Coastal Bank v. Rawlins

• Decision Date: 29 October 2018
• Docket Number: A18A1010
• Citation: 821 S.E.2d 89,347 Ga.App. 847
• Parties: The COASTAL BANK v. Larry RAWLINS, Jr. et al.
• Court: Georgia Court of Appeals

347 Ga.App. 847

821 S.E.2d 89

The COASTAL BANK

v.Larry RAWLINS, Jr. et al.

A18A1010

Court of Appeals of Georgia.

October 29, 2018

Glen M. Darbyshire, Andrew Harrison Dekle, Savannah, for Appellant.

Brent J. Savage, Brent Jamieson Savage Jr., Savannah, for Appellee.

McMillian, Judge.

In this second appearance before this Court, we address a recurrent issue: what constitutes good faith under Georgia’s offer of settlement statute. Previously, we reversed the trial court order denying summary judgment to The Coastal Bank ("Coastal") in a lawsuit filed by Larry Rawlins, Jr. and Laura Lopez (the "Rawlinses"), finding that the Rawlinses lacked standing to sue. Upon remittitur, Coastal filed a motion for attorney fees under Georgia’s offer of settlement statute, OCGA § 9-11-68, which the trial court denied, finding that the offer of settlement was not made in good faith. For the reasons that follow, we vacate the trial court’s order and remand this case for the trial court to consider whether Coastal had a subjectively reasonable belief on which to base its settlement offer.

"We review for abuse of discretion the trial court’s decision on whether a settlement offer was made in good or bad faith." Great West Cas. Co. v. Bloomfield , 313 Ga. App. 180, 181, 721 S.E.2d 173 (2011). "An abuse of discretion occurs where a ruling is unsupported by any evidence of record or where that ruling misstates or misapplies the relevant law." (Punctuation omitted.) Lewis v. Lewis , 316 Ga. App. 67, 68, 728 S.E.2d 741 (2012).

The record shows that Constance Ellis and the Rawlinses were beneficiaries of the estate of Willard Rawlins ("W. R."). After W. R.’s death, Ellis took blank checks that W. R. had pre-signed, filled in sums amounting to approximately $40,000, and cashed them on behalf of herself, her children, and her grandchildren. Coastal mistakenly honored these checks. The Rawlinses subsequently discovered Ellis’s actions and filed a lawsuit against Ellis and Coastal in the Superior Court of Chatham County, Georgia, seeking damages.

Coastal moved for summary judgment, arguing that the superior court lacked subject matter jurisdiction, the Rawlinses lacked standing to assert these claims, and they had suffered no damages. The case was eventually transferred to the Probate Court of Chatham County, after which Ellis evened up the distribution of estate assets by distributing an extra $40,000 to the Rawlinses, and the estate’s executor determined that any damages to the estate had been corrected. Coastal moved for summary judgment, again challenging the Rawlinses’ standing and their claims for damages. The probate court denied Coastal’s motion for summary judgment.

Counsel for Coastal then sent the Rawlinses an offer of settlement letter under OCGA § 9-11-68, which stated:

This letter will constitute a written offer of settlement served pursuant to [OCGA] § 9-11-68. On behalf of [Coastal], I am authorized to offer payment of $3,000 to settle all of the claims that have been alleged, or that could have been alleged, in the above-referenced lawsuit. Conditions of this settlement offer are: (1) [the Rawlinses] and [Coastal] will enter into a written settlement agreement containing broad general mutual releases of all claims, including claims for compensatory damages, punitive damages and attorney[ ] fees and expenses as have been alleged by [the Rawlinses] and [Coastal], (2) [the Rawlinses] and [Coastal] will file a joint dismissal of this lawsuit in the Probate Court of Chatham County, with prejudice, and with each party to bear its own attorney[ ] fees and expenses, and (3) the amount of the settlement must remain confidential. This settlement offer includes $1 to settle any claim for punitive damages. This offer shall remain open for 30 days.

The Rawlinses did not accept Coastal’s offer. The Rawlinses later settled with Ellis for two acres of property worth around $40,000 or $50,000 and dismissed their claims against Ellis in probate court, with prejudice. The Rawlinses then dismissed their claims against Coastal without prejudice.

The Rawlinses later re-filed their lawsuit against Coastal in the State Court of Chatham County. Coastal moved for summary judgment, again arguing that the Rawlinses did not have standing in either their individual capacities or on behalf of W. R.’s estate to maintain an action against Coastal for mishandling W. R.’s checking account and that they had no damages because Ellis had evened up the estate distribution.

The trial court denied the motion for summary judgment and certified its order for immediate review. This Court reversed the trial court’s decision. See The Coastal Bank v. Rawlins , Case No. A15A1951 (decided Feb. 12, 2016). After remittitur, the trial court entered final judgment in favor of Coastal. Coastal then filed a motion to recover attorney fees and expenses from the Rawlinses under OCGA § 9-11-68. The Rawlinses argued that fees and expenses should not be awarded because: (1) the settlement offer was ambiguous because it was unclear whether Costal was also requesting the dismissal of Ellis, and therefore it did not meet the particularity requirements of OCGA § 9-11-68 (a) (3) and (a) (4) and (2) the settlement offer had not been made in good faith because the $3,000 offer to settle all claims was low compared to the alleged damages. Coastal argued that the settlement offer clearly and unambiguously required the dismissal of Ellis and that the offer of $3,000 was reasonable because it believed that its arguments of no standing and no damages were strong, a belief borne out by Coastal’s success on appeal.

After a hearing, the trial court denied Coastal’s request for attorney fees. The trial court found that Coastal’s settlement offer had not been ambiguous, but determined that the offer had not been made in good faith.

1. Coastal first argues that the trial court erred by considering only objective evidence in determining that the offer was not made in good faith and that it failed to consider Coastal’s explanation that its low offer was based on the strength of its defense that the Rawlinses lacked standing. We agree.

We turn first to the offer of settlement statute, which is codified at OCGA § 9-11-68 et seq. The "clear purpose of [ OCGA § 9-11-68 ] is to encourage litigants in tort cases to make and accept good faith settlement proposals in order to avoid unnecessary litigation, thereby advancing this State’s strong public policy of encouraging negotiations and settlements." (Punctuation omitted.) Georgia Dept. of Corrections v. Couch , 295 Ga. 469, 471 (1) (b), 759 S.E.2d 804 (2014).

The statute applies to a written offer to settle a tort claim made more than 30 days after the service of the summons or complaint but not less than 30 days before trial (or 20 days...