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Must Plaintiffs Establish the Elements of Common Law Fraud to Make Out a Case Under the "Catchall" Provision of the UTPCPL?

June 1, 2013

By James J. Wilson, Esq.*

Key Points:

  • Bennett v. A.T. Masterpiece Homes, 40 A.3d 145 (Pa. Super. 2012) would lighten the burden for plaintiffs proceeding under the catchall provision of the UTPCPL by no longer requiring them to establish the elements of common law fraud in cases brought under the UTPCPL as amended in 1996.
  • However, the Bennett case appears to contradict Pennsylvania Supreme Court precedent.

 

In a recent opinion, a panel of the Superior Court has held that a plaintiff need not establish the elements of common law fraud, particularly justifiable reliance, in proving a claim under the "catchall" provision of the Unfair Trade Practices and Consumer Protection Law (the UTPCPL). The Superior Court's decision is questionable in light of existing precedent from the Pennsylvania Supreme Court.

In Bennett v. A.T. Masterpiece Homes, 40 A.3d 145 (Pa. Super. 2012), the plaintiffs contracted with a builder to construct a new house. During construction, the plaintiffs noticed deficiencies, brought them to the attention of the builder, and were assured by the builder that the deficiencies would be corrected. They were not, and the plaintiffs sued the builder on a number of theories, including violation of the UTPCPL, 73 P.S. §201.1, et seq. That statute provides a private action for those who purchase goods or services and suffer losses because of unlawful acts defined in §201-2(4) of the Act. The plaintiffs sued under §201-2(4)(xxi), the so-called "catchall" provision of the Act, which prohibits "engaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or misunderstanding."

At trial, the defendant builder was found liable. It appealed, claiming that the court erred by permitting the jury to find a violation of the catchall provision without proof that the plaintiffs justifiably relied upon the alleged misrepresentation; that is, without proof of the elements of common law fraud. In fact, the court instructed the jury that liability could be found under the catchall provision of the UTPCPL if they found that the defendant had merely engaged in "misleading conduct."

The Superior Court affirmed the verdict. It noted that, before 1996, the catchall provision prohibited only "fraudulent conduct," but that in 1996, the catchall provision was amended to prohibit "deceptive conduct" as well as "fraudulent conduct." Thus, the court held that a violation of the post-amendment catchall provision could be established by proof of either fraudulent conduct, or deceptive conduct.

In support of its decision, the Superior Court went through a number of its prior holdings that required proof of common law fraud to establish a basis for violation of the catchall provision. It found that these decisions either dealt with cases arising before the amendment, or were post-amendment cases that relied on pre-amendment interpretations of the law and, thus, were not binding. The court also noted that the Commonwealth Court has repeatedly held that the 1996 amendment adding "deceptive conduct" language changed the standard for the catchall provision, eliminating the need for proof of justifiable reliance. Finally, the court went through a number of Pennsylvania federal district court decisions which have held, post-amendment, that proof of justifiable reliance is no longer required to establish a violation of the UTPCPL's catchall provision.

However, Bennett seems to have ignored recent Pennsylvania Supreme Court cases involving post-amendment claims under the catchall provision. In these cases, the Supreme Court has held that, even after the 1996 amendment, a plaintiff must still prove justifiable reliance to establish that the catchall provision has been violated.

For instance, Yocca v. The Pittsburgh Steelers Sports, Inc., 854 A.2d 425 (Pa. 2004) involved claims, among others, of violations of the post-amendment catchall provision. The Supreme Court held that, in order to prevail, a plaintiff must establish justifiable reliance on the alleged misconduct or misrepresentation. In a more recent case, Schwartz v. Rockey, 932 A.2d 885 (Pa. 2008), another post-amendment case, the Supreme Court similarly held.

Moreover, apart from Supreme Court cases, on the federal side, in a 2008 decision, Hunt v. United States Tobacco Co., 538 F.3d 217 (3rd Cir. 2008), the Third Circuit also held, in a post-amendment case, that justifiable reliance is still required to establish a claim under the catchall provision of the UTPCPL. Bennett made no mention of this Third Circuit decision either.

How subsequent appellate decisions will treat the Bennett decision remains to be seen. But, for now, the prudent interpretation of the catchall provision, as held in Yocca, Schwartz and Hunt, is that the elements of common law fraud still need to be proven in order to make out a claim under that section of the UTPCPL.

* Jim is a shareholder in our Scranton, Pennsylvania, office. He can be reached at 570-496-4615 or jjwilson@mdwcg.com.

Defense Digest, Vol. 19, No. 2, June 2013

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