THE COTTO LAW GROUP, LLC v. BENEVIDEZ
A21A1601
In the Court of Appeals of Georgia
March 2, 2022
FOURTH DIVISION, DILLARD, P. J., MERCIER and PINSON, JJ.
NOTICE: Motions for reconsideration must be physically received in our clerk‘s office within ten days of the date of decision to be deemed timely filed. https://www.gaappeals.us/rules
An employee abruptly resigned from her position as an associate at a law firm and blocked its access to her firm email account, the firm‘s fax line, and client files kept in an online Dropbox account. The firm sued her, and the trial court entered a default judgment in its favor after the employee failed to file a timely answer. But the trial court declined to award any damages after a bench trial on that issue, finding that the firm had failed to carry its burden to prove any damages. The firm appealed, contending that the trial court erred by (1) applying the wrong legal standard to its claims for actual damages and declining to award even nominal damages; (2) failing to recognize that the default judgment “conclusively established” the employee‘s liability for punitive damages and attorney fees; and (3) denying the firm‘s right to present closing argument at trial.
We affirm the trial court‘s judgment excеpt with respect to the attorney fees. The trial court applied the correct legal standard and did not clearly err in finding that the firm failed to establish its actual damages with reasonable certainty. The court also did not err in failing to award nominal or punitive damages. And the court did not commit reversible error by forgoing closing argument. But because the entry of a default judgment required the trial court to award the firm its reasonable attorney fees, the judgment must be reversed to the extent the court failed to make such an award, and the case must be remanded for a determination of the proper amount of the fee award.
Background
The relevant facts, which are either undisputed or deemed admitted by virtue of the default judgment, see
The next day, Cotto filed suit, claiming that Benevidez and Lazano had “converted [its] client files . . . [and] stole[n], tortiously interfered with[,] and otherwise obstructed [the firm‘s] access to its client files” in violation of various Georgia statutes. The complaint sought injunctive relief as well as “compensatory, consequential, special, nominal, punitive, and exemplary damages,” and attorney fees under
In the months that followed, the trial court granted Cotto temporary injunctive relief. And although Benevidez appeared at the interloсutory injunction hearing, she failed to file a timely answer.4 Cotto moved for a default judgment, and, although Benevidez then filed an untimely answer and moved to open the default, the trial court rejected these efforts and granted Cotto‘s motion for default judgment.
A bench trial on damages followed.5 Cotto presented two witnesses to testify on damages. First, Cotto called Erika Quiroz, the firm‘s marketing director, who testified that, as a result of Benevidez‘s departure and the firm‘s lack of access to its electronic files, she had to “stay in the office and do office work” instead of her usual business development work outside the office. For roughly a month, Quiroz was sidelined from her marketing duties to help “reorganize . . . the operation of the law firm“; she testified that “there were files everywhere in the office and I had to start calling the clients and . . . [let] them know that Ms. Benevidez wasn‘t there anymore.” Quiroz testified that she worked 122 hours on this “reorganization” work and that her salary at the time was $15 per hour. She testified further that, in a typical month, she brought in between 20 and 35 new cases and that, during the month she was diverted from her marketing dutiеs, she brought in only ten new cases. On cross-examination, Quiroz admitted that, because Benevidez had been the firm‘s only personal injury attorney, it was inevitable that, if she were ever to leave the firm, someone would have to “tend to those files that she was no longer handling.” On redirect, Quiroz agreed that the “real reason” she had to step in to help was that Benevidez had left without providing access to her email and the Dropbox files.
