Bernstein v. Kapneck

²³² Liss, J., delivered the opinion of the Court. Helen M. Bernstein, individually, and as mother of Irene Andrea Bernstein and Deborah Bernstein, infant plaintiffs, and Edwin S. Bernstein, stepfather of the infants, and husband of Helen M. Bernstein, are the appellants in this case. Mrs. Bernstein was the nominal plaintiff in a suit at law filed in the Circuit Court for Montgomery County in which it was alleged that the infant children sustained personal injuries arising out of the negligence of the defendants, Dean Raum Kapneck, Barbara Sue Sussman, Katherine Gray Munroe and Pat Munroe, the appellees herein. On March 2, 1978, the parents of the minor children and defendant Sussman filed a settlement agreement with the lower court.

By order dated March 2,1978, the court entered judgments in favor of the minors, Irene Andrea Bernstein and Deborah Bernstein against the defendant Barbara Sue Sussman in the amount of $7,500. and $750., respectively. On the same date Helen M. Bernstein, individually, and as mother and next friend, executed an indemnifying release which was as follows: FOR THE SOLE CONSIDERATION of Seven Thousand Five Hundred and 00/100 ($7,500.00), the receipt and sufficiency whereof is hereby acknowledged, the undersigned, Helen M. Bernstein, individually and as parent and natural guardian of Irene Schulman [Bernstein], a minor, hereby releases and forever discharges Barbara Sue Sussman and Government Employees Insurance Company , their heirs, executors, administrators, agents and assigns, and all other persons, firms or corporations liable for or who might claim to be liable, hereinafter called Releasees, none of whom admit liability but all expressly deny any liability, from any and all claims, demands, damages, actions causes of action, or suits of whatsoever kind or nature, and particularly on account of loss or damage to the property and on account of bodily ²³³ injuries, known and unknown, and which have resulted or may in future develop, sustained by Irene Schulman [Bernstein], a minor, born on 3/25/70, or arising out of damage or loss direct or indirect sustained by the undersigned in consequence of an accident involving the automobile accident occurring on or about July 25, 1975, at or near Persimmon Tree Road at or near the intersection of Bradley Boulevard in Bethesda, Maryland As further consideration for the payment of said sum, the undersigned hereby agrees to protect the said Releasees against any claim for damages, compensation or otherwise, on the part of said minor or any other party, growing out of or resulting from injury to said minor in connection with the above mentioned accident, and to reimburse or make good any loss or damage or costs that the said Releasees may have to pay if any litigation arises from said injuries; and the undersigned hereby waives any and all rights of exemption, both as to real and personal property, to which the undersigned may be entitled under the laws of this or any other state as against such claims for reimbursement or indemnity by the said Releasees. IN WITNESS WHEREOF, I have hereunto set my hand and seal this 2nd day of March, 1978. X Helen M. Bernstein (SEAL) Helen M. Bernstein, Individually and as Mother and Next Friend of Irene Schulman On February 13, 1979, the appellants filed a petition for reconsideration, revision, declaratory and other relief with respect to the judgment rendered as to the minor, Irene Andrea Bernstein.

An evidentiary hearing on the petition was held on July 9, 1979, after which the lower court took the matter under advisement. ²³⁴ On September 27, 1979, the petition for reconsideration, revision, declaratory and other relief was denied by order and opinion of the court. It is from that order that this appeal was filed. Appellant states the issues to be decided by this appeal as follows: I. Does the revisory power of a court in a case of "mistake” under Maryland Rule 625 a include the power to set aside a release and settlement agreement on the ground of mutual mistake?

II

Does the law of the State of Maryland allow a release and settlement agreement entered into on behalf of a minor to be set aside on the ground of mutual mistake where the parties did not intend to settle with respect to unknown injuries? On July 25, 1975, the minor children were passengers in a motor vehicle which was involved in an accident in Montgomery County. A settlement agreement among the parties was reached on March 2, 1978, and on that date counsel and appellant, Helen M. Bernstein, appeared before the Hon. John F. McAuliffe to seek approval of the settlement made on behalf of the minor children.

After reviewing the medical reports furnished by counsel and discussing the case with the mother and her attorney, the judge entered a written order, approved the settlement and entered judgments as agreed among the parties. On March 6, 1978, plaintiffs’ counsel filed a praecipe entering all judgments paid and satisfied and also filed praecipe marking all remaining claims of the plaintiffs in the case as against all defendants settled and dismissed with prejudice. The indemnifying release was executed by Mrs. Bernstein on March 2, 1978. More than eleven months later, Helen M. Bernstein, individually and on behalf of Irene Andrea Schulman [Bernstein] filed with Edwin S. Bernstein, stepfather of the children, the petition which is the subject matter of this appeal.

