CAUGHEY v. BRIDGECREST ACCEPTANCE CORPORATION

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IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
PITTSBURGH DIVISION
MATHEW CAUGHEY, ON BEHALF
OF HIMSELF AND ALL OTHERS
SIMILARLY SITUATED,
Plaintiff,
vs.
BRIDGECREST ACCEPTANCE
CORPORATION, BRIDGECREST
CREDIT COMPANY, LLC,
Defendants.
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Civil Action No.
2:23-CV-00264-DSC-CBB
David S. Cercone
Senior United States District Judge
Christopher B. Brown
United States Magistrate Judge
REPORT AND RECOMMENDATION
ON ECF No. 49
Christopher B. Brown, United States Magistrate Judge.
I. 	Recommendation
This consumer protection class action was initiated by Plaintiff Mathew
Caughey (“Caughey”) against Defendants Bridgecrest Acceptance Corporation and
Bridgecrest Credit Company, LLC (“Defendants”) for allegedly charging and
collecting “pay-to-pay” fees and excess interest on a motor vehicle installment sales
contract in violation of Chapter 62 of Pennsylvania’s Consumer Credit Code
(“CCC”), 12 Pa. C.S. § 6201, et seq.1 After a Motion to Dismiss, Caughey’s only
remaining claim is for a violation of Pennsylvania’s Unfair Trade Practices and
1 	A prior version of this statute was codified at 69 P.S. § 601 et seq. as the Motor Vehicle Sales
Finance Act (“MVSFA”).
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Consumer Protection Law (“UTPCPL”), 73 P.S. §§ 201-1 et seq. ECF No. 14 at
Count I. The Court has subject matter jurisdiction under 28 U.S.C. § 1332.2
Pending before the Court is Defendants’ Motion for Judgment on the
Pleadings. ECF No. 49. The Motion is fully briefed and ripe for consideration. ECF
Nos. 49-50, 56-57.
For the reasons that follow, it is respectfully recommended:
• 	Defendants’ Motion for Judgment on the Pleadings based on
Caughey’s UTPCPL claim be denied as he has adequately alleged
deceptive conduct and justifiable reliance;
• 	Defendants’ Motion for Judgment on the Pleadings based on the gist of
the action doctrine be denied without prejudice to reassert once the
factual record is more developed.
II. 	Report
a. Factual and Procedural Background
Caughey, on behalf of himself and other Pennsylvanians, brings this putative
class action against Defendants for charging and collecting excess fees and interest
in connection with a motor vehicle installment sales contract in violation of Chapter
62 of the CCC. ECF No. 14 at ¶ 1.
On April 25, 2019, Caughey purchased a used vehicle from Carvana, LLC for
personal use.3 Id. at ¶ 19; ECF No. 14-1. He received financing for the vehicle
2 	Caughey and Defendants are citizens of different states and the amount in controversy
exceeds the jurisdictional threshold. See ECF Nos. 3, 26, 27.
3 	Carvana, LLC is not a party to this suit.
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pursuant to a written Retail Installment Contract and Security Agreement
(“RISC”). Id. at ¶ 21 (citing ECF No. 14-1). The RISC included a $15,278.43
amount financed and a $13,230.69 finance charge, both of which were to be repaid
over a 72-month period. Id. at ¶ 22. Caughey alleges that under the RISC, his
finance charge yielded a 23.28% APR and interest rate. Id. at ¶¶ 23, 28. Caughey
alleges this violated Chapter 62 of the CCC’s 21% APR cap on finance charges. Id.
at ¶ 13.
Caughey made at least twelve payments by phone to Defendants. Id. at ¶¶
25-26. He alleges that Defendants charged him a $3.95 “money transfer fee” for
each of these twelve payments. Id. at ¶ 27. He classifies this as a “pay-to-pay” fee
or a “money transfer fee,” and alleges this violates Chapter 62’s limits on what fees
can be charged. Id. at ¶ 29 (citing 12 Pa. C.S. § 6233). Caughey alleges Defendants
“knew or should have known it was impermissible to charge, collect, contract for, or
receive these fees and charges from Caughey,” and that Defendants do this
regularly as a “matter of policy or practice.” Id. at ¶¶ 31-32. Caughey also alleges
“Defendants represented that the interest, fees, and other charges that Caughey
and the class members paid were enforceable, even though those terms were not
enforceable.” Id. at ¶ 49.
