In a decision with potentially far reaching impacts for tort litigants in the state, the Supreme Court of Georgia last week upheld the validity of the state’s offer of settlement statute against a constitutional challenge. The case, Smith et al. v. Salon Baptiste et al., decided March 15, 2010, upholds the provision that allows parties to make an offer of settlement and, if the offer is declined with certain conditions met, recover their litigation costs from the date the offer is declined if the ultimate result is not a certain percentage better than the offer.

In the case, Smith had tendered an offer of settlement to the salon under the statute, O.C.G.A. 9-11-68, which, if accepted by the salon, would have ended the suit. Smith’s offer of settlement was rejected by the salon. Following rejection of that offer, the trial court ultimately ruled in Smith’s favor on all counts. Smith then sought recovery of attorneys’ fees under O.C.G.A. 9-11-68.

The trial court found the offer of settlement statute, part of the Georgia Tort Reform Act of 2005, unconstitutional on the grounds that it impermissibly impeded access to the courts. The Supreme Court of Georgia reversed the trial court’s holding.

In a 5-2 opinion, the Supreme Court found that the lower court improperly relied on a ‘right of access to the courts’ reading of the Georgia Constitution, which it found was misplaced on the grounds that no such right exists in the state, and that the constitutional provision at issue was only intended to provide a choice between self-representation and representation by counsel.

The majority further reasoned that the offer of settlement statute did not deny litigants access to the courts, but merely sets forth circumstances under which fees may be recoverable. Finally, the majority found the offer of settlement provisions were not an unconstitutional special law, but rather a general law with uniform application as to all tort cases.

By upholding the offer of settlement statute, the Supreme Court of Georgia has preserved a potentially compelling incentive for encouraging settlement of claims among tort litigants in the state.

For more information on this case, click [here] or contact Steve O’Day or Chris Bowers