Court Opinion

ID: 9754522
Source: CourtListenerOpinion
Date Created: 2023-08-28 20:02:59.233617+00
Date Added: 2024-06-11T07:27:54.358889
License: Public Domain

LARSEN, Justice,
dissenting.
I write to voice my opposition to: the majority’s conclusion that Rule 238 is inequitable; the suspension of Rule 238 for all pending and future cases; and the majority’s fashioning of a modified rule complete with a forum and a procedure to assess fault for delay. This precipitious action will frustrate the worthwhile purposes of the rule. It will serve to dilute the incentive to tortfeasors to settle expeditiously actions brought for bodily injury, death and for property damage.
The appellant challenges Rule 238 on grounds that: (1) it exceeds the procedural rule making authority of this Court by modifying the substantive rights of litigants; (2) it violates the equal protection guarantees of the U.S. Constitution and the Pennsylvania Constitution; and (3) it offends due process. These are the same arguments that we considered and rejected less than five years ago in Laudenberger v. Port Authority of Allegheny County, 496 Pa. 52, 436 A.2d 147 (1981). In Laudenberger we held that Rule 238 did not invalidly abridge, enlarge or modify substantive rights, nor did it violate equal protection or substantive due process. Today the majority states: “We do not overrule the rationales of Laudenberger, for they have vitality of their own in the context of the ends sought.” (At p. 65). The meaning of this indistinct statement is not readily apparent. It is clear though that the majority embraces previously discredited arguments and holds, directly contrary to Laudenberger, that Rule 238 is inequitable and offends due process. The majority reaches this conclusion by erroneously characterizing the provisions of Rule 238 as punishment for defendants as defendants for all delay. *70This simply is not the case. As we observed in Laudenberger, “[A] defendant can always protect himself from the assessment of pre-judgment interest by extending a reasonable settlement offer in a timely manner.” Id., 496 Pa. at pp. 69-70, 436 A.2d at p. 156.1 Delays in a case coming to trial, such as those which occurred in the instant case, are of no consequence to a defendant who has made a reasonable settlement offer. It is only where a defendant chooses to make an unreasonable settlement offer, or fails to make any offer that he will be subject to the mandatory requirements of Rule 238.2 In such case he will be required to pay pre-judgment interest as mandated by the rule.
The majority, in finding that the Rule violates due process, states that: “[R]ule 238 has become an uncontestible presumption that all fault [for delay] lies with a defendant.” This conclusion misses the point of Rule 238. A plaintiff, through dilatory motions, continuances and other tactics, may be responsible for causing delay in a claim coming to trial. It may be incontrovertible that a plaintiff wilfully engaged in conduct precipitating a lengthy delay. If, however, early in such a case the defendant makes a reasonable offer of settlement which remains open to the plaintiff until the commencement of trial,3 the running of pre-judgment *71interest under Rule 238 is tolled. The defendant is not made to pay Rule 238 interest after the date of the offer. Further, under such circumstances, the same would be true even where the defendant, through dilatory motions and tactics, delays resolution of the claim. The assessment of pre-judgment interest is not punishment for the delay in reaching trial. The interest mandated by the Rule arises from the defendant’s failure to make a reasonable offer of settlement. It is not a question of punishment,4 it is a matter of making the plaintiff whole.5
Realistically, delay can be of no monetary benefit to a plaintiff. If a plaintiff with a meritorious claim causes delay, he is depriving himself of monies, which are rightfully his, but which are in the hands of and benefiting the defendant. Where a plaintiff does cause delay by rejecting *72a reasonable settlement offer,6 he not only loses the beneficial use of the monies offered, he also loses the right to pre-judgment interest from the time of the offer.
The majority makes it a point to identify Rule 238 as an experiment of seven years duration. Without a shred of evidence the majority assumes that the experiment has not worked. We are left to guess that the majority reached this conclusion based upon this one single case now before us. The majority’s obvious displeasure with the mandatory assessment of pre-judgment interest against the defendant in the instant case apparently motivated the conclusion that Rule 238 is not working. There is no evidence that the rule is failing to achieve its legitimate objectives.
The majority acknowledges that the challenge to Rule 238 in this case is substantially the same as that raised in Laudenberger, supra. This time though, the majority notes, we are presented with an entirely different set of facts. But merely because the facts in this case are different from those which were before us in Laudenberger is insufficient reason to suspend the operation of Rule 238 and, in effect, overrule Laudenberger. The underlying reason for Rule 238 — to encourage prompt settlement of claims — remains the same regardless of the difference in the facts.
Apparently, the majority believes there should be some rule which addresses the matter of delay. The majority sees fit to replace the mandatory provisions of Rule 238 with a post-trial procedure involving a petition and answer presented to the judge who presided at the trial. When the case is heard by a board of arbitrators, the petition and answer are to be presented to the next available arbitration *73board. In each case a post-trial hearing may be held to resolve factual disputes.
This unnecessary and burdensome process devised by the majority tends to defeat the original purpose of Rule 238. With another procedural step in the long road from claim to verdict, an injured victim, who is entitled to a recovery, is faced with more delay. Now a defendant will have an additional post-trial procedure enabling him to hold onto the verdict monies due the plaintiff while the parties litigate the right to pre-judgment interest in a sort of “comparative” fault hearing.7 The majority’s modification of Rule 238 seems to be designed to encourage additional litigation and discourage plaintiffs from seeking pre-judgment interest.
Additionally, in providing for a post trial procedure involving a petition, answer and hearing, the majority judicially amends Rule 238 without adhering to the formal rule making process traditionally followed by this court. If the majority wants the rule changed or eliminated, its amendment or repeal should be taken up in the customary fashion.
In this case, if the appellant had made a reasonable offer of settlement and continued that offer until the start of trial, assessment of Rule 238 pre-judgment interest would have been tolled from the day of the offer.8 Based upon the prescription of the Rule, appellant did not, and therefore, it is right that appellant pay the interest assessed.
I dissent.
PAPADAKOS, J., joins this dissenting opinion.

