Court Opinion

ID: 4217565
Source: CourtListenerOpinion
Date Created: 2017-11-03 13:13:29.826485+00
Date Added: 2024-06-11T14:42:20.324534
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.

                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-0781-16T1

V.M., by his Guardian ad Litem
LaTANYA MURPHY and LaTANYA
MURPHY, Individually,

        Plaintiffs-Respondents,

v.

JERSEY SHORE UNIVERSITY
MEDICAL CENTER formerly known
as Jersey Shore Medical Center,
MERIDIAN HEALTH, CHARLES H. HUX,
M.D., and STEVEN FELD, M.D.,

        Defendants-Respondents,

and

JERSEY SHORE PERINATAL INSTITUTE,
ELIZABETH BROWNELL, M.D., CATHY
CHERON, M.D., JOSEPH C. CANTERINO,
M.D., DONNA BENNETT, M.D., ANNIE
BORDALLO, M.D., DAVID RAMOS, M.D.,
ELIZABETH ASSING, M.D., FAWAZ
KASHLAND, M.D., VIVIEN PACOLD, M.D.,
UNIVERSITY OF MEDICINE & DENTISTY OF
NEW JERSEY – ROBERT WOOD JOHNSON
MEDICAL SCHOOL,

        Defendants,

and

GEORGE E. LAUBACH, M.D.,
     Defendant-Appellant.
___________________________________________

          Argued October 23, 2017 – Decided November 3, 2017

          Before Judges Sabatino and Ostrer.

          On appeal from Superior Court of New Jersey,
          Law Division, Monmouth County, Docket No. L-
          1489-09.

          Mark A. Petraske argued the cause for
          appellant (Buckley Theroux Kline & Petraske,
          LLC, attorneys; Mr. Petraske, of counsel and
          on the briefs).

          Sharyn Rootenberg argued the cause for
          respondents V.M. and LaTanya Murphy (Chase
          Kurshan Herzfeld & Rubin, LLC, attorneys;
          Michael B. Sena and Ms. Rootenberg, on the
          briefs).

          Joseph A. DiCroce argued the cause for
          respondent Steven Feld, M.D. (Law Offices of
          Joseph A. DiCroce, LLC, attorneys; Mr.
          DiCroce, on the briefs).

PER CURIAM

     In this multi-party medical malpractice action, defendant

George E. Laubach, M.D., appeals from the trial court's October

7, 2016 order finalizing and approving the terms of a settlement

with plaintiff, an incapacitated adult, pursuant to Rule 4:44-3

and Rule 4:48A.   Defendant argues that the court erred in imposing

in its final order several material terms as to which he or his

insurer had not agreed.

                                 2                          A-0781-16T1
       For the reasons that follow, we conclude the October 7, 2016

order must be vacated without prejudice, and the matter remanded

to the trial court.     The record shows there was not an enforceable

"meeting of the minds" between the parties as to all material

terms when the supposed settlement was serially presented to the

court for approval.      Moreover, even if we were to conclude that

an enforceable mutual agreement existed as to certain features of

a settlement, the court strayed from the governing principles of

Impink v. Reyes, 396 N.J. Super. 553 (App. Div. 2007), by imposing

additional material terms upon defendant and his insurer over

objection.

                                    I.

       We need not recite at length the protracted, and often

convoluted,    procedural   history       of   this   matter   that     entailed

multiple proceedings spanning over a full year after the jury was

discharged mid-trial.

       Simply stated, Dr. Laubach and various co-defendants were

sued for negligence in connection with the treatment and handling

of plaintiff LaTanya Murphy's pregnancy in 1993 and her son

plaintiff    V.M.'s   delivery. 1   Following         V.M.'s   birth,    he   has

sustained a variety of debilitating conditions to such a degree

1
    Ms. Murphy is the mother and guardian ad litem of V.M.

                                      3                                  A-0781-16T1
that he has been declared an incapacitated adult.                   Plaintiffs

asserted that defendants, including Dr. Laubach, deviated from

applicable standards of care, causing in full or in part V.M.'s

permanent disabilities.           Defendants denied such liability.

     A jury trial commenced on August 24, 2015 against several of

the named defendants, including Dr. Laubach.               After numerous days

of testimony, but before the proofs were complete, Dr. Laubach's

attorney   and     counsel   for    other   defendants     presented   a     joint

settlement    proposal       to    plaintiffs     on   September    24,      2015.

Negotiations ensued.

