Damages For Delay

Pursuant To Pennsylvania Rule Of Civil Procedure 238

1. Purpose and Constitutionality.

Pennsylvania Rule of Civil Procedure 238 is titled "Damages for Delay in Actions for Bodily Injury, Death or Property Damage", and is commonly referred to as providing for "delay damages". A more appropriate title might be "Sanctions for Failure to Settle Promptly", because the "delay" need not be the fault of the party who must pay those damages. The Supreme Court of Pennsylvania has ruled that the purpose of Rule 238 is not to punish defendants, but to alleviate court congestion by promoting settlement. Therefore, the fact that a defendant may have done nothing to contribute to delay is no basis for relieving that party from liability under the Rule. Schrock v. Albert Einstein Medical Center, 589 A.2d 1103 (Pa. 1991).

The predecessor to the present Rule 238 provided for damages at the rate of 10% per annum, without any regard to responsibility for delay. This was held to be a constitutional exercise of the Supreme Court's rule making authority, and not a violation of due process or equal protection. Laudenberger v. Port Authority of Allegheny County, 436 A.2d 147 (Pa. 1981) appeal dism'd., 456 US 940, 102 S.Ct. 2002, 72 L.Ed.2d 462 (1982). Five years later, in Craig v. Magee Memorial Rehabilitation Center, 515 A.2d 1350 (Pa. 1986), the Supreme Court ruled the prior version unconstitutional (without explaining what constitutional provision was violated) because it created an incontestable presumption that all fault lies with the defendant.

The Court in Craig established interim procedures which required the lower court to weigh the fault of the respective parties, but when the Court promulgated a replacement rule the defendant's fault again became irrelevant. The delay time which was the plaintiff's fault was not to be counted. Rule 238(b)(2). The Supreme Court held the present version constitutional in Costa v. Lauderdale Beach Hotel, 626 A.2d 566 (Pa. 1993), on the authority of Laudenberger, supra.

The district court in applying what it believed would be Pennsylvania law, has held that plaintiff's failure to make a settlement demand would not relieve defendant from an award of delay damages. Bywaters v. Bywaters, (E.D. Pa. Apr. 11, 1991, No. 86-6973, Gawthorp J). In Schrock, supra the Court reasoned that defendants are protected by being able to toll payment by making a fair offer, and by showing that the plaintiff caused delay. The Supreme Court stated that the Rule is justified because during the course of proceedings the defendant has the use of money which really belongs to the plaintiff.

"Delay damages do not penalize a defendant that chooses to go to court, they simply do not permit a defendant to profit from holding money that belongs to the plaintiff. . ." Costa, supra.

2. Actions in Which Rule 238 Damages are Available.

Pennsylvania Rule of Civil Procedure 238 provides in subsection (a)(1):

At the request of the plaintiff in a civil action seeking monetary relief for bodily injury, death or property damage, damages for delay shall be added to the amount of compensatory damages awarded against each defendant or additional defendant found to be liable to the plaintiff in the verdict of a jury, in the decision of the Court in a nonjury trial or in the award of arbitrators appointed under section 7361 of the Judicial Code, 42 Pa. C.S. 7361, and shall become part of the verdict, decision or award.

By its express terms, the Rule applies only to civil actions seeking monetary relief for bodily injury, death or property damage. The Rule also contains, in subsection (e), two express exceptions:

"This rule shall not apply to (1) eminent domain proceedings; (2) actions in which damages for delay are allowable in absence of this rule."

Claims which might be thought to involve bodily injury or property damage, but have not been held not to do so, include:

Malicious prosecution: Wainauskis v. Howard Johnson Co., 488 A.2d 1117 (Pa. Super. 1985).

Tortious interference with contract: Temporaries Inc. v. Krane, 472 A.2d (Pa. Super. 1984).

Emotional distress, anguish, humiliation, damage to reputation and inability to obtain future employment: Butler v. Flo-Ron Vending Co., 557 A.2d 730 (Pa. 1989) allocatur denied, 567 A.2d 650 (Pa. S. 1989).

Defamation: Oweida v. Tribune-Review Publishing Co., 599 A.2d 230 (Pa. S. 1991) allocatur denied, 605 A.2d 334 (Pa. 1992). Sprague v. Walter, 656 A.2d 890 (Pa. S. 1995).

Legal malpractice, even if liability occurred during representation of a bodily injury claim: Rizzo v. Haines, 515 A.2d 321 (Pa. S. 1986) aff'd. on other grounds, 555 A.2d 58 (Pa. 1989); Wagner v. Orie & Zivic, 636 A.2d 679 (Pa. S. 1994).

Federal Employers Liability Act claims: Monessen Southwestern Railway Co. v. Morgan, 486 US 330, 108 S.Ct. 1837, 100 L.Ed.2d 349 (1988).

Contractual Bodily Injury Claim - Uninsured - Underinsured Claims: Erie Insurance v. McGee, 474 A.2d 1171 (Pa. S. 1984); Greenspan v. United States Automobile Association, 471 A.2d 856 (Pa. S. 1984) (Common Law arbitration).

Claims for Loss of Consortium: Anchorstar v. Mack Trucks, Inc., 620 A.2d 1120 (Pa. 1993).

Punitive Damage: Colodonato v. Consolidated Rail Corp., 470 A.2d 475 (Pa. S. 1983).

Contract Action: Reliance Universal v. Ernest Renda Contracting Co., 454 A.2d 39 (Pa. S. 1982).

Actions where a party is seeking relief for mental illness: Althous v. Cohen, 710 A.2d 1147 (Pa. S. 1997). See also Hodges v. Rodriguez, 645 A.2d 1340 (Pa. S. 1994).

An interesting common pleas case to be analyzed by practitioners is Davis v. Erie Insurance, No. 86 Equity 38 (C.P. Lackawanna Cty. October 24, 1991), Munley J., which held that delay damages were available where an arbitration award had been vacated and reversed to grant underinsurance coverage. That Order was affirmed by the Superior Court, and the Supreme Court denied allocatur. The Court held this was a claim under the Uniform Arbitration Act, 42 Pa. C.S.A. 7301 et seq. Not common law, and because the...