Johnson v. Green Tree Consumer Discount Company et al

1 US Bank, improperly named as U.S. Bank Trust, N.A., is the only remaining defendant.
The Complaint was dismissed as to Defendant Green Tree Consumer Discount Company by
Order dated October 4, 2005.
UNITED S TATES B ANKRUPTCY COURT
FOR T HE E ASTERN DISTRICT O F PENNSYLVANIA
In re 	: 	Chapter 13
:
RODNEY J. JOHNSON, 	: 	Bankruptcy No. 04-35404DWS
:
Debtor. 	:
:
RODNEY J. JOHNSON, 	: 	Adversary No. 05-0341
:
Plaintiff, 	:
:
v. 	:
:
GREEN TREE CONSUMER DISCOUNT 	:
COMPANY, f/k/a Conseco Finance Service :
Corporation, U.S. BANK TRUST N.A. as 	:
Trustee for Conseco Finance Home Equity 	:
Loan Trust 2001-C, 	:
:
Defendants. 	:
MEMORANDUM OPINION
BY: 	DIANE WEISS SIGMUND, Chief Bankruptcy Judge
Before the court is the Motion for Summary Judgment (the “Motion”) of defendant
U.S. Bank, N.A., as Trustee for Conseco Finance Home Equity Loan Trust 2001-C (“US
Bank”).1 For the reasons stated herein, the Motion is granted.
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2 To the extent that some documents on this record are not supported by affidavit, neither
party has raised an objection. “As is true with other material introduced on a summary judgment
motion, uncertified or otherwise inadmissible documents may be considered by the court if not
challenged.” 10A Charles A.Wright, Arthur R. Miller & Mary K. Kane, Federal Practice and
Procedure §2722, at 384 (1998). Accord Johnson v. United States Postal Service, 64 F.3d 233,
237 (6th Cir. 1995) (ruling that the “failure to object to evidentiary material submitted in support
of a summary judgment motion constitutes a waiver of those objections.”); H. Sand & Co., Inc.
v. Airtemp Corporation, 934 F.2d 450, 454-55 (2d Cir. 1991) (Rule 56 does not require parties to
authenticate documents “where appellee did not challenge the authenticity of the documents in
the district court.”); Dautremont v. Broadlawns Hospital, 827 F.2d 291, 294-95 (8th Cir. 1987)
(affirming summary judgment where appellant failed to object in district court to its
consideration of documents not in compliance with Rule 56 and failed to demonstrate that
district court’s consideration of documents constituted reversible error); Giovacchini v. Perrine
(In re Giovacchini), 1995 WL 80102, at *3 n.1 (E.D. Pa. Feb. 27, 1995) (citing Federal Practice
and Procedure §2722) (holding that unauthenticated medical reports would be considered in
ruling on motion for summary judgment since no objection was raised thereto).
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FACTUAL AND PROCEDURAL BACKGROUND2
On July 16, 2001 Debtor/Plaintiff Rodney Johnson (“Debtor”) entered into a loan
transaction with Conseco Finance Discount Company (“Conseco”) for the principal amount
of $58,149.03 with an interest rate of 11.5% (the “Refinance Loan”). 	Joint Pretrial
Statement, Statement of Uncontested Facts (“Uncontested Facts”) ¶ 5. The Refinance Loan
paid off an existing mortgage on Debtor’s home, a car loan, credit card debt, and a
preexisting loan to Conseco in the amount of $5,500. Id.; HUD Settlement Sheet, Exhibit
C to the Motion.
The sequence of events leading up to the Refinance Loan is not entirely clear on this
record and would not likely be clarified at trial. Debtor is the only witness identified on the
Joint Pretrial Statement with knowledge of the facts surrounding the Refinance Loan. At his
deposition he testified that old injuries and medication he was taking have impeded his
memory. 	Deposition of Rodney Johnson (“Johnson Dep.”) 	at 11. 	Consistent with his
admission, Debtor’s recollection of his interactions with Conseco was spotty. He could not
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3 While the documents pertaining to the original window loan were discussed at Debtor’s
deposition, they were not placed into the summary judgment record. Id. at 37.
