Paul Smith and Holly Loy Smith said they will appeal a judge’s ruling awarding the city of Atlanta attorney fees and continue to fight what they termed a retaliatory firing. (John Disney/Daily Report)

Correction appended

A judge on Tuesday slapped a former assistant city attorney and her lawyer-husband with more than $136,000 in attorney fees and costs stemming from her whistleblower suit against former colleagues with the Atlanta city government.

Holly Loy Smith claims the defendants, including City Attorney Cathy Hampton, retaliated after she raised concerns that city lawyers were mishandling litigation involving the city’s sewer department.

Following a nearly three-hour hearing, Fulton County Superior Court Judge Henry Newkirk ordered Smith and her husband, S. Paul Smith, to reimburse the city $136,623 for what it has spent to deal with the suit as it was filed, dismissed, re-filed and pared down to a single Whistleblower Act count.

Newkirk’s order came in response to a motion the city filed saying the Smith case was so baseless it met the requirements of Georgia law holding that attorney fees “shall be assessed” against a party bringing a claim “exhibiting such a complete absence of any justiciable issue of law or fact that it could not be reasonably believed that a court would accept the asserted claim …”

Holly Smith termed the day’s events “ridiculous,” while Paul Smith said he would appeal Newkirk’s fee order. “Today’s events were mind-boggling,” he said. “The Civil Practice Act gets subverted, innuendo is treated as gospel. With all due respect, I feel the judge is wrong, and we will be appealing.”

One of the city’s outside attorneys, Nelson Mullins Riley & Scarborough partner Anita Wallace Thomas, characterized Holly Smith’s claims as “bogus” and a “failed attempt at extortion” as she asked Newkirk to grant the motion awarding fees.

Deputy City Attorney Kimberly Patrick said in an emailed statement, “We are pleased with the rulings issued by the Court today, including the award of sanctions against the Plaintiff and her attorneys for the frivolous manner in which they have conducted this case. We look forward to successfully prevailing in this lawsuit in totality in the near future.”

According to the suit and subsequent filings, Holly Smith was hired in July 2011 as an assistant city attorney in the department that handles sewer and storm water damage. While there, she became concerned that cases were being mishandled.

Smith approached Hampton with her concerns and was told to discuss them with Deputy City Attorney Eric Richardson, who is now a Fulton County State Court judge. Smith’s complaint said she was never able to arrange a meeting with Richardson and that her departmental supervisors continued to handle cases inappropriately.

Among her allegations were that the city jeopardized a long-running case involving a property owner’s flooding complaints by initiating remedial measures just before trial and allowing them to be presented to the jury, which could be interpreted as an admission of liability. In another case, she charged, a judge had ordered her to prepare an order granting the city summary judgment on three separate claims when her supervisor inexplicably ordered her to abandon one of the claims and let the case proceed to trial.

In an email quoted in court papers, Holly Smith told Hampton that her supervisor, Torrey Smith (no relation), had “committed malpractice” in his handling of those and other cases, and had directed her to do so as well.

Holly Smith met with Hampton and Human Resources Commissioner Yvonne Yancey and was told an investigation had been launched and that she would be protected, according to her suit. Instead, after the investigation concluded that “the matter was simply a disagreement about litigation strategy,” the complaint said Smith was terminated.

In August 2012, the Smiths sent a demand letter to the city offering to settle her claims for $250,000 plus reinstatement to her old position, or a lump sum payment of $400,000.

In November 2012, Paul Smith and his Smith & Katz law partner Samuel Katz sued the city, Hampton, Yancey, Richardson, Torrey Smith and Roger Bhandari, Holly Smith’s former immediate supervisor. The suit sought damages for violation of Georgia’s Whistleblower statute, alleging that Holly Smith was fired in retaliation for voicing her concerns; and for the intentional infliction of emotional distress.

In 2013, the city filed a motion to dismiss, asserting that the individual defendants could not be sued under the state Whistleblower Act, which allows such suits only against public employers. The Smiths voluntarily dismissed those claims against the individual defendants, and they also dropped the intentional infliction of emotional distress claims against Bhandari, Richardson and Smith.

In response to another defense motion, the court dismissed the remaining claims without prejudice in June 2013.

The following month Smith filed an amended complaint against the city, Hampton and Yancey, again asserting whistleblower and infliction of distress claims.

The city responded by moving for attorney fees, arguing that the new suit was virtually identical to the original one and was filed solely to harass Holly Smith’s former employers. The city claimed the new suit was an effort “to force the City into a settlement by making public accusations that malign the character of the individual defendants named in the suit as well as the integrity of the City’s Law Department.”

The city bolstered its arguments by presenting evidence that Holly Smith had filed a prior discrimination action against former employer Hawkins & Parnell and had discussed filing suit against another former employer, Moraitakis, Kushel & Pearson.

In court Tuesday, Thomas said that history revealed a “pattern” of Holly Smith trying to leverage money from ex-employers by the threat of legal action.

Not so, countered Paul Smith, arguing that his wife was being targeted for defending herself against wrongdoing, “exactly what the courts are for,” he said.

Regarding disputes with prior employers, he said, Holly Smith had been granted a settlement in one and abandoned the other because she couldn’t afford to pursue the claims.

Smith said the city had consistently delayed turning over discovery materials, and asked Newkirk to sanction the defendants and award the plaintiff attorney fees.

Thomas’ co-counsel, Baker, Donelson, Bearman, Caldwell & Berkowitz partner David Gevertz, said the city had spent tens of thousands of dollars replying to Smith’s discovery requests, but he conceded that some information had been difficult to find.

Newkirk declined to sanction the city, but he admonished its attorneys to comply with discovery requests.

Paul Smith said he felt the city was trying to outgun his side with high-dollar law firms.

“My takeaway is, ‘How dare you little people with your little law firm dare take actions against the ninth-largest city in the nation and against all our lawyers,” he said.

The case is Smith v. City of Atlanta, No. 2012CV223818.

This story has been changed to reflect the following correction. The last sentence in the March 12 story, “City ‘whistleblower’ hit with $136K order,” included a typographical error that turned the word “actions” into “auctions.” The final sentence, quoting lawyer Paul Smith, should read: “My takeaway is, ‘How dare you little people with your little law firm dare take actions against the ninth-largest city in the nation and against all our lawyers,” he said.