348 Ga. App. 136
Ga. Ct. App.2018Background
- Travelers sued SRM to recover $479,017.54 in retroactive workers’ compensation premiums assessed after a 2013 audit; Travelers cancelled SRM’s policy for nonpayment.
- Travelers’ audit reclassified SRM employees (FLETC workers as “9101-School”; logistic specialists as “8292-Warehouse/Storage”), producing a large premium increase; SRM argued proper classifications were lower-cost codes (“9052-Hotel”, “8810-Clerical”).
- SRM counterclaimed for breach of contract and breach of the covenant of good faith and fair dealing, and sought attorney fees under OCGA § 13-6-11, alleging Travelers conducted a deficient audit and refused to reclassify despite information from SRM.
- After a four-day jury trial, Travelers recovered $174,858 on its breach claim for unpaid premium; the jury also found Travelers breached and awarded SRM $57,858 (breach) plus $117,000 in bad-faith attorney fees — netting out to no monetary recovery for either party.
- Trial court denied Travelers’ JNOV and new-trial motions; on appeal the Court of Appeals affirmed most of the judgment but reversed the attorney-fee award to SRM.
Issues
| Issue | Plaintiff's Argument (Travelers) | Defendant's Argument (SRM) | Held |
|---|---|---|---|
| 1) JNOV on SRM’s breach damages — sufficiency/amount | SRM introduced no proof of actual damages; award was excessive for "nominal" damages | SRM was entitled to nominal damages where Travelers’ liability was established; evidence of non-monetary harm justified submitting nominal damages to jury | Affirmed — evidence supported a nominal-damage award; large nominal awards are permissible absent bias or mistake |
| 2) JNOV on attorney fees under OCGA § 13-6-11 | SRM’s fee claim derived from a compulsory counterclaim tied to the same transaction, so SRM (defendant-in-counterclaim) cannot recover fees | SRM argued its fee claim was proper as an award for Travelers’ bad faith in audit and refusal to reclassify | Reversed — fees vacated because the counterclaim was compulsory, not an independent claim, so OCGA § 13-6-11 attorney fees were unavailable to SRM |
| 3) New trial for alleged inconsistent verdicts | Verdicts are internally inconsistent (Travelers wins on unpaid premium; SRM wins on Travelers’ breach) so should be void | Jury lawfully resolved interrelated contract disputes; verdicts can be reconciled as different findings on separate theories | Affirmed — court construed verdicts to uphold them; presumptions favor validity of verdicts |
| 4) Exclusion of subsequent insurer endorsements (motions in limine) | Documents showing later insurer classifications were irrelevant and hearsay | SRM used them as demonstrative evidence to show differing classifications; authenticated as business records | Affirmed — evidence relevant and admitted; Travelers waived hearsay objection at trial |
| 5) Requested jury charge on open-account prejudgment interest (OCGA § 7-4-16) | Travelers sought prejudgment interest on unpaid premium as open-account recovery | SRM argued classification and amount were disputed, so open-account theory improper | Affirmed — factual disputes (classification/amount) barred open-account interest; trial court properly refused charge |
Key Cases Cited
- Bishop v. Int’l Paper Co., 174 Ga. App. 863 (explains nominal damages and pleading requirements)
- Sanders v. Brown, 257 Ga. App. 566 (addresses recoverability of OCGA § 13-6-11 fees on compulsory counterclaims)
- Byers v. McGuire Props., Inc., 285 Ga. 530 (distinguishes compulsory vs. independent counterclaims for fee recovery)
- Anthony v. Gator Cochran Construction, Inc., 288 Ga. (presumption in favor of upholding potentially ambiguous verdicts)
- Lager’s, LLC v. Palace Laundry, Inc., 247 Ga. App. 260 (explains when open-account suits and prejudgment interest are improper due to factual disputes)