Case Title: Patitucci v. Laverty

Citation: 394 Pa. Super. 565, 576 A.2d 992

Docket Number: 

State: pennsylvania

Court: Pennsylvania Supreme Court

Date: 1990-06-06T00:00:00Z

Document:
394 Pa. Superior Ct. 565 (1990) 576 A.2d 992 Anthony and Marlene PATITUCCI, Individually and as Parents and Natural Guardians of James Patitucci, A Minor v. Thomas W. LAVERTY and Peter M. Pino. Appeal of NATIONWIDE INSURANCE COMPANY. Supreme Court of Pennsylvania. Submitted April 4, 1990. Filed June 6, 1990. *566 Frederick C. Fletcher, III, Philadelphia, for appellant. Robert M. Sitoski, Philadelphia, for appellee. Alan C. Ostrow, Asst. City Sol., Philadelphia, for City of Philadelphia, participating party. Before McEWEN, MONTEMURO and KELLY, JJ. MONTEMURO, Judge: This is an appeal filed by the Nationwide Insurance Company. Nationwide challenges the trial court's imposition of sanctions under Philadelphia Local Rule 170 for unreasonable refusal to settle. Nationwide argues that the trial court abused its discretion in finding that Rule 170 applies under the circumstances of the present case. Further, Nationwide contends that Rule 170 is unconstitutional. We reverse. In July of 1979, James Patitucci, a minor at the time,[1], filed a complaint against Thomas W. Laverty and Peter M. Pino. Patitucci claimed that Laverty negligently operated a vehicle owned by Pino on September 20, 1977, causing Patitucci to be struck by the vehicle while he was crossing a street. Patitucci claimed, inter alia, that Laverty was operating the vehicle at an excessive rate of speed, failed to have the vehicle under control, and failed to keep a proper lookout for pedestrians. In answer to interrogatories, Patitucci stated that as a result of the accident, he suffered "contusions of the left arm and left leg; pain and discomfort of the rib and left shoulder areas; comminuted fracture of the left tibia." Patitucci stated that he continues to *567 suffer pain in the rib and shoulder area, on occasion around the fracture site, and that his leg is deformed at the site of the fracture. Patitucci listed the following medical costs in his interrogatory answers: Additionally, Patitucci claimed that, as a result of his injuries from the accident, he missed four months and three days of employment as a stock boy at Sonny's Deli in Philadelphia. The defendants denied negligence on the part of Laverty and, throughout the course of this matter, maintained that Patitucci's own negligence had been the cause of this accident and thus his unfortunate injuries. Nationwide, in its appellate brief, states that its insured, Laverty, "advised the carrier that the plaintiff ran into the street without looking and outside of any crosswalk." Brief for Appellant at 6. The police report concerning this accident contains the following: R.R. at 40a-41a.[2] In August of 1985, Judge I. Raymond Kremer of the Court of Common Pleas of Philadelphia County held a *569 pre-trial conference in this matter. Following this, the court filed a Memorandum of Pre-Trial Conference and Case Management Order which included the following statements: "Plaintiff makes a demand of policy limits of $25,000. Defendant makes an offer of $2,000. The court makes a recommendation of $19,500. Upon consideration of all of the facts and all aspects of liability and damages and of the reasonable probabilities as to the anticipated results, defendant's offer unreasonably exposes defendant to an excess verdict and a failure of the defendant's carrier to make a settlement as recommended should be regarded as an unreasonable refusal to settle." Op. of Trial Court, February 28, 1987, at 4. "The Case Management Order placed the parties `on notice that the court will invoke Rule 170, if appropriate.'" Id. at 5. Nationwide offered $10,000 to settle the case prior to trial, but this was not accepted by Patitucci. Patitucci indicated that he was willing to accept the court's recommendation of $19,500. Following trial, the jury assessed the causal negligence of Laverty at sixty percent, and the contributory negligence of Patitucci at forty percent. The jury assessed damages at $84,000. This was reduced to $50,400 to reflect Laverty's causal negligence. When delay damages were considered, the trial court entered a molded verdict against Laverty in the amount of $81,109.48. Counsel later advised the trial court that the parties had settled the case for $60,000, which was $35,000 in excess of