Court Opinion

ID: 9646739
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:09:35.758088+00
Date Added: 2024-06-11T18:11:41.383519
License: Public Domain

ROBERTS, Justice,
dissenting.
The majority’s perpetuation of Pa.R.Civ.Proc. 238 serves well to demonstrate that it is often more difficult to confess error than to fall into error in the first place. Rule 238, which should never have been promulgated by this Court, see 480 Pa. XLI (1979) (Roberts, J., dissenting), should now be declared unconstitutional.
*72I
Rule 238 is based on the assumption that the problem of delay in trespass litigation can be solved by compelling defendants to settle early through the imposition of “financial incentives.” 1 Goodrich-Amram 2d § 238:1. Accordingly, Rule 238(a) requires a court or arbitrators presiding over an action in trespass to
“(1) add to the amount of compensatory damages in the award of the arbitrators, in the verdict of a jury, or in the court’s decision in a nonjury trial, damages for delay at ten (10) percent per annum not compounded, which shall become part of the award, verdict or decision”
and to
“(2) compute the damages for delay from the date the plaintiff filed the initial complaint in the action or from a date one year after the accrual of the cause of action, whichever is later, up to the date of the award, verdict or decision.”
Rule 238(e) provides:
“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.”
Thus, a defendant can avoid this mandatory pre-verdict interest only if he is sued immediately after the accrual of the cause of action, guesses the ultimate amount of the factfinder’s verdict, and promptly makes a settlement offer which corresponds with the unknown sum.
II
Pursuant to section 10(c) of the Judiciary Article of the Pennsylvania Constitution, this Court is vested with the authority “to prescribe general rules governing practice, *73procedure and the conduct of all courts . . . . ” The same provision of the Judiciary Article expressly provides that rules prescribed by this Court may “neither abridge, enlarge nor modify the substantive rights of any litigant . . . . ” Even a most casual reading makes clear that Rule 238 increases the relief available to a plaintiff by mandating the deprivation of a defendant’s property. In contravention of the Constitution, the plaintiff’s rights have been enlarged, while the rights of the defendant have been abridged.
A
Justice Holmes has observed that “legislatures are ultimate guardians of the liberties and welfare of the people in quite as great a degree as the courts.” Missouri, Kansas and Texas Ry. Co. v. May 194 U.S. 267, 270, 24 S.Ct. 638, 639, 48 L.Ed. 971 (1904). See In re William L., 477 Pa. 322, 383 A.2d 1228, cert. denied, 439 U.S. 880, 99 S.Ct. 216, 58 L.Ed.2d 192 (1978). Thus, our Commonwealth’s substantive law, regulating citizens’ day-to-day conduct, has traditionally been determined through legislative lawmaking and common-law decision. The Legislature, with unique factfinding capacities designed not only to correct but also to anticipate social problems, both broadly declares public policies and minutely provides for the details of implementation. This Court regulates day-to-day conduct through judicial resolution of specific controversies, applying common-law techniques to develop an appropriate substantive rule.
Until Rule 238, the availability of interest on judgments had been regulated exclusively by common-law decision and legislative act. At common law, it was determined that the plaintiff “could have execution only for the amount of the judgment without interest. In order to recover that he must resort to a new action.” Stewart v. Peterson’s Executors, 63 Pa. 230, 232 (1869). By the Act of November 27, 1700, the Legislature modified this rule to provide that “[ljawful interest shall be allowed to the creditor for the sum or value he obtained judgment for, from the time the said judgment was obtained till the time of sale, or till *74satisfaction be made.” 1 Sm.L. 7, § 2, formerly 12 P.S. § 782 (1953). The Act of April 6, 1859, P.L. 381, § 1, formerly 12 P.S. § 781 (1953), extended the availability of interest, making interest run as of the date of favorable verdict. Like the previous legislation, this Act responded to a contrary rule at common law which had been reaffirmed only one year earlier in Kelsey v. Murphy, 30 Pa. 340 (1858).