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identify persons with whom he spoke and he appeared confused with respect to which loan
transaction he was discussing.
It appears from the questions of counsel at Debtor’s deposition that Debtor originally
financed the purchase of windows from his home on January 9, 2001 (the “Window Loan”). 3
Id. at 31-33, 35-37. Debtor evidenced no independent recollection of this fact and indeed did
not realize until that moment that Conseco rather than Sears financed that purchase. Id. at
31. While he remembers having a telephone discussion with someone from Conseco after
purchasing his windows he could not pinpoint the date of his discussion. Once his counsel
showed him the Window Loan documents and told him they were dated January 9, Debtor
said Conseco contacted him 	“not too long” after that but in any case no more than six
months later. Id. at 37-38. Debtor did not provide details as to the substance of the telephone
discussion other than “he said that they can give me a better loan to pay for the windows.
Because that’s all I wanted to get done, was just pay for the windows.” Id. at 33.
To further add to Debtor’s confusion, he was shown documents relating to a loan
application with Conseco on or about January 31, 2001 that he appeared to have cancelled
before it went to a closing (the “Aborted Loan”). Johnson Dep. at 72-76, 83-89. Debtor had
absolutely no recollection of that transaction though he verified his signature on the
documents, which were not included in this summary judgment record. Id. Neither party’s
counsel elicited testimony from Debtor specifying that his telephone discussion with Conseco
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4 While the identity of the closing agent is unclear, the parties agree that it was not a
representative of US Bank and that US Bank was not involved in the origination of the
Refinance Loan. Uncontested Facts ¶¶ 26-27. Debtor apparently possesses the business card of
an individual from Conseco named Roddy Gaymon, not included in the summary judgment
record. Johnson Dep. at 58. However, Debtor cannot state with any degree of certainty that
Gaymon was the closing agent or the person he spoke to over the phone. Johnson Dep. at 27-29;
Plaintiff’s Response to Defendant’s First Set of Interrogatories (“Pls. Interrog.”) No. 1.
Debtor’s memorandum asserts that the persons at the closing were Debtor and a Edward J.
Ratagan. However, the cited deposition page makes no mention of Ratagan, nor did I see any
mention of such a person in several readings of the entire transcript.
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was with respect to the Refinance Loan as opposed to the Aborted Loan. Debtor’s testimony
makes clear that he simply cannot remember. Id.
Nevertheless, the parties have stipulated that Debtor understood Conseco was
conditioning the Refinance Loan on his agreement to refinance his first mortgage,
notwithstanding that he only wanted to pay off the Window Loan. Knowing this, Debtor
agreed to proceed with the Refinance Loan. Undisputed Facts ¶¶ 12-14.
Closing for the Refinance Loan took place on July 16, 2001 at approximately 7:00
p.m. at Debtor’s home. 	Only Debtor and an unidentified closing agent were present. 4
Uncontested Facts ¶ ¶ 5, 22. Debtor was presented with numerous documents to sign, though
he has no recollection of what those documents were. In any case, Debtor alleges that he
cannot read, and that he cannot write anything other than his name. For the purposes of the
Motion, US Bank assumes this assertion to be true. However, Debtor also admits that he did
not disclose his illiteracy either to the Conseco representative he spoke to on the phone or the
closing agent who showed up at his home, explaining that he was too embarrassed to do so.
Johnson Dep. at 26-29. Nor did he enlist any family member or friend to attend the closing
to help him as he has done in the past. 	Uncontested Facts ¶¶ 23-25; Johnson Dep. at 25-26.
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5 The other insurance options bear either a typewritten “x” in the “do not want” box or a
typed “n/a”.
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Every time the closing agent presented a document for signature Debtor would ask what he
was signing. 	The closing agent would simply answer each time, “it’s for the loan.” Pls.
Interrog. No. 3; Johnson Dep at 27-28.
