Virzi v. Grand Trunk Warehouse & Cold Storage Co.

Opinion

 [*508]  BY Judge Horace W. Gilmore

This case raises an important issue relating to the ethical obligation of an attorney to inform opposing counsel and the Court, prior to concluding a settlement, of the death of his client. For the reasons set forth in this opinion, the Court holds the attorney has an absolute ethical obligation to do so, and sets aside the settlement ordered in this matter.

This is a personal injury diversity action. Pursuant to the authority contained in Rule 32 of the Rules of the United States District Court for the Eastern District of Michigan, ¹ the case was referred to a mediation panel for mediation prior to the final pretrial conference.

 [**2]  On June 2, 1983, plaintiff's attorney prepared and filed a mediation statement for plaintiff with the mediation panel. Three days later, plaintiff died unexpectedly from causes unrelated to the lawsuit. On June 14, 1983, the case was mediated, and the mediation panel placed an evaluation of $35,000 on the case. At the time of the mediation hearing, plaintiff's attorney did not know that his client had died. ²

Several days after the mediation hearing of June 14, plaintiff's attorney learned of his client's death. A personal representative was appointed by the probate court on June 24, 1983 to administer plaintiff's estate, although no suggestion of death was made in this Court, and the representative was not substituted as plaintiff.

On July 5, 1983, counsel for plaintiff and defendants appeared before this Court at a pretrial conference and, after negotiations, entered into a settlement of the lawsuit for [**3]  the amount of the mediation award -- $35,000. At no time, from the time plaintiff's attorney learned of the plaintiff's death until the agreement to settle the case for $35,000 at the pretrial conference, did plaintiff's attorney notify defendants' attorney or the Court of the death of the plaintiff.

After the settlement was agreed upon in chambers and placed upon the record, as both attorneys were walking out of chambers to the elevator together, plaintiff's attorney, for the first time, informed defendants' attorney that plaintiff had died. The facts also show that defendants had learned of plaintiff's death shortly before the settlement was agreed upon, but were unable to convey this information to their attorney before the settlement order was entered. At no time did defendants' attorney ask plaintiff's attorney if plaintiff was still alive and available for trial.

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