21Almost invariably, the bankruptcycourt that denies collateral estoppelin whole or in part does so becausethe prior court record that the plaintiffpresented to the bankruptcy courtwas not extensive enough for thecourt to make a needed determination.The job of the prebankruptcylitigator is to keep that failure fromhappening; i.e., to create the properrecord for later use. This final sectiondiscusses four prebankruptcycase issues: the complaint; the recordin a fully contested case; the consentjudgment; and the defendant whomakes an early exit.1. Drafting the Complaint. It mayseem obvious, but the first rule ofdrafting a civil complaint to preparefor collateral estoppel in a later bankruptcycase is this: know what youhave to prove under 11 U.S.C. § 523(a)to get the discharge denied, and to figureout whether you can prove it. Thesecond rule is to divide up dischargeableliability and nondischargeableliability into separate counts, evenwhere you’re asking for the samedamages under alternate theories.In short, the well-pled paragraphsof at least one count in the complaintmust not only state a claim on whichrelief can be granted in the presentaction, but also state a claim thatwill be nondischargeable in the defendant’ssubsequent bankruptcycase. Why? First, you need to knowfrom the beginning where to steerthe ship. Second, if the defendant’sanswer is struck for whatever reason,you will not get the opportunity secureyour collateral estoppel througha special jury verdict or language inthe judgment; rather a default judgmentcan state no better facts than itscomplaint pled.For example, if the sole claim is“she broke the contract or defraudedme,” then a bankruptcy court cannottell if the jury awarded damages forbreach of contract (dischargeable), orfraud (nondischargeable), and youtry your case again. But if Count I isbreach of contract, Count II is fraud,and the jury finds for the plaintiff onCount II – no matter what happenson Count I -- then you have a judgmentthat will be given preclusive effect.(You still need to make clear thatparticular damages arose from thefraud itself, or you may get collateralestoppel on the judgment, but haveto retry the damages part.)And to continue an example fromabove, if you are suing for conversion,and you can prove that the actwas intentional, remember 11 U.S.C.§ 523(a)(6) (willful and malicious injuryto property). Aver that the actwas done “knowingly,” or “intentionally,”but do not just by rote saythat the defendant “knew or shouldhave known,” or that the defendantacted “recklessly or intentionally.”“Knew” and “intentionally” leadto collateral estoppel; “should haveknown” and “recklessly” don’t. (Ifyou do both, you can cure the problemwith a special jury verdict; seebelow.)2. Making your Record. If thematter is contested to the end, takethe opportunity to get specific findingsof fact. Remember the bankruptcydischargeability action to followwhen you suggest jury charges,or, in a bench trial, present proposedfindings of fact and conclusions oflaw. Submit special interrogatoriesto the jury. A good example appearsin the footnote. 223. The Consent Judgment. Yes,we have all heard of civil defendantswho will sign anything put in frontof them, many of whom are motivatedby a well-reasoned aversion totheir own incarceration. Can a civildefendant consent to the nondischargeabilityof a debt? Directly no,but indirectly yes, through a consentjudgment and collateral estoppel.This one is yours to lose.As a preliminary matter, settling aclaim exchanges the right to sue forbad acts now (the lawsuit or claimbeing settled), for the right to sue laterin contract, if necessary, for breachof contract (the agreement that settlesthe claim or lawsuit). That exchange,i.e., the very act of settling aclaim, does not wash away the nondischargeabilityof the underlyingact. If the debt was nondischargeableto begin with, it remains so throughthe settlement agreement. 23As a matter of public policy, a defendantmay not consent to refrainfrom filing bankruptcy, or at leastdirectly to the nondischargeabilityof a debt. But a defendant mayconsent to the existence of particularfacts that fulfill all the elements for alater finding of nondischargeability,and the resulting consent judgmentwill preclude relitigation of thosefacts. Halpern v. First Georgia Bank(In re Halpern), 810 F.2d 1061 (1987),aff’g an unpublished district courtopinion, aff’g First Georgia Bank v.Halpern (In re Halpern) 50 B.R. 260(Bankr. N.D. Ga. (1985) (J. Kahn),remains the roadmap for doing justthat. It bears extended discussion.Mr. Halpern was the CEO andprincipal shareholder of a foodwholesaler. First Georgia Bank suedcontinued on next page7

Bankruptcy-Proofing Your Law Judgmentcontinued from previous pagethe company for unpaid extensionsof credit in 1973, and amended thecomplaint in 1976 to allege thatMr. Halpern had “engaged in acheck kiting scheme.” 810 F.2d at1062. The parties settled through aconsent judgment in 1983. Here iswhat the eleventh circuit said Mr.Halpern signed:As a part of the consent judgment,Halpern admitted certainfacts. The factual findingsincluded: that Halpern madematerial misrepresentationsof fact to First Georgia; thatHalpern knew the statementswere false at the time they weremade; and that Halpern madethe misrepresentations with theintent to induce reliance by FirstGeorgia in extending cash, bankobligations and deposit creditsto Halpern. Halpern admittedthat this conduct was “wilful,malicious, and intentional anddesigned solely for the purposeof fraudulently deceivingFirst Georgia Bank.” Moreover,Halpern agreed that:These Findings of Fact andConclusions of Law will collaterallyestop [Halpern] from denying anyof the facts or law established herein.Specifically, [Halpern] recognizesthat these Findings of Fact andConclusions of Law will conclusivelyestablish that the liability which he isadjudged in this civil action to oweto [First Georgia] will be exceptedfrom discharge in any bankruptcycase in which he is a debtor. This isbecause . . . Halpern’s liability to[First Georgia] is (a) for obtainingmoney or property by false pretenses,false representations, and actualfraud, (b) for fraud or defalcationwhile acting in a fiduciary capacity,and (c) for wilful and maliciousinjury by the Defendant Halpern toPlaintiff’s property.Halpern also agreed that thedebt discussed in the judgmenthad not been discharged inbankruptcy and that Halpern“does not intend to seek a dischargeas to this Judgment.”Both Halpern and his attorneywitnessed and signed the consentjudgment.810 F.2d at 1062-63 (brackets inoriginal).That formula worked. Accordingto the eleventh circuit, the bankruptcycourt reacted like this:The court found that applyingcollateral estoppel is appropriatein this case because: (1) the statecourt findings of fact were detailedand carefully drawn; (2) Halpernand his attorney voluntarilyagreed to the judgment; (3)there is no reason to believe thatHalpern’s interest in the directionand outcome of the state courtlitigation was less than his interestin the dischargeability proceeding;and (4) Halpern did not deny thefactual findings in the consentjudgment and he presented noadditional evidence indicating thatthe factual findings should not begiven their clear meaning.810 F.2d at 1063. The bankruptcycourt held the debt nondischargeableunder 11 U.S.C. § 523(a)(2)(A)(fraud and misrepresentation) anddid not decide nondischargeabilityunder § 523(a)(4) or (a)(6). Theeleventh circuit expressly agreedthat the issues were the same, that“the parties intended that the consentjudgment operate as a finaladjudication of the factual issuescontained therein[,]” and that therewas “no evidence of coercion or duress[.]”801 F.2d at 1064-65.There is no better way to do itthan in Halpern. By contrast, seeHutchins v. Temples (In re Temples),2006 Bankr. LEXIS 3174 (Bankr. N.D.Ga. 2006) (J. Bonapfel). Apparentlythe creditor plaintiff tried to followHalpern, but cut corners. The partiesexecuted a separate settlementagreement, but did not record it withthe judgment, and there were factualfindings regarding fraud either inthe final judgment or in the settlementagreement. Under Floridalaw (no different from Georgia lawon this point), the bankruptcy courtdenied collateral estoppel.4. Default Judgments and otherEarly Exits. Many defendants don’tstick around until final judgment.Some never answer, others run outof money, and a healthy numberhave their answers struck for discoveryabuse. Does a resulting judgmenthave collateral estoppel effect?The answer depends upon howfar along the case is. The probabilityof collateral estoppel is low whenthe defendant is served, but increasesthe longer the defendant remainsactive in the case, and becomes acertainty if the defendant activelyobstructs the judicial process.In Bush v. Balfour Beatty Bahamas,Ltd., 62 F.3d 1319 (11 th Cir. 1995),an individual was defaulted out ofa federal fraud case for discoveryabuse and then filed a bankruptcycase. The bankruptcy court had appliedcollateral estoppel to hold thedebt nondischargeable. The eleventhcircuit faced the federal collateralestoppel rule, under which , “[o]rdinarily, a default judgment willnot support the application of collateralestoppel because in the caseof a judgment entered by confession,consent, or default, none of theissues is actually litigated.” 62 F.3dat 1323 (internal quotation omitted).The reason is that “a party may decidethat the amount at stake doesnot justify the expense and vexationof putting up a fight.” 62 F.3d at 1324(internal quotation omitted).The Bush court nonetheless appliedcollateral estoppel on thisreasoning:We . . . are reluctant to allow thisdebtor a second bite at the apple.Bush actively participated in theprior action over an extended period8