There is no disagreement that among those documents presented to Debtor were a
Truth-In-Lending Disclosures statement (the “TILA Statement”) and a HUD Settlement
Statement. Exhibits C and F to Motion; Exhibit B to Complaint. At the bottom of the TILA
Statement is a section which informs the borrower that “Credit life insurance and credit
disability insurance is not required to obtain credit and will not be provided unless I sign and
agree to pay the additional costs.” 	Exhibit E to Motion. 	Underneath this disclosure are
boxes where the borrower has the option of checking “I do” or “I do not” want various types
of credit insurance. 	The “I do” box for credit life insurance bears a typewritten “x,”
indicating that such insurance is desired.5 Debtor verified his signature underneath this box.
Johnson Dep. at 55. Debtor was charged a premium of $2,149.03 for credit life insurance.
HUD Settlement Sheet, Exhibit C to the Motion. Debtor has no recollection of someone
from Conseco asking him if he wanted insurance. Pls. Interrog. No. 11.
The 	summary 	judgment 	record 	also 	contains 	two 	identical 	documents 	titled
“Application for Credit Insurance” dated July 16, 2001 and bearing Debtor’s signature.
Johnson Dep. at 77-80; Exhibit G to Debtor’s Mem. Each application has five questions
with boxes to check off “yes” or “no” as to whether the applicant: (1) is 65 years or older;
(2)-(3) has been treated for various illnesses/conditions; (4) is working less than 30 hours per
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week or 9 months out of the year; and (5) is receiving disability benefits or has consented to
medical treatment that would disable the applicant. The applications indicate that if Question
Nos. 1 and 2 are answered “yes” life coverage must be denied. Debtor has no recollection
of being asked these questions by the closing agent. Johnson Dep. at 61.
The two applications diverge in how they were answered and treated by the insurer.
The first application bears a handwritten “x” in each question’s “YES” box and bears the
stamps “Received- Jul 19 2001- WSC” and “DECLINED.” This version of the application
was subsequently mailed back to Debtor. 	Johnson Dep. at 77. 	The second application,
which appears to have been produced from the records of the loan servicer (Bates Stamp
GT0019), bears a handwritten “x” in each question’s “NO” box. This application bears no
stamps indicating denial.
On or about August 1, 2001 the Refinance Loan was assigned to the Conseco Finance
Equity Loan Trust 2001-C, for which US Bank is the trustee. Affidavit of Dominc Baglio
¶¶ 3-4, Exhibit D to Motion. 	The parties agree that US Bank was not involved in the
origination of the Refinance Loan, that no employee of US Bank was present at the loan
closing, and that Debtor did not rely on any statements by or actions of US Bank.
Uncontested Facts ¶¶ 26-28. Rather, as discussed below, Debtor relies upon principles of
law to extend liability to US Bank for Conseco’s conduct.
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DISCUSSION
A motion for summary judgment is governed by Federal Rules of Civil Procedure 56,
applicable in this proceeding pursuant to Federal Rule of Bankruptcy 7056. 	Summary
judgment, 	“shall 	be 	rendered 	forthwith 	if 	the 	pleadings, 	depositions, 	answers 	to
interrogatories and admissions on file, and affidavits, if any, show that there is no genuine
issue of material fact and that the moving party is entitled to judgment as a matter of law.”
Fed.R.Civ.P. 56(c).
The party moving for summary judgment must overcome the initial burden of
demonstrating the absence of a material question of fact. Celotex v. Catrett, 477 U.S. 317,
325 (1986). 	The substantive law will determine which facts are material. 	Anderson v.
Liberty Lobby, 477 U.S. 242, 248 (1986). A court’s function is not to weigh the evidence
and determine the truth of the matter, but to determine whether there is a genuine issue for
trial. Id. at 255. A court must find that the motion alleges facts which, if proven at trial,
would require a directed verdict. 6 J. Moore, Moore's Federal Practice, ¶ 56.26 (2d ed. 1988).
If so, the respondent "must set forth specific facts showing there is a genuine issue for trial,"
and may not "rest upon the mere allegations or denials of the pleading." Fed. R. Civ P. 56(e).
