Whitfield v. Radian Guaranty, Inc. - Third Circuit - August 30, 2007
http://www.ca3.uscourts.gov/opinarch/055017p.pdf
Because of the poor credit history of Plaintiffs-borrowers, the Lender (Countrywide Home Mortgage) agreed to give them a mortgage for most of purchase price, on condition that they pay for mortgage insurance. The Lender arranged for mortgage insurance from defendant-insurer for $905/month (!), based on the loan-to-value and the consumers' credit score. Defendant conceded that the insurance premium would have been lower if the borrowers' credit score had been higher. Defendant-insurer did not send an adverse action notice to plaintiffs, according to their policy of not doing so when insurance is approved.
Plaintiffs sued, claiming that an adverse action notice was required under the Fair Credit Reporting Act, 15 USC sec.1681m(a)., since they paid more than the lowest insurance rate due to an adverse credit report. The FCRA requires that a user of information from a credit report takes any adverse action against an individual, that the user shall notice the individual of the adverse action, 15 USC 1681m(a).
Based in part on Safeco Insurance Co. b. Burr, 127 S.Ct. 2201 (2007), the court held that
a) an initial premium/first-time rate could be considered an increase in a charge for insurance for purpose of the adverse action notice requirement of the FCRA, and
b) privity of contract between the insurer and consumer-borrower is not a requirement of the FCRA
Monday, September 10, 2007
injunction - dissipation of assets
Ambrogi v. Reber - Superior Court - September 7, 2007
http://www.aopc.org/OpPosting/Superior/out/a12010_07.pdf
It was appropriate for the trial court to grant an injunction preventing defendants from dissipating their assets during the pendency of a lawsuit. The court ordered defendants to place the net proceeds of the sale of considerable real property in a supervised escrow account. There was a demonstrated need to prevent defendants from liquidating their assets and making themselves judgment proof.
The opinion contains a good review of that factors that are required to get a preliminary injunction.
- prevent immediate and irreparable harm
- greater injury from on-grant that grant
- maintenance of status quo
- the alleged wrong is manifest and the injunction of reasonably suited to abate it.
The movant doesn't have to show that he will prevail, only that there are substantial legal questions that the court has to resolve. On appeal, the court determines if the trial court had reasonable grounds for its order and will reverse only where no grounds for it exist or that the rule of law relied on was palpably erroneous or misapplied.
In this wrongful death action, defendants sold almost 40% of their real estate in less than 2 years from the date of a fatal fire at issue in the case. The trial court was troubled by the number of post-fire sales, the high value of the properties sold after the fire ($3 million), defendants' failure to purchase new real property with the proceeds, defendants' failure to disclose ownership of other properties, and very high potential damages.
The trial court simply directed that defendants must preserve their assets at a level reasonably calculated to satisfy a judgment that could be entered. Its order allowed defendants to petition for a change and release of funds to conduct their business.
http://www.aopc.org/OpPosting/Superior/out/a12010_07.pdf
It was appropriate for the trial court to grant an injunction preventing defendants from dissipating their assets during the pendency of a lawsuit. The court ordered defendants to place the net proceeds of the sale of considerable real property in a supervised escrow account. There was a demonstrated need to prevent defendants from liquidating their assets and making themselves judgment proof.
The opinion contains a good review of that factors that are required to get a preliminary injunction.
- prevent immediate and irreparable harm
- greater injury from on-grant that grant
- maintenance of status quo
- the alleged wrong is manifest and the injunction of reasonably suited to abate it.
The movant doesn't have to show that he will prevail, only that there are substantial legal questions that the court has to resolve. On appeal, the court determines if the trial court had reasonable grounds for its order and will reverse only where no grounds for it exist or that the rule of law relied on was palpably erroneous or misapplied.
In this wrongful death action, defendants sold almost 40% of their real estate in less than 2 years from the date of a fatal fire at issue in the case. The trial court was troubled by the number of post-fire sales, the high value of the properties sold after the fire ($3 million), defendants' failure to purchase new real property with the proceeds, defendants' failure to disclose ownership of other properties, and very high potential damages.
The trial court simply directed that defendants must preserve their assets at a level reasonably calculated to satisfy a judgment that could be entered. Its order allowed defendants to petition for a change and release of funds to conduct their business.
Friday, September 07, 2007
employment - wages - FLSA - donning/doffing work clothing
DeAsencio v. Tyson Foods, Inc. - 3d Circuit - September 6, 2007
http://www.ca3.uscourts.gov/opinarch/063502p.pdf
Held, time that poultry workers spent donning and doffing clothing needed to do their work was compensable "work" under the Fair Labor Standards Act, 29 USC sec. 201 et seq., since it involved activities that were an integral and indispensable part of their principal activities, took place on the employer's premises, pursuant to the rules of the employer and for its benefit.
http://www.ca3.uscourts.gov/opinarch/063502p.pdf
Held, time that poultry workers spent donning and doffing clothing needed to do their work was compensable "work" under the Fair Labor Standards Act, 29 USC sec. 201 et seq., since it involved activities that were an integral and indispensable part of their principal activities, took place on the employer's premises, pursuant to the rules of the employer and for its benefit.
Friday, August 31, 2007
Consumer - mortgage refinancing - existence of contract - estoppel/fraud - statute of frauds
McCloskey v. Novastar Mortgage, Inc. - ED Pa. - August 21, 2007
http://www.paed.uscourts.gov/documents/opinions/07D0994P.pdf
Plaintiffs were solicited by defendant to refinance their mortgage. Based on a series of conversation and emails with defendant, plaintiffs withdrew their refinancing arrangement with another mortgage company. Defendant ultimately rejected plaintiff's application, allegedly because their income was somewhat less that stated orally during phone conversations. Plaintiffs sued for breach of contract, promissory estoppel and fraud.