of time. Subsequently, he engaged indilatory and deliberately obstructiveconduct, and a default judgment,based upon fraud, was entered as asanction against him. He now attempts,in this bankruptcy proceeding,to avoid Section 523 by denyingthe fraud. Such abuse of the judicialprocess must not be rewarded by ablind application of the general ruledenying collateral estoppel effect to adefault judgment. Ibid.Almost all default judgment casesI have surveyed follow that analysis,although they found ways to do sounder other applicable law. WhileGeorgia law is stated to accordcollateral estoppel effect to defaultjudgments generally, 24 the casesappear to split at the “fault line;”i.e., collateral estoppel is appliedfor egregious conduct or extensiveparticipation in the case, 25 but notfor explainable nonfeasance andminimal participation. 26 There is oneoutlying case. 27If your defendant walks out, oris thrown out, of the action, do twothings to preserve the collateral estoppeleffect of the judgment. First,make sure that the record containsample instances of the defendant’sbad conduct. Second, be as meticulouson the entry into the record ofevidence and findings of fact concerningliability and damages as ifthe defendant had remained activein the case.ConclusionIf you have read this far, God blessyou, and I hope the article helps.You will make a friend of your client,who won’t have to watch youtry your case a second time, and thebankruptcy judge, who won’t havewatch you to try it once.FOOTNOTES1. Brown v. Felson, 442 U.S. 127, 139 n. 10 (1979) (would not apply resjudicata to nondischargeability because the claims were different, but infootnote 10 suggested that collateral estoppel could apply); Marrese v.American Academy of Orthopaedic Surgeons, 470 U.S. 373 (1985) (28U.S.C. § 1738 applies full faith and credit from state court judgments tofederal court cases; held that a state court’s finding of fact on a state courtclaim could have preclusive effect in a federal court case on a differentclaim, even though the federal court’s claim arose under federal law(antitrust) and the state court could not have had jurisdiction over it in thefirst place); Grogan v. Garner, 498 U.S. 279 (1991) (the ‘preponderance ofevidence’ standard used in state law civil cases, and not the more stringent‘clear and convincing’ standard, would apply to nondischargeabilityactions.) In addition, St. Laurent v. Ambrose (In re St. Laurent), 991F.2d 672, 675-76 (11th Cir. 1993), applied the Marrese holding, whichconcerned antitrust law, to bankruptcy nondischargeability law.2. Stinson v. Morris (In re Morris), 2005 Bankr. LEXIS 2865, *10 (Bankr. N.D.Ga. (J. Massey); Mills v. Ellerbee (In re Ellerbee), 177 B.R. 731 (Bankr.N.D. Ga. 1995) (J. Massey). If the attorneys’ fees award flows fromconduct during the case itself, then its dischargeability will independentlydepend upon 11 U.S.C. § 523(a)(6) (willful and malicious injury). Foranv. Lutz (In re Lutz), 169 B.R. 473 (Bankr. S.D. Ga. 1994) (J. Davis) appliedcollateral estoppel to hold nondischargeable a judgment in an earlieradmiralty action of attorneys fees to the defendants because the plaintiffshad “lied about the very existence of the events on which they based theirclaim.” 169 B.R. at 475 (internal quotation omitted). The attorneys’ feesmay be nondischargeable, even if the underlying debt is not. In Karl v.Stalnaker (In re Stalnaker) 408 B.R. 440, 448 (Bankr. M.D. Ga. 2009),under West Virginia law, Judge Walker denied collateral estoppel on themain claims (the plaintiff failed to submit a state court record), but grantcollateral estoppel on the attorney’s fees claim because “they are subjectto an independent legal standard.”3. O.C.G.A. § 9-12-40. Conclusiveness of judgmentsA judgment of a court of competent jurisdiction shall be conclusive betweenthe same parties and their privies as to all matters put in issue or whichunder the rules of law might have been put in issue in the cause wherein thejudgment was rendered until the judgment is reversed or set aside.O.C.G.A. § 9-12-42. Former judgment not a bar. whenWhere the merits were not and could not have been in question, a formerrecovery on purely technical grounds shall not be a bar to a subsequentaction brought so as to avoid the objection fatal to the first. For a formerjudgment to be a bar to subsequent action, the merits of the case musthave been adjudicated.4. Here’s a three:Thus, the Court will look to Georgia law to determine the effect of the statecourt judgment. In Georgia:“[T]he doctrine of collateral estoppel precludes relitigation when there is:(1) an identity of parties or their privies; (2) a previous determination of thesame or similar issues in a previous court with competent jurisdiction; and(3) [collateral estoppel] precludes only those issues actually litigated or bynecessity had to be decided for the judgment to be rendered.”Cincinnati Insurance Co. v. MacLeod, 259 Ga. App. 761, 577 S.E. 2d 799,803 (2003) cert. denied.Davis v. Conner (In re Conner), 2010 Bankr. LEXIS 1455 (Bankr. M.D. Ga.2010) (J. Smith).Here’s a five:Under Georgia law, a party may only assert the doctrine of collateralestoppel when the following elements have been satisfied: (1) identity ofthe parties is the same; (2) identity of the issues is the same; (3) actualand final litigation of the issue in question occurred; (4) the adjudicationwas essential to the earlier action; and (5) the parties had a full and fairopportunity to litigate the issues in question.Lewis v. Lowery (In re Lowery), 2010 Bankr. LEXIS 4564 (Bankr. N.D. Ga.2010) (J. Hagenau) (citation omitted).5. O.C.G.A. § 9-12-40 explicitly states that a “judgment . . . shall beconclusive . . . until the judgment is reversed or set aside.” A line of casessuggests that the appeal must be completed, but that line confuses theissue of the appeal itself with the general, but not universal, granting ofsupersedeas during the appeal. “In Georgia a judgment is suspendedwhen an appeal is entered within the time allowed. And the judgmentis not final as long as there is a right to appellate review.” LexingtonDevelopers, Inc. v O’Neal Construction Co., 143 Ga. App. 440, 441(1977), cited in Thomas v. Brown, 708 F. Supp. 336 (N.D. Ga. 1989). InLusk v. Williams (In re Williams), 282 B.R. 267, 274 (Bankr. N.D. Ga.2002), Judge Mullins recognized the split of authority, but applied collateralestoppel after a state court jury verdict despite a pending motion in thestate court case for new trial and judgment notwithstanding the verdict.6. RLI Insurance Co. v. Waters (In re Waters), 419 B.R. 919 (Bankr. M.D. Ga.2009) (J. Hershner).7. Tower Oak, Inc. v. Selmonosky (In re Selmonosky), 204 B.R. 820 (Bankr.N.D. Ga. 1996 (J. Brizendine)8. Duff v. Postell (In re Postell), 132 B.R. 788 (Bankr. N.D. Ga. 1991) (J.Bihary).9. Halpern v. First Georgia Bank (In re Halpern), 810 F.2d 1061 (1987), aff’gan unpublished district court opinion, aff’g First Georgia Bank v. Halpern(In re Halpern) 50 B.R. 260 (Bankr. N.D. Ga. (1985) (J. Kahn). See thelast section of this article.10. See the discussion and citations in Lewis v. Lowery (In re Lowery), 2010Bankr. LEXIS 4564 (Bankr. N.D. Ga. 2010) (J. Hagenau).11. See the discussion in RLI Insurance Co. v. Waters (In reWaters), 419 B.R. 919 (Bankr. M.D. Ga. 2009) (J. Hershner).12. Ibid.13. Duff v. Postell (In re Postell), 132 B.R. 788, 791 (Bankr. N.D. Ga. 1991) (J.Bihary) (internal quotation and citations omitted).14. Strong Industries, Inc. v. McKenzie (In re McKenzie), 2006 Bankr. LEXIS827, *6 - *7 (Bankr. N.D. Ga. 2006 (J. Bonapfel) (Conversion underGeorgia law may result from reckless conduct).15. Mills v. Ellerbee (In re Ellerbee), 177 B.R. 731 (Bankr. N.D. Ga. 1995) (J.Massey).16. Newton v. Lemmons (In re Lemmons), 2005 Bankr. LEXIS 2765 (Bankr.N.D. Ga. 2005) (J. Diehl); Dement v. Gunnin (In re Gunnin), 227 B.R. 332(Bankr. N.D. Ga. 1998) (J. Bihary)17. Lusk v. Williams (In re Williams), 282 B.R. 267 (Bankr. N.D. Ga. 2002) (J.Mullins).18. Aegis Mortgage Corp. v. Laudermill (In re Laudermill), 2007 Bankr. LEXIS1570 (Bankr. N.D. Ga. 2007) (J. Brizendine); Foran v. Lutz (In re Lutz), 169B.R. 473 (Bankr. S.D. Ga. 1994) (J. Davis).19. Davis v. Conner (In re Conner), 2010 Bankr. LEXIS 1455 (Bankr. M.D. Ga.2010) (J. Smith).20. Lewis v. Lowery (In re Lowery), 2010 Bankr. LEXIS 4564 (Bankr. N.D. Ga.2010) (J. Hagenau); Tower Oak, Inc. v. Selmonosky (In re Selmonosky),204 B.R. 820 (Bankr. N.D. Ga. 1996 (J. Brizendine)21. Karl v. Stalnaker (In re Stalnaker) 408 B.R. 440 (Bankr. M.D. Ga. 2009) (J.Walker).22. In Lusk v. Williams (In re Williams), 282 B.R. 267 (Bankr. N.D. Ga. 2002)(J. Mullins), the jury returned the special verdict form, which read asfollows:2. Do you find that fraud has been committed against Judy Lusk?[a. Yes.]If your answer is yes please state which Defendants you find committedfraud.[a. All Defendants]3. Please state the amount of damages awarded.[a. $ 450,000.00 General Damages and $ 0.00 Loan Repayment]4. Do you wish to award punitive damages?[a. Yes.]If yes, against whom?[a. Sherry Williams]An addendum to the verdict form awarded the Plaintiff $ 400,000.00 inpunitive damages. In sum the jury issued a special verdict in favor of thePlaintiff in the amount of $ 850,000.00.After entry of the verdict, the state court entered a judgment that states inpertinent part:WHEREAS, the jury found that fraud was committed against Plaintiff bySherry Williams; andWHEREAS, the jury returned a verdict in favor of Plaintiff against allDefendants in the amount of Four Hundred, Fifty Thousand Dollars ($450,000.00); andWHEREAS, the jury further awarded punitive damages in favor of thePlaintiff against Sherry Williams in the amount of Four Hundred ThousandDollars ($ 400,000.00);Plaintiff shall have judgment against Sherry Williams individually andd/b/a Airtex of Dalton, Airtex of Dalton, Inc., Bellemeade, Inc. and TextileConcepts, Inc. in the amount of Four Hundred Fifty Thousand Dollars($ 450,000.00). Furthermore, Plaintiff is awarded the additional sum ofFour Hundred Thousand Dollars ($ 400,000.00) against Sherry Williamsindividually.282 B.R. at 269-70.23. Archer v. Warner, 538 U.S. 314 (2003).24. League v. Graham (In re Graham), 191 B.R. 489, 495 (Bankr. N.D. Ga.1996) (J. Drake) (“A default judgment, however, will qualify as such a“judgment on the merits” for the purposes of the Georgia standard”)(Georgia Court of Appeal citations omitted); Hebbard v. Camacho (Inre Camacho), 411 B.R. 496, 502 (Bankr. S.D. Ga. 2009) (J. Davis) (“Ajudgment of default is a ‘judgment on the merits’ for purposes of § 9-12-42”) (internal quotation omitted).25. Collateral estoppel applied: Hebbard v. Camacho (In re Camacho), 411B.R. 496 (Bankr. S.D. Ga. 2009) (J. Davis) (the defendant filed an answer,participated afterward, but failed to appear for trial); Branton v. Hooks (Inre Hooks), 238 B.R. 880 (Bankr. S.D. Ga. 1999) (Judge Dalis) (answerstruck for discovery abuses); Lewis v. Lowery (In re Lowery), 2010Bankr. LEXIS 4564 (Bankr. N.D. Ga. 2010) (J. Hagenau) (answer struckfor discovery abuses); Stinson v. Morris (In re Morris), 2005 Bankr. LEXIS2865 (Bankr. N.D. Ga. 2005) (J. Massey) (answer struck for discoveryabuse); Aegis Mortgage Corp. v. Laudermill (In re Laudermill), 2007Bankr. LEXIS 1570, *8 (Bankr. N.D. Ga. 2007) (J. Brizendine). (“Debtordid appear in that litigation but chose not to be present for the entireproceeding.”); Morris v. Cunningham (In re Cunningham), 355 B.R. 913(Bankr. N.D. Ga. 2006) (J. Bihary) (defendant answered the complaint,filed a counterclaim, and failed to appear after his counsel withdrew);Fincher v. Holt (In re Holt), 173 B.R. 806 (Bankr. M.D. Ga. 1994) (J.Hershner) (debtor filed the original suit as plaintiff. The court dismissedhis claim when he did not respond to the defendants’ motion for summaryjudgment or requires for admissions. Debtor did not appear for trial on thecounterclaim); Henderson v. Woolley (In re Woolley), 288 B.R. 294 (Bankr.S.D. Ga. 2001) (J. Davis) (defendant participated until jury selection hadbeen set and the court denied his nonmeritorious defense) (CT law);League v. Graham (In re Graham), 191 B.R. 489 (Bankr. N.D. Ga. 1996)(J. Drake) (discovery abuse); Sterling Factors, Inc. v. Whelan 245 B.R. 698(N.D. Ga. 2000) (Judge Forrester) (answer struck for discovery abuses).26. Collateral estoppel not applied: Naveb v. Barzegar (In re Barzegar), 198B.R. 864 (Bankr. N.D. Ga. 1995) (J. Massey) (defendant dropped outwhen he lost a motion to dismiss, he did not abuse the system, and h edid not get adequate notice of the damages and liability hearing) (MD law);Bass v. Barber (In re Barber), 316 B.R. 391, 394 (Bankr. M.D. Ga. 2004)(J. Laney) (defendant was served, but did not file an answer; his financialcondition was deteriorating and his defense counsel advised him to file abankruptcy case instead. “Defendant acted on advice of counsel whenhe chose to allow the lawsuit to go into default and file for bankruptcyprotection, rather than incur the cost of litigation. The Court is notpersuaded that Debtor did anything deliberate that could be considered anabuse of the judicial process.”); Kendall Electric, Inc. v. Black (In re Black),2009 Bankr. LEXIS 406 (Bankr. N.D. Ga. 2009) (J. Bonapfel) (defendantwas served and simply never answered; default entered only threemonths after the complaint was filed) (MI law); Chevy Chase Bank, FSB v.Harkins (In re Harkins), 302 B.R. 927 (Bankr. M.D. Ga. 2003 (J. Hershner)(defendant did not produce requested discovery documents because heno longer had possession of them or access to them, ran out of money,and went to a bankruptcy lawyer to prepare his bankruptcy filing).27. In McKelvey v. Murray (In re Murray), 2009 Bankr. LEXIS 3290 (Bankr. N.D.Ga. 2009) (J. Murphy), the defendant was served, but appears to have donenothing in the case, and yet collateral estoppel applied to the judgment.9

