A jury found David C. Joel, Attorney at Law, P.C. (the P.C.) breached its fiduciary duty to its client, Brenda Chastain, and awarded Chastain $4,000 in compensatory damages and $20,000 in attorney fees pursuant to OCGA § 13-6-11. The jury found in favor of the P.C. on Chastain’s claims under the Fair Business Practices Act and for fraud. The P.C. claims the evidence did not support the verdict and that the trial court
1. The evidence viewed in favor of the verdict was sufficient to show a breach of fiduciary duty and damages flowing from the breach.
After Chastain was injured in an automobile accident in March 1996, she retained Joel’s P.C. in May 1996 to represent her on a personal injury claim. Joel, who at the time was the sole shareholder of the P.C., testified that he developed the P.C. into a “volume practice” using television and other advertising. Joel was not in the P.C.’s office on a regular basis, took no part in handling the cases, and was notified by weekly faxes of case dispositions after they had settled. According to Joel, “generally the case management decisions for the Georgia clients would have been left primarily to those persons who staffed the Atlanta office.” Evidence showed that, during some periods when important settlement decisions were being made on Chas-tain’s case, the P.C. employed one attorney other than Joel at the Atlanta office and eleven nonattorney support staffers to handle up to 500 pending cases. To manage the high volume, the P.C. employed nonattorney “case negotiators” who were authorized under the P.C.’s guidelines to relay settlement offers from insurance companies to clients, respond for the client to the offers, and, under supervision and instructions from the attorney, advise the client on accepting or rejecting the offers.
Under this system, Joel testified that Chastain’s case was assigned to a nonattorney employee of the P.C., Terry Lee, who acted as Chastain’s “case negotiator.”
Q: As a case negotiator for [the P.C.], it would not be possible for Terry Lee to have given Ms. Chastain legal advice on whether she should accept or reject a particular offer, would it?
A: I’m not sure that he would have, but it is possible.
Q: He was authorized to do that, correct?
A: He was authorized to transmit the offers from the insurance company and relay the client’s wishes back to the insurance company. Now, what the parameters of that authorization was in his mind, I don’t know.
Q: And he could also advise your clients on accepting or rejecting the offers, isn’t that what you told us at your deposition?
A: Within the guidelines that were set, he could do that.
Q: Mr. Joel, is your contention that in addition to Mr. Lee and any other lay person that might have worked on Ms. Chastain’s file that an actual attorney was assigned to the case from the time she initially retained [the P.C.]?
A: That’s not how we operate it, but she would have been able to speak to a lawyer at any time during that two-year period.
Q: Which attorneys had reviewed Ms. Chastain’s case file before July of 1997?
A: I don’t know.
Q: There’s no way for you to determine if any attorney was involved with that case, is there?
A: No. But it would have been [the attorney] who was there. ... I wasn’t there, so I don’t know.
Upon review of the P.C.’s file on Chastain, Joel was unable to find any reference to an attorney’s involvement in the case prior to January 1998. He stated that there may be evidence of attorney involvement in the P.C.’s computerized case management system, but no such evidence was produced. Joel testified that there was no procedure in place for client files to be reviewed by an attorney on a periodic basis, and he acknowledged that the system he created for operation of the P.C. was fraught with potential trouble.
Q: So you had 11 administrative employees, with one attorney who wasn’t there allthe time. Isn’t that ratio just asking for trouble?
A: Could be. 1
After seeing the P.C.’s television advertisements, Chastain contacted the P.C., met with nonattorney employees, and signed a fee contract with the P.C. in May 1996. Thereafter, the P.C. assisted her through nonattomey employees in seeing physicians for treatment of her injuries through November 1996. In July 1997, Lee, a nonat-torney case negotiator for the P.C., contacted Chastain. Lee introduced himself to Chastain as the P.C.’s attorney who had been assigned to handle negotiations with the insurance company in her case. Lee subsequently conveyed several offers to Chastain from the insurance company (all of which Chastain rejected), advised Chas-tain not to pay pending medical bills, and recommended that she take the insurance company’s final offer of $10,000. Despite her directions to Lee to reject the $10,000 offer, a few days later Chastain received correspondence from the P.C. dated September 5, 1997, containing settlement and release documents indicating her case had been settled with the insurance company for $10,000. When Chas-tain contacted Lee about the documents, he told her they were sent by mistake and to throw them away. Evidence showed, however, that Lee had in fact accepted the insurance company’s $10,000 offer on behalf of Chastain without her consent, although Chastain was not informed of this fact.
