High-Low Agreement Did Not Permit Plaintiff to Recover Attorneys’ Fees and Expenses Above the “High” Figure

Serico v. Rothberg, ___ N.J. ___ (2018).  As discussed here, last year, the Appellate Division ruled in this medical malpractice case that a “high-low agreement” is a contract, and that where the agreement did not provide for plaintiff to recover attorneys’ fees and litigation expenses in addition to the “high” amount, plaintiff could not be awarded such fees and expenses under Rule 4:58.  Plaintiff sought and obtained review by the Supreme Court.  Today, the Court affirmed in a unanimous opinion by Justice Fernandez-Vina.

Justice Fernandez-Vina observed that there were no disputed facts, so the de novo standard of review applied to the purely legal issue presented.  After discussing Rule 4:58, which governs offers of judgment before trial, the Court agreed with the Appellate Division that a high-low agreement “is a settlement contract and subject to the rules of contract interpretation.”

Justice Fernandez-Vina distinguished such an agreement from a Rule 4:58 offer of judgment, as “it serves a different purpose and provides distinct benefits.”  An offer of judgment “is designed to encourage parties to settle claims that ought to be settled, saving time, expense, and averting risk, while the specter of the continued prosecution of the lawsuit remains.  A high-low agreement, in contrast, only mitigates the risk faced by the litigants– it saves no time or expense related to litigation and requires the full panoply of judicial process, up to and including a jury verdict.”

The parties’ high-low agreement was between $300,000 and $1,000,000.  Colloquy before the trial court about the agreement did not include any discussion of fees and expenses.  Justice Fernandez-Vina thus concluded that there was “a meeting of the minds on both the floor and ceiling of Serico’s recovery, including fees and expenses.  Because the superseded the qualifying offer of judgment, if Serico desired Rule 4:58 expenses, she would have been required to explicitly preserve the right to pursue them when entering into the high-low agreement in this case.”  She did not do so, and thus she was not entitled to those expenses on top of the $1 million “high,” which was the amount that she in fact got, since the jury came back with a $6 million verdict.