V.M. VS. JERSEY SHORE UNIVERSITY MEDICALCENTER(L-1489-09, MONMOUTH COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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.
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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.
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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
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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.
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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
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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
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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