On Appeal from the United States District Court for the Middle District of Pennsylvania, D.C. Civil Action No. 85-1309.
Hutchinson, Scirica and Nygaard, Circuit Judges.
HUTCHINSON, Circuit Judge
Hughes Printing Company (Hughes) appeals from two orders of the United States District Court for the Middle District of Pennsylvania.*fn1 The first, dated September 1, 1988, imposed all taxable costs on Hughes and released the other defendants from the taxation of costs.*fn2 The second, dated September 21, 1988, granted plaintiff/appellee Claude R. Fauber, Jr.'s (Fauber's) motion to reconsider an order dated August 14, 1987 denying Fauber's motion for assessment of delay damages against Hughes and instead awarded Fauber delay damages of $20,073.60. In awarding delay damages, the district court reexamined and reversed its earlier analysis of Craig v. Magee Mem. Rehab. Center, 512 Pa. 60, 515 A.2d 1350 (1986). In Craig, the Supreme Court of Pennsylvania had suspended the mandatory feature of former Pennsylvania Rule of Civil Procedure 238; but reaffirmed the availability of delay damages in tort, upon a case specific examination of relevant factors, where the jury verdict is more than 125% of the settlement offer made by the defendant.
On the merits, Hughes contends that the district court's initial conclusion was correct because Craig requires us to reconsider our decisions holding that the mandatory imposition of delay damages under the suspended rule is a matter of state substantive law. We reject Hughes's argument and hold that the Pennsylvania law on delay damages in tort, whether awarded under the suspended rule, Craig or the present version of Rule 238 is substantive for purposes of Erie R.R. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938). Therefore, under Erie, it must be followed by federal courts sitting in diversity cases. Consistent with the principles of Erie, we also hold that the current version of Rule 238 must be applied to all cases pending on or after November 7, 1988, the date it was promulgated.*fn3 Pa.R.Civ.P. 238(f). We will therefore affirm the district court's order granting delay damages, but will modify it to reflect the floating rate schedule provided in the November 7, 1988 version of the rule.*fn4
The district court had subject matter jurisdiction over Fauber's claim for personal injuries under 28 U.S.C.A. 1332(a) (West Supp. 1989). We have appellate jurisdiction pursuant to 28 U.S.C.A. 1291 (West Supp. 1989). Review of the applicability of Rule 238 in this diversity case is plenary.*fn5
On September 13, 1983, a motorcycle driven by plaintiff's decedent Bryan Fauber collided with a truck driven by James Pfautz while the truck was backing into Hughes's loading dock. The truck was owned by KEM Transportation Company, Inc. (KEM). Fauber filed a complaint against Pfautz, KEM, and Hughes on September 11, 1985. He concurred in Hughes's motion to continue trial from the November 1986 to the December 1986 trial list. All parties agreed on an extension of the time for discovery and trial was again continued until the March 1987 trial list. Counsel agreed to another continuance until April and the district court heard arguments on all outstanding motions on April 16, 1987.
Before jury selection, plaintiff had demanded a total of $1,000,000 in damages. Thereafter, his lowest demand was $400,000. Hughes was asked to contribute $200,000, one-half of the total. It offered only $50,000, and Fauber rejected that offer. The other defendants settled and signed releases absolving themselves of further liability. After a 10 day trial, in which all defendants participated, the jury was asked to determine Fauber's total damages, whether Hughes was liable and, if so, the extent of its liability in comparison with that of the other parties. The jury found that the decedent was 50% negligent, Pfautz was 20% negligent, (attributable also to KEM) and Hughes was 30% responsible. The district court awarded Fauber $89,805.40 against KEM and Pfautz and $134,708.27 against Hughes out of a total jury verdict of $449,027.36.*fn6
On May 7, 1987, Fauber filed a motion to assess delay damages against Hughes, relying on Craig. The district court denied this motion on August 14, 1987. Fauber filed for reconsideration on August 24, 1987. After argument on July 11, 1988, the district court granted reconsideration and awarded delay damages of $20,073.60 by order dated September 21, 1988.
Fauber then asked that costs be taxed against the defendants. The district court stayed this matter pending Hughes's appeal of the verdict to this court. We affirmed that verdict by judgment order on January 28, 1988. Fauber v. KEM Transp. and Equip. Co., 838 F.2d 1205 (3d Cir. 1988). Thereafter, Fauber filed an initial and supplemental bill of costs and, on March 24, 1988, the clerk of the district court assessed total costs against all defendants (KEM, Pfautz and Hughes) in the amount of $5,494.05. On September 1, 1988, the district court overruled Hughes's objection to this assessment of ...