HAMP - Law Review article - using contract law to enforce HAMP

64 Hastings L.J 904

Fighting Foreclosure: Using Contract Law to Enforce the Home Affordable Modification Program (HAMP)

http://www.hastingslawjournal.org/wp-content/uploads/2013/04/Sarapinian_19.pdf
 

Arsen Sarapinian

In 2009, the Secretary of the Treasury and the Obama Administration unveiled the Making Home Affordable Program (“MHA”) to slow the foreclosure crisis and stabilize the economy. A key component of the MHA is the Home Affordable Modification Program (“HAMP”), a seventy-five billion dollar program designed to incentivize loan servicers to modify loans for certain qualified borrowers. The Treasury estimated that HAMP would permanently modify three to four million mortgages by the end of 2012; however, HAMP has failed to meet its objective.

Under HAMP, if a borrower meets certain criteria, she will be placed on a three-month trial period plan (“TPP”) where she will pay a lowered mortgage payment equal to 31% of her gross monthly income. If the borrower makes this lowered payment for three months and meets other requirements, the servicer should extend a permanent modification with a reduced monthly payment. As written, however, the provision allows servicers to deny permanent modifications even if borrowers successfully meet their reduced mortgage payments.

Recently, borrowers began to bring common law breach of contract claims to enforce the TPP, arguing that the TPP is a binding contract that requires servicers to grant permanent loan modifications. Currently, there is controversy over the validity of the TPP-based breach of contract theory and a split amongst the federal courts. This Note provides an overview of the HAMP application process, examines the controversy and split amongst the federal courts, argues in favor of upholding the theory, and provides recommendations for national legislation.

 

bankruptcy - fraud, defalcation

http://www.supremecourt.gov/opinions/12pdf/11-1518_97be.pdf

 

                                    SUPREME COURT OF THE UNITED STATES

BULLOCK v. BANKCHAMPAIGN, N. A.

CERTIORARI TO THE U.S. COURT OF APPEALS FOR THE  11th CIRCUIT

No. 11–1518. Argued March 18, 2013—Decided May 13, 2013

Petitioner’s father established a trust for the benefit of petitioner andhis siblings, and made petitioner the (nonprofessional) trustee. The trust’s sole asset was the father’s life insurance policy. Petitioner borrowed funds from the trust three times; all borrowed funds were repaid with interest. His siblings obtained a judgment against himin state court for breach of fiduciary duty, though the court found noapparent malicious motive. The court imposed constructive trusts on certain of petitioner’s interests—including his interest in the original trust—in order to secure petitioner’s payment of the judgment, with respondent serving as trustee for all of the trusts. Petitioner filed for bankruptcy. Respondent opposed discharge of petitioner’s state­court-imposed debts to the trust, and the Bankruptcy Court granted respondent summary judgment, holding that petitioner’s debts were not dischargeable pursuant to 11 U. S. C. §523(a)(4), which providesthat an individual cannot obtain a bankruptcy discharge from a debt“for fraud or defalcation while acting in a fiduciary capacity, embez­zlement, or larceny.” The Federal District Court and the Eleventh Circuit affirmed. The latter court reasoned that “defalcation requires a known breach of fiduciary duty, such that the conduct can be char­acterized as objectively reckless.”

Held: The term “defalcation” in the Bankruptcy Code includes a culpa­ble state of mind requirement involving knowledge of, or gross reck­lessness in respect to, the improper nature of the fiduciary behavior. Pp. 4−9.

(a) While “defalcation” has been an exception to discharge in abankruptcy statute since 1867, legal authorities have long disagreed about its meaning. Broad definitions of the term in modern and older dictionaries are unhelpful, and courts of appeals have disagreed  about what mental state must accompany defalcation’s definition. Pp. 4−5.

(b) In Neal v. Clark, 95 U. S. 704, this Court interpreted the term “fraud” in the Bankruptcy Code’s exceptions to discharge to mean“positive fraud, or fraud in fact, involving moral turpitude or inten­tional wrong, as does embezzlement; and not implied fraud, or fraud in law, which may exist without the imputation of bad faith or immo­rality.” Id., at 709. The term “defalcation” should be treated similar­ly. Thus, where the conduct at issue does not involve bad faith, mor­al turpitude, or other immoral conduct, “defalcation” requires an intentional wrong. An intentional wrong includes not only conduct that the fiduciary knows is improper but also reckless conduct of the kind that the criminal law often treats as the equivalent. Where ac­tual knowledge of wrongdoing is lacking, conduct is considered as equivalent if, as set forth in the Model Penal Code, the fiduciary “con­sciously disregards,” or is willfully blind to, “a substantial and unjusti­fiable risk” that his conduct will violate a fiduciary duty. Pp. 5−7.

(c) Several considerations support this interpretation. First, statu­tory context strongly favors it. The canon noscitur a sociis argues for interpreting “defalcation” as similar to its linguistic neighbors “em­bezzlement,” “larceny,” and “fraud,” which all require a showing of wrongful or felonious intent. See, e.g., Neal, supra, at 709. Second, the interpretation does not make the word identical to its statutory neighbors. “Embezzlement” requires conversion, “larceny” requires taking and carrying away another’s property, and “fraud” typicallyrequires a false statement or omission; while “defalcation” can en­compass a breach of fiduciary obligation that involves neither conver­sion, nor taking and carrying away another’s property, nor falsity.Third, the interpretation is consistent with the longstanding princi­ple that “exceptions to discharge ‘should be confined to those plainly expressed.’ ” Kawaauhau v. Geiger, 523 U. S. 57, 62. It is also con­sistent with statutory exceptions to discharge that Congress normally confines to circumstances where strong, special policy considerations,such as the presence of fault, argue for preserving the debt, thereby benefiting, for example, a typically more honest creditor. See, e.g., 11  U. S. C. §523(a)(2)(A). Fourth, some Circuits have interpreted the statute similarly for many years without administrative or other dif­ficulties. Finally, it is important to have a uniform interpretation of federal law, the choices are limited, and neither the parties nor the Government has presented strong considerations favoring a different interpretation. Pp. 7−9.