In commenting upon the effect of the Act of 1700, making interest an “incident of a judgment,” this Court observed that the interest “is as distinctly a substantive part of the debt as if the obligation to pay it was founded on a contract for interest.” Watson v. McManus, 223 Pa. 583, 588, 72 A. 1066, 1067 (1909). Rule 238 is as much a modification of the availability of interest as the Act of 1700 and the Act of 1859. Like both Acts, Rule 238 has made pre-verdict interest a “substantive part of the debt.” See also Bullins v. City of Philadelphia, 516 F.Supp. 728 (E.D. Pa. 1981) (Rule 238 remedy is matter of “substantive” law, to be applied in federal diversity case since its availability in state but not federal forum would promote forum-shopping).
The substantive character of Rule 238 is further demonstrated by the recent decision of this Court in D’Ambrosio v. Pennsylvania National Mutual Casualty Insurance Co., 494 Pa. 501, 431 A.2d 966 (1981). There, this Court declined to permit the remedy of punitive damages for an insurer’s allegedly “bad faith” conduct in denying the insured’s claim. In so holding, this Court relied heavily upon the fact that, in enacting the Unfair Insurance Practices Act, Act of July 22, 1974, P.L. 589, § 1 et seq., 40 P.S. § 1171.1 et seq. (Supp. 1981), the Legislature had already made “dramatic, sweeping efforts” to curb bad faith conduct. This Court observed:
“There is no evidence to suggest, and we have no reason to believe, that the system of sanctions established under the Unfair Insurance Practices Act must be supplemented by a judicially created cause of action. As one critic of California’s approach has observed,
‘[t]he California courts have created this “new tort” in an obvious attempt to afford more protection to in*75sureds. However, it has not really been established that there is a need of this additional protection. * * * State insurance departments are intended to serve the public and handle complaints from insureds as to insurer practices on a regular basis. Likewise, state legislatures are capable of prohibiting what are considered to be unfair claims handling practices and of imposing penalties for violations.’
Kircher, Insurer’s Mistaken Judgment — a New Tort?, 59 Marq.L.Rev. 775, 786 (1976).”
494 Pa. at 507-08, 431 A.2d at 970.
The majority cannot realistically deny the substantive character of either the Unfair Insurance Practices Act, which specifically addresses settlement practices, see, e. g., § 5(a)(10)(vi), or the cause of action proposed and rejected in D’Ambrosio. The Act regulates conduct by imposing duties and sanctions for their breach, while the proposed cause of action would have enlarged the remedies of the! insured.
There can be no basis for viewing Rule 238 any differently. As is recognized by all parties to this controversy, and must be recognized by this Court, the obvious target of Rule 238 is insurance carriers. Like the Unfair Insurance Practices Act and the cause of action proposed in DAmbrosio, Rule 238 prescribes norms for the conduct of insurance carriers and remedies to the insured for departures from the norms.*
B
By expressly denying this Court authority to fashion substantive law through rulemaking, our Constitution contemplates that the fashioning of the rules governing the *76everyday conduct of the citizens of this Commonwealth will remain a shared function of the common-law tradition and legislative lawmaking. Our rules are not to contravene substantive rights developed on a case-by-case basis and by legislation. Rather, the rules may only erect and adjust the machinery for the enforcement of those substantive rights.
Recent legislative approval of the Act of 1859 and cases of this Court deferring to the legislative judgment make interest available as of the date of favorable verdict. See 42 Pa.C.S. § 8101; Waugh v. Commonwealth, 394 Pa. 166, 146 A.2d 297 (1959); City of Carbondale School Dist. v. Fidelity & Deposit Co. of Maryland, 346 Pa. 491, 31 A.2d 279 (1943). However, neither this recent legislation nor our case law supports Rule 238’s extension of the availability of interest to the period before verdict. It is utterly inappropriate for this Court, by procedural rule, to create substantive rights and obligations lacking legislative or common-law support.
