author: WETTICK, J.,

text:
    Henry v. PNC Bank, N.A.

      July 8, 2013

      James M. Pietz, for representative class and plaintiff

      Darryl J. May, Mariah M. Murphy and Marcel S. Pratt, for defendant
   WETTICK, J.,

— The preliminary objections of PNC Bank seeking dismissal of each of the six counts within plaintiff’s amended class action complaint are the subject of this opinion and order of court.

Plaintiff, Candace H. Henry, is a former customer of PNC who was provided with a checking account and debit card. She alleges that she was the victim of a practice in which PNC maximized overdraft charges (1) by waiting until the end of a business day to determine whether the account balance in a customer’s checking account was sufficient to cover all debit transactions from the end of the prior business day to the end of the current business day and (2) by using a high-to-low posting where there were multiple transactions within this period thereby maximizing the overdraft fees whenever the total charges against the account at the end of the business day exceeded the account balance.

EXAMPLE: The balance of the customer’s checking account as of 12:01 A.M. on Wednesday is $3,000; debit card transaction 1 at 7:00 A.M.-$7.27; transaction 2 at 8:15 A.M.-$4.21; transaction 3 at 12:37 P.M.-$21.16; Transaction 4 at 1:01 P.M.-$3.13; transaction 5-$2,989.00 at 3:30 P.M. (payment of tuition).

If the account was posted in chronological order, the customer would be charged for one overdraft. If the account was posted from lowers to highest at the end of the business day, the customer would be charged for one overdraft. However, if the account was posted from highest to lowest at the end of the business day, the customer would be charged for four overdrafts. Under this third scenario, PNC would be assessing overdraft charges on four transactions for which the actual funds in the customer’s account were sufficient at the time of each transaction to cover the debits submitted for payment.

The situation is exacerbated when numerous debit card transactions occur on Saturday through Monday. PNC treats this three-day period as one business day. Consequently, if the total transaction amount for this three-day period exceeds the balance of the account as of 11:59 P.M. on Monday, the number of defaults will be based on the posting of all debits submitted over the three-day period in highest to lowest order.

In plaintiff’s first amended class action complaint, plaintiff describes three overdraft incidents:

Incident 1-At the close of business on May 19, 2010, plaintiff had an account balance of $160.34. On May 20, 2010, PNC posted three charges to plaintiff’s account: a check for $160.00 and two debit card transactions, one for $8.05 and the other for $5.93. PNC approved the two debit card transactions before it received the check. However, at the end of the business day, PNC posted the check for $160 before posting the $8.05 and $5.93 debits. The result was that plaintiff’s account was charged overdraft fees totaling $72.00 for $13.98 in overdrafts. If PNC had deducted the debit charges when it received notice of them and in chronological order, plaintiff would have been charged only one overdraft fee when the $160.00 check was posted (¶¶39-41, plaintiff’s amended complaint).

Incident 2-At the end of the day on May 20, 2010, plaintiff had a balance of-$13.64 in her checking account. However, in the early hours of May 21, 2010, PNC received a direct deposit into plaintiff’s account in the amount of $641.55. It received that money before the opening of the business day on May 21, 2010. Had her account been credited with those funds at the time PNC received them, the account balance would have been $627.91 before any additional transactions could be posted to her account. However, PNC deducted a debit card transaction before crediting plaintiff’s account for the direct deposit, resulting in another overdraft fee (¶42, plaintiff’s amended complaint).

Incident 3-On June 11, 2010, plaintiff began the day with a balance of $84.23. During the day, she deposited $320.00 in her account resulting in over $400.00 in available funds in the account on that date. However, plaintiff incurred four overdraft fees totaling $144.00 on $336.68 in total charges. But for PNC’s resequencing and delayed deposits policies, plaintiff would have incurred fewer or no overdraft fees on that day (¶43, plaintiff’s amended complaint).

Each of the counts in plaintiff’s six-count complaint is based, wholly or partially, on PNC’s practice of posting all debit transactions only at the end of the business day and processing them from the highest to lowest amount, thereby maximizing the number of overdraft fees charged to the customer.

I now consider PNC’s preliminary objections to each of plaintiff’s six causes of action.

I. BREACH OF CONTRACT AND THE DUTY OF GOOD FAITH AND FAIR DEALINGS

I initially begin with plaintiff’s third cause of action based on allegations that PNC has breached its contractual obligations to plaintiff by posting debits only at the end of the business day in high-to-low order.

PNC contends thatthis cause of actionmustbe dismissed because plaintiff executed writings which authorized the posting of all debit transactions at the end of a business day, using a high-to-low posting sequence. In support of this contention, PNC primarily relies on three writings, herein designated as writings A, B, and C.

WRITING A

PNC relies on the first page of the twenty-seven-page, single-spaced (and not indexed) account agreement for personal checking, savings and money market accounts (“account agreement”), exhibit 1 to plaintiff’s amended complaint, which directs the customer to refer to the following:

You should also refer to certain other documents for terms and conditions relating to your Account, including PNC Bank’s:

(i) Consumer Schedule of Service Charges and Fees;
(ii) Funds Availability Policy;
(iii) Substitute Check Policy Disclosure;
(iv) Consumer Electronic Funds Transfer Disclosure Statement; and,
(v) PNC Bank Online Banking and Bill Pay, Online Banking Transfer Funds and PNC Payment Services, and/or Online Bill Pay Services Agreement for Information concerning the use of these services (if you have selected any of these services);
(vi) Overdraft Protection Agreement; and
(vii) The PNC Financial Services Group, Inc. Consumer Information Privacy Principles.

WRITING B

PNC relies on the following three paragraphs of the account agreement at pages 3 and 4 under the heading withdrawals'.

Paragraph 3

Your account may be debited on the day an item is presented bv electronic or other means, or at an earlier time based on notification received bv us that an item drawn on vour account has been deposited for collection in another financial institution. We are required to permit a withdrawal only if you have sufficient available funds in your Account to cover the whole amount of the withdrawal. A determination of your account balance for purposes of making a decision to dishonor an item for insufficiency of available funds may be made at any time between the receipt of such presentment or notice and the time of payment of return of the item or debit, and no more than one such determination need be made.

Paragraph 4

Effective September 19, 2008. in determining whether you have sufficient funds in vour account to cover a withdrawal. PNC Bank will consider: flf the deposits and withdrawals posted that day to vour account, and (2) all pending electronic transactions for which PNC has received notice, even if those transactions have not been presented to PNC for payment Such transactions include (but are not limited to) purchases, transfers or withdrawals made with your Check Card or Banking Card, merchant payment authorizations, online transfers of funds, telephone transfers, and any other electronic transactions or transfers. We may conclusively rely on notice of electronic transactions in determining whether you have sufficient funds in vour account to cover a withdrawal even if the notice incorrectly describes the transaction. This could result in an overdraft if sufficient funds are not available in vour account to cover all withdrawals. We will not be responsible for damages or wrongful dishonor if any item is not paid because of insufficient funds resulting from this method of determining whether you have sufficient funds to cover a withdrawal. In addition, funds you may have deposited may not be immediately available under our Funds Availability Policy. Please review our Funds Availability Policy for more information.

Paragraph 5

Checks, debits such as ATM withdrawals, debit card transactions, preauthorized automatic debits, telephone-initiated transfers, other electronic transfers, other types of debits or other withdrawal orders that exceed the available balance in vour account (that create an overdraft) are subject to a service charge. If there are sufficient funds to cover some but not all of vour withdrawal orders, we will exercise our discretion (i) in paying some but not all of the items, and (II) to pay the items in any order. In exercising that discretion to pay in any order, we do not necessarily process items in the order in which we receive them. Our general Practice is to Post withdrawals from your account in order of the largest-to-smallest dollar item: in other words, beginning with the largest dollar item, then the next-largest dollar item., and so on until we reach the last, smallest-dollar item. The order in which we process these withdrawals may affect the total amount of overdraft fees charged to your Account. If, in our sole discretion, we choose to allow withdrawals for which there are not sufficient available funds, you agree to replay us immediately the amount of the funds advanced to you. We may also assess your Account a service charge. At no time shall we be required to allow you to overdraw your Account even if we have allowed such activity on one or more prior occasions. We reserve the right to refuse to cash or to impose a charge on anyone who asks us to cash a check that you have written. Even if your check is otherwise properly payable, we will not be liable to you for dishonor of your check, or otherwise, as a result of such refusal.

(The court’s underlining.)

WRITING C

PNC refers to page 1 ofthe Consumer Funds Availability Policy, which reads under the heading Determining Availability of a Deposit as follows:

Determining Availability of a Deposit

We determine availability by counting the number of business days from the business day of your deposit. Every day except Saturday, Sunday and a federal holiday is a business day.
If you make a deposit through one of our branch tellers, ATM, or by mail before our cut-off time, we will consider that day to be the day of your deposit. However, if you make a deposit after our cut-off time or on a day that is not a business day, we will consider the deposit as being made on the next business day that we are open. Our cut-off time for branches will not be earlier than 2:00 p.m., but may vary by branch. The cut-off time for PNC Bank ATMS will be no earlier than 12:00 Noon, but may vary by location. The cut-off time for non-PNC Bank ATMs is 3:00 p.m. Deposits made through our night depository after 6:00 a.m. may be processed on the next business day.
Availability varies depending on the type of deposit and is explained below.
Checks drawn on banks located outside of the United States are not subject to this availability Policy. Please inquire regarding availability at the time you make such deposits.

PNC’s supplemental memorandum, Ex. F at 1.

PNC primarily relies on the underlined provisions in the fifth paragraph of writing B under Withdrawals, which states that debits exceeding the available balance in the account are subj ect to a service charge. If there are sufficient funds to cover some but not all of the withdrawal orders, it is the general practice of PNC to post withdrawals in order of the largest-to-smallest dollar “item.” The order in which PNC processes these withdrawals may affect the total amount of overdraft fees.

This provision does not authorize PNC to post withdrawals only at the end of the day; it never mentions when withdrawals will be posted. Thus, even assuming that a customer can find his or her way to paragraph 5 under Withdrawals of the account agreement, this paragraph does not say when PNC processes withdrawals. If the customer purchases with a debit card two items totaling $37.10 and $11.56 at a time when the customer has $300.00 in his or her checking account, nothing in paragraph 5 suggests that these purchases will not be posted until the end of the business day (which would be the end of Monday for debit card purchases made on Saturday, Sunday, and Monday).

