Minor Settlements



Minor Settlements – A Comprehensive Guide

If you’ve ever been injured by the negligence of another person, you know firsthand that the road to recovery can be a long and stressful process. This is doubly true if your child has been harmed in an accident as well. When it comes to securing compensation for a minor child, it can certainly be intimidating to navigate such an important and complicated process on your own.

Fortunately, however, this guide provides a fairly straightforward method for making sure that your minor child gets a full and fair recovery.

Overview

If your child has been injured in an accident, court approval is typically required in order to finalize the settlement. This article is intended to provide comprehensive answers to some common questions pertaining to minor settlements and to instruct you on how minor settlements work in North Carolina.

Why are Minor Children Treated Differently?

The law states that a minor child, defined as a person under the age of 18 years by N.C. Gen. Stat. §1-17, lacks the capacity to sue or be sued in North Carolina. As such, a minor can avail his or her self to the courts by and through a general or testamentary guardian or a Guardian ad litem.

What Does It Mean to Settle a Claim?

Negligence in North Carolina occurs when a person breaches a duty by failing to exercise the level of care that a reasonable person would under the same or similar circumstances. When a person is injured by the negligence of another, North Carolina law entitles that person to recovery for their injuries. The same is true when the injured person is a minor child.

When you’ve been injured, you may generally seek relief through one of two channels. First, you can file a lawsuit by going to the county courthouse and filing a complaint and summons. A lawsuit or litigation will require a jury of your peers to evaluate two big-picture questions: (1) the defendant’s liability, and (2) if so, your damages.

Litigation is often favored in larger personal injury claims because it offers the party an opportunity to explore and evaluate the claims and defenses through a process called discovery. Litigation can sometimes “level the playing field” by requiring the at-fault party, also known as the defendant, to abide by any relevant rules and procedures of the court.

Lawsuits are often filed after negotiation attempts between the parties are unsuccessful. However, it is recommended that accident victims attempt a good-faith negotiation of their personal injury claim before filing the lawsuit, as lawsuits are terribly expensive and time-consuming.

The harsh reality is that once you file your lawsuit, you may spend several years and thousands of dollars litigating it, and it is difficult to predict how much you will be able to recover, if at anything all. Even in the event that you receive a favorable judgment in court, collecting on that judgment is all too often a headache unto itself.

Given these difficulties involved in litigation, many plaintiffs choose to attempt a negotiation before filing a lawsuit. Settlement negotiations typically involve opening a claim with the at-fault party’s insurance company, calculating and determining damages, issuing a demand for compensation and negotiating the settlement amount.

If and when an agreement is reached with the responsible party’s insurance company, the injured party effectively “agrees” to forego his or her right to sue in exchange for monetary compensation. The “agreement” that governs this contract not to sue in exchange for money is called a Settlement and Release of Claims. This option is often favored because it is significantly faster than a lawsuit and allows the injured party to have more of a say in how much money he or she is willing to accept. Since the parties don’t have to step into a courtroom, everyone typically saves a substantial amount of time and money as well.

Can I Settle My Child’s Claim on His or Her Behalf?

The short answer is “yes.” However, it is important to remember that minor children are not permitted to act on their own behalf. Imagine an insurance company calling and asking to speak to a five-year-old for the purposes of settling an injury claim. This almost humorous imagery would result in the minor being taken advantage of each and every time.

So, you may be wondering, if minor children cannot represent themselves, how do they bring a claim? Great question! Although minor children (or “minors”) are not permitted to represent their own interests, their interests can be protected by allowing a disinterested third party to fight on the minor’s behalf. This disinterested third party is called a Guardian ad litem.

Who Can be my Child’s Guardian ad Litem?

If your minor child does not have a general or testamentary guardian, it is necessary for you to explore appointment of a Guardian ad litem for your child. The appointment of a Guardian ad litem is the most common practice in North Carolina for seeking judicial approval of a minor settlement. A Guardian ad litem is required to be appointed before or at the same time of the filing of the minor’s case. The specific Guardian ad litem may be another lawyer, a family member or trusted friend. See N.C. Gen. Stat. Rule 17(c).

Rule 17 of the North Carolina Rules of Civil Procedure states that, “[when a minor child is a] plaintiff, the appointment [of guardian ad litem] shall be made at any time prior to or at the time of the commencement of the action, upon the written application of any relative or friend of said [minor] person or by the court on its own motion.” N.C. Gen Stat. §1A-1, Rule 17(c).

