On appeal from the Superior Court of New Jersey, Law Division, Morris County, L-3661-00.
The opinion of the court was delivered by: Coburn, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Coburn, Axelrad and Gilroy
Plaintiff Eric A. Kranz filed a negligence action against James and Mary Mongey for personal injuries he suffered as a result of a fall on their property. Representing him in that action were defendants Harold McGovern and Noel Schablik. After jury selection, Kranz agreed to a $500,000 settlement solely because he understood that defendant Arthur H. Tiger, M.D., his only orthopedic expert, would not be available to testify. Without Tiger plaintiff could not prove that any of his injuries were caused by the accident.
Plaintiff then pursued this action against Tiger, McGovern, and Schablik, contending primarily that their negligence in communicating with each other was the cause of Tiger's unavailability and plaintiff's acceptance of the settlement. He chose to present his case by the method known as a suit-within- a-suit, seeking damages for the difference between the settlement and the judgment he probably would have obtained had the underlying case been tried to conclusion.
At the close of all the evidence, defendants moved for directed verdicts pursuant to R. 4:40-1. In granting the defense motions, the judge assumed that the underlying case was sufficient for presentation to a jury and that Tiger had rendered a report for plaintiff indicating that his orthopedic injuries were causally related to the accident and had left him totally and permanently disabled. No defendant contends that the judge erred in making those findings. The judge then ruled for defendants on the following grounds.
As to Tiger, the judge found that although "he may have arguably breached [his] duty by reason of negligent scheduling communications from his office" with plaintiff's counsel, he was not liable as a matter of law because "the case settled," "the settlement of $500,000 was reasonable as a matter of law," and therefore plaintiff "failed to prove any damages."
As to the attorneys, the judge found that they "truly believed they lost their medical expert," and that given the amount of insurance available, one million dollars, and all the other difficulties presented by the case as to liability and damages, the settlement they negotiated with plaintiff's approval was reasonable. The judge also rejected plaintiff's claim that the attorneys were negligent in failing to have videotaped Tiger's testimony for presentation to the jury in case he became unavailable for any reason.
Plaintiff appeals, and we reverse and remand for the following reasons. Although the attorneys may have truly believed Tiger had become unavailable, the issue was not what they honestly believed; rather, it was whether they acted reasonably in forming and acting on that belief. Although the settlement may have been reasonable, given all the circumstances as perceived by the attorneys, that too was not the issue as to any of the defendants; rather, the issue was whether plaintiff, but for defendants' negligence, would have obtained a judgment in excess of the settlement had the case gone to trial.
Given the posture of this case and the arguments made, we need not describe the facts of the accident or the complex medical evidence. It suffices to say that although the case was a somewhat difficult one on liability and on the extent of plaintiff's injuries caused by the accident, those were all issues that would probably have been submitted to a jury if the case had not settled. No defendant argues otherwise, and the judge properly assumed that to be the case. But before turning to the critical evidence respecting the settlement, we note that at this trial plaintiff presented psychiatric evidence that he was totally disabled psychologically as a result of the accident and evidence that his lost income exceeded $580,000. That additional evidence would have been offered in the trial of the underlying action, but it depended on the jury accepting Tiger's testimony as true, assuming that he testified in accordance with his report. We also note that over objection defendants were permitted to introduce extensive evidence of the settlement negotiations and of the reasonable value of the settlement obtained.
Plaintiff filed his complaint against the Mongeys in 1994, but their intervening bankruptcy delayed the proceedings until June 1999. On June 22, 1999, the presiding judge conducted a case management conference and set the trial date for September 13, 1999. Two days later, he wrote to counsel, stating that "the case will not be adjourned again, especially [if] an expert is unavailable." He suggested that the testimony of all experts should be videotaped, and reiterated that the case will not be adjourned "because an expert is unavailable no matter what the reason."
McGovern testified that he and Schablik had agreed that McGovern would be responsible for notifying Tiger of the trial date and when his testimony would be needed, and Schablik would notify everyone else. McGovern said that he called Tiger on or about September 10 and again on September 15 and 17, 1999. He did not specify whether he spoke to Tiger or to someone in his office. On September 17, he spoke with Roxanne, who worked for Tiger, managing his schedule, and informed her that a jury had been selected and that he wanted the doctor to come to court on Tuesday, September 21 at 1:30 p.m.
On Monday September 20, McGovern again called Roxanne to tell her the case had not settled and that Tiger would be needed the next day at 1:30 p.m. Later on that day, while he was preparing Kranz for the trial, McGovern said he received "a message from [his] secretary that a call has just come in, right, that the doctor is not available, adjourn the case." McGovern said he then called Roxanne and had the following conversation with her:
I said, you know, what's going on, and I rehashed what had happened on Friday, making the arrangements with her for Tuesday at 1:30 and the fee and how it would be paid. She advised me, Mr. McGovern, I've been instructed to give you that message; the doctor is away; he's not here. I said, Roxanne, this is disastrous, this is terrible. This is an old case; it's try or dismiss; this is a man who's hurt seriously, very seriously . . . . We have got to do something about this; is there any way that I can talk to the doctor to explain to him our predicament? She said, Mr. McGovern, I don't know whether I'm going to hear from him anymore; I don't know whether that's possible -- very sympathetic, I mean, God bless her -- but I'll try. And I said do me a favor; I said, we're waiting here, would you call me back one way or the other; please get back to me.
Okay. In all fairness, the phones weren't the best that day and I don't know whether it was the weather or not. It took me a while to get to her. She made clear that he was gone. He's [sic] wasn't just out of the office today because of the religious holiday. I don't believe at that time that she mentioned that he's gone for two weeks or not. I'm just not sure.
McGovern said he was convinced that Tiger would not come to testify. Based on that conclusion, he advised Kranz, who had listened to McGovern's end of the above telephone conversation, to settle. McGovern called Schablik to discuss the matter, and ...