Gay v. Creditinform - 3rd Circuit - December 19, 2007
http://www.ca3.uscourts.gov/opinarch/064036p.pdf
Enforcing the contractual arbitration clause pursuant to the Federal Arbitration Act, 9 USC sec. 2, the Third Circuit affirmed the district court in granting the defendant's motion to compel arbitration, on an individual basis, of the plaintiff's proposed class action under the Credit Repair Organizations Act (CROA), 15 USC 1679 et seq. and the Pennsylvania Credit Services Act (CSA), 73 P.S 2181 et seq.
The court held that plaintiff did not satisfy her "burden of establishing that Congress intended to preclude arbitration" of a claim under the CROA or that arbitration "irreconcilably conflicts" with the purposes of the CROA, citing its similar decision under the TILA in Johnson v. West Suburban Bank, 225 F3d 366, 371, 373 (3d Cir. 2000). The court said that the plaintiff, in the arbitration proceeding, would retain her "full range of rights created by the statutes" and that the right to bring a class action was created by the federal rules of civil procedure rather than the CROA. The court also stressed the possibility of administrative enforcement of the CROA by the FTC and state attorneys general, which it said "supply procedures for obtaining remedies reasonably substituting for those available in a class action."
Concerning the anti-waiver provision of the CROA, the court said that it "only prohibits waiver of the substantive obligations" imposed by the CROA and not the enforcement procedures, such as seeking relief in a judicial forum or seeking class relief.
Concerning plaintiff's claim that the arbitration clause and the contract as a whole were unconscionable, the court recognized that federal courts may apply "generally applicable contract defenses" available under state law "such as fraud, duress, or unconscionability" without running afoul of the FAA and the supremacy clause. However, the court held that "mere inequality" of bargaining power did not render a contract unconscionable, unless it approached "fraud or overwhelming economic power that would provide grounds for the revocation of any contract." The court found that the plaintiff -- who paid defendant about $5/month under the credit repair contract -- "could have walked away" from the contract and could have chosen another company to provide the services that defendant did. Her position was "different, for example, from that of a homeowner facing a mortgage foreclosure who accepts onerous refinancing terms in a desperate attempt to save her home."
The court rejected the Pennsylvania Superior Court decisions in Lytle v. CitiFinancial Services, Inc., 810 A.2d 643 (Pa. Super. 2002) and Thibodeau v. ComCast Corp., 912 A.2d 874 (Pa. Super. 2006), which struck down waivers of the right to bring a class action as unconscionable. Citing Perry v. Thomas, 482 U.S. 483 (1987), the court held that Lytle and Thibodeau established state law principles that were unique to arbitration agreements, rather than applicable to contracts generally. "'A state-law principle that takes its meaning precisely from the fact that a contract to arbitrate is at issue does not comport with" the generality requirement of sec. 2 of the Federal Arbitration Act. The court also noted the statement in Salley v. Option One Mortgage Corp., 925 A.2d 115, 129 (Pa. 2006), that the Lytle opinion "was well intentioned" but "swept too broadly."
The court ended by stating that it expressed "no view on whether [narrowing of the application of the FAA] might be a desirable result as it is not our function to do so. Rather, our obligation is to honor the intent of Congress and that is what we are doing. If the reach of the FAA is to be confined then Congress and not the courts should be the body to do so."
Sunday, December 30, 2007
Tuesday, December 18, 2007
consumer - arbitration clause - unconscionability
O'Shea v. Direct Financial Solutions, Inc. - ED Pa. December 5, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1467P.pdf
The court held that the arbitration clause in a payday loan contract was not unconscionable, either procedurally or substantively, thus preventing the plaintiff from raising UDAP and related consumer claims in a judicial forum. The court found this result mandated by the Federal Arbitration Act, 9 USC sec. 1 et seq. Section 2 makes such a clause "valid, irrevocable, and enforceable, save upon such grounds as exist in law or in equity for the revocation of any contract." 9 USC, sec. 2 http://www.law.cornell.edu/uscode/html/uscode09/usc_sec_09_00000002----000-.html.
Unconscionability can be a ground for revocation, but a person challenging on this ground has the burden of showing that the provision is both procedurally and substantively unconscionable. Procedural unconscionability pertains to the process by which an agreement is reached and the form of an agreement, including the use of fine print or convoluted or unclear language, none of which was at issue here. Substantive unconscionability refers to terms that unreasonably favor one party, terms to which the unfavored party does not truly assent.
The Third Circuit has "repeatedly held that inequality in bargaining power, alone, is not a valid basis upon which to invalidate an arbitration agreement. Harris v. Green Tree Finance Corp., 183 F.3d, 173, 183 (3d Cir. 1999). The Harris court also held that mutuality of remedies - e.g., the ability of the lender but not the borrower to seek judicial enforcement - is not required of a valid arbitration clause. The instant court rejected the different reasoning in Bragg v. Linden Research Inc., 487 F.Supp. 2d 593 (ED Pa. 2007), which applied California law on unconscionability, not Pennsylvania law.
http://www.paed.uscourts.gov/documents/opinions/07D1467P.pdf
The court held that the arbitration clause in a payday loan contract was not unconscionable, either procedurally or substantively, thus preventing the plaintiff from raising UDAP and related consumer claims in a judicial forum. The court found this result mandated by the Federal Arbitration Act, 9 USC sec. 1 et seq. Section 2 makes such a clause "valid, irrevocable, and enforceable, save upon such grounds as exist in law or in equity for the revocation of any contract." 9 USC, sec. 2 http://www.law.cornell.edu/uscode/html/uscode09/usc_sec_09_00000002----000-.html.
Unconscionability can be a ground for revocation, but a person challenging on this ground has the burden of showing that the provision is both procedurally and substantively unconscionable. Procedural unconscionability pertains to the process by which an agreement is reached and the form of an agreement, including the use of fine print or convoluted or unclear language, none of which was at issue here. Substantive unconscionability refers to terms that unreasonably favor one party, terms to which the unfavored party does not truly assent.
The Third Circuit has "repeatedly held that inequality in bargaining power, alone, is not a valid basis upon which to invalidate an arbitration agreement. Harris v. Green Tree Finance Corp., 183 F.3d, 173, 183 (3d Cir. 1999). The Harris court also held that mutuality of remedies - e.g., the ability of the lender but not the borrower to seek judicial enforcement - is not required of a valid arbitration clause. The instant court rejected the different reasoning in Bragg v. Linden Research Inc., 487 F.Supp. 2d 593 (ED Pa. 2007), which applied California law on unconscionability, not Pennsylvania law.
Sunday, December 16, 2007
employment - wages - WPCL
Inoff v. Craftex Mills, Inc. - ED Pa. - December 2007
http://www.paed.uscourts.gov/documents/opinions/07D1457P.pdf
Suit for wages on alleged oral, three-year guaranteed contract later memorialized in a series of writings. Plaintiff was a salesman in fabric/textile industry . Motion for summary judgdment by defendant, plaintiff's purported employer, granted in part and denied in part.
choice of law -
A federal court exercising its diversity jurisdiction must apply the choice of law rules of the forum state, Klaxon Co. v. Stenton Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941), so Pennsylvania law was applied to this case. The Pennsylvania Supreme Court has adopted a “flexible rule which permits analysis of the policies and interests underlying the particular issue before the court.” Griffith v. United Airlines, Inc., 203 A.2d 796, 805 (Pa. 1964). The approach “gives to the place having the most interest in the problem paramount control over the legal issues arising out of a particular factual context and thereby allows the forum to apply the policy of the jurisdiction most intimately concerned with the outcome of the particular litigation.” Id. (internal quotation marks and alterations omitted) (quoting Babcock v. Jackson, 191 N.E.2d 279, 283 (N.Y. 1963)). The Griffith “interest/contacts” approach applies to contract disputes. Restatement 2d, Conflict sec. 188(2).
what was the parties' contract?
The defendant claims that plaintiff is an indpt. contractor whose employment was terminable at will. Plaintiff alleges another contract. “Pennsylvania law requires that a plaintiff seeking to proceed with a breach of contract action must establish ‘(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract[,] and (3) resultant damages.’” ...The first element is at issue . For a valid contract to exist, there must have been a “meeting of the minds” between the parties. A meeting of the minds is found where “both parties mutually assent to the same thing, as evidenced by an offer and its acceptance.” Since there was a genuine issue of some material facts, no summary judgment granted.
wage payment and collection law -
State statute applies only to employees,not indpt contractors . The defendant claims that plaintiff is not an "employee" under the WPCL. “Employee” is not defined by the WPCL, so Pennsylvania courts look to the state UC Law and the Worker’s Compensation Act’s definitions. ...According to the Pennsylvania courts, the following factors are relevant to the question whether one is an independent contractor: the control of the manner that work is to be done; responsibility for result only; termsof agreement between the parties; the nature of the work or occupation; the skill required for performance; whether one employed is engaged in a distinct occupationor business; which party supplies the tools; whether payment is by the time or by the job; whether the work is part of the regular business of the employer, and the rightto terminate the employment at any time.Surowski v. Commonwealth, 467 A.2d 1373, 1374 (Pa. Commw. Ct. 1983). “[P]aramount . . .among these factors is the right of an individual to control the manner that another’s work is tobe accomplished.” Morin, 871 A.2d at 850.
Also at issue in the case and discussed in the opinion are: promissory estoppel and piercing the corporate veil to make individual corporate officer liable for the wages claimed.
http://www.paed.uscourts.gov/documents/opinions/07D1457P.pdf
Suit for wages on alleged oral, three-year guaranteed contract later memorialized in a series of writings. Plaintiff was a salesman in fabric/textile industry . Motion for summary judgdment by defendant, plaintiff's purported employer, granted in part and denied in part.
choice of law -
A federal court exercising its diversity jurisdiction must apply the choice of law rules of the forum state, Klaxon Co. v. Stenton Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941), so Pennsylvania law was applied to this case. The Pennsylvania Supreme Court has adopted a “flexible rule which permits analysis of the policies and interests underlying the particular issue before the court.” Griffith v. United Airlines, Inc., 203 A.2d 796, 805 (Pa. 1964). The approach “gives to the place having the most interest in the problem paramount control over the legal issues arising out of a particular factual context and thereby allows the forum to apply the policy of the jurisdiction most intimately concerned with the outcome of the particular litigation.” Id. (internal quotation marks and alterations omitted) (quoting Babcock v. Jackson, 191 N.E.2d 279, 283 (N.Y. 1963)). The Griffith “interest/contacts” approach applies to contract disputes. Restatement 2d, Conflict sec. 188(2).
what was the parties' contract?
The defendant claims that plaintiff is an indpt. contractor whose employment was terminable at will. Plaintiff alleges another contract. “Pennsylvania law requires that a plaintiff seeking to proceed with a breach of contract action must establish ‘(1) the existence of a contract, including its essential terms, (2) a breach of a duty imposed by the contract[,] and (3) resultant damages.’” ...The first element is at issue . For a valid contract to exist, there must have been a “meeting of the minds” between the parties. A meeting of the minds is found where “both parties mutually assent to the same thing, as evidenced by an offer and its acceptance.” Since there was a genuine issue of some material facts, no summary judgment granted.
wage payment and collection law -
State statute applies only to employees,not indpt contractors . The defendant claims that plaintiff is not an "employee" under the WPCL. “Employee” is not defined by the WPCL, so Pennsylvania courts look to the state UC Law and the Worker’s Compensation Act’s definitions. ...According to the Pennsylvania courts, the following factors are relevant to the question whether one is an independent contractor: the control of the manner that work is to be done; responsibility for result only; termsof agreement between the parties; the nature of the work or occupation; the skill required for performance; whether one employed is engaged in a distinct occupationor business; which party supplies the tools; whether payment is by the time or by the job; whether the work is part of the regular business of the employer, and the rightto terminate the employment at any time.Surowski v. Commonwealth, 467 A.2d 1373, 1374 (Pa. Commw. Ct. 1983). “[P]aramount . . .among these factors is the right of an individual to control the manner that another’s work is tobe accomplished.” Morin, 871 A.2d at 850.
Also at issue in the case and discussed in the opinion are: promissory estoppel and piercing the corporate veil to make individual corporate officer liable for the wages claimed.
Thursday, December 13, 2007
employment- FMLA - notice to employer
Sarnowski v. Airbrooke Limousine, Inc - 3d Circuit - December 12, 2007
http://www.ca3.uscourts.gov/opinarch/062144p.pdf
This opinion contains a lot of good language about the requirement that an employee must give notice to the employer of the need for FMLA leave, 29 U.S.C. § 2612(e)(2)(B), 29 C.F.R. § 825.302(c). No formal written request for FMLA leave is necessary. Simple verbal notice is sufficient. The notice provision must be construed liberally. No magic words are required. The employee need not know or give the exact dates of the anticipated leave.
http://www.ca3.uscourts.gov/opinarch/062144p.pdf
This opinion contains a lot of good language about the requirement that an employee must give notice to the employer of the need for FMLA leave, 29 U.S.C. § 2612(e)(2)(B), 29 C.F.R. § 825.302(c). No formal written request for FMLA leave is necessary. Simple verbal notice is sufficient. The notice provision must be construed liberally. No magic words are required. The employee need not know or give the exact dates of the anticipated leave.
Monday, December 03, 2007
Fair Credit Reporting Act - negligent non-compliance
Perez v. Trans Union, LLC, et al. - ED Pa. - November 2007
http://www.paed.uscourts.gov/documents/opinions/07D1391P.pdf
Plaintiff sued for an alleged violation of the Fair Credit Reporting Act, 15 USC 1681e(b), when the defendant credit reporting agency (CRA) mistakenly reported to a car dealership that plaintiff had a good credit history but was deceased and thus had no credit score. After this same thing happened several times, matters finally got sorted out, but plaintiff claimed that he had paid more for credit because of the mistakes, which he said were caused by defendant's failure to "follow reasonable procedure to assure maximum possible accuracy of information...." as required by sec. 1681e(b).
Defendant moved for summary judgment, which in a negligent noncompliance case can only be granted in this circuit when the "evidence demonstrates as a matter of law that the procedures it [defendant] followed were reasonable." Philbin v. Trans Union Corp., 101 F3d 957, 965 (3d Cir. 1996). Judging reasonableness "involves weighing the potential harm from inaccuracy against the burden of safeguarding against such inaccuracy." Id at 963. By contrast, "[o]ther courts have concluded flatly that 'the question, of whether a credit reporting agency followed reasonable procedures is reserved for the jury.'" (citing cases)
The defendant here admitted reiterating inaccurate information, which it did not independently verify. The questions is whether it "ought to have appreciated, under the circumstances presented, that there was a material inaccuracy such that a duty arose upon it to do something to correct it or not make a report." (emphasis in original).
The court held that there had no willful noncompliance, which it said "requires more than mere knowledge." There was no evidence to show that the CRA was "consciously aware that Plaintiff contested the accuracy of the report and then proceeded to report the inaccuracy anyway." (emphasis in original)* There was no "deliberate intention to violate Plaintiff's personal rights."
The court also rejected the negligent noncompliance claim, which consists of four elements
- the inclusion of inaccurate information in a credit report
- the inaccuracy was due to a failure to follow reasonable procedures
- the consumer suffered injury
- the injury was caused by the inclusion of the inaccurate entry.
The court granted summary to defendant based on the plaintiff's "lack of rebuttal evidence" to counter that in the summary judgment record, which showed that the banks involved all got their credit evidence independently of defendant. There was an "absence of evidence that [defendant] provided a credit report about Plaintiff to any potential lender...."
http://www.paed.uscourts.gov/documents/opinions/07D1391P.pdf
Plaintiff sued for an alleged violation of the Fair Credit Reporting Act, 15 USC 1681e(b), when the defendant credit reporting agency (CRA) mistakenly reported to a car dealership that plaintiff had a good credit history but was deceased and thus had no credit score. After this same thing happened several times, matters finally got sorted out, but plaintiff claimed that he had paid more for credit because of the mistakes, which he said were caused by defendant's failure to "follow reasonable procedure to assure maximum possible accuracy of information...." as required by sec. 1681e(b).
Defendant moved for summary judgment, which in a negligent noncompliance case can only be granted in this circuit when the "evidence demonstrates as a matter of law that the procedures it [defendant] followed were reasonable." Philbin v. Trans Union Corp., 101 F3d 957, 965 (3d Cir. 1996). Judging reasonableness "involves weighing the potential harm from inaccuracy against the burden of safeguarding against such inaccuracy." Id at 963. By contrast, "[o]ther courts have concluded flatly that 'the question, of whether a credit reporting agency followed reasonable procedures is reserved for the jury.'" (citing cases)
The defendant here admitted reiterating inaccurate information, which it did not independently verify. The questions is whether it "ought to have appreciated, under the circumstances presented, that there was a material inaccuracy such that a duty arose upon it to do something to correct it or not make a report." (emphasis in original).
The court held that there had no willful noncompliance, which it said "requires more than mere knowledge." There was no evidence to show that the CRA was "consciously aware that Plaintiff contested the accuracy of the report and then proceeded to report the inaccuracy anyway." (emphasis in original)* There was no "deliberate intention to violate Plaintiff's personal rights."
The court also rejected the negligent noncompliance claim, which consists of four elements
- the inclusion of inaccurate information in a credit report
- the inaccuracy was due to a failure to follow reasonable procedures
- the consumer suffered injury
- the injury was caused by the inclusion of the inaccurate entry.
The court granted summary to defendant based on the plaintiff's "lack of rebuttal evidence" to counter that in the summary judgment record, which showed that the banks involved all got their credit evidence independently of defendant. There was an "absence of evidence that [defendant] provided a credit report about Plaintiff to any potential lender...."
social security disability - treating physician's opinion - claimant credibility
Wilson v. Astrue - ED Pa. November 28, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1402P.pdf
Benefits were granted in this case, which has good discussions of the standards for
- evaluating the opinion of a treating physician, and
- judging claimant credibility.
http://www.paed.uscourts.gov/documents/opinions/07D1402P.pdf
Benefits were granted in this case, which has good discussions of the standards for
- evaluating the opinion of a treating physician, and
- judging claimant credibility.
Sunday, December 02, 2007
consumer - pleading - UTPCPL - no natl. bank liability under HIFA
Millege v. Chase Bank et al - ED Pa. November 26, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1389P.pdf
Like a number of other courts, this one misstated the pleading requirements under the state consumer protection law, 73 PS 201-2(4)(xxi), holding that the particularity equivalent of fraud pleading is required. The court actually miscited and misquoted the relevant provision, citing it as sec. 201-2(4)(xvii), the pre-1996 citation, instead of sec. 201-4(xxi), and omitting the "or deceptive" language added by the 1996 amendments.