PNC also relies on the underlined provisions in paragraph 4 of writing B. However, nothing in this writing suggests that transactions will not be posted until the end of a business day.

Even assuming that paragraphs 3 through 5 could be read to provide for deposits and withdrawals to be posted at the end of the day, nothing within paragraphs 3 through 5 suggests that a day means a business day. I find no merit to PNC’s contentions that the customer was informed that a day means a business day because writing A refers the customer to a document titled Funds Availability Policy, and writing C, the first page of the Consumer Funds Availability Policy, advises the customer that the term day means business day.

The heading of this provision is Determining Availability of a Deposit, thus, no customer would look to this provision for information about overdraft fees. Furthermore, this provision covers only the availability of deposited funds.

PNC argues that this provision’s reference to a definition of a business day should be used in defining the term day in paragraphs 3 and 4 of writing B. This makes no sense because there is nothing to suggest that there is a connection between the provisions in a writing titled Funds Availability Policy and the provisions in a writing titled Account Agreement governing overdraft policies. Furthermore, since the use of the term business day refers to every day except Saturday, Sunday, and a federal holiday, the use of the term day elsewhere suggests that PNC is not referring to a business day when it uses the term day.

Plaintiff is not claiming that she did not know that overdraft fees would be charged if her debits exceeded the amount of funds in her checking account However, she correctly contends that she never knew of, and never agreed to, PNC’s use of any specific method for calculating overdraft fees because, as I have already ruled, (1) the Account Agreement does not adequately explain that PNC would post all debit transactions at the end of a business day, using a high-to-low posting sequence and (2) PNC does not claim that the account agreement describes any other method of calculating overdraft fees.

Every contract imposes upon each party a duty of good faith and fair dealing in its performance. John B. Conomos, Inc. v. Sun Co., Inc., 831 A.2d 696, 705-06 (Pa. Super. 2003). There is no breach of this implied covenant where a party to a contract has done what the provisions of the contract expressly give it the right to do. However, where, as in this case, the manner of performance is not specifically prescribed, a party exercising its discretion is subject to an implied obligation of good faith and fair dealing.

In the present case, the agreement between PNC and plaintiff does not expressly permit PNC to impose overdraft fees by posting all debits at the end of a business day, using a high-to-low posting. Furthermore, this is not the only method for imposing overdraft fees that would have been available to PNC. Consequently, plaintiff may base a breach of contract action on allegations that PNC’s use of this method of calculating overdraft fees constituted a breach of the implied covenant of fair dealing and good faith.

SUMMARY

Where an agreement between the bank and the customer authorizes the bank to impose overdraft fees and where the agreement does not fully explain to the customer how such fees will be imposed, the bank’s selection of a method for imposing overdraft fees is governed by the obligations imposed under the implied covenant of fair dealing and good faith. As with any other express or implied covenant, the implied covenant of fair dealing and good faith may be enforced through a breach of contract action.

II. VIOLATION OF THE PENNSYLVANIA

UNFAIR TRADE PRACTICES AND CONSUMER PROTECTION LAW

In count I, plaintiff alleges that PNC’s practice of posting all debit transactions at the end of a business day, using a high-to-low posting, constitutes a violation of the Pennsylvania Unfair Trade Practices and Consumer Protection Law (“Consumer Protection Law”), 73 P.S. §§201-1 et seq. In its preliminary objections, PNC seeks dismissal on two grounds: it contends (1) the disclosures set forth at pages 4-7 of this Opinion undermine any claim under the Consumer. Protection Law because this disclosure adequately informed plaintiff of the very practices she claims were concealed and (2) claims based on the Consumer Protection Law are barred by the gist of the action doctrine.

I find no merit to the first ground because my ruling in section I of this opinion concludes that the language did not adequately explain the manner in which debit transactions and deposits are posted.

As to the second ground, PNC has not cited any case law holding that the gist of the action doctrine applies to claims based on the Consumer Protection Law. Clearly, the doctrine will not defeat Consumer Protection Law claims that arise solely from a contractual relationship between the parties when the success of the Consumer Protection Law claim is dependent upon the success of a breach of contract claim. See, e.g., 73 P.S. §201-2(4)(xiv) (failure to comply with the terms of a written guarantee or warranty). Also, the doctrine will not bar recovery for the breach of a duty grounded in contract law as modified by the Consumer Protection law. See. e.g., 73 P.S. §201-2(4)(v) (representing that goods or services have characteristics, uses, or benefits they do not have) and 73 P.S. §201-2(4) (xvi) (making repairs or improvements of an inferior nature to that agreed to in writing).

Furthermore, the gist of the action doctrine cannot defeat a claim under the catchall provision of the Consumer Protection Law (73 P.S. §201-2(4)(xxi) (engaging in any other fraudulent or deceptive conduct which creates a likelihood of confusion or misunderstanding)). The purpose of the Consumer Protection Law is to provide additional protections to consumers beyond those provided by contract law, and a common law doctrine cannot be applied to reduce the remedies authorized by legislation. For example, a contractor installing the roof on a consumer’s home may have made representations upon which the consumer relied that, in a contract action, are barred by the parol evidence rule; or the consumer may have included in the contract a limitation of damages provision which precludes the consumer, the victim of fraudulent conduct, from recovering the full amount of his or her actual losses. The purpose of the catchall provision is to provide remedies in consumer transactions that contract law will not provide. Such remedies include the award of counsel fees and actual losses which may be tripled at the discretion of the court.

III. COMMON LAW UNCQNSCIONABILITY

I am sustaining PNC’s preliminary objections seeking dismissal of plaintiff’s cause of action based on common law unconscionability. Under Pennsylvania case law, a finding that a provision within a contract (or the entire contract) is unconscionable will bar the party enforcing the provision (or the entire contract). However, there is no Pennsylvania case law permitting a party to pursue a separate cause of action on the ground that the other party is enforcing an unconscionable provision in the parties’ agreement. See Salley v. Option One Mortgage Corp., 925 A.2d 115, 119 (Pa. 2007), where the court described the doctrine of unconscionability as a statutory and a common law defense to the enforcement of an allegedly unfair contract or contractual provision.

In the present case, unconscionability would come into play if PNC had clearly defined the term business day, and had clearly informed the customer that it posted all debit transactions at the end of a business day using a high-to-low posting sequence. Under these circumstances, in her breach of contract count, plaintiff would seek a ruling that the contractual provision permitting a high-to-low posting at the end of a business day should not be enforced against her on the ground of unconscionability.

Plaintiff contends that a court should recognize a cause of action for common law unconscionability in this rare situation in which the bank holds plaintiff’s money based on its unconscionable practices. Otherwise, according to plaintiff, there is no remedy.

This contention is without merit. If PNC had provided adequate notice ofthe use of a high-to-low posting sequence at the end of the business day, a customer may pursue a claim for breach of contract to recover overdraft fees in which the court is requested to rule that the contractual provisions upon which the bank relies to support its taking of plaintiff’s funds is unconscionable and unenforceable.

IV. CONVERSION

Plaintiff bases her conversion cause of action on allegations that, by improperly withdrawing overdraft fees from plaintiff’s account, PNC has interfered with plaintiff’s use of funds in her account without plaintiff’s consent and without lawful justification.

PNC contends that this cause of action is barred by the gist of the action doctrine.

In Reardon v. Allegheny College, 926 A.2d 477, 486-87 (Pa. Super. 2007), the scope of the gist of the action was described as follows:

The gist of the action doctrine acts to foreclose tort claims: 1) arising solely from the contractual relationship between the parties; 2) when the alleged duties breached were grounded in the contract itself; 3) where any liability stems from the contract; and 4) when the tort claim essentially duplicates the breach of contract claim or where the success of the tort claim is dependent on the success of the breach of contract claim. The critical conceptual distinction between a breach of contract claim and a tort claim is that the former arises out of “breaches of duties imposed by mutual consensus agreements between particular individuals,” while the letter arises out of “breaches of duties imposed by law as a matter of social policy.” (emphasis added.) (citations omitted.)

The relationship between plaintiff and PNC was contractual. Plaintiff does not question PNC’s right under the contractual relationship to withdraw overdraft fees from plaintiff’s account when there has been an overdraft. The dispute is over whether the account agreement permitted PNC to calculate overdraft fees by posting all debit transactions at the end of a business day using a high-to-low posting sequence. The success of a conversion action would depend upon whether PNC was obligated to calculate overdraft fees through a method different from the method it had used in calculating plaintiff’s overdraft fees.

I agree with PNC that the gist of the action doctrine bars plaintiff’s conversion claim. Plaintiff voluntarily deposited money with PNC with the understanding that the rights and obligations of the parties concerning this money would be governed by the account agreement. Thus, because liability stems from the alleged breach of implied contractual duties, the success of the tort claim is dependent on the success of the breach of contract claim.

V. UNJUST ENRICHMENT

The fifth count of plaintiff’s complaint sets forth an unjust enrichment claim based on allegations that PNC unjustly received benefits in the form of excessive and unnecessary overdraft fees, and that it would be inequitable for PNC to retain these fees.

I am sustaining PNC’s preliminary objections in the nature of a demurrer as to this cause of action. Plaintiff and PNC maintain a contractual relationship. The doctrine of unjust enrichment is inapplicable where the relationship between the parties is founded upon a contract; it applies only where there is no contract. Wilson Area Sch. Dist. v. Skepton, 895 A.2d 1250, 1254 (Pa. 2006).

VI. RELIEF PURSUANT TO DECLARATORY JUDGMENTS ACT

Plaintiff alleges that PNC continues to post all debit transactions at the end of a business day, using a high-to-low posting sequence. Consequently, I am overruling PNC’s preliminary objections as to count VI.

VII. INDISPENSABLE PARTY

In its preliminary objections, PNC contends that the complaint is procedurally deficient because it fails to name an indispensable party, the joint account holder.

Plaintiff alleges that the checking account that serves as the basis for Candace Henry’s cause of action was an account held jointly with her husband, David A. Henry. PNC correctly states that when a husband and a wife own a joint bank account, they hold the account as tenants by the entireties. PNC next contends that when property is owned by a husband and wife as tenants by the entireties, both are indispensable parties to any action involving the joint bank account.