Contract
The contract cause of action was dismissed, because plaintiffs failed to establish the existence of a legal contract. The documents that they produced were evidence of preliminary negotiations but not a contract. The documents did not contain the "essential terms of the contract." Under Pennsylvania law, a contract exists if a) the parties have manifested an intent to be found by the terms of the agreement, b) the terms are sufficiently definite, and c) there was consideration. Preliminary negotiations do not alone constitute a contract. To ripen into a contract, there must be a manifestation of mutual asset to the terms of a bargain -- which was not the case here. An oral contract can be enforeable, but it must be established by clear and precise evidence - again not the case here.
Promissory estoppel
Plaintiffs' alleged detrimental reliance on defendant's promises about refinancing. Defendant said plaintiff had unclean hands because of misstatements about income. Inequitable conduct by plaintiff must be connect to the matters at issue, and the conduct has to be willful, not negligent. The court held that factual matters still had to be resolved about these issues and refused defendant's motion for summary judgment.
Statute of frauds defense
A mortgage is an interest in property and must satisfy the statute of frauds, as must an oral agreement to lend money in consideration for a mortgage. A party cannot avoid the statute by relying on an estoppel theory of recovery. However, the statute only makes an oral contract for an interest in real property unenforceable. It does not void the contract. Where the oral agreement has been obtained by fraud, the buyer can recover as damages the loss of his bargain. A plaintiff is permitted to pursue a promissory estoppel claim even when the underlying promise is subject to the statute of frauds, but his recovery is limited to reliance damages in the absence of fraud. The statute of frauds may prevent the specific performance of the promise, but it does not bar the promissory estoppel claim itself. The court held that the plaintiff had the right to pursue further discovery on this claim.
Fraud claim
Defendant again claimed that plaintiffs' overstatement of income barred this claim. The court rejected this because of defendant's lack of reliance on the statement of income, which was of "minimal importance to the loan approval." The court allowed the claim to proceed and permitted additional discovery by plaintiff.
http://www.paed.uscourts.gov/documents/opinions/07D0994P.pdf
Plaintiffs were solicited by defendant to refinance their mortgage. Based on a series of conversation and emails with defendant, plaintiffs withdrew their refinancing arrangement with another mortgage company. Defendant ultimately rejected plaintiff's application, allegedly because their income was somewhat less that stated orally during phone conversations. Plaintiffs sued for breach of contract, promissory estoppel and fraud.
Contract
The contract cause of action was dismissed, because plaintiffs failed to establish the existence of a legal contract. The documents that they produced were evidence of preliminary negotiations but not a contract. The documents did not contain the "essential terms of the contract." Under Pennsylvania law, a contract exists if a) the parties have manifested an intent to be found by the terms of the agreement, b) the terms are sufficiently definite, and c) there was consideration. Preliminary negotiations do not alone constitute a contract. To ripen into a contract, there must be a manifestation of mutual asset to the terms of a bargain -- which was not the case here. An oral contract can be enforeable, but it must be established by clear and precise evidence - again not the case here.
Promissory estoppel
Plaintiffs' alleged detrimental reliance on defendant's promises about refinancing. Defendant said plaintiff had unclean hands because of misstatements about income. Inequitable conduct by plaintiff must be connect to the matters at issue, and the conduct has to be willful, not negligent. The court held that factual matters still had to be resolved about these issues and refused defendant's motion for summary judgment.
Statute of frauds defense
A mortgage is an interest in property and must satisfy the statute of frauds, as must an oral agreement to lend money in consideration for a mortgage. A party cannot avoid the statute by relying on an estoppel theory of recovery. However, the statute only makes an oral contract for an interest in real property unenforceable. It does not void the contract. Where the oral agreement has been obtained by fraud, the buyer can recover as damages the loss of his bargain. A plaintiff is permitted to pursue a promissory estoppel claim even when the underlying promise is subject to the statute of frauds, but his recovery is limited to reliance damages in the absence of fraud. The statute of frauds may prevent the specific performance of the promise, but it does not bar the promissory estoppel claim itself. The court held that the plaintiff had the right to pursue further discovery on this claim.
Fraud claim
Defendant again claimed that plaintiffs' overstatement of income barred this claim. The court rejected this because of defendant's lack of reliance on the statement of income, which was of "minimal importance to the loan approval." The court allowed the claim to proceed and permitted additional discovery by plaintiff.
Thursday, August 30, 2007
disability - reversal v. remand - effect of substance abuse
Monagle v. Astrue - ED Pa. Augsut 24, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1021P.pdf
The court held that it was appropriate to reverse and award benefits rather than remand for a further hearing, citing Morales v. Apfel, 225 F.3d 210 (3d Cir. 2000) and Allen v. Bowen, 881 F.2d 37 (3d Cir. 1989). There were no remaining evidentiary issues, and the opinions of the treating physicians that claimant was disabled, independent of his drug addiction, should have been followed.
The case also involved the problem of separating out the effect of marijuana addiction from claimant's bipolar disorder. There is good language in the case about the weight which should be given to the treating physician on this issue.
http://www.paed.uscourts.gov/documents/opinions/07D1021P.pdf
The court held that it was appropriate to reverse and award benefits rather than remand for a further hearing, citing Morales v. Apfel, 225 F.3d 210 (3d Cir. 2000) and Allen v. Bowen, 881 F.2d 37 (3d Cir. 1989). There were no remaining evidentiary issues, and the opinions of the treating physicians that claimant was disabled, independent of his drug addiction, should have been followed.
The case also involved the problem of separating out the effect of marijuana addiction from claimant's bipolar disorder. There is good language in the case about the weight which should be given to the treating physician on this issue.
Tuesday, August 28, 2007
ejectment - jurisdiction - sheriff's sale - deed
Wells Fargo Bank v. Long - Superior Court - August 22, 2007
http://www.aopc.org/OpPosting/Superior/out/a14007_07.pdf
A purchaser of property at sheriff's sale cannot bring an ejectment action until the title to the property passes by acknowledgment, delivery and recordation of the sheriff's deed. Before that time, the purchaser does not have a present right to immediate possession, a jurisdictional prerequisite to an ejectment action. The successful bidder at a sheriff's sale only gets "an inceptive, inchoate, or equitable estate."