Unhappy with Lee, Chastain called the P.C. asking to speak to Joel, but he never returned her calls. Joel testified that he was never told by the P.C. that she called. In November 1997, Chastain called the P.C. to determine the status of her case and was informed that Lee was no longer employed by the P.C. At that time, she asked again to speak with Joel but was told he was unavailable. Over a period of several weeks, Chastain called the P.C. on numerous occasions asking to speak to Joel or another attorney about her case. She was told no one was available, and her calls were not returned. Chastain persisted, and during yet another call to the P.C. in January 1998, she finally spoke to an attorney employed by the P.C. The attorney, George French, told Chastain that Lee no longer worked for the P.C. and that he had been arrested for falsely representing himself to be an attorney. During her conversation with French, Chastain learned for the first time that Lee was not an attorney and that he had settled her case for $10,000 without her consent. Evidence showed Lee was arrested at the P.C. in September 1997 on charges that he had practiced law without a license prior to being employed by the P.C. Joel testified that Lee was not authorized to represent himself as an attorney or settle cases without consent and that Lee was fired after he was arrested.
Chastain filed a grievance with the State Bar over the representation provided by the P.C. The P.C. offered to forfeit its legal fees and give Chastain the entire $10,000 settlement check if she would drop the grievance. After Chastain rejected this offer, the P.C. took the position on behalf of Chastain that the settlement was a nullity and timely filed a suit for Chastain. Chastain eventually agreed to a $25,000 settlement of her case obtained by the P.C. Chastain testified that she experienced severe emotional distress and depression as a result of the manner in which the P.C. handled her case, especially the misrepresentations by Lee.
Chastain’s subsequent suit against the P.C. was not for legal malpractice, but asserted claims for breach of fiduciary duty, violation of the Fair Business Practices Act, and for fraud. In addition to compensatory damages, the suit sought recovery of punitive damages and attorney fees pursuant to OCGA § 13-6-11. The jury returned a verdict in favor of Chastain on the breach of fiduciary duty claim and awarded $4,000 in compensatory damages and $20,000 for attorney fees. The jury returned a verdict in favor of the P.C. on the remaining claims and refused to award punitive damages.
There was evidence from which the jury could have concluded that the P.C. violated this fiduciary duty to Chastain. Joel organized his P.C. to handle a high volume of cases using nonattorney “case negotiators” like Lee and other support staff, at times under the supervision of a single attorney. Although attorneys generally employ nonattorneys such as secretaries, investigators, and other paraprofessionals to assist them in providing legal services to clients, they act for the attorney and must be adequately trained and supervised to ensure that the attorney’s legal and ethical duties to clients are not compromised. See Georgia Rules of Professional Conduct, Rule 5.3. Joel’s testimony shows that he was unsure of the amount of attorney supervision, if any, that Chastain’s case received. Despite no evidence that Joel or the P.C. sanctioned the misrepresentations that Lee made to Chastain while acting as her “case negotiator,” the jury was authorized by the evidence to conclude that Joel deliberately organized his P.C. in a manner which allowed Lee, without adequate supervision by an attorney, to mishandle Chastain’s case and that this breached the P.C.’s fiduciary duty to apply its best skill, zeal, and diligence in representing Chastain. 2
As to damages flowing from this breach, there was evidence that Chastain suffered severe mental distress caused by Lee’s misrepresentations and mishandling of her case. As a general rule, mental distress damages are not recoverable in the absence of physical injury where the claim is premised on ordinary negligence.
Hamilton v. Powell, Goldstein, Frazer &c.,
2. We find no merit in the P.C.’s contention that, as a matter, of law, Chastain waived her cause of action for breach of fiduciary duty because, after the breach, she allowed the P.C. to continue representing her by filing suit and settling the case.
The breach of fiduciary duty and resulting harm in this case were unrelated to the fact that, after the P.C. discovered the misconduct of its employee, it took steps to properly handle the case. Under the circumstances, there was no waiver.
Paul v. Destito,
3. The trial court did not err by instructing the jury on the State Bar Rules
An instruction on this standard was proper under the facts of this case. Central to Chastain’s claim was evidence that a nonattorney employed by the PC., who was not adequately supervised by an attorney, misrepresented himself as an attorney, advised Chastain on the case, and settled the case without her consent. The standard at issue was intended to protect a client in Chastain’s position from the type of harm she suffered and was relevant to the jury’s consideration of whether these actions constituted a violation of the P.C.’s fiduciary duty to Chastain.
Allen v. Lefkoff, Duncan, Grimes
&c.,
4. The evidence was sufficient to support the jury’s award of attorney fees to Chastain pursuant to OCGA § 13-6-11.
Attorney fees may be awarded pursuant to OCGA § 13-6-11 despite the existence of a bona fide controversy where bad faith is shown.
Dimambro Northend Assoc. v. Williams,
Nevertheless, Chastain was entitled only to attorney fees attributable to the breach of fiduciary duty claim on which she prevailed.
Southern Cellular Telecom v. Banks,
Judgment affirmed in part, reversed in part and case remanded with directions.