Lucia Serico v. Robert M. Rothberg, M.D. , 448 N.J. Super. 604 ( 2017 )

NOT FOR PUBLICATION WITHOUT THE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-1717-15T1
LUCIA SERICO, Executrix
of the Estate of BENJAMIN
SERICO, deceased, and
LUCIA SERICO, Individually,
APPROVED FOR PUBLICATION
Plaintiffs-Appellants,
February 16, 2017
v.
APPELLATE DIVISION
ROBERT M. ROTHBERG, M.D.,
Defendant-Respondent,
and
MOUNTAINSIDE HOSPITAL and
RICHARD ROE, M.D.,
Defendants.
________________________________________________________________
Argued January 31, 2017 – Decided February 16, 2017
Before Judges Reisner, Koblitz, and Rothstadt.
On appeal from the Superior Court of New
Jersey, Law Division, Essex County, Docket No.
L-3566-11.
Robert H. Solomon argued the cause for
appellants (Nagel Rice, LLP, attorneys; Bruce
H. Nagel and Bradley L. Rice, on the briefs).
James B. Sharp argued the cause for respondent
(Schenck, Price, Smith & King, LLP, attorneys;
Mr. Sharp and Benjamin A. Hooper, on the
brief).
The opinion of the court was delivered by
ROTHSTADT, J.A.D.
Plaintiff, Lucia Serico,[1] individually and as executrix of
her late husband Benjamin Serico's estate, appeals from the trial
court's order denying her motion for attorney's fees pursuant to
the offer of judgment rule. R. 4:58-1 to -6.2 The Law Division
denied the motion because plaintiff and defendant, Robert M.
Rothberg, M.D., entered into a high-low agreement3 in which
plaintiff did not expressly reserve her right to recover fees
under the Rule. Based on the court's experience, it found that
the "custom and usage" in the practice of law dictated that without
1
Benjamin Serico passed away during the pendency of this
litigation. Lucia Serico, as executrix of his estate, pursued his
claim for negligence and her own per quod claim. We, therefore,
refer to plaintiff in the singular.
2
"The offer-of-judgment rule permits a party to offer to take
a monetary judgment or to allow judgment to be taken against it
for a sum certain." Best v. C&M Door Controls, Inc., 200 N.J.
348, 356 (2009) (citing R. 4:58-3). "[I]f the offer of a claimant
is not accepted and the claimant obtains a money judgment, in an
amount that is 120% of the offer or more . . . the claimant shall
be allowed, in addition to costs of suit . . . all reasonable
litigation expenses incurred following non-acceptance" and other
relief. R. 4:58-2(a).
3
A high-low agreement is a settlement agreement that guarantees
a plaintiff a minimum recovery and limits a defendant's exposure
to an agreed upon amount regardless of the jury's award, if any.
See infra.
2 A-1717-15T1
evidence of a reservation of rights, a claim under the Rule was
waived by entering into a high-low agreement. On appeal, plaintiff
contends that although she did not reserve her rights, she did not
waive them by entering into the high-low agreement. Defendant
argues that plaintiff's failure to reserve her rights gave rise
to a waiver or abandonment of any claim she had for attorney's
fees and, in any event, as the trial court found, the "custom and
usage" practiced in the area provides that such claims are deemed
abandoned when a party enters into a high-low agreement.
We have considered the parties' contentions in light of the
record and the applicable principles of law. We affirm, but for
reasons different from those expressed by the trial court. We
conclude the trial court's reliance on its personal experience was
misplaced, but it correctly determined that the amount of
plaintiff's total recovery from defendant was limited by the
ceiling imposed by the high-low agreement.
The material facts are not in dispute and can be summarized
as follows. Plaintiff instituted this medical malpractice action
against defendant for failing to diagnose Benjamin Serico's colon
cancer. While the matter was awaiting a trial date, plaintiff
made an offer to accept a judgment against defendant in the amount
$750,000, "inclusive of costs and prejudgment interest" in
accordance with the Rule. Defendant did not respond to the offer.