The hiatus between the sheriff's sale and the delivery and recording of the deed is a "jurisdictional void" which cannot be traversed. There is an extensive (and repetitious) discussion of these principles, in the opinion.
http://www.aopc.org/OpPosting/Superior/out/a14007_07.pdf
A purchaser of property at sheriff's sale cannot bring an ejectment action until the title to the property passes by acknowledgment, delivery and recordation of the sheriff's deed. Before that time, the purchaser does not have a present right to immediate possession, a jurisdictional prerequisite to an ejectment action. The successful bidder at a sheriff's sale only gets "an inceptive, inchoate, or equitable estate."
The hiatus between the sheriff's sale and the delivery and recording of the deed is a "jurisdictional void" which cannot be traversed. There is an extensive (and repetitious) discussion of these principles, in the opinion.
Monday, August 20, 2007
Fair Credit Reporting Act - complaint to credit reporting agency
Beisel v. ABN Ambro Mortgage Inc. - Ed Pa. - Aguust 10, 2007
http://www.paed.uscourts.gov/documents/opinions/07D0951P.pdf
A credit reporting agency [CRA] has a duty concerning disputed information in a credit report only after the complaining party has disputed the credit information with the CRA and the credit reporting agency has notified the furnisher of information.
In this case, the consumer-plaintiffs alleged only that they disputed it with the furnisher, not the CRA, before bring suit under the FCRA, 15 USC 1681 et seq. Jaramillo v. Experian, 155 F.Supp. 2d 356, 363 (E Pa. 2001).
http://www.paed.uscourts.gov/documents/opinions/07D0951P.pdf
A credit reporting agency [CRA] has a duty concerning disputed information in a credit report only after the complaining party has disputed the credit information with the CRA and the credit reporting agency has notified the furnisher of information.
In this case, the consumer-plaintiffs alleged only that they disputed it with the furnisher, not the CRA, before bring suit under the FCRA, 15 USC 1681 et seq. Jaramillo v. Experian, 155 F.Supp. 2d 356, 363 (E Pa. 2001).
Monday, August 13, 2007
bankruptcy - dismissal - bad faith - sec. 707(a)
In re Perlin - Third Circuit - August 3, 2007
http://www.ca3.uscourts.gov/opinarch/063199p.pdf
In adjudicating a motion to dismiss assserting bad faith under 11 USC 707(a), it is within the discretion of the bankruptcy court to consider a debtor's monthly income and expenses together with any other factors relevant to a debtor's good faith in filing for bankruptcy, reflecting the "fact-intensive nature of the good-faith inquiry."
Net worth, future prospects and ability to repay are not a valid cause for dismissal. Dismissal should be carefully confined to only truly egregious cases that entail concealed or misrepresented assets and/or sources of income, lavish lifestyles, and intention to avoid a large single debt based on conduct akin to fraud, misconduct or gross negligence.
http://www.ca3.uscourts.gov/opinarch/063199p.pdf
In adjudicating a motion to dismiss assserting bad faith under 11 USC 707(a), it is within the discretion of the bankruptcy court to consider a debtor's monthly income and expenses together with any other factors relevant to a debtor's good faith in filing for bankruptcy, reflecting the "fact-intensive nature of the good-faith inquiry."
Net worth, future prospects and ability to repay are not a valid cause for dismissal. Dismissal should be carefully confined to only truly egregious cases that entail concealed or misrepresented assets and/or sources of income, lavish lifestyles, and intention to avoid a large single debt based on conduct akin to fraud, misconduct or gross negligence.
Friday, August 10, 2007
welfare - MA- resources - disretionary support trust
DeBone v. DPW - Commonwealth Court - Masy 31, 2007
http://www.courts.state.pa.us/OpPosting/CWealth/out/2138CD06_8-9-07.pdf
Held,discretionary support trust should be included as a resource in determining eligibility for MA benefits. Trust consisted of $145,000 and trustees could use the money for petitioner's benefit. Petitioner's resource held to exceed $2400 limit under 55 Pa. Code 178.1(a),178.2 and 178.4. Beneficiary's interest depends on settlor's intent. Rosenberg v. DPW, 679 A2d 767 (Pa. 1996).; Shaak v. DPW, 747 A2d 883, 886 (Pa. 2000). Court applied factors cited in those cases, especially that trustee had discretion to use the trust principal for the welfare etc of the beneficiary.
http://www.courts.state.pa.us/OpPosting/CWealth/out/2138CD06_8-9-07.pdf
Held,discretionary support trust should be included as a resource in determining eligibility for MA benefits. Trust consisted of $145,000 and trustees could use the money for petitioner's benefit. Petitioner's resource held to exceed $2400 limit under 55 Pa. Code 178.1(a),178.2 and 178.4. Beneficiary's interest depends on settlor's intent. Rosenberg v. DPW, 679 A2d 767 (Pa. 1996).; Shaak v. DPW, 747 A2d 883, 886 (Pa. 2000). Court applied factors cited in those cases, especially that trustee had discretion to use the trust principal for the welfare etc of the beneficiary.
Thursday, August 09, 2007
consumer - warranties - exclusion/modification - conflict between express and implied warranties
N.J. Transit Corp. v. Harsco Corp. - 3rd Circuit - August 2, 2007
http://www.ca3.uscourts.gov/opinarch/063507p.pdf
The court held that a sophisticated commercial buyer who had drafted the contract could not rely on UCC implied warranties of merchantability and fitness for a particular purpose under the N.J. equivalent of 13 Pa. C.S. sec. 2314 and 2315 when there was a one-year express contractual warranty that had expired at the time of the alleged loss.
The court took special note of the fact that this was "hardly the typical case" involving exclusion or modification of a warranty under sec. 2316. Here, the buyer drafted the contract, both parties were sophisticated business entities, and the parties had equal bargaining power. "It was the buyer who dictated all the contract's terms [and] whose bargaining power was superior." The buyer "specified precisely what it required" and the express warranty was "extremely broad," so "there was no implied warranty of fitness for a particular purpose."
