State's Statutory Cap Limits Delay Damages

The underlying action was started by Elizabeth Allen who, on May 31, 1989, filed a personal injury suit against Kenneth Mellinger and PennDOT for damages after she was injured in a motor vehicle accident with Mellinger.



On May 16, 1996, a Lebanon County jury found all three parties negligent, apportioning liability at 20 percent to Allen and 40 percent each to Mellinger and PennDOT.



The jury awarded Allen $2.9 million in damages. Allen filed a motion for more than $1.4 million in delay damages, citing the seven years that had passed between the time her complaint was filed and the jury verdict.



Allen also signed an agreement with Mellinger accepting payment of his insurance policy limits of $300,000 in exchange for her promise not to seek payments from his personal assets.



The agreement, however, specified that it was not meant to reduce PennDOT’s portion of the verdict.



PennDOT filed a motion for a new trial, which the trial judge denied. But the trial judge granted PennDOT’s motion to mold the verdict to conform to the statutory cap of $250,000.



The trial judge also granted Allen’s motion for delay damages on a limited basis, calculating the damages on the basis of PennDOT’s 40 percent share of the verdict rather than on the entire verdict. The resulting delay damages award was $501,654.



The trial judge acknowledged the Woods opinion but decided to follow a Commonwealth Court case that was denied allocatur by the high court, United States Fidelity & Guaranty Co. v. Royer Garden Center and Greenhouse Inc., 598 A.2d 583 (Pa. Commw. 1991). The trial judge ruled that PennDOT was not jointly and severally liable for the entire amount of delay damages.



The Royer Garden case established that under Pa.R.C.P. 238, delay damages should be calculated for each defendant according to the compensatory damages assessed against that defendant by the jury’s apportionment of negligence.



The court also said Allen’s agreement with Mellinger prevented her from attempting to collect delay damages from him.



Therefore, Allen was to receive only a portion of the delay damages award, PennDOT’s statutorily prescribed portion.



The Commonwealth Court affirmed, also using Royer Garden as a basis for its ruling. The court further said, as a side note, that Woods should not be interpreted as meaning that the commonwealth cannot be liable for the entire amount of delay damages against all defendants.

Inconsistency

On appeal to the Supreme Court, Allen argued that Royer Garden is inconsistent with Superior Court authority, expressed in Tindal v. Southeastern Pennsylvania Transportation Authority, 560 A.2d 1291 (Pa. 1995).



In Tindal, the Superior Court said that, in general, defendants are jointly and severally liable for the entire amount of delay damages because they are jointly and severally liable for the entire amount of the verdict.



Justice Stephen Zappala, the majority opinion author, said Royer Garden was not completely in conflict with Superior Court precedent, at least so far as it prescribes apportioning liability for delay damages according to the jury’s apportionment of negligence.



The Royer Garden decision did go somewhat further than that, however, Zappala said.



“The [Royer Garden] court dismissed the plaintiffs’ argument on appeal that the trial court’s apportionment of damages prevented them from recovering the full amount of damages from any defendant under the principle of joint and several liability,” Zappala said.



“The court’s reasons for disallowing joint and several liability were not clearly stated, but since the facts suggest that the defendants were joint tortfeasors, this aspect of the decision must be disapproved.”



Zappala then clarified the Supreme Court’s position on the issue.



“Thus, we hold that as a general precept Rule 238 damages awarded against all defendants in a negligence action are properly aggregated with the verdict such that the defendants are jointly and severally liable for the aggregated delay damages,” Zappala said.



“The fact that delay damages under Rule 238 may be calculated in the first instance on an individualized basis before being aggregated with the general liability verdict does not alter the analysis.”



Zappala then turned to Woods, explaining why it had to be overturned.



The Woods court said the language and the purpose of Rule 238 would be perverted if delay damages were calculated on the statutory cap. The Woods court said that any decision contrary to its ruling would give the commonwealth no incentive to seek settlement because delay damages would always be based on a constant figure, the cap.



Zappala said that reasoning was “fundamentally flawed.”



The first reason Zappala said that was so was because the Woods court based its ruling on a “misleading paraphrase” of Rule 238.



The paraphrase was read as holding that delay damages are simply added to the verdict, Zappala said, but when the rule is read in full, it holds that “delay damages are added to the compensatory damages awarded against each defendant and then become part of the verdict.”



In addition, Zappala said, the Woods court was wrong in focusing only on Rule 238′s purpose of encouraging settlement, to the exclusion of any other interests.



“Instead of recognizing that the Sovereign Immunity Act creates a unique relationship of rights and duties between plaintiffs and commonwealth parties, and then analyzing whether the application of Rule 238 in that setting still has only a collateral effect on substantive rights and duties, the court simply treated the commonwealth party the same as any other party,” Zappala said.



“The court reasoned that if delay damages were computed on the statutory cap ‘there would be no unknown which would motivate the commonwealth to discuss settlement.’ In doing so, the court failed to perceive that the absence of an ‘unknown’ originates in and cannot be separated from the statutory cap.”

Case Law vs. Statutes