This issue in this case is whether an admission of fact made by an attorney during the course of settlement negotiations is admissible against his client.
This issue has not been decided by the New Jersey courts. Plaintiff's attorney moves to quash a subpoena ad testificandum served upon him by defendant. Plaintiff, who purchased an automobile from defendant, Toresco Enterprises, doing business as Autoland, has brought suit under the Lemon Law, N.J.S.A. 56:12-29 et seq., against Toresco and others, claiming that the automobile is defective.
Prior to instituting suit, plaintiff's attorney had engaged in settlement negotiations with defendants. At one point during the negotiations period, there was a road test of the vehicle, which took place in the presence of plaintiff's attorney and
representatives of defendant. During the road test, plaintiff's attorney allegedly stated that "the vehicle appears to be operating fine." The negotiations broke down and plaintiff then instituted suit. Defendants thereafter served a subpoena ad testificandum upon plaintiff's attorney seeking his appearance at depositions. The purpose of the deposition was to obtain a recitation on the record of the attorney's statement that "the vehicle appears to be operating fine." The attorney now moves to quash the subpoena. He contends that the statement, if made, is inadmissible because it was made during the course of settlement negotiations. The New Jersey Rules of Evidence provide:
Evidence that a person has, in compromise or from humanitarian motives, furnished or offered or promised to furnish money, or any other thing, act or service to another who has sustained or claimed to have sustained loss or damage, is inadmissible to prove his liability for the loss or damage or any part of it. [ Evid.R. 52(1) (Anno.1989)]
The basis for the inadmissibility of offers to compromise is stated in the comments to the rule:
There are two alternate theories underlying the exclusionary principle of Rule 52(1) . . . First, it may be questioned whether evidence that a person has either furnished or offered or promised to furnish consideration to compromise a claim is relevant to the question of the person's liability. Economically, a defendant may come out better if he pays some money for a release at the start of a case than if he emerges successful after trial. A person may merely be buying peace of mind when he compromises a claim; he just may not want to pursue the matter even though he is convinced of his non-liability.
The other theory supporting the exclusionary principle of Rule 52(1) is founded upon social policy. It is this view which is said to have been adopted by the Uniform Rules of Evidence, from which Rule 52 is taken. . . . The law favors and encourages amicable out-of-court settlements of disputes. For that reason the law chooses not to recognize settlements and settlement offers as admissions of liability. [ Rules of Evidence, supra, Comment R. 52(1) at 455]
The New Jersey Supreme Court Committee on Evidence stated:
It is intended by Rule 52 that statements made during negotiations may not be admissible as admissions (citation omitted). The policy of Rule 52, to be totally
effective, should include such situations. [Report of the New Jersey Supreme Court Committee on Evidence (March ...