UNITED STATES FIRE INSURANCE COMPANY v. OMNOVA SOLUTIONS, INC.
Filing
97
MEMORANDUM AND OPINION re 91 MOTION to Mold Judgment to Include Prejudgment Interest filed by UNITED STATES FIRE INSURANCE COMPANY. Signed by Magistrate Judge Cynthia Reed Eddy on 11/30/2012. (ajt)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
UNITED STATES FIRE INSURANCE
COMPANY, as Subrogee of
MAFCOTE INTERNATIONAL,
INCORPORATED,
Plaintiff,
v.
OMNOVA SOLUTIONS, INC.,
Defendant.
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Civil Action No. 10-1085
Magistrate Judge Cynthia Reed Eddy
MEMORANDUM OPINION
Presently before this Court is Plaintiff’s Motion for Prejudgment Interest [ECF No. 91].
Defendant has filed a response [ECF No. 95] and for the following reasons, Plaintiff’s Motion is
granted in part and denied in part.
On November 9, 2012, after a jury trial on the negligent maintenance and design of a
culvert, a verdict was entered in favor of the Plaintiffs and against Defendant in the amount of
$3.4 million. Plaintiff filed a subsequent motion seeking an award of prejudgment interest in the
amount of $134,790.40. Pl.’s Mot. for Prejudgment Interest [ECF No. 91] at 4. Defendant
argues that because the basis of the underlying claim was a subrogation action, Pennsylvania
Rule of Civil Procedure 238 for prejudgment interest does not apply. Def.’s Resp. to Pl.’s Mot.
for Prejudgment Interest [ECF No. 95] at ¶ 2. Alternatively, Defendant argues that because
Plaintiff caused a seven month delay in the case proceeding to trial, any prejudgment interest
awarded should be reduced by that amount. Id. at ¶¶ 3-4.
Rule 238 of the Pennsylvania Rules of Civil Procedure provides in pertinent part:
(a)(1) At the request of the plaintiff in a civil action seeking
monetary relief for bodily injury, death or property damage,
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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 ...
(2) Damages for delay shall be awarded for the period of time ...
(ii) in an action commenced on or after August 1, 1989, from a
date one year after the date original process was first served in the
action up to the date of the award, verdict or decision.
(3) Damages for delay shall be calculated at the rate equal to the
prime rate as listed in the first edition of the Wall Street Journal
published for each calendar year for which the damages are
awarded, plus one percent, not compounded.
(b) The period of time for which damages for delay shall be
calculated under subdivision (a)(2) shall exclude the period of
time, if any,
(1) after which the defendant has made a written offer of
(i) settlement in a specified sum with prompt cash payment to the
plaintiff, or ...
(2) during which the plaintiff caused delay of the trial.
(c) Not later than ten days after the verdict of notice of the
decision, the plaintiff may file a written motion requesting
damages for delay and setting forth the computation.
Pa. R. Civ. P. 238(a)(1)-(c). Although the Pennsylvania Supreme Court has promulgated this
Rule as procedural, the Court of Appeals for the Third Circuit has determined that it is
substantive in nature and applies to cases brought in federal court. Knight v. Tape, Inc., 935 F.2d
617, 622 n. 4 (3d Cir. 1991); Sealover v. Carey Canada Inc., 996 F.2d 42, 46 (3d Cir. 1993).
Defendants may shield themselves from prejudgment interest by (1) tendering an appropriate
written settlement offer in a timely fashion, or (2) by showing “that the conduct of the plaintiff
throughout the course of litigation has delayed trial.” Shrock v. Albert Eistein Medical Ctr., 589
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A.2d 1103, 1106 (Pa. 1991); Pa. R. Civ. P. 238(b)(2). See also Rosen v. Rucker, 905 F.2d 702,
707-09 (3d Cir. 1990) (“a written offer is the sine qua non to any tolling of the delay damage
period, unless it is established that the plaintiff caused the delay”).
First, Defendant argues that because “Rule 238 is expressly limited in application to ‘a
civil action seeking monetary relief for bodily injury, death, or property damage,’…[it is] wholly
inapplicable to Plaintiff’s claim for reimbursement of monies paid out under an insurance policy
acquired by and maintained with premiums paid by an entity that was not party to this action.”
Id. (quoting Pa. R. Civ. P. 238(a)(1)). Defendant does not cite to any cases in support of this
contention. This Court has likewise found no cases explicitly rejecting an award of prejudgment
interest because it was a subrogation action. Although Pa. R. Civ. P. 238 does not apply to every
action, the dual purposes of the Rule is “penal, to reduce court congestion, and compensatory, to
make the plaintiff whole.” Touloumes v. E.S.C. Inc., 899 A.2d 343, 348 (Pa. 2006) (refusing to
apply prejudgment interest to a breach of contract claim). “Rule 238 provides compensation to a
plaintiff for delay in receiving the monetary damages owing as a result of the defendant’s tort.”