Under sec. 2317(c), "express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose." Here the court interpreted the express warranty and implied warranty of merchantability as "consistent and cumulative... for the one year term of the express warranty. Beyond that period, the implied warranty of merchantability conflicts with the contract's specifications, and is therefore displaced by the express" one-year warranty, pursuant to sec. 2317 (c).
The court specifically stated and emphasized that it was not interpreting sec. 2316 (exclusion or modification of warranties) to allow all express warranties of limited duration to impliedly exclude or modify limited warranties. Instead, it based its holding on the fact that here the buyer-drafted global warranty was incorporated into the contract specifications, noting that the commentary to sec. 2316 recognized such a situation as "not the ordinary circumstance that the section is designed to address." The court said that its holding was in line with the general purpose of sec. 2316 "which, according to the commentary, is to ensure that there are no surprises concerning which warranties accompany the goods sold." The element of surprise is not present where the buyer drafts the contract. A different holding would turn "a buyer's shield against surprise into a buyer's sword of surprise."
http://www.ca3.uscourts.gov/opinarch/063507p.pdf
The court held that a sophisticated commercial buyer who had drafted the contract could not rely on UCC implied warranties of merchantability and fitness for a particular purpose under the N.J. equivalent of 13 Pa. C.S. sec. 2314 and 2315 when there was a one-year express contractual warranty that had expired at the time of the alleged loss.
The court took special note of the fact that this was "hardly the typical case" involving exclusion or modification of a warranty under sec. 2316. Here, the buyer drafted the contract, both parties were sophisticated business entities, and the parties had equal bargaining power. "It was the buyer who dictated all the contract's terms [and] whose bargaining power was superior." The buyer "specified precisely what it required" and the express warranty was "extremely broad," so "there was no implied warranty of fitness for a particular purpose."
Under sec. 2317(c), "express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose." Here the court interpreted the express warranty and implied warranty of merchantability as "consistent and cumulative... for the one year term of the express warranty. Beyond that period, the implied warranty of merchantability conflicts with the contract's specifications, and is therefore displaced by the express" one-year warranty, pursuant to sec. 2317 (c).
The court specifically stated and emphasized that it was not interpreting sec. 2316 (exclusion or modification of warranties) to allow all express warranties of limited duration to impliedly exclude or modify limited warranties. Instead, it based its holding on the fact that here the buyer-drafted global warranty was incorporated into the contract specifications, noting that the commentary to sec. 2316 recognized such a situation as "not the ordinary circumstance that the section is designed to address." The court said that its holding was in line with the general purpose of sec. 2316 "which, according to the commentary, is to ensure that there are no surprises concerning which warranties accompany the goods sold." The element of surprise is not present where the buyer drafts the contract. A different holding would turn "a buyer's shield against surprise into a buyer's sword of surprise."
bankruptcy - ch. 13 - post-foreclosure sale cure
In re Connors - 3rd Circuit - August 3, 2007
http://www.ca3.uscourts.gov/opinarch/063321p.pdf
Ending a dispute among N.J. district courts, the 3rd Circuit held that a Chapter 13 debtor does not have the right, under 11 USC 1322 (c) (1), to cure a default on a mortgage secured by the debtor's residence after the residence is sold at a foreclosure sale but before the deed is delivered.
The "unambiguous language of sec. 1322 (c) (1) supports the 'gavel rule.'" It says the a "default with respect to, or that gave rise to, a lien on the debtor's residence may be cured under paragraph (3) or (5) of subsection (b) until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law…." The court said that numerous courts have held that a residence is "sold" at the foreclosure auction. The sale is final then, not when the deed is later delivered.
There is a provision, 11 USC 108(b), which allows a bankruptcy to be filed and a) objections to the sale to be filed or b) the property redeemed -- if the bankruptcy is filed before the expiration of a grace period established by a nonbankruptcy state law.
In this case, the debtor had the right to but did not exercise his statutory right to object to the foreclosure sale or redeem the property within 60 days of the filing of his chapter 13 petition, as permitted by N.J. state law and 11 USC 108(b).
http://www.ca3.uscourts.gov/opinarch/063321p.pdf
Ending a dispute among N.J. district courts, the 3rd Circuit held that a Chapter 13 debtor does not have the right, under 11 USC 1322 (c) (1), to cure a default on a mortgage secured by the debtor's residence after the residence is sold at a foreclosure sale but before the deed is delivered.
The "unambiguous language of sec. 1322 (c) (1) supports the 'gavel rule.'" It says the a "default with respect to, or that gave rise to, a lien on the debtor's residence may be cured under paragraph (3) or (5) of subsection (b) until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law…." The court said that numerous courts have held that a residence is "sold" at the foreclosure auction. The sale is final then, not when the deed is later delivered.
There is a provision, 11 USC 108(b), which allows a bankruptcy to be filed and a) objections to the sale to be filed or b) the property redeemed -- if the bankruptcy is filed before the expiration of a grace period established by a nonbankruptcy state law.
In this case, the debtor had the right to but did not exercise his statutory right to object to the foreclosure sale or redeem the property within 60 days of the filing of his chapter 13 petition, as permitted by N.J. state law and 11 USC 108(b).
Wednesday, August 08, 2007
consumer/housing - rental housing - discrimination - ECOA and CPL
Portis v. River House Associates - MD Pa. - August 2, 2007
http://www.pamd.uscourts.gov/opinions/jones/06v2123.pdf
African-American plaintiffs were turned down for rental housing by Defendant, allegedly based on lack of credit history. They subsequently got rental housing from another landlord, who used same credit agency as Defendant allegedly used. Eventual landlord got a credit history, which was readily available. Plaintiffs sued under a) the Fair Housing Act, 42 USC 3601 et seq.; b) 42 USC 1981; c) 42 USC 1982; d) the Equal Credit Opportunity Act (ECOA), 15 USC 1691 et seq.; and e) the Pennsylvania Consumer Protection Law, 73 PS 201-1 et seq. Defendant moved to dismiss the last two claims -- EDOA and Consumer Protection Law. The court agreed.
