Opinion
Civil Action 23-3628
02-15-2024
BRIAN SEPLOW, individually and on behalf of those similarly situated, v. CLOSING PRO, INC., doing business as CLOSINGPRO, and BRENDAN NOLAN
MEMORANDUM
GERALD AUSTIN McHUGH UNITED STATES DISTRICT JUDGE
Pennsylvania has adopted a uniform statute that authorizes its Department of State to set the fees that may be charged by notaries public. Plaintiff in this action alleges that a real estate services firm, involved in the transfer of title for a property he purchased, charged him substantially more for notary services than the law allows. He seeks to recover on behalf of himself and all other consumers who used the Defendants' services. Defendants now move to dismiss all of Plaintiff's claims, or failing that, to strike the class allegations. I agree that Pennsylvania's notary law does not create a private right of action, so Plaintiff's direct statutory claim will be dismissed. But Plaintiff states a claim under the Unfair Trade Practices and Consumer Protection Law, as well as a claim for unjust enrichment, and his class allegations survive at this stage of the litigation.
I. Relevant Factual Background
The facts of this case are straightforward. In 2022, Plaintiff Brian Seplow purchased a property in Pottstown, Pennsylvania. Compl. ¶ 17 (ECF 1). He used ClosingPro, a Pennsylvania business, to assist him with the administrative “closing” process. Id. ¶¶ 3, 17. ClosingPro itemized its costs to Seplow in a “Closing Disclosure” form, and based on the form, it charged $50 to Seplow for notary services. Id. ¶ 17. According to Seplow, “the only notarial service performed by
ClosingPro's notary public was the acknowledgment of Seplow's signature” in two places. Id. ¶¶ 19-20. Seplow claims that the $50 notary fee exceeded what ClosingPro could legally charge under Pennsylvania law. Id. ¶ 34. He further alleges that ClosingPro and its president, Brendan Nolan, maintained a policy of illegally overcharging clients for notary services. Id. ¶¶ 21, 23.
Seplow claims that Defendants violated Pennsylvania's Revised Uniform Law on Notarial Acts (PA RULONA) by charging more for notarial services than allowed by the Department of State. While the fee schedule appears to permit a maximum charge of $5 per notarized signature, Seplow pleads that Defendants exceeded this maximum by charging $50 to notarize two signatures. 4 Pa. Code § 161.1 (setting a $5 limit for “executing acknowledgements”).
Seplow brings this putative class action under the Class Action Fairness Act of 2005. He alleges three counts against ClosingPro and Nolan, on behalf of himself and those similarly situated: (1) a violation of PA RULONA, (2) unjust enrichment, and (3) a violation of Pennsylvania's Unfair Trade Practices and Consumer Protection Law (UTPCPL). Defendants have moved to dismiss all counts, or, in the alternative, to strike the class allegations from the Complaint.
II. Legal Standard
Motions to dismiss under Federal Rule of Civil Procedure 12(b)(6) are governed by the well-established standard set forth in Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir. 2009).
III. Discussion
A. PA RULONA does not create a private right of action.
Count I of the Complaint alleges a violation of Pennsylvania's Revised Uniform Law on Notarial Acts (PA RULONA). 57 Pa. Cons. Stat. § 301 et seq. The question of whether private individuals can bring suit under the statute appears to be one of first impression. After consideration of the parties' arguments, I conclude that PA RULONA does not afford a private right of action.
Pending motions in at least four other federal cases raise this same issue. Brannon v. Abstract Assocs. of Lancaster, Inc., et al., filed, No. 23-1627 (M.D. Pa. Oct. 2, 2023); Ortiz v. Keystone Premier Settlement Servs. LLC, et al., filed, No. 23-1509 (M.D. Pa. Sept. 12, 2023); Smith, et al. v. Radian Settlement Servs., Inc., filed, No. 23-1652 (M.D. Pa. Oct. 4, 2023); Jaraczewski, et al. v. Equity Nat'l Title & Closing Servs., et al., filed, No. 23-274 (W.D. Pa. Sept. 25, 2023).
In 2013, Pennsylvania became the fourth state to adopt the 2010 Revised Uniform Law on Notarial Acts, a model law created by the Uniform Law Commission. Unif. L. Comm'n, Law on Notarial Acts, Revised. PA RULONA, which differs only slightly from the model law, provides comprehensive standards and processes for Pennsylvania notaries public. 57 Pa. Cons. Stat. § 301 et seq. The law also grants certain authority to the Pennsylvania Department of State, including: (1) the power to investigate and penalize notarial misconduct, id. § 323, and (2) the power to create a schedule of maximum fees that notaries may charge for their services, id. § 329.1.
