Is the Plaintiff Still Alive?
Sadly, this question is sometimes necessary to ask in discovery. In Gray v. Cox Communs. Las Vegas, Inc. the plaintiff died in April, 2016 but a lawsuit was still filed in his name on September 16, 2016.[1] The complaint was amended to add a defendant on January 20, 2017, but the plaintiff’s status was not changed. The fact that plaintiff had died was apparently not disclosed until an opposition to a motion for summary judgment.
Judge Mahan granted summary judgment based upon standing. The individual plaintiff was not a proper party because, upon death, his rights passed to his estate. The estate was never named as a party. The problem for the plaintiff’s counsel is the statute of limitations had expired.
Gray was much easier to decide than a similar case I handled that taught me to at least think about asking if the plaintiff is still alive.
Plaintiff’s death was not disclosed until after settlement occurred.
It was a personal injury lawsuit where the parties reached a settlement after discovery closed, but before trial. Discovery closed on August 6,[2] on August 12 settlement occurred. Only after that did I learn that the plaintiff had died of natural causes earlier that year on May 24. He had been deposed a few months before that. He verified answers to interrogatories on May 12.
- Discovery gave me no reason to know the plaintiff died.
Plaintiff’s nephew was deposed on June 22, but he had not seen the plaintiff since the accident at issue, but did have telephone conversations with him. The nephew was not asked if the plaintiff was dead because there had been no indication that he died. Regardless, the nephew’s responses indicated he believed the plaintiff was alive.
On June 24 I deposed one of the plaintiff’s friends whom he had called twice in the hours before the accident at issue. They had been for approximately 24 years. In the two to three years before the accident, she would see the plaintiff “every couple of months.” After, she saw him once a month and had not seen him since May. At deposition, she was asked if she knew where the plaintiff was living at present but did not know. She knew the plaintiff was no longer living with his wife. The friend did not know the plaintiff’s current address, but she did have a telephone number for him. The friend was not specifically asked if the plaintiff was dead, however her responses indicate she believed he was alive.
On June 24, I also deposed the plaintiff’s economist who had calculated a loss of household services. I asked him about the plaintiff’s living arrangements.
15 Q. Does it make a difference in your analysis if
16 Plaintiff is homeless?
17 A. If he’s homeless? It might, depending upon
18 more information.
19 Q. What type of information would you need?
20 A. When did he become homeless?
21 Q. Before and after the event.
22 A. Well, that’s strange because I asked him
23 about his ability to do household work.
24 Q. I agree. It is strange.
25 If he’s homeless, does he have a loss of
1 household services?
2 A. I would think not, at the moment that he
3 would be homeless.
4 Q. Did he ever indicate to you that he was
5 homeless?
6 A. No, sir. He did not.[3]
After that, on June 29 I sent a single interrogatory to the plaintiff asking for his current residential address. No answer was received.
- The case’s procedural posture gave no reason to know the plaintiff died.
NRCP 25(a)(1) permits the substitution of an estate for a party if the party dies while the action is pending. At no point prior to settlement did plaintiff seek to substitute an estate. At no point did plaintiff ever seek a preferential trial setting due to concern about his health.
- The plaintiff’s death was not disclosed during settlement negotiations.
The death was never disclosed at any point during settlement negotiations. The communications leading to settlement, however, reasonably led me to believe the plaintiff was still alive. For instance, there was no communication stating the plaintiff had died. The communications instead implied, at a minimum, that he was still alive. For instance, in the context of discussing whether a mediation would be productive, plaintiff’s counsel wrote on July 13,
My client is voicing strong opposition to conducting a mediation in this case in light of the fact your client has been unwilling to respond to two separate demands for settlement. He believes a mediation would be an additional expense and waste of time. If your client has an offer to make we are willing to listen and attempt to settle this case and mediate at a later time if necessary.
After settlement, additional communications discussed regulatory concerns. An email to plaintiff’s counsel asked if the plaintiff was “[m]arried still and any consortium claim? And given the potential for Medicare in the future, we are covering the bases with a set aside (which we are to provide to at our expense and this should be ready soon).” That day at 11:36 I sent a proposed release for counsel’s review that named the plaintiff as the releasing party. At 11:40 Plaintiff responded that “the Release should be revised to reflect ‘[wife]’ as sole heir.” There is no medicare set aside as [plaintiff] is no longer eligible for medicare. Please confirm that the settlement check is also made payable ‘[wife and plaintiff’s firm].’” I could think of only one way that the plaintiff could have lost his Medicare eligibility. So, at 12:00 I responded, asking “[i]s [plaintiff] dead? When did that happen? That would be news to us.” My client was included on the email chain to finalize payment instructions and responded at 12:21 stating “[t]his is crucial. From my conversations with [plaintiff’s counsel] today there was no mention that he was dead (if that is so). A large/main part of the discussion was [plaintiff] getting a settlement while he was still alive. Please advise.” At 12:28, plaintiff’s counsel replied. “Really? He died May 24, 2015. I figured you both knew.” This moment was the first time I had any indication the plaintiff was dead.