It Is Seldom a Simple ContractKenneth B. Hodges, III, Esq.Alex J. Bartko, Esq.Ken is a partner at Ashe, Rafuse & Hill, LLP, where his practice is focused oncommercial, civil rights, and RICO litigation. Ken spent 15 years of his 20-yearcareer as a prosecutor, including 12 as the District Attorney of the DoughertyJudicial Circuit. He has appeared before juries hundreds of times in both civil andcriminal matters, supervised literally thousands of cases and argued before theGeorgia Court of Appeals and Supreme Court of Georgia.Ken was also the nominee in 2010 of the Democratic Party of Georgia forAttorney General after carrying 158 out of 159 counties in the primary. Hegarnered more votes than any other Democratic candidate in the General Election.He was selected District Attorney of the Year in 2002 in part due to his workas co-counsel in the case of State v. Sidney Dorsey and received the Justice RobertBenham Award for Community Service for his dedication to public service fromThe State Bar of Georgia and the Eagle Award for outstanding work on behalf ofvictims of crime by the Criminal Justice Coordinating Council of Georgia.He is a former Chairman of the Prosecuting Attorney’s Council of Georgia,a past President of the District Attorney’s Association of Georgia, and pastPresident of the Dougherty Bar Association. He is a graduate of LeadershipGeorgia and served on its Board of Directors.Ken has also been recognized by Georgia Trend Magazine as one of Georgia’s“40 Under 40” and by the Fulton County Daily Report as an attorney “On The Rise.” Ken received his B.A. from EmoryUniversity and his J.D. from the University of Georgia School of Law.I.The DramaA potential client, an executive atthe Widget Manufacturing Company(“Widget”), has come to you becauseone of Widget’s suppliers, Low Budget,has failed to meet their obligationsunder a supply contract with Widget.As the Widget executive talks, youlearn that six months ago Widget enteredinto a written contract with LowBudget under which Low Budgetagreed to provide high-quality partsto Widget. Low Budget was broughtto Widget by Widget’s exclusive, longtimeparts broker who assured Widgetthat Low Budget could supply a highgradepart. Unfortunately, Low Budgetnever possessed the capability tosupply these high-grade parts.The Widget Executive tells you thathe has learned, post-contract, thatWidget’s broker was college roommateswith Low Budget’s CEO, thatWidget’s broker knew, pre-contract,that Low Budget did not have the capabilityto supply the parts that Widgetneeded. Widget’s broker, nonetheless,recommended Low Budget inreturn for an undisclosed commissionpaid to him by Low Budget. To makematters worse, after Widget fired thebroker, he started his own competingwidget manufacturing company andhired away Widget’s best engineer.The engineer, while at Widget, developedand was in charge of a uniqueprocess by which Widget manufacturedtheir widgets. This process allowedWidget to make widgets fasterand cheaper than their competitors.Without the engineer, Widget’s productionhas slowed to a halt. The engineerwas under contract to Widget.With Widget’s lack of production,customers have moved their businessto the broker’s company. Widgethas also learned that the broker hasdirectly contacted Widget customerscurrently in contractual agreementswith Widget and has solicited them tohis new company and has told themthat Widget is being investigated for10

fraud—a false allegation.The Widget Executive tells you thatWidget needs your help to get back ontrack, to recover its damages and tostop future damages to its sales andreputation. He then asks, “What doyou think?”II.The ContractThe first place to look is to thecontractual agreement. An expresscontract is where the parties haveagreed, either orally or in writing, tobe bound. 1 This is the type of contractthat most people imagine when theythink of parties agreeing to do businesstogether. It is also the type ofcontract that exists between Widgetand Low Budget.Normally, the remedy for the breachof an express contract is damageswhich compensate the plaintiff for theloss resulting from the breach. 2 Undera breach of contract theory Widgetmay be able to recover from Low Budgetany damages that flow from thebreach by Low Budget, such as lostprofits.If there is no express contract—ifthe parties have not agreed eitherorally or in writing to be bound—alawyer should ask whether the courtwould imply an equitable contract.Such contracts are often called quasior constructive contracts 3 and are obligationsthat arise not because thereis a mutual assent by two parties, asin a legal contract, but because equityrequires them. 4 An implied contractis created by the court only when noexpress legal contract exists. 5 The remedyfor a breach of an implied contract“is expressed by the amount whichthe court considers the defendant hasbeen unjustly enriched at the expenseof the plaintiff.” 6This equitable concept of unjust enrichmentstands for the propositionthat a benefited party should compensateanother party for any conferredbenefits even if there is no legal contractto pay. 7 For example, assumethere had been no express contractbetween Widget and Low Budget,that Widget simply paid Low Budgetwith the reasonable expectation thatLow Budget would then supply parts,and assume that Low Budget acceptedthe cash. If Low Budget does notprovide Widget with parts, Low Budgetwill have been unjustly enriched.Under these facts, a court may implya contract and Low Budges may be inbreach of that contract.However, the theory of unjust enrichmenthas limitations. For it to apply,the party who confers the benefitmust have conferred that benefit withthe expectation that they would becompensated. 8 Otherwise, a volunteerwould have an equitable right to recovery,which is not the current state ofthe law. 9 Conversely, the party receivingthe benefit must have known hewas receiving it and have consentedto it. 10 This prevents Low Budget fromunilaterally leaving a box of parts onWidget’s doorstep and then suingWidget when Widget fails to pay.III.Are There Business TortClaims?A breach of contract claim may notbe Widget’s only recourse, and Lowbudget may not be the only potentialdefendant. After looking to thecontract, it is always good practice totest for tort claims and other potentialdefendants. While contract law aimsto compensate a party for its loss resultingfrom a breach, tort law seeksto compensate the victim and deterand punish the wrongdoer. 11 Thus, aplaintiff, by bringing a tort claim, maybe able to reach other potential defendantsand may be entitled to recoverpunitive damages. 12 Fraud is goodstarting place.A. FraudThere are ostensibly three types offraud. Fraud by misrepresentation isthe first category and is defined as a“[w]illful misrepresentation of a materialfact, made to induce another to act,upon which such person acts to hisinjury.” 13 This type of fraud involvesa misrepresentation that is intendedto deceive and does deceive a party. 14Within this type of fraud is fraud inthe inducement, which stands for theproposition that a promise made asan inducement to enter a contract willconstitute fraud as long as the promisewas made in a manner to deceive andmislead. 15 Widget may have a claimfor fraud by misrepresentation if Widgetcan show that either Low Budgetor the Broker made an affirmative representationto Widget with the intentto deceive. Further, Widget may havea claim for fraud in the inducement ifLow Budget or the Broker made therepresentation with intent to induceWidget into entering into the contract.The second type of fraud is fraudby concealment, which allows a plaintiffto hold a defendant liable for thefailure to disclose a material fact tothe plaintiff if the defendant was obligatedto disclose the concealed information.16 The question that follows is,when is a defendant obligated to disclosea material fact?There are two circumstances whereGeorgia law has recognized this obligationto disclose. The first is whenthere is a confidential relationship. 17A confidential relationship is “whereone party is so situated as to exercisea controlling influence over the will,conduct, and interest of another orwhere, from a similar relationship ofmutual confidence, the law requiresthe utmost good faith, such as the relationshipbetween partners, principaland agent, etc.” 18 This definition encompassesfiduciary relationships, butis broader. 19For example, the broker aboveworked exclusively for Widget fora “long time.” This may well haveplaced him within the definition of aconfidential relationship because hewas in a position to procure supplycontracts for Widget and may haveheld a position of influence with Widget.If the relationship between Widgetand its broker was an arms-lengthcontinued on next page11

12It Is Seldom a Simple Contractcontinued from previous pagerelationship, no confidential relationshipwould have been created, 20 butbecause he was the exclusive, longtimebroker, there may have been anobligation to disclose that he knewLow Budget could not supply thecontracted for parts, that he was thecollege roommate of the CEO of LowBudget, and he was paid an undisclosedcommission by Low Budget.At a minimum, genuine issues of factare raised that may well preclude amotion to dismiss by the broker.The second circumstance in whicha party has an obligation to disclosea material fact is when the “particularcircumstances of the case” require it. 21Courts have tried to define this amorphousterm and have settled on “anycase where a person intentionally concealeda fact from a certain other person,hoping thereby to derive a benefit,and knowing that only by silenceand by concealing the truth would theanticipated benefit accrue.” 22 In otherwords, courts will proceed on a caseby-casebasis to determine the culpabilityof the defendant and whetherthe defendant had an obligation todisclose a material fact.Even if the court does not find thata confidential relationship existed betweenthe broker and Widget, there isa reasonable probability the court willfind the broker had a duty to disclosebecause he stood to receive the undisclosedcommission only if Widgetsigned the contract, and Widget mightnot have signed the contract if it hadknown of the broker’s concealment ofthe fact that Low Budget made lowgradeparts and that Low Budget waspaying the broker a commission.There is one last important issuewhen pleading fraud by concealment.A plaintiff, after showing the defendanthad an obligation to disclose,must show that he or she could nothave discovered the concealed factdespite reasonable diligence. 23 Whatconstitutes reasonable diligence is aquestion for the jury. 24 Under this rule,it may be that Widget cannot pleadfraud by concealment if Widget couldhave discovered through reasonablediligence that Low Budget could notsupply the parts contracted for, thatthe broker was college roommateswith Low Budget’s CEO, or that thebroker was paid a commission by LowBudget.It is likely that Widget could have,through reasonable diligence, discoveredthe concealed fact that Low Budgetcould not supply the parts, whichwere the subject of the contract. Theabsence of the exercise of reasonablediligence could prevent Widget fromsucceeding on its fraud by concealmentclaim against Low Budget forthat issue. However, Widget may beable to show that through the exerciseof due diligence it could not have discoveredthat the broker was receivingan undisclosed commission or thatthe broker was the college roommateof the Low Budget CEO. A claim forfraud by concealment of these factsmay have a higher chance of success.The third and final type of fraud occurswhen a promise is made withouta present intent to perform. Generally,speculation and projections cannotform the basis for fraud in Georgia, 25and a fraudulent misrepresentationmust relate to past rather than futureacts. 26 The exception to this ruleis when the promise is made withno present intent to perform. For example,when Low Budget contractedto supply the bargained for parts,but knew that it could not supply thesame, Low Budget may have madethe promise with no present intent toperform. 27 This sort of promise by adefendant will constitute a misrepresentation,and as long as it is madewith the intent to deceive and mislead,the plaintiff will have an actionfor fraud. 28B. Civil RICOAnother often overlooked but powerfultool is RICO. Both Congressand the Georgia General Assemblyhave enacted a RICO statute, 29 butthe Georgia statute, in many ways, isbroader because it has less demandingdefinitions of “pattern of racketeeringactivity” and “enterprise.” The Georgiastatute also provides for a widervariety of predicate acts and gives theplaintiff the option for injunctive reliefwhen appropriate. However, the twostatutes are substantially interrelatedand Georgia courts often look to thefederal act for guidance. 30 In Georgia,the RICO Act is meant to deal with the“increasing sophistication of variouscriminal elements,” 31 and, althoughmany people think of the GeorgiaRICO Act as only dealing with organizedcrime, no nexus with organizedcrime is needed. 32Substantively, the Georgia RICO Actprohibits three types of activity. First,it prohibits a person from gaining ormaintaining an interest or control inany enterprise, real property or personalproperty through a pattern ofracketeering activity. 33 Second, it prohibitsa person employed or associatedwith an enterprise from operatingthat enterprise through a patternof racketeering activity. 34 Further, theGeorgia statute prohibits conspiringto commit a RICO violation. 35Unquestionably, the definitions inthe statute can be confusing, but understandingthem is crucial to the viabilityof a RICO claim. “A patternof racketeering activity” is defined asengaging in two or more acts of racketeeringactivity. 36 These acts are referredto as predicate acts 37 and musthave similar intents, results, accomplices,victims, or methods of commissionor must be interrelated in someway. 38 Also, one of the acts, accordingthe Georgia statute, must have occurredafter July 1, 1980, and the lastof the acts must have occurred withinfour years of a prior commission of apredicate act.A broad range of conduct can constitutea predicate act. 39 In Georgia,a predicate act can occur not only

