Security Life Ins. Co. v. St. Paul Fire & Marine Ins. Co., A03A0843.

• Decision Date: 03 October 2003
• Docket Number: No. A03A0843.,A03A0843.
• Court: Georgia Court of Appeals
• Parties: SECURITY LIFE INSURANCE COMPANY v. ST. PAUL FIRE & MARINE INSURANCE COMPANY.

588 S.E.2d 319

263 Ga. App. 525

SECURITY LIFE INSURANCE COMPANY v. ST. PAUL FIRE & MARINE INSURANCE COMPANY.

No. A03A0843.

Court of Appeals of Georgia.

October 3, 2003.

Sutherland, Asbill & Brennan, William D. Barwick, Teresa W. Roseborough, Carla W. McMillian, Atlanta, for appellant.

Porter, Orrison & Doster, J. Alexander Porter, King & Spalding, Byron Attridge, Benjamin F. Easterlin IV, S. Stewart Haskins II, Atlanta, for appellee.

ELDRIDGE, Judge.

This court remanded St. Paul Fire &c. Ins. Co. v. Clark, 255 Ga.App. 14, 566 S.E.2d 2 (2002).¹ On remand, the trial court reentered judgment as directed by this court against both Security Life Insurance Company and its supersedeas surety and co-defendant, St. Paul Fire & Marine Insurance Company and pared away the punitive damages and the jury award of attorney fees and litigation costs. Security VI, supra at 24-25, 566 S.E.2d 2. Now Security Life appeals from the entry of this last judgment, contending that the trial court computed interest on a judgment that had been fully paid and satisfied by St. Paul Fire. On the face of the judgment, the trial court set forth its calculations of pre-judgment and post-judgment interest. St. Paul did not appeal and fully paid and satisfied the judgment. Brady and Clarice Clark transferred and assigned this judgment and issued execution to St. Paul. Such judgment is res judicata between the Clarks and St. Paul and St. Paul's privies, because it was never appealed by St. Paul. See Dargan, Whitington & Conner, Inc. v. Kitchen, 138 Ga.App. 414, 416-417(1), 226 S.E.2d 482 (1976). Finding no error, we affirm.

1. Security Life contends that the trial court erred in awarding pre-judgment interest under OCGA § 51-12-14, because the attorney fee and litigation award was subsumed in the judgment entered on remand and such damages were reversed on appeal. We do not agree.

On September 25, 1995, in compliance with OCGA § 51-12-14, the Clarks made separate demands for settlement upon Security Life and all defendants for payment of $2,000,000 in settlement of their claims for a total demand of $4,000,000, and Security Life and the other defendants refused to settle within 30 days. At trial, the jury awarded $4,073,000 for fraud and, additionally, attorney fees and expenses of litigation under OCGA § 13-6-11 in the amount of $792,902.08; the judgment entered on June 13, 1996, for attorney fees and litigation costs of $306,290.98 under OCGA § 9-15-14 survived the appeal. The attorney fees and expenses of litigation awarded by the jury must be retried, because such attorney fees and litigation costs were not apportioned and returned separately for the successful fraud claim from the reversed Georgia Racketeer Influenced and Corrupt Organizations Act (RICO) claim and the directed verdict against the wrongful rescission claims. Security VI, supra at 24, 566 S.E.2d 2. Prior to the judgment, the trial court awarded attorney fees that were never paid by Security Life. Thus, the Clarks' jury verdict for fraud damages and the court-awarded attorney fees exceeded their statutory demand, and the trial court found that they were entitled to pre-judgment interest. OCGA § 51-12-14. Since neither Security Life nor St. Paul raised such error on prior appeal, pre-judgment interest was affirmed on appeal. OCGA § 9-11-60(h); Security IV, supra.

Under the June 13, 1996 judgment for attorney fees and expenses of litigation, this unsatisfied judgment awarded the Clarks $306,290.98 in attorney fees and litigation expenses under OCGA § 9-15-14. Security I through Security V. At Security Life's request, the $160,000 settlement payments of co-defendants Samuel Corey and Brokerage Resource, Inc. were set off against such judgment, leaving a principal amount of $146,290.98 and interest at 12 percent per annum from June 13, 1996. See OCGA §§ 7-4-12; 9-12-10; 9-13-75; 13-7-1; 23-2-76.

