Spaulding v. Zimmerman

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Spaulding’s (Plaintiff) attorneys agreed to a settlement for injuries sustained in a car accident while not knowing that Spaulding had an aorta aneurysm possibly resulting from the accident; and the attorneys for Zimmerman (Defendant) did know, but did not disclose it to Plaintiff or to the court

Synopsis of Rule of Law.

When parties who are in an adversarial position reach an agreement to settle, though no rule or duty requires them to disclose adverse knowledge, if defendants fail to disclose, they run the risk that failure to affirmatively disclose information may form the basis for a settlement to be vacated.

Facts.

The father of Spaulding (Plaintiff), a minor, brought a suit on Plaintiff’s behalf when Plaintiff was severely injured while riding in a car Zimmerman (Defendant) was driving.  While Plaintiff’s doctors did not discover that he had a life-threatening aorta aneurysm possibly resulting from the accident, a neurologist examined Plaintiff for Defendant and pointed out the aneurysm in his report to the Defendant’s attorneys.  A settlement agreement was reached by the parties and submitted to the court for approval.  The aorta aneurysm was never revealed to the court.  During a following checkup, the Plaintiff’s physician discovered the aneurysm, and Plaintiff immediately had surgery.  Plaintiff was no longer a minor child and brought this action for additional damages.  The court vacated the prior settlement order.  Defendant appealed

Issue.

When parties who are in an adversarial position reach an agreement to settle, though no rule or duty requires them to disclose adverse knowledge, if defendants fail to disclose, do they run the risk that failure to affirmatively disclose information may form the basis for a settlement to be vacated?

Held.

(Gallagher, J.)  Yes.  When parties who are in an adversarial position reach an agreement to settle, though no rule or duty requires them to disclose adverse knowledge, if defendants fail to disclose, they run the risk that failure to affirmatively disclose information may form the basis for a settlement to be vacated.  The lower court vacated the settlement, finding the aneurysm casually related to the accident.  A settlement made on behalf of a minor may be vacated where it is shown that in the accident the minor sustained separate and distinct injuries, which were unknown or not considered by the court at the time the settlement was approved.  In this case, Defendant’s counsel knew the seriousness of Plaintiff’s disability but failed to disclose it to the court.  Therefore, the court did not abuse its discretion in setting the prior settlement aside.  Affirmed.

Discussion.

Zimmerman’s (Defendant) attorney was not required by legal obligation or by a canon of ethics to inform Spaulding (Plaintiff) regarding the aneurysm or to advise the court about it.  Further, Plaintiff’s counsel could have obtained the information through use of the available rules of discovery.  If Plaintiff had not been a minor at the time of settlement, the lower court declared it would have been justified in denying his motion to vacate, leaving him to whatever remedy he may have had against his doctor and his lawyer.  However, note that the rule changes in ex-parte proceedings, where a lawyer is required to inform the tribunal of all material facts (ABA Model Rule 3.3).