If the non-movant’s evidence “is merely colorable, or is not significantly probative, summary
judgement may be granted. Anderson, 477 U.S. at 250. 	The absence of a genuine issue for
trial is evident where the record, taken as a whole, could not lead a rational trier of fact to
find for the non-moving party. Mashusita Electrical Industrial Co. v. Zenith Radio Corp.,
475 U.S. 574, 586 (1986).
A. Truth in Lending Claim (Counts I and II)
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Debtor’s claims under these counts are based upon the federal Truth in Lending Act
(“TILA”), 15 U.S.C. § 1601 et seq. I therefore begin with some statutory background. TILA
is a federal statute governing the terms and conditions of consumer credit. Its purpose is to
aid unsophisticated consumers lest they be easily misled as to the costs of financing.
Shepeard v. Quality Siding & Window Factory, 730 F.Supp. 1295, 1299 (D. Del.1990). To
that end, TILA and the regulations promulgated thereunder require certain disclosure of
credit terms so that the consumer will be able to compare more readily the various credit
terms available to him and avoid the uniformed use of credit. Id.
In 15 U.S.C. § 1604, Congress authorized the Federal Reserve Board to “prescribe
regulations to carry out the purposes” of TILA. 	Pursuant to this authority, the Federal
Reserve Board promulgated “Regulation Z,” which is memorialized in 12 C.F.R. § 226.
Rossman v. Fleet Bank (R.I.) National Association, 280 F.3d 384, 389 (3d Cir.2002). The
Board “also published extensive ‘Official Staff Interpretations.’ 12 C.F.R. Pt. 226, Supp. I.”
Id. The Supreme Court has instructed that “[c]ourts should honor that congressional choice.
Thus, while not abdicating their ultimate judicial responsibility to determine the law. . .
judges ought to refrain from substituting their own interstitial lawmaking for that of the
Federal Reserve, so long as the latter's lawmaking is not irrational.” 	Ford Motor Credit
Company v. Milhollin, 444 U.S. 555, 568, 100 S.Ct. 790 (1980). See also Anderson Bros.
Ford v. Valencia, 452 U.S. 205, 219, 101 S.Ct. 2266 (1981) (“absent some obvious
repugnance to the statute, ‘Regulation Z’ should be accepted by the courts, as should the
Board's interpretation of its own regulation”). 	In analyzing the Debtor's contentions, my
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guideposts are therefore the statutory provisions of TILA as well as Regulation Z and the
Official Staff Interpretations.
Pursuant to TILA, a lender must disclose, as a “finance charge,” all of those charges
“payable directly or indirectly by the person to whom the credit is extended, and imposed
directly or indirectly by the creditor as an incident to the extension of credit.. . .” 15 U.S.C.
§ 1605(a). The statute mandates the inclusion of credit life insurance as part of the “finance
charge,” subject to the following exception:
Charges 	or 	premiums 	for 	credit 	life, 	accident, 	or 	health
insurance written in connection with any consumer credit
transaction shall be included in the finance charges unless
(1) the coverage of the debtor by the insurance is not a factor in
the approval by the creditor of the extension of credit, and this
fact is clearly disclosed in writing to the person applying for or
obtaining the extension of credit; and
(2) in order to obtain the insurance in connection with the
extension of credit, the person to whom the credit is extended
must give specific affirmative written indication of his desire to
do so after written disclosure to him of the cost thereof.
15 U.S.C. § 1605(b); accord 12 CFR 226.4(d).
The Official Staff Interpretations further clarify:
Credit life, accident, health, or loss-of-income insurance must be
voluntary in order for the premium or charges to be excluded
from the finance charge. Whether the insurance is in fact
required or optional is a factual question. If the insurance is
required, the premiums must be included in the finance charge,
whether the insurance is purchased from the creditor or from a
third party.
12 C.F.R. § 226, Supp I., ¶ 226.4(d)5.
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6 US Bank also raises certain defenses it asserts are available to it as an assignee of the
Refinance Loan. Because I find no TILA or HOEPA violation with respect to the original
transaction, I need not address whether US Bank is insulated by assignee status.