Equal Credit Opportunity Act - Citing Laramore v. Ritchie Realty, 397 F3d 544 (7th Cir. 2005), the ECOA claim was dismissed because
- it did not involve the extension of "credit," i.e. the right to defer the payment of a debt
- the ECOA was meant to protect against discrimination by financial institutions, not landlords
- a Federal Reserve regulation stating that the granting of a lease is not an extension of credit
- the ECOA interests could be protected in the FHA claim, which Defendant did not move to dismiss.
Pennsylvania Consumer Protection Law
The court dismissed this claim, because the Plainiffs and Defendant never entered into a contract. Defendant rejected Plaintiff as a tenant. Plaintiffs found a new place to live. Plaintiffs did not purchase goods or services from Defendant. Calling this a case of first impression, the court held that the CPL does not permit suit by a person who leased property from one entity to bring suit against another entity from the which person initially attempted to lease property. The court noted that the CPL allows the Attorney General or county DA to bring suit, implicitly recognizing that there may be circumstances in which private actors are not permitted to bring suit but public officials can. The court also noted that while direct privity is not required under the CPL, the statute "does not stand for the proposition that a CPL claim can stand against a wholly unrelated party or one who is foreign to the purchase or lease transaction." In that sense, the CPL has a "causation requirement."
http://www.pamd.uscourts.gov/opinions/jones/06v2123.pdf
African-American plaintiffs were turned down for rental housing by Defendant, allegedly based on lack of credit history. They subsequently got rental housing from another landlord, who used same credit agency as Defendant allegedly used. Eventual landlord got a credit history, which was readily available. Plaintiffs sued under a) the Fair Housing Act, 42 USC 3601 et seq.; b) 42 USC 1981; c) 42 USC 1982; d) the Equal Credit Opportunity Act (ECOA), 15 USC 1691 et seq.; and e) the Pennsylvania Consumer Protection Law, 73 PS 201-1 et seq. Defendant moved to dismiss the last two claims -- EDOA and Consumer Protection Law. The court agreed.
Equal Credit Opportunity Act - Citing Laramore v. Ritchie Realty, 397 F3d 544 (7th Cir. 2005), the ECOA claim was dismissed because
- it did not involve the extension of "credit," i.e. the right to defer the payment of a debt
- the ECOA was meant to protect against discrimination by financial institutions, not landlords
- a Federal Reserve regulation stating that the granting of a lease is not an extension of credit
- the ECOA interests could be protected in the FHA claim, which Defendant did not move to dismiss.
Pennsylvania Consumer Protection Law
The court dismissed this claim, because the Plainiffs and Defendant never entered into a contract. Defendant rejected Plaintiff as a tenant. Plaintiffs found a new place to live. Plaintiffs did not purchase goods or services from Defendant. Calling this a case of first impression, the court held that the CPL does not permit suit by a person who leased property from one entity to bring suit against another entity from the which person initially attempted to lease property. The court noted that the CPL allows the Attorney General or county DA to bring suit, implicitly recognizing that there may be circumstances in which private actors are not permitted to bring suit but public officials can. The court also noted that while direct privity is not required under the CPL, the statute "does not stand for the proposition that a CPL claim can stand against a wholly unrelated party or one who is foreign to the purchase or lease transaction." In that sense, the CPL has a "causation requirement."
Monday, August 06, 2007
judges - deliberative thought processes - discovery
Leber v. Stretton - Superior Court - June 8, 2007
http://www.aopc.org/OpPosting/Superior/out/A16018_07.pdf
Deliberative thought processes of a judicial officer (including MDJs and presumably ALJs, referees, etc.) are not discoverable.
http://www.aopc.org/OpPosting/Superior/out/A16018_07.pdf
Deliberative thought processes of a judicial officer (including MDJs and presumably ALJs, referees, etc.) are not discoverable.
Friday, August 03, 2007
bankruptcy - retirement annuity not part of estate under sec. 541(c)(2)
Skiba v. Laher- 3rd Circuit - August 2, 2007
http://www.ca3.uscourts.gov/opinarch/054168p.pdf
Held, bankrupt's TIAA-CREF retirement annuity is exluded from the bankruptcy estate as a "trust" under 11 USC 541(c)(2).
http://www.ca3.uscourts.gov/opinarch/054168p.pdf
Held, bankrupt's TIAA-CREF retirement annuity is exluded from the bankruptcy estate as a "trust" under 11 USC 541(c)(2).
Thursday, August 02, 2007
Consumer Protection Law - pleading - particularity
Rosenberg v. Avis Rent-A-Car System, Inc. - ED Pa. - July 31, 2007
http://www.paed.uscourts.gov/documents/opinions/07D0888P.pdf
The court granted defendant's motion to dismiss a consumer protection claim under the state CPL, 73 PS 201-1 et seq, for failure to plead the claim with "particularity," as allegedly required by FRCivP 9(b), because fraud is said to be involved. "Federal courts have analogized fraud pleading to the "first paragraph of any newspaper story, requiring the who, what, when, where, and how of the circumstances." This applies not only to fraud actions under federal statutes but also to those based on state law, such as the CPL. The court gave Plaintiff 30 days to file an amended complaint.
Citing a series of ED Pa. cases, the court held that under CPL, plaintiff's must plead the following elements with particularily:
a) a specific false representation of material fact;
b) knowledge by the person who made it of its falsity
c) ignorance of its falsity by the person to whom it was made
d) the intention that it should be acted upon
e) that the plaintiff did act on it to his detriment (damages)
These requirements are "relaxed when the factual information regarding the alleged fraud is within the defendant's control."
As so often happens with this issue, the court did not mention Commonwealth v. Percudani, 825 A.2d 743 (Pa. Cmwlth 2003), noting that amendments (fraudulent or deceptive conduct prohibited) to the CPL statute negated this strict pleading requirement.
http://www.paed.uscourts.gov/documents/opinions/07D0888P.pdf
The court granted defendant's motion to dismiss a consumer protection claim under the state CPL, 73 PS 201-1 et seq, for failure to plead the claim with "particularity," as allegedly required by FRCivP 9(b), because fraud is said to be involved. "Federal courts have analogized fraud pleading to the "first paragraph of any newspaper story, requiring the who, what, when, where, and how of the circumstances." This applies not only to fraud actions under federal statutes but also to those based on state law, such as the CPL. The court gave Plaintiff 30 days to file an amended complaint.
