In Eichenblatt v. Piedmont/Maple, LLC, the Georgia Court of Appeals held the trial court improperly awarded attorney’s fees to a party pursuant to O.C.G.A. 9-11-68, reversing a six figures award ($837,444.95) of attorney’s fees. In Eichenblatt, David Eichenblatt and Kaufman Development Partners (“KDP”) formed Piedmont/Maple, a real estate investment company that owned and operated a piece of commercial property in Atlanta. The business marriage of the newly created venture later soured, and litigation followed between the business partners. In connection with one of the cases, Piedmont/Maple, LLC, Kaufman Development Partners, and Craig Kaufman filed a declaratory judgment action against Mr. Eichenblatt, and he answered the complaint and also asserted counterclaims against his business partners based on breach of contract (i.e. breaching the operating agreement for the business) and tort (i.e. breach of fiduciary duty). During the lawsuit, the Plaintiffs served a statutory settlement offer pursuant to O.C.G.A. 9-11-68, seeking to settle Mr. Eichenblatt’s counterclaims. Although Plaintiffs described the offer as an “offer to settle the counterclaim for breach of fiduciary duty asserted by [Mr. Eichenblatt]”, the statutory offer required Mr. Eichenblatt to dismiss and release all counterclaims.
The Georgia Court of Appeals reviewed the statutory offer and held the statutory offer unenforceable. First, O.C.G.A. 9-11-68 only applies to settlement of tort claims, and because the offer required the release and dismissal of all claims, including the contract claim, the statutory offer could not be enforced by the trial court. In connection with this part of the opinion, the Court of Appeals did address an exception to the general rule that these types of statutory offers can only be used to settle tort claims. If the other claims sought in the case are entirely premised on the allegations contained in the tort claims, then a statutory offer may require settlement of these non-tort claims. Applying this exception to the Eichenblatt case, the Court of Appeals reasoned this exception did not apply because the breach of contract claim was not entirely premised on the breach of fiduciary duty claim.
The Court of Appeals also reversed the trial court’s grant of attorney’s fees because the statutory offer was ambiguous based on the inconsistent description of the scope of the offer. Although the introductory paragraph noted the offer was to settle the breach of fiduciary duty claim, other parts of the statutory offer required dismissal and release of all claims. Accordingly, based on this ambiguous language, the Court of Appeals reversed the trial court’s award of attorney’s fees due to the statutory offer being legally unenforceable.
Eichenblatt illustrates both the strategic value in sending a statutory offer and how important it is to draft an offer that fully complies with the statutory requirements. A defendant can send an early statutory offer, which may create leverage in the case and in later settlement discussions. But if a defendant is going to send a statutory offer, the defendant must make sure the offer terms are clear and the other statutory requirements are satisfied.
