Labmd, Inc. v. Savera
331 Ga. App. 463
| Ga. Ct. App. | 2015Background
- Dr. Adnan Savera was LabMD’s medical director; he gave 90 days’ resignation notice but was terminated 10 days before the notice period ended; LabMD then sued him asserting multiple causes of action.
- LabMD pleaded eight claims (restrictive covenant breach, working-hours breach, breach of fiduciary duty, trade-secret misappropriation, violations of federal and Georgia computer statutes, trespass, punitive damages); several claims were abandoned or dismissed; jury favored Savera on the rest.
- Savera moved for attorney’s fees under OCGA § 9-15-14, claiming fees of ~$315,000 and that many LabMD claims were frivolous; the trial court found five of eight causes frivolous and awarded $168,257.18 (after apportionment).
- Three days before the fee order, Savera withdrew fee claims against LabMD’s counsel and its law firm because of settlements; the trial court’s order did not address any setoff for those settlements.
- Admiral Insurance paid defense costs up to its $250,000 policy limit; Savera’s total fees exceeded Admiral’s payments by about $65,494, but the trial court did not analyze or apply any setoff for insurer payments.
- The Court of Appeals affirmed entitlement to some sanctions but vacated the fee award in part and remanded for the trial court to consider setoffs (settlements with counsel and insurer payments), Savera’s out-of-pocket fees, and whether certain fee entries (counterclaim and benefits-related work) were attributable to LabMD’s sanctionable conduct.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the trial court must offset the fee award for settlements Savera received from LabMD’s counsel/law firm | Savera implicitly argued fee award need not be reduced because he withdrew claims after settlement | LabMD argued the award should be reduced by amounts recovered in those settlements to avoid double recovery | Court: Trial court must consider and apply any appropriate setoff for those settlements; remanded for findings |
| Whether Admiral’s defense payments require a setoff against Savera’s fee award | Savera relied on total fees incurred and did not seek reduction despite insurer payments | LabMD argued Admiral’s payments should reduce the sanction award to avoid double recovery | Court: Trial court must analyze Admiral’s payments and Savera’s unpaid fees and apply a setoff as appropriate; remanded |
| Whether fees for work on Admiral’s declaratory-judgment action and related insurer communications are recoverable | Savera contended those fees were necessary to defend against LabMD’s claims | LabMD contended such fees were not caused by sanctionable conduct and should be excluded | Court: Trial court did not abuse discretion including these fees; they were reasonably related to defense against LabMD |
| Whether fees for Savera’s counterclaim and benefits (401(k)) issues should be included | Savera maintained such work was part of defense strategy and necessary | LabMD argued these entries were unrelated to sanctionable claims and should be excluded | Court: These are closer questions; trial court must reassess on remand whether these fees relate to sanctionable conduct and adjust award accordingly |
Key Cases Cited
- O’Keefe v. O’Keefe, 285 Ga. 805 (explaining § 9-15-14 awards both punish and recompense litigants)
- Haggard v. Board of Regents of the Univ. System of Ga., 257 Ga. 524 (discussing standards of review for § 9-15-14 awards)
- Century Center at Braselton, LLC v. Town of Braselton, 285 Ga. 380 (discussing appellate review of fee awards)
- Ga. Northeastern R. v. Lusk, 277 Ga. 245 (prohibiting double recovery and discussing setoffs from settlements)
- Roofer’s Edge v. Standard Bldg. Co., 295 Ga. App. 294 (same principle on setoffs for settlements)