Denise Greenwald v. Sugarloaf Residential Property Owners Association, Inc. ( 2017 )

THIRD DIVISION
ELLINGTON, P. J.,
ANDREWS and RICKMAN, JJ.
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
May 23, 2017
In the Court of Appeals of Georgia
A17A0420. GREENWALD et al. v. SUGARLOAF RESIDENTIAL
PROPERTY OWNERS ASSOCIATION, INC.
RICKMAN, Judge.
In 2001, Sugarloaf Residential Property Owners Association, Inc. (“Sugarloaf”)
filed a complaint against Denise and Gary Greenwald seeking a declaratory judgment
that the Greenwalds had failed to comply with Sugarloaf residential covenants,
conditions, and restrictions and an injunction to halt landscaping work at the
Greenwalds’ residence. Thereafter, also in 2001, the Greenwalds filed an answer and
asserted counterclaims against Sugarloaf for abuse of discretion, nuisance, willful
misconduct, and attorney fees.1 From 2010 through 2011, Sugarloaf made three
1
The Greenwalds amended their counterclaim in 2002 to add a claim for
abatement.
settlement offers pursuant to OCGA § 9-11-68 (a)2 which were each rejected by the
Greenwalds. After all of the substantive claims were disposed of in Sugarloaf’s favor,
Sugarloaf filed a motion for attorney fees and expenses of litigation pursuant to
OCGA § 9-11-68 (b) (1).3 The trial court granted Sugarloaf’s motion, and the
Greenwalds appealed.
In an unpublished opinion, this Court explained that, “[i]n granting Sugarloaf’s
motion, the trial court’s order relied heavily upon our decision in L. P. Gas Indus.
2
Under OCGA § 9-11-68 (a),
[a]t any time more than 30 days after the service of a summons and
complaint on a party but not less than 30 days (or 20 days if it is a
counteroffer) before trial, either party may serve upon the other party,
but shall not file with the court, a written offer, denominated as an offer
under this Code section, to settle a tort claim for the money specified in
the offer and to enter into an agreement dismissing the claim or to allow
judgment to be entered accordingly.
3
OCGA § 9-11-68 (b) (1) provides,
[i]f a defendant makes an offer of settlement which is rejected by the
plaintiff, the defendant shall be entitled to recover reasonable attorney’s
fees and expenses of litigation incurred by the defendant or on the
defendant’s behalf from the date of the rejection of the offer of
settlement through the entry of judgment if the final judgment is one of
no liability or the final judgment obtained by the plaintiff is less than 75
percent of such offer of settlement.
2
Equip. Co. v. Burch, 306 Ga. App. 156 (701 SE2d 602) (2010), to conclude that the
relevant date for application of [OCGA § 9-11-68] was ‘the date(s) of the occurrence
of the acts giving rise to the Greenwald[s’] cause of action[.]’ Greenwald v. Sugarloaf
Residential Property Owners Assn., Inc., Case No. A15A1136, p. 3 (1) (decided Nov.
10, 2015) (unpublished). However, this Court noted that L. P. Gas was overturned by
Crane Composites, Inc. v. Wayne Farms, LLC, 296 Ga. 271 (765 SE2d 921) (2014)
on the day before the trial court’s order was entered. Greenwald, at 4 (1).
Accordingly, this Court vacated the trial court’s judgment and remanded this case
back to the trial court “for reconsideration of the effect . . . that Crane Composites has
upon its decision to grant the motion for attorney fees and expenses.” Id.On remand, the trial court found that under Crane Composites it was still
authorized to grant attorney fees and expenses to Sugarloaf pursuant to OCGA § 9-
11-68. The Greenwalds appeal from that order, contending, inter alia, that the
application of OCGA § 9-11-68 to this case is unconstitutional. For the following
reasons, we reverse.
1. The Greenwalds contend that the application of OCGA § 9-11-68 to this case
is unconstitutional. Specifically, they argue that under Crane Composites, because
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their lawsuit was commenced prior to the effective date of OCGA § 9-11-68, this
statute was impermissibly applied retroactively.
“OCGA § 9-11-68, was enacted as part of the Tort Reform Act of 2005, Ga.
L. 2005; it became effective on February 16, 2005, during the pendency of this
litigation. The Code section was amended by Ga. L. 2006, p. 589, § 1/HB 239,
effective April 27, 2006.” Fowler Properties Inc., v. Dowland, 282 Ga. 76, 77 (1)
(646 SE2d 197) (2007). “OCGA § 9-11-68 created substantive rights and . . .
therefore, it cannot be applied retroactively. However, the rights created by the statute
pertain to attorney fees and expenses arising out of litigation, not damages stemming
from injury.” Crane Composites, 296 Ga. at 273.
