Wolfington v. Reconstructive Orthopaedic Assocs. II PC
935 F.3d 187
| 3rd Cir. | 2019Background
- Wolfington underwent knee surgery performed by Rothman; he had signed a pre-surgery "Financial Policy" stating deductibles were due before surgery.
- On January 20, 2016 Rothman orally agreed (via conversation with Wolfington’s father) to accept a $200 initial payment and $100/month installments for the remaining deductible; Wolfington received two confirmation emails.
- Wolfington filed a putative class action alleging Rothman extended consumer credit without TILA/Regulation Z disclosures; an EFT claim was later withdrawn.
- Rothman moved for judgment on the pleadings; at a pre-decision telephone conference defense counsel stated there was no signed agreement and plaintiff’s counsel referenced only email confirmation receipts.
- The district court granted judgment on the pleadings (and alternatively converted to summary judgment) concluding Wolfington failed to plead a written agreement as required by Regulation Z; the court also sua sponte imposed Rule 11 sanctions on plaintiff’s counsel.
- The Third Circuit affirmed dismissal of the TILA claim for failure to allege a qualifying written agreement, but reversed the Rule 11 attorneys’‑fee sanctions and remanded (denying leave-to-amend issues raised belatedly).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether district court properly relied on counsel admissions outside the pleadings in a Rule 12(c) ruling | Wolfington: court should decide on the pleadings only; counsel’s statements are not proper basis for 12(c) dismissal | Rothman: concession at conference established no written agreement, supporting judgment | Court: district court erred to rely on oral statements in 12(c) context (and failed to give Rule 12(d) notice if converting to summary judgment), but error was harmless because claim failed on pleading grounds |
| Whether Rothman extended "credit" under TILA/Regulation Z | Wolfington: oral agreement to defer deductible payments granted right to defer payment (credit) | Rothman: arrangement was informal workout of preexisting debt, not credit subject to TILA | Court: extension of credit adequately pleaded; deferral of preexisting debt can be "credit" under the statute |
| Whether the credit transaction was "consummated" | Wolfington: offer and acceptance (down payment + installments) show contractual obligation | Rothman: no written signed agreement, no payments made, so no consummation | Court: consummation sufficiently pleaded (contract formation on pleadings); failure to perform later does not negate consummation allegation |
| Whether the agreement was a qualifying "written agreement" under Regulation Z | Wolfington: confirmation emails or other writings sufficiently evidence a written agreement | Rothman: Regulation Z requires a formal written agreement executed by the customer; emails merely confirm oral deal | Court: Wolfington failed to plead a written agreement; agency staff interpretation requiring customer-executed writing is entitled to Auer/Kisor deference; dismissal affirmed |
| Whether Rule 11 sanctions were proper and whether attorneys’ fees could be awarded sua sponte | Plaintiff’s counsel: investigation and legal theory were reasonable; emails were a plausible writing; Rule 11 fee award sua sponte is improper | Rothman: factual inaccuracies and lack of investigation warranted sanctions | Court: sanctions abused discretion — counsel’s positions were not objectively unreasonable and district court could not award attorneys’ fees sua sponte under Rule 11(c) |
Key Cases Cited
- Schmidt v. Skolas, 770 F.3d 241 (3d Cir. 2014) (counsel admissions at argument cannot justify dismissal under Rule 12(b)(6) when complaint facially sufficient)
- Bruni v. City of Pittsburgh, 824 F.3d 353 (3d Cir. 2016) (district court erred by relying on testimony and extra-pleading materials to grant dismissal)
- Bright v. Ball Memorial Hosp., 616 F.2d 328 (7th Cir. 1980) (hospital payment arrangements analyzed under informal workout vs. formal written agreement framework)
- Pollice v. Nat'l Tax Funding, L.P., 225 F.3d 379 (3d Cir. 2000) (discussion of who qualifies as a "creditor" under TILA/Regulation Z)
- Kisor v. Wilkie, 139 S. Ct. 2400 (2019) (limits and clarifies deference owed to an agency’s interpretation of its own regulation)