. What constitutes a reasonable settlement offer in any particular case is not left to the subjective judgment of the defendant, the plaintiff or the court. Rule 238 provides the objective criteria that an offer that is eighty (80%) percent or more of an eventual verdict is reasonable and if it falls short of eighty (80%) percent, it fails to meet the standard of reasonableness.

. Human nature and usual business practices tend to motivate a tortfeasor, or a tortfeasor’s insurer, to hold on to settlement monies as long as possible provided that it does not cost more money to do so. In situations where the tortfeasor, or the tortfeasor’s insurer, reaps financial benefits from holding on to these funds, the incentive to postpone a reasonable settlement offer is strong. Without the operation of Rule 238 and the assessment of pre-judgment interest, it behooves defendants not to settle early, but to retain funds earmarked for claims settlement as long as possible so that revenues may be generated from investment of those funds. Rule 238 is designed to remove the incentive to retain funds to the last hour and replace it with an incentive to settle and pay meritorious claims promptly.

. Rule 238(e) provides:
*71(e) If a defendant at any time prior to trial makes a written offer of settlement in a specified sum with prompt cash payment to the plaintiff, and continues that offer in effect until commencement of trial, but the offer is not accepted and the plaintiff does not recover by award, verdict or decision, exclusive of damages for delay, more than 125 percent of the offer, the court or the arbitrators shall not award damages for delay for the period after the date the offer was made.

. Where punishment may be called for, Courts are empowered to impose sanctions on a party who engages in dilatory conduct while an action is pending. For example see 42 Pa.C.S.A. § 2503(7) which provides:
The following participants shall be entitled to a reasonable counsel fee as part of the taxable costs of the matter:
(7) Any participant who is awarded counsel fees as a sanction against another participant for dilatory, obdurate or vexatious conduct during the pendency of a matter.
Also see Pa.R.C.P. 4019 which authorizes a court to order sanctions when a party fails to abide by pre-trial discovery rules.

. "[Rule 238] serves to indemnify the plaintiff for money he would have earned on his award if he had promptly received it.” Laudenberger v. Port Authority of Allegheny County, supra. See also Roy v. Star Chopper Co., Inc., 584 F.2d 1124 (1st Cir., 1978) where the court, in considering a Rhode Island pre-judgment interest statute said: "Prejudgment interest statutes have a long history, dating at least from 1859 in this country ... and have been held to serve the legitimate purpose of making whole an injured party.”

. The delay of concern to Rule 238 is that which is occasioned by the defendant’s failure to make a reasonable settlement offer, or the plaintiff rejecting a reasonable settlement offer. In the former case the defendant is deemed to have caused delay and pre-judgment interest is assessed. In the latter case pre-judgment interest is tolled as of the day of the offer. Delay which results from other causes is of no import to Rule 238.

. In a case where a plaintiff’s award was obtained in a compulsory arbitration proceeding the majority’s new procedure is quite cumbersome. The petition and answer must be presented to a newly convened arbitration board, who may or may not decide to hold a hearing. Whether to hold an evidentiary hearing is itself a question that may be vigorously contested.

. Since the jury verdict in this case was $50,000.00, a reasonable settlement offer would have been $40,000.00 or more. The appellant’s highest offer was $25,000.00.