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Richard A. Marlette, Sr. and Marleen Marlette, His Wife v. State Farm Mutual Automobile Insurance Company and Herman

December 28, 2012

RICHARD A. MARLETTE, SR. AND MARLEEN MARLETTE, HIS WIFE
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY AND HERMAN L. JORDAN APPEAL OF: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY RICHARD A. MARLETTE, SR. AND MARLEEN MARLETTE, HIS WIFE
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY AND HERMAN L. JORDAN APPEAL OF: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY



Appeal from the Order of the Superior Court entered December 10, 2010 at No. 623 WDA 2009 vacating the Order of the Court of Common Pleas of Allegheny County entered March 24, 2009, at No. GD-06-015333 and remanding the case. ARGUED: April 10, 2012 Appeal from the Order of the Superior Court entered December 10, 2010 at No. 703 WDA 2009 vacating the Order of the Court of Common Pleas of Allegheny County entered March 24, 2009, at No. GD-06-015333 and remanding the case. ARGUED: April 10, 2012

The opinion of the court was delivered by: Madame Justice Todd

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

OPINION

We granted allowance of appeal in this consolidated case to consider whether a plaintiff may recover delay damages on the full amount of a jury verdict in his favor, or whether delay damages are limited to the amount of the legally-recoverable molded verdict, as it was adjusted by the court to reflect insurance policy limits. For the reasons that follow, we hold that a plaintiff may recover delay damages only on the amount of legally-recoverable damages to which he is entitled pursuant to the molded verdict. Thus, we remand this matter to the Superior Court for remand to the trial court for reinstatement of its original award of delay damages.

On July 2, 2002, Richard Marlette and his wife Marleen (collectively, the "Marlettes") were stopped in traffic in the City of Pittsburgh when a vehicle operated by Herman Jordan crossed the center line and sideswiped the Marlettes' vehicle. Mr. Marlette, who occupied the driver's seat, sustained serious physical injuries, as well as lost wages and impairment of his earning capacity. On October 13, 2006, the Marlettes filed an action in the Allegheny County Court of Common Pleas against Jordan, who was uninsured, and their own insurer, State Farm Mutual Automobile Insurance Company ("State Farm"), for uninsured motorist ("UM") coverage. Liability was uncontested, and the case proceeded to trial on damages.

Following a two-day trial, the jury returned a verdict in favor of the Marlettes, awarding Mr. Marlette $550,000 for his bodily injuries and lost wages, and Mrs. Marlette $150,000 for loss of consortium. The trial court molded the $700,000 verdict to reflect the $250,000 policy limit of the Marlettes' UM policy with State Farm, which was issued in Florida.*fn1 The trial court credited an earlier payment of $16,693.02 by State Farm, resulting in a verdict of $233,306.98. Subsequently, pursuant to Pa.R.Civ.P. 238,*fn2 the Marlettes filed a motion for delay damages on the $550,000 verdict in favor of Mr. Marlette,*fn3 which State Farm opposed. The trial court granted the Marlettes' motion, but awarded delay damages in the amount of $28,223.76, which the trial court calculated by applying the applicable interest rate to the molded verdict of $233,306.98.

The Marlettes and State Farm filed cross-appeals with the Superior Court. The Marlettes argued the trial court abused its discretion by calculating its award of delay damages based on the molded verdict, rather than the actual jury verdict of $550,000 in favor of Mr. Marlette. State Farm argued, inter alia, that the trial court erred in awarding any delay damages whatsoever because, when added to the molded verdict amount, it resulted in a judgment in excess of the Marlettes' $250,000 UM policy limit, which State Farm alleged was impermissible under both Pennsylvania and Florida law.*fn4

Alternatively, State Farm argued that calculation of delay damages must be based on the verdict as molded to reflect the Marlettes' UM policy limits. In support of its argument, State Farm relied on this Court's decision in Allen v. Mellinger, 567 Pa. 1, 784 A.2d 762 (2001), wherein we held that delay damages recoverable from Commonwealth parties are limited to those calculated based on the statutory cap established by the Sovereign Immunity Act, 42 Pa.C.S.A. §§ 8521 et seq., rather than the jury's award.

In a divided opinion, the Superior Court vacated the trial court's judgment on delay damages, and remanded for recalculation of delay damages based on the amount of the jury verdict. Marlette v. State Farm Mut. Auto. Ins. Co., 10 A.3d 347 (Pa. Super. 2010). The majority first rejected State Farm's argument that the Marlettes were not entitled to any delay damages, noting that an award of delay damages was not precluded by Pennsylvania or Florida law, or by the language of the Marlettes' UM policy. The majority further determined that the amount of delay damages should be calculated based on the amount of the jury verdict, concluding State Farm's reliance on Allen was misplaced:

Unlike Allen, here, there was no statutory cap on the liability of State Farm, a private litigant. As this Court stated in [Thompson v. T.J. Whipple Const. Co., 985 A.2d 221 (Pa. Super. 2009)], "[t]he interplay of the Sovereign Immunity Act with Pa.R.C.P. 238 [in Allen] created a unique scenario not applicable here, where the parties were not bound by statutorily-imposed limits on recovery." Thompson, 985 A.2d at 225. The policy limit for UM coverage in this case simply cannot be equated with a statutorily-imposed cap on liability for Commonwealth parties.

Marlette, 10 A.3d at 354.

The majority recognized that "appellate courts have not strictly limited the holding of Allen to only those cases involving Commonwealth parties," Marlette, 10 A.3d at 354, noting that, in LaRue v. McGuire, 885 A.2d 549 (Pa. Super. 2005), the Superior Court determined that a slip-and-fall victim's delay damages should be calculated based on the $15,000 damages cap to which the victim stipulated in exchange for entry of his medical reports into evidence without authentication, rather than on the jury verdict in his favor, which was in excess of $600,000. The majority, however, distinguished LaRue, stating:

unlike LaRue, the Marlettes did not enter into an agreement with State Farm to limit the insurer's potential liability in exchange for some form of benefit at trial. The voluntary decision by the plaintiff in LaRue to proceed under Pa.R.C.P. 1311.1 is not akin to the inherent "limitation" of the compensatory damages recoverable by the Marlettes in a UM action, which was imposed not by a pre-trial stipulation and the Rules of Civil Procedure, but solely by the terms of the Policy issued by State Farm.

Marlette, 10 A.3d at 355.

Next, the majority reasoned that, under the plain language of Rule 238, delay damages against State Farm should be calculated based on the amount of the jury's award:

Rule 238 provides, in relevant part, that "damages for delay shall be added to the amount of compensatory damages awarded against each defendant or additional defendant found to be liable to the plaintiff in the verdict of a jury . . . and shall become part of the verdict, decision or award." Pa.R.C.P. 238(a)(1) (emphasis added). Here, the amount ...


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