Monday, December 31, 2012

Pennsylvania Supreme Court Limits Delay Damages Calculation to Molded Amount in UM Cases

Tort Talkers may recall previous reportings here on the delay damages case of Marlette v. State Farm involving the issue of whether delay damages in a UM case should be calculated upon the full verdict of a jury or the reduce verdict in a case where an excess verdict was molded down to the amount of the UM limits available under the applicable automobile insurance policy.

In its December 28, 2012 decision in the case of Marlette v. State Farm, 2012 WL 6720916 (Pa. Dec. 28, 2012)(Opinion by Todd, J.)(McCaffery, J., dissenting),(Orie Melvin, J., not participating) the Pennsylvania Supreme Court squarely addressed that very issue of whether, after a jury trial in an uninsured (UM) matter, a plaintiff is entitled to delay damages on the full amount of the jury's verdict or only on the reduced verdict after it has been molded down to the amount of the available uninsured motorists limits allowed by the automobile insurance policy at issue.

After reviewing the law surrounding Pa.R.C.P. 238 delay damages, the Court ruled that a plaintiff may only recover delay damages as calculated on the amount of legally-recoverable damages to which the plaintiff is entitled pursuant to the verdict as molded downward to the amount of the available UM limits under the policy.  The Court remanded the case back to the trial court for the correct calculation of the delay damages.

By way of background, In this case, the jury entered an award of $550,000 in favor of the injured party plaintiff and $150,000 in favor of the plaintiff's spouse on the loss of consortium claim. In a post-verdict ruling the trial court molded the award downward to the available UM policy limits of $250,000 ($50,000 per vehicle stacked on five vehicles).

The Allegheny County trial court had also molded the verdict downward even further to $233,306.98, reflecting a credit due to State Farm by virtue of a previous payment made by the carrier in the amount of $16,693.02.

The plaintiffs requested delay damages on the $550,000 portion of the jury's verdict (the parties agreed that delay damages are not permitted with respect to loss of consortium claims under Pennsylvania law). State Farm argued that the plaintiffs were not entitled to any delay damages because State Farm was only responsible to pay up to the UIM limits under the provision of the policy.

The trial court disagreed with both parties and awarded delay damages on the reduced figure of $233,306.98. The delay damages that were awarded did push the final verdict amount up to a number that was above the $250,000 UIM policy limits number.

On appeal, the Pennsylvania Superior Court held that the delay damages should have been calculated on the jury's verdict amount, i.e., $550,000. The appellate court also ruled that the Plaintiffs could recover monies from the carrier over and above the UIM policy limits number. 

As noted above, the Pennsylvania Supreme Court has reversed and sent the matter back to the trial court for a delay damages calculation consistent with its decision, i.e. on the reduced, molded amount. 

The rationale for the Supreme Court's decision in Marlette v. State Farm was based, in part, on its previous decision in the case of Allen v. Mellinger, 784 A.2d 762 (Pa. 2001), in which the Court limited the delay damages calculation to the statutory cap amount ($250,000) against a Commonweath defendant as opposed to the calculation being based upon a $2.9 million dollar verdict.

The obvious and stated  purpose of Rule 238 is to compensate a plaintiff for the delay in his recovery in a civil litigation matter.  In its Opinion, the Marlette Court quoted the Allen case in stating that it "[d]efies reason" to suggest that the basis for calculating such compensation could be anything other than the amount a defendant could actually be responsible for paying to the plaintiff.

Since the applicable law limits a plaintiff's recovery in a UM case to the amount of the UM limits under the applicable contract of insurance, then there can be no delay for the plaintiff in receiving amounts in excess of those limits as the plaintiff is not entitled to receive those excess amounts in this litigation against the carrier.

According to Marlette, it therefore follows that if there is no valid claim for a delay in receiving those excess amounts above the policy limits, then there is no basis to include those excess amounts in the calculation of delay damages.

Anyone wishing to view the Majority Opinion in Marlette may click HERE.

Anyone wishing to view the Majority Opinion in Marlette may click HERE.

I send thanks to the prevailing defense attorney, Daniel Rivetti, of the Pittsburgh law firm of Robb Leonard Mulvihill for bringing this decision to my attention.


Given the courts' practice of generally handling UIM and UM issues in a similar fashion, it is anticipated that that underinsured (UIM) cases will be handled in a similar fashion, i.e. delay damages will be calculated based upon a reduced verdict molded down to the amount of the available UIM limits in a given case.

In a Post-Koken case, the issue may become whether there should be two separate amounts of delay damages depending upon the defendant. 

In other words, should there be a delay damages assessed on the full verdict against the third party tortfeasor defendant, and a separate delay damages assessment against the UIM carrier based only upon a molded downward verdict against the UIM carrier to the amount of the UIM limits.

Also, should a UIM carrier's delay damages assessment only be applied to those damages left against that carrier after the verdict is molded down to the limits AND after the third party credit in the amount of the liability limits due to the UIM carrier is applied? 

Sometimes it seems that the more issues that are resolved, the more others are created.

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