Delay damages are only available on actual damages as molded by the court, not on the full amount originally awarded by a jury, the Pennsylvania Supreme Court has ruled.

In its 5-1 ruling in Marlette v. State Farm Mutual Automobile Insurance, the high court found Richard and Marleen Marlette could not collect delay damages on the $550,000 awarded by the jury to Richard Marlette, but only on the molded $233,000 verdict entered by the trial judge to reflect the Marlettes’ auto insurance policy limits.

The court’s ruling is a reversal of a split Pennsylvania Superior Court, which had found that the Marlettes could recover delay damages calculated off of the jury award.

Justice Debra M. Todd said for the majority that “a plaintiff’s recovery of delay damages under Pa.R.Civ.P. 238 is limited to the amount of the legally-recoverable molded verdict as reflected by the insurance policy limits.”

The court dismissed the Marlettes’ arguments that their case was different from the Supreme Court’s 2001 ruling in Allen v. Mellinger, because, as the Marlettes argued, Allen dealt with a state defendant and statutory caps on damages and the Marlettes were suing a private entity.

In Allen, the plaintiff was only allowed to collect delay damages from a commonwealth party based on the $250,000 statutory cap established by the Sovereign Immunity Act, not based on the jury’s $2.9 million award, Todd said.

Todd pointed out that the Superior Court, in 2005′s LaRue v. McGuire, applied the principle in Allen to a case that did not involve a state defendant. In LaRue, the Superior Court determined a slip-and-fall victim’s delay damages should be calculated based on the $15,000 damages cap to which the victim agreed to in exchange for certain evidentiary rulings, rather than the jury verdict of more than $600,000.

The Superior Court in Marlette had distinguished LaRue from the Marlettes’ case, ruling the Marlettes did not agree to a limit on State Farm’s potential liability in exchange for a benefit at trial. The Superior Court had ruled the limitation on the uninsured motorist benefits the Marlettes could seek under their policy was not the same as the damages cap agreed to by the plaintiff in LaRue.

Todd said the Supreme Court could not agree with the attempts by the Superior Court and the Marlettes to distinguish the instant case from Allen and LaRue. The justice said the Marlettes voluntarily elected and paid for a UM policy with a $250,000 limit.

“The Marlettes’ ‘self-imposed limitation on compensatory damages’ is sufficiently analogous to the statutory limitation in Allen, wherein the plaintiff had no control over the statutory cap on compensatory damages, and the stipulation in LaRue, to warrant the same treatment under Rule 238,” Todd said.

Rule 238 deals with delay damages and provides in part that “‘damages for delay shall be added to the amount of compensatory damages awarded against each defendant,’” according to the opinion.

The Superior Court in Marlette had determined the language of Rule 238 requires delay damages be calculated based on the jury’s award of damages. The Superior Court had further ruled that limiting delay damages to be calculated off of a molded verdict would eliminate the “‘unknown’” that motivates an insurer to make a settlement offer.

Todd dismissed both of those arguments, noting the Supreme Court had already rejected them in Allen.

Chief Justice Ronald D. Castille and Justices Thomas G. Saylor, J. Michael Eakin and Max Baer joined Todd. Justice Seamus P. McCaffery dissented.

McCaffery said the court’s ruling in Allen was “carefully limited” to cases involving state parties. He further noted that Rule 238 is ambiguous when it comes to what amount should be used to calculate delay damages.

“Respectfully, I believe the majority improperly extends the holding of Allen beyond its rationale, which was to limit delay damages in order to afford commonwealth parties the full protection the General Assembly intended in the Sovereign Immunity Act,” McCaffery said. “In so doing, the majority erodes the authority of this court to promulgate procedural rules.”

If the majority found it proper to award delay damages above the Marlettes’ policy limits, then McCaffery asked why the court should not award delay damages based on the full jury award.

An Allegheny County jury awarded Richard Marlette $550,000 in damages for injuries he sustained when an uninsured driver sideswiped his vehicle. Marleen Marlette was awarded $150,000.

Those awards were molded to reflect the couple’s $250,000 insurance policy limits and Richard Marlette filed for delay damages.

He sought those damages based on the $550,000 verdict. Marleen Marlette’s damages for loss of consortium are not eligible for delay damages.

State Farm opposed the motion, arguing Richard Marlette was not entitled to any delay damages since he and his wife had already received their policy limits.

A trial court judge disagreed with both State Farm and Richard Marlette, however, and awarded delay damages based only on the molded verdict of $233,306.98 — a figure that was reached after the trial court judge credited a $16,693.02 payment by State Farm. The total delay damages awarded was more than $28,000. It is that award the Supreme Court is now ordering be reinstated.

Scott B. Cooper of SchmidtKramer in Harrisburg represented the Marlettes on appeal. He said he was disappointed with the ruling, but understood the court was reaffirming the holdings in the line of cases stemming from Allen. Cooper said the court’s ruling doesn’t leave his clients without any recourse because they could still file a bad-faith claim and point to the jury’s award as their damages.

Daniel L. Rivetti of Robb Leonard Mulvihill in Pittsburgh represented State Farm. He did not return a call for comment.

Gina Passarella can be contacted at 215-557-2494 or at gpassarella@alm.com. Follow her on Twitter @GPassarellaTLI.

(Copies of the 17-page opinion in Marlette v. State Farm Mutual Automobile Insurance, PICS No. 13-0029, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information.) •