 670 F. 3d 1160, vacated and remanded.

BREYER, J., delivered the opinion for a unanimous Court

UC - procedure - issue switching

Turgeon v. UCBR - April 18, 2013 - Cmwlth. Court

 

http://www.pacourts.us/assets/opinions/Commonwealth/out/1408CD12_4-18-13.pdf?cb=1

UCBR improperly applied sec. 402(b) [voluntary quit] after the referee decided the case under sec. 402(e) [willful misconduct.

The UCBR’s regulations limit the issues that it may consider on appeal. The regulation at 34 Pa. Code §101.107 (emphases added) provides:

(a) In connection with the consideration of an appeal to the [UCBR] from the decision of a referee, the [UCBR] may consider an issue in the case though not expressly ruled upon in the decision of the Department or the referee and though not previously raised in the claim or appeal proceedings. However, issues not previously considered or raised will not be considered by the [UCBR] . . . unless the speedy administration of justice, without prejudice to any party, will be substantially served thereby and are supported by the record.

(b) The [UCBR] shall consider the issues expressly ruled upon in the decision from which the appeal was filed. However, any issue in the case, with the approval of the parties, may be determined though not expressly ruled upon or indicated in the notice of hearing, if the speedy administration of justice, without prejudice to any party, will be substantially served thereby and are supported by the record.

The “notice of hearing” referred to in subsection (b) of the regulation is the notice required when the UCBR determines that a further hearing is necessary, not the referee’s notice of hearing. Mellott v. Unemployment Compensation Board of Review, 523 A.2d 412, 414 (Pa. Cmwlth. 1987); Libonate v. Unemployment Compensation Board of Review, 426 A.2d 247, 248-49 (Pa. Cmwlth. 1981); see also 34 Pa. Code §101.105(a).

Here, the record establishes that the only section of the Law at issue before the service center and the referee was section 402(e).   Employer’s initial separation information stated that Claimant was discharged, and Employer’s petition for appeal to the referee specified that only section 402(e) was at issue. The referee’s notice of hearing also identified section 402(e) as the “specific issue[] to be considered” at the hearing.  Moreover, at the hearing, Employer’s witness testified that it was “Employer’s contention” that “[Claimant] was discharged” from her position.  Neither Employer nor Claimant raised the voluntary quit issue at any stage of the proceedings. Rather, the UCBR raised the issue sua sponte with no notice to the parties that it would consider additional issues.

We find Libonate instructive here. In that case, both the local service center and the referee found the claimant ineligible for benefits under section 402(a) of the Law, 43 P.S. §802(a). The UCBR, which took no additional evidence, found the claimant ineligible under section 401(d) of the Law, 43 P.S. §801(d). Libonate, 426 A.2d at 248. On appeal, the claimant argued that the UCBR improperly relied on section 401(d) because her eligibility under that section was never decided by the referee and she had no opportunity to present evidence on that issue. Id. Applying the regulation at 34 Pa. Code §101.107(b), this court remanded for a new hearing. We specifically rejected the UCBR’s argument that the claimant was notified that section 401(d) would be considered because that issue was listed on the “form” notice sent to all claimants before a referee’s hearing. Id. at 249. We also found that the record contained no written notice to the parties that the UCBR would consider additional issues on appeal.  We explained

Because the [UCBR] disallowed the claimant’s appeal from the referee’s decision on different grounds than that relied upon or considered in the referee’s determination, we must conclude that the claimant was denied an effective opportunity to be heard on the determinative issue of her availability for work.  Id.; see also Feinberg v. Unemployment Compensation Board of Review, 448 A.2d 664, 665-66 (Pa. Cmwlth. 1982) (vacating and remanding for a new hearing where the service center denied benefits under section 402(e) and the issue at the referee’s hearing was whether claimant committed willful misconduct, but the referee and the UCBR found the claimant ineligible under section 402(b)).

Similarly, Employer in this case had the burden of proving that Claimant was discharged for willful misconduct. If the referee had considered the voluntary quit issue, Claimant would have had the burden of proving that she had a necessitous and compelling reason for leaving her employment. See Hine v. Unemployment Compensation Board of Review, 520 A.2d 102, 105 (Pa. Cmwlth. 1987). A claimant is necessarily prejudiced when the referee and the UCBR decide the claimant’s eligibility under different sections of the Law carrying different burdens of proof with no notice to the parties. See Corbacio v. Unemployment Compensation Board of Review, 466 A.2d 1117, 1119 & n.4 (Pa. Cmwlth. 1983). Because Claimant would have been prejudiced by having to assume the burden of proof on the voluntary quit issue, the UCBR’s regulation precluded it from considering that issue. See 34 Pa. Code §101.107.

Accordingly, we vacate the UCBR’s order and remand this matter to the UCBR either to consider Claimant’s eligibility under section 402(e) of the Law or to conduct a further hearing with notice to the parties that it will consider Claimant’s eligibility under section 402(b) of the Law.