     Certain settlement terms were orally placed on the record by

counsel on October 7, 2015.            Among other things, counsel stated

that Dr. Laubach and co-defendant Dr. Steven Feld would pay $1.25

million in settlement through their insurer in exchange for their

dismissal and releases from plaintiffs; co-defendant Dr. Charles

H. Hux would be dismissed without contributing to the settlement.2

Defendant's counsel further stated to the court that it was

contemplated that the settlement funds would be placed into a

separate Special Needs Trust ("SNT") for V.M.               He noted that the

insurer    would    be   issuing     only   two   checks    to   implement      the

2
  As a separate item, co-defendant Jersey Shore University Medical
Center agreed to pay $150,000 in settlement to plaintiffs. That
settlement apparently had been implemented without dispute, and
is not before us as an issue on this appeal.

                                        4                                  A-0781-16T1
settlement: one to the trust and a second check to plaintiffs'

attorneys for their fees and costs.     Plaintiffs' counsel stated

on the record that the "mechanism" for the payment and application

of the settlement funds was to be determined by the plaintiffs at

a future time.     Notably, at this settlement hearing plaintiffs'

counsel stated on the record to V.M.'s mother "you will decide

after we have consultations as to how you want to take the rest

of the money, whether in – whether a [SNT] annuity or otherwise[,]"

to which she replied "[r]ight."      There was no mutual agreement

placed on the record that day as to who would administer the SNT,

if one were created.

     Subsequently, on March 1, 2016, counsel appeared before the

court at an initial "friendly hearing" pursuant to Rule 4:44-3 and

Rule 4:48A.   At that hearing, V.M.'s mother was sworn in as a

witness and testified.    She expressed a firm desire at that time

to have the entire amount of settlement funds remitted to her as

V.M.'s guardian.     By the end of the hearing, however, after

colloquy with the court, V.M.'s mother appeared to convey her

willingness to enter into an SNT.     The friendly hearing was not

concluded that day, in contemplation of resuming it at a later

date.

     Several months passed. In the meantime, the trial court

requested a local attorney, one with expertise in handling the

                                 5                          A-0781-16T1
settlement of cases involving minors and incompetent adults, to

provide the court with advice on a settlement disbursement plan

for V.M.    That attorney, who essentially acted as a consultant to

the court, recommended certain elements of an SNT, which he

proffered   in   a   subsequent    letter.     Among    other   things,   the

consulting attorney recommended that the SNT be funded through the

purchase of an annuity.         He also recommended that V.M.'s mother

be designated as the sole trustee of the SNT.              In addition, he

recommended payment up front of a $30,000 portion of the settlement

funds to address some of V.M.'s immediate needs for housing and

transportation.

     Plaintiffs      accepted     the   consulting     attorney's   ultimate

recommendations.     However, defendant and his insurer did not fully

agree with them, objecting in particular to: (1) being required

to purchase an annuity; (2) making a separate up-front payment;

and (3) designating V.M.'s mother as sole trustee of the SNT,

without there being a co-trustee or some other independent method

of oversight of the disbursement of the trust funds.

     A second friendly hearing was conducted on September 20,

2016.   Again, defendant's counsel voiced disagreement with the

proposed settlement terms, particularly the mandated purchase of

an annuity, the separate up-front payment, and the appointment of

V.M.'s mother as sole trustee of the SNT, without bond.

                                        6                            A-0781-16T1
     After considering the parties' positions, the court ruled

that the proposed settlement terms recommended by the consulting

attorney were in V.M.'s best interests.      Consequently, it issued,

over defendant's continued objection, a six-page final order on

October 7, 2016.   Among other things, the order specified that:

defendant's insurer would fund the SNT through the purchase of an

annuity from another designated insurance company; the insurer

would make a $30,000 separate payment directly to the SNT for

V.M.'s immediate needs; the insurer would also make a payment to

plaintiffs' law firm; and V.M.'s mother would serve as the sole

trustee of the SNT, without bond.

     Defendant   appealed    the   court's   October   7,   2016    order.

Defendant has also appealed the trial court's ruling that he or

his insurer must pay a yet-to-be-quantified sum3       in counsel fees

to plaintiffs for failing to carry out the settlement terms

specified by the court.     In the meantime, defendant has deposited

the sum of $1.25 million into court, without prejudice to its

rights, pending the outcome of the appeal.

3
   Although  this   loose  end   arguably   renders  the  appeal
interlocutory, we choose to exercise jurisdiction nonetheless in
the interests of justice and grant leave to appeal.

                                    7                              A-0781-16T1
                                     II.

     The legal principles pertinent to this dispute are well

established.        There is a strong and longstanding public policy

that favors the settlement of litigation.           Brundage v. Estate of

Carambio, 195 N.J. 575, 601 (2008) (citing Jannarone v. W.T. Co.,

65 N.J. Super. 472, 476 (App. Div.), certif. denied, 35 N.J. 61

(1961)).    Settlements provide a measure of repose and finality to

disputes that would otherwise persist and burden the litigants and

our court system if they were not amicably resolved.

