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Nevada Minor’s Compromises

The phone call to Mills & Associates always goes something like this:

Adjuster:

I was just talking to the _______________ (unrepresented parent / Plaintiff’s attorney, you fill in the blank) and we agreed on a settlement of the minor’s claim of $ __________ (some very nominal amount).  They don’t want to do a minor’s compromise for this Nevada accident.  Can we make a settlement like that without a minor’s compromise?

Attorney:

(I have always wanted to say “How lucky are you feeling today?”  I always resist that temptation.  Instead I say:)  I don’t think that that would be such a good idea.

Allow me to explain. Nevada’s minor’s compromise statute is found at N.R.S. 41.200.  That statute specifically states that a minor’s compromise “is not effective until it is approved by the district court”.  Inevitably, the next question is:

Adjuster:

But it was for just such a small amount.  And a lot of other states allow settlement for such small amounts without court approval.  I thought that maybe there was some threshold under which we could settle without going through all that trouble.

Attorney:

(This answer is why I always want to say “How lucky are you feeling today?)  Sure, the company could go ahead and pay the parent, get a release signed by the parent and pay the claim.  But think for a minute about the risks.  What happens if the parent absconds with the money, the minor finds out?

Inevitably, that grown up child is not going to confront the absconding parent.  Rather, the now adult is going to look to the company to be paid.  At that point in time, the company could say: “Hey, we reached that nominal settlement with your parent, I guess if we have to we will pay that same amount to you again”.  But there is nothing that obliges the grown minor to accept the same amount that the parent was willing to take lo those many years earlier.  That unapproved release signed by the parent is ineffective and will not bind the grown minor to any particular amount in settlement.

Then, the minor could choose to sue the company’s insured.  Keep in mind, the statute of limitations will not have expired because minority of the child tolls the statute.  The company will still have a duty to defend the insured all those many years later.  Will the company be able to find the insured 10 of 15 years from now to get help with the defense?  Will the company be able to find the important liability witnesses?

Even worse is a scenario where the now grown child alleges in his or her complaint that the injuries from the accident have become more severe than what they were when the unapproved settlement was reached?.  What happens if the injuries, that could have been effectively settled by a minor’s compromise, are magnified 10 or 50 or 100 times when the child reaches majority?  Will there be policy limits sufficient to satisfy the claim at that point?  Or will the company have exhausted the limits paying other claimants?  Would it be bad faith to fail to protect the insured by getting court approval of a minor’s compromise, especially where the settlement would have been small before but now the claim has now ballooned into something huge?

Once this explanation is given, the adjuster concedes that the court approval of the minor’s compromise is the only way to go.  So then the adjuster asks:

Adjuster:

So how much is this going to cost?

Attorney:

Relatively speaking, not that much.  The court charges no filing fees to file a petition for minor’s compromise.  The “petitioner” is the parent or guardian of the minor, who must sign the Petition.  It is easier and simpler for Plaintiff’s counsel to prepare minor’s compromises, due to their access to the parent or guardian, and the necessity of outlining their attorney fee agreement and the medical bills related to the compromised amount.  However, if the Plaintiff’s counsel is unwilling or if the parent is unrepresented, Mills & Associates can assist the parent by preparing a petition for the parent or guardian’s signature, and filing the petition with the court.  Many times, the court will consider these petitions without an appearance by counsel.

So now you can see why Mills and Associates strongly recommends that any and all compromises with minors be approved via the compromise process.  And if you call with more questions about minor’s compromises, I promise that I won’t answer your question by asking “How lucky are you feeling today?”