Cotto Law Grp., LLC v. Benevidez

Decision Date02 March 2022
Docket NumberA21A1601
Citation362 Ga.App. 850,870 S.E.2d 472
Parties The COTTO LAW GROUP, LLC v. BENEVIDEZ.
CourtGeorgia Court of Appeals

Matthew Clinton Hines, Atlanta, A. Thomas Stubbs, Decatur, L. Chandler Vreeland, Marietta, for Appellant.

Kevin Scott Little, Atlanta, Caitlin Victoria Lentz Lentz, for Appellee.

Pinson, Judge.

An employee abruptly resigned from her position as an associate at a law firm and blocked its access to her firm email account, the firm's fax line, and client files kept in an online Dropbox account. The firm sued her, and the trial court entered a default judgment in its favor after the employee failed to file a timely answer. But the trial court declined to award any damages after a bench trial on that issue, finding that the firm had failed to carry its burden to prove any damages. The firm appealed, contending that the trial court erred by (1) applying the wrong legal standard to its claims for actual damages and declining to award even nominal damages; (2) failing to recognize that the default judgment "conclusively established" the employee's liability for punitive damages and attorney fees; and (3) denying the firm's right to present closing argument at trial.

We affirm the trial court's judgment except with respect to the attorney fees. The trial court applied the correct legal standard and did not clearly err in finding that the firm failed to establish its actual damages with reasonable certainty. The court also did not err in failing to award nominal or punitive damages. And the court did not commit reversible error by forgoing closing argument. But because the entry of a default judgment required the trial court to award the firm its reasonable attorney fees, the judgment must be reversed to the extent the court failed to make such an award, and the case must be remanded for a determination of the proper amount of the fee award.

Background

The relevant facts, which are either undisputed or deemed admitted by virtue of the default judgment, see OCGA § 9-11-55 (a),1 are as follows. The Cotto Law Group is a Duluth law firm specializing in immigration and personal injury law. In 2017, Vanessa Benevidez was hired as an associate attorney to handle the firm's personal injury matters. While at Cotto, Benevidez established an account for the firm with Dropbox, an online file-sharing network, to maintain client files. She also arranged for the installation of a fax line for communicating with insurers in these personal injury matters.

In January 2019, Benevidez and Mayra Lazano, a paralegal who worked closely with Benevidez, resigned from their employment with the firm by emailing the firm's principal, Isaac Cotto, notifying him of their immediate resignation.2 On Benevidez's departure, the firm no longer had access to its Dropbox account, its fax line, or her firm email account.3 Three days after the resignations, the firm received letters from two clients, terminating the firm's services.

The next day, Cotto filed suit, claiming that Benevidez and Lazano had "converted [its] client files ... [and] stole[n], tortiously interfered with[,] and otherwise obstructed [the firm's] access to its client files" in violation of various Georgia statutes. The complaint sought injunctive relief as well as "compensatory, consequential, special, nominal, punitive, and exemplary damages," and attorney fees under OCGA § 13-6-11.

In the months that followed, the trial court granted Cotto temporary injunctive relief. And although Benevidez appeared at the interlocutory injunction hearing, she failed to file a timely answer.4 Cotto moved for a default judgment, and, although Benevidez then filed an untimely answer and moved to open the default, the trial court rejected these efforts and granted Cotto's motion for default judgment.

A bench trial on damages followed.5 Cotto presented two witnesses to testify on damages. First, Cotto called Erika Quiroz, the firm's marketing director, who testified that, as a result of Benevidez's departure and the firm's lack of access to its electronic files, she had to "stay in the office and do office work" instead of her usual business development work outside the office. For roughly a month, Quiroz was sidelined from her marketing duties to help "reorganize ... the operation of the law firm"; she testified that "there were files everywhere in the office and I had to start calling the clients and ... [let] them know that Ms. Benevidez wasn't there anymore." Quiroz testified that she worked 122 hours on this "reorganization" work and that her salary at the time was $15 per hour. She testified further that, in a typical month, she brought in between 20 and 35 new cases and that, during the month she was diverted from her marketing duties, she brought in only ten new cases. On cross-examination, Quiroz admitted that, because Benevidez had been the firm's only personal injury attorney, it was inevitable that, if she were ever to leave the firm, someone would have to "tend to those files that she was no longer handling." On redirect, Quiroz agreed that the "real reason" she had to step in to help was that Benevidez had left without providing access to her email and the Dropbox files.

