Krajewski v. American Honda Finance Corp. and Trans Union, LLC - ED Pa. - May 2008
http://www.paed.uscourts.gov/documents/opinions/08D0495P.pdf
Plaintiff and her ex-husband bought a car, which got repossessed by AHFC after their adult son was arrested and the car, in the son's possession at the time, was seized by the police under the Controlled Substances law. AHFC then reported this to Trans Union, a credit reporting agency (CRA), which in turn marked plaintiff's consumer report as "RPO" meaning repossession.
Plaintiff disputed the characterization of "repossession," alleging that she had never missed any payments and that her credit report should not reflect a repo. Plaintiff tried to get a loan to pay the debt and redeem the car and alleges that she could not because of the "repossession" notation on the credit report. She filed two notices of dispute with the CRA.
Plaintiff sued AHFC and Trans Union on multiple causes of action. AHFC's motion for summary judgment was declined on most claims, because of disputed factual and legal issues, included whether plaintiff "exposed" the car to seizure, as prohibited in the contract.
Plaintiff's claims agains Trans Union included the following issues.
Fair Credit Reporting Act - 15 USC 1681 et seq. - technical accuracy v. maximum possible accuracy
Under sec. 1681e(b) of the FCRA, "[w]henever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.”
To prevail on a claim of negligent failure to comply with § 1681e(b), a plaintiff must show the following four elements: (1) that “inaccurate information was included in a consumer’s credit report,” (2) that “the inaccuracy was due to defendant’s failure to follow reasonable procedures to assure maximum possible accuracy,” (3) that “the consumer suffered injury,” and (4) that “the consumer’s injury was caused by the inclusion of the inaccurate entry”....Trans Union argues that it is entitled to summary judgment because the information was accurate, meaning that plaintiff cannot show the first element.
A plaintiff cannot sustain a claim to enforce § 1681e(b) without showing an inaccuracy in her credit report. Whether the accuracy requirement of § 1681e(b) merely requires technical accuracy or requires something more has not been clarified by either the United States Supreme Court or the Third Circuit. Plaintiff urges this court to follow the D.C. Circuit’s reasoning in Koropoulos v. The Credit Bureau, Inc., 734 F.2d 37 (D.C. Cir. 1984), which rejected the technical accuracy defense in the context of a consumer reporting agency defendant. The court denied summary judgment for the consumer reporting agency where “there is a genuine issue of fact as to whether the report was sufficiently misleading so as to raise the issue of whether [the defendant’s] procedures for assuring ‘maximum possible accuracy’ were reasonable.” Id. at 42.
In rejecting the technical accuracy defense as applied to consumer reporting agencies, the D.C. Circuit based its conclusion on the FCRA’s requirement that consumer reporting agencies employ reasonable procedures to assure more than mere accuracy....The FCRA provides: “Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” 15 U.S.C. § 1681e(b) (emphasis added). District courts in the Eastern District of Pennsylvania have applied Koropoulos....I, too, will follow Koropoulos and deny summary judgment if “there is a genuine issue of material fact as to whether the report was . . . misleading.” 734 F.2d at 42.
Whether the credit report in the instant case is accurate and not misleading depends on the meaning of “repossession” as used in the report. “Repossession” is not defined by federal or Pennsylvania statute. It is defined by the dictionary as “the act of resuming possession of property when the purchaser fails to keep up payments on it.” Webster’s Third New International Dictionary 1926 (1981) (emphasis added). Similarly, one dictionary definition of the verb “repossess” is “to resume possession of (an item purchased on installment) in default of the payment of installments due.” Id. (emphasis added). Given these definitions, and applying the Koropoulos approach, a reasonable jury could conclude that Trans Union’s reporting was so misleading as to be inaccurate. Therefore, I will not grant Trans Union’s motion for summary judgment on the basis of the alleged accuracy of the report.
causation
Trans Union asserts in the alternative that “Trans Union is entitled to summary judgment on [p]laintiff’s claims of damages relating to credit denials in August 2006 because these allegedly occurred prior to her disputes”....Trans Union also asserts that “there is no evidence that an actual recipient of [p]laintiff’s consumer report was misled or would have acted on [p]laintiff’s application for credit differently if the reason why the repossession occurred had been included in [p]laintiff’s report.”
Plaintiff argues that, in the context of damages, Trans Union erroneously conflates § 1681i(a)’s reinvestigation requirement with § 1681e(b)’s reasonable procedures requirement. I agree. Section 1681 relates to “reasonable procedures to assure maximum possible accuracy” in reporting generally, 15 U.S.C. § 1681e(b), and so the time at which a consumer disputes the information is irrelevant to the § 1681e(b) analysis.
With respect to causation, a plaintiff need not “satisfy his burden only by introducing direct evidence that consideration of the inaccurate entry was crucial to the decision to deny credit”...Instead, a plaintiff need only “produce evidence from which a reasonable trier of fact could infer that the inaccurate entry was a ‘substantial factor’ that brought about the denial of credit.”
Thursday, May 15, 2008
federal courts - 11th Amendment - statute of limitations - continuing violation
Larsen v. State Employee Retirement System - MD Pa. - May 15, 2008
http://www.pamd.uscourts.gov/opinions/jones/07v1838.pdf
In this § 1983 action by a former state supreme court justice concerning his pension, the court discuss two issues of general interest -- the Eleventh Amendment and the continuing-violations doctrine, as applied to the issue of the statute of limitations.
A. Eleventh Amendment Immunity
The Eleventh Amendment “has been interpreted to make states generally immune from suit by private parties in federal court.”... “This immunity extends to state agencies and departments.”...Eleventh Amendment immunity also extends to state officials sued in their official capacity because in such a case the state is the real party in interest.... Suits against state officials in their personal or individual capacity, however, are not barred by the Eleventh Amendment.
“Eleventh Amendment immunity is, however, subject to three primary exceptions: (1) congressional abrogation, (2) waiver by the state, and (3) suits against individual state officers for prospective injunctive and declaratory relief to end an ongoing violation of federal law.”
Under the third exception, the doctrine of Ex parte Young, 209 U.S. 123 (1908), a suit against a state officer seeking prospective relief designed to end a continuing violation of federal law is not barred by the Eleventh Amendment under the theory that the action is not against the state because the alleged violation of federal law strips the officer of his official authority....Thus, for the doctrine to apply, the plaintiff must allege an ongoing violation of federal law....In addition, “[t]he relief sought must be prospective, declaratory, or injunctive relief governing an officer’s future conduct and cannot be retrospective, such as money damages.”
In determining whether the request relief falls within the Ex parte Young exception, a court must “look to the substance rather than the form of the relief sought.”....The doctrine applies only against state officials sued in their official capacities, not against states or state agencies....Further, “Young does not apply if, although the action is nominally against individual officers, the state is the real, substantial party in interest and the suit in fact is against the state.” ....“In determining whether the Ex parte Young doctrine avoids an Eleventh Amendment bar, the Supreme Court has made it quite clear that ‘a court need only conduct a ‘straightforward inquiry into whether [the] complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective.’” The Supreme Court has also recognized, however, that “[f]or Eleventh Amendment purposes, the line between permitted and prohibited suits will often be indistinct.”
B. Statute of Limitations - the continuing-violations doctrine
“Actions brought under 42 U.S.C. § 1983 are governed by the personal injury statute of limitations of the state in which the cause of action accrued.”... The applicable Pennsylvania statute of limitations for personal injury actions is two years....
Although the applicable statute of limitations is borrowed from state law, “the accrual date of a § 1983 cause of action is a question of federal law that is not resolved by reference to state law.” ... Rather, accrual of a § 1983 cause of action is “governed by federal rules conforming in general to common-law tort principles. Under those principles, it is the standard rule that accrual occurs when the plaintiff has a complete and present cause of action, that is, when the plaintiff can file suit and obtain relief.”....Generally, therefore, “[a] section 1983 cause of action accrues when the plaintiff knew or should have known of the injury upon which its action is based.”....
Under Pennsylvania law, the limitations period is computed from the time an action accrues....A cause of action accrues when the plaintiff could have first maintained the action to a successful conclusion, and therefore the statute of limitations begins to run as soon as the right to institute and maintain a suit arises....Generally, this right arises when the plaintiff’s injury is inflicted....
[T]he untimeliness of the [plaintiff's] claims is apparent from the face of the complaint....[Plaintiff] argues, however, that his claims are saved from the statute of limitations by the continuing violations doctrine. This doctrine is an “equitable exception to the timely filing requirement”....Under this doctrine, “when a defendant’s conduct is part of a continuing practice, an action is timely so long as the last act evidencing the continuing practice falls within the limitations period; in such an instance, the court will grant relief for the earlier related acts that would otherwise be time barred”....The doctrine is a narrow exception to the statute of limitations that is frequently invoked but rarely found.
“To establish that a claim falls within the continuing violations theory, the plaintiff must do two things. First, he must demonstrate that at least one act occurred within the filing period: The crucial question is whether any present violation exists. Next, the plaintiff must establish that the [alleged wrong] is more than the occurrence of isolated or sporadic acts”....
In examining this second step, “courts should consider at least three factors: (1) subject matter – whether the violations constitute the same type ..., tending to connect them in a continuing violation; (2) frequency – whether the acts are recurring or more in the nature of isolated incidents; and (3) degree of permanence – whether the act had a degree of permanence which should trigger the plaintiff’s awareness of and duty to assert his/her rights”....The third factor, permanence, is the most important....In considering this third factor, the court “must consider the policy rationale behind the statute of limitations. That is, the continuing violations doctrine should not provide a means for relieving plaintiffs from their duty to exercise reasonable diligence in pursuing their claims”....The burden is on the plaintiff to demonstrate that the continuing violations doctrine applies to toll the statute of limitations....
http://www.pamd.uscourts.gov/opinions/jones/07v1838.pdf
In this § 1983 action by a former state supreme court justice concerning his pension, the court discuss two issues of general interest -- the Eleventh Amendment and the continuing-violations doctrine, as applied to the issue of the statute of limitations.
