ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA. (D.C. Civil Action No. 84-02393).
Before: Sloviter, Chief Judge, and Nygaard and Seitz, Circuit Judges.
This appeal requires us to determine whether, viewed through the prism of the Pennsylvania Supreme Court, tort plaintiffs who settled before trial with some defendants for an amount greater than the ultimate verdict may nevertheless receive delay damages under Pennsylvania Rule of Civil Procedure 238 from a defendant who offered no settlement. The district court concluded that they could not and denied delay damages. We will reverse.
Richard J. Weber and his wife, Rose Marie Weber, brought this diversity action against seven defendants to recover for Richard Weber's asbestos-related personal injuries. All defendants except Celotex Corporation settled with the Webers before trial; none admitted liability. A jury returned a $9,450.00 verdict in the Webers' favor. Although the six settling defendants appeared on the verdict sheet as defendants, the jury found only Celotex liable.
The Webers moved for delay damages from Celotex. Because they had received more than the verdict amount in the six settlements, the district court denied the motion, concluding that under Rocco v. Johns-Manville Corp., 754 F.2d 110, 118 (3d Cir. 1985), these settlements made them ineligible for delay damages.
The district court had jurisdiction over this action under 28 U.S.C. § 1332(a), and we have jurisdiction over the appeal under 28 U.S.C § 1291. We conduct a plenary review of the district court's legal determination that the Webers were not entitled to delay damages.
Under Pennsylvania Rule of Civil Procedure 238, a prevailing plaintiff in a Pennsylvania tort action may receive what amounts to prejudgment interest on a compensatory damage award. See Rosen v. Rucker, 905 F.2d 702, 704 (3d Cir. 1990). Primarily, the rule serves to encourage early settlement, thereby reducing court congestion. Barris v. Bob's Drag Chutes & Safety Equip., Inc., 717 F.2d 52, 56 (3d Cir. 1983); Laudenberger v. Port Auth. of Allegheny County, 496 Pa. 52, 436 A.2d 147, 151 (1981). Secondarily, the rule serves to compensate plaintiffs for the delay in receiving the money to which they are entitled. Rocco v. Johns-Manville Corp., 754 F.2d 110, 118 (3d Cir. 1985); Laudenberger, 436 A.2d at 151.
Delay damages are added "to the amount of compensatory damages awarded against each defendant or additional defendant found to be liable to the plaintiff. . . ." Pa. R. Civ. P. 238(a)(1). They generally are awarded for the period from a specified date early in the litigation until the date of the verdict. Pa. R. Civ. P. 238(a)(2). If, however, "the defendant has made a written [settlement] offer . . ., which offer was not accepted and the plaintiff did not recover . . . more than 125 percent" of the offer, the period of time after the offer is excluded from the period on which delay damages are assessed. Pa. R. Civ. P. 238(b). Any period of delay of the trial caused by the plaintiff is also excluded from the period on which delay damages are assessed. Id.
Celotex offered no settlement to the Webers and does not contend that they caused any delay. From the plain language of the rule, the result in this case therefore seems clear: Celotex should be liable for delay damages. Celotex nonetheless argues, and the district court found, that because the Webers received settlements from the other defendants that ...