308 Ga. 404 FINAL COPY
S19G0473. SRM GROUP, INC. v. TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA.
BETHEL, Justice.
We previously held in Byers v. McGuire Properties, Inc., 285
Ga. 530, 540 (6) (679 SE2d 1) (2009), that a counterclaimant
asserting an independent compulsory counterclaim could not seek
attorney fees and litigation expenses under OCGA § 13-6-11. For
the reasons explained below, we now conclude that holding was
erroneous. A defendant who brings a counterclaim against a
plaintiff becomes the plaintiff as to that counterclaim. Thus, a
plaintiff-in-counterclaim asserting an independent claim may seek,
along with that claim, attorney fees and litigation expenses under
OCGA § 13-6-11, regardless of whether the independent claim is
permissive or compulsory. We find no compelling reason under a
stare decisis analysis to cling to the holding in Byers. Accordingly,
we overrule our holding in Byers and in Sponsler v. Sponsler, 287 Ga. 725, 728 (2) n.2 (699 SE2d 22) (2010), where we followed Byers
in a footnote, and similar holdings by the Court of Appeals. And we
reverse the part of the opinion of the Court of Appeals in this case
that follows Byers.
1. Background.
The facts, as set forth by the Court of Appeals, are as follows:
Travelers Property Casualty Company of America (“Travelers”) filed suit against SRM Group, Inc. (“SRM”), seeking to recover unpaid premiums due under a workers’ compensation insurance policy. In response, SRM asserted counterclaims against Travelers for breach of contract, breach of duty of good faith and fair dealing, and attorney fees based on Travelers’ audit of SRM’s employee risk classifications and subsequent refusal to reclassify those employees, which resulted in a substantial retroactive increase in the premium. Following a four- day trial, the jury awarded $174,858 in damages to Travelers based on SRM’s failure to pay some of the alleged increased premium due under the policy. However, the jury found that Travelers had also breached the contract and acted in bad faith in conducting the audit and in subsequently refusing to reclassify certain SRM employees. Accordingly, the jury awarded damages to SRM in the aggregate sum of $174,858, which consisted of $57,858 for the breach and $117,000 in bad faith attorney fees. Travelers filed a motion for judgment notwithstanding the verdict or, in the alternative, motion for new trial. Following a hearing, the trial court denied the motions. Travelers Prop. Casualty Co. of America v. SRM Group, Inc., 348 Ga.
App. 136, 136-137 (820 SE2d 261) (2018).
Travelers appealed, contending that the trial court erred in
denying the motion for judgment notwithstanding the verdict on
SRM’s counterclaims for breach of contract and bad faith attorney
fees, and in denying the motion for new trial. The Court of Appeals
affirmed the verdict in favor of SRM, but in Division 2 of its opinion
reversed the verdict against Travelers on SRM’s counterclaim for
attorney fees pursuant to OCGA § 13-6-11 because the request for
attorney fees was based on a compulsory counterclaim for breach of
contract that was not independent of Travelers’ claim for breach of
contract. Travelers, 348 Ga. App. at 141-142 (2). We granted SRM’s
petition for certiorari to consider whether the Court of Appeals
correctly determined that a plaintiff-in-counterclaim asserting a
compulsory counterclaim is precluded from seeking an award for the
expenses of litigation under OCGA § 13-6-11.1
1 No party sought certiorari regarding the other portions of the Court of 2. In Byers, we relied on a Court of Appeals decision, Sanders
v. Brown, 257 Ga. App. 566 (571 SE2d 532) (2002), in holding that
“a plaintiff-in-counterclaim cannot recover attorney’s fees under
OCGA § 13-6-11 unless he asserts a counterclaim which is an
independent claim that arose separately from or after the plaintiff’s
claim.”2 285 Ga. at 540 (6). That is, attorney fees could only be
sought under OCGA § 13-6-11 where a plaintiff-in-counterclaim was
asserting a permissive, as opposed to a compulsory, counterclaim.3
However, we now conclude that Sanders, and by extension, Byers,
Appeals opinion, so those parts of the Court of Appeals judgment are not affected by our decision.