Nationwide's policy coverage. The trial court subsequently held a hearing to determine whether sanctions under Philadelphia General Civil Rule 170 were in order against Nationwide. Rule 170 provides: *572 On February 18, 1986, a hearing was held by Judge Kremer concerning Rule 170. Nationwide's attorney advised the court that based upon the statements of Laverty, and the contents of the police report, Nationwide classified the instant case as a "dart out" case, which are generally "cases that can be defended." R.R. at 100a. Counsel for Nationwide also emphasized the description of the accident offered by the eyewitness, Mr. DiAntonio, to the police. Id. at 101a. Counsel stated his view, as the litigator of the case, that he thought the case "could be won on . . . liability." Id. at 103a. Our review of the transcript of the February 18, 1986, fails to reveal other argument concerning the merits of the position that Nationwide's refusal to settle this case was unreasonable, obstinate, or capricious, based upon the underlying facts and circumstances of the lawsuit instituted by Patitucci. Judge Kremer imposed a Rule 170 sanction against Nationwide in the amount of $8,110.95. In so doing, the court made a finding that there "has been an unreasonable use and abuse of the valuable facilities of this Commonwealth" by Nationwide. Op. of Trial Court, February 28, 1987, at 19. The court stated that this finding was based upon "clear and convincing evidence." Id. A review of Judge Kremer's Opinion reveals a conclusory discussion of the basis for his rejection of Nationwide's claim that because they viewed the case as defensible, their conduct in not settling the case was reasonable and justified. Judge Kremer states only the following explanations in his Opinion: Id. at 6, 14, and 18. Although Nationwide originally sought an appeal from Judge Kremer's decision, this Court in July of 1988 remanded so that an en banc panel of the Philadelphia Court of Common Pleas could consider the case. 381 Pa.Super. 665, 548 A.2d 646. A hearing was held before Judge Kremer, Judge Armand Della Porta, and Judge Curtis C. Carson, Jr., on November 28, 1988. At this hearing, counsel for Nationwide again presented the argument that based upon the police report, the statements of Laverty, and other pretrial discovery,[3] Nationwide "expected that we would go into court and that it wouldn't be sixty/forty against us, it would be sixty/forty in our favor, maybe even more than that." R.R. at 167a. Counsel for Nationwide further argued as follows: "In a dart out case such as this where there is a real substantial question of liability, not only by virtue of the pleadings, but by virtue of what we see in investigation before the case even gets into suit. . . . This was a close case of liability." Id. at 168a. For most of the proceeding, the judges discussed among themselves the *574 interpretation and scope of Rule 170. The imposition of the Rule 170 sanction was ultimately affirmed by two judges. Judge Armand Della Porta dissented on the grounds that the provisions of Rule 170 did not support the imposition of the sanction because the defense of comparative negligence had substantial merit, giving the defendant the right to proceed to trial. Judge Della Porta noted that the jury's assessment of forty percent causal negligence to Patitucci suggests the credence of this position. In finding the Rule 170 sanctions proper, the court en banc reasoned as follows: Op. of Trial Court, September 15, 1989, at 6-7. In DeFazio v. Labe, 352 Pa.Super. 120, 507 A.2d 410 (1986), aff'd. 518 Pa. 390, 543 A.2d 540 (1988), this Court set *575 forth the following principles of law which are controlling presently: DeFazio, supra at 125, 507 A.2d at 413 (citations omitted). Based upon the content of the police report, which outlined the statements of Patitucci, Laverty, and the eyewitness DiAntonio,[4] we are constrained to find that the trial court abused its discretion in characterizing Nationwide's refusal to settle as "obstinate, unreasonable, or capricious." There is nothing in the record to support the trial court's finding that at the time Nationwide refused to settle this *576 case, their decision was unreasonable. Further, there is nothing in Judge Kremer's Opinion of February 28, 1987, to explain his conclusion that "the `substantial merit' exception to the imposition of Rule 170 as suggested by counsel for defendants does not