It is important to note that when an applicant applies to be the Guardian ad litem for a minor child, the appointment application for Guardian ad litem is typically received and reviewed by the Clerk of Superior Court in the county where the action lies. This appointment application is called a Petition for Appointment of Guardian ad Litem. This petition for appointment is typically sent to the county clerk with a signed Consent to Appointment and a Proposed Order of Appointment for the clerk of court to sign.

If an attorney has been hired or retained to represent the child, it is important to understand that the lawyer represents only the minor child and the child’s interests. A lawyer hired to represent a minor child does not and should not represent the Guardian ad litem’s personal interest.

Simply put, the lawyer doesn’t represent the Guardian ad litem’s personal interest; the lawyer represents the minor child and the minor’s Guardian ad litem in his or her official capacity as a representative of the minor’s interest. The North Carolina Rules of Professional Conduct state that a “[l]awyer’s primary duty is to represent the interests of Minor, who is the real party in interest.” See RPC 163.

Additionally, if a person has been appointed as Guardian ad litem for a minor and that individual begins to act in a manner that is not in the best interest of the minor, it is possible to petition the court for the removal of a particular Guardian ad litem.

“Is Judicial Approval Actually Required?”

The simple answer is that all settlements involving minors require judicial approval of any settlement. While North Carolina requires each and every minor settlement to be presented before a judge for approval, the practical reality is that this isn’t always the case.

More specifically, it is not uncommon for insurance companies to settle a personal injury claim involving a minor by simply giving the settlement check to the parents and avoiding judicial approval completely. If the parties to a minor settlement fail to seek judicial approval of a settlement, the minor may not be bound by the unapproved settlement. A minor is only bound by a settlement where there has been judicial approval of the settlement. As such, the minor upon reaching majority age, which is 18 years old, may disavow an unapproved settlement.

It is important to note that insurance companies will typically push for and require judicial approval of a minor settlement if the injury to the minor child is significant. While the word “significant” is fairly ambiguous, most insurance companies will require a minor settlement if the settlement over three thousand or four thousand dollars. However, this may also depend on the insurance company.

What do Courts Look for in Order to Give Judicial Approval of a Settlement?

In North Carolina, the courts have been provided authority to protect and govern over the property of minors and will take such action as is necessary to protect their interests.

In each and every minor settlement hearing, the court will look closely at the settlement agreement and the facts and figures related to the case. The court will typically examine any settlement closely to determine if the settlement is in the best interest of the minor. Additionally, it has been said that the court will “lend its wisdom, experience and circumspection to the [minor].” Payseur v. Rudisil, 15 N.C. App 57 (1952).

Considering that North Carolina law requires a judge to approve a minor settlement, the parties cannot execute the settlement agreement before judicial approval. Put more specifically, parties are permitted to negotiate and agree on a settlement; however, the settlement agreement between the parties will not be binding on the minor child unless a court of competent jurisdiction approves the settlement.

A minor settlement hearing, wherein the judge reviews the facts and circumstances surrounding the case, has been designed to act as a preventive measure to prevent minors from being taken advantage of. The unfortunate part of this process is that the minor and the Guardian ad litem will typically have to go to court as part of the hearing for approval.

While this minor settlement hearing is a fairly simple process, it may be a good idea to have a competent and experienced lawyer to assist you with the process. However, most minor settlement hearings last for less than 30 minutes. However, it is worth noting that some minor settlement hearings last hours. During this time, the court will ask the minor’s Guardian ad litem or the attorney to present the facts and circumstances for the court to review.

After the minor’s Guardian ad litem or the attorney presents the case, the judge will then ask the opposing party, likely the attorney for the insurance company, to present any other facts and circumstances that they believe are relevant. Thereupon the judge will likely begin asking questions about the injuries, treatment, scarring, emotional impact and any other factor that the judge believes is relevant.

It is typically a good idea to ensure that you have the relevant medical bills and records, outstanding bills, subrogation interests and any other relevant documents with you during the hearing in the event that the judge requests to review the information.

It is important to remember that the process of getting to a minor settlement hearing involves drafting and filing a “friendly lawsuit.” A friendly lawsuit in this instance means that the parties have determined the desired outcome and are filing a lawsuit as a mere formality. The process of filing a friendly lawsuit typically involves the lawyer for the insurance company drafting a complaint, summons, answer, settlement agreement, motion of judicial approval and an order for judicial approval.

