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Plaintiffs who stipulate to a compensatory damages cap before trial are entitled to seek delay damages, a Pennsylvania Superior Court panel has ruled in a case of first impression. However, the judges also held that the damages sought should be based on the capped amounts agreed to by the parties, not on the amounts awarded to plaintiffs by juries. In LaRue v. McGuire, the court was asked to address a case that involves both Pennsylvania Rule of Civil Procedure 1311.1, under which plaintiffs are allowed to stipulate to a $15,000 cap on damages when trying a case that has already been arbitrated, and Rule 238, which mandates the right to seek delay damages. In reaching its decision, the judges overruled Bucks County Judge C. Theodore Fritsch Jr.’s denial of the plaintiff’s motion for delay damages. “We hold that the basis upon which the trial court is to calculate delay damages when a plaintiff opts to limit his or her compensatory damages to $15,000 pursuant to Rule 1311.1 is the $15,000 cap to which the plaintiff has agreed,” Judge Kate Ford Elliott wrote. Ford Elliott was joined by Judge Michael T. Joyce and Senior Judge Frank J. Montemuro Jr. The case stems from injuries Andrew LaRue Jr. received in 2000 when he tripped on the carpet of an apartment he was leasing from Richard and Clementina McGuire, according to Ford Elliott’s opinion. LaRue filed suit in February 2001, and the case was assigned for compulsory arbitration. The arbitration panel found in favor of the McGuires in November 2003. LaRue appealed, and the case was listed for trial. Settlement talks were not fruitful, according to the opinion, with LaRue claiming that the McGuires never made him an offer. At some point, the parties agreed to a Rule 1311.1 stipulation, under which LaRue agreed to limit the amount of any damages he would be awarded by a jury to $15,000, in exchange for the ability to enter his medical reports into evidence without having to compensate experts to offer substantiating testimony, according to the opinion. “Rule 1311.1, addressing introduction of evidence on appeal from the award of arbitrators, contributes to the overall goal of compulsory arbitration by reducing the time and costs associated with calling witnesses to authenticate documents that are introduced into evidence at the trial de novo,” Ford Elliott wrote. “In exchange for this cost-saving benefit, plaintiff agrees to limit damages to $15,000, regardless of the jury’s verdict in his or her favor.” The jury in LaRue, which had not been informed of the Rule 1311.1 stipulation, chose to award LaRue $600,000. The verdict was molded to reflect the $15,000 stipulation; when LaRue filed for delay damages, Fritsch denied his motion. Ford Elliott noted that the Superior Court’s standard of review for Rules of Civil Procedure questions is de novo. “While there is so far no case law in Pennsylvania interpreting the purpose and parameters of Rule 1311.1, its intent is readily discernible from its language and from its inclusion within the section of the rules relating to compulsory arbitration: ‘the overall objective of compulsory arbitration is the expeditious disposition of pending litigation,’” Ford Elliott wrote, quoting relevant case law. The judges concluded that the agreed-to limit on damages does not encompass delay damages, as well. In its 2001 decision in Allen v. Mellinger, the Pennsylvania Supreme Court ruled that a plaintiff who won an award that was statutorily capped at $250,000 under the Sovereign Immunity Act was entitled to delay damages that would increase the amount she recovered beyond $250,000. “Thus, in Allen, the parties did not dispute that despite the statutory cap the Sovereign Immunity Act requires, a plaintiff such as Elizabeth Allen, who waited to be compensated for her severe injuries for seven years from the time she filed her complaint until [the time] the jury returned a verdict, was entitled to delay damages from the commonwealth defendant even where the commonwealth’s liability would exceed the statutory cap as a result,” Ford Elliott wrote. The scenario presented by Allen is analogous to that of LaRue, Ford Elliott wrote. “Just as neither the Sovereign Immunity Act nor the Compulsory Arbitration Act eliminates the risk of delay damages, so too, Rule 1311.1 does not shield a defendant from the consequences of his or her failure to consider settling the case,” Ford Elliott wrote. The judges did, however, reject LaRue’s argument that delay damages should be calculated according to the figure awarded him by the jury. LaRue’s attorney, Morrisville, Pa., solo practitioner Lee Rockafellow, was out of the country and could not be reached for comment. Lisa Faden of Mayers Mennies & Sherr in Blue Bell, Pa., who represented the McGuires, said that she believes the court’s decision will result in parties signing private agreements, not pursuant to Rule 1311.1, under which they will stipulate to a cap of $15,000 on all damages – including delay damages and various costs not addressed by jury verdicts. “If they had instead ruled that there would be no delay damages in cases subject to Rule 1311.1, we think that would have been consistent with Rule 1311.1,” Faden said. “Generally here, you’re not speaking of tremendously large sums of money. But it’s still important to have a clarification as to what Rule 1311.1 means.”

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