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The Home Ownership and Equity Protection Act, 15 U.S.C. § 1639 (“HOEPA”), is
an amendment to TILA and requires that with regard to certain mortgages (a “HOEPA
Mortgage”), additional disclosures must be made beyond those that are required by TILA
generally. 15 U.S.C. § 1639 (“HOEPA Disclosures”). See also Solar v. Millenium Financial,
Inc., 2002 WL 1019047, at *3 n. 4 (E.D. Pa.2002). 	A HOEPA Mortgage is a “mortgage
referred to in section 1602(aa) of this title.” 15 U.S.C. § 1639(a)(1). That section in turn
defines a HOEPA Mortgage as one which, inter alia, the “points and fees” exceed 8% of the
loan amount. 15 U.S.C. § 1602(aa)(1)(B). Points and fees include “all items included in the
finance charge.” 15 U.S.C. § 1602(aa)(4)(A).
The parties agree that the credit insurance premium was not included in the “finance
charge” for the Refinance Loan. 	The parties further agree that, absent inclusion of the
insurance premium, the points and fees for the Refinance Loan do not cross the 8% threshold
for a HOEPA Mortgage. The dispositive issue therefore is whether Debtor voluntarily chose
to purchase the insurance so as to properly exclude it from the finance charge for TILA and
HOEPA purposes. 6
The TILA Statement provided to Debtor at the closing bears a clear declaration that
insurance is not a requirement for the Refinance Loan, i.e that it is voluntary. Debtor cites
to Milbourne v. Mid-Penn Consumer Discount Co. (In re Milbourne), 108 B.R. 522 (Bankr.
E.D. Pa. 1989), which held that, notwithstanding such a signed declaration, TILA liability
can be found where there is evidence that a lender “affirmatively represented, by words or
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by conduct, that insurance was in fact required.” Id. at 541. Debtor asserts that Conseco and
its closing agent represented that the insurance was required by: (1) failing to ask him if he
wanted insurance during the application process or at closing; (2) simply presenting without
explanation the TILA Statement with its pre-selected insurance option and the insurance
applications, and (3) responding “it’s for the loan”each time Debtor questioned a document.
The lender in Milbourne, like Conseco, also included insurance as part of the loan
transaction notwithstanding that the borrowers did not affirmatively request it. 	And like
Conseco, that lender’s agents did not explain insurance options to the borrowers. The court
stated:
We recognize that borrowers are often overwhelmed when they
are in the process of making loans and that they are therefore
very susceptible to suggestions from lenders regarding inclusion
of specific terms which are “recommended” by the lenders. . . .
As the court stated in Mims, supra, 426 F.Supp. at 632, “it is
natural for anyone, $$$ who wants to borrow money to be
unwilling 	to 	displease 	the 	lender 	over 	a 	small 	matter.”
Nevertheless, 	the 	. 	. 	. 	borrower's 	assumption 	that 	credit
insurance is required does not establish that the lender is
requiring the borrower to purchase insurance. Id.
108 B.R. at 542. In Mims v. Dixie Finance Corp., 426 F. Supp. 627, (D.C. Ga. 1976), upon
which Milbourne relies, the court held that the borrower could not prove her case “unless she
asks whether the insurance is required and is told that it is.” Id. at 631.
The borrower in Maya v. Fleet Consumer Discount Co. (In re Maya), 1990 WL 17351
(Bank. E.D. Pa. 1990), like the Debtor here, was presented with a TILA disclosure statement
with a declaration that such insurance was not a requirement, but with elections to purchase
insurance prefaced with X’s . The borrower signed on the X’s, though he was not advised
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about and was totally unaware that he had purchased the insurance. Id. at *2. The court
rejected the borrower’s assertion that the lender affirmatively represented that insurance was
required:
“Debtor, by his own admission . . . merely passively signed a
portion of the D/S stating that he would purchase the credit life
and disability insurance offered, which was written directly
under a portion of the form stating that these purchases were not
required . . . There is no claim that the Defendant’s agents
actively misled the Debtor or his wife . . . nor is there any
extrinsic evidence that the insurance was required.