Cotto‘s other witness was Isaac Cotto. Mr. Cotto testified that, because Benevidez had effеctively blocked the firm‘s access to her email, the Dropbox account, and the fax line, “we had to go, basically, manual labor and physically go through every single file to communicate with providers and clients.” He testified that he asked Benevidez for the Dropbox information but she never gave it to him, and that ultimately his staff had to figure out the password “through trial and error.” He also testified that five of the firm‘s personal injury clients left “within 24 hours” to go with Benevidez. As to the value of those clients’ cases, Mr. Cotto testified that, while he cоuld not “give a dollar amount,” a typical personal injury case “can range from $2,000 to $10,000“; he also opined that Benevidez “would not have taken a case of low value.” Mr. Cotto also testified that the firm had suffered reputational damage with clients and referral sources. In addition, he testified that Quiroz and her administrative assistant
On cross-examination, Mr. Cotto acknowledged that, because Benevidez and Lazano were the only staff handling personal injury cases at the firm, if they both left their employment for any reason, someone at the firm “would need to review all of the files in those cases, regardless.” In addition, Mr. Cotto confirmed that his standard engagement letter for personal injury cases provided that, if the client terminated the firm‘s services before the case was resolved, the client would be obligated to reimburse the firm at the standard hourly rate for the hours spent on the case. Thus, he admitted, the firm was entitled to seek such compensation from any of the clients who left the firm to engage Benevidez. He also admitted he did not know the “exact” value of the cases lost to Benevidez.
On further cross-examination, Mr. Cotto admitted that Benevidez had actually offered him the email and Dropbox account credentials within days after the suit was filed, but he deсlined to respond. In his words, because he had already retained counsel, “I couldn‘t communicate with her at that point.”
After Mr. Cotto‘s testimony, a recess was taken before Benevidez began calling her witnesses. After the recess, the court announced its finding that Cotto had failed to meet its burden of proof and thus no damages were being awarded. Cotto‘s counsel asked for clarification, and the court stated that Cotto had not offered “any specifics about damages.” Cotto‘s counsel noted that Cotto had offered testimony about the marketing director‘s expenses, but the court replied that Cotto never presented “a number [for] how much money the firm lost[,]” and that evidence amounted to mere “speculation.” Before the parties were excused, Cotto‘s counsel noted that Cotto had intended to ask for punitive damages.
Two days after the hearing, the court entered its written order, in which it stated summarily, “The Plaintiff failed to prove damages as required by law.”6 This appeal followed.
Discussion
On review of a judgment entered after a bench trial, this Court must uphold all findings оf fact unless they are clearly erroneous, and due regard shall be given to the trial court‘s assessment of the credibility of witnesses.
Cotto‘s contentions on appеal break down into three main arguments: (1) that judged under the proper standard, the evidence Cotto offered was enough to support a reasonable calculation of damages; (2) that the default judgment “conclusively established” Benevidez‘s liability for punitive damages and attorney fees; and (3) that the trial court erred in denying Cotto‘s right to present closing argument at trial. We review each contention in turn.
1. We take first Cotto‘s contention that it proved damages under the proper standard. It is well-settled that, to recovеr damages as a result of another‘s wrongdoing, a party must offer proof sufficient to establish the amount of its losses. Witty v. McNeal Agency, Inc., 239 Ga. App. 554, 562 (5) (521 SE2d 619) (1999). The claimant bears “the burden of showing the amount of the loss, and of showing it in such a way that the
The requirement to prove damages to a reasonable degree of certainty holds even when liability has been established. In other words, even if a defendant is found liable, an award of zero damages is authorized if the plaintiff fails to offer sufficiently specific or credible evidence to enable the calculation of damages with reasonable certainty. See, e.g., Hart v. Walker, 347 Ga. App. 582, 583-84 (1) (820 SE2d 206) (2018) (affirming trial court‘s award of zero damages, despite defendant‘s undisputed liability for wrongful eviction and other torts, where plaintiff had offered as evidence of damages only his own testimony and a single motel receipt); Jaraysi v. Sebastian, 318 Ga. App. 469, 477 (2) (733 SE2d 785) (2012), disapproved on other grounds by George v. Hercules Real Estate Serv., Inc., 339 Ga. App. 843, 850 (2) (a) (ii) (795 SE2d 81) (2016) (affirming trial court‘s determination that, though landlord may have been entitled to recover repair costs, he had failed to present evidence showing the amount of those costs and was thus not entitled to any recovery); Crawford v. Dammann, 277 Ga. App. 442, 448-49 (3) (626 SE2d 632) (2006) (affirming trial court‘s award of zero damages, сoncluding that testimony about the “approximate” amount of fees wrongfully assessed was “insufficient to prove the amount of [damages] to the requisite degree of specificity“).