Accessible at https://www.uniformlaws.org/committees/community-home?communitykey=e5350d2e-df77-4dfd-8cf0-eecf41cc09f1.
Seplow claims that Defendants violated PA RULONA by exceeding the five-dollar cap on fees for “executing acknowledgements.” Whatever the merits of Seplow's allegations, the defense is correct that he can only maintain a statutory claim under PA RULONA if the law authorizes a private right of action. “To determine whether an explicit or implied private right of action exists under a particular [Pennsylvania] statute, we must examine the language of the statute and analyze the legislative intent in enacting the statute.” Palmiter v. Commw. Health Sys., Inc., 260 A.3d 967, 973 (Pa. Super. Ct. 2021). The analysis must begin with the text of PA RULONA. Seplow points to Section 323 as the basis for a private right of action. This section mostly details the Department of State's powers to investigate and sanction notaries. Sub-section (c) then provides the following:
Other remedies. -- The authority of the department [of state] under this section does not prevent a person from seeking and obtaining other criminal or civil remedies provided by law.57 Pa. Cons. Stat. § 323(c).
On its face, this language does not suffice to create a private right of action. Under a natural reading, this provision provides only that the Department of State's enforcement powers under PA RULONA are not exclusive. If anything, it supports a conclusion that private individuals seeking to enforce provisions of the statute must look to remedies provided by other laws, especially because all the specific remedies and powers it enumerates are explicitly reserved to the Department of State. See, e.g., 57 Pa. Cons. Stat. § 323(a) (“The department may deny, refuse to renew, revoke, suspend, reprimand or impose a condition ”); id. § 323(a.1) (“The department may impose an administrative penalty ....”); id. § 323(d)(1) (“The department may issue a subpoena ”); id. § 323(e) (“The department may initiate civil proceedings ”).
Of the states that have adopted the model RULONA in some form, it appears from the Court's research that none have construed subsection (c) as creating a private right of action. And at least three states, wishing to create private statutory rights of action, added explicit language to the model law to that effect. Pennsylvania did not. More insight is gained from the drafters' explanatory comment to the model law, which omits any suggestion of a private right of action through subsection (c):
Seplow contends that the Idaho Supreme Court recently recognized a private right of action based upon the same RULONA language at issue here, 616 Inc. v. MAE Props., LLC, 524 P.3d 889 (Idaho 2023), and further argues that the Pennsylvania statute must be construed the same way. See 1 Pa. Const. Stat. § 1927 (“Statutes uniform with those of other states shall be interpreted and construed to effect their general purpose to make uniform the laws of those states which enact them.”). But I do not read the Idaho decision so expansively. Although the private plaintiff there succeeded on a RULONA claim, the parties never disputed whether a right of action existed. The Idaho Supreme Court considered unrelated issues on appeal and offered no substantive analysis of this question.
See Colo. Rev. Stat. § 24-21-531(2) (“[A notary public is] liable to the persons involved for all damages proximately caused by the notary's official misconduct.”); Or. Rev. Stat. § 194.405(1) (“A person injured [by notarial misconduct] may bring an individual action in an appropriate court to enjoin the violation and may also recover actual damages or $200, whichever is greater.”); W.Va. Code § 39-4-32(a) (“A notary public is liable to the persons involved for all damages proximately caused by the notary's official misconduct.”).
Subsection (c) provides that the fact that a commissioning officer or agency has the authority to deny, refuse to renew, suspend, revoke or impose a condition on a commission does not prevent additional relief provided by law. Either the commissioning officer or agency or a person aggrieved by the action of a notary public may seek appropriate relief, whether the relief is civil or criminal.Nat'l Conf. of Comms. on Unif. State L., Revised Uniform Law on Notarial Acts at 51 (Nov. 15, 2010) (emphasis added). This comment further supports the conclusion that a private individual's relief for a violation of the act must be found in other laws.
Accessible at https://www.uniformlaws.org/viewdocument/archive-committee?CommunityKey=e5350d2e-df77-4dfd-8cf0-eecf41cc09f1&tab=librarydocuments.
