935 F.3d 187 (3rd Cir. 2019), 17-3500, Wolfington v. Reconstructive Orthopaedic Associates II PC
|Docket Nº:||17-3500, 18-1182|
|Citation:||935 F.3d 187, 104 Fed.R.Serv.3d 856|
|Opinion Judge:||FUENTES, Circuit Judge|
|Party Name:||Andrew WOLFINGTON, individually and on behalf of all others similarly situated, Appellant v. RECONSTRUCTIVE ORTHOPAEDIC ASSOCIATES II PC, a/k/a the Rothman Institute; Rothman Institute; Does 1 through 10, inclusive|
|Attorney:||Peter H. LeVan, Jr. [ARGUED], LeVan Law Group, Counsel for Appellant Laura D. Ruccolo [ARGUED], Capehart Scatchard, Counsel for Appellee|
|Judge Panel:||Before: KRAUSE, COWEN, and FUENTES, Circuit Judges|
|Case Date:||August 20, 2019|
|Court:||United States Courts of Appeals, Court of Appeals for the Third Circuit|
Argued: October 23, 2018
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
[Copyrighted Material Omitted]
On Appeal from the United States District Court for the Eastern District of Pennsylvania (E.D. Pa. No.: 16-cv-04935) District Judge: Michael M. Baylson
Peter H. LeVan, Jr. [ARGUED], LeVan Law Group, Counsel for Appellant
Laura D. Ruccolo [ARGUED], Capehart Scatchard, Counsel for Appellee
Before: KRAUSE, COWEN, and FUENTES, Circuit Judges
FUENTES, Circuit Judge
This is an appeal from the District Courts entry of judgment on the pleadings against appellant-plaintiff Andrew Wolfington on his claim under the Truth in Lending Act1 ("the Act"). Wolfingtons claim under the Act stems from reconstructive knee surgery he received from defendant-appellee Reconstructive Orthopaedic Associates II PC, also known as the Rothman Institute ("Rothman"). Wolfington alleged that Rothman failed to provide disclosures required by the Act when it
permitted him to pay his deductible in monthly installments following surgery. The District Court entered judgment on Wolfingtons claim because it determined he had failed to allege that credit had been extended to him in a "written agreement," as required by the Acts implementing regulation, Regulation Z.2 After entering judgment, the District Court also sua sponte imposed sanctions on Wolfingtons counsel. Because we agree that Wolfington failed to adequately allege the existence of a written agreement, but conclude that counsels investigation and conduct were not unreasonable, we affirm in part and reverse in part.
Because the District Court granted judgment on the pleadings,3 we accept the well-pled allegations in Wolfingtons Complaint as true. Those allegations may be summarized as follows:
A. Wolfingtons Surgery
Wolfington agreed on January 12, 2016 to have surgery provided by Rothman, scheduled for January 21, 2016. As part of the January 12 agreement, Wolfington signed a document titled "Financial Policy."4 The Policy provided that Wolfington agreed to pay any outstanding deductible not covered by his insurance before his surgery took place. The day before Wolfingtons surgery, however, Wolfingtons father informed Rothman that Wolfington was unable to pay his deductible, then around $2,000. Rothman orally agreed to accept a $200 "initial payment" by Wolfington and to permit him to pay the remaining deductible in monthly installments of $100 (the "January 20 Agreement").5 Wolfington received two emails on January 20, one confirming the $200 payment and the other confirming the establishment of the payment plan and listing the credit card to which payments would be charged. The Complaint quotes both emails in full. Wolfington had surgery as scheduled, but subsequently failed to make any further payments on his outstanding deductible.
B. Proceedings in the District Court
Wolfington filed a putative class action in the District Court, alleging that Rothman had extended him credit in the January 20 Agreement, subject to the Truth in Lending Act, but failed to provide disclosures required by the Act. The Complaint set forth two claims, including one for violation of the Act. His second claim, for violation of the Electronic Funds Transfer Act, was later withdrawn. Rothman filed an Answer with counterclaims for breach of contract and a Motion for Judgment on the Pleadings, which included a copy of the Financial Policy, along with other documents.