The court also held that a national bank such as Chase cannot be found liable under the state Home Improvement Finance Act (HIFA), 73 P.S. 500-408, for its alleged inclusion of a cash loan in a home improvement contract, because such liability is pre-empted by 12 USC 371 and 12 CFR 34.4, which say that such banks can make real estate loans wihtout regard to state law limitations concerning the terms of credit.
http://www.paed.uscourts.gov/documents/opinions/07D1389P.pdf
Like a number of other courts, this one misstated the pleading requirements under the state consumer protection law, 73 PS 201-2(4)(xxi), holding that the particularity equivalent of fraud pleading is required. The court actually miscited and misquoted the relevant provision, citing it as sec. 201-2(4)(xvii), the pre-1996 citation, instead of sec. 201-4(xxi), and omitting the "or deceptive" language added by the 1996 amendments.
The court also held that a national bank such as Chase cannot be found liable under the state Home Improvement Finance Act (HIFA), 73 P.S. 500-408, for its alleged inclusion of a cash loan in a home improvement contract, because such liability is pre-empted by 12 USC 371 and 12 CFR 34.4, which say that such banks can make real estate loans wihtout regard to state law limitations concerning the terms of credit.
consumer - title insurance - TICA & UTPCPL - exhaustion of admin. remedies
Markocki v. Old Republic Natl. Title Ins. Co. v. Citizens Abstract Co. - ED Pa. - Nov. 19, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1382P.pdf
Held, plaintiff was entitled to sue under the Consumer Protection Law, 73 PS 201-9.2, for an alleged violation of the state Title Insurance Company Act (TICA), 40 PS 910-37(h), without first exhausting her remedies under TICA.
Plaintiff brought her case when she refinanced her mortgage and was charged a "basic rate" of $978.75 rather than a "refinance rate" of $704.70, to which she was entitled under the Rate Manual of the Title Insurance Rating Bureau, 40 PS 910-37(h). When she found out about the improper charges, she sued under RESPA, 12 USC 2607, as well as for violations of the CPL, because of the improper charges under TICA.
Old Republic joined Citizens as a 3d party defendant, because Citizens, acting as its agent under TICA, had collected the improper charges, in spite of Old Republic having told Citizens about the proper changes under the Rate Manual.
Citizens' 12(b) (6) motion to dismiss was denied. Citizens claimed that Markocki had to exhaust her remedies under TICA, which says that an aggrieved person "may be heard" under TICA concerning its insurance rating, 40 PS 910-44(b).
Relying on the "weight of authority" under
- Cohen v. Ciicago Title Insurance Co., 2006 US Dist. Lexis 36689 (ED Pa. )
- Highmark Inc v. UPMC Health Plan, 276 F3d 160 (, 168 (3d Cir. 2001), and
- Ohio Casualty Group v. Argonaut Insurance, 525 A2d 1195, 1197 (Pa. 1987)
The court held that the remedy under TICA was discretionary, optional and incomplete rather than mandatory and exclusive, and that plaintiff's case under the Consumer Protection Law should not be dismissed.
http://www.paed.uscourts.gov/documents/opinions/07D1382P.pdf
Held, plaintiff was entitled to sue under the Consumer Protection Law, 73 PS 201-9.2, for an alleged violation of the state Title Insurance Company Act (TICA), 40 PS 910-37(h), without first exhausting her remedies under TICA.
Plaintiff brought her case when she refinanced her mortgage and was charged a "basic rate" of $978.75 rather than a "refinance rate" of $704.70, to which she was entitled under the Rate Manual of the Title Insurance Rating Bureau, 40 PS 910-37(h). When she found out about the improper charges, she sued under RESPA, 12 USC 2607, as well as for violations of the CPL, because of the improper charges under TICA.
Old Republic joined Citizens as a 3d party defendant, because Citizens, acting as its agent under TICA, had collected the improper charges, in spite of Old Republic having told Citizens about the proper changes under the Rate Manual.
Citizens' 12(b) (6) motion to dismiss was denied. Citizens claimed that Markocki had to exhaust her remedies under TICA, which says that an aggrieved person "may be heard" under TICA concerning its insurance rating, 40 PS 910-44(b).
Relying on the "weight of authority" under
- Cohen v. Ciicago Title Insurance Co., 2006 US Dist. Lexis 36689 (ED Pa. )
- Highmark Inc v. UPMC Health Plan, 276 F3d 160 (, 168 (3d Cir. 2001), and
- Ohio Casualty Group v. Argonaut Insurance, 525 A2d 1195, 1197 (Pa. 1987)
The court held that the remedy under TICA was discretionary, optional and incomplete rather than mandatory and exclusive, and that plaintiff's case under the Consumer Protection Law should not be dismissed.
Wednesday, November 21, 2007
insurance - denial - bad faith
Greene v. United Services Automobile Assn. - Superior Court - November 20, 2007
http://www.aopc.org/OpPosting/Superior/out/a20010_07.pdf
The court denied the plaintiffs' claim that their insurer denied their homeowner's insurance claim in bad faith. The court held that in order for a party to succeed on a statutory claim of bad faith under 42 Pa. C.S. sec. 8371 (actions on insurance policies) that party must fulfill a two-prong test. A plaintiff must show, by clear and convincing evidence, that
- the insurer did not have a reasonable basis for denying benefits under the policy and
- knew or recklessly disregarded its lack of a reasonable basis in denying the claim.
The court elaborated that the "motive of self-interest or ill will" level of culpability is not a third element required for a finding of bad faith, but it is probative of the second element, i.e.., the insurer knew or recklessly disregarded its lack of reasonable basis in denying the claim.
http://www.aopc.org/OpPosting/Superior/out/a20010_07.pdf
The court denied the plaintiffs' claim that their insurer denied their homeowner's insurance claim in bad faith. The court held that in order for a party to succeed on a statutory claim of bad faith under 42 Pa. C.S. sec. 8371 (actions on insurance policies) that party must fulfill a two-prong test. A plaintiff must show, by clear and convincing evidence, that
- the insurer did not have a reasonable basis for denying benefits under the policy and
- knew or recklessly disregarded its lack of a reasonable basis in denying the claim.
The court elaborated that the "motive of self-interest or ill will" level of culpability is not a third element required for a finding of bad faith, but it is probative of the second element, i.e.., the insurer knew or recklessly disregarded its lack of reasonable basis in denying the claim.
Monday, November 19, 2007
midwifery - licensing - Amish - standard for stay of admin. decision
Goslin v. State Board of Medicine - Cmwlth. Court - publication ordered November 16, 2007
http://www.aopc.org/OpPosting/CWealth/out/1830CD07_11-16-07.pdf
Unlicensed midwife with 26 years experience in Amish community denied application for stay of decision of state Board of Medicine directing her to discontinue her practice and imposing fines and penalties.
Aside from the substantive law, the decision is also noteworthy concerning the standards for a stay, especially the likelihood of success on the merits. The court said that the Supreme Court
in Pennsylvania Public Utility Commission v. Process Gas Consumers Group, 502 Pa. 553, 467 A.2d 805 (1983) has set forth the standard a litigant must satisfy in seeking a stay of an adjudicatory body’s decision. Applicants for a stay or supersedeas must:
(1) make a strong showing of likelihood of success on the merits;
(2) demonstrate that, without the grant of a stay, the applicant will suffer irreparable injury;
(3) establish that the Court’s issuance of a stay will not result in substantial harm to other parties interested in the proceedings; and
(4) show that the issuance of a stay will not adversely affect the public interest.
[J]urists considering applications should not regard the first prong inflexibly. Rather, in exercising its discretion to grant or deny a stay pending appeal, this Court may properly grant a stay, even when a litigant has presented a substantial case on the merits, if the litigant’s showing with regard to the remaining three factors strongly supports the applicant’s request. Witmer v. Department of Transportation, Bureau of Driver Licensing, 889 A.2d 638, 640 (Pa. Cmwlth. 2005).
http://www.aopc.org/OpPosting/CWealth/out/1830CD07_11-16-07.pdf
Unlicensed midwife with 26 years experience in Amish community denied application for stay of decision of state Board of Medicine directing her to discontinue her practice and imposing fines and penalties.
Aside from the substantive law, the decision is also noteworthy concerning the standards for a stay, especially the likelihood of success on the merits. The court said that the Supreme Court
in Pennsylvania Public Utility Commission v. Process Gas Consumers Group, 502 Pa. 553, 467 A.2d 805 (1983) has set forth the standard a litigant must satisfy in seeking a stay of an adjudicatory body’s decision. Applicants for a stay or supersedeas must:
(1) make a strong showing of likelihood of success on the merits;
(2) demonstrate that, without the grant of a stay, the applicant will suffer irreparable injury;
(3) establish that the Court’s issuance of a stay will not result in substantial harm to other parties interested in the proceedings; and
(4) show that the issuance of a stay will not adversely affect the public interest.
[J]urists considering applications should not regard the first prong inflexibly. Rather, in exercising its discretion to grant or deny a stay pending appeal, this Court may properly grant a stay, even when a litigant has presented a substantial case on the merits, if the litigant’s showing with regard to the remaining three factors strongly supports the applicant’s request. Witmer v. Department of Transportation, Bureau of Driver Licensing, 889 A.2d 638, 640 (Pa. Cmwlth. 2005).
Thursday, November 15, 2007
dependency - counsel for child - access to child
In the Interest of A.S. - Superior Court - November 15, 2007
http://www.aopc.org/OpPosting/Superior/out/a24014_07.pdf
Trial court improperly dismissed child welfare agency's dependency petition due to the agency's failure to have the child in court to testify. The appellate court held that the dismissel was error where the child's court-appointed counsel never had a chance to meet with the child because of the mother's refusal to give counsel access to the child, despite an order directing the mother to do so.
The trial court did not receive evidence from both sides. The mother violated the child's rights by denying access by counsel and preventing the child "from being heard in any fashion at a hearing regarding her own welfare."
http://www.aopc.org/OpPosting/Superior/out/a24014_07.pdf
Trial court improperly dismissed child welfare agency's dependency petition due to the agency's failure to have the child in court to testify. The appellate court held that the dismissel was error where the child's court-appointed counsel never had a chance to meet with the child because of the mother's refusal to give counsel access to the child, despite an order directing the mother to do so.
The trial court did not receive evidence from both sides. The mother violated the child's rights by denying access by counsel and preventing the child "from being heard in any fashion at a hearing regarding her own welfare."
statutes - enactment - legislative procedure - Pa. Constitution
Marcavage v. Rendell - Commonwealth Court - November 15, 2007
http://www.aopc.org/OpPosting/CWealth/out/195MD05_11-15-07.pdf
Article III, sec. 1, of the state constitution provides that “[n]o law shall be passed except by bill, and no bill shall be altered or amended, on its passage through either House, as to change its original purpose.”
This provision is violated by the passage of a bill which began as one criminalizing crop destruction but was amended during the legislative process to become one which punished ethic intimidation.
The relevant test is set out in Pennsylvanians Against Gambling Expansion Fund, Inc., v. Commonwealth (PAGE), 877 A.2d 383 (Pa. 2005). This case established a "new two-prong test for determining whether legislation violates Article III, Section 1....First, the Court must consider the legislation's original purpose and compare it to the final purpose to determine whether there has been an alteration or amendment that changed the original purpose....Second, the Court must consider whether the title and contents of the legislation are deceptive in their final form....The challenged legislation must survive both inquiries to pass constitutional muster.
A court must consider a bill's purpose "in reasonably broad terms, so as to provide the General Assembly with full opportunity to amend and even expand a bill, and not run afoul of the constitutional prohibition on an alteration or amendment that changes its original purpose.....[T]he reviewing court should 'hypothesize, based on the text of the statute, as to a reasonably broad original purpose.'”
The court held here that there was no "single unifying purpose" between the original and amended bills, even though both concerned criminal conduct. The bills did "not regulate the same discrete activity" but rather "vastly different activities, albeit under the broad heading of crime." Even looking at the language in "reasonably broad terms," there was a change of purpose from the original to the amended bill, given that the latter had "no nexus to the conduct to which the original legislation was directed...."
http://www.aopc.org/OpPosting/CWealth/out/195MD05_11-15-07.pdf
Article III, sec. 1, of the state constitution provides that “[n]o law shall be passed except by bill, and no bill shall be altered or amended, on its passage through either House, as to change its original purpose.”
This provision is violated by the passage of a bill which began as one criminalizing crop destruction but was amended during the legislative process to become one which punished ethic intimidation.
The relevant test is set out in Pennsylvanians Against Gambling Expansion Fund, Inc., v. Commonwealth (PAGE), 877 A.2d 383 (Pa. 2005). This case established a "new two-prong test for determining whether legislation violates Article III, Section 1....First, the Court must consider the legislation's original purpose and compare it to the final purpose to determine whether there has been an alteration or amendment that changed the original purpose....Second, the Court must consider whether the title and contents of the legislation are deceptive in their final form....The challenged legislation must survive both inquiries to pass constitutional muster.
A court must consider a bill's purpose "in reasonably broad terms, so as to provide the General Assembly with full opportunity to amend and even expand a bill, and not run afoul of the constitutional prohibition on an alteration or amendment that changes its original purpose.....[T]he reviewing court should 'hypothesize, based on the text of the statute, as to a reasonably broad original purpose.'”
The court held here that there was no "single unifying purpose" between the original and amended bills, even though both concerned criminal conduct. The bills did "not regulate the same discrete activity" but rather "vastly different activities, albeit under the broad heading of crime." Even looking at the language in "reasonably broad terms," there was a change of purpose from the original to the amended bill, given that the latter had "no nexus to the conduct to which the original legislation was directed...."
Wednesday, November 07, 2007
real property - tax sale - notice - presumption of proper posting
Picknick v. Washington County Tax Claim Bureau - Commonwealth Court - November 7, 2007
http://www.aopc.org/OpPosting/CWealth/out/253CD07_11-7-07.pdf
A tax claim bureau (TCB) satisfies its initial burden of proving -- and establishes a presumption of -- regularity and proper posting under the Real Estate Tax Sale Law, 72 P.S. 5860.101 et seq., where the TCB files an affidavit of posting. Thomas v. Montgomery Co. TCB, 553 A.2d 1044, 1046 (Pa. Cmwlth. 1989). Such proof establishes a prima facie case that the method of posting is "reasonable and likely to inform the taxpayer as well as the public at large of an intended real property sale." The property owner then has the burden to produce contradictory evidence.
In this case, the TCB produced an affidavit, photos and testimony about posting. The property owner did not present any evidence to rebut the presumption.
http://www.aopc.org/OpPosting/CWealth/out/253CD07_11-7-07.pdf
A tax claim bureau (TCB) satisfies its initial burden of proving -- and establishes a presumption of -- regularity and proper posting under the Real Estate Tax Sale Law, 72 P.S. 5860.101 et seq., where the TCB files an affidavit of posting. Thomas v. Montgomery Co. TCB, 553 A.2d 1044, 1046 (Pa. Cmwlth. 1989). Such proof establishes a prima facie case that the method of posting is "reasonable and likely to inform the taxpayer as well as the public at large of an intended real property sale." The property owner then has the burden to produce contradictory evidence.
In this case, the TCB produced an affidavit, photos and testimony about posting. The property owner did not present any evidence to rebut the presumption.
Monday, November 05, 2007
School Expulsion Upheld for Breaking into School District Computer System
The Commonwealth Court of Pennsylvania upheld the suspension of a student who gained unauthorized access to the school district computer system and supplied information to another student who used the information to access and disrupt the system.
The expulsion was upheld despite the fact that the Computer Use Policy only provided for a possible suspension of one to ten days for violation of the policy.
The Court held that the School Board had discretion as to appropriate penalties in disciplinary proceedings and properly exercised its discretion to expel Student. While the Computer Use Policy suggested penalties up to a 10-day suspension, it also indicated in the Appendix that such a punishment was only to act as a guide, and an individual case could warrant the modification of the listed penalties.
The Court noted that previously, the student had committed a serious and potentially damaging violation of the School District’s Computer Use Policy when he made false student identification cards, and this time he committed a more serious violation of the School District’s Computer Use Policy by decoding encrypted information and helping another student access extremely sensitive and private School District information. Given his history, including a prior suspension for computer misconduct, and given that his conduct is felonious under the Crimes Code, the Court found that the expulsion was entirely appropriate.
Decision: M.T. for A.T. v. Central York School District [PDF]
The expulsion was upheld despite the fact that the Computer Use Policy only provided for a possible suspension of one to ten days for violation of the policy.
The Court held that the School Board had discretion as to appropriate penalties in disciplinary proceedings and properly exercised its discretion to expel Student. While the Computer Use Policy suggested penalties up to a 10-day suspension, it also indicated in the Appendix that such a punishment was only to act as a guide, and an individual case could warrant the modification of the listed penalties.
The Court noted that previously, the student had committed a serious and potentially damaging violation of the School District’s Computer Use Policy when he made false student identification cards, and this time he committed a more serious violation of the School District’s Computer Use Policy by decoding encrypted information and helping another student access extremely sensitive and private School District information. Given his history, including a prior suspension for computer misconduct, and given that his conduct is felonious under the Crimes Code, the Court found that the expulsion was entirely appropriate.
Decision: M.T. for A.T. v. Central York School District [PDF]
Wednesday, October 31, 2007
consumer - motor vehicles - MVSFA - private right of action
Nawrocki v. Faulkner Ciocca Ford - ED Pa. - October 29, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1296P.pdf
Under the facts of this case, Plaintiffs did not have a private cause of action under the Motor Vehicle Sales Finance Act (MVSFA), 68 P.S. sec. 601 et seq, for claims that a) the notice of repossession violated the MVSFA and b) the car dealer improperly applied for financing in the plaintiffs' name.
The "Pennsylvania Supreme Court has not ruled on whether the MVSFA creates a private right of action." However, in Witthoeft v. Kiskaddon, 733 A.2d 623, 616 (Pa. 1999), the Court "adopted a portion of the test from Cort v. Ash, 422 US 66, 78 (1975), to determine when a court may infer a private right of action under a statute"
Under the Witthoeft case, Pennsylvania courts consider whether
- plaintiff belongs to the class for whose special benefit the statute was enacted
- there is is an indication of any explicit or implicit legislative intent to create or deny such a remedy
- a private right of action would be consistent with the purpose of the legislative scheme.