Citing a series of ED Pa. cases, the court held that under CPL, plaintiff's must plead the following elements with particularily:
a) a specific false representation of material fact;
b) knowledge by the person who made it of its falsity
c) ignorance of its falsity by the person to whom it was made
d) the intention that it should be acted upon
e) that the plaintiff did act on it to his detriment (damages)
These requirements are "relaxed when the factual information regarding the alleged fraud is within the defendant's control."
As so often happens with this issue, the court did not mention Commonwealth v. Percudani, 825 A.2d 743 (Pa. Cmwlth 2003), noting that amendments (fraudulent or deceptive conduct prohibited) to the CPL statute negated this strict pleading requirement.
Wednesday, August 01, 2007
consumer - foreign judgment - full faith and credit - due process
Frontier Leasing Corporation v. Shah - Superior Court - July 30, 2007
http://www.aopc.org/OpPosting/Superior/out/a19038_07.pdf
Pennsylvania court stuck down a default Iowa judgment entered against defendant Shah on due process grounds.
The contractual forum selection clause purported to give Polk County, Iowa, jurisdiction. A judgment was entered against Shah, who had leased an ATM machine fromm a 3rd party lessor who in turn assigned its rights to Frontier Leasing. Shah admittedly defaulted on the lease. Frontier then tried to execute on the judgment in Allegheny County, where defendant was located. Defendant filed a motion to strike the judgment.
Full faith and credit under Article IV, sec. 1 of the US Constitution cannot be granted unless the sister state court that entered the judgment had personal jurisdiction over the defendant, who must have been afforded due process. Personal jurisdiction can be established by consent, in which case the minimum contacts requirement under International Shoe, 326 US 310 (1945), is not applicable. In addition, personal jurisdiction can be waived.
The court looked at Iowa law to determine these issues. Under Iowa law (and Pennsylvania law), forum selection clauses (FSC) are presumptively enforceable. The presumption can be rebutted by showing that the FSC is not reasonable, under the circumstances. To do so, a defendant must make a "strong showing" that the judgment should be set aside.
Some factors in this determination are
- whether there was an arm's length (what length sleeve?) transaction
- relative sophistiction of the parties (experienced and sophisticated businessmen?)
- whether enforcement would be unreasonable or unjust in the circumstances
- whether there was fraud of overreaching
- whether enforcement would make things so gravely difficult for Defendant that he would effectively be deprived of his day in court
In this case Defendant was a Pakistani immigrant with a limited command of English. The FSC did not mention the terms "jurisdiction," or "venue" or "service of process." It only said that a suit would be "proper" if brought in Iowa courts. The FSC language was not in bold type and was contained in the midst of boilerplate language, "inconspicuous even to the trained eye." The court had "no doubt that appellant had no idea what the import of this clause was…." The court decided that "if there is anything substantive to the notion that forum selection clauses should be vitiated if unreasonable, this is the case in which to apply that notion. Accordingly, we conclude the forum selection clause is unenforceable under Iowa law."
This would seem to resolve the case, Nonetheless, the court went on to consider whether Iowa's assumption of jurisdiction was proper, under Iowa law, applying a two-part test. The first part was satisfied by the presumption of jurisdiction based on the contractual FSC. The second part, however, was not. It involved several factors concerning the general notion of minimum contacts, including quantity, nature and quality, source and connection with the cause of action, etc. Here, defendant's only contact with Iowa was a "single tangential contact" -- that he executed a contract that provided that the lessor would render performance in Iowa. This contact was "accidental" and it is "doubtful that appellant had an understanding that this contact could result in his being hailed to Iowa to answer for default. It was a single fortuitous contact, insufficient to give Iowa jurisdiction under its own law."
The court held that the FSC was "not only unforceable but also is insufficient, in and of itself, to confer jurisdiction on the Iowa courts under the due process clause of the Fourteenth amendment. In the end analysis, we simply have not been psersuaded that appellant was afforded "fair warning" that he could be forced to travel to Iowa to answer for an alleged default of the lease."
http://www.aopc.org/OpPosting/Superior/out/a19038_07.pdf
Pennsylvania court stuck down a default Iowa judgment entered against defendant Shah on due process grounds.
The contractual forum selection clause purported to give Polk County, Iowa, jurisdiction. A judgment was entered against Shah, who had leased an ATM machine fromm a 3rd party lessor who in turn assigned its rights to Frontier Leasing. Shah admittedly defaulted on the lease. Frontier then tried to execute on the judgment in Allegheny County, where defendant was located. Defendant filed a motion to strike the judgment.
Full faith and credit under Article IV, sec. 1 of the US Constitution cannot be granted unless the sister state court that entered the judgment had personal jurisdiction over the defendant, who must have been afforded due process. Personal jurisdiction can be established by consent, in which case the minimum contacts requirement under International Shoe, 326 US 310 (1945), is not applicable. In addition, personal jurisdiction can be waived.
The court looked at Iowa law to determine these issues. Under Iowa law (and Pennsylvania law), forum selection clauses (FSC) are presumptively enforceable. The presumption can be rebutted by showing that the FSC is not reasonable, under the circumstances. To do so, a defendant must make a "strong showing" that the judgment should be set aside.
Some factors in this determination are
- whether there was an arm's length (what length sleeve?) transaction
- relative sophistiction of the parties (experienced and sophisticated businessmen?)