Prior to issuing its decision on Rothmans Motion, the District Court conducted a six-minute telephone conference with the parties on the record on December 14, 2016. During that telephone conference, the District Court addressed two factual issues with the parties. First, the District Court confirmed that Wolfington had made no payments pursuant to the January 20 Agreement. Second, the District
Court asked if there was "anything in writing confirming this arrangement?"7 Wolfingtons counsel replied, "[T]he only information that we have is the confirmation receipts with respect to an online bill payment plan ... that indicated the $100 a month payments." Defense counsel then stated, "Thats correct.... Theres no signed agreement by the plaintiff to make the payments."9
Eight days after the telephone conference, the District Court granted Rothmans Motion. In granting the Motion, the District Court first determined that it could properly rely on the Financial Policy, reasoning that the allegations in the Complaint referenced and relied on it. The District Court also relied on counsels statement at oral argument, stating, "[U]nder the concession of Plaintiffs counsel ... there is no longer any dispute as to any material fact, establishing that there was no finance charge and no written agreement between the parties."10 Based on that evidence, the District Court concluded that Wolfington failed to allege the existence of a written agreement for the extension of credit.
In its memorandum, the District Court framed its decision as a judgment on the pleadings under Rule 12(c). The District Court analyzed Wolfingtons claims only under the standard for Rule 12(c) and provided no substantive analysis of the standard for summary judgment under Rule 56. Pursuant to Rule 12(c), the District Court declined to consider "certain documents" Rothman attached to its Motion in order to avoid "converting the instant Motion into one for summary judgment."11 After determining it would grant judgment on the pleadings, however, the District Court stated, "Alternatively, Defendants motion will be converted into one for summary judgment, pursuant to Rule 12(d), which will also be granted."12 Wolfington moved for reconsideration under Rule 59(e), which the District Court denied.
In granting Rothmans Motion, the District Court also sua sponte initiated sanctions proceedings under Rule 11 against Wolfingtons counsel. Prior to imposing sanctions, the District Court accepted declarations from Wolfingtons counsel, conducted a hearing, and received supplemental briefing. The District Court concluded that sanctions in the form of attorneys fees were appropriate, reasoning that counsel could have reasonably discovered both the lack of a written agreement and Wolfingtons failure to make any payments on the deductible before filing the Complaint. Ultimately, the District Court imposed sanctions under Rule 11 of $38,447.91. The sanctions were imposed solely for Wolfingtons claim under the Truth in Lending Act, and not for the withdrawn claim under the Electronic Funds Transfer Act, although the District Court stated it retained the authority to impose sanctions on the withdrawn claim.
On appeal, Wolfington challenges the District Courts entry of judgment on the pleadings under Rule 12(c) and imposition of sanctions under Rule 11. For the reasons below, we conclude that Wolfington has failed to adequately allege a violation of the Truth in Lending Act, but that his counsels investigation and conduct were not unreasonable. We therefore affirm the entry of judgment on the pleadings and reverse the imposition of sanctions.
A. Truth in Lending Act
First, Wolfington challenges the District Courts entry of judgment on the pleadings on his claim under the Truth in Lending Act. In particular, Wolfington contends that (1) the District Court erred under Rule 12(c) by considering material outside the pleadings— namely, counsels purported concession that there was no written agreement— and, (2) he has adequately alleged (a) the extension of credit, (b) the consummation of a credit transaction, and (c) a written agreement. Although we conclude the District Court erred in considering material outside the pleadings, we affirm the entry of judgment on the pleadings because Wolfington has failed to allege the existence of a written agreement, as required by Regulation Z.
1. Applicable Law
(a) Judgment on the Pleadings
A motion for judgment on the pleadings under Rule 12(c) "is analyzed under the same standards that apply to a Rule 12(b)(6) motion."14 Consequently, the court must "view the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the nonmoving party," and may not grant the motion "unless the...
To continue readingFREE SIGN UP