A. Eleventh Amendment Immunity
The Eleventh Amendment “has been interpreted to make states generally immune from suit by private parties in federal court.”... “This immunity extends to state agencies and departments.”...Eleventh Amendment immunity also extends to state officials sued in their official capacity because in such a case the state is the real party in interest.... Suits against state officials in their personal or individual capacity, however, are not barred by the Eleventh Amendment.
“Eleventh Amendment immunity is, however, subject to three primary exceptions: (1) congressional abrogation, (2) waiver by the state, and (3) suits against individual state officers for prospective injunctive and declaratory relief to end an ongoing violation of federal law.”
Under the third exception, the doctrine of Ex parte Young, 209 U.S. 123 (1908), a suit against a state officer seeking prospective relief designed to end a continuing violation of federal law is not barred by the Eleventh Amendment under the theory that the action is not against the state because the alleged violation of federal law strips the officer of his official authority....Thus, for the doctrine to apply, the plaintiff must allege an ongoing violation of federal law....In addition, “[t]he relief sought must be prospective, declaratory, or injunctive relief governing an officer’s future conduct and cannot be retrospective, such as money damages.”
In determining whether the request relief falls within the Ex parte Young exception, a court must “look to the substance rather than the form of the relief sought.”....The doctrine applies only against state officials sued in their official capacities, not against states or state agencies....Further, “Young does not apply if, although the action is nominally against individual officers, the state is the real, substantial party in interest and the suit in fact is against the state.” ....“In determining whether the Ex parte Young doctrine avoids an Eleventh Amendment bar, the Supreme Court has made it quite clear that ‘a court need only conduct a ‘straightforward inquiry into whether [the] complaint alleges an ongoing violation of federal law and seeks relief properly characterized as prospective.’” The Supreme Court has also recognized, however, that “[f]or Eleventh Amendment purposes, the line between permitted and prohibited suits will often be indistinct.”
B. Statute of Limitations - the continuing-violations doctrine
“Actions brought under 42 U.S.C. § 1983 are governed by the personal injury statute of limitations of the state in which the cause of action accrued.”... The applicable Pennsylvania statute of limitations for personal injury actions is two years....
Although the applicable statute of limitations is borrowed from state law, “the accrual date of a § 1983 cause of action is a question of federal law that is not resolved by reference to state law.” ... Rather, accrual of a § 1983 cause of action is “governed by federal rules conforming in general to common-law tort principles. Under those principles, it is the standard rule that accrual occurs when the plaintiff has a complete and present cause of action, that is, when the plaintiff can file suit and obtain relief.”....Generally, therefore, “[a] section 1983 cause of action accrues when the plaintiff knew or should have known of the injury upon which its action is based.”....
Under Pennsylvania law, the limitations period is computed from the time an action accrues....A cause of action accrues when the plaintiff could have first maintained the action to a successful conclusion, and therefore the statute of limitations begins to run as soon as the right to institute and maintain a suit arises....Generally, this right arises when the plaintiff’s injury is inflicted....
[T]he untimeliness of the [plaintiff's] claims is apparent from the face of the complaint....[Plaintiff] argues, however, that his claims are saved from the statute of limitations by the continuing violations doctrine. This doctrine is an “equitable exception to the timely filing requirement”....Under this doctrine, “when a defendant’s conduct is part of a continuing practice, an action is timely so long as the last act evidencing the continuing practice falls within the limitations period; in such an instance, the court will grant relief for the earlier related acts that would otherwise be time barred”....The doctrine is a narrow exception to the statute of limitations that is frequently invoked but rarely found.
“To establish that a claim falls within the continuing violations theory, the plaintiff must do two things. First, he must demonstrate that at least one act occurred within the filing period: The crucial question is whether any present violation exists. Next, the plaintiff must establish that the [alleged wrong] is more than the occurrence of isolated or sporadic acts”....
In examining this second step, “courts should consider at least three factors: (1) subject matter – whether the violations constitute the same type ..., tending to connect them in a continuing violation; (2) frequency – whether the acts are recurring or more in the nature of isolated incidents; and (3) degree of permanence – whether the act had a degree of permanence which should trigger the plaintiff’s awareness of and duty to assert his/her rights”....The third factor, permanence, is the most important....In considering this third factor, the court “must consider the policy rationale behind the statute of limitations. That is, the continuing violations doctrine should not provide a means for relieving plaintiffs from their duty to exercise reasonable diligence in pursuing their claims”....The burden is on the plaintiff to demonstrate that the continuing violations doctrine applies to toll the statute of limitations....
drivers license - refusal to take breath test - jurisidiction to arrest
Taylor v. Penn DOT - Commonwealth Court
http://www.courts.state.pa.us/OpPosting/CWealth/out/1406CD07_5-15-08.pdf
In order to suspend a licensee’s operating privileges pursuant to 75 Pa.C.S. §1547(b), DOT has the burden of proving the following:
1) the licensee was arrested for violating Section 3802;
2) by a police officer who had reasonable grounds to believe that the license was operating a vehicle while in violation of Section 3802;
3) that the licensee was requested to submit to a chemical test;
4) that the licensee refused to do so; and
5) that the police officer fulfilled the duty imposed by 75 Pa.C.S. §1547(b)(2) by advising the licensee that his operating privileges would be suspended if he refused to submit to chemical testing…. Quick v. Department of Transportation, Bureau of Driver Licensing, 915 A.2d 1268, 1270 (Pa. Cmwlth. 2007).
In McKinley v. Department of Transportation, Bureau of Driver Licensing, 576 Pa. 85, 838 A.2d 700 (2003), the Pennsylvania Supreme Court rejected this Court’s determination that a person could be considered a police officer, even if he was acting outside of his jurisdiction, as long as he was an “officer in fact,” i.e., authorized with the power to arrest in another jurisdiction. Instead, the Pennsylvania Supreme Court determined that a police officer acting outside of his jurisdiction lacked the ability to act as a police officer and would not be treated as such. McKinley, 576 Pa. at 94, 838 A.2d at 706.
As the arresting officer did not have the authority to act as a police officer, DOT has failed to establish that Licensee was arrested by a police officer who had reasonable grounds to believe Licensee was DUI. Thus, we conclude that the trial court did not err in granting Licensee’s appeal from the suspension of his operating privilege. Accordingly, the order of the trial court is affirmed
http://www.courts.state.pa.us/OpPosting/CWealth/out/1406CD07_5-15-08.pdf
In order to suspend a licensee’s operating privileges pursuant to 75 Pa.C.S. §1547(b), DOT has the burden of proving the following:
1) the licensee was arrested for violating Section 3802;
2) by a police officer who had reasonable grounds to believe that the license was operating a vehicle while in violation of Section 3802;
3) that the licensee was requested to submit to a chemical test;
4) that the licensee refused to do so; and
5) that the police officer fulfilled the duty imposed by 75 Pa.C.S. §1547(b)(2) by advising the licensee that his operating privileges would be suspended if he refused to submit to chemical testing…. Quick v. Department of Transportation, Bureau of Driver Licensing, 915 A.2d 1268, 1270 (Pa. Cmwlth. 2007).
In McKinley v. Department of Transportation, Bureau of Driver Licensing, 576 Pa. 85, 838 A.2d 700 (2003), the Pennsylvania Supreme Court rejected this Court’s determination that a person could be considered a police officer, even if he was acting outside of his jurisdiction, as long as he was an “officer in fact,” i.e., authorized with the power to arrest in another jurisdiction. Instead, the Pennsylvania Supreme Court determined that a police officer acting outside of his jurisdiction lacked the ability to act as a police officer and would not be treated as such. McKinley, 576 Pa. at 94, 838 A.2d at 706.
As the arresting officer did not have the authority to act as a police officer, DOT has failed to establish that Licensee was arrested by a police officer who had reasonable grounds to believe Licensee was DUI. Thus, we conclude that the trial court did not err in granting Licensee’s appeal from the suspension of his operating privilege. Accordingly, the order of the trial court is affirmed
Social Security - income - stepparent - deeming
http://edocket.access.gpo.gov/2008/pdf/E8-10800.pdf
SUMMARY: We are changing the Supplemental Security Income (SSI) parent-to-child deeming rules so that we no longer will consider the income and resources of a stepparent when an eligible child resides in the household with a stepparent, but that child’s natural or adoptive parent has permanently left the household.
These rules respond to a decision by the United States Court of Appeals for the Second Circuit, codified in Social Security Acquiescence Ruling (AR) 99– 1(2), and establish a uniform national policy. Also, we are making uniform the age [22] at which we consider someone to be a ‘‘child’’ in SSI program regulations and are making other minor clarifications to our rules.
The decision of the United States Court of Appeals for the Second Circuit in Florez on Behalf of Wallace v. Callahan, 156 F.3d 438 (2d Cir. 1998), held that 20 CFR 416.1101 creates a two-part test for determining whether a spouse, who lives with a child eligible for SSI, is an ineligible parent for deeming purposes under 20 CFR 416.1160: (1) The spouse must live with the natural or adoptive parent; and (2) the relationship must be as husband or wife, as further defined in 20 CFR 416.1806.
The rule adopts the court’s rationale and changes the SSI parent-to-child deeming rules so that SSA no longer will consider the income and resources of a stepparent when an eligible child resides in the household with a stepparent, but that child’s natural or adoptive parent has permanently left the household.