By that petition she sought to set aside the settlement release and judgments entered on March 2,1978 ²³⁵ on the ground that the release was entered into, executed and delivered as a result of a mutual mistake of fact. Judge McAuliffe, in an excellent synopsis of the facts as they were known to the parties and to the trial judge at the time of settlement and the entry of the judgments, stated the factual summary as follows: 1. Irene was riding as an unbelted passenger in the rear seat of a motor vehicle when a collision caused her to be thrown against the rear portion of the seat in front of her, causing the following apparent injuries: a. Severe laceration of the face, described by the treating doctor as an "extensive, deep, irregular laceration of the forehead which extended from the glabella area down across the nose with exposure of the nasal bones and the cartilaginous framework of the nose.” b.

Chip fracture of the nasal bones. c. Non-displaced fracture of the scapula (right shoulder). d. Moderately severe traumatic neurosis. 2. Irene was five years of age at the time of the accident.

The laceration was surgically repaired under local anesthesia by a plastic surgeon, who at the same time repaired the chip fracture of the nasal bones. By his report of September 13, 1976, the plastic surgeon indicated the probable need for later revision of the scar, and stated there would result some permanent scarring notwithstanding the revision. Anticipated surgical costs for revision were $300 to $400, with a period of hospitalization of one to two days for each procedure (revision and/or dermabrasion). The non-displaced fracture of the right scapula was treated with a simple sling, and healed completely with no residuals. ²³⁶ Irene was also seen by the chief of the Ophthalmology Service of Georgetown University Hospital five days after the accident, because her mother had noted the eyes crossing for one or two days after the lids were swollen.

The ophthalmologist reported no ocular involvement. The most significant concern of the mother and stepfather following resolution of the immediate observable physical defects caused by the accident involved emotional sequelae. As a result of this concern, Irene was seen for psychiatric evaluation by Dr. Joel Ganz in or about January of 1977. Dr. Ganz was of the opinion that Irene (and her sister) were in need of therapy, and that the automobile accident was a direct causative factor, superimposed upon pre-existing conditions.

The projected cost for therapy for both children and both parents (in the opinion of Dr. Ganz) was some $9,360 per year, for about two years. Irene was next seen by Dr. Sidney Berman, who reported on March 28, 1977 that he had made "a psychiatric and neurological diagnostic study ...” of Irene. He felt Irene then suffered from a moderately severe traumatic neurosis due to "a severe injury she received as a result of an automobile accident in July of 1975.” He recommended psychotherapy over a period of six to twelve months. In his report of December 14, 1977 to the attorney then representing the plaintiffs, Dr. Berman provided some additional details of the manifestations of this diagnosed neurosis, and estimated the probable cost of necessary psychotherapy to be $4,000 to $5,300, plus transportation.

At the hearing on plaintiffs’ motion to vacate the judgment and to invalidate the release, additional uncontradicted evidence was offered which established that: Irene also suffered physical damage to the brain as a result of this accident, resulting in ²³⁷ post-traumatic seizure disorder. This diagnosis was made as a result of an electroencephalogram performed on or about October 4, 1978, and additional history elicited by Dr. Stanley Cohan from the mother and stepfather, and of course from physical and neurological testing. According to the testimony of Dr. Cohan, it was within reasonable medical probability that an electroencephalogram taken immediately after the accident would have disclosed some abnormality as a result of this injury, and an electroencephalogram taken at any time after six months following the accident would have probably demonstrated, spiking, and would otherwise have been indicative of the serious nature of the brain injury. Dr. Cohan was of the opinion that he will probably be able to control Irene’s seizure disorder, but she will undoubtedly be under the care of physicians for her seizures for the rest of her life.

In addition, he stated that her impairment in reading and eye-hand coordination, as well as the social embarrassment caused by motor incoordination are likely to be lifelong problems, and that additional expenses will be required for special education. Plaintiffs contended below and here contend that all parties including the judge were unaware that Irene had suffered brain damage as a result of the accident and that the parties, therefore, acted upon a material and mutual mistake of fact which requires that the plaintiff be granted the relief prayed. The trial judge found clear and convincing proof that Irene had in fact suffered the brain damage complained of and that the damage existed at the time of the settlement and judgment. He further found, as a fact, that Irene’s mother and stepfather had exercised reasonable diligence in attempting to ascertain the full nature and extent of Irene’s injuries prior to entering into the settlement, and that the amount of the settlement would not have been found to be reasonable by the parties or the court ²³⁸ if the additional element of a serious brain injury had been known.