Such ancillary award of litigation expenses was coincident to, and not in addition to, the jury's award of litigation expenses and prior court-awarded attorney fees and expenses of litigation. On August 6, 1996, the trial court entered a new judgment that subsumed the previous awards of attorney fees and expenses of litigation under OCGA § 9-15-14, as sanction, or by jury award. Because the recovery of the RICO claim authorized the recovery of all litigation expenses, the August 6, 1996 judgment read:

The court concludes, and the Plaintiffs agree, that they are not entitled to multiple recoveries of litigation expenses and attorney's fees. Therefore, the ancillary award of litigation expenses, including attorney's fees, entered on June 13, 1996, exists coincident with, and not in addition to, the amount of litigation expenses and attorney's fees awarded in this final judgment. IT IS THEREFORE ORDERED THAT, upon full payment and satisfaction of this final judgment, all three prior orders of this Court awarding litigation expenses, including attorney's fees, to the Plaintiffs shall be deemed fully paid and satisfied, and the Clerk shall note upon the record.

However, under the August 6, 1996 judgment, Security Life never paid such attorney fees, and Security VI reversed the amount of attorney fees awarded by the jury and ordered a new trial on those damages. Thus, the June 13, 1996 judgment is no longer subsumed, because Security Life never paid the attorney fees under the August 6, 1996 judgment. Consequently, there remains a balance due of $146,290.98 of principal as well as interest of $111,485.75 through October 18, 2002.²

The Clarks set off the $250,000 settlement of Insurers Administrative Corporation against the June 13, 1996 judgment. OCGA §§ 9-13-75; 13-7-1; 23-2-76. Thus, after October 31, 2002, a balance on that judgment of $8,401.97 remained plus interest. Therefore, on October 31, 2002, no further set-offs against the fraud damages of $4,073,000 remained, which exceeded the pre-judgment demand.

Pre-judgment interest to August 6, 1996, in the amount of $374,792.10 as found by the trial court was authorized by OCGA § 51-12-14. The plaintiffs had the right to determine which judgments it would set off settlements against.

Security Life relies upon Restina v. Crawford, 205 Ga.App. 887, 424 S.E.2d 79 (1992). Restina v. Crawford, supra, involved a pre-verdict agreement between the parties, requiring that prepaid medical expenses be set off against the judgment and such set-off alone caused the settlement demand to be greater than the judgment and prevented the award of pre-judgment interest. Such opinion holds that the judgment and not the verdict is used to determine whether or not the settlement demand has been equaled or exceeded after set-off of prior settlements. OCGA § 51-12-14(d) states clearly and unambiguously that "[i]nterest shall be made a part of the judgment upon presentation of evidence to the satisfaction of the court that this Code section has been complied with and that the verdict of the jury or the award by the [trial] judge trying the case without a jury is equal to or exceeds the amount claimed in the notice." The clear intent of the General Assembly in using the words "the verdict of the jury or award by the trial judge trying the case without a jury" was not to require the judgment to equal or exceed the demand to authorize pre-judgment interest, because the word "judgment" is not used either for the verdict or the award. The General Assembly was aware that either a jury verdict or an award by the trial court could be reduced by set-offs by the settlements of other tortfeasors, or voluntary payments by the tortfeasor, which would defeat the intent of the statute to punish the defendant who went to trial instead of settling like the other tortfeasors. Further, the purpose of the legislation to force settlements and to make trials costly was undermined by such construction.

The Unliquidated Damages [Interest] Act makes available to an injured party a coercive tool to offset injury and financial loss by encouraging a tortfeasor to make amends for his injurious conduct by making immediate payment short of litigation. If the tortfeasor does not take advantage of the opportunity to make his victim whole, the statute imposes a penalty, in effect, by authorizing the victim of the tort to collect damages in the form of interest from the time of the injury until the time the unliquidated damages become certain by verdict of the jury. As we view the intent of the statute, that award of interest from the time of injury to the date of judgment fulfills the purpose of the statute. This is independent of the jury's determination of an undifferentiated monetary verdict based upon the tort. While this jury verdict determines the amount of the pre-judgment interest, the pre-verdict interest is not a factor that is considered by the jury, nor should it form a part of the tortuous injury.

Williams v. Runion, 173 Ga.App. 54, 60(5), 325 S.E.2d 441 (1984) (determining whether post-judgment interest could be collected on an award of pre-judgment interest, i.e., interest upon interest). Therefore, to the extent Restina v. Crawford, supra, requires that set-offs of prior settlements with other joint tortfeasors must be considered in determining if the demand has been equaled or exceeded for the imposition of pre-judgment interest, such language in Restina v. Crawford, supra, is hereby disapproved.

The jury verdict award of damages for fraud of $4,073,000 was incorporated by reference into the original August 6, 1996 judgment, which was affirmed by Security V and Security VI.³

2. Security Life contends that the trial court erred in adding interest to the award before considering whether the August 6, 1996 judgment was greater than the demand for purposes of OCGA § 51-12-14. We do not agree.

For purposes of determining the judgment after the set-off, the trial court added the accrued interest from the June 13, 1996 judgment through ...