When do you have to go to court to seek approval of a minor settlement?
This issue comes up whenever a minor child is involved in an accident and a settlement is reached. The starting point in determining whether court approval is required, falls under Wisconsin Statute Sec. 807.10. Subsection (3) states as follows;
“If the amount awarded to a minor or individual adjudicated incompetent by judgment or by an order of the court approving a compromise settlement of a clam or cause of action of the minor or individual does not exceed the amount specified under s.867.03 (1g) (intro.), exclusive of interest and costs and disbursements,and if there is no guardian of the ward, the court may upon application by the guardian ad litem after judgment, or in the order approving settlement, fix and allow the expenses of the action, including attorney fees and fees of guardian ad litem, authorize the payment of the total recovery to the clerk of court, authorize and direct the guardian ad litem upon the payment to satisfy and discharge the judgment, or to execute releases to the parties entitled thereto, and enter into a stipulation dismissing the action upon its merits.”
Under sec. 867.03 (1g), the threshold amount is $50,000. So the question remains, what does the amount of the settlement need to be in order to be required to seek court approval of a minor settlement? $50,000? $10,000? $5,000 or any amount at all?
Interestingly, over the history of the statute, (sec. 807.10 Stats), the answer has changed over time. In a prior version, going as far back as 1974, the amount in the statute was listed as $1,500. In 1997, under Act 290, sec. 8 eff. June 30, 1998, the amount was changed to $10,000. In 2005, under 2005 WI Act 387, the amount of $10,000 was crossed out and replaced with the reference under sec. 867.03 (1) (g) to $50,000; that remains the current status of the law today, under sec. 867.03 (1g).
As far back as 1962, the Wisconsin Supreme Court had this to say on the practice of settling cases, without seeking court approval of minor settlements, in the case of Matter of Anderson, 17 Wis. (2d) 380 (1962).
“We are aware that settlements are sometimes made in cases involving the claims of minors where-in releases are taken from the parents, but court approval is not sought. This practice is ordinarily followed only in cases in which the injuries are modest and the settlements correspondingly small. Since it is clear that a minor cannot be bound by an extrajudicial settlement, a calculated risk is taken in striking a bargain without the benefit of judicial approval,” ( at page 382).
There are some who take the view that any minor settlement must be court approved. There are others who take the view that on any minor settlement that does not exceed more than $5,000, that the matter can be settled without going to court and seeking approval of the minor settlement. This also seems to be the prevailing view among insurance companies when settling cases involving minor children. On cases that are less than $5,000, cases are routinely being settled, without going to court and seeking minor settlement, so as to avoid wasting valuable court time on cases that have minimal value.
For more information on this article, contact Karp & Iancu.