through the violation of a numberof Georgia statutes, but also throughthe commission of conduct definedas a predicate act in the federal statute.The result is that the definition ofracketeering activity is broader underthe Georgia statute as compared tothe federal statute. 40 The standard ofproof for showing a predicate act isas in any other civil action—that theplaintiff must prove the existence ofa predicate act by a preponderance ofthe evidence. 41The concept of “enterprise” is alsoimportant. The federal statute prohibitsa person from using or investingincome derived from a pattern ofracketeering activity to acquire anyinterest in an “enterprise.” 42 The federalstatute also prohibits a person employedby an enterprise from operatingthat enterprise through a patternof racketeering activity. 43 The Georgiastatute’s language, however, is broaderbecause it expands the conceptof prohibited activity. 44 The GeorgiaRICO statute prohibits the acquiringor maintaining of “any enterprise, realproperty, or personal property of anynature, including money” througha pattern of racketeering activity. 45Thus, the Georgia statute does notlimit the prohibited activity to acquiringany interest in, or operating anenterprise, but expands to include realand personal property. For example,the federal RICO statute would onlyprohibit the defendants in this casefrom using a pattern of racketeeringactivity to operate or gain an interestin an enterprise, such as a business.In contrast, under the Georgia RICOstatute, the prohibition is broader inthat it would prohibit the defendantsnot only from buying or controllingan enterprise, but also from buying ormaintaining a boat, piece of land, ormoney through a pattern of racketeeringactivity. However, if the facts inthe case show that the defendants didnot take an interest or control of real orpersonal property, under the GeorgiaRICO statute the plaintiff must showthe existence of an enterprise. 46An enterprise is defined as “anyperson, sole proprietorship, partnership,corporation, business trust,union chartered under the laws ofthis state, or other legal entity; or anyunchartered union, association, orgroup of individuals associated in factalthough not a legal entity; and it includesillicit as well as licit enterprisesand governmental as well as otherentities.” 47 This is a broad definition,and a plaintiff does not need to showevidence of a formal group to provethat an enterprise exists. 48 Instead,an enterprise is proven by “evidenceof an ongoing organization, formalor informal, and by evidence that thevarious associates function as a continuingunit.” 49 Importantly, a plaintiffcan use the same evidence to show theexistence of both an enterprise and apattern of racketeering activity. 50However, meeting the above definitionsis not enough for a plaintiff tosustain a RICO action. To have standingagainst the defendant, the plaintiffmust show that he was injured, andthe defendant’s commission of oneor more predicate acts proximatelycaused that injury. 51 The injury mustflow directly from the predicate acts. 52For example, had one of Low Budget’semployees found out about Low Budget’sfraudulent activities, refused togo along with the activities, and gottenfired as a result, he would not have aRICO claim because his injury wouldnot flow directly from the predicateacts. 53If Widget can prove liability underRICO, there are a broad rangeof remedies available. Widget canrecover treble damages and may beable to recover punitive damages aswell. 54 Widget may also have the opportunityto recover attorney fees andcosts, 55 and, in Georgia, Widget canseek injunctive relief under the samestandard as in other civil cases, exceptinstead of having to show irreparableharm, Widget must show “immediatedanger of significant loss.” 56C. Trade SecretsWidget may have a claim for misappropriationof trade secrets underthe Georgia Trade Secrets Act. 57 Theengineer may have taken with himthe knowledge of a unique processby which Widget could manufacturewidgets cheaper and faster than thecompetition. Widget will understandablybe apprehensive that the engineerwill disclose and use the process at hisnew employer. Widget may want touse the Trade Secrets Act to prohibitthe disclosure of any trade secrets.Widget will have to use the Trade SecretsAct, rather than tort law, becausethe statute expressly supersedes alltort actions, thus any claim for misappropriationmust be brought underthe statute. 58A trade secret is any type of informationthat is (1) subject to reasonableefforts to maintain its secrecy and (2)valuable as a result of its secrecy. 59 Atrade secret must not be ascertainablethrough proper means, thus anythingthat can be derived through reverseengineering, independent development,or is available through publicsources will not be considered a tradesecret. 60 If Widget had a unique wayof manufacturing widgets which theychose to keep secret, and from thatprocess Widget derived economicbenefit, that process could be classifiedas a trade secret as opposed toconfidential information (the latter requiringan enforceable nondisclosureagreement). 61Misappropriation of a trade secretcan happen in one of two ways. A personcan be liable if he or she acquiresa trade secret under circumstanceswhere he or she knew or should haveknown that the trade secret informationhad been obtained by impropermeans or, if he or she, already in possessionof trade secret information,continued on next page13

It Is Seldom a Simple Contractcontinued from previous pagediscloses that trade secret after usingimproper means to acquire it or inviolation of a duty to keep it secret. 62Widget may be able to sue both thebroker and the engineer. The broker,if he acquired the trade secret informationfrom the engineer and knew orshould have known that the engineerprocured the secret process throughimproper means, could be liable.Also, the engineer could be liable fordisclosing the trade secret information.He created the process so he didnot use improper means to acquire thetrade secrets, but, he may have had aduty to keep it a secret as an employeefor widget. If he did have a duty, thenhe will be liable.If the broker or engineer did misappropriatea trade secret or if there isa threat of misappropriation, Widgethas the right to enjoin the defendantfrom using the trade secret, and Widgetwill be able to recover damages. 63If the misappropriation was willful,exemplary damages may be awardedand can be up to twice the amount ofcompensatory damages. 64 Further, ifa claim for misappropriation is madein bad faith, a motion to terminatean injunction is made in bad faith, orwillful or malicious misappropriationexists, then the court may award attorneys’fees to the prevailing party. 65D. Tortious InterferenceWidget may also consider actionagainst the broker for soliciting customersthat had contracts with Widget.Widget’s cause of action wouldbe a tort for the malicious injury to thebusiness of another. 66 With these torts“a claim may be stated by showing ageneral malicious intention to harmthe plaintiff’s business, or to drive theplaintiff out of business.” 67 Widgetmay be able to show that the broker,when talking to customers who werecontracted with Widget, maliciouslyinterfered with Widget’s business andis liable for damages.There are two categories of tortiousinterference that are recognized inGeorgia—interference with contractualrelations and interference withbusiness relations. 68 The two have afew common elements:(1) improper action or wrongfulconduct by the defendantwithout privilege; (2) the defendantacted purposely andwith malice with the intent toinjure; (3) the defendant induceda breach of contractualobligations or caused a party orthird parties to discontinue orfail to enter into an anticipatedbusiness relationship with theplaintiff; and (4) the defendant’stortious conduct proximatelycaused damage to the plaintiff. 69But, there is one large distinction.For interference with contract relations,a plaintiff must show that therewas a valid and enforceable contractwith which the defendant interfered. 70Tortious interference with contractualrelations seems to be the tort that fitsthis fact pattern because there werecontracts between Widget and its customers.Interference with business relationscan be used when there is nocontract. 71Interference with business relationsalso encompasses interference withprospective business relationships. 72This allows a plaintiff to sue a defendantfor interfering with the plaintiff’sefforts to procure new businessrelations. Along with the other elementsof the pair of interference torts,a plaintiff needs to show that but forthe interference, the business relationsinterfered with were reasonably likelyto develop. 73Widget may have a claim for interferencewith contractual relations ifthe defendant maliciously inducedthe customers to breach their contractswith Widget and Widget suffereddamage as a result. 74 In the context oftortious interference, the term maliciousmeans that the defendant musthave been aware of the contract andhad the intent to interfere with thecontract. 75 If the broker in our fact patternwas aware of the contracts thatexisted between Widget and his customers,he may have had the requisiteintent.To be held liable the broker mustalso be a “stranger” to the contract. 76This means a party cannot tortiouslyinterfere with its own business relationships.77 The term is narrow anddoes not include all non-parties. Infact, the Supreme Court of Georgiahas held that the term stranger doesnot encompass any one party to the“contract and any business relationshipgiving rise to and underpinningthe contract.” 78 For example, agents,attorneys and third-party beneficiarieshave all been held not to be strangersto the contract in Georgia. 79 Widgetwill need to show that the brokermeets this narrow definition of strangerto hold the broker liable for tortiousinterference.To show that interference occurred,Widget need not show that the interferenceactually caused a breach in thecontract. 80 Widget only needs to showthat the broker’s actions interferedwith Widget’s ability to perform thecontract or made it more expensive toperform the contract. 81 Widget mustthen be able to show damages, suchas lost profits from losing customersto the broker’s company and any additionalcosts of entering into a newcontract. If Widget can show theseelements, Widget may be entitled tocompensatory damages and to punitivedamages. 83E. ConspiracyA conspiracy is a combination oftwo or more people to accomplishan unlawful end or to accomplish alawful end by unlawful means. 84 Anessential element is the agreement betweentwo or more people to accomplishthe tort. 85Once a person is aware of a conspiracyand they join, that personis as much a member as if they hadbeen in the conspiracy from the be-14