2 This holding was repeated in a footnote in Sponsler, 287 Ga. at 728 (2)
n.2, where we held that the trial court did not abuse its discretion in denying attorney fees to the husband and noted that, to the extent the husband argued that he was entitled to attorney fees under OCGA § 13-6-11, his argument was meritless.
3 A “permissive” counterclaim is “any claim against an opposing party
not arising out of the transaction or occurrence that is the subject matter of the opposing party’s claim.” OCGA § 9-11-13 (b). By contrast, a “compulsory” counterclaim is “any claim which at the time of serving the pleading the pleader has against any opposing party, if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction.” OCGA § 9-11-13 (a). were incorrectly decided on these points.
The general rule is that “an award of attorney fees and
expenses of litigation are not available to a prevailing party unless
authorized by statute or contract.” Cary v. Guiragossian, 270 Ga.
192, 195 (4) (508 SE2d 403) (1998). To that end, OCGA § 13-6-11
allows for attorney fees and litigation expenses “where the plaintiff
has specially pleaded and has made prayer therefor and where the
defendant has acted in bad faith, has been stubbornly litigious, or
has caused the plaintiff unnecessary trouble and expense[.]”4
When a defendant files a claim independent from the initiating
plaintiff’s claim, the defendant becomes a plaintiff for the purposes
of that counterclaim; that is, he is a plaintiff-in-counterclaim. See
Beall v. F. H. H. Constr., Inc., 193 Ga. App. 544, 546 (4) (388 SE2d
342) (1989) (defendant “was, in effect, a plaintiff in the independent
counterclaim”). In order for a plaintiff-in-counterclaim to assert a
claim for attorney fees and litigation expenses under OCGA § 13-6-
4 While OCGA § 13-6-11 appears in the contracts section of our Code, it
is also available to litigants in cases that do not involve contract actions. See Vogtle v. Coleman, 259 Ga. 115, 117 (3) n.2 (376 SE2d 861) (1989). 11, that party must also have another claim that is separate, or free-
standing, from the OCGA § 13-6-11 claim. See Steele v. Russell, 262
Ga. 651, 651 (2) (424 SE2d 272) (1993) (damages under OCGA § 13-
6-11 “are available to a defendant only where the defendant has
brought a counterclaim asserting a claim for relief wholly
independent of any assertion as to plaintiff’s bad faith, litigiousness,
and/or harassment in bringing the underlying action”). See also
Beall, 193 Ga. App. at 546 (4) (defendant who was sued by plaintiff
construction company for alleged overpayments, slander of title, and
removal of a lien on his property in connection with a building
contract “was, in effect, a plaintiff in the independent counterclaim
for [the construction company’s] breach of contract” and thus could
recover expenses of litigation under OCGA § 13-6-11 (citation and
punctuation omitted)); Glenn v. Fourteen West Realty, Inc., 169 Ga.
App. 549, 551 (2) (313 SE2d 730) (1984) (in plaintiff homebuyer’s
suit against realtor for fraudulent inducement, realtor’s
counterclaim for real estate commissions was an “independent
counterclaim” and thus realtor could recover expenses of litigation under OCGA § 13-6-11); Ballenger Corp. v. Dresco Mechanical
Contractors, Inc., 156 Ga. App. 425, 432 (III) (A) (1) (274 SE2d 786)
(1980) (defendant brought counterclaims in addition to its claim for
attorney fees and therefore was not barred from seeking expenses of
litigation); Homac, Inc. v. Fort Wayne Mtg. Co., 577 FSupp. 1065,
1072 (III) (N.D. Ga. 1983) (defendant permitted to seek recovery
under OCGA § 13-6-11 where it asserted counterclaim for
conversion). A plaintiff-in-counterclaim cannot recover under
OCGA § 13-6-11 unless he prevails on his independent claim. See
Hamil v. Stanford, 264 Ga. 801, 802 (3) (449 SE2d 118) (1994). See
also Gibson v. Southern Gen. Ins. Co., 199 Ga. App. 776, 777 (1) (406
SE2d 121) (1991); Fla. Rock Indus., Inc. v. Smith, 163 Ga. App. 361,
363 (3) (294 SE2d 553) (1982). Thus, a dismissal or loss at trial on
an independent claim would mean a loss on a claim under OCGA §
13-6-11, as well. See Alcovy Props., Inc. v. MTW Inv., Co., 212 Ga.