The case law does not support PNC’s contention that plaintiff’s husband must be joined. In Miller v. Benjamin Coal Co., 625 A.2d 66 (Pa. Super. 1993), a truck owned by a husband and wife was damaged in a traffic accident. The husband sued the other driver to recover the full amount of the property damage. The trial court denied the other driver’s request for a directed verdict on the ground that the wife was an indispensable party who had not been joined, and a verdict was entered in favor of the husband.

On appeal, the Pennsylvania Superior Court rejected the other driver’s contention that the wife was an indispensable party. The court stated:

[wjhere a marriage continues to exist, however, we perceive no reason for holding that one spouse cannot act as agent for the entireties estate in bringing an action to recover damages for injury to the entireties property so long as the action benefits both spouses and there is no evidence rebutting the presumption of authority to act.

Id. at 68.

YIII. OTHER LITIGATION

I will briefly discuss litigation in other courts addressing claims of bank customers arising out of the practice of other banks of calculating overdraft fees in generally the same manner as PNC. I have not relied on these cases for several reasons:

My rulings are based on my reading of the specific language used in the PNC documents. Differences in language can result in different outcomes.

Pennsylvania case law is well settled as to the applicability of the implied covenant of good faith and fair dealing, the uses of the unconscionability doctrine and the gist of the action doctrine.

There are differences between the Pennsylvania Consumer Protection Law and the consumer protection laws of other jurisdictions that may produce different results in litigation challenging overdraft fees.

PNC relies on Hassler v. Sovereign Bank, 644 F.Supp.2d 509 (D.N.J. 2009), a class action in which the plaintiff challenged Sovereign Bank’s practice of processing its customers’ debit transactions by using a high-to-low sequence instead of processing these transactions in the order in which the transactions occurred.

The plaintiff raised three claims: breach of contract based on a breach of the covenant of good faith and fair dealing; unjust enrichment; and violation of a New Jersey consumer protection law. These claims were dismissed pursuant to a motion to dismiss filed by the bank.

The basis for the dismissal was the trial judge’s finding that the account agreement expressly provided, in clear language that included the use of bold print, that Sovereign posts payment transactions each business day in descending order, starting with the largest. The court stated that it would be difficult for Sovereign to disclose its practice in clearer or more understandable terms. Id. at 515.

The other three cases of which I am aware are relied on by plaintiff.

In Gutierrez v. Wells Fargo Bank, 730 F.Supp.2d 1080-82 (N.D. Cal. 2010), consumers brought a class action against Wells Fargo based on a high-to-low sequencing practice that transformed one overdraft into as many as ten overdrafts-ten being the voluntary limit the bank had imposed.

Following a bench trial, the court issued an injunction, ordering Wells Fargo to cease its practice of posting debit card transactions from high to low, and awarded restitution of close to $203 million to restore to the class overdraft fees wrongfully extracted by Wells Fargo. Id. at 1140.

The trial judge made the following findings:

The bank’s disclosures did not articulate that the bank had already adopted a high-to-low practice; the disclosures upon which the bank relied were buried in a single-spaced writing of over sixty pages in tiny, ten-point font; no reasonable depositor could be expected to read the entire agreement or locate the disclosure; the length and complexity of the agreement made it completely unrealistic to assume that many consumers would actually read those lengthy documents; if consumers read the agreement, few would actually understand the posting process because it was not clearly explained; when a customer complained about overdraft fees, Wells Fargo would send a response letter containing straightforward language explaining the actual posting order used by the bank, which further amplified the great lengths the bank undertook to burry the words deep in a lengthy fine-print document and to ensure the words selected were too vague to warn the depositor. Id. at 1113-15.

The court considered the California Business and Professions Code which prohibits business acts or practices that are unlawful, unfair, or fraudulent and ruled this legislation bars a bank from using an established practice of maximizing the number of returned checks for the sale purpose of increasing the amount of check fees-it has a duty to act in good faith. Id. at 1121, 1127.

The court said that where the contract confers on one party discretionary power of protecting the rights of the other, there is a duty imposed to exercise that discretion in good faith in accordance with fair dealings. Express grants of discretion are subject to the reasonable expectations of the parties. Customers do not reasonably expect that they will have to pay up to ten overdraft fees when only one would ordinarily be incurred. Id at 1122.

According to the court, to establish liability under the fraud provisions of the California Business and Professional Code, it is necessary only to show that members of the public are likely to be deceived. Unlike common law fraud, it is not necessary for the plaintiff to prove a fraudulent deception. The question is what would be the likely effect of such a practice on a reasonable consumer. Id. at 1126-27.

In the next case, In re Checking Account Overdraft litigation, 694 F. Supp. 2d 1302 (S.D. Fla. 2010). the plaintiffs were current or former checking account customers of several banks who sought to recover (for themselves and all other customers similarly situated) excessive overdraft fees charged to their accounts on debit card transactions. The common nucleus of fact concerned the banks’ practice of reordering debits from the plaintiffs’ accounts and posting any charges from the largest to the smallest, thus, maximizing overdraft fee revenue. Id. at 1307.

The plaintiffs filed breach of contract claims alleging breach of the implied covenants of good faith and fair dealing. The defendants sought dismissal on the ground that the implied covenant cannot vary express contractual terms. The plaintiffs ’ response, with which the court agreed, was that they were not seeking to vary the language of the contract but, rather, to have the express contractual terms carried out in good faith. The plaintiffs’ claim was simply that the ordering of debit transactions must be carried out in a manner consistent with the covenant of good faith and fair dealing. When a party is given discretion to act under a contract, discretion must be exercised in good faith. Id. at 1314-15.

The complaints included a count for unconscionability based on the reordering of the debit postings in bad faith so as to maximize the number of overdraft charges. The banks contended that unconscionability is not an affirmative cause of action; rather, case law empowers a court addressing allegations of unconscionability to do no more than refuse enforcement of the unconscionable section or sections of the contract. The plaintiff’s contended that courts can utilize equitable powers to issue a declaratory decree that the contractual terms and practices are unconscionable and to award damages for the bank’s past enforcement of the terms. Id. at 1318.

The court agreed with the plaintiffs, stating that if the overdraft provisions are found to be unconscionable, the court retains authority and discretion to fashion appropriate equitable relief. This cause of action should be recognized where the customer never had the opportunity to raise unconscionability as a defense for withholding payment; the only opportunity to raise unconscionability is through a lawsuit filed by the customer after payment has been made. Id. at 1318-19.

The court permitted an unjust enrichment claim to be raised contingent upon a finding that an express contract does not exist. Id. at 1321-22.

The court permitted the plaintiffs to pursue the tort of conversion. The court stated that the plaintiffs unquestionably had the right to possess the funds in their bank accounts upon demand to the bank, and the plaintiffs were deprived of that right because the defendant wrongfully took the funds. A conversion action may be based on this interference with the plaintiffs’ property interest in the funds, id. at 1322-23.

In White v. Wachovia Bank, 563 F. Supp. 2d 1358, 1360-61 (N.D. Ga. 2008), the plaintiffs opened a joint checking account with Wachovia and executed a standard deposit agreement. The plaintiffs alleged that Wachovia routinely enforces a policy whereby charges are posted in the order of largest to the smallest amounts, even where larger charges are received days after smaller charges.

The plaintiffs raised a breach of contract claim based on the implied covenant of good faith. The court allowed this claim to proceed because the language of the agreement did not, by its express terms, grant the bank absolute or uncontrolled discretion in exercising its contractual rights. Id. at 1363-66.

The court also ruled that the complaint set forth a plausible claim under a Georgia consumer protection law. The court concluded that if the plaintiffs’ allegations are true that Wachovia charges consumers for insufficient funds in connection with transactions for which the account had sufficient funds-this practice comes within the provisions of the law forbidding any unfair or deceptive acts or practices in the conduct of consumer transactions. Id. at 1369-70.

The court permitted the conversion cause of action to go forward because of allegations that Wachovia imposed overdraft fees when there was, in fact, no overdraft, and, furthermore, refused to return the funds upon demand by the plaintiffs. Id. at 1371.

The court dismissed the unjust enrichment claim because there was a legal contract covering Wachovia’s posting of transactions and the imposition of overdraft fees.

The court dismissed the unconscionability claim stating that the plaintiffs’ argument in support of this claim is in tension with their argument, which the court found to be persuasive, that Wachovia breached its duty of good faith and fair dealing. Furthermore, because of Georgia legislation allowing items to be charged in any order, there cannot be substantive unconscionability.

For these reasons, I enter the following order of court:

ORDER OF COURT

On this 31st day of January, 2012, upon consideration of defendant’s preliminary objections seeking dismissal of each count of plaintiff’s six-count amended complaint, it is ordered that plaintiff’s unconscionability, conversion, and unjust enrichment counts are dismissed and defendant’s preliminary objections are otherwise overruled.

A status conference will be held on February 14, 2012 at noon.

      . Plaintiff alleges that a $36.00 fee is charged for each and every transaction that results in an overdraft for up to four overdrafts per day.

      . For a court to find a contractual provision unconscionable, it must determine the contractual provision unreasonably favors the drafter, and there was no meaningful choice on the part of the other party regarding acceptance of the provisions. Todd Heller, Inc. v. United Parcel Service, Inc., 754 A.2d 689, 700-01 (Pa. Super. 2000).

      . In this opinion, I am not considering whether there would be any merit to such an argument.

      . Plaintiff will not raise this defense in this case because of my ruling that there are no contractual provisions authorizing the use of high-to-low posting at the end of the business day.

      . The gist of the action doctrine applies to claims for conversion. Pittsburgh Constr. Co. v. Griffith, 834 A.2d 572, 593 (Pa. Super. 2003); Chapski v. Moravian at indep. Sq. Condominium Ass ’n, 2 Pa. D.&C.5th 48, 55-56 (Philla. 2007); and Koken v. Commonwealth Prof’l Group, Inc., 2006 WL 334787, *1 (Phila. 2006).


source: Caselaw Access Project

author: PICCIONE, /.,

license: Public Domain

text:
    Gula v. Golden Hill Nursing Home

      May 8, 2013

      Amanda B. Kraft, for petitioner

      Robert F. Daley, for plaintiff/respondent
   PICCIONE, /.,

— Before the court for disposition is a motion for reconsideration and motion to vacate order filed on behalf of the petitioner, the Commonwealth of Pennsylvania, Department of Public Welfare (hereinafter, “DPW”) pertaining to an order of court entered by this court on November 6, 2012. Prior to reaching the merits of DPW’s motion, the court will provide a summation of the relevant procedural and factual history of this case.