3 A-1717-15T1
During the ensuing trial, while the jury was deliberating,
the parties entered into the high-low agreement. The agreement,
as placed on the record by counsel, provided for a "low" of
$300,000 and a "high" of $1 million.
Plaintiff's counsel negotiated the agreement with defendant's
carrier's representative and defense counsel. During the course
of the negotiations, no one mentioned the Rule or plaintiff's
possible entitlement to any award based upon defendant's rejection
of her offer of judgment.4 Plaintiff's counsel never expressed
any intention to waive or pursue the offer of judgment remedies,
nor did defendant's insurance carrier's representative or his
attorney make any demand for a release or waiver of plaintiff's
rights under the Rule.
When counsel placed the terms of the settlement on the record,
neither mentioned plaintiff's entitlement to recover fees. They
did state, however, that they agreed plaintiff's medical expenses
claim and any interest would be subsumed within the amount of the
high-low agreement.5 As defense counsel stated regarding interest,
4
See R. 4:58-1(b) (setting period for filing of acceptance of
offer); see also R. 4:58-2(a) (requiring that an offer be accepted
in order to avoid the consequences of the Rule).
5
The parties had earlier removed the issue of medical expenses
from the jury's consideration, leaving it to the court to decide
after the jury's verdict.
4 A-1717-15T1
without objection, "[i]f there is a verdict in favor of the
plaintiff . . . at any point for an amount of money [at] any point
between $300,000 and a million dollars, the plaintiff gets that
amount of money without interest."6 Finally, the parties waived
any right to appeal the judgment.
On the same day, the jury returned a verdict in favor of
plaintiff for $6 million. As a result, plaintiff was entitled to
the entry of a judgment against defendant pursuant to the high-
low agreement in the amount of $1 million, which was more than
120% of the amount of her offer of judgment.
Because the judgment exceeded the Rule's 120% threshold,
plaintiff filed a motion for an award of attorney's fees and costs.
Plaintiff's counsel's supporting certification explained that he
never agreed or intended to waive or release the provisions of the
offer of judgment. Defendant's counsel submitted a certification
in opposition in which he confirmed that plaintiff's counsel never
mentioned the offer of judgment during the high-low agreement's
negotiations or expressed any intention of preserving his client's
right to attorney's fees and costs under the Rule.
After considering the parties' submissions and oral
arguments, the trial court denied their motions, explaining the
6
Rule 4:42-11(b) governs prejudgment interest.
5 A-1717-15T1
court's reasons in a written decision. The court found that the
parties agreed that plaintiff's rights pursuant to the Rule were
not discussed during the settlement negotiations and the issue was
not mentioned while placing the agreement on the record. Relying
on Malick v. Seaview Lincoln Mercury, 398 N.J. Super. 182 (App.
Div. 2008), the court observed that where there are documents that
discuss the terms of a high-low agreement and the relationship of
the offer of judgment to the agreement, a court could analyze
those documents and determine whether the offer of judgment
remedies were preserved when the high-low agreement was made.
Distinguishing Malick, the court noted that there were no documents
for it to consider in order to glean the parties' intent in this
case.
The court explained that it therefore "must be bound by the
custom and usage in the industry, in this case the legal industry
or profession in New Jersey" because there was nothing in the
contract to indicate the parties' intent and "no prior course of
dealing indicating the parties' intent . . . ." Relying on his
forty-two years of experience as a civil litigator and as a trial
court judge, the judge stated that in instances that implicated a
high-low agreement and the Rule, never have prevailing parties
pursued a claim. He also stated that he "conferred with several
colleagues who have had similar experiences" and they informed him
6 A-1717-15T1
that successful parties who entered into high-low agreements
rarely, if ever, made an application for fees under the Rule, and,
in the rare instance when they did, the motion was denied. The
court concluded, "in the absence of a contrary oral or written
contemporaneous statement by counsel that the Offer of Judgment
Rule will survive a high-low agreement, the Offer of Judgment Rule
sanctions cannot be enforced after a high-low agreement."
The court entered its order denying the parties' motions.
This appeal followed.