App. 102, 104 (5) (441 SE2d 288) (1994) (OCGA § 13-6-11 claim could
not survive independent of dismissal of defendant’s other
counterclaims), overruled on other grounds by Coen v. Aptean, Inc., 307 Ga. ___, (838 SE2d 860) (2020); White v. Lance H. Herndon, Inc.,
203 Ga. App. 580, 581 (4) (417 SE2d 383) (1992) (OCGA § 13-6-11
claim could not proceed independently following loss on all other
claims). Stated differently, claims under OCGA § 13-6-11 must
always travel with a viable and distinct (i.e., “independent”) cause
of action.
However, in Sanders, the Court of Appeals appeared to equate
“independent” with permissive when it held that a plaintiff-in-
counterclaim cannot recover under OCGA § 13-6-11 “where there is
a compulsory counterclaim.” 257 Ga. App. at 570 (c). We see no
basis in the text of the statute or otherwise for such an equation.
As a preliminary matter, none of the cases relied on by the
Court of Appeals in Sanders stands for the proposition for which
they were cited, namely that a plaintiff-in-counterclaim cannot
recover under OCGA § 13-6-11 when he asserts a compulsory
counterclaim. See Alcovy, 212 Ga. App. at 104 (5), White, 203 Ga.
App. at 581 (4), and Vogtle v. Coleman, 259 Ga. 115 (376 SE2d 861)
(1989). First, in Alcovy, the plaintiff filed a complaint and notice of lis pendens seeking the cancellation of deeds conveying real property
to the defendant, and the defendant asserted numerous
counterclaims in response. See 212 Ga. App. at 102. However, all
of the defendant’s counterclaims were dismissed. On appeal, the
defendant argued that the trial court erred in dismissing its claim
for litigation expenses. The Court of Appeals rightly disagreed,
holding that because the defendant “made no showing that it
asserted a viable counterclaim for relief independent of its claim of
[the plaintiff’s] stubborn litigiousness and bad faith, expenses of
litigation pursuant to OCGA § 13-6-11” were not available to the
defendant. 212 Ga. App. at 104 (5). Thus, Alcovy did not address
whether a compulsory counterclaim constitutes an “independent”
claim for the purposes of OCGA § 13-6-11. Instead, it merely
affirmed the requirement of a viable independent claim.
In White, a business sued one of its independent contractors for
breach of contract when the contractor terminated the parties’
agreement and then provided services to a competitor in violation of
that agreement. See 203 Ga. App. at 580. The defendant counterclaimed, and the trial court granted the plaintiff’s motion for
directed verdict on that counterclaim, which the defendant did not
appeal. See id. Nonetheless, the defendant argued on appeal that
the trial court erred “in refusing to submit to the jury the issue of
his entitlement to attorney[ ] fees and expenses of litigation
pursuant to OCGA § 13-6-11.” Id. at 581 (4). The Court of Appeals
determined that OCGA § 13-6-11 attorney fees and litigation
expenses were not available to the defendant “in the absence of a
viable independent counterclaim asserting a claim for relief
independent of the assertion of the plaintiff’s harassment,
litigiousness and bad faith in bringing suit.” (Citation and
punctuation omitted.) Id. Thus, like Alcovy, White did not address
whether a compulsory counterclaim constitutes an “independent”
claim for purposes of OCGA § 13-6-11.
