Dee v. Sweet

• Decision Date: 15 September 1997
• Docket Number: No. S97A0563,S97A0563
• Citation: 268 Ga. 346,489 S.E.2d 823
• Parties: , RICO Bus.Disp.Guide 9352, 97 FCDR 3398 DEE et al. v. SWEET et al.
• Court: Georgia Supreme Court

Page 823

489 S.E.2d 823

268 Ga. 346, RICO Bus.Disp.Guide 9352, 97

FCDR 3398

DEE et al. v. SWEET et al.

No. S97A0563.

Supreme Court of Georgia.

Sept. 15, 1997.

William J. McKenney, David Mark Kupsky, McKenney & Froelich, Atlanta, for Dee et al.

James Francis Bogan, III, Matthew H. Patton, Kilpatrick & Cody, Atlanta, for Sweet et al.

Michael E. Hobbs, Asst. Atty. Gen., State Law Department, Atlanta, Amicus Appellant.

HUNSTEIN, Justice.

This case involves a challenge to the constitutionality of that provision in OCGA § 16-14-6(c) which authorizes the award of attorney fees in the appellate courts and costs of investigation and litigation reasonably incurred by a party injured by violations of the Georgia Racketeer Influenced and Corrupt Organizations (RICO) Act, OCGA § 16-14-1 et seq.

Sweet and Wright (hereinafter "appellees") filed a civil suit against Dee and McMahon ("appellants") in January 1992 asserting claims that arose out of the dissolution of an executive search business and seeking damages for, inter alia, RICO violations. The parties originally agreed to the entry of a consent order temporarily restraining the manner in which appellants handled certain assets. However, as a result of information gained during discovery, appellees later sought and obtained greater protection from the court in a TRO limiting appellants' disposition of assets; this TRO was extended until further order of the court. Appellees also obtained another TRO regarding certain sums ($142,000) that had been transferred out of state by appellant Dee's wife; in compliance with the order, Ms. Dee returned the funds and placed them into the court registry. While the RICO litigation was pending the Dees were divorced and the divorce decree specifically mentioned that the funds placed in the court registry by Ms. Dee were being held pending the outcome of the RICO action. A later court order expressly transferred these funds into the registry of the court in the RICO action.

A jury found appellants had engaged in acts of racketeering and awarded appellees damages as well as attorney fees in their RICO action. Appellants filed an appeal and the Court of Appeals, in Dee v. Sweet, 218 Ga.App. 18, 460 S.E.2d 110 (1995) ("Dee I "), affirmed the judgment. This Court denied appellants' petition for writ of certiorari and their motion for reconsideration. While this appellate litigation was pending, appellees moved to execute their RICO judgment against the funds in the court registry. Dee opposed the motion and sought appointment of a guardian ad litem for his children (contending the registry funds constituted marital assets which must be used to satisfy his child-support obligations under the divorce decree). The trial court denied the motion and appellant Dee filed a notice of appeal in February 1995, initiating the appellate litigation that ultimately resulted in a second opinion by the Court of Appeals in Dee v. Sweet, 224 Ga.App. 285, 480 S.E.2d 316 (1997) ("Dee II ").

In December 1995, within a month after the conclusion of the appellate litigation over the RICO judgment in Dee I but before the conclusion of the appellate litigation over the registry funds in Dee II, appellees filed a motion in their RICO action seeking to recover $47,867.46 they had incurred in post-trial attorney fees and litigation costs. A review of the affidavit by appellees' attorney and the exhibits attached to the motion reflects that the requested sum included fees and support costs alleged to have been incurred as a result of the post-trial litigation in Dee I and the litigation over the registry funds in the Dee II action. The affidavit and exhibits also referenced litigation of a "separate, fraudulent conveyance action" appellees had recently filed against appellants, the wife of appellant McMahon, and a corporation controlled by appellants to set aside fraudulent conveyances entered into in violation of the TRO issued by the trial court in the RICO action limiting the disposition of appellants' assets. The affidavit set forth the specific case number designating the fraudulent conveyance action and averred that that action was pending before the same judge presiding over the RICO case.

After hearing oral argument on the issue, the trial court granted appellees' motion for fees and costs, rejected appellants' constitutional challenge to OCGA § 16-14-6(c), and awarded appellees the exact sum requested. Appellants have again appealed. We affirm the trial court's judgment because OCGA § 16-14-6(c) does not violate equal protection or due process or chill the rights of litigants seeking appellate review; the statute authorizes the recovery of post-trial attorney fees and costs of investigation and litigation reasonably incurred; and we find no abuse of the trial court's discretion in concluding that the amount sought by appellees was reasonably incurred.

