Opinion ID: 2614631
Heading Depth: 2
Heading Rank: 3

Heading: The Circuit Court Abused Its Discretion In Failing To Assess The Fairness Of The Apportionment Of The Settlement Proceeds.

Text: In its amended COLs, the circuit court ruled that, [i]n the specific circumstances of this case, the exercise of inherent power to set aside the dismissal is not necessary to prevent unfair results or to correct a wrong. We interpret the circuit court's COL as essentially deciding, notwithstanding Leslie's rejection of the settlement agreements, that the agreements were fair and should remain in force. In arriving at the foregoing conclusion, the circuit court expressly declined to investigate the fairness of the apportionment of the settlement proceeds among the plaintiffs. We hold that the circuit court thereby abused its discretion. The parties appear to agree with the circuit court that the settlement amounts were for policy limits with respect to all three policies. [11] However, Leslie complains that the apportionment of the settlement proceeds was unfair as to him. [12] The record indicates that Leslie was apportioned $105,000.00 of the $250,000.00 Liberty Mutual settlement and $16,000.00 of the $35,000.000 settlement amounts derived from each of the two UIM policies. Accordingly, although Leslie was unquestionably the primary injured party, he received less than half of the total recovery. Relying on the Intermediate Court of Appeals' (ICA) decision in Gilmartin, the circuit court ruled that it need not consider the fairness of the apportionment between the plaintiffs because it constitute[d] a `dispute regarding the agreement [which] is totally separate and distinct from the dispute underlying the original action.' Gilmartin, however, is inapposite. In Gilmartin, the plaintiff filed a motion for the enforcement of a settlement agreement with the trial court after a dispute developed between the parties as to its terms. 10 Haw.App. at 287, 869 P.2d at 1348-49. The ICA held that a trial court may, in its discretion, grant a motion to vacate a prior dismissal and enforce a settlement agreement but that, if a motion to vacate a prior dismissal and enforce a settlement agreement is brought years after the original action was terminated, or the dispute regarding the agreement is totally separate and distinct from the dispute underlying the original action, a trial court could, in the exercise of its discretion HRCP Rule 60(b), decline to vacate a prior dismissal. Id. at 295, 869 P.2d at 1352. As Leslie points out, the motion under consideration in this case was not proffered for purposes of enforcing a settlement agreement; rather, it sought recission of the agreement. Moreover, unlike the parties in Gilmartin, neither Leslie nor Fresch possessed the independent authority to ratify the settlement agreement in the first instance. In Dacanay, a minor's guardian ad litem initially concurred in a settlement agreement but then repudiated it prior to the trial court's approval. Id. at 1077. The Ninth Circuit held that a guardian ad litem may repudiate his or her approval of a settlement agreement on behalf of his or her ward if he or she does so prior to the trial court's approval, so long as the repudiation is not arbitrar[y] and capricious[] in the sense that [the guardian ad litem's] conduct is inimical to the best interests of the court's ward. Id. at 1080. If the trial court finds that the repudiation is arbitrary and capricious, it may approve the settlement despite the guardian ad litem's change of heart. Id. In this way, the guardian ad litem's opinion is accorded some degree of deference, but the court does not surrender its jurisdiction over the ward to its officer. Id. See also Scruton v. Korean Air Lines Co., Ltd., 39 Cal.App.4th 1596, 46 Cal.Rptr.2d 638, 644 (1995) (holding that a trial court could not unilaterally and summarily enforce the repudiated compromise without first determining whether in rejecting the agreement [the guardian ad litem] had acted contrary to the best interests of the minors). In the present case, it is the ward himself, rather than the next friend, who has attempted to repudiate the settlement agreements. Leslie's next friend opposes Leslie's action, as evidenced by her memorandum in opposition to Leslie's motion to vacate. Because Leslie is presumptively incompetent to manage the litigation, his repudiation of the settlement agreements may not merit the same level of deference as the repudiation of a next friend. But cf. Christina B. v. Agatha B., 19 Cal.App.4th 1441, 23 Cal. Rptr.2d 918, 926-27 (1993) (holding that, while the [trial] court properly found [that the ward] was unable to assist counsel in preparing her case, the record fails to show [that] she was incapable of expressing her wishes and exercising the judgment necessary to determine whether to waive her trial rights). At the very least, however, Leslie retains the power to direct the circuit court's attention to its own duty to insure that any settlement agreement is fair to its ward. See discussion supra in section III.B. It is intuitively obvious, in order for such an inquiry to actually protect the interests of the ward, that the inquiry must extend to an assessment of the fairness of the apportionment of the proceeds among the plaintiffs. The circuit court's duty in this regard was rendered all the more crucial by Fresch's apparent conflict of interest. As a coplaintiff, Fresch's self-interest regarding her personal share of the aggregate settlement proceeds was plainly adverse to her fiduciary duty to maximize the result for Leslie. See Grunewald v. Technibilt Corp., 931 S.W.2d 593, 597 (Tex.Ct.App.1996) (A [next friend] must act as a fiduciary with respect to the [ward's] interests. As a fiduciary, the [next friend's] duty to the [ward] is one of integrity, loyalty, and the utmost good faith. (Citation omitted.)). Accordingly, her proposed apportionment should have been closely scrutinized by the circuit court. We hold that the circuit court's refusal to address the issue constituted an abuse of discretion.