The second of these "is the most important and [is] given the greatest weight."
The court noted that several sections of the MVSFA do specifically create private rights of action for their violation, citing examples. However, the court said that it could "not imply a private right of action in the entire MVSFA simply because the MVSFA contains provisions that the buyer can enforce." Such a reading would "ignore the difference between a statute that creates a private right of action and one that supplies an element of an existing cause of action. When a statute creates a private right of action, a plaintiff need only make out a violation of the statute to recover. On the other hand, when a statute supplies an element of a cause of action, the plaintiff must make out the violation of the statute and all of the other elements of the relevant cause of action before she can recover." (emphasis in original)
In this case, the court held that the violation of the sec. 623 notice provision supplied one element of a cause of action for the tort of conversion, i.e., interference with the plaintiff's use or possession of her car without her consent and "without lawful justification." (emphasis in original). However, "the MVSFA does not make a defective repossession notice in and of itself the subject of an implied cause of action."
There is no specific section of the MVSFA that covers an alleged application by a car dealer for financing in plaintiffs' names, without their knowledge or consent (even though such "behavior would likely violate the Fair Credit Reporting Act, which plaintiffs duly invoke.")
http://www.paed.uscourts.gov/documents/opinions/07D1296P.pdf
Under the facts of this case, Plaintiffs did not have a private cause of action under the Motor Vehicle Sales Finance Act (MVSFA), 68 P.S. sec. 601 et seq, for claims that a) the notice of repossession violated the MVSFA and b) the car dealer improperly applied for financing in the plaintiffs' name.
The "Pennsylvania Supreme Court has not ruled on whether the MVSFA creates a private right of action." However, in Witthoeft v. Kiskaddon, 733 A.2d 623, 616 (Pa. 1999), the Court "adopted a portion of the test from Cort v. Ash, 422 US 66, 78 (1975), to determine when a court may infer a private right of action under a statute"
Under the Witthoeft case, Pennsylvania courts consider whether
- plaintiff belongs to the class for whose special benefit the statute was enacted
- there is is an indication of any explicit or implicit legislative intent to create or deny such a remedy
- a private right of action would be consistent with the purpose of the legislative scheme.
The second of these "is the most important and [is] given the greatest weight."
The court noted that several sections of the MVSFA do specifically create private rights of action for their violation, citing examples. However, the court said that it could "not imply a private right of action in the entire MVSFA simply because the MVSFA contains provisions that the buyer can enforce." Such a reading would "ignore the difference between a statute that creates a private right of action and one that supplies an element of an existing cause of action. When a statute creates a private right of action, a plaintiff need only make out a violation of the statute to recover. On the other hand, when a statute supplies an element of a cause of action, the plaintiff must make out the violation of the statute and all of the other elements of the relevant cause of action before she can recover." (emphasis in original)
In this case, the court held that the violation of the sec. 623 notice provision supplied one element of a cause of action for the tort of conversion, i.e., interference with the plaintiff's use or possession of her car without her consent and "without lawful justification." (emphasis in original). However, "the MVSFA does not make a defective repossession notice in and of itself the subject of an implied cause of action."
There is no specific section of the MVSFA that covers an alleged application by a car dealer for financing in plaintiffs' names, without their knowledge or consent (even though such "behavior would likely violate the Fair Credit Reporting Act, which plaintiffs duly invoke.")
Tuesday, October 30, 2007
Consumer Protection Law - pleading - particularity
Nawrocki v. Faulkner Ciocca Ford - ED Pa. - Ocftober 29, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1296P.pdf
Plaintiffs adequately pleaded their case with sufficient "heightened particularity" under the Pennsylvania Consumer Protection Law, 73 P.S. sec. 201-1 et seq., and F. R. Civ. 9(b), to withstand a Rule 12(b)(6) motion.
Tran v. Metropolitan Life Ins. Co., 408 F.3d 130, 140-1 (3d Cir. 2005), requires such a plaintiff to "make out the elements of common law fraud" -- which plaintiffs did in this case, when they "palpably alleged the necessary facts with far more particularity that the 'date, time or place" Rule 9(b) requires."
http://www.paed.uscourts.gov/documents/opinions/07D1296P.pdf
Plaintiffs adequately pleaded their case with sufficient "heightened particularity" under the Pennsylvania Consumer Protection Law, 73 P.S. sec. 201-1 et seq., and F. R. Civ. 9(b), to withstand a Rule 12(b)(6) motion.
Tran v. Metropolitan Life Ins. Co., 408 F.3d 130, 140-1 (3d Cir. 2005), requires such a plaintiff to "make out the elements of common law fraud" -- which plaintiffs did in this case, when they "palpably alleged the necessary facts with far more particularity that the 'date, time or place" Rule 9(b) requires."
Monday, October 29, 2007
damages/remedies - election of remedies; rescission - need for prompt action
Schwartz v. Rockey - Pennsylvania Supreme Court - October 17, 2007
majority http://www.aopc.org/OpPosting/Supreme/out/J-4A&B-2007mo.pdf
concurring/dissenting http://www.aopc.org/OpPosting/Supreme/out/J-4A&B-2007codo.pdf
election of remedies
Held, filing a complaint seeking contract-related damages (e.g., money damages) does not, by itself, foreclose a subsequent amendment seeking an inconsistent, equitable remedy (e.g., rescission), at least where it is alleged that the plaintiff lacked knowledge of material facts at the time of filing, and in the absence of demonstrated detrimental reliance by the opposing party. The court noted "confusing congeries of doctrines [which] have been lumped together under the election of remedies label." A majority of jurisdictions, including the federal courts, apply modern rules of pleading to permit the simultaneous pleading of inconsistent claims for relief.
rescission - need for prompt action
Held, the Superior Court should not have disturbed the trial court holding that buyers of real property "failed to pursue rescission with sufficient promptitude* to support an award of such remedy." Buyers effectively affirmed the contract by living in the house for 6 years and by not promptly seeking to rescind once they became aware of previously undisclosed water damage. Prompt action is a prerequisite to the remedy of rescission. Fichera v. Gording, 227 A.2d 642, 643-4 (Pa. 1967).
* Yes, it's in the dictionary.
majority http://www.aopc.org/OpPosting/Supreme/out/J-4A&B-2007mo.pdf
concurring/dissenting http://www.aopc.org/OpPosting/Supreme/out/J-4A&B-2007codo.pdf
election of remedies
Held, filing a complaint seeking contract-related damages (e.g., money damages) does not, by itself, foreclose a subsequent amendment seeking an inconsistent, equitable remedy (e.g., rescission), at least where it is alleged that the plaintiff lacked knowledge of material facts at the time of filing, and in the absence of demonstrated detrimental reliance by the opposing party. The court noted "confusing congeries of doctrines [which] have been lumped together under the election of remedies label." A majority of jurisdictions, including the federal courts, apply modern rules of pleading to permit the simultaneous pleading of inconsistent claims for relief.
rescission - need for prompt action
Held, the Superior Court should not have disturbed the trial court holding that buyers of real property "failed to pursue rescission with sufficient promptitude* to support an award of such remedy." Buyers effectively affirmed the contract by living in the house for 6 years and by not promptly seeking to rescind once they became aware of previously undisclosed water damage. Prompt action is a prerequisite to the remedy of rescission. Fichera v. Gording, 227 A.2d 642, 643-4 (Pa. 1967).
* Yes, it's in the dictionary.
consumer protection - treble damages - standard for award
Schwartz v. Rockey - Pennsylvania Supreme Court - October 17, 2007
majority http://www.aopc.org/OpPosting/Supreme/out/J-4A&B-2007mo.pdf
concurring/dissenting http://www.aopc.org/OpPosting/Supreme/out/J-4A&B-2007codo.pdf
Stating that it was "best to adhere as closely as possible to the plain language of the statute, which on "on its plan terms, does not provide any standard pursuant to which a trial court may award treble damages," the state supreme court held that the discretion of a trial court to award treble damages under sec. 9.2 of the state Consumer Protection Law, 73 P.S. sec. 201-9.2, "should not be closely constrained by the common-law requirement associated with the award of punitive damages" i.e., "outrageous and egregious conduct," which might include an "evil motive" or "reckless indifference to the rights of others."
The Court said that question was a "very close one." It contrasted this decision with that in Johnson v. Hyundai Motor America, 698 A.2d 631 (Pa. Super. 1997), where the court mentioned a "heightened standard for assessing the availability of treble damages" and said that courts should be guided by punitive damages cases.
The statute mentions only the trial court's "discretion," which the court said "is not limitless, as we believe that awards of treble damages may be reviewed by appellate courts for rationality, akin to appellate review of the discretionary aspect of equitable awards...." Trial courts "should focus on the presence or absence of intentional or reckless, wrongful conduct, as to which an award of treble damages would be consistent with, and in furtherance of, the remedial purposes of the" Consumer Protection Law."
The chief justice dissented on this issue, stating that "the case law regarding the nature of punitive damages is well reasoned and evidences the common-law principle applied on Pennsylvania. The plain language of the statute does not expressly alter this principle. Thus, absent such express direction from the Legislature to the contrary, I believe that the UTPCPL was intended to preserve the requirement that an award of treble damages be predicated upon a punitive damage analysis."
majority http://www.aopc.org/OpPosting/Supreme/out/J-4A&B-2007mo.pdf
concurring/dissenting http://www.aopc.org/OpPosting/Supreme/out/J-4A&B-2007codo.pdf
Stating that it was "best to adhere as closely as possible to the plain language of the statute, which on "on its plan terms, does not provide any standard pursuant to which a trial court may award treble damages," the state supreme court held that the discretion of a trial court to award treble damages under sec. 9.2 of the state Consumer Protection Law, 73 P.S. sec. 201-9.2, "should not be closely constrained by the common-law requirement associated with the award of punitive damages" i.e., "outrageous and egregious conduct," which might include an "evil motive" or "reckless indifference to the rights of others."
The Court said that question was a "very close one." It contrasted this decision with that in Johnson v. Hyundai Motor America, 698 A.2d 631 (Pa. Super. 1997), where the court mentioned a "heightened standard for assessing the availability of treble damages" and said that courts should be guided by punitive damages cases.
The statute mentions only the trial court's "discretion," which the court said "is not limitless, as we believe that awards of treble damages may be reviewed by appellate courts for rationality, akin to appellate review of the discretionary aspect of equitable awards...." Trial courts "should focus on the presence or absence of intentional or reckless, wrongful conduct, as to which an award of treble damages would be consistent with, and in furtherance of, the remedial purposes of the" Consumer Protection Law."
The chief justice dissented on this issue, stating that "the case law regarding the nature of punitive damages is well reasoned and evidences the common-law principle applied on Pennsylvania. The plain language of the statute does not expressly alter this principle. Thus, absent such express direction from the Legislature to the contrary, I believe that the UTPCPL was intended to preserve the requirement that an award of treble damages be predicated upon a punitive damage analysis."
Wednesday, October 24, 2007
real property - title insurance
Rood v. Commonwealth Land Title Insurance Company - Superior Court - October 18, 2007
http://www.courts.state.pa.us/OpPosting/Superior/out/a24045_07.pdf
Title insurance policy held not to cover claim for defective on-site sewage system. The purpose of title insurance is to protect from loss arising from defects in the title which the buyer acquires. Such a contract is construed strictly in favor of the buyer. The court rejected coverage for the defective sewer system, in spite of the argument that the title was rendered unmarketable by this defect, whose disclosure might cause a reduction in price. The court looked to decisions from other states in reaching its decision, in which it found a "dearth of authorities dealing with this precise question." Ultimately, the court rejected the argument that sought to equate an abandoned septic tank with a "defect, lien or encumbrance affecting title to the property." It held that plaintiff's argument confused economic lack of marketability with title marketability. Summary judgment was properly granted to the defendant.
http://www.courts.state.pa.us/OpPosting/Superior/out/a24045_07.pdf
Title insurance policy held not to cover claim for defective on-site sewage system. The purpose of title insurance is to protect from loss arising from defects in the title which the buyer acquires. Such a contract is construed strictly in favor of the buyer. The court rejected coverage for the defective sewer system, in spite of the argument that the title was rendered unmarketable by this defect, whose disclosure might cause a reduction in price. The court looked to decisions from other states in reaching its decision, in which it found a "dearth of authorities dealing with this precise question." Ultimately, the court rejected the argument that sought to equate an abandoned septic tank with a "defect, lien or encumbrance affecting title to the property." It held that plaintiff's argument confused economic lack of marketability with title marketability. Summary judgment was properly granted to the defendant.
corporations - piercing the corporate veil
Fletcher-Harlee Corp. v. Szymanski and David Concrete Corp. - Superior Court - October 15, 2007
http://www.courts.state.pa.us/OpPosting/Superior/out/a20038_07.pdf
It was appropriate to pierce defendant's corporate veil where defendant was the sole shareholder, director, and officer of several inter-related corporations. Citing Lumax Industries v. Aultman, 669 A2d 893 (Pa. 1995), the court reviewed the factors it considers in such cases, including whther
- the corporation is undercapitalized
- corporate formalities were followed
- relevant records were kept
- there was intermingling of personal and corporate funds
The court noted that there is no clear and well-settled rule about this doctrine in Pennsylvania. It relied heavily on Lumax and The Village at Camelback v. Carr, 538 A.2d 528 (Pa. Super. 1988), in which it held, inter alia, that a plaintiff does not have to show fraud in order for the doctrine to apply.
http://www.courts.state.pa.us/OpPosting/Superior/out/a20038_07.pdf
It was appropriate to pierce defendant's corporate veil where defendant was the sole shareholder, director, and officer of several inter-related corporations. Citing Lumax Industries v. Aultman, 669 A2d 893 (Pa. 1995), the court reviewed the factors it considers in such cases, including whther
- the corporation is undercapitalized
- corporate formalities were followed
- relevant records were kept
- there was intermingling of personal and corporate funds
The court noted that there is no clear and well-settled rule about this doctrine in Pennsylvania. It relied heavily on Lumax and The Village at Camelback v. Carr, 538 A.2d 528 (Pa. Super. 1988), in which it held, inter alia, that a plaintiff does not have to show fraud in order for the doctrine to apply.
Tuesday, October 16, 2007
insurance - bad faith statute, 43 Pa. C.S. 8371 - statute of limitations - common law duty of good faith/fair dealing
Ash v. Continental Insurance Company - Pennsylvania Supreme Court - October 11, 2007
http://www.aopc.org/OpPosting/Supreme/out/J-7-2006mo.pdf
State bad-faith insurance statute, 42 Pa. C.S. 8371, held to resemble tort more than contract and thus come under the two year statute of limitations in 42 Pa. C.S. 5524.
The court rejected plaintiff's argument that because a bad-faith claim involves both tort and contract concepts, like a consumer-protection claim, Gabriel v. O'Hara, 534 A.2d 488 (Pa. Super. 1987), it should come under the catch-all six-year statute of limitations.
The opinion contains an extended discussion of the duty of good faith and fair dealing, which is most often associated with contract claims. The court held that an action for violation of the statutory duty in sec. 8371 is "distinct from the common law cause of action for breach of the contractual duty of good faith" and distinguished the contract cases involving that duty.
The court said that "Pennsylvania courts have held that the key difference between tort actions and contract actions is this: ' [t]ort actions lie for breaches imposed by law as a matter of social policy, while contract actions lie only for breaches of duties imposed by mutual consensus agreements between particular individuals....With this distinction in mind, we note the legislature apparently determined the protections afforded by the Unfair Insurance Practices Act [40 P.S. 1171.1 et seq.] were insufficient to curtail bad faith acts by insurers and that it was in the public interest to enact sec. 8371 as an additional protection....Therefore, the duty under sec. 8371 is one imposed by law as a matter of social policy rather than one imposed by mutual consensus, and an action to recover damages for a breach of that duty derives primarily from the law of torts."
http://www.aopc.org/OpPosting/Supreme/out/J-7-2006mo.pdf
State bad-faith insurance statute, 42 Pa. C.S. 8371, held to resemble tort more than contract and thus come under the two year statute of limitations in 42 Pa. C.S. 5524.
The court rejected plaintiff's argument that because a bad-faith claim involves both tort and contract concepts, like a consumer-protection claim, Gabriel v. O'Hara, 534 A.2d 488 (Pa. Super. 1987), it should come under the catch-all six-year statute of limitations.
The opinion contains an extended discussion of the duty of good faith and fair dealing, which is most often associated with contract claims. The court held that an action for violation of the statutory duty in sec. 8371 is "distinct from the common law cause of action for breach of the contractual duty of good faith" and distinguished the contract cases involving that duty.
The court said that "Pennsylvania courts have held that the key difference between tort actions and contract actions is this: ' [t]ort actions lie for breaches imposed by law as a matter of social policy, while contract actions lie only for breaches of duties imposed by mutual consensus agreements between particular individuals....With this distinction in mind, we note the legislature apparently determined the protections afforded by the Unfair Insurance Practices Act [40 P.S. 1171.1 et seq.] were insufficient to curtail bad faith acts by insurers and that it was in the public interest to enact sec. 8371 as an additional protection....Therefore, the duty under sec. 8371 is one imposed by law as a matter of social policy rather than one imposed by mutual consensus, and an action to recover damages for a breach of that duty derives primarily from the law of torts."
Friday, October 12, 2007
settlement agreements - enforcement
Thomas v. University of Pennsylvania - ED Pa. - October 2, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1204P.pdf
Held, the parties entered into a binding settlement agreement of plaintiff's race discrimination case.
At a settlement conference, the parties agreed that defendant would pay plaintiff, a former employee, a certain amount. The court then dismissed the case. However, a dispute arose when the defendant added a no-rehire provision to the final written settlement agreement. Plaintiff objected to this provision and asked the court to vacate its dismissal of the case. Defendant eventually agreed to withdraw the offending provision. "The issue is whether the University's agreement to delete the language that [plaintiff' found unacceptable constituted an acceptance of an offer to settle the case" --a position advanced by the university, which sought enforcement of the agreement.
Settlement agreement are governed by ordinary principles of contract law, including the need for a meeting of the minds on all terms. An agreement to settle a lawsuit, voluntarily entered into, is binding on the parties, whether or not made in the present of the court, and even in the absence of a writing. Such an agreement is binding even where one party had a change of heart between the time s/he agreed to the terms of the settlement and when those terms were reduced to writing.