Cotto's other witness was Isaac Cotto. Mr. Cotto testified that, because Benevidez had effectively blocked the firm's access to her email, the Dropbox account, and the fax line, "we had to go, basically, manual labor and physically go through every single file to communicate with providers and clients." He testified that he asked Benevidez for the Dropbox information but she never gave it to him, and that ultimately his staff had to figure out the password "through trial and error." He also testified that five of the firm's personal injury clients left "within 24 hours" to go with Benevidez. As to the value of those clients’ cases, Mr. Cotto testified that, while he could not "give a dollar amount," a typical personal injury case "can range from $2,000 to $10,000"; he also opined that Benevidez "would not have taken a case of low value." Mr. Cotto also testified that the firm had suffered reputational damage with clients and referral sources. In addition, he testified that Quiroz and her administrative assistant were both diverted from their marketing duties to help triage the situation; that Quiroz was paid $3,000 per month and her assistant was paid $2,000 per month; and that, because of their inability to develop business during that time, "our signup numbers went down dramatically." Mr. Cotto testified that the firm had, up until the trial, spent between $7,000 and $8,000 on attorney fees.

On cross-examination, Mr. Cotto acknowledged that, because Benevidez and Lazano were the only staff handling personal injury cases at the firm, if they both left their employment for any reason, someone at the firm "would need to review all of the files in those cases, regardless." In addition, Mr. Cotto confirmed that his standard engagement letter for personal injury cases provided that, if the client terminated the firm's services before the case was resolved, the client would be obligated to reimburse the firm at the standard hourly rate for the hours spent on the case. Thus, he admitted, the firm was entitled to seek such compensation from any of the clients who left the firm to engage Benevidez. He also admitted he did not know the "exact" value of the cases lost to Benevidez.

On further cross-examination, Mr. Cotto admitted that Benevidez had actually offered him the email and Dropbox account credentials within days after the suit was filed, but he declined to respond.

In his words, because he had already retained counsel, "I couldn't communicate with her at that point."

After Mr. Cotto's testimony, a recess was taken before Benevidez began calling her witnesses. After the recess, the court announced its finding that Cotto had failed to meet its burden of proof and thus no damages were being awarded. Cotto's counsel asked for clarification, and the court stated that Cotto had not offered "any specifics about damages." Cotto's counsel noted that Cotto had offered testimony about the marketing director's expenses, but the court replied that Cotto never presented "a number [for] how much money the firm lost[,]" and that evidence amounted to mere "speculation." Before the parties were excused, Cotto's counsel noted that Cotto had intended to ask for punitive damages.

Two days after the hearing, the court entered its written order, in which it stated summarily, "The Plaintiff failed to prove damages as required by law."6 This appeal followed.

Discussion

On review of a judgment entered after a bench trial, this Court must uphold all findings of fact unless they are clearly erroneous, and due regard shall be given to the trial court's assessment of the credibility of witnesses. OCGA § 9-11-52 (a) ; Moses v. Pennebaker , 312 Ga. App. 623, 629 (2) (b), 719 S.E.2d 521 (2011). "The clearly erroneous test is the same as the any evidence rule. Thus, an appellate court will not disturb fact findings of a trial court if there is any evidence to sustain them." Id. (punctuation and footnote omitted). On the other hand, the court's judgment must be reversed "where it is apparent that it rests on erroneous reasoning or on an erroneous legal theory." CBS, Inc. v. Anointed Hair Studio, Inc. , 325 Ga. App. 560, 560-61, 754 S.E.2d 138 (2014) (citation and punctuation omitted).

Cotto's contentions on appeal break down into three main arguments: (1) that judged under the proper standard, the evidence Cotto offered was enough to support a reasonable calculation of damages; (2) that the default judgment "conclusively established" Benevidez's liability for punitive damages and attorney fees; and (3) that the trial court erred in denying Cotto's right to present closing argument at trial. We review each contention in turn.

1. We take first Cotto's contention that it proved damages under the proper standard. It is well-settled that, to recover...

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