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Ga. SC makes ruling in case over nonexistent settlement

By Jessica M. Karmasek | Apr 27, 2012


ATLANTA (Legal Newsline) - The Georgia Supreme Court this week affirmed a lower court's award of prejudgment interest to the family of a man who was embroiled in a fraudulent wrongful death settlement.

An attorney, Paul Farr, agreed to represent the Crisler family in a lawsuit over their mother's death in a hit and run in 2004.

Though Farr never actually did any work for the family, he told them he had obtained a $1 million settlement from an insurance company in 2006.

He proceeded to wire the money from his law firm's account.

At that time, Farr asked Richard Haugabook, his father-in-law, for $1 million to cover the payout. He then deposited the money into the firm's account.

Farr's partners eventually discovered what happened and told the family, who refused to return the money.

A Clarke County Superior Court ruled that the Crislers could keep it.

Haugabook then appealed to the state Court of Appeals, which reversed the grant of summary judgment in favor of the Crislers and directed the entry of summary judgment in favor of Haugabook on a claim for money had and received.

The trial court entered summary judgment for Haugabook as directed.

Soon after, Haugabook's family -- Richard died in 2007 -- filed an amendment to his complaint, adding a prayer for prejudgment interest under OCGA § 7-4-15, and a motion for entry of final judgment awarding prejudgment interest.

The Crislers opposed the motion, pointing out that Haugabook did not seek prejudgment interest in his original complaint, and that Haugabook's amendment to his complaint seeking such interest was made without leave of court.

The trial court entered final judgment for Haugabook, awarding him the principal amount of his claim and prejudgment interest at the legal rate.

The Crislers appealed, asserting the trial court erred in awarding Haugabook prejudgment interest. The Court of Appeals affirmed.

In its ruling Tuesday, the state's high court said the issue is whether a party must make a prayer for prejudgment interest under § 7-4-15, and, if so, whether it can be made without leave of court following the grant of summary judgment.

The statute provides that "all liquidated demands, where by agreement or otherwise the sum to be paid is fixed or certain, bear interest from the time the party shall become liable and bound to pay them; if payable on demand, they shall bear interest from the time of the demand."

Also under the statute, prejudgment interest -- which flows automatically from a liquidated demand -- is to be awarded upon a judgment for a liquidated amount.

Therefore, as long as there is a demand for prejudgment interest prior to the entry of final judgment, a trial court should award it, the Court explained.

"Inasmuch as Crisler was given an opportunity to contest the award by opposing Haugabook's amendment and motion for the entry of final judgment, the award of prejudgment interest was proper," Justice Hugh P. Thompson wrote in the Court's five-page opinion.

"We note, in passing, that Crisler would not have been warranted in opposing a motion to amend to seek prejudgment interest even if, as Crisler insists, such a motion should have been made formally."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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