Caughey seeks damages, attorneys’ fees, and costs from Defendants under
the UTPCPL. ECF No. 14 at Count I. Caughey is not, however, bringing any
claims under Chapter 62 of the CCC; rather Defendants’ alleged violations of
Chapter 62 form the basis of his UTPCPL claim.
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Defendants previously moved to dismiss Caughey’s Amended Complaint for
lack of standing and for failure to state a claim. ECF No. 18. This Court issued a
Report and Recommendation recommending that Defendants’ Motion to Dismiss be
granted in part and denied in part. ECF No. 30. The District Court adopted the
Report and Recommendation and, as a result, Caughey’s only remaining claim is his
UTPCPL claim. ECF No. 31. The Defendant’s have since filed an Answer, ECF No.
48, and, on the heels of doing so, filed the instant Motion for Judgment on the
Pleadings asking that Plaintiff’s remaining claim be dismissed with prejudice. ECF
No. 49.
b. Standard of Review – Fed. R. Civ. P. 12(c)
Federal Rule of Civil Procedure 12(c) provides “[a]fter the pleadings are
closed – but early enough not to delay trial – a party may move for judgment on the
pleadings.” Fed. R. Civ. P. 12(c). “The pleadings are closed after an answer is filed,
along with a reply to any additional claims asserted in the answer.” Isaac’s Deli,
Inc. v. State Auto Prop. and Cas. Ins. Co., 539 F. Supp. 3d 424, 428 (E.D. Pa. 2021)
(quoting Atiyeh v. Nat’l Fire Ins. Co. of Hartford, 742 F. Supp. 2d 591, 595 (E.D. Pa.
2010)).
Judgment on the pleadings is appropriate when “the movant clearly
establishes that no material issue of fact remains to be resolved and that he is
entitled to judgment as a matter of law.” Rosenau v. Unifund Corp., 539 F.3d 218,
221 (3d Cir. 2008) (citing Jablonski v. Pan Am. World Airways, Inc., 863 F.2d 289,
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290 (3d Cir. 1988)); see also Zimmerman v. Corbett, 873 F.3d 414, 417 (3d Cir. 2017)
(quoting Sikirica v. Nationwide Ins. Co., 416 F.3d 214, 220 (3d Cir. 2005)).
When deciding a motion for judgment on the pleadings, the Court considers
the pleadings and exhibits attached thereto, matters of public record, and
“undisputedly authentic documents attached to the motion for judgment on the
pleadings if plaintiffs’ claims are based on the documents.” Atiyeh, 742 F. Supp. 2d
at 595; see also Wolfington v. Reconstructive Orthopaedic Assocs. II PC, 935 F.3d
187, 195 (3d Cir. 2019). The allegations “presented in the pleadings and the
inferences to be drawn therefrom” must be accepted and construed “in the light
most favorable to the nonmoving party.” Rosenau, 539 F.3d at 221.
“A motion for judgment on the pleadings based on the defense that the
plaintiff has failed to state a claim is analyzed under the same standards that apply
to a Rule 12(b)(6) motion.” Zimmerman v. Corbett, 873 F.3d 414, 417 (3d Cir. 2017)
(quoting Revell v. Port Auth. of New York, New Jersey, 598 F.3d 128, 134 (3d Cir.
2010). “To state a plausible claim for relief – and to avoid a judgment on the
pleadings – the non-moving party’s factual allegations must ‘raise a right to relief
above the speculative level,’ . . . and must do more than ‘plead[ ] facts that are
‘merely consistent with’ a defendant’s liability.’” PNC Bank, N.A. v. Axis Ins. Co.,
720 F. Supp. 3d 367, 373 (W.D. Pa. 2024) (quoting Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007), Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). “In ascertaining
whether the party moving for a judgment on the pleadings has met its burden, the
Court must give the non-moving party ‘the benefit of every favorable inference.’”