ginning. 86 This means anybody whojoins a conspiracy is liable for any actsthat were committed in furtherance ofthe conspiracy even before the personjoined. 87To be entitled to damages for civilconspiracy, a plaintiff must show thattwo or more people, acting in concert,engaged in conduct that constitutes atort. 88 There is really no such thing as acause of action for civil conspiracy. Instead,conspiracy is an action for damagescaused by an underlying tort. 89As a result, proving that an underlyingtort occurred is necessary to showconspiracy. 90Successfully pleading a conspiracymay give a plaintiff some litigationadvantages. If Widget successfullypleads and proves a civil conspiracyencompassing the CEO of Low Budget,the broker and the engineer, all ofwhom may have conspired to commita number of torts, Widget may thenbe entitled to assess joint and severalliability over a larger group of defendants.Instead of trying to recoup itslosses and punitive damages fromone defendant, Widget may be able torecover damages against the broker,the engineer, the CEO or all three. 91Because co-conspirators are joint-tortfeasors,a plaintiff may try its case inany county in which any defendantresides in Georgia, 92 and if the courthas personal jurisdiction over one coconspirator,that personal jurisdictionmay be imputed to the other co-conspirators.93 Also, pleading conspiracycan give a case jury appeal.ConclusionAlthough asserting a breach of contractclaim is often the easiest andmost apparent cause of action in thebusiness context, there are a numberof business torts that allow a plaintiff amuch larger range of remedies againstan expanded field of possible defendants.While some of these claims,RICO for example, may require alarger expenditure of time and financialresources, a successful tort claimmay provide a client with a resolutionthat better fits the client’s needs.Also, provisions such as exemplarydamages under the Georgia Trade SecretsAct, treble damages under RICO,and punitive damages under tortiousinterference can increase a plaintiff’sleverage in settlement talks. A lawyerarmed with this knowledge can be ofgreat benefit to her/his client.FOOTNOTES1. Classic Restorations, Inc. v. Bean, 155 Ga. App. 694, 699 (1980).Parol contracts are contracts made orally as remembered bywitnesses. O.C.G.A. § 13-1-6. Parol contracts are legal and maybe enforced, unless the parties disagree on whether a contractexisted. Speed v. Muhanna, 274 Ga.App. 899, 905 (2005). If theparties disagree, the absence of writing prevents enforcement. Id.Further, parol evidence may be used to explain any ambiguities in awritten contract but is inadmissible to contradict or vary the termsof a valid written instrument. O.C.G.A. § 24-6-3; O.C.G.A. § 24-6-1(2011).2. O.C.G.A. § 13-6-1 (2011).3. Eaves v. J.C. Bradford & Co., Inc. 173 Ga. App. 470, 471 (1985).4. Butts County v. Jackson Banking Co., 129 Ga. 801 (1908).5. Ades v. Werther, 256 Ga. App. 8, 10 (2002).6. Id.7. Morris v. Britt, 275 Ga. App. 293, 294 (2005).8. Id.9. Id.10. Reidling v. Holcomb, 225 Ga. App. 229, 232 (1997).11. Amalgamated Transit Union Local 1324 v. Roberts, 263 Ga. 405,407 (1993).12. O.C.G.A. § 51-12-5 (2011).13. O.C.G.A. § 51-6-2 (2011).14. Adkins v. Lee, 127 Ga. App. 261, 264 (1972).15. Perimeter Realty v. GAPI, Inc. 243 Ga. App. 584, 595-96 (2000).16. Pinkerton and Laws Co., Inc., v. Roadway Exp., Inc., 650 F. Supp1138, 1147 (1986) (citing O.C.G.A. § 23-2-53 (2011)).17. O.C.G.A. § 23-2-53.18. O.C.G.A. § 23-2-58 (2011); see also Williams v. Dresser Industries,Inc., 795 F. Supp. 1144, 1148 (1992) (whether a confidentialrelationship exists is a question for the jury), reversed on othergrounds by Williams v. Dresser Industries, Inc., 120 F.3d 1163,1171 (11th Cir. 1997); Bogle v. Bragg, 248 Ga. App. 632, 638(2001) (the burden of proof is on the party asserting the existenceof the confidential relationship).19. See Williams, 120 F.3d at 1169.20. Colony Square Co. v. Prudential Ins. Co. of Am., 843 F.2d 479, 482(1988).21. O.C.G.A. § 23-2-53.22. Williams, 795 F. Supp. at 1149 (citing Reeves v. Williams & Co.,160 Ga. 15, 21 (1925)).23. Pinkerton, 650 F. Supp. at 1147.24. Id.25. Seale v. Miller, 698 F. Supp. 883, 900 (1988).26. Id.27. Perimeter Realty, 243 Ga. App.at 595-596 (2000).28. Id.29. O.C.G.A. § 16-14-4 (2011); 18 U.S.C. § 1962 (2006).30. Williams Gen. Corp. v. Stone, 279 Ga. 428, 430 (2005).31. O.C.G.A. § 16-14-2 (2011).32. Cotton, Inc. v. Phil-Dan Trucking, Inc., 270 Ga. 95 (1998).33. O.C.G.A. § 16-14-4(a).34. O.C.G.A. § 16-14-4(b).35. O.C.G.A. § 16-14-4(c).36. O.C.G.A. § 16-14-3(8)(a) (2011).37. Williams, 279 Ga. at 428.38. O.C.G.A. § 16-14-3(8)(a).39. O.C.G.A. § 16-14-3(9).40. O.C.G.A. § 16-14-3(9)(A)(xxix).41. Williams, 279 Ga. at 429.42. 18 U.S.C. § 1962(a-b).43. 18 U.S.C. § 1962(c).44. Cobb Cnty. v Jones Grp. P.L.C., 218 Ga. App. 149, 152-53 (1995).45. O.C.G.A. § 16-14-4(a).46. Jones, 218 Ga. App. at 152-53.47. O.C.G.A. § 16-14-3(6).48. Martin v. State, 189 Ga. App. 483, 486 (1988).49. Id.50. Id.51. Nicholson v. Windham, 257 Ga. App. 429, 431 (2002).52. Id.53. See Id.54. Treble damages allow a plaintiff to recover three times the actualdamages caused by the defendant. O.C.G.A. § 16-14-6(c);A plaintiff must show “clear and convincing evidence that thedefendant’s actions showed willful misconduct, malice, fraud,wantonness, oppression, or that entire want of care which wouldraise the presumption of conscious indifference to consequences”to receive punitive damages. O.C.G.A. § 51-12-5.1(b)55. Id.56. O.C.G.A. 16-14-6(b).57. O.C.G.A. § 10-1-763(a) (2011).58. O.C.G.A. § 10-1-767 (2011).59. O.C.G.A. § 10-1-761(4) (2011).60. Uniform Trade Secret Act § 1, Official Comment.61. “Even in the absence of an express agreement, it is an impliedterm of an employment contract that an employee will not divulgea trade secret learned by virtue of his employment to a competitorof his former employer. Am. Bldgs. Co. v Pascoe Blgdg. Sys., Inc.,260 Ga. 346, 348 (1990). However, if the information does notqualify as a trade secret and is only confidential information, thanthe information must be covered by an enforceable non-disclosureagreement. See Nasco, Inc. v. Gimbert, 239 Ga. 675, 676 (1977).62. “Improper means” includes theft, bribery, misrepresentation,breach or inducement of a breach of a confidential relationship orother duty to maintain secrecy or limit use, or espionage throughelectronic or other means. Reverse engineering of a trade secret notacquired by misappropriation or independent development shall notbe considered improper means. O.C.G.A. § 10-1-761(1); O.C.G.A.§ 10-1-761(2)(B).63. O.C.G.A. § 10-1-762 (2011); O.C.G.A. § 10-1-763.64. O.C.G.A. § 10-1-763(b).65. O.C.G.A. § 10-1-764.66. Alta Anesthesia Assoc. of Ga. v. Gibbons, 245 Ga. App. 79, 84 (2000).67. Id.68. Disaster Services, Inc. v. ERC P’ship., 228 Ga. App. 739, 740 (1997).69. Id.70. Atlanta Market Center Management Co. v. McLane, 269 Ga. 604,609 (1998).71. Tom’s Amusement Co., Inc. v. Total Vending Serv’s. 243 Ga. App.294, 295 (2000).72. Hayes v. Irwin, 541 F. Supp. 397, 430 (N.D.Ga. 1982).73. Id.74. See Luke v. Pree, 158 Ga. 590 (1924).75. Medlin v. Morganstern, 268 Ga. App. 116, 119 (2004).76. McLane, 269 Ga. at 609.77. See Id.78. Id. at 611.79. Id. at 609.80. Rome Industries, Inc. v. Jonsson, 202 Ga. App. 682, 684 (1992).81. Id.82. Automated Solutions v. Clearview Software, 255 Ga. app. 884, 889(2002); WMH, Inc. v. Thomas, 260 Ga. 654, 655 (1990).83. O.C.G.A. § 51-12-5 (2011).84. Miller v. Lomax, 266 Ga. App. 93, 103 (2004).85. Traub v. Washington, 264 Ga. App. 541, 546 (2003).86. Blackstone Ind., Inc. v. Andre, 232 Ga. 715 (1974).87. Savannah College of Art & Design, Inc. v. School of Visual Arts ofSavannah, Inc., 219 Ga. App. 296, 297 (1995).88. Traub, 264 Ga. App. at 546.89. First Fed. Sav. Bank v. Hart, 185 Ga. App. 304, 305 (1987).90. Lomax, 266 Ga. App. at 103.91. American Family Life Assur. Co. v. Queen, 171 Ga. App. 870(1984) (“it has long been the law of this state that civil conspiratorsare liable as joint tortfeasors.”); Northwest Plaza, LLC (MI) v.Northeastern Ent., Inc., 305 Ga. App. 182, 193 (2010) (“theallegations showing a conspiracy make any actionable deed byone of the conspirators chargeable to all. The liability is joint andseveral.”).92. Id. at 870.93. Hyperdynamics Corp. v. Southridge Cap. Mgmt., LLC, 305 Ga. App.283 (2010)15

Punitive Damages in AutomobileCollision LitigationShawn P. O’HaraShaun P. O’Hara is an associate at the law firm of Pope, McGlamry, Kilpatrick,Morrison & Norwood, P.C., in Columbus, Georgia. Pope, McGlamry currently hasoffices in Columbus and Atlanta, Georgia, and is a regional and nationwide civil triallaw firm committed to excellent representation and legal counsel. Pope, McGlamryspecializes in and handles significant business fraud and commercial tort cases, ofteninvolving extensive damages; contract disputes; business to business litigation; casesof catastrophic injury and wrongful death involving issues related to automotiveand general products liability; car, truck, and construction accidents; consumerlitigation, including deceptive trade practices; insurance coverage litigation andpremises liability cases.Shaun graduated from LaGrange College in LaGrange, Georgia, in May 2007, cumlaude. While at LaGrange, Shaun played varsity baseball as a left-handed pitcher. Asa varsity baseball player, Shaun received the award of Academic-All Conference andin his senior year Shaun received the Dr. Malcom Shackelford Academic Award forthe senior male scholar-athlete with the highest GPA.Shaun graduated from Mercer University School of law, cum laude, May 2011.While in law school, Shaun served as a research assistant for Professor VirginiaWilliams and clerked for the Honorable Hugh Lawson in the United States DistrictCourt for the Middle District of Georgia. Shaun also served as a member of the Wagner Labor and Employment Law moot courtteam and competed in New York City during his third year. During law school Shaun spent most of his free time as a baseballumpire at Vineville Little League in Macon, Georgia.Currently, Shaun is a member of the State Bar of Georgia, the American Inns of Court-Columbus Inn, the Columbus BarAssociation, the Chattahoochee Bar Association, and is admitted to practice in the Georgia Court of Appeals.IntroductionOn July 1, 2010, Georgia becameone of 35 states that prohibit textingwhile driving. 1 Subject to certainexceptions, reading, sending orwriting text based communicationswhile driving is prohibited in Georgia,O.C.G.A. § 40–6–241.1, and driversunder age 18 are prohibited fromall forms of wireless communicationwhile driving, except in certain specifiedsituations. O.C.G.A. § 40–6–241.1(b). The law is called the CalebSorohan Act, after a young Georgiaman who died in a car crash whiletexting. 2 The law prohibits driversfrom using a cell phone, text messagingdevice, personal digital assistant(PDA), computer, or similar wirelessdevice to write, send, or read textdata while driving. O.C.G.A. § 40-6-241.1. The ban applies to text messages,instant messages (IM), email,and Internet data. Id.With the newly enacted ban ontexting while driving, Georgia driversknow or should know that thedecision to text while driving or toread an email while driving is unlawfuland dangerous and putstheir life and the lives of others indanger. Offenders of Georgia’s banon texting while driving are subjectto a $150 fine and one point againsttheir driving record. O.C.G.A. § 40-6-241.1(d)(1).However, the most significantimpact of the ban on texting whiledriving in Georgia may come in theform of punitive damages in civillitigation. This article reviews punitivedamages in automobile collisionlitigation under current Georgia lawand reviews a recent decision from16