In other words, [OCGA § 9-11-68] operates substantively, but only
insofar as it imposes an obligation to pay an opposing party’s attorney
fees and expenses of litigation. Thus, it cannot be said that the statute
operates retroactively upon substantive rights simply because the injury
occurred before the effective date of the statute. Rather, because the
rights created by the statute pertain to the conduct of litigation, the
statute is acting prospectively, not retroactively, when applied to
litigation commenced after the effective date.
Id.
4
The trial court found that the Greenwalds implicitly amended their
counterclaim to add a claim for continued nuisance and expressly amended their
counterclaim to add a claim for punitive damages after the effective date of OCGA
§ 9-11-68. The trial court reasoned that because these amendments were added after
the effective date of OCGA § 9-11-68, under Crane Composites, attorney fees and
expenses pursuant to the statute were authorized. We disagree.
In Fowler Properties, the Supreme Court of Georgia held that the application
of OCGA § 9-11-68 to a tort action that was filed in 2002 was unconstitutional.
Fowler Properties, 282 Ga. at 78-79 (1). The Court explained that,
[w]hen [the plaintiff] instituted her tort action on December 18, 2002,
the possibility that she may be responsible for paying the opposing
party’s attorney fees and expenses of litigation by rejecting an offer of
settlement did not exist because OCGA § 9-11-68 did not take effect
until more than three years later. OCGA § 9-11-68 (b) (1) does not
merely prescribe the methods of enforcing rights and obligations, but
rather affects the rights of parties by imposing an additional duty and
obligation to pay an opposing party’s attorney fees when a final
judgment does not meet a certain amount or is one of no liability. By
creating this new obligation, the statute operates as a substantive law,
which is unconstitutional given its retroactive effect to pending cases
like this one.
5
Fowler Properties, 282 Ga. at 78 (1).
The Supreme Court of Georgia in Crane Composites held that OCGA § 9-11-
68 was “properly applie[d] prospectively [even though the alleged injury occurred
prior to the statute’s effective date] because the lawsuit was commenced after the
effective date [of the statute].” Crane Composites, 296 Ga. at 274. The Court in
Crane Composites distinguished Fowler Properties by reasoning that in Fowler
Properties the Court held only that OCGA § 9-11-68 could not be applied
retroactively because the lawsuit was filed prior to the effective date of the statute.
Id. The Court noted that, “[OCGA § 9-11-68] could have been applied in Fowler if
the lawsuit had been filed after the effective date.” Id.
As a matter of first impression, we consider whether OCGA § 9-11-68 applies
when a lawsuit is filed prior to the effective date of the statute and is subsequently
amended to add additional claims after the effective date of the statute. Sugarloaf
argues that because the Greenwalds amended their counterclaims after the effective
date of OCGA § 9-11-68, the trial court properly applied the statute to this case.
However, Sugarloaf’s argument is an overly broad interpretation of existing Supreme
Court precedent. In both Crane Composites and Fowler Properties, the Supreme
Court focused on the date the lawsuit was filed in determining whether OCGA § 9-
6
11-68 was being improperly, retroactively applied. See Crane Composites, 296 Ga.
at 274; see also Fowler Properties, 282 Ga. at 78 (1); see generally Ga. Dept. of
Corrections v. Couch, 295 Ga. 469, 476 (2) (b) (759 SE2d 804) (2014) (rights created
by OCGA § 9-11-68 (b) pertain to tort action, not tort claim).
In this case, pretermitting whether the Greenwalds amended their counterclaim
after the effective date of OCGA § 9-11-68 to add claims for continued nuisance and
punitive damages, the lawsuit was commenced in 2001 when the Greenwalds filed
their initial counterclaim, which included tort claims, prior to the effective date of the
statute. Accordingly, because OCGA § 9-11-68 became effective while this case was
pending, the retroactive application of the statute is unconstitutional. We therefore
reverse the trial court’s award to Sugarloaf of attorney fees and expenses pursuant to
OCGA § 9-11-68. See Olarsch v. Newell, 295 Ga. App. 210, 212-213 (1) (671 SE2d
253) (2008); see also Fowler Properties, 282 Ga. at 77-79 (1). Compare Crane
Composites, 296 Ga. at 273-274.
2. Because of our holding in Division 1, we need not address the Greenwalds’
remaining arguments.
Judgment reversed. Ellington, P. J., and Andrews, J., concur.
7