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PNC Bank, N.A., 720 F. Supp. 3d at 373 (quoting Malleus v. George, 641 F.3d 560,
563 (3d Cir. 2011), as amended June 6, 2011) (in turn quoting Kulwicki v. Dawson,
969 F.2d 1454, 1462 (3d Cir. 1992)). “If a comparison of the averments in the
competing pleadings reveals a material dispute of fact, judgment on the pleadings
must be denied.” Capitol Specialty Ins. Corp. v. West View Apartments, Inc., No. 21-
11675, 2021 WL 6101663, at *1 (11th Cir. Dec. 22, 2021) (per curiam) (citing Perez
v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th Cir. 2014)).
With this standard of review in mind, the Court now turns to Defendants’
Motion for Judgment on the Pleadings.
c. 	Discussion
Defendants move for judgment on the pleadings on Caughey’s remaining
claim, a violation of the UTPCPL. ECF No. 50. In doing so, Defendants first argue
that Caughey failed to allege two elements of a UTPCPL claim and should therefore
be dismissed. Id. at 8-11. Defendants next argue that his claim should be
dismissed with prejudice under the gist of the action doctrine. Id. at 11-12. These
arguments are addressed in turn.
i. 	UPTCPL Claim
Defendants first move for judgment on the pleadings and argue that Caughey
has not adequately alleged two elements of a UTPCPL claim, namely deceptive
conduct and justifiable reliance. ECF No. 50 at 8-11.
Caughey’s claim is that “Defendants’ unfair methods of competition and
unfair or deceptive acts or practices are declared unlawful” under the UTPCPL.
ECF No. 50. The claim itself is based on the catchall definition of “unfair methods
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of competition” and “unfair or deceptive acts or practices” as set forth in the
UTPCPL. ECF No. 14 at ¶ 48. This catchall definition includes “fraudulent or
deceptive conduct which creates a likelihood of confusion or of misunderstanding.”
73 Pa. Cons. Stat. § 201-2(4)(xxi).
The UTPCPL “is to be liberally construed to effectuate its objective of
protecting the consumers of [Pennsylvania] from fraud and unfair or deceptive
business practices.” Seplow v. Closing Pro, Inc., 717 F. Supp. 3d 427, 435–36 (E.D.
Pa. 2024) (quoting Ash v. Cont'l Ins. Co., 932 A.2d 877, 881 (Pa. 2007)). “To bring a
private cause of action under the UTPCPL, a plaintiff must show that he justifiably
relied on the defendant's wrongful conduct or representation and that he suffered
harm as a result of that reliance.” Jaraczewski v. Equity Nat. Title & Closing Serv.,
No. 23-274, 2024 WL 3861248, at *5 (W.D. Pa. Aug. 19, 2024) (quoting Yocca v.
Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 438 (Pa. 2004)). Defendants argue
Caughey has failed to allege the elements of deceptive conduct and justifiable
reliance. ECF No. 50 at 8-11.
As set forth below, the Court finds that Caughey has sufficiently alleged
these elements and respectfully recommends that Defendants’ Motion for Judgment
on the Pleadings on these grounds be DENIED.
1. 	Fraudulent or Deceptive Conduct
Defendants first move for judgment on the pleadings, arguing Caughey’s
UTPCPL claim fails because he does not adequately allege Defendants made any
specific misrepresentation or other deceptive conduct. ECF No. 50 at 8-9.
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Defendants argue Caughey needs to allege a specific misrepresentation to bring a
claim under Federal Rules of Civil Procedure Rule 9(b)’s heightened pleading
standard for UTPCPL claims sounding in fraud.4 Id. Caughey responds that this
issue was already decided and the Court should not disturb its prior ruling
pursuant to the law of the case doctrine. ECF No. 56 at 7-8.
The Court agrees the issue of whether Caughey adequately pled the first
element of a UTPCPL claim has already been decided. In this Court’s Report and
Recommendation on Defendants’ Motion to Dismiss, the undersigned determined
the allegation that Defendants “represented that the interest, fees, and other
charges that Caughey and the class members paid were enforceable, even though
those terms were not enforceable” was sufficient to allege Defendants wrongful
conduct and recommended that Caughey be permitted to proceed with his UTPCPL
claim. ECF No. 30 at 13-14. This recommended was subsequently adopted by the
District Court. ECF No. 31. However, even if the Court had not already issued a
Report and Recommendation on this issue, Caughey has still adequately alleged the
first element of deceptive conduct.