DATES: This final rule is effective on June 16, 2008.
SUMMARY: We are changing the Supplemental Security Income (SSI) parent-to-child deeming rules so that we no longer will consider the income and resources of a stepparent when an eligible child resides in the household with a stepparent, but that child’s natural or adoptive parent has permanently left the household.
These rules respond to a decision by the United States Court of Appeals for the Second Circuit, codified in Social Security Acquiescence Ruling (AR) 99– 1(2), and establish a uniform national policy. Also, we are making uniform the age [22] at which we consider someone to be a ‘‘child’’ in SSI program regulations and are making other minor clarifications to our rules.
The decision of the United States Court of Appeals for the Second Circuit in Florez on Behalf of Wallace v. Callahan, 156 F.3d 438 (2d Cir. 1998), held that 20 CFR 416.1101 creates a two-part test for determining whether a spouse, who lives with a child eligible for SSI, is an ineligible parent for deeming purposes under 20 CFR 416.1160: (1) The spouse must live with the natural or adoptive parent; and (2) the relationship must be as husband or wife, as further defined in 20 CFR 416.1806.
The rule adopts the court’s rationale and changes the SSI parent-to-child deeming rules so that SSA no longer will consider the income and resources of a stepparent when an eligible child resides in the household with a stepparent, but that child’s natural or adoptive parent has permanently left the household.
DATES: This final rule is effective on June 16, 2008.
Tuesday, May 13, 2008
UC - subpoenas - testimony material to outcome
Horton v. UCBR - May 12, 2008 - Commonwealth Court
http://www.courts.state.pa.us/OpPosting/CWealth/out/1815CD07_7-21-08.pdf
Claimant was fired when he refused to obey a superior's order about processing incoming orders. Claimant alleged that the employer vice-president would testify about company policy and would establish good cause for his refusal to obey the order and requested that the referee issue a subpoena. The referee refused and found claimant guilty of willful misconduct.
The court reversed and remanded. "Whether the failure to issue a subpoena to allow the vice-president to testify was harmless error is determined by whether his testimony would have been material to the outcome of the case. Hussey Copper Ltd. v. Unemployment Compensation Board of Review, 718 A.2d 894 (Pa. Cmwlth. 1998).
'Given that it was the vice-president not claimant's supervisor that terminated him and was in charge of the policy, the Referee’s failure to allow Claimant to subpoena the vice-president regarding the company policy on receiving merchandise, what the V.P. had told Claimant about that policy when he hired him, and whether he was required to follow the directives of the supervisor to ignore the policy was not harmless error because it took away his ability to establish “good cause” for not following the supervisor's directive. Because the V.P.'s testimony was material to deciding the case, it was not harmless error to refuse the subpoena
http://www.courts.state.pa.us/OpPosting/CWealth/out/1815CD07_7-21-08.pdf
Claimant was fired when he refused to obey a superior's order about processing incoming orders. Claimant alleged that the employer vice-president would testify about company policy and would establish good cause for his refusal to obey the order and requested that the referee issue a subpoena. The referee refused and found claimant guilty of willful misconduct.
The court reversed and remanded. "Whether the failure to issue a subpoena to allow the vice-president to testify was harmless error is determined by whether his testimony would have been material to the outcome of the case. Hussey Copper Ltd. v. Unemployment Compensation Board of Review, 718 A.2d 894 (Pa. Cmwlth. 1998).
'Given that it was the vice-president not claimant's supervisor that terminated him and was in charge of the policy, the Referee’s failure to allow Claimant to subpoena the vice-president regarding the company policy on receiving merchandise, what the V.P. had told Claimant about that policy when he hired him, and whether he was required to follow the directives of the supervisor to ignore the policy was not harmless error because it took away his ability to establish “good cause” for not following the supervisor's directive. Because the V.P.'s testimony was material to deciding the case, it was not harmless error to refuse the subpoena
Sunday, May 11, 2008
insurance - misrepresentation - void ab initio
Cummings v. American General Life Insurance Co. - ED Pa. - May 6, 2008
http://www.paed.uscourts.gov/documents/opinions/08D0507P.pdf
Held: Misrepresentation about past drug use is a material representation that justifies insurer in declaring policy void ab initio. The policy contained a clause stating that applicant's information was true and that the insurer could reduce or deny a claim which the insurer had relied of, if it materially affected the company's acceptance of the risk.
Pennsylvania courts “have held that an insurance policy obtained by means of a material misrepresentation will, if challenged within the period of contestability, be declared void ab initio....Under Pennsylvania law an insurance policy is void for misrepresentation when the insurer establishes three elements: (1) that the representation was false; (2) that the insured knew that the representation was false when made or made it in bad faith; and (3) that the representation was material to the risk being insured.”
Courts applying Pennsylvania law have routinely held that misrepresentations regarding alcohol abuse are deemed to be made in bad faith as a matter of law and extended this holding to include misrepresentations regarding drug use. ... The Third Circuit Court of Appeals equates alcohol abuse and drug abuse in the same manner.
Under Pennsylvania law, a misrepresentation does not have to be related to the eventual claim for which benefits are sought in order to be “material” for legal purposes. A statement is material if it is relevant to the risk assumed, even if it is unrelated to the loss actually incurred.
Any “misrepresented fact is material if being disclosed to the insurer it would have caused it to refuse the risk altogether or to demand a higher premium.”
The undisputed facts here, together with long-standing governing law, lead to the conclusion that decedent's past drug use would have led the insurer to deny decedent's insurance coverage and, thus, is a material fact .
http://www.paed.uscourts.gov/documents/opinions/08D0507P.pdf
Held: Misrepresentation about past drug use is a material representation that justifies insurer in declaring policy void ab initio. The policy contained a clause stating that applicant's information was true and that the insurer could reduce or deny a claim which the insurer had relied of, if it materially affected the company's acceptance of the risk.
Pennsylvania courts “have held that an insurance policy obtained by means of a material misrepresentation will, if challenged within the period of contestability, be declared void ab initio....Under Pennsylvania law an insurance policy is void for misrepresentation when the insurer establishes three elements: (1) that the representation was false; (2) that the insured knew that the representation was false when made or made it in bad faith; and (3) that the representation was material to the risk being insured.”
Courts applying Pennsylvania law have routinely held that misrepresentations regarding alcohol abuse are deemed to be made in bad faith as a matter of law and extended this holding to include misrepresentations regarding drug use. ... The Third Circuit Court of Appeals equates alcohol abuse and drug abuse in the same manner.
Under Pennsylvania law, a misrepresentation does not have to be related to the eventual claim for which benefits are sought in order to be “material” for legal purposes. A statement is material if it is relevant to the risk assumed, even if it is unrelated to the loss actually incurred.
Any “misrepresented fact is material if being disclosed to the insurer it would have caused it to refuse the risk altogether or to demand a higher premium.”
The undisputed facts here, together with long-standing governing law, lead to the conclusion that decedent's past drug use would have led the insurer to deny decedent's insurance coverage and, thus, is a material fact .
Friday, May 09, 2008
contracts - good faith and fair dealing
Pierce v. QVC, Inc. - ED Pa. - May 5, 2008
http://www.paed.uscourts.gov/documents/opinions/08D0511P.pdf
Pennsylvania courts have adopted the general duty of good faith and fair dealing in the performance of a contract as found in the Restatement 2d, Contracts § 205, see, e.g., Somers v. Somers, 613 A.2d 1211, 1213 (Pa. Super. Ct. 1992), and the state UCC, 13 Pa. Cons. Stat. § 1203, imposes a similar requirement.
UCC §1203 provides that “[e]very contract or duty within this title imposes an obligation of good faith in its performance or enforcement.” “Good faith” is defined by statute as “[h]onesty in fact in the conduct or transaction concerned.” 13 Pa. C.S. §1201. As Pennsylvania courts and the Third Circuit have explained, however, “[t]he obligation to act in good faith in the performance of contractual duties varies somewhat with the context.”
Noting the U.C.C. definition of good faith, the Restatement explains that “[g]ood faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party . . . .” Restatement 2d, Contracts § 205 Cmt. a.
As the Third Circuit has explained, with "rare exception, the courts use the UCC good faith requirements in aid and furtherance of the parties’ agreement, not to override the parties’ agreement for reasons of fairness, policy, or morality. Thus, courts generally utilize the good faith duty as an interpretive tool to determine the parties’ justifiable expectations, and do not enforce an independent duty divorced from the specific clauses of the contract."
The comment to 13 Pa. C.S. §1203 notes that “the doctrine of good faith merely directs a court towards interpreting contracts within the commercial context in which they are created, performed, and enforced, and does not create a separate duty of fairness and reasonableness which can be independently breached.”
In fact, the Third Circuit and this Court have recognized an independent duty of good faith under Pennsylvania law only in “limited situations,” such as a confidential or fiduciary relationship.
Courts should “utilize the good faith duty as an interpretive tool to determine the parties’ justifiable expectations” and not to “override the parties’ agreement for reasons of fairness, policy, or morality,” which "would be contrary to the meaning of the duty of good faith found in the Restatement and Pennsylvania’s U.C.C."
http://www.paed.uscourts.gov/documents/opinions/08D0511P.pdf
Pennsylvania courts have adopted the general duty of good faith and fair dealing in the performance of a contract as found in the Restatement 2d, Contracts § 205, see, e.g., Somers v. Somers, 613 A.2d 1211, 1213 (Pa. Super. Ct. 1992), and the state UCC, 13 Pa. Cons. Stat. § 1203, imposes a similar requirement.
