LabMD, Inc. v. Savera

• Decision Date: 24 March 2015
• Docket Number: No. A14A1540.,A14A1540.
• Citation: 771 S.E.2d 148,331 Ga.App. 463
• Parties: LABMD, INC. v. SAVERA.
• Court: Georgia Court of Appeals

331 Ga.App. 463

771 S.E.2d 148

LABMD, INC.

v.SAVERA.

No. A14A1540.

Court of Appeals of Georgia.

March 24, 2015.

Joshua Barrett Belinfante, for Appellant.

Ernest Linwood Beaton IV, Robert B. Hill, for Appellant.

Opinion

ANDREWS, Presiding Judge.

LabMD, Inc. appeals an order by the Superior Court of Fulton County granting attorney fees to Adnan Tabrez Savera, M.D., pursuant to OCGA § 9–15–14. LabMD does not contend that the trial court's award was not authorized by the evidence; rather, it claims simply that the amount of the trial court's award should be reduced because it failed to apply a setoff and included sums that were not attributable to LabMD's sanctionable conduct. Finding that the trial court failed to consider certain factors which could influence the amount of its award, we affirm in part, vacate the trial court's order, and remand for further proceedings.

Relevant to the issues in this appeal, the trial court found that LabMD hired Dr. Savera in 2006 as its medical director and chief genitourinary pathologist. On January 22, 2010, Dr. Savera tendered 90 days' notice of his resignation from LabMD as required by his employment contract. After Dr. Savera provided his notice, he continued working for LabMD but was terminated by LabMD on April 12, 2010–ten days shy of the conclusion of his 90–day notice term. On the same date, LabMD filed a complaint against Dr. Savera alleging that Dr. Savera breached certain restrictive covenants in his employment contract.¹ In five subsequent amended complaints, LabMD asserted additional causes of action against Dr. Savera, including: (i) breach of contract for failure to maintain regular working hours; (ii) breach of fiduciary duty; (iii) misappropriation of trade secrets; (iv) violation of the Federal Computer Fraud and Abuse Act (18 USC § 1030 ); (v) violation of the Georgia Computer Systems Protection Act (OCGA § 16–9–93 ); (vi) trespass; and (vii) punitive damages. Of the eight claims asserted against Dr. Savera, two were abandoned by LabMD (breach of contract [restrictive covenants] and breach of contract [working hours] ), four were dismissed by the trial court on summary judgment (misappropriation of trade secrets, federal computer crimes, trespass, and, with one exception, breach of fiduciary duty), and one was dismissed by the trial court on Dr. Savera's motion for directed verdict during trial (punitive damages). A jury returned verdicts in favor of Dr. Savera on LabMD's remaining claims.

Following trial, Dr. Savera filed a motion for attorney fees against LabMD and LabMD's counsel pursuant to OCGA § 9–15–14(a) and (b). In his motion, Dr. Savera alleged that he incurred attorney fees totaling $315,493.92 and that each of LabMD's causes of action “had no justiciable issue of law or fact; lacked substantial justification; were presented purely for purposes of harassing [Dr. Savera]; and were substantially frivolous, groundless and vexatious.” After receiving additional briefing, the trial court conducted a hearing on Dr. Savera's motion. In addition to argument of counsel, the trial court received testimony from two of Dr. Savera's attorneys as well as affidavits and invoices from the attorneys.

In its order granting Dr. Savera's motion, the trial court initially found that Dr. Savera incurred attorney fees totaling $320,062.21. However, the trial court examined each of LabMD's eight causes of action and determined that five of them were frivolous and lacked substantial justification. As a result, the trial court apportioned Dr. Savera's attorney fees only to those causes of action it found to be frivolous, which resulted in an award of attorney fees in the amount of $168,257.18.² This appeal followed.

OCGA § 9–15–14(a) provides that

[i]n any civil action in any court of record of this state, reasonable and necessary attorney's fees and expenses of litigation shall be awarded to any party against whom another party has asserted a claim, defense, or other position with respect to which there existed such a complete absence of any justiciable issue of law or fact that it could not be reasonably believed that a court would accept the asserted claim, defense, or other position. Attorney's fees and expenses so awarded shall be assessed against the party asserting such claim, defense, or other position, or against that party's attorney, or against both in such manner as is just.

Similarly, a trial court

may assess reasonable and necessary attorney's fees and expenses of litigation in any civil action in any court of record if, upon the motion of any party or the court itself, it finds that an attorney or party brought or defended an action, or any part thereof, that lacked substantial justification or that the action, or any part thereof, was interposed for delay or harassment, or if it finds that an attorney or party unnecessarily expanded the proceeding by other improper conduct, including, but not limited to, abuses of discovery procedures available under Chapter 11 of this title, the “Georgia Civil Practice Act.” As used in this Code section, “lacked substantial justification” means substantially frivolous, substantially groundless, or substantially vexatious.

