Schrock v. Albert Einstein Medical Center

CIRILLO, President Judge,

dissenting.

I respectfully dissent from the majority’s determination that appellant Albert Einstein Medical Center [Einstein] has waived constitutional issues concerning Pennsylvania Rule of Civil Procedure 238 and its application by failing to raise those issues before the trial court. Although our rules of appellate procedure require that claims be first raised in the trial court, see Pa.R.A.P. 302, there is not and has never been any mechanism in the rules of either civil or appellate procedure which provides an avenue by which to raise, prior to appeal, claims of error concerning delay damages. I note that new rule 238 indicates that an order of the trial court concerning delay damages is not subject to a motion for post-trial relief. See Pa.R.C.P. 238(c), comment. The new rule does provide that delay damages are to be determined through petition and answer, procedures similar to those suggested by the supreme court in Craig v. Magee Memorial Rehabilitation Center, 512 Pa. 60 , 515 A.2d 1350 (1987). 1 However, I would not require that an appellant’s answer raise a claim of constitutional violation based on the possibility that the court would dispose of that petition erroneously, for I believe to do so would be akin to requiring the appellant to cry “ouch” before he or she is harmed. In any case, I note that Einstein’s answer to the petition for delay damages denied liability under Craig , even though it admitted that the verdict was 125% greater than its settlement *231 offer. Because Craig found constitutional defects in imposing delay damages without a determination of fault, I think that this statement was sufficient to satisfy Einstein’s obligation under Pa.R.A.P. 302 to bring the issue to the attention of the trial court. Moreover, because these specific claims of unconstitutionality have application to the newly promulgated rule 238, as well as to its predecessor, they have not been rendered moot by the adoption of the new rule.

Einstein complains that although a defendant is penalized for failing to make a settlement offer within 125% of the eventual jury verdict, there is no penalty assessed against a plaintiff who makes a settlement demand that is similarly excessive in comparison to that verdict. According to Einstein, this creates impermissible classifications of defendants and plaintiffs, and bears no rational relationship to the stated goal of case settlement. Although these arguments are couched in equal protection terms, they are more properly addressed as questions of fundamental fairness. Because I believe that the new rule, which was intended to rectify this defect, remains fundamentally unfair in the context of settlement negotiations, I would find that portion of the rule unconstitutional.

In Craig , the supreme court addressed the question of the constitutionality of former rule 238:

There is no point in contending that a procedural rule may exist that punishes without fault, and is yet consistent with Due Process____ We today suspend the rule because it runs too tight a gauntlet through Due Process, by denial of a forum to assess fault for the delay sought to be avoided. In short, Rule 238 has become an uncontestable presumption that all fault lies with the defendant. There are too many reasons why such is not always the case; and what is not always so may not be irrebuttable when a penalty follows.

Id., 512 Pa. at 65 , 515 A.2d at 1353 . In order to rectify this problem, the court required a hearing to ascertain fault. Id. New rule 238 has explained that courts are to ascertain *232 the period of delay caused by plaintiff, and so charge the defendant with all other trial delay, even that delay inherent in the court system and not attributable to the action or inaction of either party. See Pa.R.C.P. 238(b)(2).

The procedures in Craig , and the new rule itself, clearly contemplate an award of prejudgment interest. 2 New rule 238, to the extent that it awards prejudgment interest for delay in commencing and concluding trial of the case, may be said to be fair in light of the supposition that at the time of the verdict, the jury has determined that the defendant is in the wrong, and has been since the accrual of the cause of action. 3 The point of the litigation is to make the plaintiff whole, therefore, the defendant should recompense that plaintiff for the time he or she has been without the monies owed. Following this reasoning, it is clear that all court delay during trial would be assessed against the defendant because the delay could have been avoided by voluntarily making plaintiff whole rather than forcing him or her to seek relief in court.

The delay contemplated by the supreme court in Craig , however, and fairly remedied by an award of prejudgment interest, is not the type of delay that we are faced with in this case. In Craig , the court stated that, in addition to the period of time between the starting date and the verdict,

[t]he fact finder shall consider: the parties’ respective responsibilities in requesting continuances, the parties’ compliance with rules of discovery; the respective respon *233 sibilities for delay necessitated by the joinder of additional parties; and other pertinent factors.

Craig, 512 Pa. at 66 , 515 A.2d at 1353 . In other words, Craig was concerned with the narrow question of the parties’ fault in causing delays in the trial process itself. It did not address, and the new rule therefore made no attempt to remedy, the inequity inherent in the assessment of delay damages against defendants based on the parties’ failure to reach settlement without first taking into consideration the plaintiff’s actions during settlement. It is that issue which is before us here.

New rule 238 excludes damages for delay for the period of time:

(1) after which the defendant has made a written offer of

(i) settlement in a specified sum with prompt cash payment to the plaintiff,

* * * * * *

and continued that offer in effect for at least ninety days or until commencement of trial, whichever first occurs, which offer was not accepted and the plaintiff did not recover by award, verdict, or decision, exclusive of damages for delay, more than 125% percent of either the specified sum or the actual cost of the structured settlement plus any cash payment to the plaintiff; or

(2) during which the plaintiff caused delay of the trial.