Social security - overpayment - against equity and good conscience

Stoltzfus v. Astrue – ED Pa. – May 1, 2013

http://www.paed.uscourts.gov/documents/opinions/13D0379P.pdf

The court reversed SSA and held that recovery of an overpayment would be against equity and good conscience.   

An overpayment occurs where an individual receives payment of benefits in excess of the amount due. 20 C.F.R. § 404.501(a). Whenever there is an overpayment of benefits, the Commissioner has a statutory obligation to recover the overpayment. 42 U.S.C. § 404(a)(1).

However, recovery of an overpayment is waived where two requirements are met. 42 U.S.C. § 404(b); 20 C.F.R. § 404- 506(a). First, the overpaid individual must be without fault in causing the overpayment. Id. Fault by the agency does not relieve the overpaid individual from proving that he was without fault. 20 C.F.R. § 404.507. Second, recovery of the  overpayment must either defeat the purpose of the Act or be against equity and good conscience. Id.

The Commissioner’s regulations state that to defeat the purpose of the Act under Title II means to deprive a person of income required for ordinary and necessary living expenses. 20 C.F.R. § 404.507(a). The regulations state that this determination depends on whether the person has an income or financial resources sufficient for more than ordinary and necessary needs, or is dependent upon all of his current benefits for such needs. Id. According to the regulations, a recovery of an overpayment is against equity and good conscience:

1. When an individual changed his or her position for the worse or relinquished a valuable right because of reliance upon a notice that a payment would be made or because of the

overpayment itself; or  

2. Was living in a separate household from the overpaid person at the time of the overpayment and did not receive the overpayment. 20 C.F.R. § 404.509.

The plaintiff’s argument that the regulation’s definition of “against equity and good conscience” is too narrow involves an application of Chevron v. Natural Resources Defense

Council,467 U.S. 837, 843 (1984). Under Chevron, the Court must first decide if Congress, through the statute, has addressed the precise question at issue. If the statute is silent or ambiguous with respect to the specific issue, the question for the Court is whether the agency’s answer is based on a permissible construction of the statute. The agency’s interpretation should prevail as long as it is a reasonable interpretation of the statute, not necessarily the only possible interpretation nor even the one deemed most reasonable by the Courts. Id.

 The text of the Social Security Act is silent as to the meaning of the phrase equity and good conscience. Unless otherwise defined, statutory words “will be interpreted as taking

their ordinary, contemporary meaning.” Perrin v. United States, 444 U.S. 37, 42 (1979). The ordinary meaning of the phrase equity and good conscience anticipates that individual cases will be decided by applying general precepts of justice and fairness to the particular circumstances rather than channeling the decision through rigid and specific rules. The Court concludes that the agency’s regulation, which rigidly defines equity and good conscience to a few discrete situations, is not a reasonable interpretation of the statute.

 There is no Third Circuit precedent on the issue; but, three other circuits have dealt with the issue. The Eighth Circuit in Groseclose v. Bowen, 809 F.2d 502, 506 (8th Cir. 1987) and the Ninth Circuit in Quinlivan v. Sullivan, 916 F.2d 524, 527, (9th Cir. 1990) have held that the regulation is not an appropriate interpretation of the equity and good conscience

language. In Valley v. Comm'r of Soc. Sec., 427 F.3d 388 (6^th Cir. 2005), the Sixth Circuit has considered the equity and good conscience issue within the SSA’s regulatory framework and adopted it without much comment on the validity of the regulation itself.

The Court concludes that the Groseclose court makes a good case that the legislative history, sparse thought it is, suggests that Congress intended to make recovery more equitable, as opposed to rigidly formulaic, when it included the equity and good conscience language. See Groseclose, at 505-506 (“Provision is made for making more equitable the recovery by the Federal Government of incorrect payment to individuals”); (expressing concern over allowing recovery from persons who are “perfectly innocent of any wrong doing”); (the language “broadens the Secretary’s authority to waive adjustment or recovery of overpayments.”) (citing legislative history, internal citations omitted).

 The plain language of the statute, equity and good conscience, is apparently designed to give the Secretary and reviewing Courts case by case discretion to determine when repayment actions should be waived. Equity and good conscience is language of unusual generality, and the regulation that tries to limit the meaning of the phrase to only a few types of situations is an unreasonably narrow interpretation of that language.

Under a broader interpretation of the equity and good conscience standard, the Court concludes that the SSA’s repayment action should be waived because it violates the equity and good conscience standard for a number of reasons. 

Repayment huge compared to excess earnings - The amount the SSA is seeking in repayment, over $87,000, is a huge sum compared to the amount of excess earnings that the plaintiff received above the eligibility threshold for SGA. Additionally, the reason the amount of repayment the SSA seeks to recover grew to such a large figure is that the SSA did not notify the plaintiff of the fact that his wages had rendered him ineligible for benefits until years after that fact could have been discovered by the SSA.

Delay by SSA - The plaintiff was deemed ineligible for benefits as of April 2000 and the plaintiff reapplied for and was granted DIB in July 2004. At all times, the plaintiff would have been eligible for DIB due to his blindness so long as he had kept his income below the eligibility threshold for SGA. As early as 2001, when the plaintiff’s employer made the retroactive payment that rendered him ineligible for DIB and that payment was reported to the SSA, the SSA could have determined the plaintiff’s ineligibility and acted accordingly. Instead, the SSA did not act on the information until 2005, when the SSA first notified the plaintiff of the overpayment. It is this delay that led to the accrual of the bulk of plaintiff’s overpayments. Had the SSA acted on the plaintiff’s ineligibility more promptly, the plaintiff could have at that time adjusted his income and reapplied for benefits, just as he eventually did in 2004. Under this scenario, the plaintiff would have been eligible for and legitimately received many of the benefits the SSA now seeks to recover in this repayment action.

