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NJ Justices Consider Fee Request Following High-Low Settlement

April 9, 2018 | Posted in : Fee Entitlement, Fee Issues on Appeal, Fee Request

A recent New Jersey Law Journal story by Michael Booth, “Justices Consider Fee Petition That Followed High-Low Settlement,” reports that the New Jersey Supreme Court is considering whether a medical malpractice plaintiff who took the rare step of seeking counsel fees under the offer-of-judgment rule, even after entering a high-low agreement that was silent on the issue, may recover such fees.  Lawyers argued over whether the plaintiff could be awarded fees over and above the $1 million “high,” a question that the Appellate Division answered in the negative.

“It’s not the plaintiffs’ burden to prove” that there was a provision in the agreement for counsel fees, said Bruce Nagel, the attorney for the plaintiff on appeal.  There was no waiver of counsel fees in the settlement, said Nagel, of Nagel Rice in Roseland.  The defendant’s attorney, James Sharp, asked the court to affirm the lower court’s ruling.  “This case is settled,” said Sharp, of Schenck, Price, Smith & King in Florham Park.

In its February 2017 ruling, the Appellate Division said: “Without evidence that the parties agreed to allow plaintiff to seek amounts in excess of the high, [the plaintiff] was not entitled to any other payments.”

“Parties are always free to preserve any claim they might have pursuant to a court rule or otherwise when settling a case … but they must clearly state that intention at the time of the settlement,” Judge Garry Rothstadt wrote, joined by Judges Ellen Koblitz and Susan Reisner.

In the suit, plaintiff Ben Serico of West Caldwell claimed he was administered a colonoscopy by physician Robert Rothberg in December 2007, but two years later he was diagnosed with colon cancer that had spread to his liver.  Serico died two years after his diagnosis, in December 2011, at age 62, after which his wife, Lucia Serico, continued to pursue claims that Rothberg negligently failed to treat the cancer.  The appeals court said Lucia Serico made an offer of judgment of $750,000 before trial, to which Rothberg never responded.

According to the court, settlement negotiations began in earnest during the trial, and the parties entered a high-low agreement providing for a minimum recovery of $300,000 and a maximum of $1 million.  During the negotiations, neither side raised a possible fee award, or a reservation or waiver of rights, or the offer of judgement, the court said.

A jury found for the plaintiff after a two-week trial before Essex County Superior Court Judge James Rothschild Jr., and awarded $6 million, thus triggering the $1 million “high.”  (The jury attributed 20 percent of damages to the decedent’s pre-existing cancer, which, absent the high-low, would have reduced the award to $4.8 million.)

Because the $1 million judgment was more than 120 percent of the previous $750,000 offer, Serico, citing Rule 4:58, moved for an award of fees and costs.  Each side acknowledged that the issue hadn’t been raised at the negotiations during trial, the appeals court said.

Rothschild denied the motion.  He found there was no evidence of intent to determine that Serico’s rights to a fee sanction under the rule had been preserved.  He also referred to his 42 years’ experience as a civil lawyer and judge, as well as the experience of colleagues he consulted, and said high-low settlements were rarely if ever followed by fee applications under Rule 4:58, according to the court.

“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,” Rothstadt wrote, adding that such agreements are “subject to traditional rules of contract interpretation.”