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Georgia Court of Appeals Addresses Interplay of Apportionment and High/Low Agreements

September 4, 2019

 

          The Georgia Court of Appeals recently evaluated the trial court’s authority to apportion between two claims pursuant to a “High-Low” settlement agreement when the agreement is silent on the issue. A high-low agreement is a settlement agreement which sets a fixed range for payment such that the defendant agrees to pay the plaintiff a minimum recovery and plaintiff agrees to accept a maximum amount based on the possible outcomes at trial.  This issue was presented to the court following negligence claims brought as a wrongful death claim and an estate claim.

 

          Paul Knox was severely injured and later died following a motorcycle collision with a receptacle left in the street by workers from A-1 Sanitation Service, Inc. (“A-1”). His widow, Toni Knox, filed negligence claims against A-1: (1) as Paul’s surviving spouse for Paul’s wrongful death (“Wrongful Death Claim”) and (2) as Administrator of Paul’s estate for pain and suffering and funeral and burial expenses (“the Estate Claim”).  After trial, and after Knox entered into a high-low agreement, the jury returned a verdict in Knox’s favor and awarded her $4,000,000.  Knox then requested that the Court apportion the verdict completely under the Estate Claim.  A few days later, three of Paul’s four children filed a motion to intervene in order to assert their rights as wrongful death heirs. Following a hearing, the trial court allocated 100 percent of the high-low funds to the Estate Claim and the children appealed. Leanhart v. Knox, 830 S.E.2d 545 (Ga. Ct. App. 2019).

 

          Knox was the proper party to bring both such claims and also had the authority to settle or compromise the claims without any input from Paul’s children. See O.C.G.A. § 51-4-2(a).  However, Knox also had a fiduciary obligation to all of the wrongful death heirs, i.e., Paul’s children. The Court found that Knox acted in contravention of her fiduciary duties to the children by arguing that none of the settlement funds should be allocated to the Wrongful Death Claim because Paul had left them out of his will and he would not have wanted them to share in the recovery.  Despite Knox’s argument, the children maintained an absolute statutory right under O.C.G.A. § 51-4-2 to share in any recovery on that claim.  Accordingly, the descendant’s alleged “desires” are irrelevant to apportioning between the claims.  It would, however, be within the trial court’s discretion to consider such factors as the expenses that might be deducted from any recovery allocated to the estate, such as funeral and burial expenses, as well as the fact that Knox alone bore the costs of bringing the litigation.  The Georgia Court of Appeals vacated the portion of the trial court’s order allocating all of the settlement proceeds to the Estate Claim and remanded the case for further proceedings/consideration.

 

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