The settlement was legally unenforceable.
This caused problems. First, as a practical matter, my clients and I concluded we had been duped. As equally problematic was plaintiff’s insistence that the settlement agreement was enforceable. My clients vehemently disagreed. “Because a settlement agreement is a contract, its construction and enforcement are governed by principles of contract law. Basic contract principles require, for an enforceable contract, an offer and acceptance, meeting of the minds, and consideration.”[4]
- The contract was unenforceable because the attorney did not represent a party to the case.
I found a nearly identical fact pattern in Robison v. Orthotic & Prosthetic Lab, Inc.[5] where the Illinois Court of Appeals determined the settlement was unenforceable. “Generally, the attorney-client relationship is terminated by the death of the client, and thereafter, the authority of the attorney to represent the interests of a deceased client must come from the personal representatives of the decedent.”[6] However, “an attorney cannot proceed where he does not represent a party to the action.”[7] As a personal representative of the decedent had not substituted in as a party before the settlement occurred, the attorney did not represent a party to the case when the settlement occurred and lacked authority to settle.
The court concluded the defendant “had no knowledge about the plaintiff’s death or the appointment of a personal representative throughout the period of settlement negotiations.”[8] Plaintiff’s counsel, Mr. Gilbreth, acknowledged he did not disclose the fact of the death until after the settlement was reached.[9] He asserted the rules of professional conduct barred him from disclosing the death.
We strongly disagree. We find that the arguments expressed by Mr. Gilbreth are specious and incredible, and we are concerned about his professional judgment in this case. In failing to disclose the fact of the plaintiff’s death, Mr. Gilbreth intentionally concealed a material fact that would have reduced the overall value of the claim for damages. In addition, and equally troubling, Mr. Gilbreth led the defendant to believe that he had authority to negotiate a settlement of the litigation on behalf of the party plaintiff, when the action was without a plaintiff as the plaintiff had died and a representative had not been substituted. Given Mr. Gilbreth’s intentional misrepresentations and material omissions prior to and during the settlement negotiations, we conclude that the settlement agreement is invalid and unenforceable, and that the trial court erred in granting the motion to enforce it.[10]
I argued this same analysis applied in Nevada. At a minimum there had been no plaintiff in the case since May 24, 2015. Plaintiff’s counsel had not substituted a personal representative as a party to the case and lacked any authority to negotiate a settlement.
- The settlement contract was unenforceable due to either fraudulent inducement or fraudulent concealment.
Even had the estate been substituted, the settlement contract was unenforceable due to either fraudulent inducement or fraudulent concealment. Just as in Robison, the plaintiff’s death had a substantial, material impact upon the case value. In Nevada “[i]t is, of course, true that one has an obligation not to speak falsely when inducing another to make a bargain.”[11] “[I]ntentional misrepresentation of material facts in a contract, resulting in the intended deception, constitutes actual fraud, which is a proper ground for rescission of the contract.”[12] “Total reliance upon a misrepresentation is not required to entitle a party to rescission. It is enough that the misrepresentation is part of the inducement to enter into the transaction.”[13] “[T]he focus of the inquiry is whether the party seeking rescission was deceived in fact by the misrepresentation which the other party made knowingly and with the intention that it be relied upon.”[14] “Whether rescision shall be granted rests largely in the sound discretion of the court.”[15]
The policy of this state with respect to contracts procurred through fraud has been made clear. “[T]he courts can never be called upon to legalize a fraud, or enable any man upon an executory contract to realize a profit from his own immoral conduct. The very moment the fraud is clearly proven the court refuses to grant any relief. … Whenever, in this manner, an executory contract is tainted with fraud, the court refuses to enforce it, and it makes no difference whether the fraud is shown by the plaintiff or defendant.”[16]
The elements of fraudulent inducement are: (1) a false representation; (2) plaintiff’s knowledge or belief that the representation is false (or insufficient basis for making the representation); (3) plaintiff’s intention to induce another to act or to refrain from acting in reliance upon the misrepresentation; (4) Defendants’ justifiable reliance upon the misrepresentation; and (5) damage to Defendants resulting from such reliance.[17] Nevada has also “recognized that fraud is never presumed; it must be clearly and satisfactorily proved.” Id.
The email communications between the parties clearly indicated that plaintiff was still alive. This fact was false. As in Robison, my clients and I reasonably relied upon this fact to our detriment.