The underlying wrongful death action was initiated on August 6, 2010 by the plaintiff, Michael David Gula, individually and as executor of the Estate of Michael Gula (hereinafter, “plaintiff’) to recover damages for the negligent care and subsequent death of his father, Michael Gula, from the defendant, Golden Hill Nursing Home (hereinafter, “Golden Hill”). Plaintiff and Golden Hill eventually reached a settlement, and pursuant to the Pennsylvania Rules of Civil Procedure, Rule 2206(b)(1), petitioned the court for approval of the same on November 1,2012. The plaintiff indicated in his petition for approval of settlement and distribution of wrongful death and survival actions that the Commonwealth of Pennsylvania (hereinafter, “petition for approval”), Department of Revenue (hereinafter, “Department of Revenue”) objected to the proposed allocation of the settlement proceeds. Plaintiff represented to the court that the Department of Revenue would only agree to a 50/50 distribution of the proceeds between the wrongful death action and the survival action. The Department of Revenue did not appear in motions court, to assert its objection, despite being provided with proper notice of the plaintiff’s petition for approval, and after a brief inquiry of the respondent, this court approved the petition for approval by order of court issued on November 6, 2012.

On Februaiy 12, 2013 DPW presented a motion for reconsideration and motion to vacate order. DPW asserted that it expended a significant amount of money for the care and treatment of Michael Gula and that it did not receive notice of respondent’s petition for approval. This court granted DPW’s motion for reconsideration and scheduled a hearing for March 27, 2013. Following the March 27, 2013 hearing, both the plaintiff and DPW filed briefs in support of their respective positions. The matter is now before the court for a determination.

Plaintiff adamantly opposes DPW’s motion for reconsideration and motion to vacate order, and he argues that this court’s November 6, 2012 order was final; thus, DPW has no standing to contest the validity of the November 6,2012 order. Plaintiff further argues that DPW was informed of the petition to approve, despite the fact that DPW is not a party in this action and was not entitled to notice of the petition for approval because DPW is only a creditor of Michael Gula’s estate.

The court will, therefore, first address whether plaintiff has an obligation to specifically notify DPW of his petition for approval and if so, whether plaintiff failed to fulfill that obligation. Section 3393 of the Pennsylvania Probate, Estate and Fiduciaries Code as follows:

When the Commonwealth or a political subdivision thereof has a claim for maintaining in an institution a person who has died in the institution, the personal representative, within three months after the grant of letters, shall give notice thereof to the Department of Revenue or to the proper officer of such political subdivision, as the case may be.

20 Pa.C.S. §3393.

A strict interpretation of Section 3393 leads this court to conclude that the Department of Revenue is entitled to notice of a personal representative being issued letters testamentary within thirty days. The court does not interpret Section 3393 to require that the Commonwealth, in any of its political capacities, be provided with notice of pleadings or disposition of actions involving estates. Furthermore, the record clearly establishes that plaintiff notified the Department of Revenue of its intent to present the petition for approval. See Certificate of Service, attached to petition for approval, dated October 23, 2012. Despite the Department of Revenue being aware of respondent’s request for 80 percent of the settlement proceeds to be designated to the survival action, the Department of Revenue failed to appear before the court to assert its objection.

Respondent’s petition for approval additionally provides that “petitioner/plaintiff’s counsel has contacted all known potential lien holders, including Medicare, the Pennsylvania Department of Public Welfare, and any private insurers known to petitioner/plaintiff’s counsel...” See petition for approval, p. 2, paragraph 8 (emphasis provided). Plaintiff further admitted that DPW held a lien on the estate in the amount of $652.17. Id., p. 2. Paragraph 10.

At the March 27, 2013 hearing, plaintiff asserted that although he had no obligation to inform the DPW of these proceedings, plaintiff did notify the DPW of the ongoing wrongful death and survival actions. Plaintiff then provided the court with correspondences issued between plaintiff and DPW regarding outstanding liens on Michael Gula’s estate by attaching the same to his brief. A careful review of the exhibits attached to plaintiff’s brief indicates that DPW was notified of the ongoing litigation and ultimate settlement by correspondences sent to the DPW from plaintiff’s counsel. See Respondent’s exhibit 6, 8, 9 and 7 respectively.

After a careful review of the Pennsylvania probate, estate and fiduciary code, as well as the brief submitted by the respective parties, the court cannot find any case law or statutory law to establish that the DPW was entitled to be specifically notified of plaintiff’s petition for approval. Nevertheless, the court believes that plaintiff kept the DPW appraised of these proceedings and notified the DPW when a settlement was reached in order to satisfy any outstanding liens on the estate. The court therefore concludes that the plaintiff acted properly in his presentation of the petition for approval.

The court will next consider the DPW’s motion for reconsideration of this court’s November 6, 2012 order of court. Procedurally, the court finds that the DPW’s motion for reconsideration is untimely, as the same was presented in excess of sixty days from the date of the November 6, 2012 order. Pursuant to Rule 341 of the Pennsylvania Rules of appellate procedure, a court or moving party must act within thirty days from the entry of a final order of court. On this basis, the court concludes that the DPW’s motion for reconsideration must be denied.

However, for the purposes of fully developing and disposing of all pending matters before this court, the court will now consider the merits of the DPW’s motion for reconsideration, which proposes a distribution of the settlement proceeds of seventy-five percent directed to the survival action and twenty-five percent directed to the wrongful death action. When plaintiff presented this court with his petition for approval, plaintiff earnestly informed the court that the Department of Revenue objected to plaintiff’s proposed distribution of eighty percent of the settlement proceeds being directed to the wrongful death action and the remaining twenty percent being directed to the survival action. Plaintiff informed this court that the Department of Revenue proposed a fifty-fifty division of the proceeds.

As previously stated, Section 3323 of the probate, Estates and Fiduciaries Code, 20 Pa.C.S. §3323, provides for court approval “[w]henever it shall be proposed to compromise or settle any claim ... by or against an estate.” “The requirement for court approval of survival actions is intended to protect the estate, as well as the creditors and beneficiaries thereof. Thus, a court may refuse to approve a settlement of a survival action which is inadequate.” Moore v. Gates, 580 A.2d 1138, 1141 (Pa. Super. 1990) (holding that court approval is necessary where a large portion of a settlement award would be paid to the heirs of the decedent in settlement of the wrongful death action and only a small portion of the settlement would be paid to the decedent’s estate in settlement of the survival action)).

While an adult heir, who is entitled to recover for the wrongful death of his decedent, may settle his claims without court approval, court approval is required when wrongful death and survival actions are settled for a single amount. Moore, 580 A.2d at 1141. It is therefore, the trial court’s obligation to review the terms of the settlement and proposed distributions and evaluate the reasonableness of the terms prior to approving of any final distributions. Id. at 1142.

After a thorough review of the November 6, 2012 order of court, this court is satisfied with its determination regarding the distribution of settlement proceeds in these proceedings. The court accepted plaintiff’s counsel’s assertion that the plaintiff suffered a significant societal loss upon the death of this father, Michael Gula, and that the plaintiff maintained a strong relationship with his father throughout this life. This court has no evidence presently before it to refute these assertions orto challenge plaintiff’s credibility.

For all of the foregoing reasons, the Commonwealth of Pennsylvania, Department of Public Welfare’s motion for reconsideration and motion to vacate is denied.

ORDER OF COURT

And now, this 8th day of May, 2013, with this case being scheduled for argument on a motion for reconsideration and motion to vacate order, filed on behalf of the Commonwealth of Pennsylvania, Department of Public Welfare, after considering the Commonwealth of Pennsylvania, Department of Public Welfare’s Motions, as well as the briefs filed on behalf of the respective parties, the court hereby orders and decrees as follows:

1. The Commonwealth of Pennsylvania, Department of Public Welfare’s motion for reconsideration and motion to vacate order are denied, pursuant to the attached opinion.
2. The order of court entered in the above captioned case on November 6, 2012 is affirmed and fully incorporated herein.
3. The prothonotary shall properly serve notice of this order of court upon counsel of record for the parties.

      . On November 16, 2012, a copy of respondent’s petition for approval of settlement and distribution of wrongful death and survival actions was provided to the Honorable Judge John W. Hodge. Upon receipt of the same, Judge Hodge issued an order of court scheduling a hearing. Plaintiff subsequently petitioned the court to cancel that hearing, and indicated that Judge Hodge was improperly forwarded a copy of the petition due to a filing error on the part of the respondent. Judge Hodge subsequently cancelled the hearing and reinstated this court’s November 6,2012 order of court.

      . The court in noting the Department of Revenue’s proposed distribution of settlement proceeds is in no way comingling the Department of Revenue with the Department of Public Welfare. Rather, this court is elaborating on the court’s prior determination that a large distribution to the survivor action was not appropriate in this case.


author: WILLIAMSON, J.,

text:
    McFadden v. Li & Fung Ltd.

      May 9, 2013

      Kevin M. Conaboy, for plaintiffs

      Stephan A. Cornell, for defendants
   WILLIAMSON, J.,

— Plaintiffs commenced this action by filing a complaint on February 11,2013. Defendant Tractor Supply Company (TSC) filed preliminary objections to plaintiffs’ complaint on March 18, 2013, and a memorandum of law in support thereof on April 19, 2013. Plaintiff filed a brief in opposition to preliminary objections on May 2, 2013. Oral argument was heard before the court on May 6, 2013. We are now ready to dispose of the preliminary objections.

This matter arises from an incident that occurred on March 21, 2011, at the TSC store in Pocono Summit, Pennsylvania. Plaintiffs allege that Dawn McFadden sustained injuries when she attempted to sit on a display swing located in the store. The swing collapsed and caused Dawn McFadden to fall to the ground. Plaintiffs’ complaint alleges causes of action for negligence, strict products liability and breach of warranty.

