A jury shouldn’t have heard evidence of a lawyer-defendant’s wealth before issuing a $700,000 verdict against him, the Georgia Supreme Court decided Tuesday.

The unanimous ruling answered a question posed by the federal judge who presided over the case of a Georgia bar member sued by a former client. After the verdict, the trial judge asked for the state Supreme Court’s help in resolving a post-trial motion over whether the jury should have heard evidence of the lawyer’s wealth, saying Georgia law was uncertain.

The decision appears to settle a key issue regarding the use of an obscure Georgia statute that allows plaintiffs to collect damages for hurt feelings.

Lawyers for the defendant, James R. Holland II, say the statute might not be used very often but a ruling against their client would have had a significant impact.

“If the decision had come down the other way … I think that would have opened up floodgates of litigation,” said Carlock, Copeland & Stair partner Johannes Kingma, who argued the case for Holland at the Supreme Court. Kingma explained that claims under the statute, which allows damages for injury to “peace, happiness, or feelings,” are pursued when courts dismiss all of a plaintiff’s other avenues to recovery, or by indigent plaintiffs represented by themselves or volunteer attorneys. “Given the ruling by the Supreme Court here, those cases will not be brought as much, because the damage exposure is reduced.”

But Atlanta lawyer Brian R. Smith, who argued the case for Holland’s former client, said part of his argument was that there was no danger of a floodgate opening because a plaintiff has to prove a defendant’s conduct was willful, wanton or malicious in order to succeed under the statute.

“This does not happen very often,” said Smith. “We believe that the statute was essential for making sure that someone who behaves in the way that Mr. Holland did is punished adequately for his conduct.”

Holland came to represent Augusta resident Steven N. Caviness after Caviness was injured in a train accident in Morgan County in November 2004. According to his malpractice complaint, Caviness had been operating the train for CSX Transportation. Holland was a partner at Birmingham, Ala.-based Wettermark, Holland & Keith when he sued the railroad on Caviness’ behalf; he now has his own firm in Jacksonville, Fla.

On Nov. 16, 2007, Holland filed the lawsuit against CSX in Alabama state court under the Federal Employers Liability Act. In its answer filed on Dec. 7, 2007, CSX raised as a defense that the three-year statute of limitations had expired the day before the plaintiff filed the suit. But, according to findings by the district court that heard Caviness’ malpractice case against Holland, Holland didn’t inform Caviness of the mistake until Dec. 21, 2007.

Deadline problems

According to the district court, Holland apologized to Caviness and gave him some options, including immediately suing for malpractice. Caviness elected to hire another lawyer to investigate a malpractice claim against Holland but also to allow Holland to continue represent him in the CSX action. The Alabama court granted summary judgment to CSX on the ground that the lawsuit had been filed a day too late.

Caviness sued Holland and the Wettermark firm in Richmond County State Court. Holland and the firm were able to have the case moved to federal district court in Augusta because the parties lived in different states.

Coincidentally, the plaintiff was hurt again by a deadline. U.S. District Court Judge J. Randal Hall granted summary judgment to the defendants on the legal malpractice claim, finding a crucial expert witness report from the plaintiff was filed too late.

But the judge allowed the plaintiff’s breach of fiduciary duty claim to go to trial based on evidence that Holland had intentionally withheld information about the statute of limitations mistake from Caviness for more than a month. Kingma, Holland’s lawyer, said Holland did better than most lawyers in that he met with Caviness in person and told him he had the option to sue.

Smith, Caviness’ malpractice lawyer, said Holland engaged in bad behavior, deleting from his computer system a note reminding him of the lawsuit filing deadline, then blaming the mishap on his secretary.

Midway through the October 2011 trial, Hall ruled that Caviness couldn’t ask the jury to make Holland pay him the equivalent of a $145,000 settlement offer CSX had made prior to the filing of the FELA action. The judge based that decision on Caviness’ admission that he had rejected that offer before the statute of limitations had expired.

Wealth and happiness

One of Caviness’ other lawyers, Smith’s colleague Frank Beltran, said his side’s position was that the offer was still on the table when the statute of limitations expired. But Hall ruled that the only way Caviness could collect on his breach of fiduciary duty claim was to ask the jury for was mental distress damages for injury to his “peace, happiness, or feelings” under O.C.G.A. § 51-12-6.

Over the defense’s objections, Hall allowed the jury to hear evidence of the defendants’ wealth. This included that Wettermark, Holland & Keith grossed more than $3 million in 2010, that Holland himself made more than $1 million in 2010, and that Holland owned two homes, two boats, a BMW and a Lexus. The jury awarded Caviness $700,000 in damages.

The defendants moved for a new trial, raising among other issues the inclusion of evidence about their wealth. In ruling on the motion, Hall acknowledged a 1987 legislative change removed the language in § 51-12-6 that explicitly had said the wealth of the parties should be considered in an action for injury to the peace, happiness or feelings of the plaintiff. But Hall explained that he had allowed the wealth evidence because to exclude it would have required him to override a 1992 state Court of Appeals decision, Tahamtan v. Tahamtan, 204 Ga. App. 680, as well as the pattern jury instructions issued by the Council of Superior Court Judges of Georgia.

Hall then asked the Georgia Supreme Court to rule on the issue before he made a final decision on the defense motion for a new trial.

On Tuesday, Justice P. Harris Hines wrote that the wealth evidence shouldn’t have been put before the jury. He held that the Tort Reform Act of 1987 reflected a plan by the Georgia Legislature to eliminate from actions considered under § 51-12-6 punitive-like damages designed to deter misconduct, not just compensate the plaintiff for his injury.

Hines noted that not only did the Legislature eliminate the language about consideration of wealth from § 51-12-6, but it also added language to that section: “In such an action, punitive damages under Code Section 51-12-5 or Code Section 51-12-5.1 shall not be awarded.”

“[T]the General Assembly’s revision reflects a coherent legislative scheme,” Hines wrote. “[I]f a cause of action is within the ambit of OCGA § 51-12-5.1, evidence of the defendant’s financial circumstances may be admissible. … But, if the plaintiff proceeds under OCGA § 51-12-6, such evidence is not admissible.”

Caviness had argued the court should be careful about construing the statute this way, because the post-1987 version of the statute went against the common law rule. The Supreme Court rejected this interpretation of the case law, saying the common law had discouraged altogether causes of action for injury to peace, happiness and feelings.

Hines wrote in a footnote that juries no longer should be instructed using the offending language from the pattern jury instructions. He added that the court was overruling the Court of Appeals decision in Tahamtan to the extent it said evidence of a defendant’s wealth is admissible in a cause of action pursued under the post-1987 version of O.C.G.A. § 51-12-6.

Beltran, who represents Caviness, said his team was considering filing a motion for reconsideration, saying the court may have overlooked a 1885 decision speaking to what was permitted at common law.

“We’d like to see if we can get the court to see it our way,” said Beltran. “But if they don’t, we’ll just retry it.”

The case is Holland v. Caviness, No. S12Q1648.