the Georgia Court of Appeals, whichmay serve as a premonition for thefuture of automobile collision litigationin Georgia with regard to textingwhile driving and punitive damages.Background on PunitiveDamages in Automobile CollisionLitigationIn Georgia, punitive damages maybe awarded only in such tort actionsin which it is proven by clear andconvincing evidence that the defendant’sactions showed willful misconduct,malice, fraud, wantonness,oppression, or that entire want ofcare which would raise the presumptionof conscious indifference to consequences.O.C.G.A. § 51-12-5.1(b).In cases involving automobile collisions,punitive damages are authorizedwhen the accident results froma pattern or policy of dangerous driving,such as excessive speeding ordriving while intoxicated. Brooks v.Gray, 262 Ga. App. 232 (2003); Millerv. Crumbley, 249 Ga. App. 403 (2001).In order to recover punitive damagesthe plaintiff must show that thetortfeasor engaged in some form ofculpable conduct by clear and convincingevidence. O.C.G.A. § 51-12-5.1(b); Howard v. Alamo Corp.,216 Ga. App. 525 (1995); Ralston v.Etowah Bank, 207 Ga. App. 775, 777(1993). However, willful and intentionalconduct is not essential to recoverpunitive damages, becausewhere the facts and circumstancesof the tort show an entire want ofcare, such conduct gives rise to a presumptionof indifference to the consequences,i.e., wantonness, whichis sufficient to support an awardof punitive damages. See Brown v.StarMed Staffing, 227 Ga. App. 749,755 (1997); see also Hoffman v. Wells,260 Ga. 588 (1990); Hodges v. EffinghamCounty Hosp. Auth., 182 Ga.App. 173 (1987).The peculiar facts and circumstancesof a particular case, whensupported by clear and convincingevidence of culpability, may causeordinary negligence to give rise tothe presumption that the conductshowed a conscious indifference tothe consequences and an entire wantof care. See Durben v. American Materials,232 Ga. App. 750 (1998).The standard for awarding punitivedamages in Georgia is clear, theplaintiff has the burden of provingby clear and convincing evidencethat the defendant engaged in culpableconduct. The ambiguity for apunitive damages award in an automobilecollision case in Georgiaarises when determining how muchculpable conduct on the part of thedefendant is enough to survive a motionfor summary judgment.A. Punitive DamagesNot RecoverableIn automobile collision cases decidedunder O.C.G.A. § 51-12-5.1,punitive damages are not recoverablewhere the driver at fault simplyviolated a rule of the road. See, e.g.,Bradford v. Xerox Corp., 216 Ga. App.83 (1994) (defendant’s speeding didnot warrant imposition of punitivedamages absent evidence of otheraggravating circumstances); Coker v.Culter, 208 Ga. App. 651 (1993) (punitivedamages not warranted eventhough defendant was speeding onwet roads, had consumed some alcohol,and behaved abominably aftercollision); Cullen v. Novak, 201 Ga.App. 459 (1991) (careless running ofred light not sufficient aggravatingcircumstance).B. Punitive Damages RecoverableOn the other hand, punitive damagesare recoverable under theGeorgia statute where the collisionresulted from a pattern or policy ofdangerous driving. See, e.g., Boyettv. Webster, 224 Ga. App. 843 (1996)(cert. granted) (DUI in incident andon previous occasions); Cheevers v.Clark, 214 Ga. App. 866, 869 (1994)(drunk driving in incident at issue aswell as subsequent arrests for drunkdriving); Holt v. Grinnell, 212 Ga.App. 520 (1994) (drunken driving);Smith v. Tommy Roberts TruckingCo., 209 Ga. App. 826, 828 (1993)(a “policy” of excessive speed plusdefendant struck plaintiff’s vehicletwice and kept pushing); J.B. HuntTransport v. Bentley, 207 Ga. App.250, 255 (1992) (truck driver drove20 miles despite serious mechanicalproblem which caused collision);Viau v. Fred Dean, Inc., 203 Ga. App.801, 804 (1992) (drunken driving);Day v. Burnett, 199 Ga. App. 494, 496(1991) (driving under the influenceand in violation of a number of trafficsafety laws).Cases which involved the lessstringent standards of proof applicablebefore the effectiveness of OCGA§ 51-12-5.1 also related to aggravatedcircumstances of driving. See Harrisonv. S & B Trucking, 179 Ga. App.291, 292 (1986) (excessive speedsof tractor-trailer “in conjunctionwith the other facts”); and Moore v.Thompson, 255 Ga. 236, 237 (1985)(DUI in incident and on previousand subsequent occasions).C. Uncertainty as to WhenDefendant’s Conduct AllowsRecovery of Punitive Damages inGeorgiaOne thing that is clear with regardto punitive damages in automobilecollision cases in Georgia is there isno bright line rule as to when punitivedamages will survive a motionfor summary judgment. The closestthing to a bright line rule is thatmerely violating a rule of the road isinsufficient for an award of punitivedamages. Bradford, 216 Ga. App. at83. In the cases that survived motionsfor partial summary judgmentwith regard to punitive damages, thedefendant’s conduct tended to be asequence of events that were cumulativeviolations of rules of the road.Compare, for instance, the GeorgiaCourt of Appeals decision in Coker,208 Ga. App. at 652, where the Courtheld that punitive damages couldcontinued on next page17

opinion in this case should not beread for the proposition that punitivedamages are never available in a casewhere a driver causes an accident becausehe or she was distracted whiletalking on a wireless communicationdevice.” Id. The Court’s conclusionleft the door wide open as to whetherpunitive damages are available withregard to improper cell phone usewhile driving.Implications of TextingWhile DrivingThe Georgia Court of Appeals cautionaryconclusion in Lindsey comesas no surprise in light of Georgia’senacted ban on texting while drivingand the national awareness ofthe dangers associated with textingwhile driving. The number of driversin the United States with cell phonesand the crash statistics with regardto texting while driving are disturbing.According to the Cellular TelecommunicationsIndustry Association(“CTIA”) wireless association,in June 2010, there were 292.8 millionoperational cell phones in the UnitedStates, which amounted to more thanone cell phone for each person in theUnited States aged 5 and older. 3With the growing trend of cellphone subscriptions it was only amatter of time before cell phone usewhile driving became a nationalsafety issue. Recent research indicatesthat people under age 45 nowsend and receive three times moretext messages than calls on their cellphones. 4 Americans are also textingmulti-taskers: a recent survey foundthat 77 percent of respondents saidthey have texted or sent mobile e-mails while driving. 5The relative ease of obtaining acell phone has created a situation inwhich the majority of drivers noweither own or have access to a cellphone. 6 In recent surveys, about twothirdsof all drivers reported talkingon a cell phone while drivingand about one-eighth of all driversreported texting or emailing whiledriving. 7 The growth in the numberof drivers using cell phones has ledto an increased number of distracteddriver accidents in the last few years. 8The increase in cell phone use whiledriving is alarming because studieshave shown that drivers who use cellphones are four times more likely tobe involved in a crash. 9 Two differentstudies found this same conclusion,a 1997 New England Journal ofMedicine examination of hospital recordsand a 2005 Insurance Institutefor Highway Safety study linkingautomobile crashes to cell phone useby reviewing the driver’s cell phonerecords. 10 Even more alarming is areport from the Virginia Tech TransportationInstitute, which recentlyfound that a texting driver is 23 timesmore likely to get into a crash than anon-texting driver. 11According to the National HighwayTraffic Safety Administration(NHTSA), in 2009 nearly 5474 peopledied and half a million were injuredin crashes involving a distracteddriver. 12 The NHTSA research alsorevealed that distraction-related fatalitiesrepresented 16 percent of alltraffic fatalities in 2009. 13In an effort to cure the onslaughtof cell phone related automobile accidents,as of December 2011, ninestates and the District of Columbiaprohibited talking on a hand-heldcell phone while driving, 30 statesand the District of Columbia prohibitedthe use of all cell phones bynovice drivers, 35 states and the Districtof Columbia prohibited textingwhile driving, and seven additionalstates prohibited texting by novicedrivers. 14The U.S. Department of Transportationrecently joined the movementof banning the use of hand-held cellphone devices and texting whiledriving. In a press release dated November23, 2011, U.S. TransportationSecretary Ray LaHood announceda new federal rule that prohibits interstatetruck and bus drivers fromusing hand-held cell phones whileoperating their vehicles. 15 LaHoodwas quoted as saying “when driversof large trucks, buses and hazardousmaterials take their eyes off theroad for even a few seconds, the outcomecan be deadly, I hope that thisrule will save lives by helping commercialdrivers stay laser-focused onsafety at all times while behind thewheel.” 16Despite 35 states, including Georgia,having now prohibited textingwhile driving, the number of accidentsinvolving distracted drivershas remained constant. 17 In a recentautomobile safety study, the HighwayLoss Data Institute (“HLDI”)researched the effect of texting whiledriving bans on collision claims. 18HLDI concluded that texting whiledriving bans did not reduce collisionclaims. 19 In fact, there was asmall increase in the states enactingtexting while driving bans comparedto neighboring states. 20 HLDI suggestedtwo possible reasons for theincrease; (1) drivers who text whiledriving may realize that texting bansare difficult to enforce, so they mayhave little incentive to reduce textingfor fear of being detected and fined,and/or (2) drivers who text whiledriving may have responded to theban by hiding their phones fromview, potentially increasing their distractingeffects by requiring longerglances away from the road. 21The act of talking on a cell phonewhile driving is distracting and dangerous.Texting while driving is evenmore distracting and even more dangerous.Further, the revelation in theHLDI study that texting bans mayactually be useless is ominous newsfor observant drivers. 22Therefore, the question that mustbe answered is, other than enactingstatutes that ban texting while driving,how can texting while driving beslowed down or stopped? One sugcontinuedon next page19

Punitive Damagescontinued from previous pagegestion is to treat texting while drivinglike driving under the influenceand allow jurors to decide if punitivedamages should be awarded to deterand punish negligent drivers fromtexting while driving. Georgia’s punitivedamages statute provides that“punitive damages shall be awardednot as compensation to a plaintiff butsolely to punish, penalize, or deter adefendant.” O.C.G.A. § 51-12-5.1(c).In Carter v. Spells, 229 Ga. App. 441(1997), the Georgia Court of Appealsheld that the purpose of punitivedamages for a tort is to punish or penalizethe defendant for the tort committedor to deter the defendant fromfuture similar acts.FOOTNOTES1. GHSA (2011). Cell Phone and Texting Laws, December 2011.Washington, DC: Governors Highway Safety Association.2. GHSA (2011). Cell Phone and Texting Laws, May 2011.Washington DC: Governors Highway Safety Association. www.ghsa.org/html/stateinfo/laws/cellphone_laws.html.3. CTIA (2010). 50 Wireless Quick Facts. Washington, DC: CTIA-TheWireless Association. www.ctia.org/advocacy/research/index.cfm/AID/103774. Sari Harrar. Text at Your Own Risk; O, The Oprah Magazine(February 2009).5. Id.6. Braitman, K.A. and McCartt, A.T. National Reported Patterns ofDriver Cell Phone Use in the United States, Traffic Injury Prevention11 (6) (2010), p. 543-548.ConclusionIn light of the Georgia Court of Appealsconclusion in Lindsey that theopinion should not be read for theproposition that punitive damagesare never available in an automobileaccident case where the at-fault driverwas distracted by their cell phone,the case law in Georgia is unsettledas to whether using a cell phone ortexting while driving rises to thelevel of punitive damages. 2011 WL4057533 at *2.With the newly enacted ban of textingwhile driving in Georgia and thewidespread awareness of the safetyhazards associated with texting7. Frank A. Drews. Text Messaging during Simulated Driving, HumanFactors: the Journal of the Human Factors and Ergonomics Society(December 16, 2009).8. Id.9. Horrey, W.J., Lesch, M.F., & Garabet, A. Assessing the Awarenessof Performance Decrements in Distracted Drivers. AccidentAnalysis & Prevention 40(2), 675-682. (2008).10. Id.11. In Study, Texting Lifts Crash Risk by Large Margin, The New YorkTimes, July 27, 200912. NHTSA. Overview of the National Highway Traffic SafetyAdministration’s Driver Distraction Program http://www.distraction.gov/files/dot/6835_driverDistractionPlan_4_14_v6_tag.pdf (April2010).while driving, it seems that a juryshould be allowed to decide whetheran at-fault driver’s cell phone userises to the level of punitive damages.By allowing jurors to decidewhether punitive damages are recoverablein automobile collisioncases involving drivers distractedby their cell phones, Georgia Courtscan help the movement toward deterringand punishing drivers whocarelessly text while driving and theCourts can provide some certainty asto when an automobile collision casewill survive a motion for summaryjudgment on the issue of punitivedamages.13. Id.14. GHSA (2011). Distracted Driving: What Research Shows and WhatStates Can Do.15. http://www.fmcsa.dot.gov/about/news/news-releases/2011/Secretary-LaHood-Announces-Step-towards-Safer-Highways.aspx.16. Id.17. HLDI (2010). Texting Laws and Collision Claim Frequencies.Highway Loss Data Institute Bulletin Vol. 27, No. 11. Arlington, VA:Highway Loss Data Institute.18. Id. at 2.19. Id. at 6.20. Id.21. Id. at 9.22. Id.20