Id. at *3. 	At best the record before me reflects that Conseco was “pushing” or
“recommending” insurance by pre-checking the option to purchase on the TILA Statement
and including an insurance application. 	This does not rise to the level of an affirmative
statement or act indicating that insurance is in fact required.
I am disturbed by the two versions of the insurance application with conflicting
answers to the medical questions. There is no testimony to rebut Debtor’s assertion that the
application questions were not asked of him. The only implication is that Conseco or its
agents submitted the applications to the insurer without Debtor’s input either before or after
his signature was obtained on the applications. 	While the applications certainly raise a
question as to possible insurance fraud on the part of Conseco, that is a matter outside the
jurisdiction of this Court. However, under Milbourne and Maya the applications do not rise
to the level of an “affirmative representation” that insurance was a requirement.
I am not persuaded otherwise by the closing agent’s general response “it’s for the
loan” to Debtor’s questioning of the TILA Statement and insurance applications. Debtor
could not read, so he could not have been questioning the agent about insurance. Rather it
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appears Debtor was generally asking “what is this?” before signing each document. With
respect to the TILA Statement, the closing agent’s answer was not inaccurate. The TILA
Statement was “for the loan.” Indeed, it is a federally mandated form that must be included
as part of the transaction. While the agent could have been more specific with regard to the
insurance application, once debtor signed the TILA Statement’s acknowledgment that he
wanted insurance, the insurance applications could be construed as “for the loan.” 	More
importantly, I simply do not find the statement “it’s for the loan,” to rise to the level of an
“affirmative representation” that insurance is required.
The clear distinguishing fact here is Debtor’s illiteracy. He could not read the loan
documents, including the declaration that insurance was not required. 	His theory is that,
because of his illiteracy, presenting the insurance applications and the TILA Statement
containing the pre-selected insurance option, along with the closing agent’s standard
response “it’s for the loan” rises to an “affirmative representation” that insurance was
required for the loan. However, this argument rests on the premise that Conseco knew, or
at least should have known that Debtor could not read. 	The record before me lacks any
evidence to support such a premise.
Debtor admits that he never revealed his illiteracy to Conseco during his phone
conversations or at the closing. To the extent that Debtor would like the Court to infer that
the closing agent must have realized Debtor’s illiteracy from Debtor’s questioning of each
document, the best evidence on this issue is the Debtor himself who admits that he did not
believe the agent knew of his illiteracy. 	Johnson Dep. at 28-29. 	This latter admission is
significant, as Debtor is the only trial witness identified in the parties’ Joint Pretrial
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Statement who was present at the closing and during the telephone discussion. It is clear that
a trial would elicit no further information as to Conseco’s knowledge of Debtor’s illiteracy
or any further fact surrounding the transaction.
In short, the record before me, taken as a whole, could not lead a rational trier of fact
to find that Conseco affirmatively represented, by word or deed, that credit insurance was
required. The insurance premium therefore was not required to be included in the calculation
of the finance charge. 	As such, no TILA disclosure violation can be proven and the
Refinance Loan is not a HOEPA Mortgage subject to the additional disclosure requirements.
Summary judgment shall be entered in favor of US Bank on Counts I and II.
B. State Consumer Law Claim (Count III)
In Count III of the complaint, Debtor alleges violations of the Pennsylvania Unfair
Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq., sometimes referred
to as “UDAP” because the statute prohibits 	“unfair and deceptive acts and practices.”
Barber v. Fairbanks Capital Corp. (In re Barber), 266 B.R. 309, 320-21 (Bankr. E.D. Pa.
