A medical malpractice plaintiff, who took the apparently rare step of seeking an attorney fee award under the offer-of-judgment rule after entering a high-low settlement, has failed to recover those fees thanks to an appeals court’s holding that the settlement’s silence on the issue was fatal.
“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,” the Appellate Division said in Serico v. Rothberg, a published decision.
“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 for the panel.
In the suit—previously reported by the Law Journal—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 purse claims that Rothberg negligently failed to treat the cancer.
According to the Feb. 16 decision, Serico made an offer of judgment of $750,000 before trial, to which Rothberg never responded.
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, according to the decision.
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, according to the previous Law Journal report—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 decision stated.
Rothschild issued a written decision denying 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 decision.
On appeal, Rothstadt, joined by Appellate Division Judges Ellen Koblitz and Susan Reisner affirmed.
“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.”
The court distinguished Malick v. Seaview Lincoln Mercury, a 2008 Appellate Division ruling. There, the court deemed a plaintiff entitled to fees under the rule after a verdict triggering the high. But, the Serico court said, that case included documents preserving the plaintiff’s rights under the offer-of-judgment rule.
The panel did warn against Rothschild’s approach in the case, holding that “reliance on [his] personal experience was misplaced.”
Rothberg’s counsel, James Sharp of Schenck, Price, Smith & King in Florham Park, said he shared Rothberg’s view that the fact pattern in this case is extremely rare.
“I’ve been doing this work for 35 years. … This was the first time this subject was ever broached,” he said.
“To 99.9 percent of plaintiff attorneys and defense attorneys, this is a concept that would never occur to them,” Sharp said, adding that, going forward, careful lawyers “should make explicit that the offer of judgment is encompassed by the high-low.”
The plaintiffs were represented at trial by Bruce Nagel of Nagel Rice in Roseland. His partner, Robert Solomon, argued the appeal.
Solomon said the court “put the burden on … the plaintiff to affirmatively mention the offer-of-judgment rule,” while he took the position that it should be up to the defendant to obtain a release.
The facts of the case are rare, but do occur, Solomon said, pledging to file a petition for certification with the state Supreme Court.