The plaintiff raised this precise issue in trying to argue that this repayment action violates the equity and good conscience standard as defined by the SSA’s own regulations.  Although the plaintiff’s argument is unavailing for that purpose, the argument does cut strongly in the plaintiff’s favor under a broader definition of the equity and good conscience standard.

As neither the plaintiff’s initial ineligibility for benefits nor the SSA’s delay in acting on that ineligibility were within the plaintiff’s control, the Court finds that it would be against equity and good conscience to make the plaintiff repay the large amount of benefit overpayments that accrued as a result of that confluence of circumstances.

This conclusion is consistent with other cases where a broader conception of the equity and good conscience test has been applied. Villate v. Sullivan, 862 F. Supp. 514 (D.D.C. 1994; Audet v. Astrue, 4:08CV3220, 2009 WL 1664598 (D. Neb. June 11, 2009).  Here, just as in Villate, the SSA had the necessary information to cut off the accrual of the overpayments and failed to do so, and just as in Audet, the plaintiff did not know he was receiving overpayments because his income had exceeded the SGA threshold.

Because of the compelling facts and circumstances of this case, the Court concludes that recovery of the overpayments made to Stolztfus would be against equity and good conscience.

Access to (federal) courts - Arthur Miller article

SIMPLIFIED PLEADING, MEANINGFUL DAYS IN COURT,

AND TRIALS ON THE MERITS: REFLECTIONS ON THE

DEFORMATION OF FEDERAL PROCEDURE

http://www.nyulawreview.org/sites/default/files/pdf/NYULawReview-88-1-Miller.pdf

from the intro

When the Federal Rules of Civil Procedure were promulgated in 1938, theyreflected a policy of citizen access for civil disputes and sought to promote their resolution on the merits rather than on the basis of the technicalities that characterized earlier procedural systems.The federal courts applied that philosophy of procedure for many years.

However, the last quarter century has seen a dramatic contrary shift in the way the federal courts, especially the U.S. Supreme Court, have interpreted and applied the Federal Rules and other procedural matters. This shift has produced the increasingly early procedural disposition of cases prior to trial. Indeed, civil trials, especially jury trials, are very few and far between today.

The author examines the significant manifestations of this dramatic change, andtraces the shift in judicial attitude back to the three pro-summary judgment decisions by the Supreme Court in 1986. Furthermore, he goes on to discuss the judicial gatekeeping that has emerged regarding (1) expert testimony, (2) the constriction of class action certification, (3) the enforcement of arbitration clauses in an extraordinaryarray of contracts (many adhesive in character), (4) the Court’s abandonment of notice pleading in favor of plausibility pleading (which, in effect, is a return to fact pleading), (5) the intimations of a potential narrowing of the reach of in personam  jurisdiction, and (6) a number of limitations on pretrial discovery that haveresulted from Rule amendments during the last twenty-five years.

All of these changes restrict the ability of plaintiffs to reach a determination of theirclaims’ merits, which has resulted in a narrowing effect on citizen access to a meaningful day in court. Beyond that, these restrictive procedural developments work against the effectiveness of private litigation to enforce various public policies involving such matters as civil rights, antitrust, employment discrimination, andsecurities regulation.

Concerns about abusive and frivolous litigation, threats of extortionate settlements,and the high cost of today’s large-scale lawsuits motivate these deviations from the original philosophy of the Federal Rules, but these concerns fail to take properaccount of other systemic values. The author argues that these assertions are speculative and not empirically justified, are overstated, and simply reflect the self-interestof various groups that seek to terminate claims asserted against them as early as possible to avoid both discovery and a trial. Indeed, they simply may reflect a strong pro-business and pro-government orientation of today’s federal judiciary.

The author cautions that some restoration of the earlier underlying philosophy of the Federal Rules is necessary if we are to preserve the procedural principles that should underlie our civil justice system and maintain the viability of private litigationas an adjunct to government regulation for the enforcement of important societal policies and values.

UC - vol. quit - resignation - revocation of

Bier v. UCBR – Cmwlth. Court – Apriol 26, 2013 – unpublished memorandum opinion

http://www.pacourts.us/assets/opinions/Commonwealth/out/1908CD12_4-26-13.pdf?cb=1

This Court has held that “[a] claimant who stated that he quit and walked off the job is not considered an employee thereafter.”  Spadaro v. UCBR, 850 A.2d 855, 859 (Pa. Cmwlth. 2004).  We conclude, based on the totality of the circumstances as described above, that Claimant voluntarily quit his employment effective on May 14, 2012 and was no longer an employee thereafter. 

While there may be some circumstances where an employee may rescind a resignation after the fact, those circumstances are not present here. In Spadaro, we noted that “[a]n employee who revokes his resignation before the ‘effective date’ of his resignation and before the employer took steps to replace him is entitled to benefits.” Id. at 859. Claimant did not resign with an “effective date”; he quit, effective immediately, when he essentially told Employer that he was quitting, got up, left the room, and did not report to work thereafter. Accordingly, Claimant’s actions after May 14, 2012 do not alter his ineligibility for UC benefits under these circumstances.