An “unfair or deceptive practice” under the catch-all provision is defined as
“any . . . fraudulent or deceptive conduct which creates a likelihood of confusion or
of misunderstanding.” Catena v. NVR, Inc., No. 23-1642, 2024 WL 4003085, at *4
(3d Cir. Aug. 30, 2024) (citing 73 Pa. Stat. § 201-2(4)(xxi)). This includes both oral
4 	Pursuant to F.R.C.P. Rule 9(b), “[i]n alleging fraud or mistake, a party must state with
particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other
conditions of a person's mind may be alleged generally.”
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and written representations. Id. Additionally, a plaintiff may state a cause of
action under the UTPCPL “by satisfying the elements of common-law fraud or by
otherwise alleging deceptive conduct.” Vassalotti v. Wells Fargo Bank, N.A., 732 F.
Supp. 2d 503, 510 (E.D. Pa. 2010) (emphasis added).
Defendants argue Caughey is alleging a claim sounding in fraud, and his
claim should therefore be dismissed for failure to allege a specific misrepresentation
under Rule 9(b)’s heightened pleading standard. ECF No. 50 at 8-9.5 Defendants
urge the Court to apply the requirements of common law fraud – namely, that a
“plaintiff must plead a claim of a violation of the UTPCPL with the same specificity
as a claim for common-law fraud.” Grant v. Kingswood Apartments, No. 01-1523,
2001 WL 1178796, at *5 (E.D. Pa. Oct. 2, 2001). See also Coleman v.
Commonwealth Land Title Ins. Co., 684 F. Supp. 2d 595, 619 (E.D. Pa. 2010)
(stating common law fraud requires: “(1) a misrepresentation, (2) material to the
transaction, (3) made falsely, (4) with the intent of misleading another to rely on it,
5 	The cases Defendants cite for the proposition that a case must be dismissed when a plaintiff
fails to plead a specific misrepresentation are easily distinguished. See ECF No. 50 at 8-9. In
Kemezis v. Matthews, 394 F. App'x 956, 958 (3d Cir. 2010), the Court dismissed the Complaint
because plaintiffs failed to allege any sort of misrepresentation or “what, if anything, the defendants
had done or said,” which is not the case here as Caughey alleges Defendants misrepresented that the
fees were enforceable when they were not. See ECF No. 14 at ¶ 49. Next, in Jones v. GEICO Choice
Ins. Co., 617 F. Supp. 3d 275, 289 (E.D. Pa. 2022), aff'd sub nom. Berardi v. USAA Gen. Indem. Co.,
No. 22-2231, 2023 WL 4418219 (3d Cir. July 10, 2023), the Court found the plaintiffs did not actually
allege a deceptive act because they mistakenly alleged their insurance coverage was illusory when
the Court determined it was not illusory. Jones is inapplicable here as Caughey’s claim is not based
on any mistake of law – he is alleging Defendants made misrepresentations about the legality of the
fees and interest under Chapter 62 of the CCC. ECF No. 14 at ¶¶ 24-28; 49. Finally, in Rubenstein
v. Dovenmuehle Mortg., Inc., No. 09-721, 2009 WL 3467769, at *6 (E.D. Pa. Oct. 28, 2009), the Court
found that the plaintiffs did not allege deceptive conduct because the defendants’ actions did not
actually harm the plaintiffs. Here, Caughey has adequately alleged harm – overpaying, among other
things – that allegedly came from Defendants’ representations. ECF No. 14 at ¶¶ 32-35.
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(5) justifiable reliance resulted, and (6) injury was proximately caused by the
reliance”). However, in the Amended Complaint, Caughey alleges Defendants
engaged in “fraudulent or deceptive conduct” when they represented that the
interest and fees that Caughey paid were enforceable, even though those terms
were not enforceable. ECF No. 14 at ¶¶ 48-49 (emphasis added).