When plaintiff told the court that she would accept a certain financial settlement provided that there was no bar to her being rehired, she made a definite and specific offer to settle. When the University accepted, plaintiff became bound by the terms of her offer. Once the offer was accepted, the case was settled. A settlement is at bottom a contract, and it is basic contract law that an offer cannot be withdrawn after it has been accepted.
http://www.paed.uscourts.gov/documents/opinions/07D1204P.pdf
Held, the parties entered into a binding settlement agreement of plaintiff's race discrimination case.
At a settlement conference, the parties agreed that defendant would pay plaintiff, a former employee, a certain amount. The court then dismissed the case. However, a dispute arose when the defendant added a no-rehire provision to the final written settlement agreement. Plaintiff objected to this provision and asked the court to vacate its dismissal of the case. Defendant eventually agreed to withdraw the offending provision. "The issue is whether the University's agreement to delete the language that [plaintiff' found unacceptable constituted an acceptance of an offer to settle the case" --a position advanced by the university, which sought enforcement of the agreement.
Settlement agreement are governed by ordinary principles of contract law, including the need for a meeting of the minds on all terms. An agreement to settle a lawsuit, voluntarily entered into, is binding on the parties, whether or not made in the present of the court, and even in the absence of a writing. Such an agreement is binding even where one party had a change of heart between the time s/he agreed to the terms of the settlement and when those terms were reduced to writing.
When plaintiff told the court that she would accept a certain financial settlement provided that there was no bar to her being rehired, she made a definite and specific offer to settle. When the University accepted, plaintiff became bound by the terms of her offer. Once the offer was accepted, the case was settled. A settlement is at bottom a contract, and it is basic contract law that an offer cannot be withdrawn after it has been accepted.
contracts - sales - venue - approval/acceptance of credit
84 Lumber Co. v. Fish Hatchery, L.P. et al. - Superior Court - Ocftober 1, 2007
http://www.aopc.org/OpPosting/Superior/out/a23003_07.pdf
Plaintiff-appellant is a building supplier who sued defendants-appellees for breach of contract, alleging non-payment for lumber and building materials purchased at plaintiff's retail location in Northampton County. Plaintiff sued in Washington County, the location of its corporate headquarters and the place where defendants' credit application was approved. Defendants were located in Lehigh County, as was the residential construction project for which the materials were purchased.
Defendants filed preliminary objections alleging improper venue, and the lower court transferred the case to Northampton County, which was a) the location of the lumber yard where defendants bought the materials, b) the location where defendants applied for credit, and c) the location where defendants made payments to plaintiff.
Noting that trial courts have "considerable discretion" in change-of-venue cases, the appellate court interpreted Rule 1006 (venue for civil actions generally) and Rule 2130 (venue where partnerships are parties), and sustained the change of venue to the Northampton County, where it held that the "transaction" had taken place and "not merely some part of the transaction...." The court said that the civil rules do not permit a lawsuit to be instituted in any country where some facet of a complex transaction -- such as the approval of the buyer's credit application -- has occurred.
The court said that there was no "substantial relationship" between Washington County and the parties' dispute which would justify venue there. It was at the retail location in Northampton County "where the offer to purchase goods was accepted by Appellant in its delivery of such good for payment." [sic] The court rejected the contention that approval of credit amounted to the actual acceptance of the contract, since there was no suggestion that the approval was necessary to form the contract.
http://www.aopc.org/OpPosting/Superior/out/a23003_07.pdf
Plaintiff-appellant is a building supplier who sued defendants-appellees for breach of contract, alleging non-payment for lumber and building materials purchased at plaintiff's retail location in Northampton County. Plaintiff sued in Washington County, the location of its corporate headquarters and the place where defendants' credit application was approved. Defendants were located in Lehigh County, as was the residential construction project for which the materials were purchased.
Defendants filed preliminary objections alleging improper venue, and the lower court transferred the case to Northampton County, which was a) the location of the lumber yard where defendants bought the materials, b) the location where defendants applied for credit, and c) the location where defendants made payments to plaintiff.
Noting that trial courts have "considerable discretion" in change-of-venue cases, the appellate court interpreted Rule 1006 (venue for civil actions generally) and Rule 2130 (venue where partnerships are parties), and sustained the change of venue to the Northampton County, where it held that the "transaction" had taken place and "not merely some part of the transaction...." The court said that the civil rules do not permit a lawsuit to be instituted in any country where some facet of a complex transaction -- such as the approval of the buyer's credit application -- has occurred.
The court said that there was no "substantial relationship" between Washington County and the parties' dispute which would justify venue there. It was at the retail location in Northampton County "where the offer to purchase goods was accepted by Appellant in its delivery of such good for payment." [sic] The court rejected the contention that approval of credit amounted to the actual acceptance of the contract, since there was no suggestion that the approval was necessary to form the contract.
Tuesday, October 09, 2007
declaratory judgment - ripeness - challenge to admin. regulations
Township of Derry v. Dept. of Labor and Industry - Pa. Supreme Court - September 26, 2007
http://www.aopc.org/OpPosting/Supreme/out/J-116-2007mo.pdf
Request for declaratory relief challenging DLI regulations concerning the definition of "state-owned building" was held to be ripe, overruling the Commonwealth Court's sua sponte dismissal on ripeness grounds.
The Supreme Court held that
- the issues were adequately developed
- the parties would suffer hardship if review were delayed
- there was an actual and ongoing controversy
- the issues were concrete and adequately developed for judicial review
The Court also noted that evidence in an administrative enforcement proceeding would be different from the evidence relevant to the plaintiff's challenge. "The enforcement process has not been accepted as a substitute for declaratory judgment review in...circumstances involving substantial challenges to state administrative regulations....[I]ndeed, the concept of pre-enforcement review has expressly been approved."
http://www.aopc.org/OpPosting/Supreme/out/J-116-2007mo.pdf
Request for declaratory relief challenging DLI regulations concerning the definition of "state-owned building" was held to be ripe, overruling the Commonwealth Court's sua sponte dismissal on ripeness grounds.
The Supreme Court held that
- the issues were adequately developed
- the parties would suffer hardship if review were delayed
- there was an actual and ongoing controversy
- the issues were concrete and adequately developed for judicial review
The Court also noted that evidence in an administrative enforcement proceeding would be different from the evidence relevant to the plaintiff's challenge. "The enforcement process has not been accepted as a substitute for declaratory judgment review in...circumstances involving substantial challenges to state administrative regulations....[I]ndeed, the concept of pre-enforcement review has expressly been approved."
Friday, October 05, 2007
UC - willful misconduct - single standard
Dept. of Corrections v. UCBR - Pa. Supreme Court - October 4, 2007
http://www.aopc.org/OpPosting/Supreme/out/272MAL2007sd.pdf
The court reversed a Commonwealth Court decision denying benefits to a prison guard who did not report rumors of a planned attack on an inmate and did not not intervene when he heard the inmate being beaten, because of the officer's fear of reprisals and fear for his own safety. The lower court said that such fears did not constitute good cause for his actions. The court said that its conscience was shocked by the Board's conclusion "that a corrections officer who refuses to report a threat of violence against an inmate and refuses to render aid to an inmate being beaten could use fear for his own personal safety as good cause justification for his refusal to render aid....We can do nothing but express our outrage" that the DOC's Office of Professional Responsibility was aware of and condoned claimant's conduct and that of others in his situation.
The Supreme Court reversed and remanded for reconsideration in light of its decisions in Navickas v. UCBR, 787 A.2d 284 (Pa. 2001) and Grieb v. UCBR, 827 A.2d 422 (Pa. 2003), holding that the UC Act "sets for a single governing standard of willful misconduct and rejecting the idea that a higher standard may apply based upon the type or nature of the employment involved."
The Commonwealth Court decision is reported at 919 A/2d 316 (Pa. Cmwlth. 2007) http://www.courts.state.pa.us/OpPosting/CWealth/out/1205CD06_2-28-07.pdf. The lower court cited it decision in Williams v. UCBR, 648 A.2d 1321 (Pa. Cmwlth. 1994), the court noted its prior holdings that a "corrections officer, like law enforcement officials, occupy positions of great responsibility and trust, and thus, must adhere to demanding standards, which are higher than those applied to many other professions."
A concurring opinion in the lower court noted that the statement was in direct conflict with the Supreme Court's decision in Navickas v. UCBR, 778 A.2d 284, 290-1 (Pa. 2001), where the court rejected a higher standard of care for a health care worker, stating that that is a "question...of policy...not posed by the Unemployment Compensation Law we are called upon to construe. The Act sets for a single governing standard of willful misconduct, one that does not draw distinctions based upon the type or nature of the employee involved."
http://www.aopc.org/OpPosting/Supreme/out/272MAL2007sd.pdf
The court reversed a Commonwealth Court decision denying benefits to a prison guard who did not report rumors of a planned attack on an inmate and did not not intervene when he heard the inmate being beaten, because of the officer's fear of reprisals and fear for his own safety. The lower court said that such fears did not constitute good cause for his actions. The court said that its conscience was shocked by the Board's conclusion "that a corrections officer who refuses to report a threat of violence against an inmate and refuses to render aid to an inmate being beaten could use fear for his own personal safety as good cause justification for his refusal to render aid....We can do nothing but express our outrage" that the DOC's Office of Professional Responsibility was aware of and condoned claimant's conduct and that of others in his situation.
The Supreme Court reversed and remanded for reconsideration in light of its decisions in Navickas v. UCBR, 787 A.2d 284 (Pa. 2001) and Grieb v. UCBR, 827 A.2d 422 (Pa. 2003), holding that the UC Act "sets for a single governing standard of willful misconduct and rejecting the idea that a higher standard may apply based upon the type or nature of the employment involved."
The Commonwealth Court decision is reported at 919 A/2d 316 (Pa. Cmwlth. 2007) http://www.courts.state.pa.us/OpPosting/CWealth/out/1205CD06_2-28-07.pdf. The lower court cited it decision in Williams v. UCBR, 648 A.2d 1321 (Pa. Cmwlth. 1994), the court noted its prior holdings that a "corrections officer, like law enforcement officials, occupy positions of great responsibility and trust, and thus, must adhere to demanding standards, which are higher than those applied to many other professions."
A concurring opinion in the lower court noted that the statement was in direct conflict with the Supreme Court's decision in Navickas v. UCBR, 778 A.2d 284, 290-1 (Pa. 2001), where the court rejected a higher standard of care for a health care worker, stating that that is a "question...of policy...not posed by the Unemployment Compensation Law we are called upon to construe. The Act sets for a single governing standard of willful misconduct, one that does not draw distinctions based upon the type or nature of the employee involved."
Thursday, October 04, 2007
IFP - denial - frivolous action
Bailey v. Wakefield - Commonwealth Court - October 4, 2007
http://www.aopc.org/OpPosting/CWealth/out/1084CD07_10-4-07.pdf
Three prisoners sought a writ of mandamus against officers of a state correctional institution in the county court where the SCI is located. The trial court denied the plaintiffs' IFP petition on the grounds that the action was frivilous, pursuant to Pa. R.C.P. 240(j) http://www.pacode.com/secure/data/231/chapter200/s240.html.
A "frivolous" action is one that lacks an arguable basis either in law or in fact. A complaint is frivolous if it does not set forth a valud cause of action. The plaintiffs' complaint did allege a valid cause of action, claiming violations of state and federal constitutions and prison regulations and policies.
However, the complaint is still frivolous because the form of action - mandamus - cannot address the constitutional rights that they pleaded. Mandamus is only appropriate where the right to be enforced is very clear. Here, the defendants had a lot of discretion, because of the need for orderly administration of the prison. Mandamus is not maintainable in the circumstances.
"Because there is no way that [plaintiffs] can be successful, the trial court properly denied the petition to proceed in forma pauperis and dismissed the action seeking a writ of mandamus as frivolous."
http://www.aopc.org/OpPosting/CWealth/out/1084CD07_10-4-07.pdf
Three prisoners sought a writ of mandamus against officers of a state correctional institution in the county court where the SCI is located. The trial court denied the plaintiffs' IFP petition on the grounds that the action was frivilous, pursuant to Pa. R.C.P. 240(j) http://www.pacode.com/secure/data/231/chapter200/s240.html.
A "frivolous" action is one that lacks an arguable basis either in law or in fact. A complaint is frivolous if it does not set forth a valud cause of action. The plaintiffs' complaint did allege a valid cause of action, claiming violations of state and federal constitutions and prison regulations and policies.
However, the complaint is still frivolous because the form of action - mandamus - cannot address the constitutional rights that they pleaded. Mandamus is only appropriate where the right to be enforced is very clear. Here, the defendants had a lot of discretion, because of the need for orderly administration of the prison. Mandamus is not maintainable in the circumstances.
"Because there is no way that [plaintiffs] can be successful, the trial court properly denied the petition to proceed in forma pauperis and dismissed the action seeking a writ of mandamus as frivolous."
Wednesday, October 03, 2007
bankruptcy - conversion - bad faith
In re Piccoli - ED Pa. - September 27, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1167P.pdf
Denial of bankrupt's motion to convert Ch. 7 to Ch. 13 case upheld by district court, because of finding that the bankrupt was acting in bad faith, based largely on pre-petition conduct.
Bankrupt (B) transferred her interest in her home to her daughter and son-in-law only 16 months before filing, for no consideration. She also understated the value of her home and misrepresented the value of her unsecured claims. The court applied the factors in the case of In re Pakuris, 262 B.R. (Bankr. ED Pa. 2001) and In re Lilley, 91 F.3d 491 (3d Cir., 1996).
The court found that, under a fact-intensive inquiry --
- B's motion for conversion was to avoid fair payment to creditors
- conversion would be waste of judicial resources, since there would probably be re-conversion to Ch. 7
- home equity would give more to creditors in Ch. 7 than Ch. 13 case
- there is no absolute right to convert Ch. 7 to Ch. 13 - Marrama v. Citizens Bank - 127 S.Ct. 1105 (2007)
- B's conduct was "atypical" and not consistent with that of an honest and forthright but unfortunate debtor
- the timing in her case was "suspicious"
- B showed a lack of candor
http://www.paed.uscourts.gov/documents/opinions/07D1167P.pdf
Denial of bankrupt's motion to convert Ch. 7 to Ch. 13 case upheld by district court, because of finding that the bankrupt was acting in bad faith, based largely on pre-petition conduct.
Bankrupt (B) transferred her interest in her home to her daughter and son-in-law only 16 months before filing, for no consideration. She also understated the value of her home and misrepresented the value of her unsecured claims. The court applied the factors in the case of In re Pakuris, 262 B.R. (Bankr. ED Pa. 2001) and In re Lilley, 91 F.3d 491 (3d Cir., 1996).
The court found that, under a fact-intensive inquiry --
- B's motion for conversion was to avoid fair payment to creditors
- conversion would be waste of judicial resources, since there would probably be re-conversion to Ch. 7
- home equity would give more to creditors in Ch. 7 than Ch. 13 case
- there is no absolute right to convert Ch. 7 to Ch. 13 - Marrama v. Citizens Bank - 127 S.Ct. 1105 (2007)
- B's conduct was "atypical" and not consistent with that of an honest and forthright but unfortunate debtor
- the timing in her case was "suspicious"
- B showed a lack of candor
Monday, October 01, 2007
discovery - pre-complaint discovery - new state court rules
order http://www.aopc.org/OpPosting/Supreme/out/483civ.5.pdf
rule http://www.aopc.org/OpPosting/Supreme/out/483civ.5attch.pdf
There are a number of new, related state court rules about pre-complaint discovery, but the primary one is Rule 4003.8:
"A plaintiff may obtain pre-complaint discovery where the information sought is material and necessary to the filing of the complaint and the discovery will not cause unreasonable annoyance, embarrassment, oppression, burden or expense to any person or party."
rule http://www.aopc.org/OpPosting/Supreme/out/483civ.5attch.pdf
There are a number of new, related state court rules about pre-complaint discovery, but the primary one is Rule 4003.8:
"A plaintiff may obtain pre-complaint discovery where the information sought is material and necessary to the filing of the complaint and the discovery will not cause unreasonable annoyance, embarrassment, oppression, burden or expense to any person or party."
Friday, September 28, 2007
Fair Credit Reporting Act - private cause of action eliminated
Meyers v. Freedom Credit Union - ED Pa. - September 21, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1139P.pdf
There is no longer a private cause of action for the failure of a prospective creditor/lender to give a loan applicant who was denied credit the name, address and toll-free number of the credit reporting agency (CRA) whose report formed the basis, at least in part, of the denial of credit, as required by 15 USC sec. 1681m(a)(2)(A).
It is "beyond dispute" that there had been a private cause of action uner 15 USC secs. 1681n and 1681o for such failure -- until the enactment of a provision of the Fair and Accurate Credit Transaction Act (FACTA), P.L. 108-159, which amended the FCRA by, inter alia, eliminating a private cause of action for the conduct of which plaintiff complains. Under FACTA, such violations can now be enforced only by the relevant federal agencies and officials.
The court reached this conclusion by recognizing the "primacy of text and structure in statutory interpretation" and the decisions of "almost all" of the courts that have examined the issue, even while noting that the result was contrary to the structure, history and purpose of FACTA.
Somewhat ironically, however, the plaintiff in this case was able to recover, because her cause of action accrued before FACTA took effect.
http://www.paed.uscourts.gov/documents/opinions/07D1139P.pdf
There is no longer a private cause of action for the failure of a prospective creditor/lender to give a loan applicant who was denied credit the name, address and toll-free number of the credit reporting agency (CRA) whose report formed the basis, at least in part, of the denial of credit, as required by 15 USC sec. 1681m(a)(2)(A).
It is "beyond dispute" that there had been a private cause of action uner 15 USC secs. 1681n and 1681o for such failure -- until the enactment of a provision of the Fair and Accurate Credit Transaction Act (FACTA), P.L. 108-159, which amended the FCRA by, inter alia, eliminating a private cause of action for the conduct of which plaintiff complains. Under FACTA, such violations can now be enforced only by the relevant federal agencies and officials.
The court reached this conclusion by recognizing the "primacy of text and structure in statutory interpretation" and the decisions of "almost all" of the courts that have examined the issue, even while noting that the result was contrary to the structure, history and purpose of FACTA.
Somewhat ironically, however, the plaintiff in this case was able to recover, because her cause of action accrued before FACTA took effect.
