Surrogate mother Mary Beth Whitehead Gould and her former husband have settled a lawsuit in Newark, N.J., charging a New York clinic that arranged the Baby M contract failed to exercise proper care in choosing her to serve as a surrogate. The surrogate mother, who lost custody of her daughter last week after nearly two years of highly publicized court battles, will file the settlement this week in federal court in Manhattan, her attorney said. Details of the settlement were not disclosed. The New Jersey Supreme Court ruled Wednesday that the surrogate motherhood contract signed with a childless couple was invalid. But the high court refused to give Gould custody of Baby M, who will remain with her natural father, William Stern, and his wife, Elizabeth, of Tenafly.