UCC §1203 provides that “[e]very contract or duty within this title imposes an obligation of good faith in its performance or enforcement.” “Good faith” is defined by statute as “[h]onesty in fact in the conduct or transaction concerned.” 13 Pa. C.S. §1201. As Pennsylvania courts and the Third Circuit have explained, however, “[t]he obligation to act in good faith in the performance of contractual duties varies somewhat with the context.”
Noting the U.C.C. definition of good faith, the Restatement explains that “[g]ood faith performance or enforcement of a contract emphasizes faithfulness to an agreed common purpose and consistency with the justified expectations of the other party . . . .” Restatement 2d, Contracts § 205 Cmt. a.
As the Third Circuit has explained, with "rare exception, the courts use the UCC good faith requirements in aid and furtherance of the parties’ agreement, not to override the parties’ agreement for reasons of fairness, policy, or morality. Thus, courts generally utilize the good faith duty as an interpretive tool to determine the parties’ justifiable expectations, and do not enforce an independent duty divorced from the specific clauses of the contract."
The comment to 13 Pa. C.S. §1203 notes that “the doctrine of good faith merely directs a court towards interpreting contracts within the commercial context in which they are created, performed, and enforced, and does not create a separate duty of fairness and reasonableness which can be independently breached.”
In fact, the Third Circuit and this Court have recognized an independent duty of good faith under Pennsylvania law only in “limited situations,” such as a confidential or fiduciary relationship.
Courts should “utilize the good faith duty as an interpretive tool to determine the parties’ justifiable expectations” and not to “override the parties’ agreement for reasons of fairness, policy, or morality,” which "would be contrary to the meaning of the duty of good faith found in the Restatement and Pennsylvania’s U.C.C."
employment - "infamous crimes" - crimen falsi - Article II, sec. 7
Cmwlth. v. Griffin - Pennsylvania Supreme Court - May 6, 2008
http://www.courts.state.pa.us/OpPosting/Supreme/out/J-26-08mo.pdf
This quo warranto case concerns Article II, sec. 7, of the Pennsylvania Constitution, which provides that "[n]o person convicted of embezzlement of public moneys, bribery, perjury or other infamous crime shall be eligible to the General Assembly, or capable of holding any office of trust or profit in this Commonwealth."
The Court held that the respondent, a Philadelphia Municipal Court judge, who was convicted of two felonies in 1984 related to fraudulently procuring a credit card, was disqualified under Article II, sec. 7, from continuing to hold her office as judge.
infamous crimes -
In "the seminal decision of Commonwealth v. Shaver (Pa. 1842) after a thorough historical review, this Court ultimately described the category of infamous offenses as follows: The offences which disqualify a person to give evidence, when convicted of the same, are treason, felony, and every species of the crimen falsi--such as forgery, subornation of perjury, attaint of false verdict, and other offences of the like description, which involve the charge of falsehood and affect the public administration of justice."
The court here rejected respondent's claims that "the inclusion of all felonies and crimen falsi offenses within the constitutional classification...'appears to go too far' [and] that such crimes should only be considered as prohibiting the holding of public office if they undermine the administration of justice." The Court said that it "has consistently adhered to an interpretation in which felonies and crimen falsi offenses are distinct (albeit overlapping) categories, both of which contribute to the definition of infamous crimes.""
This also comports with the understanding of the term 'infamous' at common law. As one commentator has observed: [U]nder the early common law certain crimes were called “infamous” on account of the shameful status which resulted to the person convicted of one of them. Crimes which were regarded as infamous were treason, felonies, any offense tending to pervert the administration of justice, and such crimes as came within the general scope of the term “crimen falsi” of the Roman law, such as perjury, subornation of perjury, barratry, conspiracy, swindling, cheating, and other crimes of a kindred nature. M. C. Dransfield, Annotation, What is an Infamous Crime or One Involving Moral Turpitude Constituting Disqualification to Hold Public Office, 52 A.L.R.2d 1514, §2(a)
laches -
Laches bars relief when the plaintiff’s lack of due diligence in failing to timely institute an action results in prejudice to another. Because it is an affirmative defense, the burden of proof is on the defendant or respondent to demonstrate unreasonable delay and prejudice....Thus, “[t]he party asserting laches as a defense must present evidence demonstrating prejudice from a lapse of time . . . [such as] that a witness has died or become unavailable, that substantiating records were lost, or that the defendant has changed [her] position in anticipation the opposing party has waived his claims.” ...Furthermore, “[t]he question of laches is factual and is determined by examining the circumstances of each case.” ....[L]aches may be invoked in disciplinary proceedings for professional misconduct [although] it is less clear that it should ordinarily be deemed available relative to an Article II, Section 7 quo warranto action.
“Where the time delay is grossly unreasonable, the defendant’s burden of proof may be proportionately eased and the ‘necessity for specifics regarding prejudice or injury becomes less crucial.’”
http://www.courts.state.pa.us/OpPosting/Supreme/out/J-26-08mo.pdf
This quo warranto case concerns Article II, sec. 7, of the Pennsylvania Constitution, which provides that "[n]o person convicted of embezzlement of public moneys, bribery, perjury or other infamous crime shall be eligible to the General Assembly, or capable of holding any office of trust or profit in this Commonwealth."
The Court held that the respondent, a Philadelphia Municipal Court judge, who was convicted of two felonies in 1984 related to fraudulently procuring a credit card, was disqualified under Article II, sec. 7, from continuing to hold her office as judge.
infamous crimes -
In "the seminal decision of Commonwealth v. Shaver (Pa. 1842) after a thorough historical review, this Court ultimately described the category of infamous offenses as follows: The offences which disqualify a person to give evidence, when convicted of the same, are treason, felony, and every species of the crimen falsi--such as forgery, subornation of perjury, attaint of false verdict, and other offences of the like description, which involve the charge of falsehood and affect the public administration of justice."
The court here rejected respondent's claims that "the inclusion of all felonies and crimen falsi offenses within the constitutional classification...'appears to go too far' [and] that such crimes should only be considered as prohibiting the holding of public office if they undermine the administration of justice." The Court said that it "has consistently adhered to an interpretation in which felonies and crimen falsi offenses are distinct (albeit overlapping) categories, both of which contribute to the definition of infamous crimes.""
This also comports with the understanding of the term 'infamous' at common law. As one commentator has observed: [U]nder the early common law certain crimes were called “infamous” on account of the shameful status which resulted to the person convicted of one of them. Crimes which were regarded as infamous were treason, felonies, any offense tending to pervert the administration of justice, and such crimes as came within the general scope of the term “crimen falsi” of the Roman law, such as perjury, subornation of perjury, barratry, conspiracy, swindling, cheating, and other crimes of a kindred nature. M. C. Dransfield, Annotation, What is an Infamous Crime or One Involving Moral Turpitude Constituting Disqualification to Hold Public Office, 52 A.L.R.2d 1514, §2(a)
laches -
Laches bars relief when the plaintiff’s lack of due diligence in failing to timely institute an action results in prejudice to another. Because it is an affirmative defense, the burden of proof is on the defendant or respondent to demonstrate unreasonable delay and prejudice....Thus, “[t]he party asserting laches as a defense must present evidence demonstrating prejudice from a lapse of time . . . [such as] that a witness has died or become unavailable, that substantiating records were lost, or that the defendant has changed [her] position in anticipation the opposing party has waived his claims.” ...Furthermore, “[t]he question of laches is factual and is determined by examining the circumstances of each case.” ....[L]aches may be invoked in disciplinary proceedings for professional misconduct [although] it is less clear that it should ordinarily be deemed available relative to an Article II, Section 7 quo warranto action.
“Where the time delay is grossly unreasonable, the defendant’s burden of proof may be proportionately eased and the ‘necessity for specifics regarding prejudice or injury becomes less crucial.’”
Friday, May 02, 2008
Fair Housing Act - reasonable accommodations - HUD/DOJ Joint Statement
http://www.hud.gov/offices/fheo/disabilities/reasonable_modifications_mar08.pdf
The Department of Justice ("DOJ") and the Department of Housing and Urban Development ("HUD") are jointly responsible for enforcing the federal Fair Housing Act, 42 U.S.C. §§ 3601-3619, which prohibits discrimination in housing on the basis of race, color, religion, sex, national origin, familial status, and disability.
One type of disability discrimination prohibited by the Act is a refusal to permit, at the expense of the person with a disability, reasonable modifications of existing premises occupied or to be occupied by such person if such modifications may be necessary to afford such person full enjoyment of the premises.
HUD and DOJ frequently respond to complaints alleging that housing providers have violated the Act by refusing reasonable modifications to persons with disabilities.
This Statement provides technical assistance regarding the rights and obligations of persons with disabilities and housing providers under the Act relating to reasonable modifications.
The Department of Justice ("DOJ") and the Department of Housing and Urban Development ("HUD") are jointly responsible for enforcing the federal Fair Housing Act, 42 U.S.C. §§ 3601-3619, which prohibits discrimination in housing on the basis of race, color, religion, sex, national origin, familial status, and disability.
One type of disability discrimination prohibited by the Act is a refusal to permit, at the expense of the person with a disability, reasonable modifications of existing premises occupied or to be occupied by such person if such modifications may be necessary to afford such person full enjoyment of the premises.
HUD and DOJ frequently respond to complaints alleging that housing providers have violated the Act by refusing reasonable modifications to persons with disabilities.
This Statement provides technical assistance regarding the rights and obligations of persons with disabilities and housing providers under the Act relating to reasonable modifications.
