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Pennsylvania Supreme Court Holds That Plaintiffs to Contract Actions Are Not Entitled to Delay Damages

In an opinion written by Chief Justice Ralph Cappy, the Pennsylvania Supreme Court held that delay damages are not available in breach of contract actions that involve property damage. Touloumes v. E.S.C., Inc., 889 A.2d 343 (Pa. 2006). In doing so, the court resolved a discrepancy between the Commonwealth and Superior Court regarding this issue of statutory interpretation.

This case was based on litigation in Cumberland County involving a contract for roofing work. in which E.C.S. was hired by Toulomes to make improvements to the roof of a motel in 1994. In 1996, the roof leaked after a snowstorm, causing damage to the motel and making the guest rooms inhospitable. Toulomes brought suit and received approximately $35,000 in damages. However, both the trial court and Superior Court denied delay damages.

Rule 238 of the Pennsylvania Rules of Civil Procedure states that delay damages are available “at the request of the plaintiffs in a civil action seeking monetary relief for bodily injury, death, or property damage.” In a prior case, the Superior Court held that these damages are not available to contract actions. See Reliance Universal, Inc. of Ohio v. Ernest Renda Contracting, 308 Pa. Super. 98, 454 A.2d 39 (Pa. Super. 1982). However, the Commonwealth Court had held that delay damages were appropriate in actions involving property damage, pursuant to the language of the Rule. See Loeffler v. Mountaintop Area Joint Sanitary Authority, 101 Pa. Commw. 514, 516 A.2d 848 (1986).

The Supreme Court relied on case law, statutory construction and potential implications of the decision to determine that delay damages for cases involving property damage were only applicable in tort cases. It held that because the dispute between Touloumes and E.S.C. involved a breach of contract involving property damage, delay damages were not available. In so holding, Justice Cappy explained that because plaintiffs in contract actions were already entitled to pre-judgment interest, allowing them to also receive delay damages “would not only create uncertainty, but could lead to an unwarranted windfall for a plaintiff.”

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