Lastly, there is no evidence to suggest that the Pennsylvania General Assembly meant to imply a private right of action under PA RULONA. See Palmiter, 260 A.3d at 973 (explaining that without clear statutory language, Pennsylvania courts “look to the intent of the General Assembly to determine whether there is an implied right of action”); accord Transamerica Mortg. Advisors, Inc. v. Lewis, 444 U.S. 11, 15-18 (1979). The parties even seem to agree that the legislative history does not point in either direction. Compare Def.'s Br. at 7-8 (ECF 11) (citing remarks from the Pennsylvania House and Senate to claim there is “no indication of legislative intent to create a private right of action under the RULONA.”), with Pl.'s Br. at 8 (ECF 13) (“[T]here is no meaningful floor debate or other reliable legislative history to indicate a legislative intent to deny a private right of action.”). Given the statutory language, I cannot construe silence in the legislative history as indicating an intent on the part of the Pennsylvania legislature to create a private remedy through the statute.
I therefore hold that PA RULONA contains no private right of action and will dismiss Seplow's claim under the statute. But that does not end the inquiry given that § 323(c) expressly acknowledges a private individual's right to seek other “civil remedies provided by law.”
B. Plaintiff states a claim for unjust enrichment against the Defendants.
Pennsylvania defines unjust enrichment as “the retention of a benefit conferred by another, without offering compensation, in circumstances where compensation is reasonably expected, and for which the beneficiary must make restitution.” Roethlein v. Portnoff L. Assocs., Ltd., 81 A.3d 816, 825 n.8 (Pa. 2013). To prevail on an unjust enrichment claim, a plaintiff must show that: (1) the plaintiff conferred a benefit on the defendant, (2) the defendant received the benefit, and (3) the defendant accepted the benefit under circumstances that make it inequitable for the defendant to retain the benefit without paying value for it. Karden Constr. Servs., Inc. v. D'Amico, 219 A.3d 619, 628 (Pa. Super. Ct. 2019) (citations omitted).
An unjust enrichment action is based in equity. The Pennsylvania Supreme Court has described it as an action “which sounds in quasi-contract or contract implied in law.” Sevast v. Kakouras, 915 A.2d 1147, 1153 n.7 (Pa. 2007). “Quasi-contracts, or contracts implied in law, are to be distinguished from express contracts or contracts implied in fact. Unlike true contracts, quasi-contracts are not based on the apparent intention of the parties to undertake the performances in question, nor are they promises. They are obligations created by law for reasons of justice.” Schott v. Westinghouse Elec. Corp., 259 A.2d 443, 449 (Pa. 1969) (citations and quotations omitted).
Unjust enrichment claims are often brought “as an alternative to a breach of contract claim,” but they can also be brought “based on unlawful or improper conduct established by an underlying claim, such as fraud.” Whitaker v. Herr Foods, Inc., 198 F.Supp.3d 476, 492 (E.D. Pa. 2016); accord Zafarana v. Pfizer, Inc., 724 F.Supp.2d 545, 561 (E.D. Pa. 2010); Lisowski v. Henry Thayer Co., 501 F.Supp.3d 316, 338-39 (W.D. Pa. 2020).
Here, Plaintiff alleges that Defendants deliberately overcharged for services regulated by law. It bears emphasis that a notary who provides services is not simply engaged in a private commercial transaction. The Pennsylvania Supreme Court has characterized notaries as “public officers” who perform “official acts.” Commw. v. U.S. Fid. & Guar. Co., 73 A.2d 422, 425 (Pa. 1950). And in a case applying New Jersey law, the Third Circuit held that “[a] notary is a public officer and owes a duty to the public to discharge his or her functions with diligence.” Villanueva v. Brown, 103 F.3d 1128, 1137 (3d Cir. 1997). The RULONA Prefatory Note by the National Conference of Commissions on Uniform State Laws describes the model law as seeking “to provide integrity in the process of performing notarial acts.” Nat'l Conf. of Comms. on Unif. State L., Revised Uniform Law on Notarial Acts at 1 (Nov. 15, 2010). Given the purpose of RULONA, the quasi-public role of notaries, and the fact that any services they render are a function of having been commissioned by the Commonwealth, there would seem to be an ample equitable basis to impose a responsibility on their part to comply with the law “for reasons of justice.”
Accessible at https://www.uniformlaws.org/viewdocument/archive-committee?CommunityKey=e5350d2e-df77-4dfd-8cf0-eecf41cc09f1&tab=librarydocuments.