(a) Cotto contends that the trial court applied “an erroneous legal standard” in assessing its damages claims, but nothing in the court‘s oral pronouncement or its summary written order indicates that it applied any standard other than the reasonable-degree-of-certainty test. So this contention fails.
(b) Absent application of the wrong legal stаndard, the question becomes whether the trial court clearly erred in finding that the evidence of Cotto‘s alleged damages was insufficient to allow calculation of damages to a reasonable certainty. See
(i) Cotto first claims that it was entitled to damages for the five clients that left the firm to engage Benevidez. But Cotto admits it could offer no actual dollar аmounts to represent the value of these clients’ matters. Although Mr. Cotto testified that a typical personal injury case “can range from $2,000 to $10,000,” Cotto offered no specific evidence about any of the five “stolen” cases, and thus no basis for making any reasonable estimate of their potential value. Moreover, it is unclear what this $2,000 to $10,000 range even represents. But even assuming it refers to the firm‘s contingency fee on successful resolution of the case, and assuming each case would have been successfully resolved, this figure does not necessarily represent the firm‘s profit from that case, as it does not take into account any expenses the firm would have incurred in generating that fee. See Legacy Academy, Inc. v. JLK, Inc., 330 Ga. App. 397, 404-05 (2) (765 SE2d 472) (2014) (“To sufficiently quantify lost profits, a finder of fact ‘must be provided with figures establishing the business‘s projected revenue as well as its projected expenses.‘” (emphasis supplied)). In sum, the trial court‘s finding that Cotto failed to offer sufficient evidence to prove this item of damages was not clearly erroneous. See Hart, 347 Ga. App. at 583-84 (1); Crawford, 277 Ga. App. at 448-49 (3).
(ii) Next, Cotto contends that it was entitled to recover damages to cover the expenses it incurred in “restoring its client files and communications.” Cotto cites evidence that Quiroz and her assistant were paid $3,000 and $2,000 per month, respectively, and Quiroz‘s testimony that she spent a month doing “office work” to help “reorganize . . . the operation of the law firm.” Cotto claims it was entitled to recover $5,000.
It is true that “necessary expenses consequent upon an injury are a legitimate item in the estimate of damages.”
(iii) Cotto also contends that it should have been awarded its losses attributable to the decline in new cases brought in during the month in which Quiroz was diverted from her marketing duties. Cotto asserts that it “lost $20,000, and likely much more, because of its lack of marketing for an entire month.” This number comes from Quiroz‘s testimony that the firm effectively “lost” at least ten new cases—given its typical twenty to thirty-five monthly case originations, versus the ten cases it actually originated during the month in question—combined with Mr. Cotto‘s testimony valuing each personal injury case in the range of $2,000 to $10,000.
But we have already held that Mr. Cotto‘s testimony about the value of аctual cases the firm lost to Benevidez was speculative, and that the trial court did not clearly err in concluding that it did not allow for calculation of those damages with reasonable certainty. The value of any potential cases the firm may have lost would be at least as speculative. For this reason, there was no clear error in the trial court‘s failure to award this item of damages. See Hart, 347 Ga. App. at 583-84 (1); Crawford, 277 Ga. App. at 448-49 (3).
(iv) Cotto also contends that the trial court erred by failing to award nominal damages. Again, we disagree.
Nominal damаges are a form of “general damages,” a term which refers to “those which the law presumes to flow from a tortious act.” MTW Inv. Co. v. Alcovy Props., Inc., 228 Ga. App. 206, 211 (1) (c) (491 SE2d 460) (1997) (emphasis in original). See
But just because nominal damages may be awarded does not mean they must be awarded. Although a trial court may not under these circumstances reject a claim for nominal damages as a matter of law, see, e.g., Zhong v. PNC Bank, N.A., 345 Ga. App. 135, 142-43 (2) (c) (812 SE2d 514) (2018) (reversal was warranted where it was decided as a matter of law that nominal damages were unavailable without proof of actual damages); Ambort v. Tarica, 151 Ga. App. 97, 97 (1) (258 SE2d 755) (1979) (reversing directed verdict on counterclaim because nominal damages were potentially recovеrable), we have on at least two occasions held that a trier of fact may properly decline to award even nominal damages despite the defendant‘s liability having been definitively established. See Hodson v. Whitworth, 173 Ga. App. 863, 864 (1) (328 SE2d 753) (1985) (declining to reverse jury‘s zero damages award where liability was already established, noting that nominal damages were “authorized but not demanded“); Corrosion Control, Inc. v. William Armstrong Smith Co., 157 Ga. App. 291, 292 (277 SE2d 287) (1981) (declining to reverse zero damages award after bench trial even though nominal damages would have been authorized). Cf. Hooker v. Roberson, 316 Ga. App. 345, 346 (2) (729 SE2d 484) (2012) (reversing where trial court sitting as trier of fact had failed to consider nominal damages because of its error in reconsidering defendant‘s liability after the entry of a default judgment). Thus, Cotto‘s contention that the trial court was required to award nominal damages here is unfounded.