     A settlement is a type of contract.          See Pascarella v. Bruck,

190 N.J. Super. 118, 124-25 (App. Div.), certif. denied, 94 N.J.
600 (1983).     It is well settled that "[a] contract arises from

offer and acceptance, and must be sufficiently definite 'that the

performance to be rendered by each party can be ascertained with

reasonable certainty.'"        Weichert Co. Realtors v. Ryan, 128 N.J.
427, 435 (1992) (quoting W. Caldwell v. Caldwell, 26 N.J. 9, 24-

25 (1958)); see also Savarese v. Pyrene Mfg. Co., 9 N.J. 595, 599

(1952).

     "Where the parties do not agree to one or more essential

terms   .   .   .    courts   generally    hold   that   the   agreement    is

unenforceable."       Weichert Co. Realtors, supra, 128 N.J. at 435;

see also Heim v. Shore, 56 N.J. Super. 62, 72 (App. Div. 1959)

("[T]he recipe for the making of a binding contract requires if

                                      8                              A-0781-16T1
not absolute definiteness and certainty on essential terms, at

least   expressions     of   assent    sufficient        to   permit     reasonable

implications to be drawn as to the performance to be rendered.").

     Therefore, a settlement is not enforceable until the parties

have agreed on all essential terms.                 Mosley v. Femina Fashions,

Inc., 356 N.J. Super. 118, 126 (App. Div. 2002), certif. denied,

176 N.J. 279 (2003).         Releases or other closing "contingencies"

are essential terms that must be approved by both parties.                       Ibid.

     These general principles were illuminated by this court in

Impink, supra, 396 N.J. Super. at 558, in the specific context of

a proposed settlement of a personal injury claim involving a minor

plaintiff.     The proposed settlement was presented to the trial

court for approval under Rule 4:44-3.                Id. at 559.    Initially, the

parties agreed to settle the minor's lawsuit for a specified amount

in cash.     Id. at 558.     However, at the ensuing friendly hearing,

the minor's counsel moved to compel the defendants' insurer to

remit the settlement proceeds by purchasing an annuity that would

function as a structured settlement, payable to the minor or his

guardians in future installments. Id. at 559.                       The defendants

objected to this modification, noting that they and their insurer

had only agreed to pay the settlement proceeds in cash.                    Ibid.

     The trial court rejected the defendants' objection in Impink,

finding    that   the   purchase      of       an   annuity   was   in   the     minor

                                           9                                   A-0781-16T1
plaintiff's best interests.       Ibid.   As described in our opinion,

the trial court reasoned that it "was not changing the terms of

the settlement, but rather directing how and to whom the proceeds

[were] to be paid."    Ibid.

     On appeal in Impink, we reversed the trial court's order and

remanded for further proceedings.         Id. at 559-65.      Although we

recognized the public policies favoring the voluntary settlement

of civil disputes, we concluded the trial court had exceeded its

authority   by   imposing   on   the   defendants   a   material   term    of

settlement, i.e., the annuity, as to which they had never agreed.

Id. at 560-61.    As the late Judge Thomas Lyons cogently explained,

the defendants' insurer had a legitimate basis for withholding its

assent to the proposed annuity purchase:

                 The trial judge noted that the structure
            would not prejudice defendants' insurer.
            Defendants' insurer did not provide a specific
            documented example of prejudice to it, but
            rather a general concern that it may still be
            liable at some time in the future should the
            structure fail. It also argued that it was
            not its desire to enter into a structure in
            this    case     without     some     financial
            consideration. Defendants' insurance carrier
            may, within the bounds of good faith,
            determine   what   issues   are   of   material
            importance to it. Presumably, the insurance
            carrier was concerned that if it were
            obligated   to   place   each   of   its   cash
            settlements in structures, it would lose the
            ability in the future to offer to other
            plaintiffs structured settlements, but at a
            reduced settlement amount.     In addition, it

                                   10                               A-0781-16T1
          may have been concerned with additional
          administrative   burdens   and   the   remote
          possibility of future liability should a
          structure fail. Those concerns are legitimate
          and do not appear to indicate bad faith.

          [Id. at 564 (emphasis added).]

     Given the legitimacy of these concerns, and the absence of

mutual assent as to this settlement term, we ruled that the trial

court had erred in forcing the defendants and their insurance

carrier to purchase the annuity.      Ibid.   We therefore set aside

the provision, even though it may well have been in the minor

plaintiff's best interests to receive a structured payout rather

than receiving a lump sum in cash:

               We conclude, therefore, that in the
          context of a "friendly" hearing conducted
          pursuant to [Rule] 4:44-3, a motion judge's
          inherent parens patriae powers do not permit
          a judge to change the terms of the settlement
          contract submitted to it without the consent
          of the parties. Because we believe that the
          motion judge exceeded his [Rule] 4:44-3
          authority in ordering the structure, we
          reverse the judge's order and remand the
          matter to the trial judge so that he can
          determine whether, as presented to him, the
          settlement contract entered into by the
          parties is fair and reasonable to the infant-
          plaintiff. If, after he weighs the appropriate
          factors, he determines it is not, he may
          reject it and schedule the matter for trial.