In most minor settlement hearings, the judge will consider the following component:

  • The relative strength of the minor’s claims for relief
  • The relative strengths of the at-fault party’s defenses
  • The minor’s injuries and medical treatment
  • The permanency of the minor’s injuries
  • The extent of insurance coverage, if any
  • The settlement amount and the net recovery to the minor
  • The outstanding bills and liens
  • The opinions of the minor’s Guardian ad litem

“When is the Best Time For a Minor Settlement?”

Timing is one of the more important things to consider when you’re navigating your child’s settlement. Your decision should be shaped by a complete determination of your child’s damages, as well as by the applicable statute of limitations. For more information about the applicable statute of limitation in your minor child’s case, please see Statute of Limitations for Minors and our Minor Statute of Limitations Calculator.

Keep in mind that the ultimate goal in settling a minor’s personal injury claim is to make the minor child whole again. The theory of damages in a case like this is to put the plaintiff in as good a position as she was in the moment before the accident occurred.

With that said, it’s important to know that the full scope of damages isn’t always apparent in the hours or days after the accident. In some cases, it can take months or even years to know just how severe the injuries are and whether and to what extent the injured person will recover.

Without knowing the ultimate severity of the injuries, it’s impossible to determine the monetary value of the injured party’s damages. For this reason, it is important to gain a full and complete understanding of the minor’s injuries before proceeding. However, please be mindful of the applicable statute of limitation and be sure not to wait too long.

The statute of limitation is a legal concept that defines the window of time in which a claim can be brought. A statute of limitation is a statutorily imposed deadline that requires you to file a claim within a certain amount of time after the accident. For adults over the age of 18, the statute of limitation in North Carolina is three years from the date of the accident for a claim of negligence.

For example, if you are injured as a result of a car accident on January 1, 2016, North Carolina law gives you until January 1, 2019 to file a lawsuit against the at-fault driver for a claim of negligence. Remember that the window in which you are permitted by law to bring your claim begins to run when you are injured.

However, the law in North Carolina regarding minor children’s statute of limitations is significantly different. With minor children, the statute of limitations states that “[a] person entitled to commence an action who is under a disability at the time the cause of action accrued may bring his or her action within the time limited in this Subchapter, after the disability is removed[.]” N.C. Gen. Stat. § 1-17(a) (2009). It is important note that in North Carolina being under the age of 18, a minor, is considered a disability. It is nothing more than a legal term to describe minor children.

As such, while the minor child is under their “disability,” until they reach the age of 18, the minor will have three years after their 18th birthday to bring the claim for negligence in their personal injury claim. This does not mean that you, the parent, are entitled to extend the statute of limitations for your claim for medical expenses or loss of services when your child is injured.

For example, let’s say that your 14-year-old daughter was injured in a car accident on January 1, 2016. Let’s say that she went to the emergency room, her primary care physician and a physical therapist to be treated for her injuries, and you paid a total of $1,000 for her treatment. Since your daughter is a minor (under a legal “disability”), she can bring her claim for personal injury at any time before three years after her eighteenth birthday. However, you are required to bring your claim for medical expenses and loss of services before January 1, 2019.

Parents have attempted to circumvent this legal anomaly by “assigning” their claims to their child, thereby extending the statute of limitations for the parent’s claim as well as the child’s. Judges are not amused by this, and will not allow you access to a larger statute of limitations by assignment. See Ellington v. Bradford, 242 N.C. 159, 162, 86 S.E.2d 925, 927 (1955 ).

“Does the Statute of Limitation Change After the Appointment of GAL?”

North Carolina provides for a second exception related to minors and the statute of limitations, namely involving the appointment of the Guardian ad litem. The exception states that once a GAL is appointed, the statute of limitations will begin to run only as to the claims and parties which the GAL has been appointed to pursue. See Jefferys v. Tolin, 90 N.C.App. 233, 235, 368 S.E.2d 201, 202 (1988). Let’s illustrate this exception by going back to the previous example.

Your 14-year-old daughter is injured in a car accident on January 1, 2016. In the car accident, she was traveling through an intersection when she was struck simultaneously by an at-fault driver on the left side of her car. On February 15, 2017, a GAL is appointed to pursue your daughter’s personal injury claim against the at-fault driver. The statute of limitations will begin to run against the claim for negligence against the at-fault driver at the time of appointment for the GAL. This means that the claim must be brought before the court on or before the expiration for three years from February 15, 2017.