Under the catch-all provision, “a showing of deceptive activity, as opposed to
establishing the elements of a common law fraud claim, is sufficient to impose
liability.” Wilson v. Parisi, 549 F. Supp. 2d 637, 666 (M.D. Pa. 2008). To bring a
claim for deceptive conduct, a plaintiff must demonstrate that the “defendant made
a misrepresentation or engaged in deceptive conduct – conduct that is likely to
deceive a consumer acting reasonably under similar circumstances.” Ries v. Curtis,
No. 13-1400, 2013 WL 3196429, at *6 (E.D. Pa. June 25, 2013) (citing Sacks v. DJA
Auto., No. 12-284, 2013 WL 210248, at *11 (E.D. Pa. Jan. 18, 2013)). Plaintiffs do
not need to allege common law fraud and meet Rule 9(b)’s requirements if they are
alleging deceptive conduct. Seplow,717 F. Supp. 3d at 435–36.
A deceptive act is “the act of intentionally giving a false impression” or “a tort
arising from a false representation made knowingly or recklessly with the intent
that another person should detrimentally rely on it.” Wilson, 549 F. Supp. 2d at 666
(citing In re Patterson, 263 B.R. 82, 94 (Bankr. E.D. Pa. 2001)). Plaintiffs must
identify “the specific act, omission or misrepresentation ‘in order to demonstrate
that such confusion or misunderstanding was caused by certain acts or omissions on
the part of the Defendants.’” Doherty v. Allstate Indem. Co., No. 15-05165, 2016 WL
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5390638, at *6 (E.D. Pa. Sept. 27, 2016) (quoting Farmerie v. Kramer, No. 2071
WDA 2014, 2015 WL 6507844, at *9 (Pa. Super. Oct. 27, 2015)). See also Dukich v.
IKEA US Retail LLC, 343 F.R.D. 296, 304 (E.D. Pa. 2022) (same).
Caughey has identified the specific misrepresentations here – he alleges the
Defendants “represented that the interest, fees, and other charges that Caughey
and the class members paid were enforceable, even though those terms were not
enforceable,” and that Defendants “created a likelihood of confusion or
misunderstanding.” ECF No. 14 at ¶¶ 48-49. That is sufficient at this stage.
The United States District Court for the Eastern District of Pennsylvania has
found similar allegations of misrepresentations specific enough to survive to the
next stage in litigation. For example, while Caughey does not specify exactly when
and where the Defendants made those representations, the Court in Gidley v.
Allstate Ins. found an allegation by Plaintiff that the defendants made
misrepresentations at “material times,” without more detail on when and where, to
be sufficient to survive to discovery. Gidley v. Allstate Ins. Co., No. A. 09-3701, 2009
WL 4893567, at *5 (E.D. Pa. Dec. 17, 2009). Another example, in Fike v. Global
Pharma Healthcare, plaintiff’s allegations that the defendants “warranted and
represented that its [product] was safe and free of defects in materials and
manufacture and that they possessed safety features” were deemed sufficient to
allege deceptive conduct even though plaintiff did not identify or quote the specific
warranties or representations. Fike v. Glob. Pharma Healthcare Priv., Ltd., 741 F.
Supp. 3d 265, 278–79 (E.D. Pa. 2024).
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Defendants also argue that Caughey’s claim fails because he has not alleged
any misrepresentation by them, as opposed to Carvana, since the interest rates are
contained in the RISC between Caughey and Carvana. ECF No. 57 at 3. While the
point is taken, the Court is nonetheless unconvinced at this stage of the litigation.
In the Amended Complaint, Caughey does not say that the alleged
misrepresentations were exclusively contained in the four corners of the RISC. ECF
No. 14 at ¶¶ 48-49. Additionally, the terms of the pay-to-play fees are not in the
RISC and Defendants allegedly charged those fees “as a matter of policy or practice”
and only after the contract was executed. Id. at ¶ 31. Thus, it is not currently clear
when and where Defendants allegedly made the misrepresentations – and whether
those were written or oral – as such more discovery is needed. Defendants can
revisit this argument at a later stage.
Caughey’s allegations that Defendants allegedly misrepresented that the fees
and interest were enforceable are sufficient to allege deceptive conduct at this early
stage of litigation and Caughey has alleged enough to “raise the allegations above
the speculative level.” Ries, 2013 WL 3196429, at *7 (finding allegations of
potential misconduct sufficient to raise questions about whether the defendants
intentionally misled plaintiffs). While Caughey’s allegations are sufficient to
survive the present Motion, Caughey’s “burden will be much heavier on a motion for
summary judgment” and he will need to provide more detail about the alleged
misrepresentations. Gidley, 2009 WL 4893567, at *5.
