Georgia’s Apportionment Statute Applies to Purely Monetary Loss, But Does Not Abrogate Joint and Several Liability for Tortfeasors Acting in Concert

By Scott L. Bonder

On March 13, 2019, the Georgia Supreme Court issued a significant decision that clarified two aspects of Georgia’s Apportionment Statute, § 51-12-33.  First, the Court held that the Statute applies to purely monetary, or “pecuniary,” losses. Federal Deposit Insurance Corp. v. Loudermilk, __ S.E.2d __, 2019 WL 1303652 at *6 (Ga. March 13, 2019).  Second, the Court held that the Statute does not require apportionment when tortfeasors act in concert, such as through a civil conspiracy.  Id. at *8.

In Loudermilk, the FDIC acted as receiver for a defunct bank. Id. at 1.  In its role as receiver, the FDIC sued the bank’s former directors and officers for negligently, and grossly negligently, approving 10 commercial real estate loans that cost the bank $22 million dollars in losses.  Id.  Both before and during the trial, the directors and officers requested a jury charge under Code Section 51-12-33, seeking to apportion damages among themselves.  The pertinent portion of Code Section 51-12-33 provides:

Where an action is brought against more than one person for injury to person or property, the trier of fact, in its determination of the total amount of damages to be awarded, if any, shall . . . apportion its award of damages among the persons who are liable according to the percentage of fault of each person.

O.C.G.A. § 51-12-33(b) (emphasis added).  The district court denied the defendants’ requests for an apportionment charge.  Id.

Ultimately, the jury returned an approximately $5 million-dollar verdict against the defendants, jointly and severally, for negligently issuing 4 of the 10 commercial loans at issue.  Id.  For the defendants, being found jointly and severally liable meant that the FDIC could collect the full amount of the judgment from any of them, regardless of their relative degree of fault for issuing the 4 “bad” loans.

On appeal, Defendants argued the district court erred by failing to issue an apportionment instruction.  Id.  The Eleventh Circuit Court of Appeals then certified three questions to the Georgia Supreme Court: 1) Does the Apportionment Statute apply to purely monetary losses; 2) Did the Apportionment Statute abrogate Georgia’s common-law rule of joint and several liability for tortfeasors who act in concert; and 3) Do board members act “in concert” by engaging in their decision-making process?

As noted above, the Georgia Supreme Court answered the first question in the affirmative and the second question in the negative.  As to the first question, the Supreme Court held that the term “property” in Code Section 51-12-33(b) includes personal property, not just real property.  Thus, it held, Code Section 51-12-33(b) applied to tort claims alleging purely monetary, or “pecuniary,” losses, such as the losses attributable to the bad loans in Loudermilk.

Nevertheless, the Court held the district court did not err by failing to give an apportionment instruction.  That is because, it held, the FDIC accused the directors and officers of engaging in concerted activity and the Apportionment Statute “[does] not abrogate Georgia’s common-law rule imposing joint and several liability on persons who act in concert.”  Id. at *11.  The Court reasoned that the Apportionment Statute speaks in terms of allocating “fault,” but in cases involving truly concerted activity, fault is indivisible.  “That is because true concerted action is predicated on the idea that wrongdoers ‘in pursuance of a common plan or design to commit a tortious act . . . are equally liable,’ and that through ‘joint enterprise’ and ‘mutual agency . . . the act of one is the act of all.’” Id. at *9 (citations omitted).

The Court declined to answer the final question certified by the Eleventh Circuit—whether board-members engaged in their decision-making process act “in concert.” Instead, it left the determination as to whether particular defendants engage in “mutual agency” and a “joint enterprise” to the lower courts. Id. at *10.

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