It is equally inappropriate that the Rule is perpetuated in light of this Court’s recent observation in D’Ambrosio. There, this Court stated:
“Surely it is for the Legislature to announce and implement the Commonwealth’s public policy governing the regulation of insurance carriers. In our view it is equally for the Legislature to determine whether sanctions beyond those created under the [Unfair Insurance Practices] Act are required to deter conduct which is less than scrupulous.”
494 Pa. at 508, 431 A.2d at 970. Surely under the guise of procedural rulemaking this Court cannot create rights and obligations which by decision it has recently declined to establish.
It is most inappropriate for this Court to have selected a rate of interest of 10%. The selection of a rate of interest of 10% is nothing more than a judicial experiment in an area long recognized to be within the exclusive province of the Legislature. The Legislature has determined that rates of interest on verdicts and judgments shall not exceed 6%. See, e. g., Act of January 30, 1974, P.L. 13, §§ 201 & 202, 41 *77P.S. §§ 201 & 202 (Supp.1981); Act of May 28, 1858, P.L. 622, § 1, formerly 41 P.S. § 3 (1971). As in D’Ambrosio, the expert judgment of our co-equal branch may not be ignored or overridden by this Court.
C
By reserving substantive lawmaking to the common-law tradition and legislative lawmaking, our Constitution also seeks to assure that the substantive rules governing citizens’ day-to-day conduct are fashioned in the fairest manner possible. Apart from its impermissible intrusion into the legislative province, unconstitutionally creating substantive law by “procedural” rule, Rule 238 imposes arbitrary, unreasonable, and unequal burdens in the absence of tangible evidence that such measures will serve to accomplish the Rule’s intended purpose of eliminating delay.
Rule 238 automatically imposes liability without regard to the good or bad faith of the defendant. One defendant can make a settlement offer which would appear reasonable, and yet be subjected to the 10% penalty if the factfinder’s award should exceed the offer by 26%. Another defendant, deliberately offering an unreasonably low sum in an effort to force the plaintiff through litigation, will be automatically relieved of the penalty if the factfinder should enter an award a few dollars less than 125% of the proposed settlement.
Rule 238 imposes a penalty even where the factfinder’s award is within 125% of the settlement offer. Interest is to be computed either from the date the complaint is filed, or from one year after accrual of the cause of action, whichever is the later date. Rule 238(a)(2). Where a plaintiff files a complaint immediately after the accrual of the cause of action, the defendant has time to evaluate the merits of the complaint and make a reasoned settlement offer. However, where the plaintiff files a complaint more than one year after accrual, the defendant is immediately subjected to the interest penalty, with no “free time” in which to make a reasoned evaluation of the merits.
*78The unfairness of Rule 238 is further compounded by its imposition of duties and sanctions only upon defendants, and not upon plaintiffs. If the object of the Rule is to discourage delay, the Rule should not only require defendants to make reasonable settlement offers, but also should require plaintiffs to make reasonable demands. Failure of either party to make a reasonable effort to settle should result in the imposition of similar sanctions.
Ill
Thus it is clear that, in promulgating Rule 238, a majority of this Court embarked upon a misguided, improper journey, wholly beyond its constitutional procedural rulemaking authority. As a result, the lawmaking function of our Legislature improperly has been usurped. So too, trespass litigants needlessly have been subjected to unfair treatment.
Either of these results would require correction of the Court’s error. Together, they compel the need for relief.
Accordingly, to restore not only a proper allocation of the separation of powers but also fairness to litigants, the order of the Court of Common Pleas of Allegheny County declaring Rule 238 unconstitutional should be affirmed.

 See also Pennsylvania No-Fault Motor Vehicle Insurance Act, Act of July 19, 1974, P.L. 489, § 106(a)(2), 40 P.S. § 1009.106(a)(2) (Supp. 1981) (no-fault benefits statutorily deemed “overdue” where not paid within thirty days after insurer’s receipt of reasonable proof of loss; “overdue payments” bear interest at rate of 18%); Hayes v. Erie Insurance Exchange, 493 Pa. 150, 425 A.2d 419 (1981) (§ 106(a)(2) of No-Fault Act reflects rationally based legislative judgment, not in violation of “substantive due process”).