Finally, this Court’s decision in Vogtle does not stand for the
proposition that a claim must arise separately from or after the
plaintiff’s complaint (that is, that it must be a permissive, rather
than compulsory, counterclaim) in order to constitute an independent claim for purposes of an OCGA § 13-6-11 claim. In
Vogtle, this Court considered when a defendant could recover
attorney fees in connection with a claim for malicious use of legal
process and explained that under Ballenger, “a defendant could not
counterclaim against a plaintiff for bad faith and attorney fees under
OCGA § 13-6-11 merely for bringing the suit, except as a plaintiff-
in-counterclaim where the counterclaim was on an independent
ground.” Id. at 117 (3). Thus, much like the Court of Appeals in
Alcovy and White, we never reached the question in Vogtle as to
whether only permissive counterclaims could give rise to a recovery
under OCGA § 13-6-11. Therefore, neither the text of the statute
nor the opinions cited in Sanders support its holding.
Moreover, in deciding Byers, this Court relied solely on Sanders
in holding that “a plaintiff-in-counterclaim cannot recover attorney’s
fees under OCGA § 13-6-11 unless he asserts a counterclaim which
is an independent claim that arose separately from or after the
plaintiff’s claim.” 285 Ga. at 540 (6). This Court further noted in
Byers that even if the counterclaim could be considered independent, the plaintiff-in-counterclaim would not be able to recover under
OCGA § 13-6-11 because it had prevailed on only part of its
counterclaim, and the plaintiff-in-counterclaim had failed to set
forth any facts showing that the other party had been stubbornly
litigious. See id. Further, in Byers and Sanders, neither this Court
nor the Court of Appeals acknowledged Ballenger, which held only
that in order to seek attorney fees under OCGA § 13-6-11, the
plaintiff-in-counterclaim also needed to assert a separate,
independent claim in addition to the OCGA § 13-6-11 request, not
that the counterclaim had to be permissive rather than compulsory.
3. Sanders’ holding was erroneous, and this Court’s reliance
on it in deciding Byers was misplaced. But because Byers is
precedent, we must decide whether the doctrine of stare decisis
nevertheless counsels against overruling it.
Under the doctrine of stare decisis, courts generally stand by their prior decisions, because it promotes the evenhanded, predictable, and consistent development of legal principles, fosters reliance on judicial decisions, and contributes to the actual and perceived integrity of the judicial process. Stare decisis, however, is not an inexorable command . . . . In reconsidering our prior decisions, we must balance the importance of having the question decided against the importance of having it decided right. To that end, we have developed a test that considers the age of the precedent, the reliance interests at stake, the workability of the decision, and, most importantly, the soundness of its reasoning.
(Citations and punctuation omitted; emphasis in original.) Olevik v.
State, 302 Ga. 228, 244-245 (2) (c) (iv) (806 SE2d 505) (2017).
The unsoundness of Byers’ reasoning weighs strongly in favor
of discarding its holding, as it finds no support in either statutory
text or reasoned precedent. Rather, it relies solely on Sanders,
which, as we have explained above, was wrongly decided. Nothing
in the text of OCGA § 13-6-11 suggests that awards of fees and
expenses are limited to permissive counterclaims. Nor as a practical
matter is a distinction between permissive and compulsory
counterclaims always a workable distinction in this context, as there
is a fine line, often difficult for courts to discern, between permissive
and compulsory counterclaims. See, e.g., Douglas D. McFarland, In
Search of the Transaction or Occurrence: Counterclaims, 40 CRLR
699, 708-728 (III) (2007) (noting, in the similar context of Federal Rule of Civil Procedure 13, the struggles courts have in interpreting
when a claim arises out of the same “transaction or occurrence”).
Indeed, the Byers holding creates perverse incentives and endorses
“a ‘race to the courthouse’ theory of recovery,” which arbitrarily
awards a possible avenue for recovery to the winner of such a race
while denying that same option to the other party that is similarly
asserting independent claims for recovery. See Ballenger, 156 Ga.
App. at 431 (III) (A) (1). Such a “rigid rule preventing any defendant
from recovering litigation expenses works particular inequity when
a defendant . . . is required by law to file a compulsory counterclaim
or be deemed to have waived the claim altogether.” Id. at 432 (III)
(A) (1). Each of these considerations weighs in favor of discarding
Byers.