Tuesday, April 29, 2008
bankruptcy - sanctions - Rule 9011 - misrepresentation - ownership of note
In re Nosek - Bankr. D. Mass. - April 25, 2008
https://ecf.mab.uscourts.gov/cgi-bin/op.pl?jbr - Nosek decision 02-46025
or
http://online.wsj.com/public/resources/documents/LB_Nosek-Decision.pdf?mod=WSJBlog
In this individual bankruptcy case, the court sanctioned Ameriquest ($250,000), Wells Fargo ($250,000) and various attorneys ($25,000) and a firm ($100,000) under Bankruptcy Rule 9011 http://www.law.cornell.edu/rules/frbp/rules.htm#Rule9011 (Signing of Papers; Representations to the Court; Sanctions; Verification and Copies of Papers) for misrepresentations about the ownership of a note and mortgage.
holder/standing - The court expressed itself in the strongest language, e.g. - "As this Court has noted on more than one occasion, those parties who do not hold the note or mortgage and who do not service the mortgage do not have standing to pursue motions for relief or other actions arising from the mortgage obligation....The Court has had to expend time and resources, as have debtors already burdened in their attempts to pay their mortgages, because of the carelessness of those in the residential mortgage industry and the bombast this Court and others have encountered when calling them on their shortcomings."
intent - The court rejected the claim of lack of bad intent on the part of the attorneys, firms and creditors - "Virtually all of parties argue that there was no intent to mislead the Court. Because the standard to be applied is an objective one, the Court may quickly dispatch this argument. Intent is irrelevant. The argument that the assignment of the note and mortgage was a matter of public record and therefore the Debtor knew or should have known of Norwest’s identity is relevant but disingenuous, indeed even arrogant, since many of these same parties asserting this position allege they had no way of knowing about the assignment. They seek to bind the Debtor to one standard and themselves to a much lower one. Moreover the attorneys and law firms’ argument that notes and mortgages frequently change hands multiple times, often with written documentation executed later, which they offer as explanation as to why its reasonable for them to rely on the representations of their clients should provide little shelter when they insist that the Debtor should have known better than to take their pleadings literally. This Court will not countenance creditors and creditors’s attorneys holding themselves to a different and clearly lower standard than what they expect of the Debtor. It will not tolerate a lender’s or servicer’s disregard for the rules that govern litigation, including contested matters, in the federal courts. It is the creditor’s responsibility to keep a borrower and the Court informed as to who owns the note and mortgage and is servicing the loan, not the borrower’s or the Court’s responsibility to ferret out the truth." (emphasis added)
https://ecf.mab.uscourts.gov/cgi-bin/op.pl?jbr - Nosek decision 02-46025
or
http://online.wsj.com/public/resources/documents/LB_Nosek-Decision.pdf?mod=WSJBlog
In this individual bankruptcy case, the court sanctioned Ameriquest ($250,000), Wells Fargo ($250,000) and various attorneys ($25,000) and a firm ($100,000) under Bankruptcy Rule 9011 http://www.law.cornell.edu/rules/frbp/rules.htm#Rule9011 (Signing of Papers; Representations to the Court; Sanctions; Verification and Copies of Papers) for misrepresentations about the ownership of a note and mortgage.
holder/standing - The court expressed itself in the strongest language, e.g. - "As this Court has noted on more than one occasion, those parties who do not hold the note or mortgage and who do not service the mortgage do not have standing to pursue motions for relief or other actions arising from the mortgage obligation....The Court has had to expend time and resources, as have debtors already burdened in their attempts to pay their mortgages, because of the carelessness of those in the residential mortgage industry and the bombast this Court and others have encountered when calling them on their shortcomings."
intent - The court rejected the claim of lack of bad intent on the part of the attorneys, firms and creditors - "Virtually all of parties argue that there was no intent to mislead the Court. Because the standard to be applied is an objective one, the Court may quickly dispatch this argument. Intent is irrelevant. The argument that the assignment of the note and mortgage was a matter of public record and therefore the Debtor knew or should have known of Norwest’s identity is relevant but disingenuous, indeed even arrogant, since many of these same parties asserting this position allege they had no way of knowing about the assignment. They seek to bind the Debtor to one standard and themselves to a much lower one. Moreover the attorneys and law firms’ argument that notes and mortgages frequently change hands multiple times, often with written documentation executed later, which they offer as explanation as to why its reasonable for them to rely on the representations of their clients should provide little shelter when they insist that the Debtor should have known better than to take their pleadings literally. This Court will not countenance creditors and creditors’s attorneys holding themselves to a different and clearly lower standard than what they expect of the Debtor. It will not tolerate a lender’s or servicer’s disregard for the rules that govern litigation, including contested matters, in the federal courts. It is the creditor’s responsibility to keep a borrower and the Court informed as to who owns the note and mortgage and is servicing the loan, not the borrower’s or the Court’s responsibility to ferret out the truth." (emphasis added)
Friday, April 25, 2008
consumer - arbitration clause - unconscionability - waiver
Zimmer v. CooperNeff Advisors, Inc. - 3d Circuit - April 14, 2008
http://www.ca3.uscourts.gov/opinarch/051119p.pdf
The employer/federal defendant sued plaintiff in state court seeking injunctive relief under 6 different legal theories, asking the court to enjoin Zimmer from disclosing or using a stock trading model he had developed.
Six months later, plaintiff/employee, a Harvard Ph.D. in economics, sued the former employer for copyright infringement and other matters concerning the model. Defendant answered the complaint on September 7 and asserted two counterclaims seeking declaratory judgments. In an amended answer, filed two weeks later, defendant asserted a right to arbitration and then filed a motion to compel.
There had been extensive job negotiations before Plaintiff Zimmer became employed at CooperNeff. The contract included a clause requiring plaintiff to submit any disputes about intellectual property to arbitration but allowed the employer to retain the right to bring any action "directly in a court of competent jurisdiction and [without the need] to arbitrate any such claims."
The district court found the arbitration clause unconscionable and that the defendant had waived its enforcement. The appellate court reversed on the unconscionability issue and remanded for further fact-finding about waiver.
unconscionability
Under Pennsylvania law, a party challenging an arbitration agreement has the burden to demonstrate that the agreement is both procedurally and substantively unconscionable. Salley v. Option One Mortgage Corp., 925 A.2d 115, 119-120 (Pa. 2007).
procedural unconscionability
Procedural unconscionability refers specifically to “the process by which an agreement is reached and the form of an agreement, including the use therein of fine print and convoluted or unclear language.” Harris v. Green Tree Fin. Corp., 183 F.3d 173, 181 (3d Cir. 1999). The trial court had found the agreement was procedurally unconscionable. The appellate court overruled, contrasting the case of Alexander v. Anthony International, 341 F.3d 256 (3d Cir. 2003), in which the workers were uneducated crane operators to whom the contract was offered on a take-it-or-leave-it basis. Here, plaintiff was very educated and bargained about the contract terms. Plaintiff "did not lack a meaningful choice in accepting the challenged arbitration provision."
substantive unconscionability
Even though the lack of procedural unconscionability decided the case, the court said that it was going to "take the occasion" to register its "concern about the District Court's holding on substantive unconscionability," which looks to whether the arbitration provision “unreasonably favors the party asserting it.” Salley, 925 A.2d 115 at 119.
The court noted that the Salley court had expressly abrogated the holding in Lytle v. Citifinancial Servs., Inc., 810 A.2d 643, 665 (Pa. Super. Ct. 2002), that “under Pennsylvania law, the reservation by [one party] of access to the courts for itself to the exclusion of [another] creates a presumption of unconscionability, which in the absence of ‘business realities’ that compel inclusion of such a provision in an arbitration provision, renders the arbitration provision unconscionable and unenforceable under Pennsylvania law." Rather, it held that "there is no presumption of unconscionability associated with an arbitration agreement merely on the basis that the agreement reserves judicial remedies associated with foreclosure” for lenders, to the exclusion of borrowers." Salley at 129.
Salley did not hold that an arbitration clause reserving remedies could never be unconscionable; rather, it held that there “is a facially apparent business justification for such an exception [in the context of mortgage lending], as the safeguards thereby preserved assure regularity and consistency for the benefit of both lender and borrower, and accordingly, there are sound pragmatic and policy reasons why foreclosure proceedings should be pursued in a court of law.” Salley at 128.
The instant court went on to say, however, that it did "not hold, and we believe the Pennsylvania Supreme Court did not hold, that unequal access to the courts can never be the basis for finding an arbitration agreement unconscionable. The conclusion in each case will depend on the circumstances."
waiver
The district court held that the company had waived its right to compel arbitration solely on the basis of its initiation and pursuit of judicial enforcement of its rights in state court. On appeal the court held, initially, that the waiver issue was a judicial question, not one for an arbitrator. Ehleiter v. Grapetree Stores, 482 F.3d 207, 221 (3d Cir. 2007).
It went on, however, to reject the notion that litigation by itself constitute a waiver. It said that "prejudice [to the opposing party] is the touchstone for determining whether the right to arbitrate has been waived by litigation conduct" and cited a "nonexclusive list of factors" including the length and the breadth of the judicial action, and the assert of the arbitration right, and other factors tending to show that the party "too unfair advantage of the litigation process to the detriment of the other party" and availed itself of litigation procedures (discovery, etc.) not available in arbitration. It remanded on this issue for relevant fact-finding.
http://www.ca3.uscourts.gov/opinarch/051119p.pdf
The employer/federal defendant sued plaintiff in state court seeking injunctive relief under 6 different legal theories, asking the court to enjoin Zimmer from disclosing or using a stock trading model he had developed.
Six months later, plaintiff/employee, a Harvard Ph.D. in economics, sued the former employer for copyright infringement and other matters concerning the model. Defendant answered the complaint on September 7 and asserted two counterclaims seeking declaratory judgments. In an amended answer, filed two weeks later, defendant asserted a right to arbitration and then filed a motion to compel.