DISCUSSION

In ruling on preliminary objections, “all well-pleaded allegations and material facts averred in the complaint, as well as all reasonable inferences deducible therefrom, must be accepted as true.” Wurth by Wurth v. City of Philadelphia, 584 A.2d 403, 407 (Pa. Cmwlth. 1990). The “court need not accept as true conclusions of law, unwarranted inferences from facts, argumentative allegations, or expressions of opinions.” Penn Title Ins. Co. v. Deshler, 661 A.2d 481, 483 (Pa. Cmwlth. 1995).

Defendant’s preliminary objections are as follows: (1) an objection to all counts of the complaint for insufficient specificity of pleading; (2) a demurrer to plaintiffs’ strict liability claim (count II); and (3) a demurrer to plaintiffs’ breach of warranty claim (count III).

I. Insufficient Specificity

TSC’s first preliminary objection asks the court to dismiss the complaint due to insufficient specificity pursuant to Pennsylvania Rule of Civil Procedure 1019(a), which states that “the material facts in which cause of action or defense is based, shall be stated in a concise and summary form.” Pa.R.C.P. 1019(a). The allegations in the complaint “must apprise the defendant of the claim being asserted and summarize the essential facts to support that claim.” Estate of Swift v. Northeastern Hosp. of Philadelphia, 690 A.2d 719, 723 (Pa. Super. 1997) citing Krajsa v. Keypunch, Inc., 622 A.2d 355, 357 (Pa. Super. 1993).

Specifically, TSC asserts that the complaint is unclear as to whether there was a sale of goods, which in turn fails to apprise TSC of the claims against it. Similarly, TSC asserts that the complaint fails to specify its breach of warranty claim.

Plaintiffs’ complaint, when taken as a whole, places the defendants on sufficient notice of the claims asserted against them. Paragraph 19 of plaintiffs’ complaint alleges that “Defendant, Tractor Supply Company, designed, manufactured, assembled, constructed, fabricated, sold, distributed and/or placed in the consumer market for sale, use distribution and/or rental to customers and use by the public at large, including the swing [in] question, which was intended by the Defendant to be used and was used by said customers in and about the Commonwealth of Pennsylvania.” See Complaint, ¶19. Paragraph 30 of the complaint alleges that “[t]he Defendant, Tractor Supply Company, was at all times material hereto, a merchant/ seller with respect to the swing in question and expressly and/or impliedly warranted to users and consumers thereof that said product was merchantable and fit for the particular purposes for which it was required, intended, sold and used.” See Complaint, ¶30. These paragraphs, along with the rest of the complaint, adequately apprise the defendants of the strict liability and breach of warranty claims that are being asserted against them. Therefore, TSC’s first preliminary objection is overruled.

II. Demurrers to Counts II and III

TSC’s second and third preliminary objections are demurrers to counts II and III of the complaint for legal insufficiency of pleading. TSC argues that the complaint fails to set forth viable claims for strict liability and breach of warranty because plaintiffs do not aver that TS C sold the swing to them, or that TSC expressed any communication of the warranty terms to them.

A demurrer may be sustained only if it is clear on the face of the pleading that the law will not provide or permit the recovery sought. Morgan v. McPhail, 672 A.2d 1359 (Pa. Super. 1996). If there is any doubt, it should be resolved by overruling the demurrer. Mellon Bank N.A. v. Fabinyi, 650 A.2d 895 (Pa. Super. 1994).

Both parties agree that the elements required for a strict liability claim are set forth as follows:

1. A product;
2. Sale of that product;
3. A user or consumer;
4. Defective condition;
5. Unreasonably dangerous; and
6. The product caused physical harm to the ultimate user or consumer or to his property.

Schriner v. Pa. Power and Light Co., 501 A.2d 1128, 1132 (Pa. 1985). TSC argues that plaintiffs have not averred that they purchased the display swing from TSC, and therefore, the claim of strict liability would be legally insufficient because an element was not plead. A simple reading of the complaint shows that plaintiffs properly plead the second element of strict liability. As quoted above, paragraph 19 of the complaint avers that TSC, “designed, manufactured, assembled, constructed, fabricated, sold, distributed and/ or placed in the consumer market for sale, use, distribution and/or rental to customers and use by the public at large” the swing in question. At this point in the pleadings, since the court must accept well-pleaded allegations as true, we find that the plaintiffs have made out a claim for strict liability in count II of the complaint.

Similarly, we find that the plaintiffs have adequately alleged a claim for breach of warranty under count III of the complaint. As explained above, plaintiffs have alleged the sale of the swing, and therefore, that element has been met for purposes of surviving a demurrer.

An implied warranty of fitness for a particular purpose is breached when a seller: “(1) on whose skill and judgment a buyer relies, and (2) who has reason to know, at the time of contracting, (3) of a particular purpose for which the goods are required, (4) fails to provide goods that perform to the specific use contemplated by the buyer.” Gall v. Allegheny County Health Department, 555 A.2d 786(Pa. 1989).

TSC argues that the claim for breach of warranty should be dismissed for the additional reason that Plaintiffs have failed to aver that they ever communicated to TSC their intention to use the display swing for a particular purpose. However, this argument rings hollow upon examination of the complaint, particularly, paragraph 35. Plaintiffs allege “The Defendant, Tractor Supply Company, knew or had reason to know when it sold, distributed and supplied the swing in question the particular purposes for which the swing was required, intended, sold, leased and proposed for use.” See Complaint, ¶35. Plaintiffs plead that TSC knew or had reason to know of their intended use of the swing. The logical inference from that allegation is that TSC knew or had reason to know that the plaintiff was going to sit on the swing. Therefore, count III of the complaint has been properly plead, and TSC’s second and third preliminary objections are overruled.

It should be noted that TSC attached plaintiffs’ answers to request for admissions to their memorandum of law. A court cannot consider matters collateral to the complaint when considering a demurrer, such as answers to a request for admissions. Stilp v. Com., 910 A.2d 775 (Pa. Cmwlth. Ct. 2006). If TSC wishes to argue that the plaintiffs cannot recover on their claims as a matter of law due to their answers to request for admissions, the proper procedure is to file a motion for summary judgment at the close of discovery.

ORDER

And now, this 9th day of May, 2013, after consideration of the preliminary objections of defendant, Tractor Supply Company, to the complaint of plaintiffs, Dawn and Barry McFadden, and following oral argument, it is hereby ordered as follows:

1. Defendant’s first objection in the nature of a motion for more specific pleading is overruled.
2. Defendant’s second objection in the nature of demurrer is overruled.
3. Defendant’s third objection in the nature of a demurrer is overruled.
4. The defendant shall file an answer to the complaint within twenty (20) days of the date of this order.

      . TSC did not include this issue in their memorandum in support of preliminary objections. TSC acknowledged at argument there was no issue regarding the negligence count.


author: COX, J.,

text:
    Lefebvre v. Bielak

      June 3, 2013 —

      Douglas A. Olcott, Katelyn Harrington and Dallas W. Hartman, for plaintiffs

      William J. Kelly, Jr., for defendant Frank Bielak

      Daniel J. Sammel and Stephen J. Summers, for additional defendant Willaim D. Lefebvre
   COX, J.,

Before the court for disposition is the motion for summary judgment filed on behalf of the additional defendant William D. Lefebvre, which argues that the additional defendant is entitled to summary judgment because the defendant Frank Bielak is strictly liable for damages caused by his livestock.

On April 11, 2010, at approximately 8:50 p.m., the plaintiff Janice Lefebvre was a passenger in a vehicle driven by the additional defendant. They were traveling south on State Route 168 in Hickory Township, Lawrence County, Pennsylvania, when a cow owned by the defendant walked onto the roadway. The vehicle struck the cow causing injuries to the plaintiff and damage to the additional defendant’s vehicle. The plaintiff and additional defendant filed suit against the defendant. The plaintiff asserted a claim of negligence against the defendant while the additional defendant averred claims for loss of consortium and for property damage.

In response, the defendant filed an answer, new matter and cross-claim to the plaintiffs’ complaint, in which he alleged that the additional defendant’s negligence was the proximate cause of the injuries and damages to the plaintiff as the additional defendant failed to travel at a safe speed, violated the assured clear distance ahead doctrine and failed to maintain adequate control of his vehicle to avoid a collision with objects in his path. The defendant also asserts, in the alternative, that the additional defendant is jointly and severally liable for his own damages and the plaintiff’s injuries. The additional defendant filed a reply to new matter and cross-claim, in which he denied that he was negligent in causing the accident. Now, the additional defendant has filed a motion for summary judgment, which contends that the additional defendant is entitled to summary judgment because the defendant is strictly liable for damages caused by his livestock.

The purpose of the summary judgment rule is to eliminate cases prior to trial where a party cannot make out a claim or defense after the relevant discovery has been completed. Miller v. Sacred Heart Hospital, 753 A.2d 829 (Pa. Super. 2000). The mission of the summary judgment procedure is to pierce the pleadings and to assess the proof in order to see whether there is a genuine need for a trial. The summary judgment rule exists to dispense with a trial of a case or, in some matters, issues in a case, where a party lacks the beginnings of evidence to establish or contest a material issue. Ertel v. Patriot-News Company, 544 Pa. 93, 674 A.2d 1038 (1996), reargument denied, (1996), certiorari denied, 519 U.S. 1008 (1996).

Any party may move for summary judgment in whole or in part as a matter of law whenever there is no genuine issue of any material fact as to a necessary element of the cause of action or defense which could be established by additional discovery or expert report or if, after the completion of discovery relevant to the motion, including the production of expert reports, an adverse party who will bear the burden of proof at trial has failed to produce evidence of facts essential to the cause of action or defense which in a jury trial would require the issues to be submitted to a jury. Pa.R.C.P. No. 1035.2. However, summary judgment is only appropriate when discovery relevant to the motion has been completed. Id. Summary judgment may be granted only in cases where it is clear and free from doubt that there is no genuine issue as to any material fact and that the moving party is entitled to a summary judgment as a matter of law. Kafando v. Erie Ceramic Arts Co., 764 A.2d 59, 61 (Pa. Super. 2000) (citing Rush v. Philadelphia Newspaper, Inc., 732 A.2d 648, 650-651 (Pa. Super. 1999)).