1. OCGA § 16-14-6(c) provides in pertinent part that

[a]ny person who is injured by reason of any violation of [the RICO statute, OCGA § 16-14-4] shall have a cause of action for three times the actual damages sustained and, where appropriate, punitive damages. Such person shall also recover attorneys' fees in the trial and appellate courts and costs of investigation and litigation reasonably incurred. ¹

Appellants argue that OCGA § 16-14-6(c) violates the equal protection and due process clauses of the State and Federal constitutions and chills the exercise of the appellate rights of RICO defendants because it treats defendants appealing RICO judgments different from parties appealing non-RICO judgments by requiring RICO defendants to pay the costs incurred by RICO plaintiffs during the appellate litigation, a burden which deters or prevents RICO defendants from exercising their right to appeal even meritorious issues to the appellate courts.

"A statute is presumed to be constitutional until the contrary appears, and, therefore, the burden is on the party alleging a statute to be unconstitutional to prove it. [Cit.]" State Farm, etc., Ins. Co. v. Five Transp. Co., 246 Ga. 447, 450(1), 271 S.E.2d 844 (1980). There is no showing that the statutory classification drawn between RICO and non-RICO appellants involves either a suspect class or the exercise of a fundamental right. See Nix v. Long Mt. Resources, Inc., 262 Ga. 506(3), 422 S.E.2d 195 (1992) (the right to appeal to the courts is not a fundamental right guaranteed by due process); see generally Ambles v. State, 259 Ga. 406, 383 S.E.2d 555 (1989). Therefore, the standard of review is that the classification drawn by the statute not be arbitrary or unreasonable and that the basis of the classification bear a direct and real relation to the object or purpose of the legislation. State Farm, etc., Ins. Co. v. Five Transp. Co., supra, 246 Ga. at 451(1), 271 S.E.2d 844. See also City of Atlanta v. Watson, 267 Ga. 185(1), 475 S.E.2d 896 (1996) (discussion of equal protection analysis; State equal protection guarantee construed consistent with Federal counterpart); Hayward v. Ramick, 248 Ga. 841(1), 285 S.E.2d 697 (1982) (due process analysis).

The purpose of the Georgia RICO Act is "to impose sanctions against [the] subversion of the economy by organized criminal elements and to provide compensation to private persons injured thereby." OCGA § 16-14-2(b). OCGA § 16-14-6(c) promotes this legislative purpose in that it provides compensation to civil plaintiffs who have successfully established that they have been injured by a defendant's RICO violations by including in the amount recoverable those attorney fees and costs of investigation and litigation reasonably incurred by plaintiffs in the trial and appellate courts. ² By authorizing the recovery of appellate fees and costs, OCGA § 16-14-6(c) provides RICO plaintiffs with effective access to the judicial process, thus enabling them to present on appeal the reasons why the RICO judgments they obtained should be upheld.

We find it neither unreasonable nor arbitrary for the Legislature to distinguish between RICO defendants and non-RICO defendants in making the decision to treat the former differently by requiring only RICO defendants to bear the financial responsibility of attorney fees and costs reasonably incurred by RICO plaintiffs in response to appellate litigation a RICO defendant elects to pursue upon judgment being entered in favor of the RICO plaintiff. ³ The RICO defendants to whom OCGA § 16-14-6(c) applies are parties who, as the result of successful litigation commenced by civil plaintiffs, have been found by a jury to have committed two or more predicate criminal acts which have resulted in injury to the plaintiffs, id.; OCGA § 16-14-4, whereas non-RICO defendants are parties who have not engaged in a comparable interrelated pattern of criminal activity. Given the compensatory goal of the Georgia RICO Act, there is a reasonable basis for the Legislature's distinction between types of appealing defendants and a direct relation between the classification and the purpose of the Act. Therefore, we find that OCGA § 16-14-6(c) does not violate the constitutional guarantees of due process and equal protection or deny access to the courts. ⁴

2. Appellants contend the trial court erred by allowing appellees to recover post-trial attorney fees and other costs under OCGA § 16-14-6(c) for any litigation other than the RICO action itself. The affidavit and documents attached to appellees' motion seeking fees and costs, which detailed the precise source of the sums requested, clearly reflect that appellees were seeking to recover attorney fees and costs of investigation and litigation associated not only with the post-trial litigation in Dee I, but also with the proceedings that ultimately led to the Court of Appeals' opinion in Dee II and the proceedings arising out of appellants' alleged violation of the TRO wherein the trial court, in the course of the RICO action, had limited the...