Fair Housing Act - attorney fees
Snyder v. Bazargani et al. - ED Pa. - September 25, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1146P.pdf
Plaintiffs awarded attorney fees under the Fair Housing Act, 42 USC 3613(c)(2), against defendant-landlords who "inquired about plaintiffs' religious affiliation and thereafter....refused to rent plaintiffs the property." Given that plaintiffs prevailed at trial, the court had "very little discretion to deny an award of counsel fees." The court's discretion to deny fees is "tightly cabined."
http://www.paed.uscourts.gov/documents/opinions/07D1146P.pdf
Plaintiffs awarded attorney fees under the Fair Housing Act, 42 USC 3613(c)(2), against defendant-landlords who "inquired about plaintiffs' religious affiliation and thereafter....refused to rent plaintiffs the property." Given that plaintiffs prevailed at trial, the court had "very little discretion to deny an award of counsel fees." The court's discretion to deny fees is "tightly cabined."
contracts - damages - duty to mitigate - burden of proof
Wilmington Finance Co. v. Matrix Financial Services - ED Pa. - September 26, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1159P.pdf
"In Pennsylvania, a plaintiff in a breach-of-contract action has a duty to take reasonable steps to mitigate its damages. Delliponti v. DeAngelis, 681 A.2d 1261, 1264 (Pa. 1996). Defendant bears the burden of proving plaintiff’s alleged failure to mitigate. Id. To meet that burden, defendant must “show how further loss could have been avoided through the reasonable efforts of the injured party.” Pontiere v. James Dinert, Inc., 627 A.2d 1204, 1209 (Pa. Super. Ct. 1993)." It was thus "essential" that the defendant show that the plaintiff "could have taken reasonable steps...and that taking those steps would have prevented at least some of [plaintiff's] loss."
http://www.paed.uscourts.gov/documents/opinions/07D1159P.pdf
"In Pennsylvania, a plaintiff in a breach-of-contract action has a duty to take reasonable steps to mitigate its damages. Delliponti v. DeAngelis, 681 A.2d 1261, 1264 (Pa. 1996). Defendant bears the burden of proving plaintiff’s alleged failure to mitigate. Id. To meet that burden, defendant must “show how further loss could have been avoided through the reasonable efforts of the injured party.” Pontiere v. James Dinert, Inc., 627 A.2d 1204, 1209 (Pa. Super. Ct. 1993)." It was thus "essential" that the defendant show that the plaintiff "could have taken reasonable steps...and that taking those steps would have prevented at least some of [plaintiff's] loss."
Protection from Abuse - family/household members - siblings - business partners
Custer v. Cochran - Superior Court - September 25, 2007
http://www.aopc.org/OpPosting/Superior/out/E01002_07.pdf
Siblings who do not live together and whose only relationship is a business one come within the plain words of the definition of "family or household members," 23 Pa. C.S. 6102, since they are clearly related by consanguinity or affinity, overruling Olivieri v. Olivieri, 678 A.2d 393 (Pa. Super. 1996), to the extent that it limited application of the PFA Act to people who live in the same household.
The court also held that there was adequate proof of abuse and noted the ages, height and weight of the parties, and that plaintiff -- whose testimony the court found credible -- experienced fear and pain in her arm for several days as a result of defendant's actions.
Judge Ford Elliot concurred reluctantly, noting that the "clear legislative purpose and objective of the Act is frustrated by applying its protection to a dispute between business partners concerning purely business matters." The judge noted that the legislature's removal of the same-household requirement "simply enlarged the group of victims who have standing to seek relief under the Act so long as the abuse they suffer is the result of an intimate, sexual, or familial relationship they share or have shared with the abuser." The current litigants have no relationship that exists in any "domestic sphere." Nonetheless, the judge concurred, finding the majority view "legally sustainable."
http://www.aopc.org/OpPosting/Superior/out/E01002_07.pdf
Siblings who do not live together and whose only relationship is a business one come within the plain words of the definition of "family or household members," 23 Pa. C.S. 6102, since they are clearly related by consanguinity or affinity, overruling Olivieri v. Olivieri, 678 A.2d 393 (Pa. Super. 1996), to the extent that it limited application of the PFA Act to people who live in the same household.
The court also held that there was adequate proof of abuse and noted the ages, height and weight of the parties, and that plaintiff -- whose testimony the court found credible -- experienced fear and pain in her arm for several days as a result of defendant's actions.
Judge Ford Elliot concurred reluctantly, noting that the "clear legislative purpose and objective of the Act is frustrated by applying its protection to a dispute between business partners concerning purely business matters." The judge noted that the legislature's removal of the same-household requirement "simply enlarged the group of victims who have standing to seek relief under the Act so long as the abuse they suffer is the result of an intimate, sexual, or familial relationship they share or have shared with the abuser." The current litigants have no relationship that exists in any "domestic sphere." Nonetheless, the judge concurred, finding the majority view "legally sustainable."
Sunday, September 23, 2007
FMLA - state employer - immunity - self-care v. family care
Wampler v. Department of Labor & Industry - MD Pa. - September 14, 2007
http://www.pamd.uscourts.gov/opinions/kane/06v1877.pdf
A claim against against a state employer under the self-care provision of the FMLA, 29 USC sec. 2612(a)(1)(D) is barred by sovereign immunity, under the rationale of Chittester v. DCED, 226 F.3d 223 (3d Cir. 200) and Nevada DHS v. Hibbs, 538 US 721 (2003), as well as decisions from the 6th, 7th, 8th and 10th Circuits.
Unlike the family-care provision of the FMLA, 29 USC sec. 2612(a)(1)(C), the self-care provision does not inplicate gender-based stereotypes, which Congress has the power to deal with under the enforcement clause of the 14th Amendment.
http://www.pamd.uscourts.gov/opinions/kane/06v1877.pdf
A claim against against a state employer under the self-care provision of the FMLA, 29 USC sec. 2612(a)(1)(D) is barred by sovereign immunity, under the rationale of Chittester v. DCED, 226 F.3d 223 (3d Cir. 200) and Nevada DHS v. Hibbs, 538 US 721 (2003), as well as decisions from the 6th, 7th, 8th and 10th Circuits.
Unlike the family-care provision of the FMLA, 29 USC sec. 2612(a)(1)(C), the self-care provision does not inplicate gender-based stereotypes, which Congress has the power to deal with under the enforcement clause of the 14th Amendment.
Friday, September 21, 2007
contracts - unjust enrichment/quantum meruit
Northeast Fence & Iron Works, Inc. v. Murphy Quigley Co., Inc. - Superior Ct. - Sept. 18, 2007
http://www.aopc.org/OpPosting/Superior/out/a35022_06.pdf
Plaintiff/subcontractor's judgment against defendant/general contractor for installation of fencing at county prison upheld on theory of quantum meruit/unjust enrichment, which are synonymous terms. Plaintiff finished the fence job on emergency basis when a prior subcontractor left the job incomplete.
The elements/factors in QM/unjust enrichment are
a) lack of an express contract - there was a dispute about the price in this case
b) benefit conferred on defendant - satisfaction of D's contractual obligation to 3d party
c) acceptance and retention of benefit by defendant
d) circumstances would make it inequitable or unjust to retain benefit w/o payment, the "most significant element" of the doctrine
e) QM can apply where there has been partial payment, if benefit is greater than amount paid
http://www.aopc.org/OpPosting/Superior/out/a35022_06.pdf
Plaintiff/subcontractor's judgment against defendant/general contractor for installation of fencing at county prison upheld on theory of quantum meruit/unjust enrichment, which are synonymous terms. Plaintiff finished the fence job on emergency basis when a prior subcontractor left the job incomplete.
The elements/factors in QM/unjust enrichment are
a) lack of an express contract - there was a dispute about the price in this case
b) benefit conferred on defendant - satisfaction of D's contractual obligation to 3d party
c) acceptance and retention of benefit by defendant
d) circumstances would make it inequitable or unjust to retain benefit w/o payment, the "most significant element" of the doctrine
e) QM can apply where there has been partial payment, if benefit is greater than amount paid
Thursday, September 13, 2007
consumer - debt collection - bad checks
FTC v. Check Investors, Inc. - Third Circuit - September 6, 2007
http://www.ca3.uscourts.gov/opinarch/053558p.pdf
The court affirmed the district court's grant on injunctive relief and a $10.2 million fine pursuant to the Fair Debt Collection Practices Act, 15 USC 1692 et seq., against a company which purchased more than 2.2 million bad checks for $348 million and admittedly used abusive debt collection practices against the consumer who had written the checks -- most notably false threats of criminal prosecution and calling people criminals or crooks. The defendant also tried to collect a fee of $125-$130 to the face amount of each check, which exceeded the legal limit of most states. The court said that defendant's tactics "apparently knew no limits."
Background of the FDCPA
The court discussed the "basis tenet" of the FDCPA that "all consumers, even those who have mismanaged their financial affairs resulting in default on their debts, deserve the rights to be treated in a reasonable and civil manner," and noted that the "number of persons who willfully refused to pay debts is minuscule....When default occurs, it is nearly always due to an unforeseen event such as unemployment, overextension, serious illness or marital difficulties or divorce."
NSF checks are "debts" under the FDCPA
A "debt" under the FDCPA is "any obligation...to pay money" arising out of a consumer transaction, even if the payor's intent was fraudulent at the time s/he wrote the check. Four other courts of appeals reached this same conclusion. A check written in a consumer transaction evidences the drawer's obligation to pay, which remains even if the check is dishonored. A transaction's status as a debt must be determined at the time the obligation first arose. The crime of writing a bad check is a specific intent crime; the bad intent must exist at the time the check is written--a fact that defendant could not establish. There is no crime even when the drawer is at fault for the dishonor unless wrongful intent exists at the time the check was written.
But even if that were not the case, "there is no fault exception in the FDCPA....Congress chose not to exempt debt collectors from following the Act [even] if they could prove that the consumer intended his check to be dishonored or accepted credit from a merchant intending default....[N]o consumer deserves to be abused in the collection process."
The payors/drawers of the NSF checks are "consumers" under the FDCPA
The FDCPA defines "consumer" as "any natural person obligated or allegedly obligated to pay any debt." (emphasis in original). "Congress realized that some people who write bad check do so knowingly and willfully and that their conduct is fraudulent. It is just as clear that Congress enacted a definition of 'consumer' that did not exclude such person from the protections they would otherwise be afforded under the FDCPA."
Check Investors was a "debt collector" and not a "creditor under the FDCPA
The court rejected defendant's argument that because it purchased the checks involved, it was not a "debt collector" under the FDCPA because it was collecting its own debts, not those of another. The court distinguished those who acquire a debt with the intent to continue to service it, from those who buy for collection--the case here. The court also stressed the difference between buying a debt which is not in default from buying one which was in default when acquired.
"Not only do we conclude that Appellants are 'debt collectors' rather than a 'creditors,' we believe that their course of conduct exemplifies why Congress enacted the FDCPA and the wisdom of doing so. It also shows why Congress has directed us to focus on whether a debt was in default when acquired to determine the status of 'creditor' vs. 'debt collector.' "
http://www.ca3.uscourts.gov/opinarch/053558p.pdf
The court affirmed the district court's grant on injunctive relief and a $10.2 million fine pursuant to the Fair Debt Collection Practices Act, 15 USC 1692 et seq., against a company which purchased more than 2.2 million bad checks for $348 million and admittedly used abusive debt collection practices against the consumer who had written the checks -- most notably false threats of criminal prosecution and calling people criminals or crooks. The defendant also tried to collect a fee of $125-$130 to the face amount of each check, which exceeded the legal limit of most states. The court said that defendant's tactics "apparently knew no limits."
Background of the FDCPA
The court discussed the "basis tenet" of the FDCPA that "all consumers, even those who have mismanaged their financial affairs resulting in default on their debts, deserve the rights to be treated in a reasonable and civil manner," and noted that the "number of persons who willfully refused to pay debts is minuscule....When default occurs, it is nearly always due to an unforeseen event such as unemployment, overextension, serious illness or marital difficulties or divorce."
NSF checks are "debts" under the FDCPA
A "debt" under the FDCPA is "any obligation...to pay money" arising out of a consumer transaction, even if the payor's intent was fraudulent at the time s/he wrote the check. Four other courts of appeals reached this same conclusion. A check written in a consumer transaction evidences the drawer's obligation to pay, which remains even if the check is dishonored. A transaction's status as a debt must be determined at the time the obligation first arose. The crime of writing a bad check is a specific intent crime; the bad intent must exist at the time the check is written--a fact that defendant could not establish. There is no crime even when the drawer is at fault for the dishonor unless wrongful intent exists at the time the check was written.
But even if that were not the case, "there is no fault exception in the FDCPA....Congress chose not to exempt debt collectors from following the Act [even] if they could prove that the consumer intended his check to be dishonored or accepted credit from a merchant intending default....[N]o consumer deserves to be abused in the collection process."
The payors/drawers of the NSF checks are "consumers" under the FDCPA
The FDCPA defines "consumer" as "any natural person obligated or allegedly obligated to pay any debt." (emphasis in original). "Congress realized that some people who write bad check do so knowingly and willfully and that their conduct is fraudulent. It is just as clear that Congress enacted a definition of 'consumer' that did not exclude such person from the protections they would otherwise be afforded under the FDCPA."
Check Investors was a "debt collector" and not a "creditor under the FDCPA
The court rejected defendant's argument that because it purchased the checks involved, it was not a "debt collector" under the FDCPA because it was collecting its own debts, not those of another. The court distinguished those who acquire a debt with the intent to continue to service it, from those who buy for collection--the case here. The court also stressed the difference between buying a debt which is not in default from buying one which was in default when acquired.
"Not only do we conclude that Appellants are 'debt collectors' rather than a 'creditors,' we believe that their course of conduct exemplifies why Congress enacted the FDCPA and the wisdom of doing so. It also shows why Congress has directed us to focus on whether a debt was in default when acquired to determine the status of 'creditor' vs. 'debt collector.' "
Wednesday, September 12, 2007
Third Circuit Rules Child Wrongfully Detained under Hague Convention
http://www.ca3.uscourts.gov/opinarch/063962p.pdf
The U.S. Court of Appeals for the Third Circuit upheld the District Cout's decision in Yang v. Tsui, No. 06-3962, Filed: August 22, 2007.
In the decision the Court held that the Father in this case wrongfully retained custody of his five year old daughter in Pittsburgh after taking temporary physical custody of her while the mother had surgery and follow up treatment for a major medical condition at home in Canada.
The Court found that, Under the Hague Convention, four questions must be answered. A court must determine (1) when the removal or retention took place; (2) the child’s habitual residence immediately prior to such removal or retention; (3) whether the removal or retention breached the petitioner’s custody rights under the law of the child’s habitual residence; and (4) whether the petitioner was exercising his or her custody rights at the time of removal or retention.
In this case the court found that based on an analysis of these considerations the child in this case was wrongfully detained.
The determination by a court that a child was wrongfully removed or retained does not automatically mean that the child must be returned to his or her habitual residence. Rather, once the petitioner has proven his or her case, “the burden shifts to the respondent to prove an affirmative defense against the return of the child to the country of habitual residence.”
The father maintained that he proved the “wishes of the child” defense by a preponderance of the evidence and that the District Court abused its discretion by entering the order for Raeann to be returned to Canada despite such proof.
The Court found that the District Court did not err by refusing to apply the defense. Consequently, the order of the Distict Court was affirmed mandating that the child be returned to her mother in Canada.
The U.S. Court of Appeals for the Third Circuit upheld the District Cout's decision in Yang v. Tsui, No. 06-3962, Filed: August 22, 2007.
In the decision the Court held that the Father in this case wrongfully retained custody of his five year old daughter in Pittsburgh after taking temporary physical custody of her while the mother had surgery and follow up treatment for a major medical condition at home in Canada.
The Court found that, Under the Hague Convention, four questions must be answered. A court must determine (1) when the removal or retention took place; (2) the child’s habitual residence immediately prior to such removal or retention; (3) whether the removal or retention breached the petitioner’s custody rights under the law of the child’s habitual residence; and (4) whether the petitioner was exercising his or her custody rights at the time of removal or retention.
In this case the court found that based on an analysis of these considerations the child in this case was wrongfully detained.
The determination by a court that a child was wrongfully removed or retained does not automatically mean that the child must be returned to his or her habitual residence. Rather, once the petitioner has proven his or her case, “the burden shifts to the respondent to prove an affirmative defense against the return of the child to the country of habitual residence.”
The father maintained that he proved the “wishes of the child” defense by a preponderance of the evidence and that the District Court abused its discretion by entering the order for Raeann to be returned to Canada despite such proof.
The Court found that the District Court did not err by refusing to apply the defense. Consequently, the order of the Distict Court was affirmed mandating that the child be returned to her mother in Canada.
Monday, September 10, 2007
mortgage insurance - Fair Credit Reporting Act - adverse action notice
Whitfield v. Radian Guaranty, Inc. - Third Circuit - August 30, 2007
http://www.ca3.uscourts.gov/opinarch/055017p.pdf
Because of the poor credit history of Plaintiffs-borrowers, the Lender (Countrywide Home Mortgage) agreed to give them a mortgage for most of purchase price, on condition that they pay for mortgage insurance. The Lender arranged for mortgage insurance from defendant-insurer for $905/month (!), based on the loan-to-value and the consumers' credit score. Defendant conceded that the insurance premium would have been lower if the borrowers' credit score had been higher. Defendant-insurer did not send an adverse action notice to plaintiffs, according to their policy of not doing so when insurance is approved.
Plaintiffs sued, claiming that an adverse action notice was required under the Fair Credit Reporting Act, 15 USC sec.1681m(a)., since they paid more than the lowest insurance rate due to an adverse credit report. The FCRA requires that a user of information from a credit report takes any adverse action against an individual, that the user shall notice the individual of the adverse action, 15 USC 1681m(a).
Based in part on Safeco Insurance Co. b. Burr, 127 S.Ct. 2201 (2007), the court held that
a) an initial premium/first-time rate could be considered an increase in a charge for insurance for purpose of the adverse action notice requirement of the FCRA, and
b) privity of contract between the insurer and consumer-borrower is not a requirement of the FCRA
http://www.ca3.uscourts.gov/opinarch/055017p.pdf
Because of the poor credit history of Plaintiffs-borrowers, the Lender (Countrywide Home Mortgage) agreed to give them a mortgage for most of purchase price, on condition that they pay for mortgage insurance. The Lender arranged for mortgage insurance from defendant-insurer for $905/month (!), based on the loan-to-value and the consumers' credit score. Defendant conceded that the insurance premium would have been lower if the borrowers' credit score had been higher. Defendant-insurer did not send an adverse action notice to plaintiffs, according to their policy of not doing so when insurance is approved.