2001). Debtor’s memorandum clarifies that he is alleging a violation of § 201-2(4)(v), which
prohibits “representing that goods or services have sponsorship, approval, characteristics,
ingredients, uses, benefits or quantities that they do not have or that a person has a
sponsorship, approval, status, affiliation or connection that he does not have,” and the more
general “catch-all” provision, § 201-2(4)(xxi), which prohibits “engaging in any other
fraudulent 	or 	deceptive 	conduct 	which 	creates 	a 	likelihood 	of 	confusion 	or 	of
misunderstanding.” Debtor’s Mem. at 25-26. The UDAP provides a private cause of action
to any person “who purchases or leases goods or services primarily for personal, family or
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7 Section 1641(d) states in part that an assignee of a HOEPA Mortgage “shall be subject
to all claims and defenses with respect to that mortgage that the consumer could assert against
the creditor of the mortgage.”
8 This should not be confused with this Court’s holding in In re Patterson, 263 B.R. 82,
91-92 (Bankr. E.D. Pa. 2001), that common law fraud need not be proven to show a violation of
the catch-all provision, § 201-2(4)(xxi). Yocca addresses § 201-9.2, which governs a private
cause of action for violations of the prohibited conduct enunciated in § 201-2(4).
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household purposes and thereby suffers any ascertainable loss of money or property, real or
personal, as a result of the use or employment by any person of a method, act or practice
declared unlawful by section 3 of this act.” 73 P.S. § 201-9.2.
As an initial matter, US Bank correctly notes that it could not have engaged in any
prohibited conduct because it was not involved in the loan transaction. Uncontested Facts
¶¶ 26-28. Debtor appears to rely upon a provision of HOEPA, 15 U.S.C. § 1641(d),7 which
has been held to provide liability for other state law claims, including UDAP, against an
assignee of a HOEPA Mortgage. 	See Barber, 266 B.R. at 319-20. 	However, as the
Refinance Loan is not a HOEPA Mortgage, § 1641(d) cannot be used to assert UDAP
liability against US Bank as an assignee.
Assuming that US Bank could be held liable under UDAP for the conduct of Conseco
and its agent, Debtor agrees that his reliance upon Conseco’s conduct is an essential element
for a UDAP claim. Debtor’s Mem. at 27. More accurately, “‘[t]o bring a private cause of
action under the [UDAP], 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.’”
Tran v. Metropolitan Life Ins. Co., 408 F.3d 130 (3d Cir. 2005) (emphasis in original)
(quoting Yocca v. Pittsburgh Steelers Sports, Inc., 578 Pa. 479, 854 A.2d 425, 438 (2004)). 8
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Debtor asserts that “it was the representation [over the telephone] that the [Refinance Loan]
would be better than what he already had that induced him to go along with the [Refinance
Loan].” Debtor’s Mem. at 25-26; Johnson Dep. at 33 (“They said . . . that they can give me
a better loan to pay for the windows”).
Preliminarily, Debtor’s testimony makes clear that he cannot pinpoint the date of this
telephone conversation beyond the six month period following January 9, 2001. 	His
deposition further indicates the Aborted Loan transaction took place on or about January 31,
2001. 	The Refinance Loan took place on July 16. 	Debtor simply cannot prove that the
alleged telephone discussion with Conseco was with respect to the Refinance Loan as
opposed to the Aborted Loan.
Even if the telephone conversation could be connected to the Refinance Loan, “[a]
misrepresentation, however, must be distinguished from puffery.” Berkebile v. Brantly
Helicopter Corp., 462 Pa. 83, 103, 337 A.2d 893, 903 (1975). Puffery is “an exaggeration
or overstatement expressed in broad, vague and commendatory language.” Castrol Inc. v.
Pennzoil Co., 987 F.2d 939, 945 (3d Cir. 1993). 	It is “offered and understood as an
expression of the seller's opinion only, which is to be discounted as such by the buyer, and
on which no reasonable [person] would rely.” W. Page Keeton, Prosser and Keeton on the
Law of Torts §109 at 757 (5th ed. 1984). 	See also Huddleston v. Infertility Center of
America Inc., 700 A.2d 453 (Pa. Super. 1997) (finding clinic’s representations that it was the
“‘premier’ surrogacy program in the country and that it was designed and implemented to
ensure the safety of its [clients]” to be puffery of no legal consequence). A promise of a
“better” loan, without more, is mere puffery upon which Debtor could not justifiably rely.
