Understanding Delay Damages in Pennsylvania

What are Delay Damages?

Delay damages are an interest-based award to a plaintiff for the time lost in recovering damages in civil actions for money in Pennsylvania. They are designed to compensate the plaintiff for losses incurred due to the delay in receiving their money, from the defendant’s failure to make a reasonable offer to settle the case prior to the verdict or award in Plaintiff’s favor.            

1. Delay Damages in Negligence Cases

In negligence or tort cases, delay damages are typically governed by Pa. R.C.P. 238 (Rule 238). This rule allows a  plaintiff to recover delay damages when there is a verdict/award for compensatory damages, and the delay is not the fault of the plaintiff.        

Understanding Rule 238

First, it makes no difference whether the Defendant had been “at fault” for the delay.  Secondly, Rule 238 provides the Defendant with a reasonable amount of time (one year) after receiving service of suit, to work to resolve the matter through settlement or verdict.  So here’s the calculation method:    

• • Starts one year after service of process. 

  • Ends on the date of the verdict or award. Rule 238(a)(2)

  • The interest rate is the Wall Street Journal prime rate plus 1% annually.  Rule 238(a)(3) 

So the key timeframe — during which a claim for delay damages may accrue — starts one year after service of suit and ends on the date of the award of verdict (“key timeframe”).  Plaintiff gets interest on the verdict or award during the key timeframe.  

Key Limitations 

Reasonable Offer.  Rule 238 rewards the Defendant for making a reasonable offer.  This means, if the Defendant makes an offer to settle — that turns about to be equal to or greater than the award or verdict — then no delay damages accrue from the date of the offer to the date of the verdict. Rule 238(b)(1)

So, for example, let’s say a Plaintiff sues the Defendant for injuries from a motor vehicle accident.  The Defendant, when served with suit, makes an offer to settle the case for $101,000.  The case percolates through the courts for four years years and a jury eventually awards the Plaintiff $100,000.  Here, a court will preclude the Plaintiff from recovering an award for delay damages.  

Plaintiff-Caused Delays.  Let’s say in the above example, the Defendant gets served with suit, but makes no offer.  Instead, the court schedules trial to take place within one year of service of suit on the Defendant.  However, the Plaintiff seeks a continuance of the case, asking the case be pushed back over a year.  There, again, a court will preclude the Plaintiff from recovering an award for delay damages.  

COVID-19 Exception Example

In Heffelfinger v. Shen, No. 681 MDA 2024 (Pa. Super. July 21, 2025), the court upheld a delay damages award exceeding $11 million. However, it excluded the judicial emergency period caused by COVID-19, reflecting the court’s recognition that some delays are unavoidable and not attributable to either party.

Notably, the Superior Court upheld the trial court’s award of delay damages, specifically affirming that the award properly excluded the COVID-19 judicial emergency period in mid-2020. The court further emphasized that the pandemic and judicial emergency do not diminish a plaintiff’s right to be made whole or create an unjust windfall for defendant tortfeasors.  

Takeaway: In tort cases, delay damages ensure plaintiffs are compensated for the time they wait to be made whole, even when the defendant didn’t directly cause the delay. However, courts adjust for uncontrollable delays, such as pandemics.  

 

II. Delay Damages in Breach of Contract Cases

In the realm of breach of contract, particularly in construction disputes, delay damages are evaluated under the broader principles of contract law rather than a specific rule like Pa.R.C.P. 238. 

General Rule

A party can often get awarded delay damages for a breach of contract in Pennsylvania, which is six percent per annum.    

Moreover, on commercial construction jobs (non-residential projects only), there also exists the Contractor Subcontractor Payment Act, which statutorily allows the contractor to collect late payments for a recovery of 1 percent per month!  But again, this is only for non-residential jobs.   

Exceptions

There are several exceptions when courts do not allow delay damages on contract-related claims:  

1. NDD Clauses.  Since 1935, Pennsylvania law has often enforced “no damages for delay” (NDD) clauses in construction contracts. See LVI Environmental Services, Inc. v. Duane Morris, LLP, Philadelphia County (2008), Control No. 09122487, citing to Henry Shenk Co. v. Erie County, 319 Pa. 100, 106, 178 A. 662, 665 (1935).
2. Bad faith, active interference, or failure to act by the other party.
3. Government Contracts.  

In John Spearly Constr., Inc. v. Penns Valley Area School District, 2015 Pa. Commw. LEXIS 337 (Pa. Cmwlth. 2015), a Court held that a contractor may recover delay damages despite a “no damages for delay” clause if the delay was caused by the government’s failure to act.  

There, the Plaintiff was a contractor that had agreed to install a biomass boiler system (Project) for a school district.  Other contractors were involved, such as a sewer contractor working on the sewer system, which needed to be completed for the Plaintiff-Contractor to complete their work. The school district blamed the sewer installer for the property not being ready for the Plaintiff-contractor to complete its work. However, the school district was responsible to coordinate work on the property.     

Ultimately, the Pennsylvania Commonwealth Court held that the Plaintiff-contractor could recover delay damages despite the “no damages for delay” clause between the parties.  Although the school district blamed a third party for the delay, the court found that liability depends on who controls those parties. Moreover, the school district had actual knowledge of the delay (despite a lack of formal written notice) and failed to act, making delay damages appropriate.       

 

Difference Between Contract and Negligence Claims

As you can see from the above, the interest rate one can recover as delay damages depends on whether the claim is for breach of contract or tort (negligence).  Pennsylvania follows the “gist of the action” doctrine, which guides a court in determining whether a claim is for breach of contract or negligence, or both.  For more, click here.    

 

Conclusions

Delay damages serve as a powerful remedy in both negligence and contract law under Pennsylvania statutes and case law.

• In negligence cases, Rule 238 ensures timely resolution and discourages unjustified delay, even when the delay wasn’t intentional.    

• In contract cases, especially construction disputes, the ability to recover delay damages depends on the contract’s language. However, exceptions protect parties from unfair results when delays are caused by the other party’s interference or inaction.   

• Because these types of law are treated differently, you should contact a lawyer to determine whether the “gist‘ of your action is for breach of contract or negligence.