______________

 

The opinion, though not reported, may be cited "for its persuasive value, but not as binding precedent." 210 Pa. Code § 67.55. Citing Judicial Opinions.

custody - appeal - discussion of statutory factors by trial court prior to appeal deadline

C.B. v. J.B. – Superior Court – Apriol 22, 2013

http://www.pacourts.us/assets/opinions/Superior/out/a24016_12.pdf?cb=1

In this appeal, we are called upon squarely to determine the point in time at which a trial court must specify the reasons for its decision in a child custody case. We address this question under the “new” Child Custody Act (“the Act”), which our General Assembly enacted in November 2010, and which took effect in January 2011. In this case, C.B. appeals the custody order entered on October 24, 2011. That order awarded primary physical custody of two childrento their paternal uncle,from whom appellant Aunt is separated.

To decide this appeal, we must address the timing of the trial court’s application of the sixteen custody factors delineated in the Act. We hold today that the Act requires a trial court to address each of these factors prior to the deadline by which a litigant must file a notice of  appeal, and preferably at the time the custody order is issued or shortly thereafter. We apply this holding prospectively, as the trial court here was not bound to anticipate this construction of the Act.

 

contracts - duty of good faith and fair dealing

MYSERVICESFORCE v. American Home Shield – ED Pa. – April 24, 2013

http://www.paed.uscourts.gov/documents/opinions/13D0358P.pdf

 “Courts have defined the duty of good faith as [h]onesty in fact in the conduct or transaction concerned, adopting the definition set forth in Section 1201 of the Uniform Commercial Code, 13 Pa.C.S. 1201.”3 Southeastern Pennsylvania Transp. Auth. v. Holmes, 835 A.2d 851, 858 (Pa. Commw. Ct. 2003) (citing Creeger Brick Building Supply Inc. v. Mid-State Bank Trust Co., 560 A.2d 151, 153 (Pa. Super. Ct. 1989)); see also Cavanaugh v. Avalon Golf Props., LLC., No. E2010–00046–COA–R3–CV, 2011 WL 662961, at *8 (Tenn. Ct. App. Feb. 24, 2011) (same).

Courts have further recognized that, while “‘a complete catalogue of types of bad faith is impossible,’” bad faith may include: “‘evasion of the spirit of the bargain, lack of diligence and slacking off, willful rendering of imperfect performance, abuse of a power to specify terms, and interference with or failure to cooperate in the other party’s performance.’” Stamerro v. Stamerro, 889 A.2d 1251, 1259 (Pa. Super. Ct. 2005) (quoting Somers v. Somers, 613 A.2d 1211, 1213 (Pa. Super. Ct. 1992)); see also Sanders v. Breath of Life Christian Church, Inc., No. W2010–01801–COA–R3–CV, 2012 WL 114279, at *21 (Tenn. Ct. App. Jan. 13, 2012) (“Based on the duty of good faith, this Court has recognized that each party to a contract is ‘under an implied obligation to restrain from doing any act that would delay or prevent the other party’s performance of the contract’ and that ‘[e]ach party has the right to proceed free of hindrance by the other party.’” (quoting ACG, Inc. v. Southeast Elevator, Inc., 912 S.W.2d 163, 168 (Tenn. Ct. App. 1995)). Nonetheless, “‘the common law duty of good faith does not extend beyond the agreed upon terms of the contract and the reasonable contractual expectations of the parties.’” Dick Broad. Co. v. Oak Ridge FM, Inc., ___ S.W.3d ___, 2013 WL 175491, at *9 (Tenn. 2013) (quoting Wallace v. Nat’l Bank of Commerce, 938 S.W.2d 684, 687 (Tenn. 1996)).

 
Consequently, “‘[t]he implied obligation of good faith and fair dealing does not . . . create new contractual rights or obligations, nor can it be used to circumvent or alter the specific terms of the parties’ agreement.’” Id. (alterations in original) (quoting Lamar Adver. Co. v. By-Pass Partners, 313 S.W.3d 779, 791 (Tenn. Ct. App. 2009). See also John B. Conomos, Inc. v. Sun Co., Inc. (R&M), 831 A.2d 696, 706-07 (Pa. Super. Ct. 2003) (stating that, since the “‘obligation of good faith is tied specifically to and is not separate from the [express] duties a contract imposes on the parties,’ it cannot imply a term not explicitly contemplated by the contract” (alteration in original) (quoting Murphy v. Duquesne Univ. of the Holy Ghost, 777 A.2d 418, 434 n.11 (Pa. 2001))).

custody - elimination of parenting coordination - Rule 1915.11-1

Order - http://www.pacourts.us/assets/opinions/Supreme/out/577civ.pdf?cb=1

http://www.pacourts.us/assets/opinions/Supreme/out/577civ-attach.pdf?cb=1

Rule 1915.11-1. Elimination of Parenting Coordination.

Only judges may make decisions in child custody cases. Masters and hearing officers may make recommendations to the court. Courts shall not

appoint any other individual to make decisions or recommendations or alter a custody order in child custody cases. Any order appointing a parenting

coordinator shall be deemed vacated on the date this rule becomes effective. Local rules and administrative orders authorizing the appointment of parenting

coordinators also shall be deemed vacated on the date this rule becomes effective.

UC - voluntary quit - religion

Mathis v. UCBR – Cmwlth. Court – April 9, 2013

http://www.pacourts.us/assets/opinions/Commonwealth/out/1435CD12_4-9-13.pdf

Worker quit without good cause, when he left employment because employer insisted that he wear an ID badge, which on the reverse side had the statement This company is not only a business, it is a ministry. It is set on standards that are higher than man’s own. Our goal is to run this company in a way most pleasing to the Lord. Treating employees and customers as we would want to be treated along with running a business as if we are all part of one big family is our plan

Claimant was aware at the time he was hired that he was required to wear the ID badge containing the mission statement as part of his uniform, and voiced no objection to it during his 21-month employment period, until his last day of work. The Board stated that Employer did not change the terms and conditions of Claimant’s employment, nor did he require Claimant to do anything in violation of his religious beliefs.