Id. at 348. (emphasis in original) (citations omitted). Therefore, tort claims, including negligent
maintenance and design, are the type of claims envisioned to be protected by Pa. R. Civ. P. 238.
Pennsylvania courts have restricted applying prejudgment interest “to situations where a
defendant causes bodily injury, death or property damage” and have set forth cases in which
prejudgment interest does not apply to tort claims, none of which are negligent maintenance or
design claims. Pa. R. Civ. P. 238(a)(1). See Anchostar v. Mack Trucks, Inc., 620 A.2d 1120 (Pa.
1993) (prejudgment interest not applicable for loss of consortium claim); Rizzo v. Haines, 515
A.2d 321, 326 (Pa.Super. 1986) (prejudgment interest not applicable for legal malpractice in
personal injury cases); Colodonato v. Consol. Rail Corp., 470 A.2d 475 (1983) (prejudgment
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interest not applicable to punitive damages); Oweida v. Tribune-Review Publ’g Co., 599 A.2d
230 (Pa. Super. 1991) app. den., 605 A.2d 334 (Pa. 1991) (prejudgment interest not applicable
for libel action); Wainauskis v. Howard Johnson Co., 488 A.2d 1117 (Pa. Super. 1985)
(prejudgment interest not applicable for malicious prosecution claim); Erie Ins. Exch. v. McGee,
474 A.2d 1171 (Pa. Super. 1984) (prejudgment interest not applicable to uninsured motorist
arbitration award); Reliance Universal v. Ernest Renda Contracting Co., 454 A.2d 39 (Pa. Super.
1982) (prejudgment interest not applicable in contract action).
Alternatively, Defendant argues that because the Court continued the case upon
Plaintiff’s motion for a period of seven months, any prejudgment interest awarded should be
reduced by that amount. Def.’s Resp. to Pl.’s Mot. for Prejudgment Interest [ECF No. 95] at ¶¶
3-4. Under Pennsylvania Rule of Civil Procedure 238, “[d]amages for delay shall be awarded
for the period of time from a date one year after the date original process was first served in the
action to the award, verdict or decision.” Pa. R. Civ. P. 238(a). Prejudgment interest is “not
available to plaintiffs for any period of time ‘during which the plaintiff caused the delay of
trial.’” LaBarre v. Werner Enter., Inc., 420 Fed.App’x. 169, 170 (3d Cir. March 28, 2011)
(quoting Pa. R. Civ. P. 238(b)(2)). “[T]he period of time a trial [is] delayed due to a continuance
requested by the plaintiff should be excluded from the period for which delay damages are
awarded.” Sealover, 996 F.2d at 46. See also Rice v. Schneider Nat’l Carriers, Inc., 2001 WL
1478667, *2 (E.D.Pa 2001) (“Since the court was prepared to call the case to trial, the plaintiff’s
requests thus postponed the beginning of the trial” and defendants were entitled to a reduction);
Wirth v. Miller, 580 A.2d 1154 (Pa. Super. 1991) (court did not inquire into the reason for the
continuance).
Here, the trial was scheduled to commence on April 16, 2012. Order of 12/12/2011 [ECF
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No. 23]. However, Plaintiff moved to continue the case because of its counsel’s poor health.
Pl.’s Mot. to Continue Trial [ECF No. 53]. The trial was continued, and commenced on
November 5, 2012. Because Plaintiff indeed caused the delay of trial from April 16, 2012 to
November 5, 2012, it is not entitled to prejudgment interest for that period.
For the above reasons, the Court concludes that Plaintiff is entitled to an amended
judgment incorporating prejudgment interest. Defendant was served with the complaint on
December 1, 2010, thus the relevant time period begins on December 1, 2011. Pa. R. Civ. P.
238(a)(2). The time period ends on November 9, 2012, the date the verdict was entered. See id.
However, this time period excludes the days from April 16, 2012, the date the trial was originally
scheduled, to November 5, 2012, the date the trial was continued to in accordance with section
(b)(1) of the Rule. Based on the Addendum to the Explanatory Note to Pa. R. Civ. P. 238, the
proper interest rate for calculating delay damages consists of the prime rate as listed in the first
edition of the Wall Street Journal published for each calendar year for which the prejudgment
interest is awarded, plus one per-cent. Therefore, the prejudgment interest is ordered as follows:
2011
2012
3.25% + 1%
3.25% + 1%
=
=
4.25%
4.25%
1. 12/1/2011 – 12/31/2011 (31 days of $3.4 million at 4.25%);
$144,500 x 31 / 365
$12,272.60
2. 1/1/2012 – 4/16/2012 (107 days of $3.4 million at 4.25%);
$144,500 x 107 / 365
$42,360.27
3. 11/5/2012 – 11/9/2012 (5 days of 3.4 million at 4.25%);
$144,500 x 5 / 365
$1,979.45
$56,612.32
An appropriate Order follows.
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