Defendants place great emphasis on Tripicchio v. UPS Store, Inc., No. 21-14512, 2023 WL 3182915 (D.N.J. Apr. 30, 2023), where the court dismissed a claim for unjust enrichment. Its rationale was that the “[defendants provided a service at an agreed upon price - that is, each party received their expected benefit. [The p]laintiff fail[ed] to cite any authority supporting the notion that a transaction for services at a fixed price gives rise to a cause of action for unjust enrichment where those services were sufficiently rendered.” Id. at *9. I find this reasoning hard to accept where, as alleged here, the purportedly “agreed upon price” incorporated an unlawful overcharge, of which one party - a party exercising authority conferred by statute - was aware, and the other was not. I therefore decline to follow Tripicchio.
Defendants' attempt to invoke the “voluntary payment doctrine” suffers from a similar conceptual weakness. That doctrine provides that when a person “voluntarily and without fraud or duress pays money to another with full knowledge of the facts, the money paid cannot be recovered.” Williams v. Enter. Holdings, Inc., No. 12-5531, 2013 WL 1158508, at *2 (E.D. Pa. Mar. 20, 2013). Plaintiff here contends he had no awareness of the unlawful nature of the notary services charge, so unless discovery reveals facts to the contrary, a voluntary payment defense lacks merit.
Additionally, as Plaintiff cogently observes, this is an affirmative defense providing an inappropriate basis on which to dismiss the claim. Parsons v. City of Phila., No. 13-955, 2014 WL 6973024, at *2-3 (E.D. Pa. Dec. 9, 2014); see also Wurtz v. Rawlings Co., LLC, No. 12-1182, 2014 WL 4961422, at *6 (E.D.N.Y. Oct. 3, 2014) (“The voluntary payment doctrine is an affirmative defense, and, therefore, its applicability must be apparent on the face of the complaint to warrant dismissal under Rule 12(b)(6).”).
The facts that support a UTPCPL claim - deceptive overcharging for notary services -separately suffice as the basis for an unjust enrichment claim. Compl. ¶¶ 65, 68-70.
This count can proceed against Defendant Nolan as well. The Complaint alleges that Mr. Nolan, as president of the company, “personally and actively participated in the establishment of a company policy of charging a fee for notary public service[s] higher than the statutory maximum and, therefore, he is individually liable for damages . . . caused by ClosingPro's unjust collection of excessive fees.” Compl. ¶ 66. This allegation is sufficient to state a claim for unjust enrichment against Nolan. See Wicks v. Milzoco Builders, Inc., 470 A.2d 86, 90 (Pa. 1983) (“[A]n officer of a corporation who takes part in the commission of a tort by the corporation is personally liable therefor ....”) (citations omitted). Mr. Nolan may well prevail at summary judgment, but he does not prevail under Rule 12 given the allegations in the Complaint.
Pi Plaintiff states a claim under the UTPCPL.
Plaintiff alleges that Defendants violated the “catch-all provision” of Pennsylvania's Unfair Trade Practices and Consumer Protection Law (UTPCPL), which generally prohibits “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.” Ash v. Cont'l Ins. Co., 932 A.2d 877, 881 (Pa. 2007); see also Bennett v. A.T. Masterpiece Homes at Broadsprings, LLC, 40 A.3d 145, 154 (Pa. Super. Ct. 2012) (recognizing a lower pleading standard under the UTPCPL catch-all provision than for common law fraud). “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.” Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d 425, 438 (Pa. 2004); accord Hunt v. U.S. Tobacco Co., 538 F.3d 217, 224 (3d Cir. 2008). For pleading purposes, the complaint must establish that, had the plaintiff known of the deceptive conduct, he would have acted differently. See Hunt, 538 F.3d at 227.
Plaintiff pleads that: “The Defendants by their conduct [led] Seplow to assume the $50 notary fee was bona fide and proper .... [He] relied on Defendants to, and assumed Defendants would, follow Pennsylvania law in providing notarial services .... Seplow paid the $50 notary fee without objection and thereby relied on Defendants' misrepresentation.” Compl. ¶¶ 28-29, 31. These allegations are plausible and suffice to show justifiable reliance for purposes of the UTPCPL. See Coleman v. Commw. Land Title Ins. Co., 684 F.Supp.2d 595, 619 (E.D. Pa. 2010) (Slomsky, J.) (“Plaintiffs allege sufficient facts of justifiable reliance at this stage by pleading that no Plaintiff would have knowingly paid a premium for title insurance that was higher than the premium that was actually due and owing.”) (quotations omitted).
