McGrogan v. First Commonwealth Bank
74 A.3d 1063
| Pa. Super. Ct. | 2013Background
- Plaintiffs Patrick and Barbara McGrogan opened IRA Market Rate Savings Accounts with First Commonwealth Bank in the 1980s; account documents included a Custodial Agreement and a Disclosure Statement describing a 90-day term and an 8% guaranteed minimum rate.
- Plaintiffs allege bank executives orally promised the accounts would automatically renew/roll over at no less than 8% unless the depositor acted; Plaintiffs claim the written disclosures omitted that promised automatic-renewal term (fraud in the execution) and that a 1998 bank letter modified the contract to guarantee 8% going forward.
- Plaintiffs filed a putative class action asserting multiple counts including fraud in the execution (Count 1), promissory estoppel, contract modification (Count 3), fiduciary duty, UTPCPL (Count 5), and declaratory relief.
- Trial court sustained many preliminary objections, allowing only fraud in the execution, breach-of-contract modification (based on the June 3, 1998 letter), and a UTPCPL claim insofar as it relied on the fraud-in-execution theory to proceed.
- The trial court later certified the class only as to the breach-of-contract modification claim (Count 3), denied class certification for fraud-in-the-execution and UTPCPL claims, then granted bank summary judgment on Count 3 and denied plaintiffs’ partial summary judgment.
- On appeal the Superior Court held it lacked jurisdiction to review most interlocutory merits dismissals and cross-appeal issues, but allowed appeal of the denial of class certification for Counts 1 and 5 under the collateral-order doctrine, and affirmed the denial of class certification for those counts; the bank’s late appeal of the earlier class-certification grant was quashed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether class certification should have been granted for fraud-in-the-execution (Count 1) | Plaintiffs argued classwide relief appropriate because bank owed fiduciary duty and reliance should be presumed or common. | Bank argued reliance and alleged oral promises differ among putative class members, defeating commonality. | Affirmed denial: trial court correctly found material variations in alleged promises and reliance that precluded class treatment. |
| Whether class certification should have been granted for UTPCPL claim (Count 5) | Plaintiffs asserted UTPCPL claims are common because they flow from the same alleged fraudulent omission and fiduciary relationship. | Bank argued UTPCPL issues depend on individualized proof of reliance and differing representations. | Affirmed denial for same reasons as Count 1: individualized issues (different promises, reliance) defeat class certification. |
| Whether the June 3, 1998 letter modified the custodial/investment agreements and barred the bank’s resignation-right defense (class certified on Count 3 originally) | Plaintiffs: the 1998 letter unambiguously modified contracts to guarantee 8% going forward until account closure, supporting class treatment and liability. | Bank: even if letter modified rates, it did not waive or eliminate the preexisting contractual right to resign as custodian; resignation permitted and defeats breach claim. | Court declined to review merits on interlocutory appeal; later (trial court) granted summary judgment to bank on Count 3—dismissed the class claim because letter did not strip bank’s resignation right. |
| Whether appellate court has jurisdiction to review these interlocutory orders | Plaintiffs sought review of many dismissed claims and of Class-cert and summary judgment rulings. | Bank cross-appealed class-cert grant but filed late. | Superior Court limited review: only denial of class certification for Counts 1 and 5 is appealable under collateral-order doctrine and was affirmed; other merits issues and the bank’s late appeal quashed for lack of jurisdiction. |
Key Cases Cited
- Toy v. Metropolitan Life Insurance Co., 593 Pa. 20, 928 A.2d 186 (fraud in the execution is not barred by parol evidence rule)
- Hanson v. Federal Signal Corp., 679 A.2d 785 (denial of class certification is appealable under collateral-order doctrine; class-certification standards discussed)
- Clark v. Pfizer Inc., 990 A.2d 17 (trial court has broad discretion on class certification; appellate review limited)
- Melvin v. Doe, 836 A.2d 42 (collateral-order doctrine narrow; each prong must be satisfied)
- Rae v. Pennsylvania Funeral Directors Ass’n, 977 A.2d 1121 (collateral-order test applied to individual issues)
- Ben v. Schwartz, 729 A.2d 547 (order separable from main action if reviewable without reaching merits)