When a personal injury case was dismissed for inaction, plaintiff lawyer Michael Alvarez won reinstatement by asserting he had held back because he thought the defendant agreed to settle.

But an appeals court reversed on Thursday, finding that Alvarez’s say-so was not enough, given that defense counsel denied agreeing to settle or even discussing the topic. Further, the trial court never cross-examined the lawyers or held a hearing to resolve the dispute.

The panel remanded the case, Acosta v. Jackovino, A-3869-11, for a plenary hearing in which lawyers for both sides will be called to testify and the trial court will make credibility determinations and findings of fact.

Alvarez, of Lord & Kobrin in Mountainside, represents Pedro and Antonio Acosta, who sued John Jackovino in Union County Superior Court over alleged injuries from a June 2007 car accident. Nonbinding arbitration in June 2011 resulted in a $25,000 award to the Acostas.

The dispute is about what happened afterward. The parties had 30 days after the filing of the award to reject it and demand a trial de novo, 50 days to submit a consent order settling and dismissing the case and 50 days to move to confirm the award.

If none of those things happened within the specified times, the case had to be thrown out under court rules. On Aug. 26, 2011, Judge Lisa Chrystal administratively dismissed it.

Alvarez moved on Nov. 4, 2011, to vacate the dismissal and to confirm the award, alleging that his failure to act in time was the result of his belief that he and his adversary, Michael McCaffrey, had agreed to settle.

He certified in support that when he was leaving the arbitration, he and McCaffrey discussed settlement, leading him to believe the case had settled. He said he held that belief until Oct. 26, 2011, when, following the dismissal, the defense informed him the deal was off.

McCaffrey told a different story. He claimed in his opposing certification that Alvarez referred to the award as “a little light” and asked him how the carrier, New Jersey Manufacturers, would react to it. McCaffrey answered that he did not know but that he would report it and await instruction.

McCaffrey insisted he did not offer to settle and had no authority to do so and “said nothing to plaintiff’s attorney that would have induced any reasonable person to conclude that an offer in settlement had been made and plaintiff’s attorney said nothing suggesting that an offer of settlement had been perceived or accepted.”

McCaffrey attached a redacted copy of the report he sent to NJM one day after the arbitration asking whether he should accept or reject the award and making no mention of a settlement.

He also recounted a subsequent phone call to Alvarez on June 20, 2011. He meant to ask what Alvarez would accept to settle, but Alvarez was out of the office and the message he left for him said nothing about settlement but only asked him to return the call. Alvarez did not get back to him, he said.

McCaffrey claimed that after the dismissal, on Oct. 5, 2011, Alvarez asked what was happening with the case and if it had been settled and told McCaffrey his client would accept $25,000 and if the carrier would not pay, he would have to get the case “back on.” McCaffrey said that after speaking with the carrier he called Alvarez to say it would not make an offer to settle. He said he spoke with a paralegal who lowered the sum to $20,000, and called back and spoke with him again when the carrier still said no.

Chrystal granted the motion and confirmed the award on Dec. 2, 2011. She found “excusable neglect” under Rule 4:50-1(a) based on Alvarez’s certified belief in a settlement, noting that motions to vacate administrative dismissal are supposed to be viewed liberally.

McCaffrey sought reconsideration, asserting that Alvarez never stated as a fact that the case was settled, did not identify a settlement amount and did not describe the discussion that allegedly led to it. Nor did Alvarez ever write a letter confirming the settlement to him or his own clients or have his clients sign a release, McCaffrey argued.

Chrystal denied reconsideration, stating that it would be prejudicial to the plaintiffs if she granted it, that Alvarez’s failure to seek trial de novo indicated his view that the litigation had been resolved, and that allowing more time was equitable and consistent with the policy supporting finality of arbitration.

Appellate Division Judges Francine Axelrad and William Nugent reversed the reinstatement of the case, contrasting Alvarez’s “vague, conclusory statement” of his belief in a settlement with McCaffrey’s detailed opposition.

“We fail to discern how the trial court could have resolved the factual disputes on the record presented and, in particular, to have summarily concluded that plaintiffs’ counsel’s ‘mistaken belief’ as to the existence of a settlement constituted ‘excusable neglect,’” they wrote.

They distinguished Allen v. Heritage Court Associates, 325 N.J. Super. 112 (App. Div, 1999), on which Chrystal relied, which held postarbitration settlement talks justified reinstating a case, on the ground that the defendant there did not deny discussing settlement.

Neither Alvarez nor McCaffrey could be reached for comment Thursday because their offices were still without telephone service in the aftermath of Superstorm Sandy. •