OCGA § 9–15–14(b). The damages authorized by OCGA § 9–15–14 “are intended not merely to punish or deter litigation abuses but also to recompense litigants who are forced to expend their resources in contending with [abusive litigation].” O'Keefe v. O'Keefe, 285 Ga. 805, 806, 684 S.E.2d 266 (2009). See also Dixon v. Home Indem. Co., 206 Ga.App. 623, 624(1), 426 S.E.2d 381 (1992) (“Though an award arising from a judgment under OCGA § 9–15–14 also serves the incidental purpose of providing compensation to the injured party, this does not diminish the reality that awards made under it are ‘sanctions' under the accepted definition of that term.”). The standard of review for OCGA § 9–15–14(a) is the “any evidence” rule, while “OCGA § 9–15–14(b) is discretionary and the standard of review is abuse of discretion.” Haggard v. Board of Regents of the Univ. System of Ga., 257 Ga. 524, 527(4), 360 S.E.2d 566 (1987). See also Century Center at Braselton, LLC v. Town of Braselton, 285 Ga. 380, 381, 382(1), 677 S.E.2d 106 (2009).

As a threshold matter, LabMD does not challenge Dr. Savera's entitlement to an award under OCGA § 9–15–14(a) or (b). Furthermore, we conclude that the trial court did not abuse its discretion in awarding attorney fees in some amount. See Town of Braselton, 285 Ga. at 382(1), 677 S.E.2d 106 ; Haggard, 257 Ga. at 527, 360 S.E.2d 566 (“Under both standards the record supports the trial court's award.”); Lawrence v. Direct Mtg. Lenders Corp.,

254 Ga.App. 672, 676(4), 563 S.E.2d 533 (2002). We therefore turn to an analysis of the amount awarded by the trial court.

1. In its first enumeration of error, LabMD contends that the trial court erred in awarding attorney fees to Dr. Savera without considering a potential setoff for: (a) the amounts received, if any, from Dr. Savera's settlements with LabMD's counsel and counsel's law firm; and (b) the amounts received from Admiral pursuant to cost of defense payments made under its insurance policy issued to LabMD. See n. 1, supra. We agree.

(a) Settlement of Claims. On January 23, 2013, Dr. Savera filed withdrawals of his motion for attorney fees as it applied to counsel for LabMD and counsel's law firm; the dismissals acknowledged that Dr. Savera “settled its attorneys' fees claim against [counsel and counsel's law firm, respectively]” but contained no additional information concerning the settlement agreement. Three days later, the trial court executed its order granting Dr. Savera's motion and awarding $168,257.18 in attorney fees.

Although the trial court was aware of the settlement of Dr. Savera's claims against LabMD's counsel and counsel's law firm, the order is silent as to the effect, if any, of Dr. Savera's settlements on the trial court's award. See generally Ga. Northeastern R. v. Lusk, 277 Ga. 245, 246(1), 587 S.E.2d 643 (2003) (“Georgia, as part of its common law and public policy, has always prohibited a plaintiff from a double recovery of damages; the plaintiff is entitled to only one recovery and satisfaction of damages, because such recovery and satisfaction is deemed to make the plaintiff whole.”); Roofers Edge v. Standard Bldg. Co., 295 Ga.App. 294, 296(1), 671 S.E.2d 310 (2008) (same); Cole v. Webb, 267 Ga.App. 174, 177(2), 598 S.E.2d 886 (2004) (discussion of setoff due to settlement in context of tort claim). As a result, we vacate the trial court's order granting Dr. Savera's motion for attorney fees and remand this matter to the trial court to consider the amounts, if any, of the settlements between Dr. Savera and LabMD's counsel and counsel's law firm and their effect upon the trial court's award of attorney fees.

(b) Payment of Attorney Fees by Insurance Policy. Similarly, LabMD next argues that the trial court failed to apply a setoff of its attorney fees award to account for the defense costs paid by Admiral. Again, we agree.

In its order granting Dr. Savera's motion for attorney fees, the trial court awarded fees in the amount of $168,257.18. However, the parties acknowledged that Admiral exhausted its $250,000.00 policy limit to cover Dr. Savera's defense costs. To that end, Dr. Savera introduced evidence that he incurred attorney fees of $315,493.92, or $65,493.92 in excess of Admiral's defense cost payments. In any case, the trial court neglected to analyze the amounts paid by Admiral and, in particular, Dr. Savera, and to determine the proper application of the setoff in view of the fees incurred individually by Dr. Savera. See Lusk, 277 Ga. at 246(1), 587 S.E.2d 643 ; Roofers Edge, 295 Ga.App. at 296(1), 671 S.E.2d 310. As discussed in Division 1, supra, we remand this matter to the trial court for findings of fact and conclusions of law concerning a potential setoff of its award in view of Admiral's payments and Dr. Savera's attorney...