by: Peter J. Gallagher (@pjsgallagher) (LinkedIn)
Embarrassing as this is to admit, there was a time when I did not entirely understand the difference between "net" and "gross." I would like to say that time was long ago, but it wasn't that long ago. Rest assured, however, that I know the difference now. The difference between the two was at the heart of Thakkar v. Allers, an unpublished decision from the Appellate Division in which plaintiff claimed that he authorized his attorney to settle for a net recovery of $80,000 but his lawyer settled for the gross amount of $80,000. In other words, plaintiff thought he would receive $80,000 from the settlement but he actually received less than $80,000 after fees and costs were deducted from the gross settlement amount. Plaintiff tried to undo the settlement, but the trial court denied his request and the Appellate Division affirmed.
Thakkar involved a personal injury lawsuit. Plaintiff was awarded $50,000 through mandatory, pre-trial arbitration, but rejected that award and demanded trial de novo. Prior to trial, plaintiff claims that he authorized his attorney to settle the case for "an amount that would yield an $80,000 recovery to [plaintiff], after deductions for fees and costs." He claimed that he gave his attorney these instructions over the telephone and in a letter. Several days after the alleged telephone conversation between plaintiff and plaintiff's counsel, plaintiff's counsel settled the case in a call with defendants' counsel and later confirmed the settlement in an email to defendants' counsel, which read: "As discussed at 5 PM today, [plaintiff] has authorized [plaintiff's counsel] to accept $80,000.00 in settlement."
Four days later, plaintiff's counsel wrote to defendants' counsel to report that plaintiff refused to sign a release because he wanted a settlement yielding a net recovery of $80,000, a fact that plaintiff's counsel indicated was "in no way" communicated to him by plaintiff before plaintiff's counsel advised defendants' counsel that plaintiff's counsel was authorized to settle the case for "the sum of $80,000.00."
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