Fauber v. Kem Transportation & Equipment Co.

698 F. Supp. 1234, 1988 U.S. Dist. LEXIS 12304, 1988 WL 116315
CourtDistrict Court, M.D. Pennsylvania
DecidedSeptember 21, 1988
DocketCiv. No. 85-1309
StatusPublished

This text of 698 F. Supp. 1234 (Fauber v. Kem Transportation & Equipment Co.) is published on Counsel Stack Legal Research, covering District Court, M.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Fauber v. Kem Transportation & Equipment Co., 698 F. Supp. 1234, 1988 U.S. Dist. LEXIS 12304, 1988 WL 116315 (M.D. Pa. 1988).

Opinion

MEMORANDUM AND ORDER

CONABOY, District Judge.

Procedural Background

This case is a wrongful death and survival action arising from the death of Bryan D. Fauber in a motorcycle accident on September 13, 1983. Suit was filed in federal [1235]*1235court on September 11, 1985 and after several delays in the pleading and discovery stages, this matter was tried before a jury beginning on April 21, 1987. On May 4, 1987, a verdict for $449,027.35 was returned in favor of the Plaintiff. Of that amount, Defendant Hughes’ obligation was calculated to be $134,708.20.

On May 7, 1987, Plaintiff motioned this court under Pa.R.C.P. 238 to impose delay damages since the jury award exceeded the Defendant’s settlement offer by 125%.1 Prior to trial, Plaintiff’s settlement demands ranged from a high of $1,000,000.00 to a low of $400,000.00 of which Hughes Printing was to pay $200,000. On the other hand, Defendant Hughes Printing never made an offer that exceeded $50,000.00.

On August 14, 1987, this court entered an order denying the Plaintiff request for delay damages since it was found that the dilatory tactics and lack of good faith in settlement negotiations exhibited on both sides did not warrant Rule 238 sanctions. Specifically, we found that although Defendant Hughes requested the two continuances in this case, counsel for Plaintiff concurred in the first and helped trigger the second by failing to supply expert reports by the initial discovery deadline.2 Moveover, since the Plaintiff’s demands were unreasonable and the case was in trial before settlement proposals reached a point were serious negotiations could begin, we decided against Rule 238 damages.

Plaintiff has filed a motion to reconsider asserting that this court misinterpreted the Pennsylvania Supreme Court’s application of Rule 238 and that state court precedent dictates that delay damages are appropriate in this case. Defendant counters by first asserting that Rule 238 damages no longer apply in federal court. Alternatively, the Defendant insists that if Rule 238 damages are available, the court properly applied the law to the facts when it found that since the Plaintiff’s demands were unreasonable until after the trial started, damages should not apply. This court heard oral arguments on July 11, 1988, concerning Plaintiff’s motion for reconsideration to resolve any factual disputes which may have been presented and weigh any final comments by the parties. After reviewing the supplemental briefs submitted by both parties, we are now prepared to rule on this matter.

Discussion

I.

The first issue that must be addressed by this court is whether Pennsylvania’s Rule of Civil Procedure 238 applies in federal diversity actions in light of Craig v. Magee Memorial Rehabilitation Center, 512 Pa. 60, 515 A.2d 1350 (1986), and its progeny.

Since the Plaintiff first requested this court to impose delay damages, several federal courts have found Rule 238 to be merely procedural and not applicable in federal court under the Erie Doctrine.3 This strain of reasoning developed after the Supreme Court of Pennsylvania suspended the mandatory provisions of Rule 238 in October of 1986. See Craig, 515 A.2d at 1353. Previously, Rule 238 provided for the automatic addition of delay damages to jury awards which exceeded written settlement offers by 125%. That rule had been held applicable to diversity actions in federal courts. Jarvis v. Johnson, 668 F.2d 740 (3d Cir.1982).

However, in the Craig case, the Pennsylvania Supreme Court suspended the mandatory provision of Rule 238 because it was [1236]*1236found that the assessment of damages without regard to fault “runs too tight a gauntlet through Due Process.” The court found that, in practice, Rule 238 had become “an uncontestable presumption that all fault lies with a defendant.” Craig 515 A.2d at 1353. The mandatory provision of Rule 238 was suspended precisely because the rule had, in application, overstepped the limits of a procedural rule.