Plaintiff argues on appeal that she is entitled to legal fees
after obtaining a judgment against defendant in excess of 120% of
the rejected offer of judgment, consistent with the Rule's "purpose
to impose financial consequences on a party [that] rejects a
settlement offer." Relying on Wiese v. Dedhia, 188 N.J. 587, 592
(2006), plaintiff argues the Rule "is cast in mandatory and not
exhortatory terms, and, thus, accords judges no discretion
regarding whether or not to award attorney's fees . . . ."
Moreover, she contends the parties' high-low agreement is a
contract subject to the traditional rules of contract
interpretation. Plaintiff asserts that the terms of the contract
are clear, there is no room for interpretation, and a party "cannot
be relieved from the language simply because they had a secret,
unexpressed intent that the language should have an interpretation
7 A-1717-15T1
contrary to the words' plain meaning." Relying on Malick,
plaintiff argues, "absent an express waiver by the parties of the
rights afforded by the [Rule]," a high-low agreement alone does
not waive a plaintiff's right to seek sanctions under the Rule.
Without her express waiver, plaintiff argues that the trial court
"erred by permitting [d]efendant to avoid the consequences of his
rejection of the [o]ffer of [j]udgment." We disagree.
"On . . . appeal we review de novo the trial judge's factual
and legal conclusions reached after a summary proceeding,
including his construction of" the Rule. Malick, supra, 398 N.J.
Super. at 186. Applying that standard here, we conclude the trial
court mistakenly relied upon its own experiences and those of
other judges in other matters. See Cuevas v. Wentworth Grp., 226
N.J. 480, 486 (2016) (rejecting reliance upon a judge's personal
experience relating to verdicts when considering a remittitur
motion).7 Nevertheless, we affirm.
By entering into the high-low agreement, plaintiff could not
recover any amount beyond the "high" to which she agreed because
the agreement limits the total amount of defendant's obligation
to that amount. "A high-low agreement is a device used in
7
At the time the trial court decided the matter, the Supreme
Court's opinion in He v. Miller, 207 N.J. 230 (2011) permitted
reliance on a judge's experience.
8 A-1717-15T1
negligence cases in which a defendant agrees to pay plaintiff a
minimum recovery in return for plaintiff's agreement to accept a
maximum sum regardless of the outcome of the trial." Malick,
supra, 398 N.J. Super. at 184 n.1 (quoting Benz v. Pires, 269 N.J.
Super. 574, 578 (App. Div. 1994)). As we have previously explained
while addressing a successful claimant's right to interest under
the Rule:
A high-low agreement governs a number of
possible trial outcomes:
If there is a no-cause verdict, the agreed
floor controls, and plaintiff takes that
amount. There is nothing to calculate
interest on. There is only the agreed minimum
recovery.
If there is a damage verdict below the agreed
floor, interest is calculated on the verdict
and plaintiff receives the total, up to the
agreed ceiling; if the total does not exceed
the floor, plaintiff receives the floor.
If there is a damage verdict of the floor or
more, but less than the agreed ceiling,
interest is calculated on the verdict.
Plaintiff receives the full amount up to the
ceiling.
If there is a damage verdict of the ceiling
or more, plaintiff receives the amount of the
ceiling.
[Benz, supra, 269 N.J. Super. at 579-80
(emphasis added).]
High-low agreements are contracts and are subject to
traditional rules of contract interpretation. See Malick, supra,
9 A-1717-15T1
389 N.J. Super. at 186. Like any contract, if the terms of a
high-low agreement are clear, "they are to be enforced as written."
Id. at 187 (citing Cnty. of Morris v. Fauver, 153 N.J. 80, 103
(1998)).
The parties' high-low agreement made no mention of the effect
of defendant's rejection of plaintiff's offer of judgment that,
absent the high-low agreement, entitled plaintiff to an award of
counsel fees and other remedies based upon the amount of the
judgment entered after the jury's verdict. See R. 4:58-2. "The
fundamental purpose of the [Rule] is to induce settlement by
discouraging the rejection of reasonable offers of compromise."
