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Neuberg v. Michael Reese Hospital Foundation

July 29, 1997




Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 75 C 3844 Charles R. Norgle, Sr., Judge.

Before ESCHBACH, COFFEY, and DIANE P. WOOD, Circuit Judges.

DIANE P. WOOD, Circuit Judge.

Argued January 16, 1997

Decided JULY 29, 1997

This is an appeal from the district court's denial of a motion filed under Rule 60(b)(6) that sought to reopen a case that had been settled some 21 months earlier. The lawsuit itself had been a medical malpractice action, filed in 1975, that alleged negligence in connection with a 1947 use of radiation therapy to treat plaintiffs' tonsillitis. The district court found that Leland and Joel Neuberg, the plaintiffs, had not presented the kind of extraordinary reason to disturb the final judgment it had entered in reliance on the settlement. We agree and affirm the judgment of the district court.

This lawsuit began in 1975 when Leland and Joel Neuberg sued Michael Reese Hospital and Medical Center, Michael Reese Research Foundation, Dr. Arthur Rosenblum, and J. William Holland as Special Administrator of the estates of Dr. Philip Rosenblum and Dr. Erich Uhlmann for medical malpractice. The details of their claims are not pertinent to this appeal. As the Neubergs put it in their brief on appeal, "[i]n early 1994, the court indicated irritation with the slow pace of this 19 year-old case." District Judge Norgle decided to set March 28, 1994, as a firm trial date -- an action that had the predictable effect of focusing the parties' attention on the possibility of settling the case. On March 25, the parties met at the law offices of Lord, Bissell & Brook in Chicago to discuss settlement further. Going into that meeting, the defendants tell us now that their latest settlement offer was $300,000. At the meeting, however, the plaintiffs expressed some concern about the amount of the attorneys' liens that might have accumulated in the case over its 19-year history. At least five attorneys who had not filed waivers of liens had formally represented the Neubergs, even though others orally indicated at the meeting that they would not seek to collect a fee from the settlement proceeds. Whether for this reason or for another (and it is important to note that it does not matter at this juncture), at the end of the meeting the defendants offered a $350,000 settlement to the Neubergs and they accepted.

Attorneys for the defendants reduced the agreement to writing and signed it on behalf of all the defendants; Leland signed it individually and on behalf of Joel, and Anthony McGuire signed it as counsel for both Leland and Joel, signifying (as the Neubergs concede in their brief) "plaintiffs' unconditional acceptance." As the written settlement agreement required, on March 28, 1994, the Neubergs moved under Fed. R. Civ. P. 41(a)(2) for voluntary dismissal of the suit with prejudice. The court was evidently pleased that the parties had succeeded in resolving their differences, as its remarks upon granting the Rule 41(a)(2) dismissal reflect:

THE COURT: So the entire settlement agreement but for the actual amount will be filed.

MR. PARSON (for the defendants): Your Honor, we had not anticipated filing the entire settlement.

THE COURT: I'm not going to require it, but I want to be sure that this case is totally, completely and absolutely resolved. And is that the status of the case?


MR. MCGUIRE (for the plaintiffs): Yes.

After this exchange, the court made it clear that the dismissal would be with prejudice and that there was no need to file the written settlement agreement as long as the document would be available in the future if it was needed. He concluded by announcing that "[t]he agreed motion to voluntarily dismiss the case based upon a settlement is granted, and the matter is dismissed with prejudice . . . . This is a final order. . . . It is meant to be and is a final judgment. The matter is dismissed with prejudice." The court did not retain jurisdiction over the case, nor did it incorporate the terms of the settlement agreement into its order of dismissal.

The seven insurance companies that had policies with the various defendants entered into an agreement around the time of the settlement to split up the sum of $350,000 among themselves, assigning a particular amount to each one. Problems arose almost immediately after the dismissal order over the question of attorneys' liens for the Neubergs' prior counsel. The Neubergs took the position that prior counsel were not entitled to any of the settlement proceeds and that any claims they might have to the contrary were invalid. Defense counsel, David Hall, wrote to McGuire, who was still representing the Neubergs, on April 14, 1994, pointing out that the defendants and their insurance carriers could not release any ...

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