Plaintiffs sued, claiming that an adverse action notice was required under the Fair Credit Reporting Act, 15 USC sec.1681m(a)., since they paid more than the lowest insurance rate due to an adverse credit report. The FCRA requires that a user of information from a credit report takes any adverse action against an individual, that the user shall notice the individual of the adverse action, 15 USC 1681m(a).
Based in part on Safeco Insurance Co. b. Burr, 127 S.Ct. 2201 (2007), the court held that
a) an initial premium/first-time rate could be considered an increase in a charge for insurance for purpose of the adverse action notice requirement of the FCRA, and
b) privity of contract between the insurer and consumer-borrower is not a requirement of the FCRA
injunction - dissipation of assets
Ambrogi v. Reber - Superior Court - September 7, 2007
http://www.aopc.org/OpPosting/Superior/out/a12010_07.pdf
It was appropriate for the trial court to grant an injunction preventing defendants from dissipating their assets during the pendency of a lawsuit. The court ordered defendants to place the net proceeds of the sale of considerable real property in a supervised escrow account. There was a demonstrated need to prevent defendants from liquidating their assets and making themselves judgment proof.
The opinion contains a good review of that factors that are required to get a preliminary injunction.
- prevent immediate and irreparable harm
- greater injury from on-grant that grant
- maintenance of status quo
- the alleged wrong is manifest and the injunction of reasonably suited to abate it.
The movant doesn't have to show that he will prevail, only that there are substantial legal questions that the court has to resolve. On appeal, the court determines if the trial court had reasonable grounds for its order and will reverse only where no grounds for it exist or that the rule of law relied on was palpably erroneous or misapplied.
In this wrongful death action, defendants sold almost 40% of their real estate in less than 2 years from the date of a fatal fire at issue in the case. The trial court was troubled by the number of post-fire sales, the high value of the properties sold after the fire ($3 million), defendants' failure to purchase new real property with the proceeds, defendants' failure to disclose ownership of other properties, and very high potential damages.
The trial court simply directed that defendants must preserve their assets at a level reasonably calculated to satisfy a judgment that could be entered. Its order allowed defendants to petition for a change and release of funds to conduct their business.
http://www.aopc.org/OpPosting/Superior/out/a12010_07.pdf
It was appropriate for the trial court to grant an injunction preventing defendants from dissipating their assets during the pendency of a lawsuit. The court ordered defendants to place the net proceeds of the sale of considerable real property in a supervised escrow account. There was a demonstrated need to prevent defendants from liquidating their assets and making themselves judgment proof.
The opinion contains a good review of that factors that are required to get a preliminary injunction.
- prevent immediate and irreparable harm
- greater injury from on-grant that grant
- maintenance of status quo
- the alleged wrong is manifest and the injunction of reasonably suited to abate it.
The movant doesn't have to show that he will prevail, only that there are substantial legal questions that the court has to resolve. On appeal, the court determines if the trial court had reasonable grounds for its order and will reverse only where no grounds for it exist or that the rule of law relied on was palpably erroneous or misapplied.
In this wrongful death action, defendants sold almost 40% of their real estate in less than 2 years from the date of a fatal fire at issue in the case. The trial court was troubled by the number of post-fire sales, the high value of the properties sold after the fire ($3 million), defendants' failure to purchase new real property with the proceeds, defendants' failure to disclose ownership of other properties, and very high potential damages.
The trial court simply directed that defendants must preserve their assets at a level reasonably calculated to satisfy a judgment that could be entered. Its order allowed defendants to petition for a change and release of funds to conduct their business.
Friday, September 07, 2007
employment - wages - FLSA - donning/doffing work clothing
DeAsencio v. Tyson Foods, Inc. - 3d Circuit - September 6, 2007
http://www.ca3.uscourts.gov/opinarch/063502p.pdf
Held, time that poultry workers spent donning and doffing clothing needed to do their work was compensable "work" under the Fair Labor Standards Act, 29 USC sec. 201 et seq., since it involved activities that were an integral and indispensable part of their principal activities, took place on the employer's premises, pursuant to the rules of the employer and for its benefit.
http://www.ca3.uscourts.gov/opinarch/063502p.pdf
Held, time that poultry workers spent donning and doffing clothing needed to do their work was compensable "work" under the Fair Labor Standards Act, 29 USC sec. 201 et seq., since it involved activities that were an integral and indispensable part of their principal activities, took place on the employer's premises, pursuant to the rules of the employer and for its benefit.
Friday, August 31, 2007
Consumer - mortgage refinancing - existence of contract - estoppel/fraud - statute of frauds
McCloskey v. Novastar Mortgage, Inc. - ED Pa. - August 21, 2007
http://www.paed.uscourts.gov/documents/opinions/07D0994P.pdf
Plaintiffs were solicited by defendant to refinance their mortgage. Based on a series of conversation and emails with defendant, plaintiffs withdrew their refinancing arrangement with another mortgage company. Defendant ultimately rejected plaintiff's application, allegedly because their income was somewhat less that stated orally during phone conversations. Plaintiffs sued for breach of contract, promissory estoppel and fraud.
Contract
The contract cause of action was dismissed, because plaintiffs failed to establish the existence of a legal contract. The documents that they produced were evidence of preliminary negotiations but not a contract. The documents did not contain the "essential terms of the contract." Under Pennsylvania law, a contract exists if a) the parties have manifested an intent to be found by the terms of the agreement, b) the terms are sufficiently definite, and c) there was consideration. Preliminary negotiations do not alone constitute a contract. To ripen into a contract, there must be a manifestation of mutual asset to the terms of a bargain -- which was not the case here. An oral contract can be enforeable, but it must be established by clear and precise evidence - again not the case here.
Promissory estoppel
Plaintiffs' alleged detrimental reliance on defendant's promises about refinancing. Defendant said plaintiff had unclean hands because of misstatements about income. Inequitable conduct by plaintiff must be connect to the matters at issue, and the conduct has to be willful, not negligent. The court held that factual matters still had to be resolved about these issues and refused defendant's motion for summary judgment.
Statute of frauds defense
A mortgage is an interest in property and must satisfy the statute of frauds, as must an oral agreement to lend money in consideration for a mortgage. A party cannot avoid the statute by relying on an estoppel theory of recovery. However, the statute only makes an oral contract for an interest in real property unenforceable. It does not void the contract. Where the oral agreement has been obtained by fraud, the buyer can recover as damages the loss of his bargain. A plaintiff is permitted to pursue a promissory estoppel claim even when the underlying promise is subject to the statute of frauds, but his recovery is limited to reliance damages in the absence of fraud. The statute of frauds may prevent the specific performance of the promise, but it does not bar the promissory estoppel claim itself. The court held that the plaintiff had the right to pursue further discovery on this claim.
Fraud claim
Defendant again claimed that plaintiffs' overstatement of income barred this claim. The court rejected this because of defendant's lack of reliance on the statement of income, which was of "minimal importance to the loan approval." The court allowed the claim to proceed and permitted additional discovery by plaintiff.
http://www.paed.uscourts.gov/documents/opinions/07D0994P.pdf
Plaintiffs were solicited by defendant to refinance their mortgage. Based on a series of conversation and emails with defendant, plaintiffs withdrew their refinancing arrangement with another mortgage company. Defendant ultimately rejected plaintiff's application, allegedly because their income was somewhat less that stated orally during phone conversations. Plaintiffs sued for breach of contract, promissory estoppel and fraud.
Contract
The contract cause of action was dismissed, because plaintiffs failed to establish the existence of a legal contract. The documents that they produced were evidence of preliminary negotiations but not a contract. The documents did not contain the "essential terms of the contract." Under Pennsylvania law, a contract exists if a) the parties have manifested an intent to be found by the terms of the agreement, b) the terms are sufficiently definite, and c) there was consideration. Preliminary negotiations do not alone constitute a contract. To ripen into a contract, there must be a manifestation of mutual asset to the terms of a bargain -- which was not the case here. An oral contract can be enforeable, but it must be established by clear and precise evidence - again not the case here.
Promissory estoppel
Plaintiffs' alleged detrimental reliance on defendant's promises about refinancing. Defendant said plaintiff had unclean hands because of misstatements about income. Inequitable conduct by plaintiff must be connect to the matters at issue, and the conduct has to be willful, not negligent. The court held that factual matters still had to be resolved about these issues and refused defendant's motion for summary judgment.
Statute of frauds defense
A mortgage is an interest in property and must satisfy the statute of frauds, as must an oral agreement to lend money in consideration for a mortgage. A party cannot avoid the statute by relying on an estoppel theory of recovery. However, the statute only makes an oral contract for an interest in real property unenforceable. It does not void the contract. Where the oral agreement has been obtained by fraud, the buyer can recover as damages the loss of his bargain. A plaintiff is permitted to pursue a promissory estoppel claim even when the underlying promise is subject to the statute of frauds, but his recovery is limited to reliance damages in the absence of fraud. The statute of frauds may prevent the specific performance of the promise, but it does not bar the promissory estoppel claim itself. The court held that the plaintiff had the right to pursue further discovery on this claim.
Fraud claim
Defendant again claimed that plaintiffs' overstatement of income barred this claim. The court rejected this because of defendant's lack of reliance on the statement of income, which was of "minimal importance to the loan approval." The court allowed the claim to proceed and permitted additional discovery by plaintiff.
Thursday, August 30, 2007
disability - reversal v. remand - effect of substance abuse
Monagle v. Astrue - ED Pa. Augsut 24, 2007
http://www.paed.uscourts.gov/documents/opinions/07D1021P.pdf
The court held that it was appropriate to reverse and award benefits rather than remand for a further hearing, citing Morales v. Apfel, 225 F.3d 210 (3d Cir. 2000) and Allen v. Bowen, 881 F.2d 37 (3d Cir. 1989). There were no remaining evidentiary issues, and the opinions of the treating physicians that claimant was disabled, independent of his drug addiction, should have been followed.
The case also involved the problem of separating out the effect of marijuana addiction from claimant's bipolar disorder. There is good language in the case about the weight which should be given to the treating physician on this issue.
http://www.paed.uscourts.gov/documents/opinions/07D1021P.pdf
The court held that it was appropriate to reverse and award benefits rather than remand for a further hearing, citing Morales v. Apfel, 225 F.3d 210 (3d Cir. 2000) and Allen v. Bowen, 881 F.2d 37 (3d Cir. 1989). There were no remaining evidentiary issues, and the opinions of the treating physicians that claimant was disabled, independent of his drug addiction, should have been followed.
The case also involved the problem of separating out the effect of marijuana addiction from claimant's bipolar disorder. There is good language in the case about the weight which should be given to the treating physician on this issue.
Tuesday, August 28, 2007
ejectment - jurisdiction - sheriff's sale - deed
Wells Fargo Bank v. Long - Superior Court - August 22, 2007
http://www.aopc.org/OpPosting/Superior/out/a14007_07.pdf
A purchaser of property at sheriff's sale cannot bring an ejectment action until the title to the property passes by acknowledgment, delivery and recordation of the sheriff's deed. Before that time, the purchaser does not have a present right to immediate possession, a jurisdictional prerequisite to an ejectment action. The successful bidder at a sheriff's sale only gets "an inceptive, inchoate, or equitable estate."
The hiatus between the sheriff's sale and the delivery and recording of the deed is a "jurisdictional void" which cannot be traversed. There is an extensive (and repetitious) discussion of these principles, in the opinion.
http://www.aopc.org/OpPosting/Superior/out/a14007_07.pdf
A purchaser of property at sheriff's sale cannot bring an ejectment action until the title to the property passes by acknowledgment, delivery and recordation of the sheriff's deed. Before that time, the purchaser does not have a present right to immediate possession, a jurisdictional prerequisite to an ejectment action. The successful bidder at a sheriff's sale only gets "an inceptive, inchoate, or equitable estate."
The hiatus between the sheriff's sale and the delivery and recording of the deed is a "jurisdictional void" which cannot be traversed. There is an extensive (and repetitious) discussion of these principles, in the opinion.
Monday, August 20, 2007
Fair Credit Reporting Act - complaint to credit reporting agency
Beisel v. ABN Ambro Mortgage Inc. - Ed Pa. - Aguust 10, 2007
http://www.paed.uscourts.gov/documents/opinions/07D0951P.pdf
A credit reporting agency [CRA] has a duty concerning disputed information in a credit report only after the complaining party has disputed the credit information with the CRA and the credit reporting agency has notified the furnisher of information.
In this case, the consumer-plaintiffs alleged only that they disputed it with the furnisher, not the CRA, before bring suit under the FCRA, 15 USC 1681 et seq. Jaramillo v. Experian, 155 F.Supp. 2d 356, 363 (E Pa. 2001).
http://www.paed.uscourts.gov/documents/opinions/07D0951P.pdf
A credit reporting agency [CRA] has a duty concerning disputed information in a credit report only after the complaining party has disputed the credit information with the CRA and the credit reporting agency has notified the furnisher of information.
In this case, the consumer-plaintiffs alleged only that they disputed it with the furnisher, not the CRA, before bring suit under the FCRA, 15 USC 1681 et seq. Jaramillo v. Experian, 155 F.Supp. 2d 356, 363 (E Pa. 2001).
Monday, August 13, 2007
bankruptcy - dismissal - bad faith - sec. 707(a)
In re Perlin - Third Circuit - August 3, 2007
http://www.ca3.uscourts.gov/opinarch/063199p.pdf
In adjudicating a motion to dismiss assserting bad faith under 11 USC 707(a), it is within the discretion of the bankruptcy court to consider a debtor's monthly income and expenses together with any other factors relevant to a debtor's good faith in filing for bankruptcy, reflecting the "fact-intensive nature of the good-faith inquiry."
Net worth, future prospects and ability to repay are not a valid cause for dismissal. Dismissal should be carefully confined to only truly egregious cases that entail concealed or misrepresented assets and/or sources of income, lavish lifestyles, and intention to avoid a large single debt based on conduct akin to fraud, misconduct or gross negligence.
http://www.ca3.uscourts.gov/opinarch/063199p.pdf
In adjudicating a motion to dismiss assserting bad faith under 11 USC 707(a), it is within the discretion of the bankruptcy court to consider a debtor's monthly income and expenses together with any other factors relevant to a debtor's good faith in filing for bankruptcy, reflecting the "fact-intensive nature of the good-faith inquiry."
Net worth, future prospects and ability to repay are not a valid cause for dismissal. Dismissal should be carefully confined to only truly egregious cases that entail concealed or misrepresented assets and/or sources of income, lavish lifestyles, and intention to avoid a large single debt based on conduct akin to fraud, misconduct or gross negligence.
Friday, August 10, 2007
welfare - MA- resources - disretionary support trust
DeBone v. DPW - Commonwealth Court - Masy 31, 2007
http://www.courts.state.pa.us/OpPosting/CWealth/out/2138CD06_8-9-07.pdf
Held,discretionary support trust should be included as a resource in determining eligibility for MA benefits. Trust consisted of $145,000 and trustees could use the money for petitioner's benefit. Petitioner's resource held to exceed $2400 limit under 55 Pa. Code 178.1(a),178.2 and 178.4. Beneficiary's interest depends on settlor's intent. Rosenberg v. DPW, 679 A2d 767 (Pa. 1996).; Shaak v. DPW, 747 A2d 883, 886 (Pa. 2000). Court applied factors cited in those cases, especially that trustee had discretion to use the trust principal for the welfare etc of the beneficiary.
http://www.courts.state.pa.us/OpPosting/CWealth/out/2138CD06_8-9-07.pdf
Held,discretionary support trust should be included as a resource in determining eligibility for MA benefits. Trust consisted of $145,000 and trustees could use the money for petitioner's benefit. Petitioner's resource held to exceed $2400 limit under 55 Pa. Code 178.1(a),178.2 and 178.4. Beneficiary's interest depends on settlor's intent. Rosenberg v. DPW, 679 A2d 767 (Pa. 1996).; Shaak v. DPW, 747 A2d 883, 886 (Pa. 2000). Court applied factors cited in those cases, especially that trustee had discretion to use the trust principal for the welfare etc of the beneficiary.
Thursday, August 09, 2007
consumer - warranties - exclusion/modification - conflict between express and implied warranties
N.J. Transit Corp. v. Harsco Corp. - 3rd Circuit - August 2, 2007
http://www.ca3.uscourts.gov/opinarch/063507p.pdf
The court held that a sophisticated commercial buyer who had drafted the contract could not rely on UCC implied warranties of merchantability and fitness for a particular purpose under the N.J. equivalent of 13 Pa. C.S. sec. 2314 and 2315 when there was a one-year express contractual warranty that had expired at the time of the alleged loss.
The court took special note of the fact that this was "hardly the typical case" involving exclusion or modification of a warranty under sec. 2316. Here, the buyer drafted the contract, both parties were sophisticated business entities, and the parties had equal bargaining power. "It was the buyer who dictated all the contract's terms [and] whose bargaining power was superior." The buyer "specified precisely what it required" and the express warranty was "extremely broad," so "there was no implied warranty of fitness for a particular purpose."
Under sec. 2317(c), "express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose." Here the court interpreted the express warranty and implied warranty of merchantability as "consistent and cumulative... for the one year term of the express warranty. Beyond that period, the implied warranty of merchantability conflicts with the contract's specifications, and is therefore displaced by the express" one-year warranty, pursuant to sec. 2317 (c).
The court specifically stated and emphasized that it was not interpreting sec. 2316 (exclusion or modification of warranties) to allow all express warranties of limited duration to impliedly exclude or modify limited warranties. Instead, it based its holding on the fact that here the buyer-drafted global warranty was incorporated into the contract specifications, noting that the commentary to sec. 2316 recognized such a situation as "not the ordinary circumstance that the section is designed to address." The court said that its holding was in line with the general purpose of sec. 2316 "which, according to the commentary, is to ensure that there are no surprises concerning which warranties accompany the goods sold." The element of surprise is not present where the buyer drafts the contract. A different holding would turn "a buyer's shield against surprise into a buyer's sword of surprise."
http://www.ca3.uscourts.gov/opinarch/063507p.pdf
The court held that a sophisticated commercial buyer who had drafted the contract could not rely on UCC implied warranties of merchantability and fitness for a particular purpose under the N.J. equivalent of 13 Pa. C.S. sec. 2314 and 2315 when there was a one-year express contractual warranty that had expired at the time of the alleged loss.