Defendants argue that the Complaint does not plausibly show Seplow's justifiable reliance because he fails to allege that, had he known the notary fees exceeded the legal limit, he would not have gone forward with closing on his home. Def.'s Br. at 14-15. But this artificially constricts the choices Seplow had. Plaintiff has squarely pleaded he would have objected if he was aware of the overcharge, and such objection could plausibly take many forms.
In the Court's experience, most real estate closings involve a reconciliation of various costs and charges at the settlement table, and where consensus is not reached, funds are sometimes reserved in escrow.
Defendants, in their reply brief, also suggest that even if they overcharged for notary fees, “the UTPCPL does not provide a cause of action merely for overcharging.” Def.'s Reply at 6 (ECF 15). But the catch-all provision of the UTPCPL is meant to encompass a broad range of deceptive behavior on which a consumer relies to his detriment, and I have no hesitation that charging a fee higher than the law allows while exercising a public commission falls within the scope of § 201-2(4)(xxi).
D. Defendants fail to meet the high bar to strike the Complaint's class action allegations.
Finally, Defendants move to strike Seplow's class action allegations. As both parties acknowledge, class allegations are rarely struck prior to the class certification stage. This is because, “[a]s a practical matter, the court's determination [on class certification] usually should be predicated on more information than the complaint itself affords. Thus, courts frequently have ruled that discovery relating to the issue whether a class action is appropriate needs to be undertaken before deciding whether to allow the action to proceed on a class basis.” 5C Wright, Miller & Kane, Fed. Prac. & Proc. Civ. § 1785.3 (3d ed.); see also Ehrhart v. Synthes, No. 71237, 2007 WL 4591276, at *5 (D.N.J. Dec. 28, 2007) (“Decisions from our sister courts (and courts in a number of other jurisdictions) have made clear that dismissal of class allegations at [the motion to dismiss] stage should be done rarely and that the better course is to deny such a motion because the shape and form of a class action evolves only through the process of discovery.”) (quotations omitted). Accordingly, the defense faces a high bar.
As to unjust enrichment, Defendants principally rely upon Grandalski v. Quest Diagnostics Inc., 767 F.3d 175, 185 (3d Cir. 2014), where the Third Circuit held that class certification was properly denied in a case where the plaintiff alleged that a medical laboratory routinely charged patients more than was contractually permitted for a variety of different tests. Individualized determinations were necessarily required there, as various procedures were involved, and the plaintiff conceded that some patients had later received refunds or adjustments. But these kinds of individualized distinctions are not so apparent here. On the record before me, it has been alleged that a Department of State regulation fixes the maximum notary fee in every instance at five dollars per signature, and a credible argument can be made that each time a consumer was overcharged, the Defendants were unjustly enriched by definition. The plethora of other decisions Defendants cite simply underscore that class certification requires a precise analysis of the facts. And to the extent that the proposed class is overbroad, that is also a subject to be addressed at the class certification stage. Discovery may reveal insurmountable obstacles for Plaintiff, but it is premature at this stage to rule on whether the unjust enrichment claim is amenable to class certification. See Landau v. Viridian Energy PA LLC, 223 F.Supp.3d 401, 422 (E.D. Pa. 2016) (McHugh, J.).
As to the UTPCPL claim, Defendants urge me to conclude that claims brought under the catch-all provision are inherently unfit for class certification due to Pennsylvania's requirement that plaintiffs prove their justifiable reliance. Def.'s Br. at 24. As a general rule, reliance may not be presumed, Hunt, 538 F.3d at 227 , but I construe the Complaint as alleging that each consumer's payment of an excessive fee necessarily demonstrates reliance on the deception, as no consumer would willingly pay an unlawful fee for which they received no added benefit. In addition, Pennsylvania courts have already recognized one exception to the requirement to prove justifiable reliance, where there is a fiduciary relationship. See Debbs v. Chrysler Corp., 810 A.2d 137, 157 (Pa. Super. Ct. 2002). It remains to be seen at the class certification stage whether the official nature of the functions performed by notaries has some bearing upon the need to prove reliance, and what evidence would suffice as proof. In any case, even if Plaintiff's burden of establishing commonality proves difficult, he is entitled to an opportunity to meet it. “To rule on the motion to strike at this stage would risk eviscerating the class certification process as a whole.” Whitaker v. Herr Foods, Inc., 198 F.Supp.3d 476, 498 (E.D. Pa. 2016).
IV. Conclusion
For the reasons set forth above, Defendants' motion to dismiss will be granted in part and denied in part. The PA RULONA claim will be dismissed, but the remaining claims - including the class claims - will survive. An appropriate order follows.