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Allen v. Montalvan – Car Accident Settlement Over $50K With Minors Requires Court-Appointed Legal Rep.

Motor vehicle accidents are the No. 1 killer of children under 14 in the U.S., according to the Centers for Disease Control and Prevention (CDC). When a car accident involves a child injury, it’s important to ensure the child’s rights are protected in any ensuing settlement or litigation. In fact, Florida law requires that the court appoint a guardian ad litem to represent the child’s interests in any settlement agreement involving a gross figure of $50,000 or more. 

Courts are given discretion to appoint a legal representative for settlements with lower dollar amounts, but F.S. 744.3025 requires that it be done when the amount reaches that $50,000 threshold.

This was a central issue in the recent 4th DCA case of Allen v. Montalvan. This was a tragic accident in which a grandmother was killed, and her adult daughter, minor son and three minor grandchildren were injured to varying degrees when their vehicle was struck by a drunk driver. 

Soon after the crash, the adult daughter sought legal advice and secured an attorney to represent her and her family members – including the children – in this case. The attorney sent a letter to the at-fault driver’s insurance carrier, seeking information about coverage and it was learned he had a policy limit of $25,000 in per-person liability coverage and $50,000 per accident. Divvied up among six people (the estate of decedent grandmother and the others involved), this is not a lot. It’s a good lesson in why underinsured motorist coverage is so valuable.

In any case, the insurer agreed to tender the car accident policy limit. It was requested that the $50,000 be issued in two checks – a $25,000 check to the estate of decedent grandmother and $25,000 to settle the remaining five claims. The insurance employee said that it was up to the law firm’s discretion how this remaining $25,000 should be divided. Insurer sent release forms to be signed by the mother on behalf of herself, the grandmother’s estate and the minor children. Because there was uncertainty as to how the funds would be allocated, the insurer left the amounts in the release blank, to be filled in by plaintiff’s attorneys. Insurance employee said it did not occur to her that some of the claimants might not receive anything.

But in fact, that is what happened. To each of the children, $0 were allocated. The checks were paid.

Plaintiff attorney would later recall that the agreement was the insurer would tender the policy limit, but it was not necessarily a resolution of all remaining claims.

Two years later, the mother initiated a lawsuit on behalf of the minor children seeking additional damages.

The insurer answered and raised a number of affirmative defenses, most namely that the claims were barred by the settlement based on the prior release, as well as alleged contributory negligence by the decedent. Insurer moved to enforce the settlement at a non-jury hearing, which is ultimately what the trial court did, over the mother’s objections. She appealed.

Florida’s 4th District Court of Appeals reversed and remanded. The primary reason for this about-face was the fact that neither party ensured adherence to F.S. 744.3025. Although the court ruled the insurer had acted in good faith with its settlement agreement, it nonetheless – just like plaintiff – had a responsibility to ensure the agreement was legally binding, and that meant abiding by all applicable statutes.

Insurer argued that this was actually a $25,000 case – not a $50,000 one – because $25,000 was the amount allocated to the mother and the minors, the court ruled the gross settlement amount was $50,000 and thus the children were entitled to have their interests protected by a court-appointed guardian ad litem before the settlement was approved.

Call Freeman Injury Law — 1-800-561-7777 for a free appointment to discuss your rights. Now serving Orlando, West Palm Beach, Port St. Lucie and Fort Lauderdale.

Additional Resources:

Allen v. Montalvan, June 22, 2016, 4th DCA

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Report: Drivers Face Few Penalties for Cycling Deaths, June 19, 2016, West Palm Beach Car Accident Lawyer Blog

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