It is important to note that where a GAL is not appointed, the statute of limitations will not begin to run until the minor’s 18th birthday. The general exception involving the appointment of the GAL only applies to the claims for which the GAL was appointed. As such, if a minor has been involved in two accidents and a GAL is only appointed to one claim, the statute of limitations is unaffected in the claim where the GAL does not represent the minor.

Remember that a parent’s claim for medical expenses, for example, is not the same a minor’s claim for damages. And a parent’s claim for damages is not subject to the same protection provided to minors by way of the statute of limitations. It is always recommended to have the GAL a few weeks before seeking judicial approval of the settlement. Appointing a GAL at the right time ensures that you are protecting your claim and your legal interests.

What is a Guardian Ad Litem?

The GAL is the person who will stand in place of your child during the minor settlement hearing, and, generally speaking, it can be any competent adult who is disinterested in the outcome of the settlement. There are, however, a few issues that should be ironed out before you make your decision about who should serve as GAL for your minor child. These include the issues of GAL eligibility, powers and duties, and payment.

GAL Eligibility and Ineligibility

It is common to see the parents of the minor child or an attorney appointed to act as GAL for an injured minor. However, where a parent has a direct (and potentially conflicting) interest in the outcome of the case, the court will typically find that the parent is an unfit candidate for appointment and will instead opt to appoint a disinterested third party.

A potential conflict may arise for several reasons but the most common occurs when a parent plans and intends to assert a separate claim against the at-fault party for the medical expenses incurred by the minor child as a result of the accident.

However, it is worth noting that North Carolina case law permits for “conflict of interest” between the parent and child to be waived or removed if the parent (i) waives his or her claim for medical expenses, or (ii) assigns the medical expense claim to the child, making the child the only “real party in interest” to the matter.

It is extremely important to remember that your claim for medical expenses is still subject to the three-year statute of limitations, even if you assign your claim to your child. Vaughan v. Moore, 89 N.C.App. 566, 366 S.E.2d 518 (1988).

Where the parents may not be well suited to act as a GAL, it is common practice to appoint a licensed attorney to act as GAL for your child. This is often a good idea because the attorney will be an objective and disinterested third party to stand in place of your child. Additionally, the attorney, acting as GAL, will be more comfortable standing before the court when the judge decides to start asking questions about the proposed settlement.

GAL Powers and Duties

North Carolina case law requires the GAL to “protect the interest of the minor child … at every stage of the proceeding.” See Vaughan v. Moore, 89 N.C.App. 566, 366 S.E.2d 518 (1988).

While the GAL is, again, not the minor’s actual attorney, North Carolina courts have held that an attorney GAL does owe a duty to the minor, which is highly similar to the duties an attorney owes to his client. In re Clark at 585-96, 281 S.E.2d at 50-51.

Though the GAL is required to act diligently and in good faith, his or her duties are limited in scope to the purposes for which he or she has been retained. The GAL’s responsibility to the minor terminates at the moment the established purpose is accomplished. Johnston Cnty., 226 N.C. at 279, 38 S.E.2d at 38 (1946).

GAL Payment

As discussed above, the two most common options for appointing a GAL are to appoint the parent or to appoint a neutral third-party, often an attorney. Where the GAL is the parent of the minor child, it is highly unlikely that the judge would permit the parent to claim or assert a fee for their services as the GAL.

However, it is commonplace for an insurance company and judges to approve fees associated with a GAL’s service to a minor child where the GAL is a third party or attorney.

As such, there are typically two ways in which the GAL may receive a fee for their services to the minor child. First, the defendant or his liability insurance carrier may agree beforehand to pay the reasonable fee. Alternatively, where the insurance company will not agree to a fee for a GAL, the GAL or the minor’s attorney may request reimbursement of costs and expense, including a reasonable fee for the GAL services.

While it is difficult to accurately predict what reimbursement an insurance company may be willing to offer a GAL for their services, we have typically seen and heard fees ranging from $100 to $750. However, for extremely complicated cases, it may be reasonable to consider asking the court for an hourly fee as opposed to a traditional flat fee. Regardless of what you ask for, please be sure that you are prepared to defend your assertion with a reasonable and thoughtful response.

Conclusion

While a minor settlement is a straightforward process, it remains true that there are a lot of moving parts and “bases to cover.” However, as long as you are diligent and pay attention to the details, this is absolutely something that you can do on your own.

If you become overwhelmed, intimidated, or if you just have questions, please do not hesitate to give us a call or use the chat button below. Best of luck!


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