Florida law has very strict rules regarding the representation of the economic interests of minors and settlements in legal proceedings. But when is a guardian ad litem required for a personal injury settlement?
A minor’s parents can settle claims on their child’s behalf without court intervention when the gross value of the settlement is $15,000 or less. When a minor has an interest in a settlement whose gross value is greater than $15,000 but less than $50,000, the court has discretion to require appointment of a guardian or guardian ad litem. If a minor has an interest in a settlement whose gross value—irrespective of the portion to which the minor is entitled—exceeds $50,000, the court must appoint a guardian or guardian ad litem.
Minors Involved in a Personal Injury Settlement
The need for judicial approval of a minor’s settlement was recently at issue in the Fourth District’s opinion in Allen v. Montalvan (4th DCA 2016). There, three minors involved in a car accident (“Plainitffs”) attempted to settle potential legal claims against the drivers of the other vehicle (“Defendants”) and their insurer (“Insurer”).
The Plaintiff’s interests were represented in negotiations by the mother of two of the three minors. The Plaintiffs, through counsel, reached a settlement with the Insurer under which the Insurer would tender full policy benefits. Pursuant to the settlement, the Insurer paid $50,000.00 to the Plaintiffs in the form of two $25,000 checks: one addressing a potential wrongful death claim and one addressing potential claims for personal injury. Notably, the parties did not agree to an apportionment of funds for the personal injury claims. In exchange, the Plaintiffs gave the Insurer and the Defendants a written release.
Nearly two years after the checks were tendered, Plaintiffs returned the releases to the Insurer.
Shortly after the releases were returned to the Insurer, the Plaintiffs—now being represented by new counsel—sued the Defendants for damages stemming from the same accident. The Plaintiffs maintained that their previous acceptance of funds from the Insurer for potential personal injury claims was not a settlement and release, but merely a tender of the policy limit. After the Insurer intervened in this lawsuit and moved to enforce the settlement agreement, the trial court dismissed the Plaintiffs’ claims and entered judgment in favor of Defendants. Indispensable to the trial court’s finding was its conclusion that the gross settlement to Plaintiffs for the purposes of determining whether a guardianship was required did not include the $25,000 earmarked as “wrongful death” funds. Accordingly, the trial court held that the $50,000 threshold mandating appointment of a guardian was not met.
The Fourth District disagreed. Drawing from the directives of Fla. Stat. § 744.3025(1)(b), the appellate court found that it was “inescapable” that “the universal settlement involved the minor children and was within the monetary range of [Section 744.3025(1)(b)].”
Gross Settlement Equals or Exceeds $50,000
The court’s decision is significant in two respects.
First, the decision serves to illustrate that the appointment of a guardian ad litem is triggered by the gross settlement amount without regards to a minor’s share of the settlement proceeds.
Second, implicit in the Court’s holding is its interpretation of the aforementioned statute as requiring a guardianship and court approval when the gross settlement amount equals or exceeds $50,000. Ultimately, the Fourth District found that the failure to obtain court approval of the original settlement rendered the agreement a nullity. Because no valid settlement was ever reached, the Plaintiffs were not precluded from filing suit.
Fla. Prob. R. 5.636, intended to serve as a companion to Fla. Stat. § 744.3025, employs the term exceeds $50,000 rather than the equals or exceeds language found in the statute. The Fourth District essentially found this disparity to be an oversight.