Criteria for Defendants to Recover Attorney Fees in Georgia Litigation After SRM Grp., Inc. (2020)

A common question most people have is how to recover fees resulting from a lawsuit. An award of attorney fees and expenses of litigation is not generally available to a prevailing party. This is unless a contract or a statute exists providing for the recovery of fees from the opposing party. In Georgia, a plaintiff is allowed to recover fees under O.C.G.A § 13-6-11 if a defendant has acted in bad faith, been stubbornly litigious, or caused unnecessary trouble and expense. Despite the fact that the statute states "plaintiff" on its face, a defendant asserting counterclaims may also seek their fees if they meet certain requirements.

The Defendant Must Assert an Independent Claim

Although O.C.G.A. § 13-6-11 has been interpreted to also apply to defendants, a defendant cannot simply assert a counterclaim for fees. The defendant must also assert another independent claim. In other words, if a defendant asserts a counterclaim, they are also entitled to also assert a claim for fees. This is because a defendant is considered the plaintiff of their own counterclaims—the “plaintiff-in-counterclaim.” Previously not every counterclaim would be able to benefit from O.C.G.A. § 13-6-11; however, a recent Supreme Court of Georgia decision now provides defendants a better chance at recovering fees.

Impact of Georgia Supreme Court Decision in SRM Grp., Inc. v. Travelers

Prior to the Supreme Court of Georgia’s recent ruling in SRM Grp., Inc. v. Travelers Prop. Cas. Co. of Am., 841 S.E.2d 729, 731 (Ga. 2020), in order for a defendant’s counterclaim to include a claim for fees under O.C.G.A. § 13-6-11, the independent claim could not have arisen from the same transaction or occurrence of the plaintiff’s original claim. This essentially gave an advantage to the party who came to the court first to file their claim. However, in SRM Grp., Inc., the Supreme Court of Georgia has reinterpreted O.C.G.A. § 13-6-11 to embrace all counterclaims, and in so doing overruled decade-old caselaw in the process. As such, a defendant is now able to seek recovery of its fees regardless of the facts underlying the counterclaim.

Why SRM Grp., Inc. Matters When You Are Sued

SRM Grp., Inc. is obviously important to you and your business in a lawsuit because it allows claims for attorney fees if the party suing you “has acted in bad faith, been stubbornly litigious, or caused unnecessary trouble and expense.” But the case’s holding is also critical because it specifies the nature of counterclaims that will justify a demand for fees. It becomes very important your attorney gives attention to other options and potential counterclaims available when evaluating how to respond to a lawsuit.

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