 The company handbook contained a statement “the company was dedicated to the Lord. After several years of the Lord providing for him, Dave wanted to give back to the Lord in some way. As an owner, he wanted to be able to help those who couldn’t afford a system. As an employer, he wanted to be able to give someone a second chance with a career at this company. Therefore, this company is not only a business, it is a ministry. It is set on standards that are higher than Dave’s own. His goal is to run this company in a way most pleasing to the Lord. This includes treating employees and customers as he would want to be treated.”  

In Thomas v. Review Board of the Indiana Employment Security Division, et al., 450 U.S. 707 (1981), the United States Supreme Court held that the State of Indiana’s denial of unemployment compensation violated a claimant’s first amendment right to free exercise of religion, where the claimant, a Jehovah’s Witness, quit his job after he was transferred to a department that fabricated turrets for military tanks. In Thomas, the Supreme Court noted that the claimant’s termination flowed from the fact that the employment, once acceptable, became religiously objectionable because of changed conditions. 450 U.S. at 718. The Supreme Court stated “[w]here the state conditions receipt of an important benefit upon conduct proscribed by a religious faith, or where it denies such a benefit because of conduct mandated by religious belief, thereby putting substantial pressure on an adherent to modify his behavior or to violate his beliefs, a burden upon religion exists.” 450 U.S. at 717-718.

Here, there is no evidence of changed conditions; Claimant was required to wear a badge containing the mission statement from the beginning of his employment, approximately one year and nine months prior, but did not feel compelled to cover it or voice any objections until January 24, 2012.

 

In Monroe v. Unemployment Compensation Board of Review, 535 A.2d 1222, 1224 (Pa. Cmwlth. 1988), the Court held that an actual conflict between a claimant’s sincerely held religious beliefs and his employment conditions may constitute cause of a necessitous and compelling nature for voluntary terminating employment. In Monroe, the Court remanded to the Board, for findings as to whether the claimant’s beliefs were sincerely held and religious in nature, and if so, whether or not there was an actual conflict between those be iefs and the employer’s job requirements. 535 A.2d at 1225-26.  

 

Sub judice, we find that Claimant did not meet his burden because he offered no evidence as to any sincerely held religious beliefs, nor did he attempt to describe any actual conflict between a religious belief and Employer’s requirement that the identification badge bearing the mission statement be worn. Owner testified at the initial hearing that his staff includes non-believers and members of other faiths besides his own; he stated that the mission statement was not a religious statement but rather a statement that sets forth certain values or basic rules for treating people.

Claimant argues before this Court that he was repeatedly harassed for his religious beliefs, but the hearing transcripts are devoid of such evidence, and the Board did not find that any such harassment occurred. Claimant admitted that he never spoke to anyone in management about his objections to the mission statement, and presented no evidence that he had ever requested an accommodation.

UC - willful misconduct - offensive language - labor dispute - NLRA

Arndt v. UCBR – Cmwlth. Court – March 15, 2013

http://www.pacourts.us/assets/opinions/Commonwealth/out/702CD12_3-15-13.pdf

Offensive comments made on picket line during labor dispute held to not be willful misconduct.  Labor dispture language is often vituperative, abuse, and inexact.  Even comments that may seem threatening are protected under the National Labor Relations Act, 29 USC sec. 151 et seq., because picket line rehtoric is not to be construed literally.

 

Welfare - drug-testing - 11th Cir. 2013

Lebron v.   Florida Dept. of Children and Families -  11th Cir. - February 26, 2013

http://www.ca11.uscourts.gov/opinions/ops/201115258.pdf

11th Circuit rejected drug testing as a condition of receiving cash assistance in Florida.

State failed to show "special needs" for exception from 4^th amendment requirements.

Ordinarily, to be reasonable, a search must be based on individualized suspicion of wrongdoing. . . . "[The Fourth Amendment’s] restraint on government conduct generally bars officials from undertaking a search or seizure absent individualized suspicion."). In most cases, this standard is met only when a search "is accomplished pursuant to a judicial warrant issued upon probable cause." Skinner, 489 U.S. at 619.

However, the Supreme Court has upheld as reasonable searches without a showing of individualized suspicion in certain very limited and exceptional circumstances. See New Jersey v. T.L.O., 469 U.S. 325, 351 (1985) (Blackmun, J., concurring in judgment) (explaining that a court may substitute its own reasonableness balancing for that of the Fourth Amendment’s warrant and probable cause requirement only in those "exceptional circumstances" where special needs have been established). But to establish these limited and exceptional circumstances that justify the suspension of Fourth Amendment protections, the Supreme Court has required the government to make a threshold 

Not only must the government identify the special needs that make the warrant and probable-cause requirement impracticable but it must establish that those special needs are "substantial." See Chandler, 520 U.S at 318 ("Our precedents establish that the proffered special need for drug testing must be substantial."). Only if the government is able to make a showing of substantial special needs will the court thereafter "undertake a context-specific inquiry, examining closely the competing private and public interests advanced by the parties," to determine the reasonableness of the search. Id. at 314; see also T.L.O., 469 U.S. at 351

The question is not whether drug use is detrimental to the goals of the TANF program, which it might be. Instead, the only pertinent inquiry is whether there is a substantial special need for mandatory, suspicionless drug testing of TANF recipients when there is no immediate or direct threat to public safety, when those being searched are not directly involved in the frontlines of drug interdiction, when there is no public school setting where the government has a responsibility for the care and tutelage of its young students, or when there are no dire consequences or grave risk of imminent physical harm as a result of waiting to obtain a warrant if a TANF recipient, or anyone else for that matter, is suspected of violating the law. We conclude that, on this record, the answer to that question of whether there is a substantial special need for mandatory suspicionless drug testing is "no."
 

