Probably every business owner who’s ever been sued has expressed an unshakable belief that the whole case is complete b*llsh!t. Often, there’s another side to the story. This is not to say that abusive litigation, that is, a lawsuit brought out of malice and lacking in substantial justification, doesn’t ever get filed. Sometimes, they do.
Georgia law provides remedies for a party against whom abusive litigation is pursued. An aggrieved party may recover an amount equal to the attorney’s fees incurred in addressing the malicious claim or defense.
We previously discussed the recovery of attorney’s fees from an adversary in bad faith litigation. But the attorney’s fees incurred might not be the only damages suffered because of a malicious lawsuit.
Georgia’s Abusive Litigation Act provides a path to recovering not only attorney’s fees, but also other damages suffered by the victim of abusive litigation. An aggrieved party can file a separate lawsuit against a malicious adversary.
To avail oneself of that claim, an aggrieved party must send the bad actor a written notice of an intent to bring an abusive litigation claim unless the malicious claim is voluntarily withdrawn or dismissed. The notice must satisfy specific requirements:
- It must identify the case, claim, or defense complained about.
- It must be sent by certified or overnight mail to ensure delivery.
- It must be sent while the malicious claim remains pending, and it must demand the withdrawal of the malicious claim.
A recent Georgia Supreme Court opinion highlights the importance of satisfying these requirements. In P&J Beverage Corp. v. The Bottle Shop, P&B sued the City of Columbus for granting a liquor license to a competitor, The Bottle Shop. P&J alleged that The Bottle Shop was located too close to a school, in violation of a city ordinance. The trial court agreed and issued an injunction requiring the city to rescind The Bottle Shop’s liquor license. The Bottle Shop intervened in that lawsuit and appealed. The Bottle Shop also sent an email to P&J threatening to sue P&J for abusive litigation if P&J did not dismiss its case.
The Bottle Shop did win on appeal, and its liquor license was reinstated. The Bottle Shop then sued P&J for abusive litigation and won a judgment against P&J for $543,501.51, consisting of $175,451.51 in actual damages, $250,000 in punitive damages, and $98,050 in attorney’s fees.
P&J appealed that award, alleging that the email The Bottle Shop sent to P&J threatening to sue for abusive litigation did not specifically identify the lawsuit that The Bottle Shop wanted P&J to abandon by style and case number. The Georgia Supreme Court agreed and vacated the judgment. Just like that, The Bottle Shop’s $543,000 judgment was poured down the drain. Likely both sides—and their lawyers—found themselves in need of a stiff drink, albeit for different reasons.
While the Abusive Litigation Act provides a potentially strong deterrent to malicious claims, it is crucial to follow its requirements to the letter. Good counsel can help.
Healthy business relationships are an essential component of business success. When disputes cause business relationships to sour, declining productivity and revenues are sure to follow. Bill works with business owners to bring successful and efficient resolution to a wide variety.