Shortly after the Craig decision, Chief Judge John Fullam stated in Locke v. Frank, Civ. No. 86-2087, slip op. at 4 (E.D.Pa. Jan. 16,1988) [available on WEST-LAW, 1987 WL 5717]:

[g]iven the Craig decision, it is indeed difficult to view whatever remains of Pennsylvania’s delay damage doctrine as a matter of substantive law for Erie purposes. Rather, it appears to be a procedural matter of imposing sanctions for litigation misconduct. Moreover, since the rule has been suspended, and has been replaced merely by directives of the Pennsylvania Supreme Court in exercising its supervisory power over the lower state courts, the new procedure plainly has no direct application in the federal courts; at most, the new arrangement may be looked to as comity.

This reasoning has been applied by several other judges in that district. See Holley v. Cincinnati-Forte Co., Civ. No. 87-1779, slip op. (E.D.Pa. May 25, 1988) [available on WESTLAW, 1988 WL 55234] (available September 16,1988, on LEXIS, Genfed library, Dist file); Salvatico v. Supermarkets General Corporation, Civ. No. 86-4072, slip op. (E.D.Pa. April 29, 1988) [available on WESTLAW, 1988 WL 41441] (available September 16,1988, on LEXIS, Genfed library, Dist file); Redmann v. Jefferis, Civ. No. 87-4056, slip op. (E.D.Pa. April 1, 1988) [available on WESTLAW, 1988 WL 33927] (available September 16, 1988, on LEXIS, Genfed library, Dist file); DeMarchis v. Louisville Ladder, Civ. No. 85-1494, slip op. (E.D.Pa. Feb. 4, 1988) [available on WESTLAW, 1988 WL 9518] (available September 16, 1988, on LEXIS, Genfed library, Dist file); Nabisco Brands, Inc. v. Hill Creek Farms, Civ. No. 85-6726, slip op. (E.D.Pa. Oct. 22, 1987) [available on WESTLAW, 1987 WL 18859] (available September 16, 1988, on LEXIS, Genfed library, Dist file); Schmehl v. Sheraton Corp., Civ. No. 85-3242, slip op. (E.D.Pa. March 3, 1987) [available on WESTLAW, 1987 WL 7389] (available September 16, 1988, on LEXIS, Genfed library, Dist file).

Although this court acknowledges the above cited decisions, on the appellate level, there have been three cases which indirectly address the application of Rule 238 damages to federal diversity actions. Two of them, Monessen Southwestern Railway Company v. Morgan, — U.S. —, 108 S.Ct. 1837,100 L.Ed.2d 349 (1988) and Poleto v. Consolidated Rail Corp., et al, 826 F.2d 1270 (3d Cir.1987), interpret the application of Rule 238 to suits filed under the Federal Employers’ Liability Act (FELA). The other ease, Salas v. Wang, et al, 846 F.2d 897 (3d Cir.1988), discusses an analogous New Jersey delay damages statute.4

In Monessen and Poleto, the U.S. Supreme Court and the Third Circuit Court of Appeals found that when a state court hears a FELA case, “state substantive law, particularly Pennsylvania Rule of Civil Procedure 238,” is not applicable. Poleto at 1274. In Monessen, the high court examined the same issue presented in Poleto,

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Related

Erie Railroad v. Tompkins
304 U.S. 64 (Supreme Court, 1938)
Guaranty Trust Co. v. York
326 U.S. 99 (Supreme Court, 1945)
Monessen Southwestern Railway Co. v. Morgan
486 U.S. 330 (Supreme Court, 1988)
Guaranty Trust Co. v. York
326 U.S. 99 (Supreme Court, 1945)
Huddell v. Levin
395 F. Supp. 64 (D. New Jersey, 1975)
Hall v. Brown
526 A.2d 413 (Supreme Court of Pennsylvania, 1987)
Laudenberger v. Port Auth. of Allegheny
436 A.2d 147 (Supreme Court of Pennsylvania, 1981)
Craig v. Magee Memorial Rehabilitation Center
515 A.2d 1350 (Supreme Court of Pennsylvania, 1986)
Huddell v. Levin
537 F.2d 726 (Third Circuit, 1976)
Jarvis v. Johnson
668 F.2d 740 (Third Circuit, 1982)
Poleto v. Consolidated Rail Corp.
826 F.2d 1270 (Third Circuit, 1987)
Weaver v. Abdul-Ela
43 Pa. D. & C.3d 346 (Lawrence County Court of Common Pleas, 1987)

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Bluebook (online)
698 F. Supp. 1234, 1988 U.S. Dist. LEXIS 12304, 1988 WL 116315, Counsel Stack Legal Research, https://law.counselstack.com/opinion/fauber-v-kem-transportation-equipment-co-pamd-1988.