The settlement contract was also void via fraudulent concealment. “While a fraud claim may arise if affirmative misrepresentations are made, a fraudulent concealment claim may arise from ‘negative misrepresentations, such as the failure of a party to a transaction to fully disclose facts of a material nature’ where that party has a duty to speak.”[18] In the context of fraudulent concealment, a duty to disclose arises “where the defendant alone has knowledge of material facts which are not accessible to the plaintiff.”[19] The elements to prove such a claim in Nevada are
(1) the defendant concealed or suppressed a material fact; (2) the defendant was under a duty to disclose the fact to the plaintiff; (3) the defendant intentionally concealed or suppressed the fact with the intent to defraud the plaintiff; that is, the defendant concealed or suppressed the fact for the purposes of inducing the plaintiff to act differently than she would have if she had known the fact; (4) the plaintiff was unaware of the fact and would have acted differently if she had known of the concealed or suppressed fact; (5) and, as a result of the concealment or suppression of the fact, the plaintiff sustained damages.[20]
The plaintiff’s death was a material fact and it was concealed. A duty to disclose this fact existed, as Robison concluded. Consequently, the settlement contract is unenforceable.
- The contract was unenforceable based upon a unilateral mistake.
Finally, a contract may be unenforceable based upon a unilateral or mutual mistake. A “mutual mistake may provide a basis for relief from a contract.”[21] A “[m]utual mistake occurs when both parties, at the time of contracting, share a misconception about a vital fact upon which they based their bargain.”[22] However there was no mutual mistake here; plaintiff’s counsel knew plaintiff died.
Instead unilateral mistake applied. Nevada “has also recognized that the occurrence of unilateral mistakes may allow a party to a contract to obtain relief from that agreement.”[23] “A unilateral mistake occurs when one party makes a mistake as to a basic assumption of the contract, that party does not bear the risk of mistake, and the other party has reason to know of the mistake or caused it.” “[U]nder general principles of contract law, unilateral mistake is not a ground for rescission unless the other party knows or has reason to know of the mistake.”[24]
Applied to plaintiff, my clients and I were mistaken as to a basic assumption of the contract: plaintiff was alive. My clients and I did not bear the risk of that mistake because there was no way for it to know of this fact. Additionally, based upon the parties’ emails, there is a strong inference that plaintiff’s counsel either knew or had reason to know of the mistake. No suggestion of death or motion to substitute an estate was filed per NRCP 25. No supplemental discovery disclosures were provided indicating plaintiff was deceased. No response, of any type, was received to the June 29, 2015 interrogatories asking for plaintiff’s current residential address. Instead, on July 13, 2015 plaintiff’s counsel wrote and indicated he spoke with his client. Given that plaintiff was dead, that statement was impossible.
What happened?
We’ll never know how a Nevada court would have addressed this problem. After the initial emotional reactions subsided, the plaintiff elected to not pursue efforts to enforce the settlement. We instead began new negotiations that produced an alternative settlement. However, it created a new question in discovery: is the plaintiff still alive?
[1] No. 2:17-CV-890, 2017 U.S. Dist. LEXIS 92087 (D. Nev. June 14, 2017).
[2] Yes, I’m omitting the year.
[3] This line of questioning was a lot of fun. Plaintiff had been homeless.
[4] May v. Anderson, 121 Nev. 668, 672, 119 P.3d 1254, 1257 (2005).
[5] 27 N.E.3d 182 (Ill. App. 2015).
[6] Id. at 185.
[7] Id.
[8] Id. at 186.
[9] Id.
[10] Id.
[11] Violin v. Fireman’s Fund Ins. Co., 81 Nev. 456, 458, 406 P.2d 287, 288 (1965).
[12] Friendly Irishman v. Ronnow, 74 Nev. 316, 318, 330 P.2d 497, 498 (1958).
[13] Pac. Maxon, Inc. v. Wilson, 96 Nev. 867, 869, 619 P.2d 816, 817 (1980).
[14] Id. at 870, 619 P.2d at 818.
[15] Havas v. Alger, 85 Nev. 627, 631, 461 P.2d 857, 860 (1969).
[16] Id. at 632, 461 P.2d at 860 (quoting McCausland v. Ralston, 12 Nev. 195, 216 (1877)).
[17] J.A. Jones Constr. Co. v. Lehrer McGovern Bovis, Inc., 120 Nev. 277, 290-91, 89 P.3d 1009, 1018 (2004).
[18] Ridley v. Deutsche Bank Nat’l Trust Co. (In re Ridley), 453 B.R. 58, 70 (Bankr. E.D.N.Y. 2011) (applying Nevada law) (quoting 37 Am. Jur. 2d Fraud and Deceit § 200 (2005)).
[19] Epperson v. Roloff, 102 Nev. 206, 213, 719 P.2d 799, 804 (1986).
[20] Dow Chem. Co. v. Mahlum, 114 Nev. 1468, 1485, 970 P.2d 98, 110 (1998) (overruled in part on other grounds by GES, Inc. v. Corbitt, 117 Nev. 265, 21 P.3d 11, 15 (2001)).
[21] Monzo v. Dist. Ct., (In re Irrevocable Trust Agreement of 1979), 331 P.3d 881, 885 (Nev. 2014) (quoting Gramanz v. Gramanz, 113 Nev. 1, 8, 930 P.2d 753, 758 (1997)).
[22] Id.
[23] Monzo, 331 P.3d at 885 (citations omitted).
[24] Gen. Motors v. Jackson, 111 Nev. 1026, 1032, 900 P.2d 345, 349 (1995).