Criminal Defense and Investigations

Duty to Pay Delay Damages Rests on Defendants

Defendants who have not caused a delay will still have to pay for one, the Superior Court ruled yesterday.

In J.W.S. Delavau Inc. v. Eastern America Transport & Warehousing Inc., a three-judge panel led by Judge John T. J. Kelly Jr. said that when a defendant fails to make a qualified settlement offer and the plaintiff did not cause the delay, Pennsylvania Rule of Civil Procedure 238 dictates imposition of delay damages.

“Moreover,” Kelly wrote, “the rule provides no exception that applies when the delay cannot be attributed to either party.”

The circumstances that landed the J.W.S. Delavau parties before the Superior Court were unusual.

Initially, the dispute between the nutritional supplements manufacturer, Delavau, and the warehouser, Eastern America, was presided over by Judge Berel Caesar of the Philadelphia Court of Common Pleas. In June 1997, Caesar rendered a verdict in favor of Delavau, the plaintiff, but also found for Eastern America on its counterclaim. The judge then vacated his decision pending post-trial motions. He died in an accident in October 1997 while the motions were still pending.

In February 2000, the parties appeared before Judge Joseph Papalini for a new trial. Papalini found for Delavau to the tune of $1.37 million, but the company netted only $1.36 million because Eastern America again prevailed on its counterclaim.

Eastern America filed post-trial motions which were denied, with limited delay damages awarded to Delavau. According to the Superior Court, the delay damages excluded the two-plus years attributable to Caesar’s death.

On appeal, Eastern America asked the Superior Court to reverse the judgment in favor of Delavau, including the delay damages. Delavau requested additional delay damages, arguing that the period between Caesar’s death and the start of the second trial should have been included in the trial court’s calculations.

Delavau asserted in its brief that Papalini came back with partial delay damages because the lapse “‘was in no way the fault of either side,’” the Superior Court said. The three judges — Kelly, Correale F. Stevens and Patrick R. Tamilia — rejected that reasoning.

“The language in Rule 238 is mandatory,” Kelly wrote. “It does not extend discretion to the trial court to exclude a period of time from the calculation of delay damages where the defendant was not at fault.”

In addition to reciting Rule 238, the court turned to two of its 1998 en banc decisions. In the first, Miller v. Wise Business Forms Inc., the defendant failed to make an adequate settlement offer before trial and the plaintiff sought delay damages. The trial court refused to award them as neither party caused the delay. The Superior Court reversed, finding the defendant responsible for delay damages even though he did not cause the delay.

In the second case, King v. Southeastern America Pennsylvania Transportation Authority, the trial court determined that a backlog in the judicial system caused the delay at issue. That court ruled that while neither party was responsible for the delay, the defendant would have to pay for it. The Superior Court affirmed, finding, “Where the defendant has not made an adequate settlement offer pursuant to Rule 238(b)(1) and the plaintiff has not caused the delay of the trial as noted in Rule 238(b)(2), there is no basis on which to deny the plaintiff an award of damages.” The King court also noted that the rule did not provide for exclusions when a delay was not caused by either party.

After rejecting Eastern America’s arguments on several additional issues, the court remanded and relinquished its jurisdiction.

David J. Wolfsohn and Peter H. LeVan Jr. of Hangley Aronchick Segal & Pudlin served as counsel for Delavau. William J. Schmidt, Edward M. Koch and Mary E. Dixon of White & Williams represented Eastern America.

(Copies of the 28-page opinion in J.W.S. Delavau Inc. v. Eastern America Transport & Warehousing Inc., PICS NO. 02-1670, are available from The Legal Intelligencer. Please call the Pennsylvania Instant Case Service at 800-276-PICS to order or for information. Some cases are not available until 1 p.m.