Pa.R.C.P. 238(b)(1)(i) & (b)(2). Although one might assume that the current procedure would subtract from the total delay all delay caused by the plaintiff, including delay during settlement, the rule does not require this result. Rather, the rule specifically states that all trial delay attributable to plaintiff will be excluded. See Pa.R.A.P. 238(b)(2); see also Craig, 512 Pa. at 66 , 515 A.2d at 1353 . No mention is made of the plaintiff’s role in the settlement process. Rather, the burden of settlement rests upon the shoulders of the defendant. See Pa.R.A.P. 238(b)(1)(i). I believe that this is fundamentally unfair.

A settlement is an agreement between two parties and therefore presumably requires an effort on the part of both. *234 Under the present rule, should a plaintiff choose to demand an unreasonable amount at settlement negotiations, an amount which the defendant cannot or justifiably will not pay, settlement is as surely thwarted as if the defendant had failed to make a reasonable offer. In the latter case, the imposition of delay damages against the defendant for all trial delay less the amount of delay caused by the plaintiff is at least logical — had the defendant moved to make a reasonable offer plaintiff would have been made whole that much sooner, and without having to spend time at trial. However, where the plaintiff has made only an unreasonable settlement demand, has failed to make any move toward settlement, or in some way acts to delay or prevent settlement, it is unfair to place the blame for going to trial, in the form of assessment of damages for all court-caused delay, solely on the defendant. If the plaintiff makes a demand which, when considered in light of the jury verdict, appears unreasonable, the plaintiff is at least as responsible for going to trial as the defendant. In such a situation, the plaintiff is not prevented from being made whole at settlement through any profit motive of the defendant; the profit motive appears to be the plaintiffs. A defendant should not then be penalized by being required to pay those monies which, after the jury verdict, are determined to have been the property of the plaintiff all along. The plaintiff could have had the use of those monies through settlement, but frustrated the settlement process by his or her actions. Further, an unreasonable settlement demand on the part of the plaintiff could be viewed by a defendant as a rejection of any more reasonable offer, and therefore could discourage that defendant from making any other offer which would shield him or her from rule 238 damages.

In the case before us, Einstein complains that, although the jury verdict exceeded its settlement offer, the plaintiffs settlement demand exceeded the jury’s award and was unreasonable. The jury awarded Schrock $25,000.00; his original demand was $125,000.00, five times the amount eventually awarded. It appears that both plaintiff and *235 defendant misvalued the case; only the defendant, however, is being penalized for the failure to settle. This construction of the rule puts the onus of the settlement negotiations squarely on one party. I do not think such an arrangement comports with fundamental fairness. I am in agreement with Justice Roberts’ well-considered dissent in Laudenberger v. Port Authority of Allegheny County, 496 Pa. 52 , 436 A.2d 147 (1981):

The 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.

Id., 496 Pa. at 78 , 436 A.2d at 160 (Roberts, J., dissenting).

Further, I am uncertain that such a process even facilitates settlement. I fail to see any relationship between punishing a defendant for failure to make an adequate settlement offer based on an arbitrary percentage, and encouraging settlement of cases. The supreme court has already conceded that not every defendant is motivated by profit. See Craig, 512 Pa. at 64-65 , 515 A.2d at 1352 . If this is true, then the rule is ineffectual. The “settlement instincts” of defendants will not be altered because they are unable to profit from money held until judgment unless their motive for retaining those funds is to profit. Where there are other reasons for refusing to settle, the elimination of the profit motive will not result in a greater willingness to settle, and the purpose of the rule will not be effectuated.

It seems to me that the court in Craig recognized that the failure to make a finding of the respective fault of the parties smacked of unconstitutionality, and held that rule 238 was unworkable for precisely this reason. It “[had] become an uncontestable presumption that all fault lies with a defendant. There are too many reasons why such is *236 not always the case; and what is not always so may not be irrebutable when a penalty follows.” Id., 512 Pa. at 65 , 515 A.2d at 1353 . There are many reasons for a failure to settle a case, and unless we can determine that the defendant’s role in the settlement scenario was played out with a profit motivation, then we should not, and constitutionally cannot, punish that defendant. If we attempt to do so, we are mandating settlement in situations where settlement should perhaps not take place, we are punishing defendants for attempting to litigate their cases, and, in some instances, we are punishing them for being unable to make an acceptable settlement offer. I am of the opinion that to assess all trial delay against a defendant solely because of the amount of his or her settlement offer without any determination of the respective fault of the parties during settlement negotiations is ineffectual and fundamentally unfair. I therefore dissent.

. Under the new rule, a plaintiff may file a motion requesting delay damages within ten days of the verdict or the notice of the decision, and a defendant may file an answer within ten days of the motion. Pa.RX.P. 238(c)(1). In Craig , the supreme court set a five day limit on the petition, and the answer. Craig, 512 Pa. at 65 , 515 A.2d at 1353 .

. I make no comment on the constitutionality of such a rule under the separation of powers clause of our state constitution, as that issue was not raised before us.

. This is said for the sake of argument. I question whether a rule which assumes that all defendants who refuse to compensate plaintiffs without a jury verdict profit from the monies they have ostensibly kept for themselves can be said to be fundamentally fair. I note with concern the case of the self-insurer, who may not have the funds on hand to invest, and who most probably will be unable to obtain a return comparable to that suggested by the rule — the prime rate listed in the first edition of the Wall Street Journal for each calender year for which the damages are to be awarded, plus one percent, not compounded.