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

Heading: Fresch Was Required To Obtain The Circuit Court's Approval Of The Settlement Agreements.

Text: Fresch also signed and apparently approved the settlement agreements in this case. It is unclear whether she meant to do so in her capacity as next friend or merely in her capacity as coplaintiff. Assuming, arguendo, that Fresch did purport to execute the agreements in her capacity as Leslie's next friend, we hold that her authorization was insufficient to validate the agreements with regard to Leslie in the absence of the circuit court's approval. In Lalakea v. Laupahoehoe Sugar Co., 35 Haw. 262 (1939), reh'g denied, 35 Haw. 349 (1940), this court addressed a stipulation to a consent decree concerning the partition of a parcel of real property, entered into by the guardian ad litem of a minor without judicial inquiry into the fairness of the agreement. The Lalakea court observed that [c]ourts have always been exceedingly zealous in guarding the rights and interests of minors. They have usually permitted guardians and guardians ad litem to do such things as were clearly to the advantage of the ward, and when the advantage to the ward was not clear[,] they have instituted inquiry, and have sometimes referred the question of advantage to a master, before giving heed to the agreement of such guardian. The agreement of the guardian ad litem in regard to mere formal matters, such as relate to the speeding of the cause, as, for instance, entering into a stipulation to transfer the case from one court to another court of like jurisdiction, has been sanctioned. On the other hand, courts have refused to permit a guardian ad litem to make an agreement that the decision in one case shall determine that in another, although the cases involve precisely the same facts and the same parties, and substantially the same points of controversy, on the ground that a guardian ad litem had but one duty to perform, and that was to defend the suit. The courts have been practically unanimous in holding that a guardian ad litem can admit nothing against and waive nothing in favor of his ward[.] Id. at 283 (citations and internal quotation marks omitted) (emphases added). Based on its extensive survey of the then-current case law, the Lalakea court held that it may be said to be the settled rule in this State and elsewhere that a next friend or guardian ad litem cannot[,] by admission or stipulation[,] surrender the rights of the infant. It is the duty of the court to protect the interests of the infants, and to see to it that their rights are not bargained away by those who represent them. Id. at 285 (emphasis added). The Lalakea court further ruled that, where the consent decree waives or surrenders substantial rights of the minor, the decree will not be binding because it would denote a surrender of the rights of the infant without investigation by the court. Id. at 283. See also In re Estate of Campbell, 46 Haw. 475, 529, 382 P.2d 920, 956-57 (1963) (holding that a stipulation entered into by a guardian ad litem without investigation by the court was not binding under the rule of Lalakea ); In re Estate of Campbell, 42 Haw. 586, 610 (1958) (noting, pursuant to Lalakea, that the court may not blindly rubber stamp the action of a guardian ad litem). We can discern no reason why a different rule should apply to adult incompetents represented by a next friend. Cf. Centala v. Navrude, 30 Mich.App. 30, 186 N.W.2d 35, 36 (1971) (holding that prior Michigan case law requiring trial courts to approve settlement agreements made by the guardians of minors applied likewise to settlements agreed to by the guardians of adult incompetents). As Leslie points out, a number of other jurisdictions share the position that the trial court must approve a settlement agreement negotiated by a next friend or guardian ad litem. See, e.g., Kingsbury v. Buckner, 134 U.S. 650, 680, 10 S.Ct. 638, 33 L.Ed. 1047 (1890); Green, 111 F.3d at 1300-01; Dacanay v. Mendoza, 573 F.2d 1075, 1079 (9th Cir.1978); Crawford, 84 F.R.D. at 87; Walker v. Stephens, 3 Ark.App. 205, 626 S.W.2d 200, 205 (Ark.Ct.App.1981); Ott v. Little Company of Mary Hospital, 273 Ill.App.3d 563, 210 Ill.Dec. 75, 652 N.E.2d 1051, 1057, appeal denied, 164 Ill.2d 567, 214 Ill.Dec. 323, 660 N.E.2d 1272 (1995); Centala, 186 N.W.2d at 36; Kress v. Lederle Laboratories, 901 S.W.2d 206, 208 (Mo.Ct.App.1995); Ballard v. Hunter, 12 N.C.App. 613, 184 S.E.2d 423, 427 (1971), cert. denied, 280 N.C. 180, 185 S.E.2d 704 (1972); Rexroat v. Prescott, 570 S.W.2d 457, 459 (Tex.Ct.App.1978); but see Baker v. Binder, 34 Mass.App.Ct. 287, 609 N.E.2d 1240, 1243 (1993) (holding that, in the absence of special circumstances, such as fraud, bad faith, or conscious disregard of a minor's interests, a settlement for a minor will not be set aside because it was the product of the parties' agreement). The Estate relies upon Eagan v. Jackson, 855 F.Supp. 765, 775 (E.D.Pa.1994), in which the United States District Court for the Eastern District of Pennsylvania concluded that Federal Rules of Civil Procedure (FRCP) Rule 17(c), which is substantially similar to HRCP Rule 17(c), does not authorize a court to issue an order approving a proposed settlement agreement. However, having ruled that FRCP Rule 17(c) was not the source of such a power, the Eagan court proceeded to rule that the more certain sources for this Court's authority to approve the settlement of the case is the state law that this Court must apply, [10] as well as the Court's inherent duty to protect the interests of minors and incompetents that come before it.  Id. (emphasis added). The Eagan court quoted the following description of the court's inherent power from the decision of the United States Court of Appeals for the Ninth Circuit in Dacanay, 573 F.2d at 1079: It is an ancient precept of Anglo-American jurisprudence that infant and other incompetent parties are wards of any court called upon to measure and weigh their interests. While the infant sues or is defended by a guardian ad litem or next friend, every step in the proceeding occurs under the aegis of the court. Id. (emphasis added). We agree with the Eagan court's conclusion that the trial court's power and responsibility to approve a proposed settlement of a ward derives from its common law inherent power, rather than from the plain language of HRCP Rule 17(c). As implied by Eagan, moreover, we hold that the HRCP present no impediment to the foregoing power and duty. We reject the circuit court's reasoning that, merely because HRCP Rule 55 expressly provides that default is not to be entered against an infant or incompetent under certain circumstances, and HRCP Rule 41(a)(1)(A) contains no express provision for the trial court's review of a settlement agreement executed by a next friend, the protection of the HRCP is manifestly limited to the interests of minors and incompetent party defendants and does not extend to minors and incompetent plaintiffs. Such an interpretation does not comport with the HRCP's goal of reflect[ing] the essentials of due process and fair play, see Bank of Hawaii v. Horwoth, 71 Haw. 204, 216, 787 P.2d 674, 681 (1990), or the prescription of HRCP Rule 1 (1996) that the rules shall be construed to secure the just ... determination of every action. Cf. Green, 111 F.3d at 1300-01 (rejecting a similar argument raised with respect to FRCP Rule 41(a)(1)). Accordingly, we adhere to our decision in Lalakea and hold that the next friend of an incompetent adult may not validate a settlement agreement on behalf of the incompetent party without the approval of the court.