On appeal from Superior Court of New Jersey, Law Division, Ocean County, Docket No. L-2872-02.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Graves and Espinosa.
On August 25, 2000, defendant Ryan J. Drews was driving an automobile in Brick, New Jersey, when he struck the rear end of an automobile operated by plaintiff Sheena J. Markin-Merwin*fn1 that was stopped in traffic. Plaintiff brought suit seeking damages for personal injuries.
In October 2007, the parties entered into a "high/low" settlement agreement in which plaintiff would receive a minimum of $60,000 and defendants would be required to pay no more than $650,000 in damages. At plaintiff's request, this agreement was refined further. By letter dated November 30, 2007, her counsel made the following proposal:
If Allstate remits to the plaintiff the sum of $58,500.00 by 5 p.m. on Friday December 7, 2007 plaintiff will give Allstate full credit for the $60,000.00 'low'. In effect we are offering Allstate a 'discount' of $1,500.00 on the $60,000.00 'low' if payment of $58,500.00 is received on or before the deadline set forth above.
There were further discussions between counsel regarding this proposal, a lower prepayment figure, and the possibility that plaintiff might waive prejudgment interest. In a letter dated December 5, 2007, defense counsel wrote to "confirm our various conversations . . . and your offer to waive interest." He advised that Allstate, the insurance carrier, agreed to pay the sum of $57,500 in exchange for a release executed by the plaintiffs for that amount. Defense counsel further noted that there should be additional correspondence executed by the plaintiffs to document the modification of their high/low agreement to reflect a low amount of $57,500. Defense counsel also outlined his understanding of how the high/low agreement would operate, including the scenario that occurred here: "[S]hould the jury come in with an amount less than $57,500 the previously executed release . . . would be forwarded to me along with the appropriate closing documents for the court. That would thereby end in its entirety, this litigation."
Plaintiff's counsel responded by letter dated December 5, 2007. He did not respond to the statement that the litigation would "end in its entirety" under the circumstances described. He only corrected defense counsel's reference to a waiver of prejudgment interest, stating that he had explicitly withdrawn the offer to waive prejudgment interest in an earlier letter. Plaintiff's counsel explained that prejudgment interest would be included within the parameters of the high/low agreement: "In other words, no matter what the verdict, with pre-judgment interest my total recovery cannot be above $650,000 or less than $60,000." Plaintiff's counsel asked defense counsel to advise whether the proposal set forth in his November 30, 2007 letter quoted above was acceptable and extended the deadline for reply to December 14, 2007.
An Allstate representative sent a letter, dated December 6, 2007, to plaintiffs' counsel stating that a settlement check was issued to the plaintiffs and their counsel in the amount of $57,500. After receiving this letter, plaintiffs' counsel wrote to defense counsel. Stressing that he had clearly indicated that the plaintiffs were not waiving any prejudgment interest, plaintiffs' counsel asked his adversary to confirm that the terms of the agreement were as follows:
By acceptance of this check, the Merwin's [sic] agree to waive any pre-judgment interest on the $60,000 low end of the high-low agreement. In other words, if a jury returns a verdict in the amount of $100,000, the Merwin's [sic] agree to waive any prejudgment interest on the first $60,000.
They would then compute the pre-judgment interest on $40,000.
Plaintiff's counsel asked that, if counsel agreed "that this constitutes the terms of the agreement, I would appreciate it if you would notify [the Allstate representative] of same in order that he can release the settlement draft to me." By letter dated December 18, 2007, defense counsel confirmed Allstate's willingness to accept the proposal so outlined and enclosed the settlement check of $57,500, payable to plaintiffs and their counsel.
Approximately one month later, the case proceeded to trial. Defendants stipulated liability for the accident. Because plaintiff was subject to the provisions of the "verbal threshold" statute, N.J.S.A. 39:6A-8a,*fn2 the issues for the jury to decide were whether plaintiff had suffered a "permanent injury" in the accident ...