Finally, the holding in Byers has not been deeply embedded in
Georgia law. The case is only 11 years old; we have overruled
incorrectly decided cases much older than that. See, e.g., Woodard
v. State, 296 Ga. 803, 808-814 (3) (771 SE2d 362) (2015) (overruling
24-year-old interpretation of justification statute); State v. Jackson, 287 Ga. 646, 659-660 (5), (6) (697 SE2d 757) (2010) (overruling
nearly 29-year-old interpretation of felony murder statute). This
Court has followed the problematic portion of Byers only once, in a
footnote in Sponsler, 287 Ga. at 728 (2) n.2, and the Court of Appeals
has followed Byers only six times.5
Further, our precedent on this point affects no property issues,
establishes no substantive rights, and does not involve any other
reliance interests typically recognized in the stare decisis analysis.
See Nalls v. State, 304 Ga. 168, 180 (3) (b) (815 SE2d 38) (2018). Nor
does it change the substantive rights of parties entering into a
contract; rather, at most, it affects the scope of available remedies
and the procedural posture in which these remedies may be sought.
Cf. Savage v. State of Ga., 297 Ga. 627, 641-642 (5) (b) (774 SE2d
5 See Vickery Falls, LLC v. ASIH, LLC, 354 Ga. App. ___, ___ (1) n.4 (__
SE2d __) (2020); HA&W Capital Partners, LLC v. Bhandari, 346 Ga. App. 598, 609-610 (3) (b) (816 SE2d 804) (2018); Graybill v. Attaway Constr. & Assoc., LLC, 341 Ga. App. 805, 810-811 (2) (a) (802 SE2d 91) (2017); Cronan v. JP Morgan Chase Bank, N.A., 336 Ga. App. 201, 204 (2) (784 SE2d 57) (2016); Singh v. Sterling United, Inc., 326 Ga. App. 504, 512-513 (4) (756 SE2d 728) (2014); Sugarloaf Mills Ltd. Partnership of Ga. v. Record Town, Inc., 306 Ga. App. 263, 266-267 (2) (701 SE2d 881) (2010). 624) (2015) (explaining that overruling the line of precedent at issue
would undermine the validity of countless intergovernmental
contracts). To the extent a party who has acted in bad faith, been
stubbornly litigious, or caused the other party unnecessary trouble
and expense has relied upon Byers in racing to the courthouse to file
its claims first so as to cut off the ability of the counter-party it has
mistreated to seek relief under OCGA § 13-6-11, this is not the sort
of reliance interest we have recognized as being worthy of protection.
We therefore overrule Byers, Sponsler, and the cases of the Court of
Appeals cited in footnote 5,6 in addition to Sanders, to the extent
they have held that a plaintiff-in-counterclaim cannot seek attorney
fees under OCGA § 13-6-11 for a compulsory counterclaim.
4. With Byers set aside, and given our determination in
Division 2, it is clear that SRM was entitled to seek attorney fees
under OCGA § 13-6-11, as it asserted independent claims for breach
6 We also disapprove of Maree v. ROMAR Joint Venture, 329 Ga. App.
282, 297 (6) (d) n.18 (763 SE2d 899) (2014); and Murtagh v. Emory Univ., 321 Ga. App. 411, 417 (3) (b) (741 SE2d 212) (2013), to the extent those cases follow the rule set forth in Sanders and its progeny. of contract and breach of the duty of good faith on which it prevailed
at trial. Accordingly, the Court of Appeals erred in reversing the
verdict against Travelers on SRM’s counterclaim for attorney fees;
we therefore reverse Division 2 of the Court of Appeals decision.
Judgment reversed in part. Melton, C. J., Nahmias, P. J., and Blackwell, Boggs, Peterson, Warren, and Ellington, JJ. concur.
DECIDED APRIL 6, 2020. Certiorari to the Court of Appeals of Georgia — 348 Ga. App. 136. Schoenthaler Law Group, Peter F. Schoenthaler, Neill K. Wright, Ann R. Emery, Josephine E. Graddy, for appellant. Savell & Williams, William E. Turnipseed, David M. Gram, for appellee.