The moving party bears the burden of proving the nonexistence of any genuine issue of material fact. Kafando, supra. A material fact, for summary judgment purposes, is one that directly affects the outcome of the case. Gerrow v. Shincor Silicones, Inc., 756 A.2d 697 (Pa. Super. 2000); Kuney v. Benjamin Franklin Clinic, 751 A.2d 662 (Pa. Super. 2000). The non-moving party must adduce sufficient evidence on issues essential to his case on which he bears the burden of proof such that a jury could return a verdict in his favor. Failure to adduce this evidence establishes that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ertel, supra. The non-moving party must demonstrate that there is a genuine issue for trial and may not rest on averments in its pleadings. DeSantis v. Frick Company, 745 A.2d 624 (Pa. Super. 1999); Merriweather v. Philadelphia Newspaper, Inc., 453 Pa. Super. 464, 469-472, 684 A.2d 137, 140 (1996).

When determining whether to grant a motion for summary judgment, the court must view the record in the light most favorable to the non-moving party, and all doubts as to the existence of a genuine issue of material fact must be resolved against the moving party. Hughes v. Seven-Springs Farm, Inc., 563 Pa. 501, 752 A.2d 339 (2000); Dean v. Commonwealth Department of Transportation, 561 Pa. 503, 751 A.2d 1130 (2000). Summary judgment is proper only when the uncontroverted allegations in the pleadings, depositions, answers to interrogatories, admissions of record, and submitted affidavits demonstrate that no genuine issue of material fact exists, and that the moving party is entitled to judgment as a matter of law. P.J.S. v. Pennsylvania State Ethics Comm ’n, 555 Pa. 149, 153, 723 A.2d 174, 175 (1999); Basile v. H&R Block, 761 A.2d 1115 (Pa. Super. 20001 ); Kuney v. Benjamin Franklin Clinic, 751 A.2d 662 (Pa. Super. 2000); Stevens Painton Corporation v. First State Insurance Company, 746 A.2d 649 (Pa. Super. 2000).

Only when the facts are so clear that reasonable minds cannot differ, a trial court may properly enter summary judgment. Basile, supra. If there are no genuine issues of material fact in dispute or if the non-moving party has failed to state a prima facie case, summary judgment may be granted. Dudley v. USX Corporation, 414 Pa. Super. 160, 606 A.2d 916 (1992). Thus, a proper grant of summary judgment depends upon an evidentiary record that either (1) shows the material facts are undisputed or (2) contains insufficient evidence of facts to make out a prima facie cause of action or defense. Rauch v. Mike-Mayer, 783 A.2d 815 (Pa. Super. 2001). The trial court must confine its inquiry when confronted with a motion for summary judgment to questions of whether material factual disputes exist. Township of Bensalem v. Moore, 152 Pa. Cmwlth. 540, 620 A.2d 76 (1993). It is not the function of the court ruling on a motion for summary judgment to weigh evidence and to determine the truth of the matter. Keenheel v. Pennsylvania Securities Commission, 143 Pa. Cmwlth. 494, 579 A.2d 1358 (1990).

The additional defendant cites to the Fence Law, 29 P.S. §41, as an indication that Pennsylvania law imposes strict liability upon agricultural landowners to construct a fence to ensure that livestock remains enclosed upon the landowner’s property. However, there is nothing in that statute which imposes strict liability upon landowners for damage caused by livestock that was not properly enclosed by a fence. 29 P.S. §41 merely requires that agricultural properties be enclosed by a fence. If that property is not properly enclosed by a fence, an adjacent landowner may have the county surveyor, the county surveyor of any adjoining county or the court of common pleas appoint a surveyor to examine the property or existing fence. If the fence is inadequate, the property owner has 40 days to erect a new fence or make the proper repairs to the existing fence. 29 P.S. §41. The language of that statute does not address strict liability for damages caused by livestock that wander from the landowner’s property, it merely provides a remedy for adjacent landowners to demand that a proper fence be constructed. 29 P.S. §41.

Now, the court must examine whether the case law imposes strict liability upon an owner of livestock for damages caused by their livestock for a motor vehicle accident. The additional defendant cites to Fogle v. Malvern Court, Inc., et al., 554 Pa. 633, 722 A.2d 680 (1999) and Tassoni v. LeBoutillier, 130 Pa. Super. 303, 196 A. 534 (1937), in support of his argument that the defendant is strictly liable for the motor vehicle accident caused by his cow standing on the roadway. In Fogle, the court recognized that the purpose of the Fence Law was to provide for the containment of livestock that might damage neighboring properties. Fogle, 554 Pa. at 637, 722 A.2d at 682. The court also acknowledged that the common law imposed a rule of strict liability for damages caused by animals if they trespass onto another’s land. Id., 554 Pa. at 637, 722 A.2d at 682-683. However, that case did not address the applicability of strict liability for injuries caused in a motor vehicle accident as the central issue before that court was whether adjoining landowners were required to share the expenses of constructing a fence pursuant to 29 P.S. §41. Id, 554 Pa. at 640, 722 A.2d at 684.

In Tassoni, the plaintiff filed suit seeking to recover for damages caused to his automobile after it collided with the defendant’s horse. The trial judge granted the defendant’s motion for a compulsory nonsuit and the plaintiff appealed to the Superior Court of Pennsylvania. The court examined the facts of the case in a light most favorable to the plaintiff, which revealed that the horse, that was left unattended, ran approximately one-half mile from the defendant’s property onto the street and was struck by the plaintiff’s vehicle. The plaintiff issued a statement claiming that he was operating his vehicle properly when the horse dashed onto the road without warning. The Tassoni court indicated that the plaintiff was required to present evidence from which negligence could be inferred. Tassoni, 130 Pa. Super. at 305, 196 A. at 536 (citing Rennie v. Schepps et al., 297 Pa. 39, 41, 146 A. 261, 262 (1929)). “Defendant would not be ‘responsible for injuries caused by his [horse] unless he himself was guilty of negligence in his manner of controlling or not controlling that property.”’ Id. (citing Andrews v. Smith et ux., 324 Pa. 455, 458, 188 A. 146, 148 (1936)). The court also explained that an owner of an animal is supposed to have knowledge of the likelihood it will stray and the owner is required to exercise ordinaiy care to keep it from straying. Id., 130 Pa. Super, at 307, 196 A. at 536. If the owner fails to do so, he or she will be held liable for any injuries that occur. Id. Hence, the Tassoni Court overturned the decision of the trial court and held that the plaintiff presented sufficient evidence to create an issue of fact regarding the defendant’s failure to exercise ordinary care in preventing his horse from running astray. Id.

The court could not locate any case law indicating that strict liability should be imposed upon the owner of livestock for injuries arising from a collision between a vehicle and that livestock. The case law indicates that strict liability is to be enforced upon an owner of livestock when that livestock trespasses upon and causes damage to property owned by another person. However, the Tassoni court clearly stated a plaintiff must demonstrate that the owner of livestock failed to exercise due care in preventing his or her livestock from straying from his or her property. Only when the owner of livestock fails to exercise due care will the courts impose liability upon the owner for injuries arising from a motor vehicle collision with livestock standing on a roadway. In the current matter, the additional defendant is now arguing that strict liability should be imposed upon the defendant, who owned the cow that was struck by the additional defendant’s vehicle; thus, relieving the additional defendant of any possible liability for the injuries suffered by the plaintiff. It is apparent that there is no existing case law to support that argument. As a result, there are issues of fact remaining as to whether the defendant was negligent in failing to confine his cow and whether the additional defendant negligently operated his vehicle causing the collision with the cow. Therefore, the defendant is not strictly liable for the damages incurred during the collision between the additional defendant’s vehicle and the defendant’s cow.

For the reasons set forth in this opinion, the additional defendant’s motion for summary judgment is denied.

ORDER OF COURT

Now this 3rd day of June, 2013, this case being before the court on April 29, 2013, for oral argument on the motion for summary judgment filed by the cross-claim defendant with all parties appearing through their counsel, the plaintiffs Janice LeFebvre and William D. LeFebvre, her husband, represented through counsel, Katelyn Harrington, Esquire, the defendant Frank Bielak, represented through counsel, William J. Kelly, Jr., Esquire and the additional defendant William D. LeFebvre, represented through counsel, Daniel J. Sammel, Esquire and after consideration of the arguments and briefs presented and submitted by counsel and a complete and thorough review of the applicable record, the court enters the following order and it is hereby ordered, adjudged and decreed as follows:

1. In accordance with the attached opinion, the motion for summary judgment filed by the additional defendant/ cross-claim defendant is hereby denied.

2. The prothonotary is directed to serve a copy of this order of court upon counsel of record.


author: TUCKER, J,

text:
    AFSCME District Council 33 v. City of Philadelphia

      June 13, 2013—

      Thomas M. Gribben, Jr., Claiborne S. Newlin and Samuel L. Spear, for appellants

      Shannon D. Farmer and Meredith C. Swartz, for appellee
   TUCKER, J,

I. Procedural History

This matter comes before the court on appeal from the entry of an order denying AFSCME, District Council 33 and AFSCME, Local 159’s (hereinafter referred to as “appellants”) motion to vacate an arbitration award. On April 23, 2012, appellants filed a motion to vacate arbitration award in the Philadelphia County Court of Common Pleas. Mot. to vacate filed (04/23/2012). The city of Philadelphia (hereinafter referred to as “appellee”) filed preliminary objections to appellants’ motion to vacate arbitration award on May 14, 2012. Prelim, obj. (05/14/2012).

The court issued a rule to show cause why appellants were not entitled to the vacation of the arbitration award at issue; the rule was returnable on June 14,2012 at 10:00 am in courtroom 675, City Hall, Philadelphia, PA. Rule issued (05/24/2012). This rule was later discharged pending the court’s resolution of appellee’s preliminary objections. Order entered by J. Tucker (06/05/2012). Appellants’ filed a supplemental amended motion to vacate the same day, thereby rendering appellee’s preliminary objections moot. Praecipe to suppl/attach filed (06/05/2012); Prelim, obj. marked moot (06/05/2012).

On June 25,2012, appellee notified the court that a notice of removal of this matter had been filed in the United States District court for the Eastern District of Pennsylvania. Not. of removal to U.S. Dist. Ct. (06/22/2012). Roughly six months later, this matter was remanded to the attention of the Philadelphia County Court of Common Pleas by the United States District court for the Eastern District of Pennsylvania. Remanded by U.S. Dist. Ct. (11/14/2012).