- whether enforcement would be unreasonable or unjust in the circumstances
- whether there was fraud of overreaching
- whether enforcement would make things so gravely difficult for Defendant that he would effectively be deprived of his day in court
In this case Defendant was a Pakistani immigrant with a limited command of English. The FSC did not mention the terms "jurisdiction," or "venue" or "service of process." It only said that a suit would be "proper" if brought in Iowa courts. The FSC language was not in bold type and was contained in the midst of boilerplate language, "inconspicuous even to the trained eye." The court had "no doubt that appellant had no idea what the import of this clause was…." The court decided that "if there is anything substantive to the notion that forum selection clauses should be vitiated if unreasonable, this is the case in which to apply that notion. Accordingly, we conclude the forum selection clause is unenforceable under Iowa law."
This would seem to resolve the case, Nonetheless, the court went on to consider whether Iowa's assumption of jurisdiction was proper, under Iowa law, applying a two-part test. The first part was satisfied by the presumption of jurisdiction based on the contractual FSC. The second part, however, was not. It involved several factors concerning the general notion of minimum contacts, including quantity, nature and quality, source and connection with the cause of action, etc. Here, defendant's only contact with Iowa was a "single tangential contact" -- that he executed a contract that provided that the lessor would render performance in Iowa. This contact was "accidental" and it is "doubtful that appellant had an understanding that this contact could result in his being hailed to Iowa to answer for default. It was a single fortuitous contact, insufficient to give Iowa jurisdiction under its own law."
The court held that the FSC was "not only unforceable but also is insufficient, in and of itself, to confer jurisdiction on the Iowa courts under the due process clause of the Fourteenth amendment. In the end analysis, we simply have not been psersuaded that appellant was afforded "fair warning" that he could be forced to travel to Iowa to answer for an alleged default of the lease."
consumer - payday lending - license - Consumer Discount Company Law
Department of Banking v. NCAS of Delaware - Commonwealth Court - July 31, 2007
http://www.aopc.org/OpPosting/CWealth/out/519MD06_7-31-07.pdf
In this original jurisdiction case, the court determined that Advance America, a payday lender, was subject to the licensing requirements of the state Consumer Discount Company Act, 73 PS 6201 et seq., since the effective interest rate in its transactions was much higher than the statutory limit of 6% . The court grant the Department's motion for judgment on the pleadings on this claim.
Although the stated contract interest rate was 5.98% - just below the 6% limit prescribed by the CDCA - AA also charged consumers $149.95 per month as a "participation fee", which the court said was a charge under the statute that had to be include in the aggregate charges and thus was part of the interest rate deterimination, because the participation fee was a "necessary condition" of any credit advance by AA and was a "charge inextricably related to the amount actually loaned or advanced." By including the participation fee, the aggregate interest rate was about 368%, "far in excess of" the 6% interest that an unlicensed lender is permitted to charge.
The court held that the factual record was not sufficient to determine the Act 6 question - whether the monthly participation fee should be considered sham interest which, when combined iwth the stated interest rate of 5.98%, established a violation of 41 PS 201.
The court also held Pennsylvania law applied to the case, since it was brought by the state Department of Banking for violation of state banking laws, and thus was not governed by the terms of contracts between AA and individual consumers, which specified that Delaware law applied.
http://www.aopc.org/OpPosting/CWealth/out/519MD06_7-31-07.pdf
In this original jurisdiction case, the court determined that Advance America, a payday lender, was subject to the licensing requirements of the state Consumer Discount Company Act, 73 PS 6201 et seq., since the effective interest rate in its transactions was much higher than the statutory limit of 6% . The court grant the Department's motion for judgment on the pleadings on this claim.
Although the stated contract interest rate was 5.98% - just below the 6% limit prescribed by the CDCA - AA also charged consumers $149.95 per month as a "participation fee", which the court said was a charge under the statute that had to be include in the aggregate charges and thus was part of the interest rate deterimination, because the participation fee was a "necessary condition" of any credit advance by AA and was a "charge inextricably related to the amount actually loaned or advanced." By including the participation fee, the aggregate interest rate was about 368%, "far in excess of" the 6% interest that an unlicensed lender is permitted to charge.
The court held that the factual record was not sufficient to determine the Act 6 question - whether the monthly participation fee should be considered sham interest which, when combined iwth the stated interest rate of 5.98%, established a violation of 41 PS 201.
The court also held Pennsylvania law applied to the case, since it was brought by the state Department of Banking for violation of state banking laws, and thus was not governed by the terms of contracts between AA and individual consumers, which specified that Delaware law applied.
Monday, July 30, 2007
real property - consumer protection - disclosures
Growall v. Maietta - Superior Court - July 26, 2007
http://www.courts.state.pa.us/OpPosting/Superior/out/A04001_07.pdf
Jury found husband/seller liable but not wife/seller, for failure to tell buyer about basement water problem The appellate court affirmed
- under Consumer Protection Law, 73 PS 201-1 et seq., because it appeared that the purchase was for investment and not personal, family, or household purposes
- under Real Estate Settlement Disclosure Law, 68 Pa C.S. 7301 et seq., because - jury found wife did not know of problem at time of sellers' RESDL disclosure - seller/wife was not obligated to make any specific investigation or inquiry to complete the disclosure, 68 Pa CS 7307
- seller/wife not liable to error or inaccuracy or omission if she did not have knowledge of it, 68 Pa. CS 7308
- there was no allegation or proof that there was a problem until 2 months after disclosure statement filled out
The court distinguished similar cases, since they involved "basic facts" about the property "readily ascertainable by the sellers," e.g., zoning retrictions and boundary lines. In the case at bar, the problem was called "an isolated incident of water damage/flooding in the basement," and not a "basis fact."
http://www.courts.state.pa.us/OpPosting/Superior/out/A04001_07.pdf
Jury found husband/seller liable but not wife/seller, for failure to tell buyer about basement water problem The appellate court affirmed
- under Consumer Protection Law, 73 PS 201-1 et seq., because it appeared that the purchase was for investment and not personal, family, or household purposes
- under Real Estate Settlement Disclosure Law, 68 Pa C.S. 7301 et seq., because - jury found wife did not know of problem at time of sellers' RESDL disclosure - seller/wife was not obligated to make any specific investigation or inquiry to complete the disclosure, 68 Pa CS 7307
- seller/wife not liable to error or inaccuracy or omission if she did not have knowledge of it, 68 Pa. CS 7308
- there was no allegation or proof that there was a problem until 2 months after disclosure statement filled out
The court distinguished similar cases, since they involved "basic facts" about the property "readily ascertainable by the sellers," e.g., zoning retrictions and boundary lines. In the case at bar, the problem was called "an isolated incident of water damage/flooding in the basement," and not a "basis fact."