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Accordingly, it is respectfully recommended that Defendants’ Motion for
Judgment on the Pleadings as to Caughey’s UTPCPL claim on the element of
deceptive conduct be DENIED.
2. 	Justifiable Reliance
Defendants next move for judgment on the pleadings, arguing Caughey’s
UTPCPL claim should be dismissed because he does not allege justifiable reliance.
ECF No. 50 at 10-11.
Plaintiffs “alleging violations of the UTPCPL must prove justifiable reliance.”
Francis v. Humana, No. 1:24-02017, 2025 WL 365687, at *4 (M.D. Pa. Jan. 31,
2025) (quoting Toy v. Metro. Life Ins. Co., 928 A.2d 186, 202 (Pa. 2007)). See also
See also Yocca, 854 A.2d at 438 (“To bring a private cause of action under the
UTPCPL, a plaintiff must show that he justifiably relied on the defendant's
wrongful conduct or representation and that he suffered harm as a result of that
reliance.”). The plaintiff “must prove justifiable reliance affirmatively,” it may not
be presumed. Hunt v. United States Tobacco Co., 538 F.3d 217, 227 (3d Cir. 2008).
Courts consider justifiable reliance a question for a fact-finder. Johnson v. MetLife
Bank, N.A., 883 F. Supp. 2d 542, 548-49 (E.D. Pa. 2012) (noting justifiable reliance
is a question of fact, depending on the parties’ circumstances and relationship). See
also Toy, 928 A.2d at 208 (“[J]ustifiable reliance is typically a question of fact for the
fact-finder to decide, and requires a consideration of the parties, their relationship,
and the circumstances surrounding their transaction”). Additionally, “the
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complaint must establish that, had the plaintiff known of the deceptive conduct, he
would have acted differently.” Francis, 2025 WL 365687, at *4.
Defendants argue Caughey does not sufficiently allege justifiable reliance
because he does not allege he would have acted differently but for Defendants’
allegedly deceptive conduct. ECF No. 50 at 11. Caughey responds he adequately
alleged justifiable reliance because under Seplow, “all he needed to allege was that
Defendants charged illegal “pay-to-play” fees and interest charges in excess of what
is permitted under Pennsylvania law, and that Caughey paid those charges.” ECF
No. 56 at 8 (citing Seplow, 717 F. Supp. 3d at 437).6
In the Amended Complaint, Caughey alleges Defendants acted deceptively
and represented the fees and interest they were charging him were the proper
amount under Pennsylvania law and enforceable when, in fact, they were not
enforceable. ECF No. 14 at ¶¶ 48-49. As a result, Caughey paid the fees and
interest relying on the veracity of Defendants’ representations, thinking the fees
and interest were what he actually owed for each billing cycle. Id. at ¶¶ 24-28, 31,
33. He has therefore alleged sufficient facts at this stage showing he justifiable
relied on Defendants’ alleged misrepresentations regarding the amounts due and
owed.
6 	Caughey also attaches a proposed Second Amended Complaint with additional allegations
related to justifiable reliance. ECF No. 56-1. However, as the operative Amended Complaint
sufficiently pleads justifiable reliance, the Court does not consider the allegations in the proposed
Second Amended Complaint. See also In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426
(3d Cir. 1997) (stating what when ruling on a motion for judgment on the pleadings, a court cannot
consider matters outside of the pleadings).
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In a recent case where a plaintiff alleged defendants’ deceptive conduct
induced him to pay an inflated fee, the United States District Court for the Middle
District of Pennsylvania found the allegations sufficient to demonstrate justifiable
reliance at the motion to dismiss stage. See Brannon v. Abstract Assocs. of
Lancaster, Inc., No. 1:23-01627, 2024 WL 3871752, at *6–7 (M.D. Pa. Aug. 19, 2024)
(citing Coleman, 684 F. Supp. 2d at 619 (finding justifiable reliance sufficiently pled
under the UTPCPL when a plaintiff was charged more than she owed since no
reasonable person would knowingly pay more for insurance than was owed)).
