No Delay Damages After Rejection of Settlement Offer (PA)

The Montgomery County Court of Common Pleas recently denied delay damages to insureds in an automobile accident case. Delay damages compensate the plaintiff when there is a delay in the ultimate resolution of a matter, including the failure of the defendant to make a timely written settlement offer. Pursuant to Pa.R.Civ.P 238, damages begin to run from a date one year following the proper service of process.

 In Dickerman v. Erie Ins. Exch., Plaintiff William Dickerman was injured in an automobile accident by the vehicle of Joseph Danilla that crossed a center dividing line. Allstate, Danilla’s insurer, paid Dickerman and his wife the policy limit of $100,000 and was thereby released from all claims.  Subsequently, Plaintiffs filed a complaint against their own insurer, Erie Insurance Exchange, for alleged breach of policy and loss of consortium. Plaintiffs requested damages in amounts representing the policy limit of their underinsured motorists (UIM) coverage ($250,000) and incident coverage ($500,000). Erie claimed to be entitled to a credit in the amount of Allstate’s original payment to the Plaintiffs ($100,000).

Prior to trial, Plaintiffs refused multiple written settlement offers in the amounts of $250,000, $300,000 and $400,000. Defendant made a final oral offer of $450,000 on the morning of trial which was again rejected.

The jury found in favor of the Plaintiffs, awarding $530,000 in damages ($495,000 in non-economic damages and $35,000 for loss of consortium). Ultimately the court molded the verdict to $430,000, reflecting the deduction of the $100,000 credit requested by the Defendant, and denied delay damages outright.

On appeal, the court held that Plaintiffs first claim, alleging that the court failed to properly apply Pa.R.Civ.P. 238 to the issue of delay damages, was too vague for the court to review and was therefore considered waived. Plaintiff’s second claim was another broad statement positing that the court erred in ruling that the pretrial written settlement offers in this case barred the award of delay damages.

Ultimately, the court held the denial of delay damages under these circumstances appropriate. The court reasoned that the requisite elements for awarding delay damages were not met here. Pursuant to Pa.R.Civ.P. 238, the Plaintiff cannot recover delay damages in this case because he refused all pretrial written settlement offers (open for 90 days up to the date of trial) and, because neither the jury award nor molded verdict surpassed 125% of any of the those settlement offers. The court also noted as a general matter that delay damages are not recoverable on loss of consortium claims.

Special Thanks to Samantha Epstein for her contribution.

For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com.