Appellants filed another motion to vacate arbitration award on November 21, 2012. Mot. to vacate filed (11/21/2012). Appellee filed another set of preliminary objections to appellants’ motion to vacate arbitration award on December 10, 2012. Prelim, obj. (12/10/2012). Again, the court issued a rule to show cause why appellants were not entitled to the vacation of the arbitration award at issue; the rule was returnable on February 5, 2013 at 10:00 am in courtroom 675, City Hall, Philadelphia, PA. Rule issued (12/19/2012). By stipulation, appellants were granted leave to file their answer to appellee’s preliminary objections. Stipulation filed (12/17/2012); Prelim, obj.resp. date updated (01/08/2013); stipulation approved (01/8/2013). Appellants timely filed their answer to appellee’s preliminary objections on January 10, 2013. Ans. to prelim, obj. (01/10/2013).

Thereafter, the parties filed a stipulation to reschedule the February rule to show cause hearing on appellants’ motion to vacate arbitration award; the court approved the stipulation and made the rule returnable on April 3, 2013. Stipulation filed (01/11/2013); stipulation approved (01/18/2013). On February 25, 2013, the court scheduled a hearing on appellee’s outstanding preliminary objections on April 4, 2013; for reasons of judicial economy, the court ordered that both the preliminary objections and the merits of the motion to vacate be heard on the same day. Mot. hearing scheduled (02/25/2013); order entered by J. Tucker (03/28/2013).

On April 5, 2013, the court entered two orders: (1) an order overruling appellee’s preliminary objections to the motion to vacate arbitration award; and (2) an order denying appellant’s motion to vacate arbitration award. Orders entered by J. Tucker (04/05/2013), docketed (04/09/2013). The court notes that orders were scanned in the incorrect order; the overruled preliminary objections should have been scanned prior to the “final disposition” on the motion to vacate arbitration award.

On April 11, 2013, appellants filed an appeal of the court’s order denying their motion to vacate arbitration award to the Commonwealth Court. Appeal to Commonwealth Court (04/11/2013). On April 16, 2013, the court ordered appellants to file of record a concise statement of matters complained of on appeal pursuant to Pa.R.A.P. 1925(b) (“1925(b) statement”). Order entered by J. Tucker (04/16/2013). Appellants timely filed a 1925(b) statement wherein alleging the following errors committed by the court, verbatim:

1. The court erred by issuing an Order on the merits of the case when the only issue that was before the court was the Preliminary Objections filed by the City of Philadelphia on December 10, 2012.
2. The court erred by failing to find that plaintiff’s Motion to Vacate Arbitration Award met the standard for narrow certiorari scope of review as set out in FOP Lodge No. 5 v. City of Philadelphia, 725 A.2d 206, 209 (Pa. Cmwlth. 1999).
3. The court erred by finding that the Arbitration Panel’s improper reliance on the Pennsylvania Intergovernmental Cooperation Authority Act for Cities of First Class, 53 P.S. §§ 12720.101 et seq. (the PICA Act) constituted a mere error of law.
4. The court erred by failing to find that the Arbitration Panel’s reliance on PICA constituted an excess of the Arbitration Panel’s jurisdiction.
5. The court erred by failing to find that the Arbitration Panel’s reliance on PICA compromised the regularity of the proceedings before the Arbitrator.
6. The court erred by failing to find that the Arbitration Panel’s decision was in excess of their powers.
7. The court erred by failing to recognize that the Arbitration Panel’s decision denied the City’s Correctional Officers and Youth Detention Counselors substantive due process as guaranteed by Article I, Section I of the Pennsylvania Constitution through its misplaced reliance on the PICA Act and by binding its Award under the restraints of that Act.

1925(b) statement (05/06/2013). A discussion ensues:

II. Facts:

Appellants DC 33 and its affiliate Local 159 are the bargaining representatives of the city of Philadelphia’s nonprofessional and non-uniformed employees. Appellants and appellee are parties to a collective bargaining agreement (hereinafter referred to as “CBA”) covering approximately two thousand (2000) correctional officers, youth detention counselors and security guards working throughout facilities located in the city of Philadelphia. The officers, guards, and counselors represented by appellants are “guards” as defined by 43 P.S. §§ 1101.101 et seq., also known as the Public Employe Relations Act (“PERA/ Act 195”). After the Pennsylvania Labor Relations Board resolved an issue regarding appellants’ right to invoke interest arbitration of various bargaining proposals, interest arbitration was invoked pursuant to PERA/Act 195. A three-member arbitration panel was convened and twelve (12) evidentiary hearings were conducted between June and October 2010. On March 16, 2012, the neutral panel member issued an award (“award”), which was joined by the city panel member on March 22, 2012. The union panel member dissented.

The award sets the terms and conditions of employment for covered employees for the period of July 1, 2008 through June 30, 2014. Appellants seek to vacate the following portions of the award, arguing that:

Section 2 fails to issue a wage award covering the period of July 1, 2009 through July 1, 2012;
Section 3 fails to reinstate unilaterally suspended Step and Longevity increases retroactively;
Section 5 raises the pension contribution rates for current employees effective July 1, 2013 and;
Section 8 removes holiday pay, sick pay and administrative leave as paid time for purposes of calculating when overtime pay is due.

Mot. to vacate (11/21/2012).

III. Legal Analysis

Governing Principles

Appellants represent city of Philadelphia employees governed by PERA/Act 195. 43 P.S. §1101.805; City of Philadelphia v. Pennsylvania Labor Relations Bd., 982 A.2d 136 (Pa. Cmwlth. 2009). Pursuant to PERA/ Act 195, appellants are prohibited from striking due to policy reasons. 43 P.S. §1101.1001. Instead, appellants participate in binding interest arbitration as a trade-off to the prohibition on striking. City of Philadelphia, 982 A.2d at 139. As explained by the Commonwealth court in FOP, Lodge No. 5 v. City of Philadelphia (Costello), 725 A.2d 206, 208 (Pa. Cmwlth. 1999), the goal of interest arbitrations is to formulate a collective bargaining agreement where the parties have been unable to do so. This is because unlike grievance arbitration panels, interest arbitration panels do not have a bargaining agreement to interpret. Id.

Although interest arbitrations awards are “final and binding upon” the arbitrating parties, the courts of the Commonwealth have been vested with judicial scrutiny of PERA/Act 195 arbitration awards under a narrow certiorari review. Dept. of Corr. v. Pennsylvania State Corrections Officers Ass’n, 12 A.3d 346, 351 (Pa. 2011). Specifically, as here, the court is limited to resolving questions relating to: 1) excess of arbitrator’s jurisdiction; 2) the regularity of the proceedings; 3) excess of arbitrator’s powers; and 4) constitutional deprivations. Id. (citing DOC v. State Corr. Officers Ass’n, 932 A.2d 359, 364 (Pa. Cmwlth. 2007). The court will discuss each of these questions intern.

1) The court properly issued its ruling on the merits of Appellant’s Motion to Vacate Arbitration Award and also Appellee’s Preliminary Objections on the Motion to Vacate Arbitration Award.

To begin, the court did not err in ruling on the underlying motion to vacate arbitration award. Contrary to appellants’ assertions, both appellee’s preliminary objections to the motion to vacate arbitration award and the underlying motion to vacate arbitration award were before the court. The docket and notes of testimony confirm this fact. The court ordered a rule to show cause in regard to the motion to vacate arbitration award on December 19, 2012. Rule issued (12/19/2012). The rule returnable was rescheduled pursuant to a joint stipulation of the parties. Stipulation filed (01/11/2013). The rule returnable was rescheduled to April 4, 2013 at 10:00 am in courtroom 675, City Hall, Philadelphia, PA. Mot. hearing scheduled (01/18/2013); mot. hearing scheduled (02/25/2013). Indeed, there is not one, but two docket entries notifying the parties that the rule on the motion to vacate arbitration award was returnable on April 4, 2013. Id.

In regard to the preliminary objections, the court ordered oral arguments on the preliminary objections on March 28,2013. Order entered by J. Tucker (03/28/2013). The motion hearing on the preliminary objections was rescheduled to April 4,2013 at 10:00 am in courtroom 675, City Hall, Philadelphia, PA. Order entered by J. Tucker (03/28/2013). Simply put, appellants and appellee were well aware that the court would entertain argument on both the preliminaiy objections and the motion to vacate arbitration award on the same day, at the same place, at the same time, despite appellants’ statements to the contrary. The record reflects that both the court and appellee were prepared for hearings on both issues. N.T. (04/04/2013) at 2-4, 16-17.

The court notes that appellants have not stated that the court somehow erred in holding both hearings on the same date. 1925(b) statement (05/06/2013). In addition, the court notes that appellants did not appeal the court’s order overruling preliminary objections to their motion to vacate. However, in the interest of providing clarification, the court will shed light on its reasoning for holding both hearings on the same date, which go to judicial economy.

Preliminary objections in the nature of demurrer test the legal sufficiency of the complaint, and are an assertion that the pleading does not set forth a cause of action upon which relief can be granted. Div. 85 of Amalgamated Transit Union v. Port Auth. of Allegheny County, 455 A.2d 1265, 1267 (Pa. Cmwlth. 1983). Such preliminary objections admit all well-pleaded facts and all reasonable inferences therefrom. Id. On a motion to vacate arbitration award, every inference of fact should be drawn in favor of the party having the award. Elec. Power Const. Co. v. Allen, Lane & Scott, 80 A.2d 799, 801 (Pa. 1951). In addition, the court must determine whether the proper standards where applied in order to resolve a motion to vacate an arbitration award. AFSCME District Council 47 v. City of Philadelphia (AFSCME), 53 A.3d 93 (Pa. Cmwlth. 2012) (determining whether the arbitrators properly applied the “essence test”).

The court was within its discretion to order one hearing to determine whether appellants set forth a cause of action upon which relief could be granted and whether the motion to vacate an interest arbitration award was meritorious based on applicable standards of review. Arguments either for or against a motion to vacate arbitration award go a step or two beyond arguments to sustain or overrule preliminary objections to a motion to vacate arbitration award. Even appellants are aware of this logic as they stated that in order to determine the preliminary objections, the court has to pass upon the four-prong narrow certiorari scope of review. N.T. (04/04/2013) at 17, 19. The court was not obligated to waste judicial resources by scheduling separate hearings for both motions. The court took everything appellants said as true and determined that preliminary objections should be overruled. The court then took every inference of fact in favor of the party having the award and determined that the motion to vacate should be denied. N.T. (04/04/2013). Appellants failed to appreciate the court’s orders scheduling both hearing, or simply chose to show up to the April 2013 unprepared. The court did not err in reaching the merits of the motion to vacate arbitration award, which was scheduled for hearing the same day as the preliminary objections in this matter.

