2:23-cv-00264•CAUGHEY v. BRIDGECREST ACCEPTANCE CORPORATION
Testo completo
1 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. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) 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”). Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 1 of 20
2 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. Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 2 of 20
3 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. Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 3 of 20
4 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, Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 4 of 20
5 290 (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.’” Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 5 of 20
6 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 Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 6 of 20
7 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. Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 7 of 20
8 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.” Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 8 of 20
9 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. Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 9 of 20
10 (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 Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 10 of 20
11 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). Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 11 of 20
12 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. Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 12 of 20
13 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 Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 13 of 20
14 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). Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 14 of 20
15 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 Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 15 of 20
16 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. Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 16 of 20
17 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 Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 17 of 20
18 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 Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 18 of 20
19 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 Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 19 of 20
20 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 Case 2:23-cv-00264-DSC-CBB Document 60 Filed 10/29/25 Page 20 of 20
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