Consumer Protection - deceptive conduct - ascertainable loss

Grimes v. Enterprise Leasing – superior Court – March 19, 2013

http://www.pacourts.us/assets/opinions/Superior/out/a33037_12.pdf#search=%22enterpRISE

Deceptive conduct v. misrepresenatation

A plaintiff need not specifically allege a misrepresentation. As this Court recently observed, any deceptive conduct will suffice under the UTPCPL’s catchall provision. See Bennett v. A.T.

Masterpiece Homes at Broadsprings, LLC, 40 A.3d 145, 151 (Pa. Super. 2012).. Here, Grimes alleged that Enterprise engaged in deceptive conduct “[b]y intentionally and artificially inflating the costs it incurred under the rental car contracts, and by concealing from [Grimes] the true costs it incurred ….” …. Then, in attempting to collect the money it believed it was owed, Enterprise “threaten[ed] and plann[ed] to contact [Grimes’] insurer and credit card issuer ….” . In our view, these allegations plainly meet the UTPCPL catchall provision’s requirement of “fraudulent or deceptive conduct  which creates a likelihood of confusion or of misunderstanding.” 73 P.S. § 201-2(4)(xxi); see also Commonwealth by Fisher v. Cole, 709 A.2d 994, 997 (Pa. Cmwlth. 1998) (holding a physician’s efforts to collect debts from former patients that were barred by the statute of limitations constituted a violation of the UTPCPL), appeal denied, 736 A.2d 606 (Pa. 1999). Therefore, we conclude Grimes has pled facts sufficient to state a cause of action for deceptive conduct under the UTPCPL catchall provision.

Pleading "justifiable reliance" not required
The trial court also noted that “[Grimes] can[not] establish justifiable reliance” in furtherance of her UTPCPL claim.   The claim under the catchall provision of the UTPCPL alleges that Enterprise’s conduct was both fraudulent and deceptive. . As this Court recently held in Bennett, when a plaintiff alleges a claim under the UTPCPL catchall provision under the theory of deceptive conduct, the plaintiff need not prove the elements of common law fraud, including “induc[ment of] justifiable reliance ….” Bennett, supra at 152 n.5, 154-155. Therefore, to the extent that Grimes alleges Enterprise’s conduct was deceptive, as opposed to fraudulent, she need not allege justifiable reliance.

Ascertainable loss

Plaintiff averred that she incurred costs and fees associated with asserting her rights and protecting herself against Enterprise’s alleged deceptive trade practices. This Court has held that in determining whether there has been an “[a]scertainable loss [, it] must be established from the factual circumstances surrounding each case ….” Agoliori v. Metro. Life Ins. Co., 879 A.2d 315, 320 (Pa. Super. 2005). We further observe the UTPCPL has a deterrent effect. This is relevant when determining whether there is an ascertainable loss in each case. Id. On

this issue, we find the analysis set forth in Agoliori and Jarzyna v. Home Properties, L.P., 763 F. Supp. 2d 742 (E.D. Pa. 2011), to be dispositive.  Grimes alleges the same loss as the plaintiff in Jarzyna. Plaintiff here alleges that she has incurred costs and fees associated with asserting her rights and preventing Enterprise from collecting its debt. 

UC - willful misconduct - job application - omitting criminal record history

Moore v. UCBR – Cmwlth – Court – April 8, 2013 – unreported memorandum decision

 http://www.pacourts.us/assets/opinions/Commonwealth/out/209CD12_4-8-13.pdf

Claimant’s action of omitting the details of her lengthy criminal history, despite Employer’s emphasis of the importance of honesty on her job application, was material to Claimant’s employment, we affirm the Board’s Order.  When filling out her employment application, Claimant indicated that she had a criminal record, but listed only one conviction for conspiracy. In fact, Claimant’s six-page criminal history included numerous convictions, including forgery and identity theft. After performing a criminal background check that revealed numerous convictions, Employer discharged Claimant on September 2, 2011

This Court has consistently held that “[UC] benefits are properly denied when a claimant’s discharge stems from a false or incomplete statement on an employment-related application document if the misrepresentation is knowing and material to the employee’s qualifications for the job at issue.” Sill-Hopkins v. Commonwealth, 563 A.2d 1288, 1290 (Pa. Cmwlth. 1989) (holding that claimant’s misrepresentation regarding her availability to sell securities was material because a “significant nexus” existed between the misrepresentation and the ability to perform the job at issue). The materiality of a misrepresentation is determined based on “the factual matrix present in each case.” Id. (citing Albater v. Unemployment Compensation Board of Review, 423 A.2d 9, 11 (Pa. Cmwlth. 1980)).  “We must look at the circumstances surrounding each case in order to determine whether information concealed from the employer is material to the employment.” Albater, 423 A.2d at 11. Thus, this Court looked both to the nature of the job at issue and also to the nature of the criminal record concealed.

