SASS v. FIRST NATIONAL BANK OF CHEROKEE

Court of Appeals of Georgia1997-07-24No. A97A1679

228 Ga. App. 7491 S.E.2d 76

Summary · law.co

Holding. The jury's award of litigation expenses under the applicable statute was supported by sufficient evidence of bad faith conduct arising from the transaction, and the judgment is affirmed.

The bank sued Sass to recover on a promissory note and obtained a jury verdict awarding both the note amount and litigation expenses totaling $52,234.77 under Georgia law. Sass appealed, arguing insufficient evidence supported the attorney fees award. The court examined the standard for awarding litigation expenses under the applicable statute, which permits such awards when a defendant acts in bad faith, is stubbornly litigious, or causes unnecessary trouble and expense to the plaintiff.

The court found sufficient evidence of bad faith in Sass's conduct. Although Sass claimed he never signed the note, the bank presented multiple forms of corroborating evidence: Sass made at least five payments on the note to the bank, the loan officer testified to witnessing the signing, a bank director testified that Sass agreed to co-sign and later called to say he was at the bank signing it, and handwriting experts from both sides identified the signature as Sass's. This evidence allowed the jury to reject Sass's testimony and conclude his refusal to pay was not made in good faith but constituted bad faith breach of the contract underlying the claim.

Sass also raised a secondary argument that contractual attorney fee provisions in the note precluded recovery under the statute, but this argument was not properly preserved for appeal because Sass failed to object at trial or enumerate the issue correctly on appeal, resulting in waiver of the claim.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether evidence of bad faith conduct supports an award of litigation expenses
Whether mere refusal to pay a debt constitutes actionable bad faith or whether additional misconduct is required
Whether a defendant's breach of contractual obligations can constitute bad faith justifying litigation expense awards
Whether failure to preserve an argument through proper objection and enumeration results in waiver on appeal

Procedural posture

Sass appealed a jury verdict rendered in the bank's favor on a promissory note claim, challenging the award of litigation expenses as unsupported by evidence.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

majority opinion

Blackburn, Judge.

First National Bank of Cherokee (the bank) brought the underlying action to recover on a promissory note executed by the defendant Gray W. Sass. The jury returned a verdict for the bank on the note and awarded the bank $52,234.77 as expenses of litigation. Sass appeals the jury’s award of attorney fees under OCGA § 13-6-11 contending that it was not supported by the evidence.

“The question of attorney fees under OCGA § 13-6-11 is a question for the jury. The standard of review of an award of attorney fees under OCGA § 13-6-11 is whether there is any evidence to support the award.” (Citation and punctuation omitted.) C & S Trust Co. v. Hicks, 216 Ga. App. 338, 340 (2) (454 SE2d 207) (1995).

1. Initially, Sass contends that no evidence of bad faith was presented to the jury and that a bona fide controversy existed over the bank’s right to recover attorney fees pursuant to OCGA § 13-6-11. Such Code section provides that “[t]he expenses of litigation generally shall not be allowed as a part of the damages; but where the plaintiff has specially pleaded and has made prayer therefor and where the defendant has acted in bad faith, has been stubbornly litigious, or has caused the plaintiff unnecessary trouble and expense, the jury may allow them.”

“A plaintiff may recover for bad faith concerning the transactions and dealings out of which the cause of action arose. OCGA § 13-6-11. A bona fide controversy within the contemplation of the code section pertains solely to the issue of stubborn litigiousness or causing the plaintiff unnecessary trouble and expense. Despite the existence of a bona fide controversy as to liability, a jury may find that defendant acted in the most atrocious bad faith in his dealing with the plaintiff. The question is whether there was bad faith concerning the transactions and dealings out of which the cause of action arose.” (Citations and punctuation omitted.) Stargate Software Intl. v. Rumph, 224 Ga App. 873, 878 (4) (482 SE2d 498) (1997).

Sass asserts that mere refusal to pay a just debt is insufficient tc support the award of attorney fees under OCGA § 13-6-11. Although Sass’ statement of law is correct, it does not go far enough. “Bad faith other than mere refusal to pay a just debt may authorize the jury tc award attorney fees, provided it is not prompted by an honest mistake as to one’s rights or duties but by some interested or sinistei motive. There may be bad faith in carrying out the provisions of the contract sufficient to support the award.” (Punctuation omitted.) C & S Trust Co., supra at 339 (2). We have previously upheld awards pursuant to OCGA § 13-6-11 which arose out of the defendant’s actions in breaching the contract, i.e., where the refusal to pay a debí was not made in good faith but was an attempt to defeat the clear intent of the contract. See id.

In the present case, Sass contended that he did not sign the promissory note. However, the bank presented evidence that Sass made at least five payments on the note directly to the bank. The bank’s officer who made the loan testified that he witnessed Sass sign the note. Stuart Tasman, a director of the bank, testified that he called Sass and requested that Sass co-sign on the note. Sass agreed. Tasman testified that when Sass called him for lunch one day, Sass indicated he was at the bank signing the note. Additionally, both the bank’s handwriting expert and Sass’ document expert testified that the signature on the note was Sass’ signature.

Under these facts, the jury could have disbelieved Sass’ testimony and found that his refusal to pay the note was not in good faith. The jury could have found that Sass’ bad faith arose out of the transaction which supported the bank’s complaint, i.e., Sass’ breach of his agreement to pay the note. See id.

2. Sass argues in his brief that as the note provided for attorney fees of 15 percent in the event an attorney is hired to collect the note due to nonpayment, attorney fees pursuant to OCGA § 13-6-11 should not be recoverable. This issue was raised in the trial court, and the court reserved its ruling. When the trial court later ruled to submit the issue of OCGA § 13-6-11 attorney fees to the jury, Sass failed to object. Nor did Sass properly enumerate this issue on appeal. Sass’ enumeration of error addresses itself solely to whether sufficient evidence to support attorney fees was presented to the jury. It does not raise the issue of whether such fees were appropriate in light of the contract language for attorney fees. Therefore, the alleged error was waived by Sass’ failure to enumerate it. See Mom Corp. v. Chattahoochee Bank, 203 Ga. App. 847, 849 (3) (418 SE2d 74) (1992).

Decided July 24, 1997

Reconsideration denied August 6, 1997.

Kitchens, Kelley & Gaynes, Mark A. Kelley, Jesus A. Nerio, for appellant.

Quirk & Quirk, Martin G. Quirk, Kevin E. Quirk, for appellee.

Judgment affirmed.

Pope, P. J., and Johnson, J., concur.