Monday, October 10, 2011

Eastern District Federal Court Rules that Delay Damages are Recoverable Under UIM Policy

I have previously reported on how the courts have grappled with the issue of how to handle delay damages in post-Koken cases.

Almost a year ago, in December of 2010, the Pennsylvania Superior Court ruled (1) that delay damages should be calculated based upon the jury’s full verdict, as opposed to the molded downward amount after the application of credits due to the UIM carrier, and (2) that a Plaintiff could recover delay damages against a UIM carrier, even if the addition of the delay damages brought the verdict amount to a number higher than the available policy limits. See Marlette v. State Farm and Jordan, 10 A.3d 347 (Pa.Super. Dec. 10, 2010, Musmanno, Bender, Bowes, J.J.)(Opinion by Musmanno, J.).

Click here to view the Tort Talk post on the Marlette v. State Farm case.

This issue of delay damages in post-Koken cases was recently addressed again by the Federal District Court for the Eastern District of Pennsylvania in the case of Heebner v. Nationwide Ins. Enterprise, No. 10-2381 (E.D. Pa. Sept. 28, 2011).

In Heebner, the court reviewed the question of whether delay damages are to be included as a component of the compensatory damages to be paid under a UIM insurance policy.

The plaintiff in Heebner secured a verdict of $85,000.00. Delay damages in the amount of $48,201.96 were tacked on, resulting in a total award of $133,201.96. Nationwide paid the $85,000 under the terms of plaintiff's policy but refused to pay the delay damages under an argument that that delay damages were not damages for which it was liable under the terms of its UM/UIM policy.
After finding that delay damages were "merely an extension of the compensatory damages necessary to make a plaintiff whole" Judge Goldberg of the Eastern District ruled that Nationwide was required to pay the full amount of the award, delay damages and all.

In so ruling, the court noted that the Nationwide policy was ambiguous in its failure to fully define the term “compensatory damages.” Citing Pennsylvania Supreme Court cases from the 1980’s, it was also noted that delay damages are generally considered under Pennsylvania law to be a part of compensatory damages in any event. The Heebner court did not cite to the Marlette v. State Farm decision noted above.

Judge Goldberg concluded his Opinion by finding that Nationwide did not act in bad faith by taking the position it did on the delay damages issue. The court noted that neither party cited any case on point so as to render Nationwide’s position so unreasonable at the time as to constitute bad faith.

Anyone desiring a copy of this case may contact me at

I send thanks to Attorney Scott Cooper of the Harrisburg law firm of Schmidt Kramer for bringing this case to my attention.

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