Wanted: Clarification Regarding Georgia’sHospital Lien StatuteDavid T. RohwedderDavid T. Rohwedder is an associate with Brown & Adams, LLC in Columbus,Georgia. His practice consists of defense-oriented civil litigation includingautomobile, construction, premises and professional liability. David is licensed topractice in Georgia, Alabama and the United States District Court for the MiddleDistrict of Georgia.David graduated from the University of Alabama at Birmingham in 2005 withbachelor degrees in Philosophy and Sociology. After graduating from UAB, heattended graduate school University of Pennsylvania School of Medicine where heearned a master’s degree in bioethics in August, 2006. While studying at Penn,David served as a research fellow working with the University of Pennsylvania Ethicsof Vaccines Project. After graduation David moved back to Birmingham, Alabamato attend law school at the Cumberland School of Law at Samford University. Asa student at Cumberland, he served as a Senior Associate Editor for the AmericanJournal of Trial Advocacy and earned a research fellowship with the CumberlandCenter for Biotechnology, Law and Ethics. Prior to graduating from Cumberlandin 2009, David published two articles in Volume 32 of the American Journal of TrialAdvocacy.Outside of work, David enjoys playing the guitar, golf, basketball and hunting.David is also an adjunct professor at Columbus State University where he teachesa course entitled “Ethics and Legal Issues in the Profession: Bioethics.” He also serves on the board of the Columbus StateUniversity Athletic Fund.IntroductionHospital liens have become acomplicating factor in the arena ofpersonal injury practice. Whethera plaintiff’s counsel endeavors tonegotiate a resolution of a hospitallien or defense counsel insistsupon the satisfaction of a hospitallien, everyone recognizes that ahospital lien must be addressedupon settlement. However, thereare instances when counsel for theinjured claimant does not satisfya known hospital lien despite anexpress agreement to do so. Sucha failure potentially subjects atortfeasor’s liability carrier to adirect action to enforce the lien.Integon Indemnity Corporation v.Henry Medical Center, Inc., 235 Ga.App. 97, 98 (1998); see also O.C.G.A.§ 44-14-471. The success of thedirect action is contingent upon thehospital’s compliance with the filingprovisions set forth in Georgia’shospital lien statute, O.C.G.A. § 44-14-470 et seq., which is discussed inmore detail below.This article discusses thecontrolling authority with respectto the perfection and enforcementof hospital liens and the lack of theappellate decisions that apply thecurrent version of Georgia’s hospitallien statute.O.C.G.A. 44-14-470 et seg.Georgia’s hospital lien statute,O.C.G.A. § 44-14-470 et seq.,establishes the right of a hospitalrendering treatment to a patientto have a “lien for the reasonablecharges for hospital . . . care andtreatment of [an] injured person.”O.C.G.A. § 44-14-470(b). Such a “lienshall be upon any and all causesof action accruing to the person towhom the care was furnished . . . onaccount of the injuries giving rise tothe action.” Id. The lien is not againstthe injured person and “shall not beevidence of such person’s failureto pay a debt.” Id. The method forcontinued on next page21

22Wantedcontinued from previous pageperfecting such a lien is set forth inO.C.G.A. § 44-14-471.To properly perfect a hospital lien,a hospital must first, at least 15 daysprior to filing said lien, “providewritten notice to the patient and, tothe best of the claimant’s knowledge,the persons, firms, corporations, andtheir insurers claimed by the injuredperson or the legal representative ofthe injured person to be liable fordamages arising from the injuries.”O.C.G.A. § 44-14-471(a)(1). Inconjunction with subsection (a)(1), ahospital is further required to:file in the office of the clerk ofthe superior court of the countyin which the hospital . . . is locatedand in the county where inthe patient resides . . . a verifiedstatement setting forth the nameand address of the patient . . .; thename and location of the hospital. . . and the name address ofthe operator thereof; the dates ofadmission and discharge of thepatient . . . and the amount duefor the hospital . . . care.O.C.G.A. 44-14-471(a)(2). Thefiled statement must “be filed within75 days after the person has beendischarged from the facility.” Id.“The filing of a claim or lien shallbe notice to all persons, firms, orcorporations liable for the damages,whether or not they received thewritten notice provided for in thisCode section.” O.C.G.A. § 44-14-471(b) (emphasis added). Notably,failure to comply with the aboverequirements invalidates the hospitallien with respect to the enforceabilityagainst, for example, a liabilitycarrier unless the carrier “receivesprior to the date of any . . . settlement,actual notice of a notice and filedstatement made under subsection(a) [sic], via hand delivery, certifiedmail, return receipt requested, orstatutory overnight delivery withconfirmation of receipt” prior to anysettlement with the injured claimant.O.C.G.A. § 44-14-471(b) (emphasisadded).On its face, the statute appears tobe hospital-friendly. For example, ifa hospital complies with subsection(a)(1), but otherwise fails to timelyfile the verified statement requiredunder subsection (a)(2), the hospitalcan nevertheless enforce its lienagainst the tortfeasor’s liabilitycarrier. Subsection (b) of O.C.G.A. §44-14-471, amended in 2006, operatesas a “savings clause” that provides ahospital an opportunity to resurrectan otherwise invalid lien – that is,one that does not timely comply withsubsections (a)(1) and/or (a)(2) –provided the party against whom thehospital seeks enforcement of the lienreceives “actual notice” of the lienvia one of the three methods listedtherein prior to any settlement. 1 Withthe addition of the savings clause,hospitals are given an additionalavenue within which to enforce liens.This amendment dictates that strictcompliance with subsections (a)(1)and (2) is not mandatory.As discussed in greater detail below,the definitions, distinction betweenand practical implications ofhaving “notice” and “actual notice”are markedly absent from O.C.G.A.§ 44-14-470 et seq. and relevant caselaw. 2 If the filing entity did notstrictly comply with subsections (a)(1) and/or (a)(2), such definitionswould certainly provide guidanceregarding whether such hospital lienis enforceable given the recent additionsto subsection (b). This distinctionis especially important given thefirst sentence of subsection (b) specificallyreferences, but does not definethe term “notice.” 3 “Although thepurpose of the filing requirementsis to provide notice to all potentiallyliable parties,” the most recent casesdiscussing the enforceability liensthat were not filed in accordance withsubsections (a)(1) and/or (a)(2) allmention the importance of, but fail todefine what it means when a personor entity has “actual notice.” Macon-Bibb Hosp. Auth. v. Nat’l Union FireIns. Co., 793 F. Supp. 321, 325 (M.D.Ga. 1992); see also Thomas v. McClure,236 Ga. App. 622, 624 (1999). Clearlydefining and distinguishing theseterms is important given the fact thatthe current version of O.C.G.A. § 44-14-471 is significantly different thanwhat was in effect at the time both ofthe following cases were decided.Case LawThomas v. McClure 4 is the most recentdecision from Georgia’s appellatecourts addressing the validity of ahospital lien that does not complywith the requirements set forth inO.C.G.A. § 44-14-471(a)(1) and/or (a)(2). In Thomas, the Court of Appealsconsidered whether a hospital lienwas valid and enforceable despitethe filing hospital’s failure to timelyadhere to the requirements forfiling a verified statement undersubsection (a)(2). 236 Ga. App. at622. Thomas arose out of a motorvehicle accident between RobertThomas (“Thomas”) and BobbyMcClure (“McClure”) that resultedin Thomas being treated for personalinjuries “at Tanner Medical Centeron April 15, 1994 until his dischargeon April 28, 1994.” Id. “On May 31,1994, Tanner Medical filed in court averified statement for [a] hospital lienshowing that Thomas owed $13,397for medical care.” Id. Thereafter,Thomas brought suit againstMcClure for personal injuries. Id.As McClure was uninsured, Thomassettled his claims with his uninsuredmotorist carrier for $15,000, and thecarrier, pursuant to court order, paidsuch sum into the court registry.Id. “Tanner Medical then moved tointervene, claiming that pursuantto its hospital lien it was entitled topayment from the proceeds paid intothe Court. Thomas challenged theclaim, arguing that the hospital hadnot timely perfected its lien” since theverified statement was filed 3 dayslate according to O.C.G.A. § 44-14-

471. Id. Despite Thomas’ challenge,the court awarded Tanner Medicalthe sum of $8,681.00. Id. On appeal,the Court of Appeals affirmed. Id.In affirming the trial court’s ruling,the Court of Appeals found that thehospital lien was enforceable eventhough Tanner Medical Center didnot strictly comply with the filingrequirements under O.C.G.A. § 44-14-471. Id. at 623. Specifically, theCourt held that the undisputedfacts showed both Thomas and hisuninsured motorist carrier had actualnotice 5 of the lien. Thomas, 236 Ga.App. at 623. In so holding, the Courtdrew upon the opinion of Macon-Bibb County Hosp. Auth. v. Nat. UnionFire Ins. Co., 793 F. Supp. 321 (M.D.Ga. 1992) for support. Id. In Macon-Bibb, an untimely hospital lien, filed33 days after the injured personwas discharged, was neverthelessdetermined valid and enforceable onthe ground that it was undisputedthat the liable insurance companyhad actual notice of the hospital lien.Id. at 323; 793 F. Supp. at 325. Despiteholding that strict compliance withsubsections (a)(1) and (a)(2) is notrequired to enforce a hospital lienagainst a liability or other insurancecarrier when said carrier has actualnotice of the lien, Thomas and Macon-Bibb did not actually define whatconstitutes “actual notice” and“notice” or the methods by whicha person or entity receives “actualnotice” or “notice” of the lien.The appellate courts in Georgiahave not revisited these issues sinceO.C.G.A. § 44-14-471 was amendedin 2006. The statute considered bythe courts in Thomas and Macon-Bibbwas different from the Code section’scurrent version. On this basis, it isquestionable whether these casesshould remain controlling. The appellatecourts have not yet reported adecision addressing whether a hospitallien that does not strictly complywith the current version of O.C.G.A.44-14-471(a)(1) and (a)(2) can be enforcedagainst a person or entity liablefor the damages if, for example,the liability carrier (i) receives a copyof the notice and verified statementvia certified mail, return receipt requested,before the injured partysettles his claims with said carrier;(ii) does not receive a copy of the noticeand verified statement via certifiedmail, return receipt requested,before the injured party settles hisclaims with said carrier; and/or (iii)receives a copy of the notice and verifiedstatement by some other mannernot provided in subsection (b) of thisCode section. What may have constituted“actual notice” at the timeThomas and Macon-Bibb were decidedis likely different from what nowconstitutes “actual notice” accordingto the 2006 amendment. As such, theCourts are left to make determinationsabout the validity and enforceabilityof hospital liens armed withcases applying a version of a statutethat is no longer in effect.ConclussionThe most recent amendment toO.C.G.A. § 44-14-471, specifically theaddition of the savings clause, waslikely an attempt by the Georgia legislatureto enhance the rights of hospitalsto enforce liens for the treatmentand services rendered in theirfacilities, rather than providing hospitalswith an automatic lien. 6. Thefact that the former versions of thisCode section did not specifically providehospitals with a similar opportunityto enforce a lien that did nototherwise strictly comply with therequirements set forth in subsections(a)(1) and (a)(2) seems to support thisconclusion. However, the currentversion of the statute does not bridgethe gap left by the pre-2006 decisionsof Thomas and Macon-Bibb. As such,further revisions to this Code sectionmay be necessary to balance a hospital’sright to have and enforce a lienfor the reasonable charges for treatmentand services rendered to aninjured person and, for example, aninsurer’s right against being requiredto satisfy a lien that does not complywith subsection (a) or (b) of this Codesection. Defining the terms “notice”and “actual notice” in subsection(a) of O.C.G.A. 44-14-470 would begreatly beneficial in clarifying theimportance and effect of these terms.Furthermore, it may likewise be beneficialto revisit whether the first sentenceof subsection (b) of O.C.G.A. §44-14-471 is needed given the recentaddition of the savings clause.FOOTNOTES1. Prior to 2006, subsection (b) read as follows: “[t]he filing ofthe claim or lien shall be notice thereof to all persons, firms, orcorporations liable for the damages, whether or not they receivedwritten notice provided for in this Code section. The failure toperfect such a lien in accordance with this Code section shallinvalidate such lien.”2. Prior to the publication of this article, a diligent search was madeand no case law was found that defined “notice” as it is discussedherein.3. The first sentence of O.C.G.A. § 44-14-471(b) currently reads asfollows: “[t]he filing of a claim or lien shall be notice to all persons,firms, or corporations liable for the damages, whether or not theyreceived the written notice provided for in this Code setion.”4. At the time the Court of Appeals considered the issues presentedin Thomas, O.C.G.A. § 44-14-471 required that at a hospital filethe verified statement within 30 days of the patient’s discharge, asopposed to the current 75 day requirement. 236 Ga. App. at 623.Furthermore, the statute did not have the “savings clause” languagethat subsection (b) now contains.5. See, e.g., ALA. CODE § 33-11-370; Ex parte University of SouthAlabama, 761 So. 2d 240, 244 (Ala. 1999) (Alabama’s hospital lienstatute gives a hospital an automatic lien for the reasonable value ofits services).23

