Wednesday, November 23, 2011

consumer - CPL - fraud v. deceptive; parol evidence rule - ED Pa. case

Schnell v. Bank of New York - ED Pa. - November 21, 2011

This state consumer protection law case concerms Plaintiff's claim that accuses the banks of first deceiving her and then pressuring her into accepting a mortgage she and her late husband could not afford. The CPL’s catch-all provision bars “[e]ngaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or of misunderstanding.” 73 Pa. C.S. § 201-2(4)(xxi).

A plaintiff may succeed under the catch-all provision by satisfying the elements of common law fraud or by otherwise alleging deceptive conduct. Hunt v. U.S. Tobacco Co., 538 F.3d 217,
219 (3d Cir. 2008).5 Plaintiff explicitly references the Defendant Banks’ “deceptive acts” and therefore does not need to prove all of the elements of common-law fraud or meet the particularity requirement of Federal Rule of Civil Procedure 9(b). Seldon v. Home Loan Servs., Inc., 647 F. Supp. 2d 451, 469-70 (E.D. Pa. 2009) (citations omitted). Yet even under the less stringent standard, “a plaintiff must allege facts showing a ‘deceptive act,’ that is ‘conduct that is likely to deceive a consumer acting reasonably under similar circumstances.”’ Id. at 470 (citations omitted). Defendant BNY had no role vis-à-vis the origination of the loan, and Plaintiff fails to demonstrate how BNY could have deceived her into accepting the refinancing when it did not become the assignee until after the closing.

Defendant BOA, on the other hand, played a role in the origination of the disputed refinancing loan (via its acquisition of Countrywide). But to bring a private cause of action under the UTPCPL, Schnell must show that she “justifiably relied on the defendant’s wrongful conduct.” Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 438 (Pa. 2004). Plaintiff's claim, however, is based on representations allegedly made by BOA and its agents prior to the signing of the refinancing contract. [emphasis added] As a result of Pennsylvania’s parol evidence rule, Plaintiff cannot be said to have justifiably relied on any precontractual representations. Id. at 502 Although the mortgage refinancing loan did not contain an integration clause, Plaintiff admits in her Complaint that she was aware of the higher interest rate and still signed the ontract.


n. 5 Pennsylvania’s lower courts have split over whether or not the “deceptive conduct” prong has the same requirements or offers plaintiffs a lower standard. Seldon, 647 F. Supp. 2d at 468 (comparing Commonwealth v. Percudani, 825 A.2d 743, 746 (Pa. Commw. Ct. 2003) with Booze v. Allstate Ins. Co., 750 A.2d 877, 880 (Pa. Super. Ct. 2000)). Although the Pennsylvania Supreme Court has not yet spoken on the issue, courts in this district have held that the 1996 amendment to the catch-all provision of the UTPCPL added a prohibition on deceptive
conduct that permits plaintiffs to proceed without satisfying all of the elements of common-law fraud. See, e.g., Fingles v. Continental Cas. Co., No. 08-5943, 2010 WL 1718289, at *7 (E.D. Pa. Apr. 28, 2010); Seldon, 647 F. Supp. 2d at 468-71; Flores v. Shapiro & Kreisman, 246 F. Supp. 2d 427, 432 (E.D. Pa. 2002). I adopt their reasoning.