Pennsylvania Supreme Court Holds That Delay Damages Are Based On Molded Verdict Of Insurance Policy Limits, Not Jury Award
Posted Scott B. Cooper on Jan 03, 2013 in News
Posted on Jan 03, 2013
The Legal Intelligencer is reporting today on an important insurance case which impacts any underinsured motorist case which goes to trial and results in a verdict in excess of the policy limits. Below are portions of Gina Passarella's report on the Pennsylvania Supreme Court Opinion.
Delay damages are only available on actual damages as molded by the court, not on the full amount originally awarded by a jury, the Pennsylvania Supreme Court has ruled. In its 5-1 ruling in Marlette v. State Farm Mutual Automobile Insurance, the high court found Richard and Marleen Marlette could not collect delay damages on the $550,000 awarded by the jury to Richard Marlette, but only on the molded $233,000 verdict entered by the trial judge to reflect the Marlettes' auto insurance policy limits.
Justice Debra M. Todd said for the majority that "a plaintiff's recovery of delay damages under Pa.R.Civ.P. 238 is limited to the amount of the legally-recoverable molded verdict as reflected by the insurance policy limits."
The court dismissed the Marlettes' arguments that their case was different from the Supreme Court's 2001 ruling in Allen v. Mellinger, because, as the Marlettes argued, Allen dealt with a state defendant and statutory caps on damages and the Marlettes were suing a private entity.
Todd said the Supreme Court could not agree with the attempts by the Superior Court and the Marlettes to distinguish the instant case from Allen. The Justice said the Marlettes voluntarily elected and paid for a UM policy with a $250,000 limit.
"The Marlettes' 'self-imposed limitation on compensatory damages' is sufficiently analogous to the statutory limitation in Allen, wherein the plaintiff had no control over the statutory cap on compensatory damages, and the stipulation in LaRue, to warrant the same treatment under Rule 238," Todd said.
Rule 238 deals with delay damages and provides in part that "'damages for delay shall be added to the amount of compensatory damages awarded against each defendant,'" according to the opinion.
The Superior Court in Marlette had determined the language of Rule 238 requires delay damages be calculated based on the jury's award of damages. The Superior Court had further ruled that limiting delay damages to be calculated off of a molded verdict would eliminate the "'unknown'" that motivates an insurer to make a settlement offer.
Todd dismissed both of those arguments, noting the Supreme Court had already rejected them in Allen.
Justice Seamus P. McCaffery dissented. McCaffery said the court's ruling in Allen was "carefully limited" to cases involving state parties. He further noted that Rule 238 is ambiguous when it comes to what amount should be used to calculate delay damages. "Respectfully, I believe the majority improperly extends the holding of Allen beyond its rationale, which was to limit delay damages in order to afford commonwealth parties the full protection the General Assembly intended in the Sovereign Immunity Act," McCaffery said. "In so doing, the majority erodes the authority of this court to promulgate procedural rules."
Scott B. Cooper of Schmidt Kramer in Harrisburg represented the Marlettes on appeal. He said he was disappointed with the ruling, but understood the court was reaffirming the holdings in the line of cases stemming from Allen. Cooper said the court's ruling doesn't leave his clients without any recourse because they could still file a bad-faith claim and point to the jury's award as their damages.
Daniel L. Rivetti of Robb Leonard Mulvihill in Pittsburgh represented State Farm. He did not return a call for comment.
For the entire article read today's Legal Intelligencer.
Anyone who desires a copy of the opinion can feel free to email Scott Cooper at Schmidt Kramer Pennsylvania Car Accident Lawyers at scooper@Schmidt Kramer.com or call him at 717-888-8888.
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