Likewise, as Caughey notes, the United States District Court for the Eastern
District of Pennsylvania found a plaintiff sufficiently pled justifiable reliance when
he alleged he paid a notary fee after defendants led the plaintiff to assume the
notary fee was bona fide and proper. Seplow, 717 F. Supp. 3d at 436. When
discussing class certification, the Court in Seplow went on to say that “each
consumer’s payment of an excessive fee necessarily demonstrates reliance on the
deception, as no consumer would willing pay an unlawful fee for which they
received no added benefit.” Id. at 437.
In their Reply, Defendants argue that Caughey misstates the holding in
Seplow and that payment of excessive fees does not necessarily satisfy the
requirement to allege justifiable reliance. ECF No. 57 at 4.7 The situation here,
7 	Defendants also argue that Caughey is essentially arguing an impermissible per se violation
of Chapter 62 of the CCC. ECF No. 57 at 4. Caughey, however, is not alleging a per se violation of
the CCC because his claim is based on Defendants’ alleged misstatements that the payments were
enforceable, not on the mere act of overcharging him. ECF No. 14 at ¶ 49. 	Defendants also argue
Seplow is inapplicable because it involved a motion to certify class. The fact that Seplow involved a
motion to dismiss all of plaintiff’s claims, or in the alternative to strike class allegations, does not
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however, involves more than just the payment of excessive fees. Caughey alleges he
only paid the fees after Defendants represented that the interest, fees, and other
charges that Caughey and the class members paid were enforceable. ECF No. 14 at
¶ 49. This situation tracks closely with those in Brannon and Seplow, where the
plaintiff paid the excessive fee, to their detriment, only after relying on defendants’
assurances that the fees were enforceable. Brannon, 2024 WL 3871752, at *6;
Seplow, 717 F. Supp. 3d at 436. As in Brannon and Seplow, Caughey has
sufficiently alleged justifiable reliance at this stage.
Accordingly, it is respectfully recommended that Defendants’ Motion for
Judgment on the Pleadings as to Caughey’s UTPCPL claim on the element of
justifiable reliance be DENIED as well.
ii. 	Gist of the Action Doctrine
Lastly, Defendants move for judgment on the pleadings under the gist of the
action doctrine, arguing that Caughey’s UTPCPL claim should be dismissed with
prejudice because his claim is rooted in contract. ECF No. 50 at 11-12; ECF No. 57
at 5-6.
The gist of the action doctrine “bars a claim that ‘although sounding in tort’ is
effectively a claim for ‘breach of its contractual obligations.’” Catena, 2024 WL
4003085, at *6 (quoting Dixon v. Nw. Mut., 146 A.3d 780, 788 (Pa. 2016)). The
Court of Appeals for the Third Circuit has adopted the Pennsylvania Supreme
make the case inapplicable and the Court notes the justifiable reliance as it relates to the UTPCPL
claim was decided at the motion to dismiss juncture. Seplow, 717 F. Supp. 3d at 436.
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Court’s test for applying the gist of the action doctrine set forth in Bruno v. Erie
Insurance Company:
If the facts of a particular claim establish that the duty breached is one
created by the parties by the terms of their contract—i.e., a specific
promise to do something that a party would not ordinarily have been
obligated to do but for the existence of the contract—then the claim is
to be viewed as one for breach of contract. If, however, the facts
establish that the claim involves the defendant's violation of a broader
social duty owed to all individuals, which is imposed by the law of torts
and, hence, exists regardless of the contract, then it must be regarded
as a tort.
Earl v. NVR, Inc., 990 F.3d 310, 315 (3d Cir. 2021) (quoting Bruno v. Erie Ins. Co.,
106 A.3d 48, 68 (Pa. 2014)).
In moving for judgment on the pleadings, Defendants characterize Caughey’s
claim narrowly and argue his entire UTPCPL claim arises from the RISC. ECF No.
50 at 11. Defendants further argue the “alleged misrepresentation would not exist
but for the RISC,” so the UTPCPL claim sounds in contract and must be dismissed.
Id. at 12. See also ECF No. 57 at 5-6.
Caughey, on the other hand, argues the fees and excess interest are deceptive
because the charges themselves are unlawful under the CCC and not because the
terms of the RISC were breached. ECF No. 56 at 10-14. He further argues the gist
of the action doctrine does not bar his claim because it is a duty based on the CCC, a
statute, rather than a violation of a duty imposed by contract. Id. at 12.