In this case, it appears that Claimant’s position was not one requiring a great deal of trust or an unblemished criminal record.  Employer’s witness credibly testified that Employer would have hired Claimant despite her criminal record. .. However, the information Claimant concealed was not merely an arrest, but a lengthy history of convictions for crimes involving dishonesty, such as forgery and identity theft. Moreover, at issue in this case is not merely Claimant’s criminal history, but her active concealment of this history despite Employer’s instruction to Claimant that it was important that she be honest on her application.

Dishonesty in connection with one’s employment constitutes a disregard of expected standards of behavior where the employee’s actions are affirmatively deceptive. DeRiggi v. Unemployment Compensation Board of Review, 856 A.2d 253, 256-57 (Pa. Cmwlth. 2004). Contrary to Claimant’s arguments, Claimant “was well aware of the importance of accuracy” and truthfulness to Employer. Simonds v. Unemployment Compensation Board of Review, 535 A.2d 742, 744 (Pa. Cmwlth. 1988). Employer’s witness testified, “I tell everyone, just be truthful, okay, just be truthful on your application.”

In Claimant’s testimony, she stated, “I knew that when you typed in my name, everything was going to come up.” (Hr’g Tr. at 11 (emphasis added).) Nonetheless, Claimant deliberately omitted5 the details of her criminal history, despite knowing that Employer intended to verify the truthfulness of Claimant’s application. Employer may not have cared about Claimant’s past criminal history when making its employment decision, which is consistent with the “deeply ingrained public policy of this State to avoid unwarranted stigmatization of and unreasonable restrictions upon former offenders.” Unemployment Compensation Board of Review v. Dixon, 365 A.2d 668, 669 (Pa. Cmwlth. 1976). However, Employer emphasized the importance of truthfulness during the application process to its applicants. Given the nature and length of Claimant’s criminal history and her active concealment thereof, despite Employer’s emphasis regarding the importance of honesty on the job application, we hold that the Board did not err in finding that Claimant’s deception was material to her employment.

________________

The opinion, though not reported, may be cited "for its persuasive value, but not as binding precedent." 210 Pa. Code § 67.55. Citing Judicial Opinions.

 

 

 

Relief from judgment of non pros - inactivity - Rule 3051

In Re: Order Amending Rule 3051 of the Pennsylvania Rules of Civil Procedure, No. 574 Civil Procedural Rules Docket

rule - http://www.pacourts.us/assets/opinions/Supreme/out/574civ.attach.pdf

explanatory comment -  http://www.pacourts.us/assets/opinions/Supreme/out/574civ-rpt.pdf

Explanatory Comment

The Supreme Court of Pennsylvania has amended Rule 3051 governing relief from a judgment of non pros to clarify the requirements for opening a judgment of non

pros entered for inactivity. In Madrid v. Alpine Mountain Corp., 24 A.3d 380 (Pa. Super. 2011), the Superior Court of Pennsylvania ruled that under the current language of Rule

3051(b) it was compelled to conclude that a plaintiff is not entitled to relief from a judgment of non pros for inactivity without a showing that there was a reasonable explanation or legitimate excuse for the inactivity. Under this interpretation of Rule 3051(b), a judgment of non pros for inactivity cannot be opened even if the record did not establish actual prejudice unless the plaintiff could also show a reasonable explanation or legitimate excuse for the delay.

 Thus, while the defendant was required to show that the delay caused actual prejudice in order to obtain a judgment of non pros for inactivity, the plaintiff who cannot show a reasonable excuse for the delay may not challenge the entry of the judgment of non pros on the ground that the record failed to establish actual prejudice.

 New subdivision (c) is intended to alter the ruling in Madrid by providing for the opening of a judgment of non pros dismissing a case for inactivity upon a showing that the defendant did not meet each of the three requirements for the entry of a judgment of non pros.

 

By the Civil Procedural

Rules Committee

Diane W. Perer

Chair

UC - limitation of issues/presumption of employment

Connect America v. UCBR – Cmwlth. Court – March 19, 2013 – unpublished

http://www.pacourts.us/assets/opinions/Commonwealth/out/1473CD12_3-19-13.pdf

1. Limitation of issues

Pursuant to 34 Pa. Code §101.87, only an issue properly before the referee shall be ruled on at the hearing before the referee; it states:

When an appeal is taken from a decision of the Department, the Department shall be deemed to have ruled upon all matters and questions pertaining to the claim. In hearing the appeal the tribunal shall consider the issues expressly ruled upon in the decision from which the appeal was filed. However, any issue in the case may, with the approval of the parties, be heard, if the speedy administration of justice, without prejudice to any party, will be substantially served thereby.

Id. (emphasis added). We interpret this provision as requiring that “the evidence adduced and determination made at the referee’s hearing be limited to the legal issue ruled on” by the Department. Anthony v. Unemployment Comp. Bd. of Review, 506 A.2d 501, 503 (Pa. Cmwlth. 1986) (quoting Corressel v. Unemployment Comp. Bd. of Review, 385 A.2d 615, 616 (Pa. Cmwlth. 1978)).

Here, the Department ruled Claimant was financially eligible for UC benefits. Employer appealed, raising the sole issue that Claimant was not an employee, but rather was an independent contractor. The referee informed the parties that she would receive evidence on that issue, and only that issue. 

2. Presumption of employment-

Employer bears the heavy burden of overcoming the presumption of employment. Kurbatov v. Dep’t of Labor & Indus., 29 A.3d 66 (Pa. Cmwlth. 2011).

  _________________________

 

The opinion, though not reported, may be cited "for its persuasive value, but not as binding precedent." 210 Pa. Code § 67.55. Citing Judicial Opinions.