The court took special note of the fact that this was "hardly the typical case" involving exclusion or modification of a warranty under sec. 2316. Here, the buyer drafted the contract, both parties were sophisticated business entities, and the parties had equal bargaining power. "It was the buyer who dictated all the contract's terms [and] whose bargaining power was superior." The buyer "specified precisely what it required" and the express warranty was "extremely broad," so "there was no implied warranty of fitness for a particular purpose."
Under sec. 2317(c), "express warranties displace inconsistent implied warranties other than an implied warranty of fitness for a particular purpose." Here the court interpreted the express warranty and implied warranty of merchantability as "consistent and cumulative... for the one year term of the express warranty. Beyond that period, the implied warranty of merchantability conflicts with the contract's specifications, and is therefore displaced by the express" one-year warranty, pursuant to sec. 2317 (c).
The court specifically stated and emphasized that it was not interpreting sec. 2316 (exclusion or modification of warranties) to allow all express warranties of limited duration to impliedly exclude or modify limited warranties. Instead, it based its holding on the fact that here the buyer-drafted global warranty was incorporated into the contract specifications, noting that the commentary to sec. 2316 recognized such a situation as "not the ordinary circumstance that the section is designed to address." The court said that its holding was in line with the general purpose of sec. 2316 "which, according to the commentary, is to ensure that there are no surprises concerning which warranties accompany the goods sold." The element of surprise is not present where the buyer drafts the contract. A different holding would turn "a buyer's shield against surprise into a buyer's sword of surprise."
bankruptcy - ch. 13 - post-foreclosure sale cure
In re Connors - 3rd Circuit - August 3, 2007
http://www.ca3.uscourts.gov/opinarch/063321p.pdf
Ending a dispute among N.J. district courts, the 3rd Circuit held that a Chapter 13 debtor does not have the right, under 11 USC 1322 (c) (1), to cure a default on a mortgage secured by the debtor's residence after the residence is sold at a foreclosure sale but before the deed is delivered.
The "unambiguous language of sec. 1322 (c) (1) supports the 'gavel rule.'" It says the a "default with respect to, or that gave rise to, a lien on the debtor's residence may be cured under paragraph (3) or (5) of subsection (b) until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law…." The court said that numerous courts have held that a residence is "sold" at the foreclosure auction. The sale is final then, not when the deed is later delivered.
There is a provision, 11 USC 108(b), which allows a bankruptcy to be filed and a) objections to the sale to be filed or b) the property redeemed -- if the bankruptcy is filed before the expiration of a grace period established by a nonbankruptcy state law.
In this case, the debtor had the right to but did not exercise his statutory right to object to the foreclosure sale or redeem the property within 60 days of the filing of his chapter 13 petition, as permitted by N.J. state law and 11 USC 108(b).
http://www.ca3.uscourts.gov/opinarch/063321p.pdf
Ending a dispute among N.J. district courts, the 3rd Circuit held that a Chapter 13 debtor does not have the right, under 11 USC 1322 (c) (1), to cure a default on a mortgage secured by the debtor's residence after the residence is sold at a foreclosure sale but before the deed is delivered.
The "unambiguous language of sec. 1322 (c) (1) supports the 'gavel rule.'" It says the a "default with respect to, or that gave rise to, a lien on the debtor's residence may be cured under paragraph (3) or (5) of subsection (b) until such residence is sold at a foreclosure sale that is conducted in accordance with applicable nonbankruptcy law…." The court said that numerous courts have held that a residence is "sold" at the foreclosure auction. The sale is final then, not when the deed is later delivered.
There is a provision, 11 USC 108(b), which allows a bankruptcy to be filed and a) objections to the sale to be filed or b) the property redeemed -- if the bankruptcy is filed before the expiration of a grace period established by a nonbankruptcy state law.
In this case, the debtor had the right to but did not exercise his statutory right to object to the foreclosure sale or redeem the property within 60 days of the filing of his chapter 13 petition, as permitted by N.J. state law and 11 USC 108(b).
Wednesday, August 08, 2007
consumer/housing - rental housing - discrimination - ECOA and CPL
Portis v. River House Associates - MD Pa. - August 2, 2007
http://www.pamd.uscourts.gov/opinions/jones/06v2123.pdf
African-American plaintiffs were turned down for rental housing by Defendant, allegedly based on lack of credit history. They subsequently got rental housing from another landlord, who used same credit agency as Defendant allegedly used. Eventual landlord got a credit history, which was readily available. Plaintiffs sued under a) the Fair Housing Act, 42 USC 3601 et seq.; b) 42 USC 1981; c) 42 USC 1982; d) the Equal Credit Opportunity Act (ECOA), 15 USC 1691 et seq.; and e) the Pennsylvania Consumer Protection Law, 73 PS 201-1 et seq. Defendant moved to dismiss the last two claims -- EDOA and Consumer Protection Law. The court agreed.
Equal Credit Opportunity Act - Citing Laramore v. Ritchie Realty, 397 F3d 544 (7th Cir. 2005), the ECOA claim was dismissed because
- it did not involve the extension of "credit," i.e. the right to defer the payment of a debt
- the ECOA was meant to protect against discrimination by financial institutions, not landlords
- a Federal Reserve regulation stating that the granting of a lease is not an extension of credit
- the ECOA interests could be protected in the FHA claim, which Defendant did not move to dismiss.
Pennsylvania Consumer Protection Law
The court dismissed this claim, because the Plainiffs and Defendant never entered into a contract. Defendant rejected Plaintiff as a tenant. Plaintiffs found a new place to live. Plaintiffs did not purchase goods or services from Defendant. Calling this a case of first impression, the court held that the CPL does not permit suit by a person who leased property from one entity to bring suit against another entity from the which person initially attempted to lease property. The court noted that the CPL allows the Attorney General or county DA to bring suit, implicitly recognizing that there may be circumstances in which private actors are not permitted to bring suit but public officials can. The court also noted that while direct privity is not required under the CPL, the statute "does not stand for the proposition that a CPL claim can stand against a wholly unrelated party or one who is foreign to the purchase or lease transaction." In that sense, the CPL has a "causation requirement."
http://www.pamd.uscourts.gov/opinions/jones/06v2123.pdf
African-American plaintiffs were turned down for rental housing by Defendant, allegedly based on lack of credit history. They subsequently got rental housing from another landlord, who used same credit agency as Defendant allegedly used. Eventual landlord got a credit history, which was readily available. Plaintiffs sued under a) the Fair Housing Act, 42 USC 3601 et seq.; b) 42 USC 1981; c) 42 USC 1982; d) the Equal Credit Opportunity Act (ECOA), 15 USC 1691 et seq.; and e) the Pennsylvania Consumer Protection Law, 73 PS 201-1 et seq. Defendant moved to dismiss the last two claims -- EDOA and Consumer Protection Law. The court agreed.
Equal Credit Opportunity Act - Citing Laramore v. Ritchie Realty, 397 F3d 544 (7th Cir. 2005), the ECOA claim was dismissed because
- it did not involve the extension of "credit," i.e. the right to defer the payment of a debt
- the ECOA was meant to protect against discrimination by financial institutions, not landlords
- a Federal Reserve regulation stating that the granting of a lease is not an extension of credit
- the ECOA interests could be protected in the FHA claim, which Defendant did not move to dismiss.
Pennsylvania Consumer Protection Law
The court dismissed this claim, because the Plainiffs and Defendant never entered into a contract. Defendant rejected Plaintiff as a tenant. Plaintiffs found a new place to live. Plaintiffs did not purchase goods or services from Defendant. Calling this a case of first impression, the court held that the CPL does not permit suit by a person who leased property from one entity to bring suit against another entity from the which person initially attempted to lease property. The court noted that the CPL allows the Attorney General or county DA to bring suit, implicitly recognizing that there may be circumstances in which private actors are not permitted to bring suit but public officials can. The court also noted that while direct privity is not required under the CPL, the statute "does not stand for the proposition that a CPL claim can stand against a wholly unrelated party or one who is foreign to the purchase or lease transaction." In that sense, the CPL has a "causation requirement."
Monday, August 06, 2007
judges - deliberative thought processes - discovery
Leber v. Stretton - Superior Court - June 8, 2007
http://www.aopc.org/OpPosting/Superior/out/A16018_07.pdf
Deliberative thought processes of a judicial officer (including MDJs and presumably ALJs, referees, etc.) are not discoverable.
http://www.aopc.org/OpPosting/Superior/out/A16018_07.pdf
Deliberative thought processes of a judicial officer (including MDJs and presumably ALJs, referees, etc.) are not discoverable.
Friday, August 03, 2007
bankruptcy - retirement annuity not part of estate under sec. 541(c)(2)
Skiba v. Laher- 3rd Circuit - August 2, 2007
http://www.ca3.uscourts.gov/opinarch/054168p.pdf
Held, bankrupt's TIAA-CREF retirement annuity is exluded from the bankruptcy estate as a "trust" under 11 USC 541(c)(2).
http://www.ca3.uscourts.gov/opinarch/054168p.pdf
Held, bankrupt's TIAA-CREF retirement annuity is exluded from the bankruptcy estate as a "trust" under 11 USC 541(c)(2).
Thursday, August 02, 2007
Consumer Protection Law - pleading - particularity
Rosenberg v. Avis Rent-A-Car System, Inc. - ED Pa. - July 31, 2007
http://www.paed.uscourts.gov/documents/opinions/07D0888P.pdf
The court granted defendant's motion to dismiss a consumer protection claim under the state CPL, 73 PS 201-1 et seq, for failure to plead the claim with "particularity," as allegedly required by FRCivP 9(b), because fraud is said to be involved. "Federal courts have analogized fraud pleading to the "first paragraph of any newspaper story, requiring the who, what, when, where, and how of the circumstances." This applies not only to fraud actions under federal statutes but also to those based on state law, such as the CPL. The court gave Plaintiff 30 days to file an amended complaint.
Citing a series of ED Pa. cases, the court held that under CPL, plaintiff's must plead the following elements with particularily:
a) a specific false representation of material fact;
b) knowledge by the person who made it of its falsity
c) ignorance of its falsity by the person to whom it was made
d) the intention that it should be acted upon
e) that the plaintiff did act on it to his detriment (damages)
These requirements are "relaxed when the factual information regarding the alleged fraud is within the defendant's control."
As so often happens with this issue, the court did not mention Commonwealth v. Percudani, 825 A.2d 743 (Pa. Cmwlth 2003), noting that amendments (fraudulent or deceptive conduct prohibited) to the CPL statute negated this strict pleading requirement.
http://www.paed.uscourts.gov/documents/opinions/07D0888P.pdf
The court granted defendant's motion to dismiss a consumer protection claim under the state CPL, 73 PS 201-1 et seq, for failure to plead the claim with "particularity," as allegedly required by FRCivP 9(b), because fraud is said to be involved. "Federal courts have analogized fraud pleading to the "first paragraph of any newspaper story, requiring the who, what, when, where, and how of the circumstances." This applies not only to fraud actions under federal statutes but also to those based on state law, such as the CPL. The court gave Plaintiff 30 days to file an amended complaint.
Citing a series of ED Pa. cases, the court held that under CPL, plaintiff's must plead the following elements with particularily:
a) a specific false representation of material fact;
b) knowledge by the person who made it of its falsity
c) ignorance of its falsity by the person to whom it was made
d) the intention that it should be acted upon
e) that the plaintiff did act on it to his detriment (damages)
These requirements are "relaxed when the factual information regarding the alleged fraud is within the defendant's control."
As so often happens with this issue, the court did not mention Commonwealth v. Percudani, 825 A.2d 743 (Pa. Cmwlth 2003), noting that amendments (fraudulent or deceptive conduct prohibited) to the CPL statute negated this strict pleading requirement.
Wednesday, August 01, 2007
consumer - foreign judgment - full faith and credit - due process
Frontier Leasing Corporation v. Shah - Superior Court - July 30, 2007
http://www.aopc.org/OpPosting/Superior/out/a19038_07.pdf
Pennsylvania court stuck down a default Iowa judgment entered against defendant Shah on due process grounds.
The contractual forum selection clause purported to give Polk County, Iowa, jurisdiction. A judgment was entered against Shah, who had leased an ATM machine fromm a 3rd party lessor who in turn assigned its rights to Frontier Leasing. Shah admittedly defaulted on the lease. Frontier then tried to execute on the judgment in Allegheny County, where defendant was located. Defendant filed a motion to strike the judgment.
Full faith and credit under Article IV, sec. 1 of the US Constitution cannot be granted unless the sister state court that entered the judgment had personal jurisdiction over the defendant, who must have been afforded due process. Personal jurisdiction can be established by consent, in which case the minimum contacts requirement under International Shoe, 326 US 310 (1945), is not applicable. In addition, personal jurisdiction can be waived.
The court looked at Iowa law to determine these issues. Under Iowa law (and Pennsylvania law), forum selection clauses (FSC) are presumptively enforceable. The presumption can be rebutted by showing that the FSC is not reasonable, under the circumstances. To do so, a defendant must make a "strong showing" that the judgment should be set aside.
Some factors in this determination are
- whether there was an arm's length (what length sleeve?) transaction
- relative sophistiction of the parties (experienced and sophisticated businessmen?)
- whether enforcement would be unreasonable or unjust in the circumstances
- whether there was fraud of overreaching
- whether enforcement would make things so gravely difficult for Defendant that he would effectively be deprived of his day in court
In this case Defendant was a Pakistani immigrant with a limited command of English. The FSC did not mention the terms "jurisdiction," or "venue" or "service of process." It only said that a suit would be "proper" if brought in Iowa courts. The FSC language was not in bold type and was contained in the midst of boilerplate language, "inconspicuous even to the trained eye." The court had "no doubt that appellant had no idea what the import of this clause was…." The court decided that "if there is anything substantive to the notion that forum selection clauses should be vitiated if unreasonable, this is the case in which to apply that notion. Accordingly, we conclude the forum selection clause is unenforceable under Iowa law."
This would seem to resolve the case, Nonetheless, the court went on to consider whether Iowa's assumption of jurisdiction was proper, under Iowa law, applying a two-part test. The first part was satisfied by the presumption of jurisdiction based on the contractual FSC. The second part, however, was not. It involved several factors concerning the general notion of minimum contacts, including quantity, nature and quality, source and connection with the cause of action, etc. Here, defendant's only contact with Iowa was a "single tangential contact" -- that he executed a contract that provided that the lessor would render performance in Iowa. This contact was "accidental" and it is "doubtful that appellant had an understanding that this contact could result in his being hailed to Iowa to answer for default. It was a single fortuitous contact, insufficient to give Iowa jurisdiction under its own law."
The court held that the FSC was "not only unforceable but also is insufficient, in and of itself, to confer jurisdiction on the Iowa courts under the due process clause of the Fourteenth amendment. In the end analysis, we simply have not been psersuaded that appellant was afforded "fair warning" that he could be forced to travel to Iowa to answer for an alleged default of the lease."
http://www.aopc.org/OpPosting/Superior/out/a19038_07.pdf
Pennsylvania court stuck down a default Iowa judgment entered against defendant Shah on due process grounds.
The contractual forum selection clause purported to give Polk County, Iowa, jurisdiction. A judgment was entered against Shah, who had leased an ATM machine fromm a 3rd party lessor who in turn assigned its rights to Frontier Leasing. Shah admittedly defaulted on the lease. Frontier then tried to execute on the judgment in Allegheny County, where defendant was located. Defendant filed a motion to strike the judgment.
Full faith and credit under Article IV, sec. 1 of the US Constitution cannot be granted unless the sister state court that entered the judgment had personal jurisdiction over the defendant, who must have been afforded due process. Personal jurisdiction can be established by consent, in which case the minimum contacts requirement under International Shoe, 326 US 310 (1945), is not applicable. In addition, personal jurisdiction can be waived.
The court looked at Iowa law to determine these issues. Under Iowa law (and Pennsylvania law), forum selection clauses (FSC) are presumptively enforceable. The presumption can be rebutted by showing that the FSC is not reasonable, under the circumstances. To do so, a defendant must make a "strong showing" that the judgment should be set aside.
Some factors in this determination are
- whether there was an arm's length (what length sleeve?) transaction
- relative sophistiction of the parties (experienced and sophisticated businessmen?)
- whether enforcement would be unreasonable or unjust in the circumstances
- whether there was fraud of overreaching
- whether enforcement would make things so gravely difficult for Defendant that he would effectively be deprived of his day in court
In this case Defendant was a Pakistani immigrant with a limited command of English. The FSC did not mention the terms "jurisdiction," or "venue" or "service of process." It only said that a suit would be "proper" if brought in Iowa courts. The FSC language was not in bold type and was contained in the midst of boilerplate language, "inconspicuous even to the trained eye." The court had "no doubt that appellant had no idea what the import of this clause was…." The court decided that "if there is anything substantive to the notion that forum selection clauses should be vitiated if unreasonable, this is the case in which to apply that notion. Accordingly, we conclude the forum selection clause is unenforceable under Iowa law."
This would seem to resolve the case, Nonetheless, the court went on to consider whether Iowa's assumption of jurisdiction was proper, under Iowa law, applying a two-part test. The first part was satisfied by the presumption of jurisdiction based on the contractual FSC. The second part, however, was not. It involved several factors concerning the general notion of minimum contacts, including quantity, nature and quality, source and connection with the cause of action, etc. Here, defendant's only contact with Iowa was a "single tangential contact" -- that he executed a contract that provided that the lessor would render performance in Iowa. This contact was "accidental" and it is "doubtful that appellant had an understanding that this contact could result in his being hailed to Iowa to answer for default. It was a single fortuitous contact, insufficient to give Iowa jurisdiction under its own law."
The court held that the FSC was "not only unforceable but also is insufficient, in and of itself, to confer jurisdiction on the Iowa courts under the due process clause of the Fourteenth amendment. In the end analysis, we simply have not been psersuaded that appellant was afforded "fair warning" that he could be forced to travel to Iowa to answer for an alleged default of the lease."
consumer - payday lending - license - Consumer Discount Company Law
Department of Banking v. NCAS of Delaware - Commonwealth Court - July 31, 2007
http://www.aopc.org/OpPosting/CWealth/out/519MD06_7-31-07.pdf
In this original jurisdiction case, the court determined that Advance America, a payday lender, was subject to the licensing requirements of the state Consumer Discount Company Act, 73 PS 6201 et seq., since the effective interest rate in its transactions was much higher than the statutory limit of 6% . The court grant the Department's motion for judgment on the pleadings on this claim.
