counsel for the plaintiff, under the circumstances set forth herein, should not have discussed settlement with Nationwide without having first obtained the consent of defense counsel.
However, apart from any breaches of the Code of Professional Responsibility which may have been committed by plaintiff's counsel, this Court must set aside the settlement because (a) the settlement resulted because both Wicks and Lerner negotiated the settlement while operating under a mutual mistake of fact, and (b) the settlement is voidable by Nationwide because Nationwide did not know of the arbitrators' award whereas counsel of record for the plaintiff, Bernard Kubert, Esq., had been advised of the award prior to the negotiation of the settlement on November 16.
Mr. Eric Lerner, attorney for the law firm representing the plaintiff, testified at the April 26 hearing before this Court that on November 16, 1982, when he discussed settlement with Nationwide negotiator Wicks, he was unaware of the arbitration panel's decision. As heretofore noted, Mr. Wicks and Nationwide were unaware of the arbitrators' award. Thus, at the time they negotiated and effected the $15,000.00 settlement, both Lerner and Wicks made a mutual mistake of fact. The settlement contract they made is therefore voidable. See Corbin, Contracts, § 606-612, at 553-63 (1952). Kotzen and Nationwide are therefore entitled to have the settlement agreement set aside on this basis.
The evidence presented at the April 26 hearing before this Court makes it apparent that Mr. Wicks, the Nationwide agent who negotiated with plaintiff's counsel, was unaware of the posture of the case on November 16, 1982 when he agreed to settle the matter for $15,000.00, $11,000.00 more than the award made to the plaintiff by the arbitrators. However, Mr. Kubert, counsel of record for the plaintiff and the senior partner in the law firm representing the plaintiff, was aware of the arbitrators' award by virtue of his telephone conversation with the chairman of the arbitration panel that heard the case. Mr. Kubert knew of the arbitration award on the morning of November 16, 1982. It was during the afternoon of November 16 that Mr. Lerner, a lawyer in the Kubert firm, and Nationwide negotiator Wicks reached settlement. Although Mr. Lerner testified that he personally did not know of the arbitrators' award at this time, counsel of record for the plaintiff did know of the award. Furthermore, notice of an arbitration award to counsel of record for the plaintiff and to a member of plaintiff's law firm is notice to the entire law firm. Therefore, Mr. Lerner had constructive knowledge of the award which was not given to Mr. Wicks. Consequently, the settlement of $15,000.00 is voidable because plaintiff's counsel constructively knew of the arbitrators' award.
For the reasons heretofore stated, this Court must set aside the settlement between Waller and Kotzen. Because of the involved procedural history of this matter, the Court will give the parties 30 days from the date of this Order in which to demand trial de novo of this case in the event they disagree with the arbitrators' award of $4,000.00 in favor of plaintiff Waller. If neither party demands trial de novo within 30 days of this date, the arbitrators' award shall become a final judgment pursuant to Local Rule 8 of this Court. An appropriate Order will be accordingly entered.
AND NOW, this 20th day of July, 1983, upon consideration of defendant's Motion to Set Aside Settlement, and plaintiff's response thereto, a hearing having been held before this Court, for the reasons set forth in this Court's Memorandum of July 20th, 1983,
IT IS HEREBY ORDERED:
1. Defendant Stephen Kotzen's Motion to Set Aside Settlement is GRANTED;
2. The settlement in the amount of $15,000.00 negotiated between plaintiff's counsel and Nationwide Mutual Insurance Co. is declared null and void;
3. The arbitrators' award of November 15, 1982 in favor of plaintiff Carol Ann Waller in the amount of $4,000.00 is reinstated; and
4. The parties shall have 30 days from the date upon which this Order is entered to demand trial de novo pursuant to Local Rule of Civil Procedure 8. In the event trial de novo is not demanded within 30 days, the arbitrators' award shall become a final judgment in the manner set forth in Local Civil Rule 8.
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