There had been extensive job negotiations before Plaintiff Zimmer became employed at CooperNeff. The contract included a clause requiring plaintiff to submit any disputes about intellectual property to arbitration but allowed the employer to retain the right to bring any action "directly in a court of competent jurisdiction and [without the need] to arbitrate any such claims."
The district court found the arbitration clause unconscionable and that the defendant had waived its enforcement. The appellate court reversed on the unconscionability issue and remanded for further fact-finding about waiver.
unconscionability
Under Pennsylvania law, a party challenging an arbitration agreement has the burden to demonstrate that the agreement is both procedurally and substantively unconscionable. Salley v. Option One Mortgage Corp., 925 A.2d 115, 119-120 (Pa. 2007).
procedural unconscionability
Procedural unconscionability refers specifically to “the process by which an agreement is reached and the form of an agreement, including the use therein of fine print and convoluted or unclear language.” Harris v. Green Tree Fin. Corp., 183 F.3d 173, 181 (3d Cir. 1999). The trial court had found the agreement was procedurally unconscionable. The appellate court overruled, contrasting the case of Alexander v. Anthony International, 341 F.3d 256 (3d Cir. 2003), in which the workers were uneducated crane operators to whom the contract was offered on a take-it-or-leave-it basis. Here, plaintiff was very educated and bargained about the contract terms. Plaintiff "did not lack a meaningful choice in accepting the challenged arbitration provision."
substantive unconscionability
Even though the lack of procedural unconscionability decided the case, the court said that it was going to "take the occasion" to register its "concern about the District Court's holding on substantive unconscionability," which looks to whether the arbitration provision “unreasonably favors the party asserting it.” Salley, 925 A.2d 115 at 119.
The court noted that the Salley court had expressly abrogated the holding in Lytle v. Citifinancial Servs., Inc., 810 A.2d 643, 665 (Pa. Super. Ct. 2002), that “under Pennsylvania law, the reservation by [one party] of access to the courts for itself to the exclusion of [another] creates a presumption of unconscionability, which in the absence of ‘business realities’ that compel inclusion of such a provision in an arbitration provision, renders the arbitration provision unconscionable and unenforceable under Pennsylvania law." Rather, it held that "there is no presumption of unconscionability associated with an arbitration agreement merely on the basis that the agreement reserves judicial remedies associated with foreclosure” for lenders, to the exclusion of borrowers." Salley at 129.
Salley did not hold that an arbitration clause reserving remedies could never be unconscionable; rather, it held that there “is a facially apparent business justification for such an exception [in the context of mortgage lending], as the safeguards thereby preserved assure regularity and consistency for the benefit of both lender and borrower, and accordingly, there are sound pragmatic and policy reasons why foreclosure proceedings should be pursued in a court of law.” Salley at 128.
The instant court went on to say, however, that it did "not hold, and we believe the Pennsylvania Supreme Court did not hold, that unequal access to the courts can never be the basis for finding an arbitration agreement unconscionable. The conclusion in each case will depend on the circumstances."
waiver
The district court held that the company had waived its right to compel arbitration solely on the basis of its initiation and pursuit of judicial enforcement of its rights in state court. On appeal the court held, initially, that the waiver issue was a judicial question, not one for an arbitrator. Ehleiter v. Grapetree Stores, 482 F.3d 207, 221 (3d Cir. 2007).
It went on, however, to reject the notion that litigation by itself constitute a waiver. It said that "prejudice [to the opposing party] is the touchstone for determining whether the right to arbitrate has been waived by litigation conduct" and cited a "nonexclusive list of factors" including the length and the breadth of the judicial action, and the assert of the arbitration right, and other factors tending to show that the party "too unfair advantage of the litigation process to the detriment of the other party" and availed itself of litigation procedures (discovery, etc.) not available in arbitration. It remanded on this issue for relevant fact-finding.
Thursday, April 24, 2008
mortgage foreclosure - Philadelphia Residential Mortgage Foreclosure Diversion Pilot Program
Philadelphia has recently (April 2008) started a Residential Mortgage Foreclosure Diversion Pilot Program.
Under the program, homeowners faced with foreclosure will have the opportunity, after seeing a housing counselor, to take part in a "concilliation conference" in which the parties try to work out an affordable modification of the loan or an affordable payment arrangement.
Here is a link to the program regulations:
http://fjd.phila.gov/pdf/regs/2008/cpjgcr-2008-01.pdf
Here is a link to the court order and relevant forms (fillable PDF): http://fjd.phila.gov/pdf/regs/2008/2008-01-Order-Certification-Objection.pdf
Under the program, homeowners faced with foreclosure will have the opportunity, after seeing a housing counselor, to take part in a "concilliation conference" in which the parties try to work out an affordable modification of the loan or an affordable payment arrangement.
Here is a link to the program regulations:
http://fjd.phila.gov/pdf/regs/2008/cpjgcr-2008-01.pdf
Here is a link to the court order and relevant forms (fillable PDF): http://fjd.phila.gov/pdf/regs/2008/2008-01-Order-Certification-Objection.pdf
UC- self-employment - employee v. independent contractor
CE Credits Online v. UCBR - Commonwealth Court - April 24, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/1269CD07_4-24-08.pdf
The claimant was held to be an independent contractor rather than an employee and thus ineligible for benefits under sec. 402(h) of the UC Law, 43 P.S. sec. 802(h).
The claimant, who had an M.S. in adult education, was an online moderator, for several online educational institutions, including the employer in this case. The court held that the "heart of the issue of 'control'" of a person's work involves control over both the means and result of the work. "Every job, whether performed by an employee or by an independent contractor, has parameters and expectations. 'Control' for purposes of Section 4(l)(2)(B) of the Law is not a matter of approving or directing the final work product so much as it is a matter of controlling the means of its accomplishment."
"Whether an individual performs services as an independent contractor or as an employee is governed by Section 4(l)(2)(B) of the Law. It states as follows:
'Services performed by an individual for wages shall be deemed to be employment subject to this act, unless and until it is shown to the satisfaction of the department that -- (a) such individual has been and will continue to be free from control or direction over the performance of such services both under his contract of service and in fact; and (b) as to such services such individual is customarily engaged in an independently established trade, occupation, profession or business. 43 P.S. §753(l)(2)(B) (emphasis added).
Thus, where the claimant’s services are performed free of the employer's control and the claimant’s services are the type performed in an independent trade or business, the claimant is not in an employment relationship. The employer asserting that the claimant is not eligible by reason of Section 4(l)(2)(B) of the Law bears the burden of proof. Urban Redevelopment Authority of Pittsburgh v. UCBR, 596 A.2d 1209, 1211 (Pa. Cmwlth. 1991)."
The Commonwealth Court "has identified a number of factors relevant to whether an employee is free of 'control' for purposes of Section 4(l)(2)(B). They include: whether there is a fixed rate of remuneration; whether taxes are withheld from the claimant’s pay; whether the employer supplies the tools necessary to carry out the services; whether the employer provides on-the-job training; and whether the employer holds regular meetings that the claimant was expected to attend. Pavalonis v. UCBR, 426 A.2d 215, 217 (Pa. Cmwlth. 1981). No one factor is dispositive of the ultimate question of whether the putative employer “controls” the work to be done and the manner in which it is done." Only one factor - the fixed rate of remuneration - cut in the claimant's favor in this case.
The claimant only worked a few hours a week for the company, at times and a place (home) of his own choice, with his own equipment (a computer), and free of day-to-day supervision. In addition, there was a written contract stating the claimant was an independent contractor, and that he had the "sole right to control and direct the mean, manner and method by which the services required...will be performed." Claimant had a similar arrangement with several other companies. No taxes were deducted from his pay, and he got no job benefits (insurance, etc.).
http://www.courts.state.pa.us/OpPosting/CWealth/out/1269CD07_4-24-08.pdf
The claimant was held to be an independent contractor rather than an employee and thus ineligible for benefits under sec. 402(h) of the UC Law, 43 P.S. sec. 802(h).
The claimant, who had an M.S. in adult education, was an online moderator, for several online educational institutions, including the employer in this case. The court held that the "heart of the issue of 'control'" of a person's work involves control over both the means and result of the work. "Every job, whether performed by an employee or by an independent contractor, has parameters and expectations. 'Control' for purposes of Section 4(l)(2)(B) of the Law is not a matter of approving or directing the final work product so much as it is a matter of controlling the means of its accomplishment."
"Whether an individual performs services as an independent contractor or as an employee is governed by Section 4(l)(2)(B) of the Law. It states as follows:
'Services performed by an individual for wages shall be deemed to be employment subject to this act, unless and until it is shown to the satisfaction of the department that -- (a) such individual has been and will continue to be free from control or direction over the performance of such services both under his contract of service and in fact; and (b) as to such services such individual is customarily engaged in an independently established trade, occupation, profession or business. 43 P.S. §753(l)(2)(B) (emphasis added).
Thus, where the claimant’s services are performed free of the employer's control and the claimant’s services are the type performed in an independent trade or business, the claimant is not in an employment relationship. The employer asserting that the claimant is not eligible by reason of Section 4(l)(2)(B) of the Law bears the burden of proof. Urban Redevelopment Authority of Pittsburgh v. UCBR, 596 A.2d 1209, 1211 (Pa. Cmwlth. 1991)."
The Commonwealth Court "has identified a number of factors relevant to whether an employee is free of 'control' for purposes of Section 4(l)(2)(B). They include: whether there is a fixed rate of remuneration; whether taxes are withheld from the claimant’s pay; whether the employer supplies the tools necessary to carry out the services; whether the employer provides on-the-job training; and whether the employer holds regular meetings that the claimant was expected to attend. Pavalonis v. UCBR, 426 A.2d 215, 217 (Pa. Cmwlth. 1981). No one factor is dispositive of the ultimate question of whether the putative employer “controls” the work to be done and the manner in which it is done." Only one factor - the fixed rate of remuneration - cut in the claimant's favor in this case.