Although the stated contract interest rate was 5.98% - just below the 6% limit prescribed by the CDCA - AA also charged consumers $149.95 per month as a "participation fee", which the court said was a charge under the statute that had to be include in the aggregate charges and thus was part of the interest rate deterimination, because the participation fee was a "necessary condition" of any credit advance by AA and was a "charge inextricably related to the amount actually loaned or advanced." By including the participation fee, the aggregate interest rate was about 368%, "far in excess of" the 6% interest that an unlicensed lender is permitted to charge.
The court held that the factual record was not sufficient to determine the Act 6 question - whether the monthly participation fee should be considered sham interest which, when combined iwth the stated interest rate of 5.98%, established a violation of 41 PS 201.
The court also held Pennsylvania law applied to the case, since it was brought by the state Department of Banking for violation of state banking laws, and thus was not governed by the terms of contracts between AA and individual consumers, which specified that Delaware law applied.
http://www.aopc.org/OpPosting/CWealth/out/519MD06_7-31-07.pdf
In this original jurisdiction case, the court determined that Advance America, a payday lender, was subject to the licensing requirements of the state Consumer Discount Company Act, 73 PS 6201 et seq., since the effective interest rate in its transactions was much higher than the statutory limit of 6% . The court grant the Department's motion for judgment on the pleadings on this claim.
Although the stated contract interest rate was 5.98% - just below the 6% limit prescribed by the CDCA - AA also charged consumers $149.95 per month as a "participation fee", which the court said was a charge under the statute that had to be include in the aggregate charges and thus was part of the interest rate deterimination, because the participation fee was a "necessary condition" of any credit advance by AA and was a "charge inextricably related to the amount actually loaned or advanced." By including the participation fee, the aggregate interest rate was about 368%, "far in excess of" the 6% interest that an unlicensed lender is permitted to charge.
The court held that the factual record was not sufficient to determine the Act 6 question - whether the monthly participation fee should be considered sham interest which, when combined iwth the stated interest rate of 5.98%, established a violation of 41 PS 201.
The court also held Pennsylvania law applied to the case, since it was brought by the state Department of Banking for violation of state banking laws, and thus was not governed by the terms of contracts between AA and individual consumers, which specified that Delaware law applied.
Monday, July 30, 2007
real property - consumer protection - disclosures
Growall v. Maietta - Superior Court - July 26, 2007
http://www.courts.state.pa.us/OpPosting/Superior/out/A04001_07.pdf
Jury found husband/seller liable but not wife/seller, for failure to tell buyer about basement water problem The appellate court affirmed
- under Consumer Protection Law, 73 PS 201-1 et seq., because it appeared that the purchase was for investment and not personal, family, or household purposes
- under Real Estate Settlement Disclosure Law, 68 Pa C.S. 7301 et seq., because - jury found wife did not know of problem at time of sellers' RESDL disclosure - seller/wife was not obligated to make any specific investigation or inquiry to complete the disclosure, 68 Pa CS 7307
- seller/wife not liable to error or inaccuracy or omission if she did not have knowledge of it, 68 Pa. CS 7308
- there was no allegation or proof that there was a problem until 2 months after disclosure statement filled out
The court distinguished similar cases, since they involved "basic facts" about the property "readily ascertainable by the sellers," e.g., zoning retrictions and boundary lines. In the case at bar, the problem was called "an isolated incident of water damage/flooding in the basement," and not a "basis fact."
http://www.courts.state.pa.us/OpPosting/Superior/out/A04001_07.pdf
Jury found husband/seller liable but not wife/seller, for failure to tell buyer about basement water problem The appellate court affirmed
- under Consumer Protection Law, 73 PS 201-1 et seq., because it appeared that the purchase was for investment and not personal, family, or household purposes
- under Real Estate Settlement Disclosure Law, 68 Pa C.S. 7301 et seq., because - jury found wife did not know of problem at time of sellers' RESDL disclosure - seller/wife was not obligated to make any specific investigation or inquiry to complete the disclosure, 68 Pa CS 7307
- seller/wife not liable to error or inaccuracy or omission if she did not have knowledge of it, 68 Pa. CS 7308
- there was no allegation or proof that there was a problem until 2 months after disclosure statement filled out
The court distinguished similar cases, since they involved "basic facts" about the property "readily ascertainable by the sellers," e.g., zoning retrictions and boundary lines. In the case at bar, the problem was called "an isolated incident of water damage/flooding in the basement," and not a "basis fact."
Friday, July 27, 2007
consumer - debt collection - corporate officer
Campuzano-Burgos v. Midland Credit Mgmt., et al. - ED Pa. - July 26, 2007
http://www.paed.uscourts.gov/documents/opinions/07D0870P.pdf
Use of a dunning letter bearing the signature of corporate president and executive v.p. who had no role in the debt collection process was held to be violation if Fair Debt Collection Practices Act, 15 USC 1692e(9), which bars use of any written communication which, inter alia, creates a false impression as to its source, authorization or approval.
The FDCPA is to be interpreted from the viewpoint of the least sophisticated debtor, while avoiding bizarre or idiosyncratic intepretations, and presuming reading with care and in context. The FDCPA is meant to protect the gullible as well as the shrewd.
A writing is deceptive where is can be reasonably read to have two or more different meanings, one of which is inaccurate. It was alleged in this case that the letter was misleading because it gave the impression that the debt was being pursued by "high-ranking officer of the company," when in fact it was not, thereby creating a false impression as to source, authorization or approval. There are analgous cases involving the use of an attorney's name when the attorney is not involved in the collection.
In both situations, there is an implication of "special authority." An unsophisticated consumer getting a letter from an attorney or corporate officer "knows the price of poker has just gone up" because attorneys and officers have a special status and greater weight and "get the debtor's knees knocking. An escalation from a lowly collection agent to a senior executive of the company" shows that the debt collector means business. It "connotes authority and is more likely to generate a response." In such cases, there is a "general concern with debt collectors' practice of falsely implying that someone in a position of real authority is supervising the collection of this debt." It is an "attempt to goad a debtor into paying by using a signatory who has no involvement in the handling of the…cases as a signal that the collection process has escalated to a graver level….to convey that a high-roller has entered the game."
The court held that "where some aspect of a debt collector's communication - whether explicit or implied - has the purpose or effect of making a debtor more likely to respond, the FDCPA requires that it be true." Because the executives in this cases did not review the case and had no actual involvement, the court found that the letter was deceptive and misleading within the meaning of sec. 1692e.
http://www.paed.uscourts.gov/documents/opinions/07D0870P.pdf
Use of a dunning letter bearing the signature of corporate president and executive v.p. who had no role in the debt collection process was held to be violation if Fair Debt Collection Practices Act, 15 USC 1692e(9), which bars use of any written communication which, inter alia, creates a false impression as to its source, authorization or approval.
The FDCPA is to be interpreted from the viewpoint of the least sophisticated debtor, while avoiding bizarre or idiosyncratic intepretations, and presuming reading with care and in context. The FDCPA is meant to protect the gullible as well as the shrewd.
A writing is deceptive where is can be reasonably read to have two or more different meanings, one of which is inaccurate. It was alleged in this case that the letter was misleading because it gave the impression that the debt was being pursued by "high-ranking officer of the company," when in fact it was not, thereby creating a false impression as to source, authorization or approval. There are analgous cases involving the use of an attorney's name when the attorney is not involved in the collection.
In both situations, there is an implication of "special authority." An unsophisticated consumer getting a letter from an attorney or corporate officer "knows the price of poker has just gone up" because attorneys and officers have a special status and greater weight and "get the debtor's knees knocking. An escalation from a lowly collection agent to a senior executive of the company" shows that the debt collector means business. It "connotes authority and is more likely to generate a response." In such cases, there is a "general concern with debt collectors' practice of falsely implying that someone in a position of real authority is supervising the collection of this debt." It is an "attempt to goad a debtor into paying by using a signatory who has no involvement in the handling of the…cases as a signal that the collection process has escalated to a graver level….to convey that a high-roller has entered the game."
The court held that "where some aspect of a debt collector's communication - whether explicit or implied - has the purpose or effect of making a debtor more likely to respond, the FDCPA requires that it be true." Because the executives in this cases did not review the case and had no actual involvement, the court found that the letter was deceptive and misleading within the meaning of sec. 1692e.
admin. law - appeal - late appeal - nunc pro tunc
Hantman, Inc. v. Office of UC Tax Services
http://www.aopc.org/OpPosting/CWealth/out/36CD07_7-11-07.pdf
Nunc pro tunc appeal denied where agency rejected the credibility of petitioner's claim that he had a psychological disability -- a phobia about forms.
As a rule, time limits for appeals are mandatory, absent
- fraud or manifestly wrongful or negligent conduct of admininstrative authorities
- non-negligent circumstances of appellant or his/her counsel, if
- the appeal is filed shortly after expiration date and
- the appellee is not prejudiced (Bass - 401 A2d 1133 (Pa. 1979)
- unexpected illness/hospitalization (Cook - 671 A2d 1139 (Pa. 1996))
Even in those case, the party attempting to file an appeal nunc pro tunc carries a "heavy burden to justify an untimely appeal."
http://www.aopc.org/OpPosting/CWealth/out/36CD07_7-11-07.pdf
Nunc pro tunc appeal denied where agency rejected the credibility of petitioner's claim that he had a psychological disability -- a phobia about forms.
As a rule, time limits for appeals are mandatory, absent
- fraud or manifestly wrongful or negligent conduct of admininstrative authorities
- non-negligent circumstances of appellant or his/her counsel, if
- the appeal is filed shortly after expiration date and
- the appellee is not prejudiced (Bass - 401 A2d 1133 (Pa. 1979)
- unexpected illness/hospitalization (Cook - 671 A2d 1139 (Pa. 1996))
Even in those case, the party attempting to file an appeal nunc pro tunc carries a "heavy burden to justify an untimely appeal."
Thursday, July 26, 2007
mortage foreclosure - HEMAP
Fish v. PHFA - Commonwealth Court - July 25, 2007
http://www.aopc.org/OpPosting/CWealth/out/32CD07_7-25-07.pdf
Court upheld PHFA's rejection of the HEMAP application of a attorney/petitioner.
PHFA had rejected the application, finding that
a) applicant did not show that he was suffering financial hardship due to circumstances beyond his control, because
- he got a tax return of $6180, enough to make 10 mortgage payments, but saved nothing toward the mortgage delinquency
- applicant had net monthly income of $2161, enough to meet his regular monthly expenses, but "has failed to save any funds toward the delinquency"
b) applicant did not comply with procedural requirements of Act 91, in that he failed to attend a face-to-face meeting with a consumer credit counseling agency (CCCA) within 33 days of the date of his Act 91 letter http://www.phfa.org/forms/hemap/hemap_act91_notice.pdf.
c) since applicant had received but not acted on an Act 91 notice in a first foreclosure action, no second Act 91 letter was required before the second foreclosure was commenced under 12 Pa. Code 31.203(a)(3)(iv) http://www.pacode.com/secure/data/012/chapter31/s31.203.html.
The purpose of an Act 91 notice is to "instruct the morgagor of different means he may use to resolve his arrearages in order to avoid foreclosure…and also gives him a timetable in which such means must be accomplished." Applicant got that information.
http://www.aopc.org/OpPosting/CWealth/out/32CD07_7-25-07.pdf
Court upheld PHFA's rejection of the HEMAP application of a attorney/petitioner.
PHFA had rejected the application, finding that
a) applicant did not show that he was suffering financial hardship due to circumstances beyond his control, because
- he got a tax return of $6180, enough to make 10 mortgage payments, but saved nothing toward the mortgage delinquency
- applicant had net monthly income of $2161, enough to meet his regular monthly expenses, but "has failed to save any funds toward the delinquency"
b) applicant did not comply with procedural requirements of Act 91, in that he failed to attend a face-to-face meeting with a consumer credit counseling agency (CCCA) within 33 days of the date of his Act 91 letter http://www.phfa.org/forms/hemap/hemap_act91_notice.pdf.
c) since applicant had received but not acted on an Act 91 notice in a first foreclosure action, no second Act 91 letter was required before the second foreclosure was commenced under 12 Pa. Code 31.203(a)(3)(iv) http://www.pacode.com/secure/data/012/chapter31/s31.203.html.
The purpose of an Act 91 notice is to "instruct the morgagor of different means he may use to resolve his arrearages in order to avoid foreclosure…and also gives him a timetable in which such means must be accomplished." Applicant got that information.
Monday, July 23, 2007
discovery - sanctions - factors
Reilly v. Ernst & Young LLP - Superior Court- July 18, 2007
http://www.courts.state.pa.us/OpPosting/Superior/out/e03004_06.pdf
Trial court abused its discretion by ordering the deemed admission of a party's Request for Admissions due to other party's failure to verify its responses to the RFA.
The following factors militated strongy against such a deemed admission
- the prejudice caused to the other party and whether the prejudice can be cured
- the defaulting party's willfulness or bad faith in failing to comply with the discovery order. - the number of discovery violations
- the importance of the precluded evidence in light of the failure to comply
http://www.courts.state.pa.us/OpPosting/Superior/out/e03004_06.pdf
Trial court abused its discretion by ordering the deemed admission of a party's Request for Admissions due to other party's failure to verify its responses to the RFA.
The following factors militated strongy against such a deemed admission
- the prejudice caused to the other party and whether the prejudice can be cured
- the defaulting party's willfulness or bad faith in failing to comply with the discovery order. - the number of discovery violations
- the importance of the precluded evidence in light of the failure to comply
Wednesday, July 18, 2007
mortgage foreclosure - jurisdiction - service
PNC Bank v. Mathias- Superior Court- July 17, 2007
http://www.aopc.org/OpPosting/Superior/out/A03002_07.pdf
The trial court did not have jurisdiction to enter a default judgment against the heir of deceased mortgagor, where the plaintiff bank did not serve the heir -- named as a defendant "unknown heir" -- with a copy of the complaint, even though it knew of his existence and location and had corresponded with him by letter and phone.
Despite learning of mortgagor's death, the existence of a potential heir, and correspondence with that person, the bank filed and trial court granted the bank's motion for alternate serve under Rule 430, instead of requiring regular service under Rule 410(a). The heir didn’t learn of the alternate service and never received personal service. In its motion, the bank averred that decedent's heirs were not known.
The appellate court held that the plaintiff "did not effectuate proper service" of the complaint where it had prior written and telephone communications with the heir, knew that the heir represented the mortgagor's estate, and knew that the person was a possible heir to the mortgagor's estate, having said as much in a letter to him. "If the plaintiff has failed to effectuate valid service and if the defendant lacks notice of the proceedings against him, the court has no jurisdiction over the party and is powerless to enter judgment. Entry of a judgment under these circumstances was also held to violate due process.
http://www.aopc.org/OpPosting/Superior/out/A03002_07.pdf
The trial court did not have jurisdiction to enter a default judgment against the heir of deceased mortgagor, where the plaintiff bank did not serve the heir -- named as a defendant "unknown heir" -- with a copy of the complaint, even though it knew of his existence and location and had corresponded with him by letter and phone.
Despite learning of mortgagor's death, the existence of a potential heir, and correspondence with that person, the bank filed and trial court granted the bank's motion for alternate serve under Rule 430, instead of requiring regular service under Rule 410(a). The heir didn’t learn of the alternate service and never received personal service. In its motion, the bank averred that decedent's heirs were not known.
The appellate court held that the plaintiff "did not effectuate proper service" of the complaint where it had prior written and telephone communications with the heir, knew that the heir represented the mortgagor's estate, and knew that the person was a possible heir to the mortgagor's estate, having said as much in a letter to him. "If the plaintiff has failed to effectuate valid service and if the defendant lacks notice of the proceedings against him, the court has no jurisdiction over the party and is powerless to enter judgment. Entry of a judgment under these circumstances was also held to violate due process.
mortgage foreclosure - deficiency judgment - proof of value
Loukas v. Mathias, et al. - Superior Court - July 12, 2007
http://www.courts.state.pa.us/OpPosting/Superior/out/S22037_07.pdf
Plaintiff in a mortgage foreclosure must offer competent proof of an alleged reduction in value due to "uncertainty of title" in a Deficiency Judgment Act (DFA) case under, 42 Pa CS 8101 . The Superior Court reversed the trial court, which had improperly adopted the unsupported testimony of plaintiff's witness that a supposed uncertainty of title reduced the value of the property by about 10%, thus causing a substantial deficiency judgment and continued liability of the defendant, over and above the value of the real property taken in execution.
The objective of the DFA is "to relieve a debtor of further personal liability to the creditor, if the real property taken by the creditor on an execution has a fair market value... sufficient so that the creditor may dispose of the property to others...without a net loss to the creditor." In this case, the unproven reduction in value, "without factual support in the record," thwarted that purpose. The appellate court's reversal resulted in a surplus in excess of plaintiff-appellee's judgment, thus rendering a deficiency judgment "inappropriate." The court found that the property, bolstered in value by the rejection of an unwarranted deduction due to the alleged uncertainty of title, satisfied defendants' liability to plaintiff.
http://www.courts.state.pa.us/OpPosting/Superior/out/S22037_07.pdf
Plaintiff in a mortgage foreclosure must offer competent proof of an alleged reduction in value due to "uncertainty of title" in a Deficiency Judgment Act (DFA) case under, 42 Pa CS 8101 . The Superior Court reversed the trial court, which had improperly adopted the unsupported testimony of plaintiff's witness that a supposed uncertainty of title reduced the value of the property by about 10%, thus causing a substantial deficiency judgment and continued liability of the defendant, over and above the value of the real property taken in execution.
The objective of the DFA is "to relieve a debtor of further personal liability to the creditor, if the real property taken by the creditor on an execution has a fair market value... sufficient so that the creditor may dispose of the property to others...without a net loss to the creditor." In this case, the unproven reduction in value, "without factual support in the record," thwarted that purpose. The appellate court's reversal resulted in a surplus in excess of plaintiff-appellee's judgment, thus rendering a deficiency judgment "inappropriate." The court found that the property, bolstered in value by the rejection of an unwarranted deduction due to the alleged uncertainty of title, satisfied defendants' liability to plaintiff.
Subscribe to:
Posts (Atom)