The first question is whether Caughey’s UTPCPL claim sounds in contract or
tort. Catena, 2024 WL 4003085, at *7. Notably, “the mere existence of a contract
between two parties does not ipso facto, classify a claim . . . as one for breach of
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contract.” Bruno v. Roundhouse Cycles Inc., 750 F. Supp. 3d 501, 512 (W.D. Pa.
2024) (quoting Bruno, 106 A.3d at 114). Instead, “if a tort claim is alleged based
upon actions of a contracting party not governed by contractual obligations, the
claim is not viewed as an action based upon the underlying contract itself because
the contract was merely a mechanism which established the relationship between
the parties during which a tort was committed.” Id. at 512.
It is premature to decide whether Caughey’s UTPCPL claim sounds in
contract or in tort. It is not clear at this stage in the proceeding exactly when and
where “Defendants represented that the interest, fees, and other charges that
Caughey and the class members paid were enforceable, even though those terms
were not enforceable.” ECF No. 14 at ¶ 49. For example, it is not clear when and
where Defendants allegedly made the representations related to the pay-to-play
fees, as the terms of those fees are not contained in the RISC and were charged only
after the contract was executed. See, e.g., id. at ¶ 31. More discovery is needed to
determine the interplay between these alleged representations and the parties’
contractual obligations. There is insufficient information before the Court at this
stage to adopt either Defendants’ or Caughey’s interpretation. Frank C. Pollara
Grp., LLC v. Ocean View Inv. Holding, LLC, 784 F.3d 177, 186 (3d Cir. 2015)
(“Thus, ‘[a]pplication of [the gist of the action] doctrine frequently requires courts to
engage in a factually intensive inquiry as to the nature of a plaintiff's claims’”)
(quoting Addie v. Kjaer, 737 F.3d 854, 868 (3d Cir. 2013)). See also Grear v. U.S.
Bank, No. 1:21-237, 2022 WL 4450400, at *4 (W.D. Pa. Sept. 23, 2022) (“[T]he
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Court's evaluation of the ‘gist of the action’ doctrine is better reserved for the
summary stage, when the factual record is more developed”); Boyer v. Clearfield
Cnty. Indus. Dev. Auth., No. 3:19-152, 2021 WL 2402005, at *15 (W.D. Pa. June 11,
2021) (stating that “district courts in this Circuit commonly . . . defer evaluating a
gist of the action challenge until the summary judgment stage if necessary”); H
Contractors, LLC v. E.J.H. Construction, Inc., No. 16-368, 2017 WL 658240, at *5-6
(W.D. Pa. Feb. 16, 2017) (denying motion to dismiss on “gist of the action” grounds,
but allowing the movant to “revisit this issue after the close of discovery”).
Accordingly, it is respectfully recommended that Defendants’ Motion for
Judgment on the Pleadings based on the gist of the action doctrine be denied
without prejudice to reassert upon a completed factual record.
III. 	Conclusion
For the reasons stated herein, it is respectfully recommended that
Defendants’ Motion for Judgment on the Pleadings (ECF No. 49) based on
Caughey’s UTPCPL claim be denied as he has adequately alleged deceptive conduct
and justifiable reliance. It is also respectfully recommended that Defendants’
Motion for Judgment on the Pleadings based on the gist of the action doctrine be
denied without prejudice to reassert once the factual record is more developed.
In accordance with 28 U.S.C. § 636(b)(1) and Fed. R. Civ. P. 72, the parties
may seek review by the District Court by filing Objections to the Report and
Recommendation within fourteen (14) days of the filing of this Report and
Recommendation, or by November 12, 2025. Any party opposing the objections
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shall have fourteen (14) days from the date of service of Objections to respond
thereto. See Fed. R. Civ. P. 72(b)(2). Failure to file timely objections will constitute
a waiver of appellate rights. See Brightwell v. Lehman, 637 F.3d 187, 193 n.7 (3d
Cir. 2011).
DATED this 29th day of October, 2025.
Respectfully submitted:
s/Christopher B. Brown
United States Magistrate Judge
CC: 	Hon. David S. Cercone
Senior United States District Judge
All counsel of record, via ECF
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