Wolfington v. Reconstructive Orthopaedic Associates II, P.C.
268 F. Supp. 3d 756
E.D. Pa.2016Background
- Wolfington needed knee surgery; he signed a clinic "Financial Policy" requiring payment of his insurance deductible prior to the procedure.
- Plaintiff paid $200 before surgery; clinic agreed orally (per Complaint) to allow deferred payments of $100/month to cover the remaining deductible so surgery could proceed.
- Plaintiff later filed a putative class action under the Truth in Lending Act (TILA), alleging the clinic failed to provide required written TILA disclosures for the alleged financing; he did not allege any finance charge or written payment agreement.
- Defendant denied a consummated credit transaction, asserted a state-law counterclaim for breach of the Financial Policy, and moved for judgment on the pleadings (or summary judgment) on the TILA claim.
- At a conference Plaintiff’s counsel conceded there was no written agreement and no finance charge; the court found the post-signing discussions were informal "workout" negotiations, not a consummated TILA credit transaction.
- Court granted defendant judgment on the pleadings (or summary judgment) with prejudice on the TILA claim and declined to exercise supplemental jurisdiction over the breach-of-contract counterclaim (dismissed without prejudice); court also warned of potential Rule 11 proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether TILA/Reg Z applied because a "credit"/"creditor" relationship existed | Wolfington: clinic extended credit via a payment plan (initial $200 + $100/mo) and failed to provide disclosures | Clinic: no consummated TILA transaction; only an oral/ informal accommodation after a written policy requiring full payment; no written agreement or finance charge | Court: No TILA transaction — informal workout, no written agreement and no finance charge; Regulation Z requires written agreement for such accommodation, so TILA not triggered |
| Whether Regulation Z’s written-agreement requirement is consistent with TILA | Wolfington: claimed entitlement to disclosures under TILA (did not engage Regulation Z arguments) | Clinic: Regulation Z is a valid implementing regulation and requires a written agreement for credit without finance charge | Court: Defer to Regulation Z; requiring a writing is reasonable and prevents endless credibility disputes; applies Regulation Z to bar claim |
| Whether defendant was a "creditor" for the specific transaction | Wolfington: clinic acted as creditor in this transaction | Clinic: even if a creditor generally, it did not extend credit in this specific instance as defined by Regulation Z | Court: Plaintiff failed to plead facts satisfying the specific-transaction prong (no written agreement/no finance charge) |
| Whether the court should exercise supplemental jurisdiction over defendant’s breach-of-contract counterclaim | Wolfington: moved to dismiss counterclaim for lack of federal jurisdiction | Clinic: counterclaim arises from same facts and should be within supplemental jurisdiction | Court: Declined to exercise supplemental jurisdiction under 28 U.S.C. § 1367; dismissed counterclaim without prejudice (state court available) |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (establishes plausibility pleading standard)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (pleading must cross line from conceivable to plausible)
- Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379 (3d Cir.) (interpretation of "credit" and "creditor" under TILA)
- Bright v. Ball Memorial Hosp. Ass'n, 616 F.2d 328 (7th Cir.) (informal workout arrangements are not consummated TILA transactions)
- Ford Motor Credit Co. v. Milhollin, 444 U.S. 555 (deference to Federal Reserve Board/Regulation Z implementing TILA)
- Smith v. Fidelity Consumer Discount Co., 898 F.2d 896 (3d Cir.) (TILA strict liability for disclosure failures)