The claimant only worked a few hours a week for the company, at times and a place (home) of his own choice, with his own equipment (a computer), and free of day-to-day supervision. In addition, there was a written contract stating the claimant was an independent contractor, and that he had the "sole right to control and direct the mean, manner and method by which the services required...will be performed." Claimant had a similar arrangement with several other companies. No taxes were deducted from his pay, and he got no job benefits (insurance, etc.).
Wednesday, April 23, 2008
mortage foreclosure - Pew Reports (2008)
The Pew Charitable Trusts has just published a report on the governmental response to the foreclosure crisis.
It has also issued a report about each state.
Here is the general report http://www.pewcenteronthestates.org/uploadedFiles/PCS_DefaultingOnTheDream_Report_FINAL041508_01.pdf
Here is the report on Pennsylvania
http://www.pewcenteronthestates.org/uploadedFiles/wwwpewcenteronthestatesorg/Fact_Sheets/8013PCTS_StateFactSht_FINAL041508%20PA.pdf
It has also issued a report about each state.
Here is the general report http://www.pewcenteronthestates.org/uploadedFiles/PCS_DefaultingOnTheDream_Report_FINAL041508_01.pdf
Here is the report on Pennsylvania
http://www.pewcenteronthestates.org/uploadedFiles/wwwpewcenteronthestatesorg/Fact_Sheets/8013PCTS_StateFactSht_FINAL041508%20PA.pdf
Monday, April 21, 2008
real property - tax assessments - LIHTC properties - fair market value
1198 Butler Street Associates, et al. v.Board of Assessment Appeals - Commonwealth Court - April 17, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/1374CD07_4-17-08.pdf
Taxpayers, seven limited partnerships operating under the aegis of a non-profit general partner, appealed property assessments for residential rental properties on which there were income and rent restrictions under the Low-Income Housing Tax Credit (LIHTC) provision of the IRS Code, 26 USC 42, which provides income tax credits for non-public entities that develop affordable rental housing.
All properties were developed with the same non-revocable restrictive covenant in order to benefit from the tax credits. They are all rent- and income-restricted for a period of 30 years. These non-revocable covenants restrict the renter’s income level to either 50% or 60% of area median income.
Taxpayers presented testimony, credited by the trial court, that they did not charge the maximum allowable rent because their tenants could not afford it. The testimony also established that there would be increased vacancy and collection rates if they charged the maximum allowable rent, and that taxpayers needed property tax relief because the income generated from the subject properties does not support the current real estate taxes
Taxpayers' expert identified the properties’ highest and best uses of the property as subsidized income tax credit housing facilities. Addressing the three methods of valuation for real estate tax purposes, as required by 72 P.S. 5020-402(a), Taxpayers’ expert discounted the cost approach (rental incomes would not support construction of new facilities) and the comparable sales approach (no other comparable units with similar rent restrictions) and adopted the income approach, which the trial court improperly (but harmlessly) referred to as "use value.
The General Assembly amended the Assessment Law in 2003 to include sec. 402(c)(1), 72 P.S. §5020-402(c)(1), which provides that: "[i]n arriving at the actual value of real property, the impact of applicable rent restrictions, affordability requirements or any other related restrictions prescribed by any Federal or State programs shall be considered."
The amendment is consistent with prior case law addressing the effects of rent restrictions and clearly mandates that rent restrictions be considered in determining fair market value. It has the laudatory goal of encouraging development of low income housing in exchange for reduced property valuation for real estate tax purposes. The amendment was intended to provide property tax relief to those entities that do not have unfettered ability to raise rent to combat increasing business expenses.
The position of the taxing authority failed to account for the amendment's direction that “affordability requirements” be considered in determining fair market value for tax assessment purposes. This new, express statutory directive must be viewed as overriding older court decisions to the extent they support a contrary result. In addition, federal tax law anticipates affordability restrictions in addition to maximum allowable rents. This is consistent with the statutory goal of making affordable housing available to lower income consumers.
"In light Section 402 of the Assessment Law, the taxpayers’ evidence regarding rent restrictions under 26 U.S.C. §42, the non-revocable restrictive covenants which limit taxpayers ability to produce income on the subject properties, and the affordability of taxpayers’ units, we discern no error in the trial court’s application of Section 402(c)(1) of the Assessment Law."
Judge Pelligrini, concurring -
Based on the issues raised, I join in the well-reasoned majority opinion. I write separately because I disagree that 72 P.S. §5020-402(c) is consistent with our Supreme Court’s decision in In re Appeal of Johnstown Associates, 494 Pa. 433, 431 A.2d 932 (1981). In that case, like here, rents in a subsidized housing project were fixed by the Department of Housing and Urban Development at a rate below the prevailing rate for comparable non-subsidized units in a long term arrangement in return for a subsidized mortgage. The taxpayer argued that the rent restrictions should be considered in valuing the property. Our Supreme Court agreed, holding that the certitude that the property did not have the potential for rental profit increases must at least be considered, but went on to hold that the depreciated tax shelter benefits associated with owning this type of property could be taken into consideration. Id., 431 A.2d at 935.
Read in full, 72 P.S. §5020-402 (c), however, provides that:
(c)(1) In arriving at the actual value of real property, the impact of applicable rent restrictions, affordability requirements or any other related restrictions prescribed by any Federal or State programs shall be considered. (2) Federal or State income tax credits with respect to property shall not be considered real property or income attributable to real property. (3) This subsection shall apply in all counties and other political subdivisions in this Commonwealth. (Emphasis added.)
Unlike our Supreme Court’s holding in Johnstown Associates, 72 P.S. §5020-402(c) precludes the substantial credits a taxpayer receives from being included in the income stream. By not allowing those tax credits, that provision could be considered to have created a back door partial tax exemption, calling into question whether it violates Article 8, Section 2 of the Pennsylvania Constitution which only allows tax exemptions for real property in certain enumerated areas. Article 8, Section 5 of the Pennsylvania Constitution provides that “All laws exempting property from taxation, other than the property above enumerated [Article 8, §2 of the Constitution] shall be void.”
We do not need to deal with that issue here because in the years in question in this appeal, taxpayer is receiving no tax credits. Moreover, the income stream used in the income capitalization method of valuation will need to be adjusted as the 30-year rent restriction nears its end. For example, in year 29 of the rent restriction, a willing buyer will look more at what market rent can be charged after the rent restriction has expired in determining what he or she is willing to pay for the property .
http://www.courts.state.pa.us/OpPosting/CWealth/out/1374CD07_4-17-08.pdf
Taxpayers, seven limited partnerships operating under the aegis of a non-profit general partner, appealed property assessments for residential rental properties on which there were income and rent restrictions under the Low-Income Housing Tax Credit (LIHTC) provision of the IRS Code, 26 USC 42, which provides income tax credits for non-public entities that develop affordable rental housing.
All properties were developed with the same non-revocable restrictive covenant in order to benefit from the tax credits. They are all rent- and income-restricted for a period of 30 years. These non-revocable covenants restrict the renter’s income level to either 50% or 60% of area median income.
Taxpayers presented testimony, credited by the trial court, that they did not charge the maximum allowable rent because their tenants could not afford it. The testimony also established that there would be increased vacancy and collection rates if they charged the maximum allowable rent, and that taxpayers needed property tax relief because the income generated from the subject properties does not support the current real estate taxes
Taxpayers' expert identified the properties’ highest and best uses of the property as subsidized income tax credit housing facilities. Addressing the three methods of valuation for real estate tax purposes, as required by 72 P.S. 5020-402(a), Taxpayers’ expert discounted the cost approach (rental incomes would not support construction of new facilities) and the comparable sales approach (no other comparable units with similar rent restrictions) and adopted the income approach, which the trial court improperly (but harmlessly) referred to as "use value.
The General Assembly amended the Assessment Law in 2003 to include sec. 402(c)(1), 72 P.S. §5020-402(c)(1), which provides that: "[i]n arriving at the actual value of real property, the impact of applicable rent restrictions, affordability requirements or any other related restrictions prescribed by any Federal or State programs shall be considered."
The amendment is consistent with prior case law addressing the effects of rent restrictions and clearly mandates that rent restrictions be considered in determining fair market value. It has the laudatory goal of encouraging development of low income housing in exchange for reduced property valuation for real estate tax purposes. The amendment was intended to provide property tax relief to those entities that do not have unfettered ability to raise rent to combat increasing business expenses.
The position of the taxing authority failed to account for the amendment's direction that “affordability requirements” be considered in determining fair market value for tax assessment purposes. This new, express statutory directive must be viewed as overriding older court decisions to the extent they support a contrary result. In addition, federal tax law anticipates affordability restrictions in addition to maximum allowable rents. This is consistent with the statutory goal of making affordable housing available to lower income consumers.
"In light Section 402 of the Assessment Law, the taxpayers’ evidence regarding rent restrictions under 26 U.S.C. §42, the non-revocable restrictive covenants which limit taxpayers ability to produce income on the subject properties, and the affordability of taxpayers’ units, we discern no error in the trial court’s application of Section 402(c)(1) of the Assessment Law."
Judge Pelligrini, concurring -
Based on the issues raised, I join in the well-reasoned majority opinion. I write separately because I disagree that 72 P.S. §5020-402(c) is consistent with our Supreme Court’s decision in In re Appeal of Johnstown Associates, 494 Pa. 433, 431 A.2d 932 (1981). In that case, like here, rents in a subsidized housing project were fixed by the Department of Housing and Urban Development at a rate below the prevailing rate for comparable non-subsidized units in a long term arrangement in return for a subsidized mortgage. The taxpayer argued that the rent restrictions should be considered in valuing the property. Our Supreme Court agreed, holding that the certitude that the property did not have the potential for rental profit increases must at least be considered, but went on to hold that the depreciated tax shelter benefits associated with owning this type of property could be taken into consideration. Id., 431 A.2d at 935.