Where nominal damages are authorized, the proper amount of the award is the prerogative of the trier of fact, whose determination is “not [to] be disturbed on appeal, except in extreme cases.” Ponce de Leon Condos. v. DiGirolamo, 238 Ga. 188, 190 (3) (232 SE2d 62) (1977). Particularly given Cotto‘s undisputed failure to mitigate its actual damages, we do not view this case as so “extreme” as to warrant disturbing the non-award of nominal damages.
2. Cotto next contends that Benevidez‘s default “conclusively established” its entitlement to punitive damages and attorney fees. We address each kind of damages in turn.
(a) A defendant in default “‘is in the position of having admitted each and every material allegation of the plaintiff‘s petition except as to the amount of damages alleged.‘” Cohran v. Carlin, 254 Ga. 580, 585 (3) (331 SE2d 523) (1985). See also
In light of these principles, it is “within the trial court‘s authority to award no punitive damages despite the fact that [a] default judgment established liability for them.” Wilson Welding Serv. v. Partee, 234 Ga. App. 619, 620 (507 SE2d 168) (1998), overruled on other grounds by Shields v. Gish, 280 Ga. 556, 557 (1) (629 SE2d 244) (2006). So even when a defendant defaults on a complaint seeking punitive damages, the trial court is authorized to find that no punitive damages should be awarded based on the particular facts presented. This is because “the determination of liability for punitive damages and the amount of punitive damages are two separate issues.” Id. (emphasis supplied). Thus, as with the other kinds of damages, we must consider the trial сourt‘s determination on punitive damages by reference to the facts established by the default and the evidence presented at the hearing.
Under this highly deferential standard оf review, we discern no error in the trial court‘s determination that punitive damages were not warranted here. The allegations in Cotto‘s verified complaint, which are deemed admitted by the default, show that when she left the firm, Benevidez changed the passwords for the Dropbox account and her email account; refused to respond to an email requesting these credentials; changed the contact information for Cotto‘s fax line, which cut off its access to clients and their insurers; formed a new firm that was soliciting Cotto‘s clients; and “effectuated the termination of two of [Cotto‘s] client relationships.” Although there is no doubt that these acts were wrongful, we note that there are no specific averments in the complaint that Benevidez‘s conduct was willful, malicious, fraudulent, wanton, oppressive, or consciously indifferent to the consequences, as would be required to justify an award under
(b) Our analysis of the attorney fee award, however, yields a different conclusion.
Here, Cotto‘s complaint did include a specific claim for
3. Cotto lastly contends that the trial court committed reversible error by “denying” its request for closing argument. Assuming for the sake of argument that Cotto‘s right to make a closing argument was denied, “[a] new trial based on the denial of the right to . . . close argument is not warranted if there is an absence of any conflict in the evidence.” Gilmer Cty. Bd. of Tax Assessors v. Spence, 309 Ga. App. 482, 483 (1) (b) (711 SE2d 51) (2011) (citations and punctuation omitted). There was clearly no conflict in the evidence here becаuse the only evidence presented was Cotto‘s. Thus, the trial court‘s alleged denial of Cotto‘s right to present closing argument was not reversible error.
Judgment affirmed in part and reversed in part, and case remanded with direction. Dillard, P. J., and Mercier, J., concur.
PINSON
JUDGE