Friday, July 27, 2007
consumer - debt collection - corporate officer
Campuzano-Burgos v. Midland Credit Mgmt., et al. - ED Pa. - July 26, 2007
http://www.paed.uscourts.gov/documents/opinions/07D0870P.pdf
Use of a dunning letter bearing the signature of corporate president and executive v.p. who had no role in the debt collection process was held to be violation if Fair Debt Collection Practices Act, 15 USC 1692e(9), which bars use of any written communication which, inter alia, creates a false impression as to its source, authorization or approval.
The FDCPA is to be interpreted from the viewpoint of the least sophisticated debtor, while avoiding bizarre or idiosyncratic intepretations, and presuming reading with care and in context. The FDCPA is meant to protect the gullible as well as the shrewd.
A writing is deceptive where is can be reasonably read to have two or more different meanings, one of which is inaccurate. It was alleged in this case that the letter was misleading because it gave the impression that the debt was being pursued by "high-ranking officer of the company," when in fact it was not, thereby creating a false impression as to source, authorization or approval. There are analgous cases involving the use of an attorney's name when the attorney is not involved in the collection.
In both situations, there is an implication of "special authority." An unsophisticated consumer getting a letter from an attorney or corporate officer "knows the price of poker has just gone up" because attorneys and officers have a special status and greater weight and "get the debtor's knees knocking. An escalation from a lowly collection agent to a senior executive of the company" shows that the debt collector means business. It "connotes authority and is more likely to generate a response." In such cases, there is a "general concern with debt collectors' practice of falsely implying that someone in a position of real authority is supervising the collection of this debt." It is an "attempt to goad a debtor into paying by using a signatory who has no involvement in the handling of the…cases as a signal that the collection process has escalated to a graver level….to convey that a high-roller has entered the game."
The court held that "where some aspect of a debt collector's communication - whether explicit or implied - has the purpose or effect of making a debtor more likely to respond, the FDCPA requires that it be true." Because the executives in this cases did not review the case and had no actual involvement, the court found that the letter was deceptive and misleading within the meaning of sec. 1692e.
http://www.paed.uscourts.gov/documents/opinions/07D0870P.pdf
Use of a dunning letter bearing the signature of corporate president and executive v.p. who had no role in the debt collection process was held to be violation if Fair Debt Collection Practices Act, 15 USC 1692e(9), which bars use of any written communication which, inter alia, creates a false impression as to its source, authorization or approval.
The FDCPA is to be interpreted from the viewpoint of the least sophisticated debtor, while avoiding bizarre or idiosyncratic intepretations, and presuming reading with care and in context. The FDCPA is meant to protect the gullible as well as the shrewd.
A writing is deceptive where is can be reasonably read to have two or more different meanings, one of which is inaccurate. It was alleged in this case that the letter was misleading because it gave the impression that the debt was being pursued by "high-ranking officer of the company," when in fact it was not, thereby creating a false impression as to source, authorization or approval. There are analgous cases involving the use of an attorney's name when the attorney is not involved in the collection.
In both situations, there is an implication of "special authority." An unsophisticated consumer getting a letter from an attorney or corporate officer "knows the price of poker has just gone up" because attorneys and officers have a special status and greater weight and "get the debtor's knees knocking. An escalation from a lowly collection agent to a senior executive of the company" shows that the debt collector means business. It "connotes authority and is more likely to generate a response." In such cases, there is a "general concern with debt collectors' practice of falsely implying that someone in a position of real authority is supervising the collection of this debt." It is an "attempt to goad a debtor into paying by using a signatory who has no involvement in the handling of the…cases as a signal that the collection process has escalated to a graver level….to convey that a high-roller has entered the game."
The court held that "where some aspect of a debt collector's communication - whether explicit or implied - has the purpose or effect of making a debtor more likely to respond, the FDCPA requires that it be true." Because the executives in this cases did not review the case and had no actual involvement, the court found that the letter was deceptive and misleading within the meaning of sec. 1692e.
admin. law - appeal - late appeal - nunc pro tunc
Hantman, Inc. v. Office of UC Tax Services
http://www.aopc.org/OpPosting/CWealth/out/36CD07_7-11-07.pdf
Nunc pro tunc appeal denied where agency rejected the credibility of petitioner's claim that he had a psychological disability -- a phobia about forms.
As a rule, time limits for appeals are mandatory, absent
- fraud or manifestly wrongful or negligent conduct of admininstrative authorities
- non-negligent circumstances of appellant or his/her counsel, if
- the appeal is filed shortly after expiration date and
- the appellee is not prejudiced (Bass - 401 A2d 1133 (Pa. 1979)
- unexpected illness/hospitalization (Cook - 671 A2d 1139 (Pa. 1996))
Even in those case, the party attempting to file an appeal nunc pro tunc carries a "heavy burden to justify an untimely appeal."
http://www.aopc.org/OpPosting/CWealth/out/36CD07_7-11-07.pdf
Nunc pro tunc appeal denied where agency rejected the credibility of petitioner's claim that he had a psychological disability -- a phobia about forms.
As a rule, time limits for appeals are mandatory, absent
- fraud or manifestly wrongful or negligent conduct of admininstrative authorities
- non-negligent circumstances of appellant or his/her counsel, if
- the appeal is filed shortly after expiration date and
- the appellee is not prejudiced (Bass - 401 A2d 1133 (Pa. 1979)
- unexpected illness/hospitalization (Cook - 671 A2d 1139 (Pa. 1996))
Even in those case, the party attempting to file an appeal nunc pro tunc carries a "heavy burden to justify an untimely appeal."
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