New Jersey Appeals Court Vacated An Order Placing A Settlement In A Special Needs Trust

A New Jersey appeals court vacated an order approving a settlement and placing it in a special needs trust (SNT), ruling that there was no “meeting of the minds” between the parties. V.M. v. Jersey Shore University Medical Center, (N.J. Super. Ct. App. Div., A-0781-16T1, Nov. 3, 2017).

LaTanya Murphy and her adult son V.M. sued her doctors and others for medical malpractice in their treatment of her pregnancy and V.M.’s delivery.  Following his birth, V.M. sustained a variety of debilitating conditions, and was ultimately declared an incapacitated adult. Plaintiffs claimed the doctors deviated from applicable standards of care, causing V.M.’s disabilities.

Following several days of trial, defendants presented a joint settlement proposal that included an offer to pay $1.25 million. It was expected that the settlement funds would be put into an SNT.  However, no agreement was reached concerning the mechanics and application of the settlement, or about who would administer the SNT.

After a settlement hearing with the parties, the court sought advice on a settlement plan for V.M. from an attorney with expertise in settling these types of cases. That attorney made several recommendations, including that an SNT be funded through the purchase of an annuity, that an up-front payment be made to address some of V.M.’s immediate needs, and that Ms. Murphy be made sole trustee of the SNT.  Plaintiffs accepted the recommendations, but defendants objected. Over defendants’ objections, however, the court issued a final order approving the settlement and implementing the consulting attorney’s recommendations.

Defendants appealed. The Superior Court of New Jersey, Appellate Division, vacated the trial court’s order approving the terms of the settlement and implementing the consulting attorney’s recommendations, and remanded the matter to the trial court for a new trial.  The appeals court held that the settlement terms were never agreed to in full by the parties, i.e., there was no “meeting of the minds,” and that the settlement agreement was, therefore, unenforceable.

With regard to the case on remand, the appeals court expressed the “genuine[] hope that, on remand, the parties will be able to negotiate a final enforceable settlement agreement and obviate the need for a new trial.” If a settlement was achieved, the appeals court directed that the agreement “shall be reduced to writing and presented to the trial court for review at a … hearing. At such a hearing, the court’s sole options will be either to approve the negotiated terms, or reject them as not being in V.M.’s best interests. We do not intimate whatsoever any views on the appropriate terms of settlement.”

For the court’s full opinion, V.M. v. Jersey Shore University Medical Center

For additional information concerning special needs trusts and disability planning, visit:

NJ Special Needs Trusts and Disability Planning