          [Id. at 564-65 (emphasis added).]

     Applying   these   controlling   principles   of   law   here,    we

similarly conclude that the trial court's October 7, 2016 order

                                11                              A-0781-16T1
in this case must be set aside.         First, the series of proceedings

and associated documents make it eminently clear that there never

was a meeting of the minds between the parties as to all material

terms of a settlement.       To be sure, the dollar amount to be paid

by or on behalf of defendants, i.e., $1.25 million, was mutually

approved.      But the specific methods by which those funds would be

allocated and paid were not agreed upon in full.

     We recognize that plaintiffs' counsel advised the court, when

certain settlement terms were first placed on the record on October

7, 2015, of an expectation that he would thereafter "sit down and

discuss" with his client "the appropriate mechanism" to allocate

the settlement funds, "whether it's a special needs trust, an

annuity or otherwise."       Even so, defendants and their insurer did

not cede unilateral authority to plaintiffs to determine that

"mechanism."

     As   we    held   in   Impink,   the    specification   of   whether    a

defendant's contribution to a settlement shall be paid in cash as

a lump sum, through the purchase of an annuity, or in some

combination thereof, may be a material term, and one that cannot

be   foisted     unilaterally    upon       an   non-assenting    defendant.

Reciprocally, a court may not force an unwilling plaintiff to

accede to material payment terms dictated by a defendant or its

                                      12                             A-0781-16T1
insurer.      There instead must be a mutual "meeting of the minds."

That objective unfortunately was not achieved here.4

      Even if, for the sake of argument, there was a meeting of the

minds as to certain settlement terms, such as the $1.25 million

to be paid by defendants in consideration and the reciprocal

provision of releases by plaintiffs, the imposition of additional

material   terms     by     the   court     without   defendant's    assent    was

inappropriate.       Those additional terms include the annuity, the

up-front separate payment, and the designation of V.M.'s mother

as the sole trustee of the SNT.                  Although we surely appreciate

the   trial    court's      diligent       and   earnest   efforts   at   several

proceedings     to   help    forge     a   final    agreement   in   V.M.'s   best

4
  At oral argument on the appeal, we explored with counsel whether
the matter should be remanded to the trial court to conduct an
evidentiary hearing to ascertain whether the parties had agreed
to all material terms of a settlement. See, e.g., Harrington v.
Harrington, 281 N.J. Super. 39 (App. Div. 1995) (in which this
court remanded a settlement dispute for such an evidentiary
hearing). However, plaintiffs' counsel advised us that no such
hearing was necessary, and that the transcripts and documents
supplied on appeal were sufficient to reflect the existence of a
binding agreement as to all material terms.        Defense counsel
likewise did not urge that we order such an evidentiary hearing,
and advocated that the trial court's final order be vacated. Given
the steadfast competing positions of the parties, as well as the
passage of considerable time since the trial was halted, we doubt
that there would be much practical benefit to ordering an
evidentiary hearing, the outcome of which might well provoke
another appeal by an aggrieved party.     In fact, it is patently
obvious from the documentary record that no enforceable agreement
was ever attained.

                                           13                             A-0781-16T1
interests, the law does not allow the court at a friendly hearing

to impose material settlement terms upon the parties, when lacking

their mutual assent.

      For these many reasons, the October 7, 2016 order is vacated,

and the matter is remanded to the trial court for a new trial. In

addition, the court's related ruling to impose a counsel fee

sanction is likewise vacated, as we detect no bad faith by either

side in this thorny dispute.

      We genuinely hope that, on remand, the parties will be able

to negotiate a final enforceable settlement agreement and obviate

the need for a new trial.           Accordingly, we suggest that a case

management conference be conducted within the next thirty days.

In the interim, the funds on deposit shall remain in place, unless

and   until   the   trial   court    otherwise   directs.   If   a     final

enforceable settlement with all material terms is attained, it

shall be reduced to writing and presented to the trial court for

review at a renewed friendly hearing.            At such a hearing, the

court's sole options will be either to approve the negotiated

terms, or reject them as not being in V.M.'s best interests.                We

do not intimate whatsoever any views on the appropriate terms of

settlement.

      Vacated and remanded.     We do not retain jurisdiction.

                                      14                             A-0781-16T1