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Keywords

settlementplaintiffdefendantmediationattorneytrialplaintiff's attorney
settlementplaintiffdefendantmediationattorneylawyerhearingtrialprobatewilldocketplaintiff's attorney

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Virzi v. Grand Trunk Warehouse and Cold Storage Co., 571 F.Supp. 507, 37 Fed.R.Serv.2d 864

Facts

The case involved a personal injury diversity action where the plaintiff's attorney filed a mediation statement shortly before the plaintiff died unexpectedly. After the plaintiff's death, the attorney did not inform the court or the defendants' attorney during settlement negotiations, leading to a settlement agreement for $35,000. The defendants were unaware of the plaintiff's death at the time of the settlement, which raised questions about the validity of the agreement.

Several days after the mediation hearing of June 14, plaintiff's attorney learned of his client's death. A personal representative was appointed by the probate court on June 24, 1983 to administer plaintiff's estate, although no suggestion of death was made in this Court, and the representative was not substituted as plaintiff.

Issue

Did the plaintiff's attorney have an ethical duty to inform the court and opposing counsel of the plaintiff's death before finalizing the settlement?

The sole issue in the case is whether plaintiff's attorney had an ethical duty to advise this Court and defendants' attorney, who was unaware of the death of plaintiff, that plaintiff had died a few weeks prior to the settlement agreement.

Rule

An attorney has an absolute ethical obligation to disclose significant facts, such as the death of a client, to the court and opposing counsel to maintain the integrity of the legal process.

Disciplinary Rule 7–102(A) of the American Bar Association Model Code of Professional Responsibility, which is applicable to lawyers practicing in the United States District Court for the Eastern District of Michigan provides: (A) In his representation of a client, a lawyer shall not: (3) Conceal or knowingly fail to disclose that which he is required by law to reveal.

Analysis

The court determined that the plaintiff's attorney's failure to disclose the death of the plaintiff constituted a breach of ethical duty. The attorney's actions misled the court and opposing counsel, as the defendants were unaware of the plaintiff's death and believed they were negotiating with a living party. The court emphasized that the attorney's duty of candor extended to both the court and opposing counsel, particularly in light of the significant impact the plaintiff's death would have had on the settlement discussions.

Here, plaintiff's attorney did not make a false statement regarding the death of plaintiff. He was never placed in a position to do so because during the two weeks of settlement negotiations defendants' attorney never thought to ask if plaintiff was still alive.

Conclusion

The court set aside the settlement and reinstated the case for trial, concluding that the attorney's failure to inform the court and opposing counsel of the plaintiff's death invalidated the settlement agreement.

For the foregoing reasons, the settlement will be set aside and the case reinstated on the docket for trial.

Who won?

Defendants prevailed in the case as the court ruled in their favor, setting aside the settlement due to the plaintiff's attorney's failure to disclose the death of the plaintiff.

Defendants contend that because their lawyer did not know of plaintiff's death at the time of the settlement, and because plaintiff's attorney failed to disclose that fact, the settlement is void.

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