Thursday, June 26, 2008

UC - willful misconduct - absenteeism - imprisonment

Weems v. UCBR - Commonwealth Court - publication ordered June 26, 2008

A nine-month absence from work because of incarceration is willful misconduct, despite claimant's alleged eligibility for work release and employer's refusal to participate in the program.

While absenteeism alone does not constitute willful misconduct, "excessive absences and lack of good or adequate cause for the absence" can be. See Medina v. UCBR, 423 A.2d 469 (Pa. Cmwlth. 1980). Although the claimant told the employer that she would be serving a nine-month prison sentence for an assault conviction, her absence due to that incarceration "clearly constitutes excessive absence."

Imprisonment is not good or adequate cause for absence because “an employee who engages in criminal activity punishable by incarceration should realize that his ability to attend work may be jeopardized....It is the inability to attend work, not the criminal conduct, which supports the finding of willful misconduct....Thus, Claimant’s conduct did rise to the level of willful misconduct."

Claimant's alleged eligibility for work release not proven by her testimony
Claimant's testimony that she was eligible for work release was held to be insufficient to prove that she was, in fact, eligible, citing Cruz v. UCBR, 464 A.2d 656 (Pa. Cmwlth. 1983), where the court affirmed a denial of benefits "in part on the lack of any evidence of an order placing the claimant in such a program....Here, aside from Claimant’s testimony that she was eligible for work release, there is no evidence on the record of any court order related to a work release program. Even if such an order does exist, we are not aware of the limitations it might place on Claimant or the responsibilities it might impose on any potential employer."

Employer had a right to refuse to participate in the work release program
The court also rejected claimant's argument that the employer was "obligated to participate in a work release program. Employer cannot be expected to change the conditions of employment in order to accommodate Claimant. In finding the prohibition of unemployment benefits for incarcerated individuals constitutional, we suggested that the General Assembly 'could have felt that while on work release, because of restrictions necessarily imposed under those programs, prisoners were not sufficiently available for work so as to permit them to have a full range of employment options that other claimants have in pursuing new employment'....Employers need not adapt work release restrictions that change the terms of employment. The decision by Employer not to participate in a work release program does not excuse Claimant’s absence from work. Claimant had an obligation to report to work regardless of whether Employer agreed to participate in the work release program."

mortgage foreclosure - equitable subrogation - Pennsylvania v. Restatement

1312466 Ontario Inc v. Carr - Superior Court - June 25, 2008

U.S. Bank, mortgagee in 4th lien position loaned property owner (p/o) money, which p/o used to pay off first and second mortgage lienors. US Bank was unaware of the 3rd lienor (Ontario), due to a negligent error in its title search.

When p/o defaulted on 3d mortgage, Ontario sued and got judgment in mortgage foreclosure.

US Bank then filed petition to intervene, claiming that it was entitled to "equitable subrogation" under Restatement 3d, Property 7.6, which says that "one who fully performs an obligation of another, secured by a mortgage, becomes by subrogation the owner of the obligation and the mortgage to the extent necessary to prevent unjust enrichment." Such equitable subrogation is an exception to the "first in time" rule that generally determines the priority of a lien.

The trial and appellate courts rejected US Bank's petition, holding that it was not entitled to equitable subrogation under Pennsylvania law, as that doctrine is defined by Home Owners' Loan Corp. v. Crouse, 30 A.2d 330 (Pa. Super. 1943) and First Commonwealth Bank v. Heller, 863 A.2d 1153 (Pa. Super. 2004) -- which are different from the Restatement definition in important respects.

"Like many other jurisdictions," Pennsylvania requires "four criteria to be met for equitable subrogation to apply....These four requirements are:
(1) the claimant paid the creditor to protect his own interests;
(2) the claimant did not act as a volunteer;
(3) the claimant was not primarily liable for the debt; and
(4) allowing subrogation will not cause injustice to the rights of others."

The appellate court found that there were two "important" differences between Pennsylvania's interpretation of equitable subrogation and that in the Restatement.

a) voluntary agent - Under Pennsylvania cases, a creditor such as U.S. Bank is considered an “entirely voluntary agent with no interest in the property” The Restatement does not adopt the 'volunteer' rule but instead only requires that the subrogee paid the creditor to protect some interest. "Thus, under the Restatement, a mortgagee pays off existing loans in order to protect its own interest in gaining the first priority lien position, and therefore would be entitled to the remedy of equitable subrogation."

b) mistake - Another important difference between Pennsylvania law on equitable subrogation and the Restatement’s approach is also illustrated in the Home Owners’ decision, where the court said that “courts of equity will not relieve a party from the consequences of an error due to his own ignorance or carelessness when there were available means which would have enabled him to avoid the mistake if reasonable care had been exercised.... [A] creditor’s mistake 'can be attributed only to its own negligence in failing to search or discover what clearly appeared on the public records'....The Restatement, on the other hand, says that 'subrogation can be granted even if the payor had actual knowledge of the intervening interest; the payor’s notice, actual or constructive, is not necessarily relevant'....Instead, what is relevant under the Restatement is 'whether the payor reasonably expected to get security with a priority equal to the mortgage being paid.'....In fact, the Restatement declares that a refinancing mortgagee should be presumed to have this expectation, even if they are aware of a remaining lien, unless there is affirmative proof that the mortgagee intended to subordinate its mortgage to the remaining interest."

Although the court pointed out that existing state doctrine might sometimes lead to undesirable results*** and "may be ripe for legislative review," it determined that it was bound by its own prior decisions "and principles of stare decisis." The court was also influenced by "the fact that it was US Bank's carelessness that brought about the pecuniary loss that it is now facing."

*** The court posited that, given Pennsylvania doctrine, US Bank would not made the loan "leaving [borrower] in all likelihood unable to refinance his existing loan" -- a scenario that it thought "may be a frequent dilemma for homeowners amidst the current mortgage crisis....."

UC- vol. quit - salary cap

Pearson v. UCBR - Commonwealth Court - June 26, 2008 - UNPUBLISHED

Claimant was not eligible for benefits where she quit her job after the employer told her that "there would be no possibility of either promotion or increase in pay." Such a statement might "dampen her enthusiasm for continued employment; however, dampened enthusiasm is not a necessitous and compelling reason to quit."

"Claimant’s displeasure with being 'salary capped' was mere dissatisfaction with her working conditions....[M]ere dissatisfaction with one's working conditions does not constitute cause of a necessitous and compelling nature for terminating one's employment. Brunswick Hotel & Conference Center, LLC v. Unemployment Compensation Board of Review, 906 A.2d 657 (Pa. Cmwlth. 2006); McKeown v. Unemployment Compensation Board of Review, 442 A.2d 1257 (Pa. Cmwlth. 1982)."