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Debtor makes no assertion that Conseco misrepresented over the telephone any specific
terms of the Refinance Loan which he now finds “non-beneficial,” i.e the interest rate, term
of the loan, the total amount he would end up paying, and what debts were being paid off.
Pls. Interrog. No. 12.
Debtor further asserts that Conseco’s alleged representation that insurance was
required violates the UDAP. However, I have already found above that no such affirmative
representation was made. 	Thus I find no misrepresentation of the characteristics of the
Refinance Loan that could fall under § 201-2(4)(v) of the UDAP. Moreover, having found
that the closing agent had no knowledge of Debtor’s illiteracy, I cannot find that the agent’s
conduct constitutes “fraudulent or deceptive conduct which creates a likelihood of confusion
or of misunderstanding.” See 73 P.S. § 201-9.2. Rather it was Debtor’s own act of blinding
himself to the written disclosures which resulted in his confusion.
The Court, while sympathetic to Debtor’s struggle to manage his life without basic
reading skills, must administer a law that holds Debtor responsible for his failure to disclose
his disability to Conseco or to demand that the documents be read aloud to him or explained
in detail:
If a party, who can read $$$ will not read a deed put before him
for execution; or if, being unable to read, will not demand to
have it read or explained to him, he is guilty of supine
negligence, which $$$ is not the subject of protection, either in
equity or at law.
Standard Venetian Blind Co. v. American Empire Ins. Co., 469 A.2d 563, 566 (Pa.,1983)
(citation omitted) (emphasis added); accord North Penn Sanitation, Inc. v. Workers’ Comp.
Appeal Bd. (Dillard), 850 A.2d 795, 801 n.3 (Pa. Commw. 2004) (persons who are blind or
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illiterate are not automatically excused from complying with the terms of a contract, release
or agreement . . . A person with such a disability must make a reasonable effort to have the
document read to him.). Summary judgment shall be entered in favor of US Bank on Count
III of the Complaint.
C. Objection to Proof of Claim (Count IV)
Count IV of the Complaint simply objects to the proof of claim for the Refinance
Loan on the basis of his argument under Counts I-III. As Debtor has failed to demonstrate
any triable issue of fact with respect to Counts I-III, summary judgment is warranted on
Count IV as well.
An Order consistent with this Memorandum Opinion shall issue.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
Dated: July 14, 2006
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UNITED S TATES B ANKRUPTCY COURT
FOR T HE E ASTERN DISTRICT O F PENNSYLVANIA
In re 	: 	Chapter 13
:
RODNEY J. JOHNSON, 	: 	Bankruptcy No. 04-35404DWS
:
Debtor. 	:
:
RODNEY J. JOHNSON, 	: 	Adversary No. 05-0341
:
Plaintiff, 	:
v. 	:
:
GREEN TREE CONSUMER DISCOUNT 	:
COMPANY, f/k/a Conseco Finance Service :
Corporation, U.S. BANK TRUST N.A. as 	:
Trustee for Conseco Finance Home Equity 	:
Loan Trust 2001-C, 	:
:
Defendants. 	:
ORDER
AND NOW, this 14th day of July 2006, upon consideration of the Motion for
Summary Judgment (the “Motion”) of defendant U.S. Bank, N.A., as Trustee for Conseco
Finance Home Equity Loan Trust 2001-C (“US Bank”), and for the reasons stated in the
accompanying Memorandum Opinion;
It is hereby ORDERED that the Motion is GRANTED. 	Summary judgment is
entered in favor of US Bank and against Debtor.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
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Copies to:
Harriet L. Hornick, Esquire
Two Penn Center
1500 JFK Boulevard
Suite 1050
Philadelphia, PA 19102
Barbara Kiely Hager, Esquire
REED SMITH, LLP
2500 One Liberty Place
1650 Market Street
Philadelphia, PA 19103-7301
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