Despite a Georgia Court of Appeals opinion upholding a $1.1 million verdict for a man shot at a gas station, the defense is cheering a companion opinion that left in place a fee award that was far less than that the plaintiff's attorneys sought under Georgia's offer of judgment statute. 

"This decision shows that plaintiffs cannot automatically recover attorney fees under a fee shifting statute based on the percentage in their counsel's engagement letter," said attorney Laurie Webb Daniel.

Plaintiff's counsel had asked for more than $400,000 based on fees accrued after the defense turned down an offer to settle the case for $150,000 several months before trial. Under the statute, a party that declines a settlement offer and then loses at trial by at least 25% more than the rejected offer may be required to pay the other side's fees from the date of the offer.

Daniel Rosebud had a contingency fee agreement under which his attorney would be paid 40% of any recovery, if the case settled pretrial, and 45% if it went to trial.  

Fulton County State Court Judge Diane Bessen reviewed the fee request on the grounds of "reasonableness" and awarded $140,951.

Judge Chris McFadden (Photo: John Disney/ALM)

Court of Appeals Senior Judge Harold Phipps—who wrote the majority opinion—and Judge Carla McMillian said Bessen's interpretation of the fee issue was sound, but Chief Judge Christopher McFadden disagreed.

In a dissent, McFadden said the language of the fee-shifting statute "directs courts' attention to the amount the plaintiff and his attorney actually agreed upon and that plaintiff actually owes his attorney—as opposed to a counterfactual finding about an hourly rate that a hypothetical plaintiff and attorney might have agreed upon."

Courts should not rely on the method Bessen followed of calculating a lawyer's hypothetical hourly rate by the hours presumably worked on a matter, known as the lodestar, he said.

That dissent means the decision is not binding precedent for future cases, but Daniel said it's welcome nonetheless.

"We were disappointed that the verdict was not overturned but are pleased that the court affirmed the amount of attorney fees, which was 70% less than what the plaintiff wanted," said Daniel via email. 

The opinion makes clear that a contingency fee agreement does not bind a trial judge in determining reasonable fees, she said.

"While the Rosebud case involved low dollars relatively speaking, the attorney fee issue is a hot topic in my cases where verdicts range from $20 million to over $100 million," said Daniel, who chairs Holland & Knight's appellate section and handled the appeal with colleague Matt Friedlander. 

Defense counsel at trial were Glenn Bass of Scrudder, Bass, Quillian, Horlock, Taylor & Lazarus and Molly Moyer, who is no longer with the firm.

Rosebud is represented by Rafi Law principal Michael Rafi, and his appeal was handled by Darren Summerville of the The Summerville Firm and Kurt Kastorf, now of Kastorf Law.

"The offer of judgment statute exists to punish a party for failing to accept a more than reasonable offer," Rafi said.

"While we disagree with the way in which the trial court computed the attorney's fees, the statute served its purpose and Khalia will now be forced to pay seven figures," he said.

Rafi said there are no plans for further appeal on Rosebud's part.

The underlying case involved a shooting at a gas station off Fairburn Road in 2015. Rosebud, a passenger in a customer's car, was wounded after an assailant opened fire on the driver, who returned fire as he sped away. 

Rosebud was shot in the stomach and underwent surgery to remove part of his intestine. 

The driver, Dantavius Miles, was later charged with reckless endangerment. The other shooter was never caught.

Rosebud sued the property's owners and the gas station operator, Khalia Inc. The owners settled, but Khalia went to trial.    

The jury awarded $1.7 million in total damages in October 2017, apportioning 66% of the fault to Khalia and splitting the remainder between the two shooters. 

Khalia's share of the judgment came to $1.1 million.

Khalia filed a motion for a new trial or judgment notwithstanding the verdict, which Bessen denied.

Rosebud filed a motion for fees under the offer of settlement statute, arguing that—depending on the method Bessen used to calculate them—he should be awarded between $408,000 and $488,000. 

Of the three options, Bessen wrote that a "value added" approach comparing the fee Rosebud's lawyers would have earned if Khalia had accepted the $150,000 settlement to what they were due under the fee agreement "comports with the spirit of a contingency fee agreement, where risks are taken in the hope, but not expectation, of fees at the end. Because the math is based on the contingency fee, it comes closest to effectuating the purpose of the statute as set out" in prior case law. 

Under that calculation, the lawyers would be due $442,855.

But Bessen also said that Khalia had provided expert testimony rebutting Rosebud's lawyers' claims that they'd put hundreds of hours into the case after the offer was denied.  

"The court finds the truth to rest somewhere in the middle," Bessen wrote, saying she "does not believe that $442,855 is a reasonable amount to recover in this case, and that some of the fees evidenced by Rosebud's attorneys were unnecessary."

"Considering all of the circumstances of the trial, the contingency agreement, and the evidence presented, the court hereby awards Rosebud $140,951.17 as 'reasonable attorney's fees and expenses of litigation incurred by plaintiff,'" Bessen's order said.

In upholding both the denial of Khalia's motion for judgment notwithstanding and the fee award, Phipps wrote that state Supreme Court precedent holds that "although a contingency fee agreement is 'certainly a guidepost to the reasonable value of the services the lawyer performed,'" it "is not conclusive, and it cannot bind the court in determining that reasonable value, nor should it bind the opposing party required to pay the attorney fees, who had no role in negotiating the agreement." 

"There was some evidence before this trial court that 200 hours was a reasonable amount of time for counsel to spend from Khalia's rejection of Rosebud's offer of judgment through trial and that $250 per hour was a reasonable rate for this lawyer," Phipps wrote. "On this record, which includes an award of nearly three times the amount due according to this evidence, we cannot say that the trial court erred when it awarded Rosebud more than $140,000 in reasonable fees and costs."

In his dissent, McFadden said "the majority tacitly approves the lodestar method for fee calculations," even though that method—used in federal courts—"has not been adopted in Georgia, and it is incompatible with the language of the subsection [of the statute] before us."