Lachenmeier, Enloe & Rall - February, 2004 Publication

Beware of Personal Representatives Bearing Settlement Agreements on Wrongful Death Claims
January 2006

How often does a Claim Representative enter into an agreement to settle a Wrongful Death claim with an attorney representing a Personal Representative and believe that a legally enforceable settlement of the claim has thereby been reached? This would seem to be a reasonable assumption, whenever negotiations result in a meeting of the minds, but we now know it is a mistaken assumption. No legally binding settlement agreement is reached in such a circumstance and no settlement payment should be made based on such an apparent agreement until the court appointing the Personal Representative has approved the settlement.

This results from a recent Oregon Court of Appeals pronouncement, in the case of Busch and Phillippe and Zalokar v. Farmington Centers Beaverton et al, which has held that all settlement discussions with Wrongful Death claimants, Personal Representatives, or their attorneys should be treated as only preliminary discussions, even if you feel there has been a meeting of the minds and that the case has been fully and completely settled. This is true even if you have obtained a signed Release. The lesson of this recent case is:

DO NOT WRITE A SETTLEMENT CHECK UNTIL YOU SEE A PROPER COURT ORDER APPROVING THE SETTLEMENT, OR YOU MAY END UP WRITING EVEN MORE CHECKS.

     The Court of Appeals in the Busch case tells us that agreements to settle Wrongful Death claims are not legally binding agreements at all. Such agreements are necessarily contingent upon court approval under ORS 30.070.

     In the Busch case, the Wrongful Death claim had been filed and had gone to mediation, successfully resulting in what the parties (and the mediator) felt was a full settlement, for the sum of $160,000. Certain Wrongful Death beneficiaries who had not participated in the mediation subsequently expressed their unhappiness with the agreed upon settlement amount. When their unhappiness came to the attention of the Probate Court, the settlement agreement was not approved. The Wrongful Death defendant then asserted Settlement and Breach of Contract as Affirmative Defenses and the trial court ruled in favor of the defendant. This did not satisfy the already dissatisfied beneficiaries, who then took their dissatisfaction to the Court of Appeals. As noted above, the Court of Appeals held that a Wrongful Death claim settlement requires approval of the Probate Court and that a Personal Representative does not have the power to enter into a settlement agreement absent such court approval. As a result, the trial court’s decision was reversed and the case was sent back to the trial court for further proceedings.

     This situation probably comes up frequently in the context of pre-litigation settlements, when you do not have the involvement of defense counsel. How many times have you entered into a settlement agreement of a Wrongful Death claim when litigation has not yet been commenced, perhaps even when no Personal Representative has been appointed? Undoubtedly, countless times. Settling such a claim without requiring court approval is playing with fire. Unless you are 150% certain that you know who all of the possible statutory Wrongful Death beneficiaries are, and you have secured their signatures on an iron-clad settlement agreement document, you are running the risk that an unknown and ultimately dissatisfied beneficiary would come out of the woodwork and contend there was no settlement at all, possibly requiring a second substantial payment.

     Even if no further payment results, a settlement agreement signed by someone who purports to be a Personal Representative, when there has been no court approval, would be in violation of ORS 30.070, as a Personal Representative does not have the power to settle a Wrongful Death claim. As such, you may end up in a costly fight about who is to receive the settlement proceeds, if the court is not involved. If there has been no court approval and you do actually obtain signatures on release documents from all statutory beneficiaries, this could end up being a case of “no harm, no foul”, as there might be no one left to complain about the release being signed without court approval. On the other hand, you would probably prefer to not run the risk. Avoiding the risk all together is simple to do, by insisting on court approval.

     The real difficulty of proceeding without insisting on court approval is in determining who all the statutory beneficiaries are. ORS 30.020 prescribes who Wrongful Death beneficiaries can be. Under this statute, the following individuals are Wrongful Death beneficiaries:

“…the decedent’s surviving spouse, surviving children, surviving parents and other individuals, if any, who under the law of intestate succession of the Estate of the decedent’s domicile would be entitled to inherit the personal property of the decedent, and for the benefit of any stepchild or stepparent whether that stepchild or stepparent would be entitled to inherit the personal property of the decedent or not…”

Analyzing all the possible statutory Wrongful Death beneficiaries under ORS 30.020 is often neither a quick nor an easy task. Other than by taking the word of the person you are dealing with, you really would not know whether the decedent has left parents, a spouse, children (either in or out of marriage), or stepchildren or stepparents. Checking public records will rarely provide you with all of the answers. If there is any possibility that the decedent left any survivors other than a spouse and natural children, then the following intestacy statute, ORS 112.045 (assuming an Oregon domiciled decedent) would also need to be consulted:

“The part of the net intestate estate not passing to the surviving spouse shall pass:

To the issue of the decedent. If the issue are all of the same degree of kinship to the decedent, they shall take equally, but if of unequal degree, then those of more remote degrees take by representation.

If there is no surviving issue, to the surviving parents of the decedent.

If there is no surviving issue or parent, to the brothers and sisters of the decedent and the issue of any deceased brother or sister of the decedent by representation. If there is no surviving brother or sister, the issue of brothers and sisters take equally if they are all of the same degree of kinship to the decedent, but if of unequal degree, then those of more remote degrees take by representation.

If there is no surviving issue, parent or issue of a parent, to the grandparents of the decedent and the issue of any deceased grandparent of the decedent by representation. If there is no surviving grandparent, the issue of grandparents take equally if they are all of the same degree of kinship to the decedent, but if of unequal degree, then those of more remote degrees take by representation.

If, at the time of taking, surviving parents or grandparents of the decedent are married to each other, they shall take real property as tenants by the entirety and personal property as joint owners with the right of survivorship.”

     By far and away, the safest claims handling procedure when dealing with a Wrongful Death claim is to insist that the claimant attorney agree to obtain Probate Court approval of the preliminary settlement agreement once the preliminary terms have been reached. If the claimant does not have an attorney, he or she should be encouraged to retain one (your defense counsel ordinarily will not be able to serve in that capacity, even if you agree to pay the attorney fees, due to potential conflicts of interest).

     Even if the claimant is represented, and if you and the attorney believe you have come to terms on a settlement agreement, keep in mind that you will still not have a settlement agreement until the Probate Court has approved the settlement. You should insist upon seeing a copy of the signed Probate Court Order approving the settlement before paying out any settlement funds. This is far preferable to paying a substantial sum of money and then later, perhaps months or even years, receiving a phone call from some estranged out-of-wedlock child, or stepchild, wondering where his or her money is and asking you to write another check.

     If you have any questions about this or any related topic, please feel free to call the writer Jay Enloe, at 503-768-9600, or by email at jay@lerlaw.com.