Best, supra, 200 N.J. at 356 (citations omitted). "That goal is
achieved through the imposition of financial consequences (the
award of fees and costs) where a settlement offer turns out to be
more favorable than the ultimate judgment." Ibid. (citing
Firefreeze Worldwide Inc. v. Brennan & Assocs., 347 N.J. Super.
435, 441 (App. Div. 2002)). It is the amount of the actual money
judgment that determines the amount against which the offer of
judgment is measured, not against the jury's verdict. See Malick,
supra, 398 N.J. Super. at 190-91.
It is a basic assumption of high-low agreements that "a
plaintiff cannot recover more than the amount agreed to as the
'high' limit," id. at 187, even if a court rule entitles the
10 A-1717-15T1
plaintiff to more. See Benz, supra, 269 N.J. Super. at 578-79
(rejecting plaintiff's claim for prejudgment interest beyond the
limits of the high-low agreement because it was never "mentioned
on the record [and n]o one contend[ed] it was discussed off the
record" before entering into the agreement). Awarding a plaintiff
any sum more than the "high" would be contrary to the "purpose of
encouraging defendants to seek early disposition . . . ." Id. at
579.
The holding in Malick does not compel a contrary result. In
Malick, the plaintiff's offer of judgment, $650,000, was made
prior to trial, during which the parties negotiated a high-low
agreement with $175,000 as the "low," and $1 million as the "high"
figure. Malick, supra, 389 N.J. Super. at 184-85. The jury
returned a verdict of $5 million, and the plaintiff sought
penalties under the Rule, including prejudgment interest
calculated upon the amount of the jury verdict. Id. at 185. We
reversed the trial court's denial of the motion and ordered a
plenary hearing because there were documents indicating "that
plaintiff was 'preserving [his] remedies' under the offer of
judgment rule . . . .'" Id. at 189. We stated, however, absent
an agreement, a plaintiff cannot recover more than the amount
agreed to as the "high" limit. Id. at 187.
11 A-1717-15T1
In the present case, plaintiff did not come forward with any
evidence that she preserved her rights under the Rule. To the
contrary, as in Benz, it was undisputed that there was no evidence
the parties ever mentioned plaintiff's claim for any amount other
than the high-low amounts, medical expenses, and interest. Without
evidence that the parties agreed to allow plaintiff to seek amounts
in excess of the high, she was not entitled to any other payments.
Malick, supra, 398 N.J. Super. at 187 ("a plaintiff is entitled
to prejudgment interest if the jury's verdict is somewhere in
between the high and low limits, but not if the verdict is higher
than the amount set as the 'ceiling'").
Parties are always free to preserve any claim they might have
pursuant to a court rule or otherwise when settling a case, see
Malick, supra, 398 N.J. Super. at 187; Benz, supra, 269 N.J. Super.
at 580, but they must clearly state that intention at the time of
the settlement. In this case, as with any settlement, if there
was any intention to preserve a claim for amounts beyond the high,
"[i]t was [plaintiff's counsel's] obligation to clearly indicate
that plaintiff retained [the] right to [seek fees] and that the
entire matter was not being resolved in the [high-low agreement]."
Elliott-Marine v. Campenella, 351 N.J. Super. 135, 142 (App. Div.),
certif. denied, 174 N.J. 365 (2002). A claim for additional
amounts beyond the high, including attorney's fees, is considered
12 A-1717-15T1
encompassed within a negotiated settlement unless expressly
preserved because "[g]ood practice and the ordinary candor
expected between attorneys dictate that . . . [plaintiff's] counsel
make defendants and defense counsel aware of the[] conditions for
settlement of any pending litigation." Coleman v. Fiore Bros.,
Inc., 113 N.J. 594, 611 (1989), overruled in part on other grounds,
Pinto v. Spectrum Chems. & Lab. Prods., 200 N.J. 580 (2010).
Because the jury's verdict here was in excess of the high,
the trial court correctly rejected plaintiff's claim and limited
plaintiff's recovery to $1 million, including all fees and costs
to which she might have been entitled.
Affirmed.
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