2) The court properly determined that Appellants’ Motion to Vacate Arbitration Award did not meet the standards for narrow certiorari scope ofreview governing interest arbitrations

a. Exceeding Arbitrator’s Jurisdiction

First, appellant failed to show that the three-member arbitration panel exceeded its jurisdiction in this matter. The question of whether the arbitrator exceeded jurisdiction is straightforward - “did the decision-maker in the adjudicatory process act in that general class of controversies that the law empowers it to consider.” City of Philadelphia v. International Ass’n of Firefighters, Local 22 (IAFF, Local 22), 999 A.2d 555, 564 (Pa. 2010) (citing Dauphin Deposit Trust Co. v. Myers, 130 A.2d 686, 694 (Pa. 1957)). An assertion that an arbitration panel improperly considered a “controversy that is not of this type [of disputes that arise out of the collective bargaining process]” raises a question of jurisdiction. Id.

Here, appellants have not alleged that the panel improperly considered a dispute that did not arise out of the collective bargaining process. Instead, appellants simply state that the three-member panel “wrongly asserts that any award must be governed by” 53 P.S. §§ 12720.101, also known as the Pennsylvania Intergovernmental Cooperation Authority Act for Cities of the First Class (“PICA/Act 111”). Mot. to vacate (11/21/2012). Appellants claim that this action was taken in excess of the arbitration panel’s jurisdiction. N.T. (04/04/2013) at 17-20.

The record is clear that all of the portions of the award challenged by appellants address subjects that are unquestionably issues arising out of the collective bargaining process. Indeed, both parties submitted their respective proposals on the issues raised in the instant motion to vacate arbitration award. Praecipe to supplement/attach (06/05/2012)(“arbitration award”). The three-member arbitration panel acted in the general class of controversies that the law empowers it to consider.

There is a distinct difference between the three-member panel taking PICA/Act 111 budgetary issues into consideration to resolve a collective bargaining dispute under PERA/Act 195 and the three-member panel actually setting appellee’s budget. For example, if the three-member panel rewrote appellee’s budget based on PICA/ Act 111, or PERA/Act 195, such an act would constitute an excess of jurisdiction.

b. Regularity of the Proceedings

Appellants did not raise any dispute as to the regularity of the proceedings in this matter before the court. Mot. to vacate arbitration award (11/21/2012); N.T. (04/04/2013). Appellants cannot now charge as error to this court its failure to make a finding as to irregularity of proceedings for the first time on appeal based on waiver principles.

c. Excess of Arbitrator’s Powers

Appellants did not directly raise any dispute as to whether the arbitration panel exceeded its powers. Mot. to vacate arbitration award (11/21/2012); N.T. (04/04/2013) at 17. However, the court provides the analysis below as appellants’ motion to vacate can be construed to argue that the arbitration panel exceeded its powers. In regard to the excess of power prong, an arbitration panel exceeds its powers when “it mandates that the public employer carry out an illegal act...that is, one that it could not have performed voluntarily...or perform an action unrelated to a bargainable term or condition of employment.” Pa. State Corr. Officers Ass’n, 12 A.3d at 356 (internal citations omitted). Furthermore, as the Pennsylvania Supreme court stated in City of Washington v. Police Dept. of Washington, 259 A.2d 437, 441-42 (Pa. 1969):

Whether the decision maker in an adjudicatory process has been guilty of an excess in the exercise of power depends fundamentally on whether he has gone outside the boundaries of his authority. No adjudicatory body has unlimited discretion. At the very least, each and every adjudicator is bound by the Constitution of the United States; and most are bound by even tighter strictures.... In the instant case the adjudicatory power is an arbitration panel. Since it is a creature of the Legislature we must look to see if its powers were restricted in any way. If they were, and if the panel went beyond the limits of its authority, then it committed an excess in the exercise of power and the tainted portions of its mandate may be reviewed and corrected.

259 A.2d at 441, superceded by statute on other grounds. In contrast, “mere error[s] of law” will not support a finding that the arbitration panel exceeded its powers. Pa. State Corrections Officers Ass’n, 12 A.3d at 356. Errors of law include misinterpretations or misapplication of law affecting a term or condition or employment. City of Philadelphia v. FOP, Lodge No. 5, 558 A.2d 163, 164 (Pa. Cmwlth. 1989).

Here, appellants do not allege that the arbitration panel carried out an illegal act or mandated that appellee perform an action unrelated to a bargainable term or condition of employment. Instead, appellants argue that the arbitration panel committed what amounts to an error of law, as discussed below, in that the arbitration panel took PICA/Act 111 into consideration while resolving a PERA/Act 195 interest arbitration. An error of law alone is not proper grounds to vacate an arbitration award. Pa. State Corrections Officers Ass’n, 12A.3dat356.

To the extent that appellants argue the court erred in determining that the arbitration panel committed an error of law, this claim is without merit. PICA/Act 111 only applies to Act 111 arbitrations and not PERA/Act 195 arbitrations as here. Specifically, PICA/Act 111 states:

(k) EFFECT OF PLAN UPON CERTAIN ARBITRATION AWARDS.-

(l) After the approval by the authority of a financial plan submitted pursuant to this section, any determination of a board of arbitration established pursuant to the provisions of the act of June 24, 1968 (P.L. 237, No. Ill), referred to as the Policemen and Firemen Collective Bargaining Act, providing for an increase in wages or fringe benefits of any employee of an assisted city under the plan, in addition to considering any standard or factor required to be considered by applicable law, shall take into consideration and accord substantial weight to:
(i) the approved financial plan; and
(ii) the financial ability of the assisted city to pay the cost of such increase in wages or fringe benefits without adversely affecting levels of service.

53 PS §1270.209(k)(l). PERA/Act 195 has no such provision. Indeed, PERA/Act 195 provides the following:

Public employers shall not be required to bargain over matters of inherent managerial policy, which shall include but shall not be limited to such areas of discretion or policy as the functions and programs of the public employer, standards of services, its overall budget, utilization of technology, the organizational structure and selection and direction of personnel. Public employers, however, shall be required to meet and discuss on policy matters affecting wages, hours and terms and conditions of employment as well as the impact thereon upon request by public employe representatives.

43 P.S. §1101.702. As the court stated in its April 9, 2013 order denying appellants’ motion to vacate, the record is clear that the arbitration panel took the economic constraints of the city of Philadelphia into consideration pursuant to PICA/Act 111. Order entered by J. Tucker (04/04/2013). As such, the arbitration panel applied the incorrect law in the instant interest arbitration. The applicable statute, PERA/Act 195, did not require the Arbitration Panel to take economic constraints of the city into consideration. Therefore, the panel’s consideration of PICA/Act 111 economic constraints is a misapplication and error of law, which alone is not a proper ground upon which the court can vacate the arbitration award. Pa. State Corr. Officers Ass’n, 12 A.3d at 356.

d. Constitutional Deprivations

Third, appellant failed to show that the three-member arbitrationpanel committed any constitutional deprivations, namely a violation of substantive due process rights. The Supreme court of Pennsylvania has held that “the requirements of Article 1, Section 1 of the Pennsylvania Constitution are not distinguishable from those of the [Due Process Clause] of the 14th Amendment... [thus]...the same analysis [applies] to both claims.” Pa. Game Comm’n v. Marich, 666 A.2d 253, 255 n.6 (Pa. 1955)(citations omitted). To establish a substantive due process claim, a petitioner must prove that: (1) he or she was deprived of a protected property interest by state action; and (2) the state action was arbitrary and capricious. Nicholas v. Pa. State Univ., 227 F.3d 133, 139-40 (3d Cir. 2000); Sameric Corp. v. City of Philadelphia, 142 F.3d 582, 590 (3d Cir. 1998); Levine v. Com., Dept. of Educ., 468 A.2d 1216, 1218 (Pa. Cmwlth. 1984). In order to establish a property interest, a litigant must show that they have an enforceable expectation created either by statute or by contract. Barrett v. Ross Tp. Civil Service Com’n, 55 A.3d 550, 556 (Pa. Cmwlth. 2012); Pennsylvania Social Serv. Union, Local 668 v. Com., Dept. of Public Welfare, Office of Inspector General, 699 A.2d 807, 812 (Pa. Cmwlth. 1997)(citing Ins. Federation of Pennsylvania, Inc. v. Foster, 587 A.2d 865, appeal denied, 600 A.2d 956 (Pa. 1991)). Lastly, an error of law does not create a substantive due process claim. Sameric Corp., 142 F.3d at 592.

Here, appellants failed to establish a property interest in the arbitration panel’s decision to rely on PICA/Art 111 in its award. Specifically, although appellants state that “the panel majority’s professed reliance on the PICA Act, a law which does not apply to Act 195 Interest Arbitration, denied Local 159 fundamental fairness and substantial justice[],” such reliance does not amount to a deprivation of an enforceable expectation created either by statute or by contract. As stated above, the arbitration panel misapplied the law in this matter, which amounts to an error of law which is not sufficient to sustain a substantive due process claim.

IV. Conclusion

The court was well within its discretion to schedule one hearing to resolve both preliminary objections to a motion to vacate an arbitration award and the motion to vacate the arbitration award itself. The court properly denied appellant’s motion to vacate a PERA/Act 195 arbitration award under the narrow certiorari scope of review for vacating interest arbitration awards. Upon review of the motion to vacate arbitration, response and oral argument thereon, the court properly denied appellants motion to vacate arbitration award. Although the three-member arbitration panel improperly applied and relied on PICA/ Act 111 to fashion an interest arbitration agreement governed by PERA/Act 195, the arbitration panel’s act amounted to a mere error of law. Such error of law is not proper grounds for vacating an arbitration award in the Commonwealth of Pennsylvania.

      . The court notes that the union panel member, Bernard N. Katz, appears to be a named partner of the law firm representing appellants at the arbitration as well as before the court.