A suit was entered against a doctor by Lucia Serico for a failure to make a diagnosis of colon cancer that ultimately led to her husband’s death. She had offered to accept $750,000 under New Jersey‘s offer of judgment rule, which would have included interest and other costs. The defendant did not accept the offer and the case went to a ruling decided by a jury. During these deliberations, the parties settled on a high-low agreement, which stated that Serico would receive between a minimum of $300,000 and a maximum of $1 million. The jury awarded her $6 million, which meant she would receive the maximum of $1 million. The plaintiff then petitioned for the addition of costs and attorney fees that the offer of judgment rule allows for when a judgment that is 20% higher than the declined offer.
Serico’s award was above the 20% threshold; however, her motion was denied due to a failure to formally ask for the right to collect attorney fees available with the offer of judgment rule when accepting the high-low agreement. There was no existing case law that discussed this issue to reference. The judge ruled that an offer of judgment rule may exist in conjunction with a high-low agreement, yet the terms must be negotiated when the high-low agreement is entered—not after the fact.
On appeal, the court found that the plaintiff did not have a right to additional recovery beyond the high amount agreed upon. The court clarified that:
- If a no-cause verdict is awarded, the plaintiff receives the low amount, but there is nothing to use for calculating interest.
- If the award is below the low (minimum) amount, plaintiff’s interest is calculated and the plaintiff then receives that total.
- If the award is more than the minimum, interest is also added.
- If the award exceeds that maximum, only the maximum is collectable without any additions.
In this instance, the plaintiff could have negotiated that applicable amounts of interest and attorney fees be added into the award based on the New Jersey’s offer of judgment rule; however, either her counsel overlooked this possibility, or assumed this was the case when entering the high-low agreement. The court had no record of such a request either orally or in writing; therefore, made a ruling according to basic contract laws as it is read. The appeals court affirmed the ruling of the lower count in limiting her recovery to the $1 million award.