apply under the facts of this case." Op. of Trial Court, February 28, 1987, at 18. We must reject the trial court's reliance on Nationwide's settlement after trial as an admission on the part of Nationwide that its pre-trial refusal to settle was not reasonable. Based upon the trial court's own settlement recommendation, the jury's verdict was higher than anticipated by both the court and the parties. However, faced with a jury verdict, Nationwide was able to reach a settlement which reflected the jury's findings. In reviewing the provisions of Rule 170, we find the language of the Rule and its clear intent envisions that the trial court, when determining whether to impose Rule 170 sanctions, will limit its consideration to the facts and circumstances which existed when the pre-trial settlement negotiations occurred. In the present case, Nationwide has consistently maintained that, in their view, the present case was one that was defensible because of evidence which pointed to Patitucci's own negligence as the primary if not sole cause of the accident. Indeed, it would appear from what we have in the record before us that this defense had substantial merit. Thus, we agree with Judge Armand Della Porta that, under the provisions of Rule 170, Nationwide's conduct cannot properly be characterized as unreasonable for the purpose of imposing sanctions. As we view the evidence which was available at the settlement conference, we find no support for the trial court's finding that Nationwide's defense lacked substantial merit. The statements of the eyewitness DiAntonio were favorable to the defense of comparative negligence and corroborated the statements given by Laverty. Further, Patitucci had told the police that he was running to catch a bus at the time he was struck. Under these circumstances, we thus find that the trial court *577 abused its discretion in imposing sanctions upon Nationwide. Further, we note that although Nationwide did not offer the $19,500 settlement figure recommended by the trial court, Nationwide did make a settlement offer of $10,000. The verdict which was returned in this matter could not have been and was not anticipated by the trial court or the parties. Nationwide had, prior to trial, a defense of substantial merit to the cause of action against their insured which Nationwide believed warranted a defense verdict. Imposing a sanction under these circumstances will not achieve the important goal of Rule 170: to encourage settlement in cases where, if the parties were reasonable, settlement in lieu of trial should occur. Based upon the foregoing reasons, we reverse and vacate the order of the trial court imposing Rule 170 sanctions upon appellant Nationwide.[5] Jurisdiction is relinquished. [1] At the time of the accident, Patitucci was fifteen years of age. [2] Counsel for the appellant is admonished that much of the police report copied in the Reproduced Record is not legible. We do have a legible copy in our record from the trial court, but it is counsel's duty to this Court, as well as to his client, to provide this Court with a Reproduced Record which is usable when seeking appellate relief from this Court. See Pa.R.A.P. 2171(a). [3] Our record does not contain any deposition testimony, and the docket reveals that no depositions were filed with the trial court. Thus, the content of any depositions was not considered by Judge Kremer in formulating his settlement recommendation, and should have no effect on the application of Rule 170 to the present case. [4] In the trial brief submitted by Nationwide, Nationwide mentions two "purported" eyewitnesses, not mentioned in the police report, which Nationwide anticipated would be called by plaintiffs at trial. R.R. at 33a. We have no way of knowing whether the testimony of these witnesses was considered by the trial court in formulating the settlement recommendation or in determining whether to impose Rule 170 sanctions. We must assume, based upon the fact that the trial court did not, at any time, mention this testimony, that the court did not consider it or rely upon it. Indeed, during the two hearings held with reference to the imposition of Rule 170 sanctions, before Judge Kremer and then before the court en banc, the only witness named and discussed in the record was Mr. DiAntonio. [5] Based upon our disposition in this case, we need not address the constitutional challenges to Rule 170 raised by Nationwide.