ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA
Before Hunter and Garth, Circuit Judges, and Sarokin, District Judge*fn** .
This appeal requires us to determine whether Rule 238 of the Pennsylvania Rules of Civil Procedure, which provides for prejudgment interest in tort cases, must be applied in a diversity action brought in a federal district court in Pennsylvania.
The district court held that Rule 238 was a "procedural" rule and that therefore prejudgment interest was not available in a federal court under the doctrine first enunciated in Erie R.R. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817, 82 L. Ed. 1188 (1938). Jarvis v. Johnson, 491 F. Supp. 389 (W.D.Pa.1980). Two other federal district courts in Pennsylvania have since come to the opposite conclusion, and have applied Rule 238 in the cases before them. Bullins v. City of Philadelphia, 516 F. Supp. 728 (E.D.Pa.1981); Renner v. Lichtenwalner, 513 F. Supp. 271 (E.D.Pa.1981). Each of these opinions was filed prior to the opinion of the Pennsylvania Supreme Court in Laudenberger v. Port Authority, 496 Pa. 52, 436 A.2d 147 (Pa.1981), filed on October 29, 1981, which analyzed and upheld the validity of the Rule under the Pennsylvania Constitution.
After considering Rule 238 against the background of the policies embodied in the Erie doctrine, we conclude that Pennsylvania Rule of Civil Procedure 238 must be applied by the federal courts sitting in Pennsylvania. We thus reverse the district court's order of May 28, 1980 which denied plaintiffs' motion for prejudgment interest.*fn1
On July 18, 1977, while passengers in an automobile owned by their daughter, Lois E. Gillette, plaintiffs Harold L. Jarvis and Janet R. Jarvis were injured when the automobile in which they were traveling was struck from behind by a vehicle driven by defendant-appellee Raymond E. Johnson. The accident occurred on Route 90 in Erie County, Pennsylvania. The Jarvises, citizens of California, thereupon brought a diversity personal injury action in the U. S. District Court for the Western District of Pennsylvania against Johnson; K & L Builders, the partnership that owned the vehicle driven by Johnson; and K & L's partners, Michael V. Kienle and Gene C. Lenhart; all citizens of Ohio. The defendants in turn joined Gillette, a citizen of Indiana, as a third-party defendant.
After trial, the jury found the defendants to be 70% liable and the third-party defendant, Gillette, 30% liable for the Jarvises' injuries. The district court, after reducing the damage award to Harold Jarvis by the amount due him under the Pennsylvania No-Fault Motor Vehicle Insurance Act, entered judgments totaling $57,750 in favor of the two plaintiffs. The propriety of these awards is not contested in this appeal.*fn2
On April 1, 1980, the Jarvises filed a motion to amend the judgment to include prejudgment interest in accordance with Rule 238. The district court denied the motion on May 28, 1980. The sole question presented by this appeal is whether the district court correctly held that Rule 238 does not constitute a substantive right of recovery and therefore is inapplicable in a diversity action brought in a federal court in Pennsylvania.
It has been generally held that a state rule of law which is deemed "substantive" is to be applied in federal diversity proceedings, whereas a state rule which is characterized as "procedural" is not to be so applied. However, in Edelson v. Soricelli, 610 F.2d 131, 133 (3d Cir. 1979), this court stated: "Labeling a legal precept ab initio as "procedural' or "substantive,' without more, contributes nothing to reasoned discourse. It provides no effective guidance in solving difficult problems that arise in diversity cases such as the one before us."
Since this case does not present a direct conflict between state law and any Federal Rule of Civil Procedure, the starting point for our inquiry as to when a state rule is to be applied in a diversity action, must be the Rules of Decision Act, originally enacted as section 34 of the Judiciary Act of 1789:
The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the ...