Our apologies to Mr. Moraitakis for missing part of his speech in our last issueand we are reprinting the full speech in it’s entirety.Remarks byNicholas C. MoraitakisLet me first thank my good friend, RobinClark, for her kind introduction and for all ofher work on behalf of the Bench, the Bar and ourcivil justice system. Robin has been a pioneerin her leadership of the Georgia Trial LawyersAssociation and continues to beso with the State Bar of Georgia.We appreciate your leadershipaccompanied by a steady handand a level head. We appreciateyou Robin Clark.To those of you here today,and to those responsible forthis recognition, no words ofappreciation can appropriatelyreflect that which I feel. Letme say simply “thank you”.Please understand that to berecognized for a Tradition ofExcellence, from the peoplein this room, is the greatestcompliment that I can receive.Indeed, there is no other groupI treasure more receiving recognition from. Thisis a distinct honor from the most meaningful offriends.I look with awe at the list of past recipients ofthe Tradition of Excellence Award and wonderaloud why my name should be added. I am sureI speak for all of us when I say that awards andrecognition are not things we seek. We wake upevery morning, go to work, and give it our verybest every day, all day. That is what we seek: todo our best and be our best. Many people: family,friends, mentors, co-workers, adversaries andjudges contribute to placing us in a position toappreciate the severity of our mission and be thebest we can be in its undertaking.As trial lawyers of course, we frequently findourselves up at 4:00 o’clock in the morninggetting ready for a hearing, prepare openingstatements or cross examination. Our familiesare often on the receiving end of our reaction toirrational hours and, at the end of the day, whatwe may deem irrational results from juries, andyes even sometimes from judges. So I first thankand salute my family; my daughters Lia (24)and Maria (16), who could not be with us todayas they are each on their own travels; and mostimportantly my lovely wife of32 years, Effie. Effie helps buildconfidence when in doubt,lends support in each endeavorand keeps my thinking straightwhen it wanders astray. (I willsay, however, in the privacy ofour own home she will let mehave it when I really screw up.)Let me give you anexample of the level of Effie’strust and support. We had beenmarried about 9 years and in1988 I decided to run for theUnited States Congress. WhenI relayed the idea to Effie, itwas not met with a great deal ofenthusiasm. She was quick topoint out that we had a 14 month old child, that Iwas a very busy insurance defense lawyer, that wehad a significant mortgage payment and perhapsmost importantly that I had absolutely no chanceof winning. It was easy for her to be right aboutthe age of our daughter, the nature of my legalwork and the size of our mortgage. Little did Iknow of her acumen for political consultationas I was trounced in the Democratic Primary bya fellow named Ben Jones. You may rememberBen; he became famous for playing Cooter inthe Dukes of Hazard. With that said, if there isany interest in reconsidering the wisdom of myselection, I will certainly understand.It has been my good fortune to practice with,litigated with, litigated against and thus beinfluenced by a myriad of fine lawyers andwonderful people. I started my first job in 1977with Don Fain, Mike Gorby and Mike Reeves.Through them I gained a full understandingof the significance of preparation and a healthy24

appreciation for the technical pitfalls whichkeep us awake at night.The first time I went into court as a lawyerwas with my first boss, Don Fain. We wererepresenting a trucking company defendantand the plaintiff was represented by a priorrecipient of this award and a giant in the practiceof law, Paul Hawkins. Sitting second chair withPaul was another recent recipient of this award,Bill Bird. Bill and I sat and assisted our seniorpartners, soaking up the opportunity to learn.I remember at one point during his closingargument, Paul Hawkins leaned over to thejury, making his case in a whispered tone. DonFain stood up and addressed Judge OsgoodWilliams with an objection, based on the factthat he could not hear what Paul was saying.Without missing a beat, Paul turned his headto Don and said in a voice that could be heardby all “that’s because I’m not talking to you”.Judge Williams had no chance to rule on theobjection because the laughter was too loud.Everybody in the courtroom got a big kick outof the exchange except for me and Don. Thejury came back with an award for Paul andBill’s client far in excess of the amount we hadoffered.A lesson in courtroom opportunities andperhaps needless objections.I have had wonderful partners in both thedefense and plaintiffs practices of law. Morerecently, Roger Mills and then Al Pearson. Iwas blessed to have the opportunity to practicewith one of the finest young men I’ve everknown, who unfortunately left us too early,Arnold Gardner. Arnold was a kind and gentleman who saw the good side of everything andeveryone and influenced those of us who spenttime with him to do the same. His memory willbe eternal.I have been particularly rewarded the last 19years to have practiced law with the smartestand most capable lawyer I have ever known,Glenn Kushel. Glenn is both a big picture andlittle picture guy. While he can certainly see theforest, he knows the status of every tree. WhileI love him to death, I hate to have him proofreadany of my work. From time to time I will spendhours preparing a particular document andhand it to Glenn, with the confidence that I haveall bases covered. Inevitably, the pages comeback full of red ink, corrections and additions.One of my goals in life is to one day hand Glennsomething to read which will come back lookingat least partially similar to the document I gavehim to read in the first place. Thanks for puttingup with me Glenn. You are a great partner anda great friend.The lesson taken from this relationship isalways have a partner who is younger andsmarter than you are.For two years in law school, I served as alaw clerk for the law firm known as HenningChambers & Mabry. There I worked with BoChambers and Walter McClelland, both ofwhom remain friends to this day. This was agreat opportunity for a young law student to beexposed to very talented lawyers. Walter hasoften times reminded me of the story wherehe sat second chair to Bo in a trial where thefirm was representing the driver of a car thatsimply rear-ended the plaintiff. In his closingargument, Bo argued that the plaintiff’s car wasstopped in front of the defendant, and the whileliability might seem clear, he said “my clientwasn’t a helicopter; he couldn’t go over him. Hewasn’t a submarine; he couldn’t go under him.”In later years both Walter and I tried that sameargument in front of juries who looked at us asif we had a screw loose or a marble missing.There was also the case in which Borepresented a female plaintiff whose breastaugmentation surgery had gone awry. Hecalled the defendant doctor as his first witnessand began with this question: “Doctor, why aremy clients’ breasts all cattywampus?” Aftereverybody in the courtroom, including theContinued on next page25

Remarks by Nicholas C. Moraitakiscontinued from previous pagejudge and defense lawyer, stopped laughing, thedoctor went on to explain to Mr. Chambers thathe could not respond to that question because“cattywampus” was not a medical term. Neverone to miss an opportunity, Bo said “Well youknow what I mean doctor, one of em’s pointingthis way and the other’s pointin’ that way”. Thetrial was won with the cross examination of thevery first witness.We are so lucky for our exposure to peoplelike Paul Hawkins and Bo Chambers, whodemonstrate a courtroom flair derived fromconfidence which is so successful for them. Fromthis we all learn to be ourselves; be the best ofourselves and grow our own confidence andcourtroom presence.I do want to mention my father, who passedaway almost thirty years ago at age 54 whilelifting boxes on his job at Happy Herman’sLiquor Store. He tried to teach me a number oflessons; two in particular which I remember. Thefirst was “If you don’t have anything good to sayabout somebody, just keep your mouth shut.”That was a lesson I really did not learn very well.And I think with a straight face, I can attribute theneed for fierce advocacy as part of the reason formy indiscretion in this regard.As the son of an immigrant, my father felt itimportant to provide for his children betteropportunities than those that were afforded him.This lesson he sought to instill in us: to workhard to provide the next generation with everyopportunity to succeed . . . in essence to leavethings better off when you depart than you foundthem when you arrived. That did seem a lessonworth learning and passing on. As I got olderand studied history, I found a similar expressionwritten by a lawyer, one of our Country’sfounding fathers.In a letter that John Adams wrote to his wifeAbigail while he was serving the colonies inFrance, he wrote as follows:I must study politics and war, thatmy sons may have liberty to studymathematics and philosophy . . . inorder to give their children a rightto study painting, poetry, music,architecture. . .That is one of my favorite thoughts and I pointit out at this time simply as a guiding principlefor all, both in law and in life. I appreciate the opportunity and ammindful of the responsibility of theprivilege of practicing law; I look forward to waking up everymorning and trying to do my best everyday, all day; I thank you for your thoughtfulness; I respect your good work; I will strive to continue a tradition ofexcellence. I will remember you and thisday forever.John F. Kennedy used to quote the ancient Greeksas saying, “True happiness is the full use of your powersalong lines of excellence in a life affording scope.”For all of us today, we celebrate the pursuit ofthis special form of happiness and for that I giveyou my thanks.26

Co-Editors:R. Walker Garrett, 233 12th St., Suite #900.The Corporate CenterColumbus, GA, 31901David A. Sleppy, 649 Irvin St., P.O. Box #689,Cornelia, GA 30531PRESORTEDSTANDARDU.S. POSTAGEPAIDAtlanta, GeorgiaPermit No. 1447GENERALPRACTICE &TRIAL SECTION“Georgia’s Largest Law Firm”For members of the State Bar of Georgia:GENERAL PRACTICE AND TRIAL SECTION STATE BAR OF GEORGIAAPPLICATION FOR MEMBERSHIP IN THE GENERALPRACTICE & TRIAL SECTION OF THE STATE BAR OF GEORGIAName: _________________________________________________________________________________________________State Bar #: _____________________________________________________________________________________________Address: _______________________________________________________________________________________________City, State & Zip: _______________________________________________________________________________________E-Mail: ________________________________________________________________________________________________Application date: _______________________________________________________________________________________Cost: $35, payable by check to the State Bar of Georgia, and send to:The General Practice & Trial Section, 104 Marietta Street, NW, Suite #650, Atlanta, GA 30303________________________________________________Signature