In spite of these findings, the trial judge did not find the existence of a mutual mistake of fact sufficient to justify the judicial rescission of the contract of release in this case. We find this case in a somewhat confusing posture. Appellants filed their petition originally at law in an effort to have the court exercise its revisory power under Maryland Rule 625 a which was the sole authority cited to support appellants’ position at that point. At some juncture in the proceedings, the character of the case changed to an equitable proceeding in which the appellants sought the rescission of the contract of release on the equitable ground of mutual mistake. 1 Although the case was not transferred to equity, it was argued on equitable grounds before the lower court without objection by either side and was briefed and argued before us by both parties on the same basis.

The lower court decided the case based on Rule 625 a and the equitable claim for rescission. We shall follow suit. I. It must be emphasized that the judgment here involved was enrolled at the expiration of thirty days from its original entry on March 2,1978. Appellants concede that they did not begin their proceeding to set aside the judgment until long after that thirty day period had elapsed.

They urge, however, that under statutory law as codified in the Annotated Code of Maryland, Courts and Judicial Proceedings Article, Sec. 6-408 (1974,1979 Cum. Supp.), and Rule 625 a, the court has revisory power and control over the judgment beyond the thirty day period in the event of fraud, ²³⁹ mistake, or irregularity. The language is the same in the rule and the statute except that the statute adds the language "or failure of an employee of the court or the clerk’s office to perform a duty required by statute or rule.” That additional language has no relevance to the case at bar. Appellant concedes that in the reported cases from the Court of Appeals and this Court the meaning of "mistake” as used in Rule 625 a has not been clearly defined.

However, it is clear to us that in those cases permitting a judgment to be set aside on the basis of "mistake,” the mistake must necessarily be confined to those instances where there is a jurisdictional mistake involved. In Hughes v. Beltway Homes, Inc., 276 Md. 382 , 347 A.2d 837 (1975), the Court of Appeals interpreted "mistake” as follows: The type of situation in which mistake might be applicable is demonstrated by Miles v. Hamilton, 269 Md. 708 , 309 A.2d 631 (1973) (no valid service of process) and Ashe v. Spears, 263 Md. 622 , 284 A.2d 207 (1971), cert. denied, 406 U.S. 958 (1972), (a contention of no valid service of process). It is further demonstrated by two cases arising before adoption of Rule 625, Harvey v. Slacum, 181 Md. 206, 210-11 ; 29 A.2d 276 (1942), (default judgment entered where there has been no valid service of process), and May v. Wolvington, 69 Md. 117 , 14 A. 706 (1888), (judgment by default entered for lack of a plea when appropriate pleadings had in fact been filed). [ 276 Md. at 387 .] The Court indicated that these jurisdictional mistakes could justify the utilization of the Court’s revisory power over an enrolled judgment. The Court also noted that it had in various opinions seemed to have equated the term "mistake” with "irregularity.” However, it cited a number of cases to which the term mistake was not applicable to an enrolled judgment where there had been an effort to strike.

The Court stated that Rule 625 was: not applicable to an enrolled decree in a mechanics’ ²⁴⁰ lien foreclosure case, making reference to the wrong lot, Brunecz v. DiLeo, 263 Md. 481, 483 , 283 A.2d 606 (1971); to a mistaken belief of out-of-state counsel the Maryland procedure relative to attachment was similar to that in his state, which brought about a judgment by default, Penn Central Co. v. Buffalo Spring, 260 Md. 576, 581 , 273 A.2d 97 (1971); to the negligence or mistake of the agents and counsel of a complaining party, Wooddy v. Wooddy, 256 Md. 440, 453 , 261 A.2d 486 (1970); to failure to attach a ledger card to an affidavit with a motion for summary judgment or the failure of counsel to file an appropriate pleading prior to the expiration of the time specified by rule, Household Fin. Corp. v. Taylor, 254 Md. 349, 356 , 254 A.2d 687 (1969); to a finding that a judgment by default was based upon vouchers, some of which were in the name of the defendant, some in the name of a corporation, and some in the name of another person, Berwyn Fuel & Feed Co. v. Kolb, 249 Md. 475, 478-79 , 240 A.2d 239 (1968); to a mistaken determination that summary judgment should be entered against a defendant, Rhodes Co. v. Blue Ridge Co., 218 Md. 329, 331 , 146 A.2d 771 (1958); or to a failure by parties defendant to inform their attorneys of the