On this date in 1990, the Supreme Court decided Nolan v. Lee Ho, 120 N.J. 465 (1990). According to Westlaw, that case has been cited over 1,100 times. Generally, those citations invoke legal rules relating to settlement of litigation, such as “A settlement agreement between parties to a lawsuit is a contract,” “Settlement of litigation ranks high in our public policy,” and “In general, settlement agreements will be honored absent a demonstration of fraud or other compelling circumstances.”
Less well known than principles such as those is the fact that Nolan was a per curiam decision for a sharply divided 4-2 Court, on extraordinary facts. The issue in the case, a wrongful birth/wrongful life matter involving settlements with two defendants, was whether a testimonial hearing should have been held before the trial court vacated the settlements. The basis for vacating the settlements was the assertion that plaintiffs’ counsel had committed a fraud on defendants by failing to disclose a key fact involving the alleged advice of a doctor whom the plaintiff mother had consulted years earlier. The Law Division vacated the settlements without holding a hearing. The Appellate Division affirmed.
The majority of the Supreme Court found that whether the prior doctor had given the alleged advice, and how Ms. Nolan interpreted it, was “unresolved.” The majority went on to say that “[f]urther inquiry would focus on whether the omitted information, if true, would have a significant effect on the merits of both plaintiffs’ cause of action and defendants’ defenses. Those issues must be determined in the context of setting aside or rescinding a settlement. The extent to which defendants were actually misled and their ability to engage in discovery and prepare defenses significantly hindered are matters that can most properly be developed and determined through a hearing.” The majority thus remanded to the Law Division “for a testimonial hearing consistent with this opinion.”
Justices Pollock and Garibaldi dissented. They would have affirmed the vacation of the settlements without need for a hearing because, in their view, knowledge by defendants of the prior doctor’s advice, which that doctor described in a letter to plaintiffs’ counsel eleven months before trial, “would have had a substantial effect on their willingness to enter a settlement agreement” and was unquestionably prejudicial to defendants.
The case had everything: tragic circumstances in which the plaintiff mother, who was blind as a result of malignant tumors, gave birth to a daughter who was blind due to malignant tumors. The mother alleged that she was never told that her own condition might be congenital and subject to being inherited by children (prior to the pregnancy that was the subject of this case, she did have a child who did not suffer from that condition). When the situation blew up, she sued the prior doctor, but that suit failed due to the statute of limitations. Whether plaintiffs failed to disclose the situation with the prior doctor was disputed: the defense served an interrogatory asking about doctors who had “seen” the mother, she explicitly responded with a list of doctors who had “treated” her, and the prior doctor had in fact declined to take her as a patient so she did not disclose him. There was even a disciplinary proceeding against her counsel that was ultimately dismissed. Thus, a case that many lawyers know for elementary principles regarding settlement in fact holds quite a tale. Check it out.