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Settlement Agreement From Helicopter Crash Set Aside Where One Attorney Represented All Victims

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Can an attorney represent the estate of a deceased accident victim and potential tortfeasors in a settlement with an insurance company when there are conflicting claims between the client parties?  According to the Third District Court of Appeals in Miami, in the absence of full disclosures of potential conflicts amongst the parties, the attorney could obviously not represent all of the parties.  Gogoleva v. Soffer(3rd DCA 2016).

Jeffrey Soffer, the billionaire owner of Miami’s Fountainebleau hotel, was traveling to the Bahamas in a helicopter with several business associates in a helicopter.  The helicopter had two pilot seats – one occupied by a professional helicopter pilot, the other allegedly by Mr. Soffer.  The helicopter crashed on landing, killing Lance Valdez, apparently a longtime friend of Mr. Soffer.

The estate of Mr. Valdez, his minor children, and his widow, Daria Gogoleva, as well as the other passengers on the helicopter retained attorney Steven Marks, a prominent aviation attorney, to handle the litigation against the owner of the helicopter and the insurance company.  The insurance company agreed to pay policy limits to Mr. Valdez’s widow and minor children, and the other passengers agreed to forgo any recover against the insurance company.

In drafting the settlement agreement, the estate, the guardianships for the minor children, and the other passengers agreed to release the insurance company from any liability.  Importantly, the releases also released each of the passengers from claims against each other, not just claims against the helicopter owner and insurance company.

Allegedly, there turned out to be conflicting stories about who was piloting the helicopter when it crashed – with the pilot claiming that it was Soffer who was piloting the helicopter when it crashed.  Mark’s investigator allegedly told Marks that the pilot had told the investigator that Soffer was piloting the helicopter when it crashed.  Attorney Marks allegedly failed to advise Valdez’s widow that she might have a claim against Soffer, but despite this conflict nonetheless represented the estate, the widow, the guardianships of the minor children and Soffer as clients in settling with the insurance company and with each other.

Valdez’a widow ultimately discovered what had taken place and sued Mr. Marks for malpractice and to set aside the settlement agreement wherein Mr. Valdez’s estate and the minor children’s guardianships had released Mr. Soffer from any liability.  The trial court dismissed the attempt to set aside the settlement agreement.

One Attorney Could Not Represent Parties with Conflicting Claims And No Disclosure

In reversing the trial court and allowing the settlement agreement to potentially be set aside, the appellate court cut right to the heart of the matter:

The heart of the amended complaint is an attempt to relieve Gogoleva and her children from an unusual feature of the Release. While it is clear that NAE [the insurance company] and the other ten “Releasees” would expect releases from Gogoleva and the other three “Releasors” (Soffer and the Riordans) before paying policy limits to the estate and children of the only passenger who died in the helicopter crash, it is far from clear why the Release was purportedly drafted to require Gogoleva to release Soffer and the Riordans (and for each of them to release the other three “Releasors”). The amended complaint asserts that this feature of the Release was not required by NAE and that it is “quite unusual and extraordinary, and is not the norm in the industry.” An irreconcilable problem raised by the amended complaint boils down to this: if there were not claims among Gogoleva, Soffer, and the Riordans, why add the unusual words purporting to expand the number of releasees, thereby creating a conflict with the defined term, “Releasees”? But if any such claims inter se were suspected or known, how could a single attorney ethically represent all four Releasors?

The appellate court did not rule in favor of Mr. Valez’s estate on the merits of anything other than allowing the estate to proceed to try to prove its allegations in the attempt to set aside the settlement agreement.

 

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