Read in full, 72 P.S. §5020-402 (c), however, provides that:
(c)(1) In arriving at the actual value of real property, the impact of applicable rent restrictions, affordability requirements or any other related restrictions prescribed by any Federal or State programs shall be considered. (2) Federal or State income tax credits with respect to property shall not be considered real property or income attributable to real property. (3) This subsection shall apply in all counties and other political subdivisions in this Commonwealth. (Emphasis added.)
Unlike our Supreme Court’s holding in Johnstown Associates, 72 P.S. §5020-402(c) precludes the substantial credits a taxpayer receives from being included in the income stream. By not allowing those tax credits, that provision could be considered to have created a back door partial tax exemption, calling into question whether it violates Article 8, Section 2 of the Pennsylvania Constitution which only allows tax exemptions for real property in certain enumerated areas. Article 8, Section 5 of the Pennsylvania Constitution provides that “All laws exempting property from taxation, other than the property above enumerated [Article 8, §2 of the Constitution] shall be void.”
We do not need to deal with that issue here because in the years in question in this appeal, taxpayer is receiving no tax credits. Moreover, the income stream used in the income capitalization method of valuation will need to be adjusted as the 30-year rent restriction nears its end. For example, in year 29 of the rent restriction, a willing buyer will look more at what market rent can be charged after the rent restriction has expired in determining what he or she is willing to pay for the property .
Thursday, April 17, 2008
UC - willful misconduct - failure to report absence
Ross v. UCBR - UNREPORTED OPINION - Commonwealth Court - April 14, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/1874CD07_4-14-08.pdf
Claimant committed willful misconduct by failing to properly report her absence, as required by acknowledged employer policy. Claimant's medication caused "extreme fatigue", but the Board found and claimant admitted that she was able to call the employer at some time during the day.
Although claimant's absence was justified, her failure to report it, as required, was willful misconduct. Sedor v. UCBR, 522 A.2d 118 (Pa. Cmwlth 1987)
The fact that the employer policy was not written did not excuse claimant's failure. "It is not necessary that Employer's directive be in writing" in order to establish willful misconduct. Graham v. UCBR, 840 A.2d 1054 (Pa. Cmwlth. 2004).
http://www.courts.state.pa.us/OpPosting/CWealth/out/1874CD07_4-14-08.pdf
Claimant committed willful misconduct by failing to properly report her absence, as required by acknowledged employer policy. Claimant's medication caused "extreme fatigue", but the Board found and claimant admitted that she was able to call the employer at some time during the day.
Although claimant's absence was justified, her failure to report it, as required, was willful misconduct. Sedor v. UCBR, 522 A.2d 118 (Pa. Cmwlth 1987)
The fact that the employer policy was not written did not excuse claimant's failure. "It is not necessary that Employer's directive be in writing" in order to establish willful misconduct. Graham v. UCBR, 840 A.2d 1054 (Pa. Cmwlth. 2004).
divorce - venue - residence or agreement - Rule 1920.2
Danz v. Danz - Superior Court - April 16, 2008
http://www.courts.state.pa.us/OpPosting/Superior/out/s21041_08.pdf
Motion to open decree granted where record did not not establish compliance with Rule 1920.2, showing that one of the parties resides in the county or the parties have agreed, in writing, that the action could be brought in the suejct county.
"The plain language of Rule 1920.2(b) and the history surrounding its promulgation lead us to an inexorable conclusion. Rule 1920.2(b) requires a trial court to ensure the record establishes venue is proper—either by residence, written agreement, or tacit agreement through participation— before directing entrance of a divorce decree. The divorce decree in this case suffers from “a fatal defect apparent upon the face of the record” due to the fact that the trial court failed to comply with Rule 1920.2(b)."
http://www.courts.state.pa.us/OpPosting/Superior/out/s21041_08.pdf
Motion to open decree granted where record did not not establish compliance with Rule 1920.2, showing that one of the parties resides in the county or the parties have agreed, in writing, that the action could be brought in the suejct county.
"The plain language of Rule 1920.2(b) and the history surrounding its promulgation lead us to an inexorable conclusion. Rule 1920.2(b) requires a trial court to ensure the record establishes venue is proper—either by residence, written agreement, or tacit agreement through participation— before directing entrance of a divorce decree. The divorce decree in this case suffers from “a fatal defect apparent upon the face of the record” due to the fact that the trial court failed to comply with Rule 1920.2(b)."
Wednesday, April 16, 2008
UC - willful misconduct - theft of employer property - legal entitlement
Mancine v. UCBR - Commonwealth Court - April 15, 2008
http://www.courts.state.pa.us/OpPosting/CWealth/out/2144CD07_4-15-08.pdf
The court reversed the UCBR and held that a claimant's use of free drink coupons, alleged to be only for the use of patients and their families, did not constitute willful misconduct. The employer did not satisfy its "burden of proving that Claimant had no legal entitlement to use the coupons."
The court distinguished other employer-property cases, notably
- Gibson v. UCBR, 760 A2d 492, where unlike here, the employer had a written policy prohibiting the removal of any employer property, including scrap and trash
- Temple Univ. v. UCBR, 772 A.2d 416, where the claimant could not overcome the lack of legal entitlement to pay for hours he did not work, in spite of the approval of his supervisor, who suggested that he list the hours on his pay records.
In order to satisfy its "burden to show that a claimant has engaged in willful misconduct by violating a rule against theft, an employer has the burden to establish that a claimant did not have legal entitlement to the subject property."
In this case, the coupons on their face contained no prohibition or limitation on the user or transferability of the coupons. The claimant apparently got the coupons from a patient, although the manner in which the claimant got them was not at issue.
In addition, the employer provided no proof that it had told employees that they could not use the coupons, or that the coupons were only for patients and their families. The testimony of an employer witness that such limitations existed was "insufficient to support a conclusion that Claimant had no legal entitlement to use the coupons."
http://www.courts.state.pa.us/OpPosting/CWealth/out/2144CD07_4-15-08.pdf
The court reversed the UCBR and held that a claimant's use of free drink coupons, alleged to be only for the use of patients and their families, did not constitute willful misconduct. The employer did not satisfy its "burden of proving that Claimant had no legal entitlement to use the coupons."
The court distinguished other employer-property cases, notably
- Gibson v. UCBR, 760 A2d 492, where unlike here, the employer had a written policy prohibiting the removal of any employer property, including scrap and trash
- Temple Univ. v. UCBR, 772 A.2d 416, where the claimant could not overcome the lack of legal entitlement to pay for hours he did not work, in spite of the approval of his supervisor, who suggested that he list the hours on his pay records.
In order to satisfy its "burden to show that a claimant has engaged in willful misconduct by violating a rule against theft, an employer has the burden to establish that a claimant did not have legal entitlement to the subject property."
In this case, the coupons on their face contained no prohibition or limitation on the user or transferability of the coupons. The claimant apparently got the coupons from a patient, although the manner in which the claimant got them was not at issue.
In addition, the employer provided no proof that it had told employees that they could not use the coupons, or that the coupons were only for patients and their families. The testimony of an employer witness that such limitations existed was "insufficient to support a conclusion that Claimant had no legal entitlement to use the coupons."
Monday, April 14, 2008
consumer - state UTPCPL - deceptive conduct - pleading
Chiles v. Ameriquest Mortgage Co. - ED Pa. - March 17, 2008
http://www.paed.uscourts.gov/documents/opinions/08d0302p.pdf
" [T]he Court recognizes that the requirements for fraud under the catchall provision are in flux in Pennsylvania state and federal courts. Several courts require a plaintiff to prove all elements of common law fraud. when asserting a claim under the catch-all provision.... Cf. Christopher, 2006 U.S. Dist. LEXIS 2255, *9-10 (Plaintiff must plead all elements of common law fraud only if alleging fraud, not deceptive conduct under UTPCPL.) In Christopher, the court interpreted the inclusion of the term “deceptive” into the catch-all provision as relaxing the standard of proof such that actual fraud need not be proved. Id. The Pennsylvania Supreme Court has not yet addressed this issue.
The UTPCPL must be construed liberally. See Keller v. Volkswagen of Am., Inc., 733 A.2d 642, 646 (Pa. Super. 1999). This Court will therefore adopt the view that in order for the addition of the terms “or deceptive” to be given effect, all elements of common law fraud need not be proven if Plaintiff alleges deceptive conduct. "
http://www.paed.uscourts.gov/documents/opinions/08d0302p.pdf
" [T]he Court recognizes that the requirements for fraud under the catchall provision are in flux in Pennsylvania state and federal courts. Several courts require a plaintiff to prove all elements of common law fraud. when asserting a claim under the catch-all provision.... Cf. Christopher, 2006 U.S. Dist. LEXIS 2255, *9-10 (Plaintiff must plead all elements of common law fraud only if alleging fraud, not deceptive conduct under UTPCPL.) In Christopher, the court interpreted the inclusion of the term “deceptive” into the catch-all provision as relaxing the standard of proof such that actual fraud need not be proved. Id. The Pennsylvania Supreme Court has not yet addressed this issue.
The UTPCPL must be construed liberally. See Keller v. Volkswagen of Am., Inc., 733 A.2d 642, 646 (Pa. Super. 1999). This Court will therefore adopt the view that in order for the addition of the terms “or deceptive” to be given effect, all elements of common law fraud need not be proven if Plaintiff alleges deceptive conduct. "
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