Roethlein v. Portnoff Law Associates, Ltd.Roethlein v. Portnoff Law Associates, Ltd.
OPINION
In thе instant case, we consider whether Pennsylvania’s Loan Interest and Protection Law (“Act 6” or “the Act”)
Portnoff Law Associates, Ltd., and Michelle Portnoff, Esquire, the sole shareholder thereof (hereinafter “Port-noff’), serves as a private tax collector for various municipalities and school districts (collectively, “municipalities”) in the Commonwealth pursuant to the MCTLA. According to the trial court’s findings of fact, between November 2000 and November 2002, Portnoff had contracts with 22 municipalities to represent them in the collection of delinquent real estate taxes. The contracts, which were prepared by Port-noff and submitted to the municipalities for execution, provided that Portnoff would be compensated for her collections by charging her legal fees to the delinquent taxpayer. Specifically, taxpayers would be charged $150 for the opening of a file and preparation of a demand letter; $150 for the filing of a lien and preparation of a second letter; and $150 for preparation and filing of a writ of scire facias,
For each delinquent account, the municipalities sent Portnoff a file that containеd a “placement amount.” The placement amount included the delinquent real estate tax, which was referred to as the “face amount”, as well as a penalty imposed by the municipality. Portnoff would then add to the placement amount a $35 fee, which she labeled an “administrative cost,” to cover the costs of opening a file and sending, by certified mail, the initial notice of delinquency on the municipalities’ letterhead. The administrative cost plus the placement amount was referred to by Portnoff as “principal.” From the time a file was sent to her for collection, Portnoff began charging 10% interest on the principal.
In November 2002, Appellee Beverly Roethlein, a taxpayer residing in Allentown, Pennsylvaniа, filed a class action complaint against Portnoff and one of her employees seeking recovery for unjust enrichment and violations of Section 502 of Act 6.
A person who has paid a rate of interest for the loan or use of money at a rate in excess of that provided for by this act or otherwise by law or has paid charges prohibited or in excess of those allowed by this act or otherwise by law may recover triple the amount of such excess interest or charges in a suit at law against the person who has collected such excess interest or charges: Provided, [t]hat no action to recover such excess shall be sustained in any court of this Commonwealth unless the same shall have been commenced within four years from and after the time of such payment. Recovery of triple the amount of such excess interest or charges, but not the actual amount of such excess interest or charges, shall be limited to a four-year period of the contract.
The complaint alleged, inter alia, that, during the class period of November 27, 2000 through November 26, 2002, Portnoff collected from Roethlein and others (“Taxpayers”)
On appeal, the Commonwealth Court affirmed. Roethlein v. Portnoff Law Assoc., Ltd.,
The Honorable Mary Hannah Leavitt authored a dissenting opinion, wherein she
Portnoff filed a petition for allowance of appeal with this Court, which we granted, limited to the following issues:
a. Did the Commonwealth Court err as a matter of law in holding that Pennsylvania’s usury statute, [Act 6], provides a cause of action to challenge costs charged in the collection of delinquent taxes and to impose statutory penalties of treble damages and attorneys’ fees, when the costs did not arise from a transaction involving the loan or use of money?
b. Did the Commonwealth Court err as a matter of law in allowing claims under [Act 6] to be pursued by way of a class action suit?
' c. Did the Commonwealth [Court] err as a matter of law in ruling that amounts paid by a municipality to a third party tax collector in order to collect delinquent taxes were not “charges, expenses or fees” under the MCTLA which could be added to the delinquent taxes?
Roethlein v. Portnoff Law Assoc., Ltd.,
We begin with Portnoff s argument that the Commonwealth Court erred in holding that Act 6 provides a separate cause of action by which delinquent taxpayers may recover administrative fees, as well as damages and attorneys’ fees. Count II of Taxpayers’ Complaint was brought pursuant to
A person who has paid a rate of interest for the loan or use of money at a rate in excess of that provided for by this act or otherwise by law or has paid charges prohibited or in excess of those allowed by this act or otherwise by law may recover triple the amount of such excess interest or charges in a suit at law against the person who has collected such excess interest or charges
(a) If a borrower or debtor, including but not limited to a residential mortgage debtor, prevails in an action arising under this act, he shall recover the aggregate amount of costs and expenses determined by the court to have been reasonably incurred on his behalf in connection with the prosecution of such action, together with a reasonable amount for attorney’s fee.
Portnoff contends that the Commonwealth Court, in allowing Taxpayers to recover under
Portnoff further asserts that the Commonwealth’s construction of Act 6 ignores the legislative history of the Act, noting that Senate Bill 1255, which became Act 6, contained an introductory statement describing Act 6 as an act “regulating agreements for the loan or use of money.” Portnoff s Brief at 26 (citing S.B. 1255, Gen. Assem. Sess. (Pa.1973-74)). Portnoff also refers to comments made on the Senate floor during the debate on Act 6, wherein one senator stressed that Act 6 was intended as a mortgage interest bill, designed to apply to claims involving the loan or use of money.
Finally, Portnoff maintains that the Commonwealth Court’s holding conflicts with other decisions regarding the applicability of Act 6, and offers that “[n]o Pennsylvania court has ever applied [Act 6] to any claims other than claims for recovery of interest or charges paid in connection •with the loan or use of money.” Portnoff s Brief at 28. Appellant cites, in particular, the Superior Court’s decision in In re Estate of John Francis Braun,
Taxpayers, in response to Portnoff s arguments, emphasize that a court’s objective in construing a statute is to ascertain and effectuate the intent of the General Assembly in enacting the statute, and that, when the words of a statute are clear and free from all ambiguity, “the letter of it is not to be disregarded under the pretext of pursuing its spirit.”
Taxpayers further argue that the mere fact “that Pennsylvania’s usury statute generally applies to contracts for the loan or use of money is insufficient to show that the ‘charges’ to which
The Commonwealth Court’s discussion of this issue is exceedingly brief. The court first noted that the title of
Section 502 of Act 6 specifically states: “A person who has paid ... charges prohibited or in excess of those allowed by ... law may recover triple the amount of such excess interest or charges in a suit at law against the person who has collected such excess ... charges....” (Emphasis added). By the plain language of the statute, this action is permitted.
Id. (omissions original). We disagree with the Commonwealth Court’s determination that the plain language of
When interpreting a statute, courts should read the sections of a statute together and construe them to give effect to all of the statute’s provisions.
Nearly all of the definitions under Section 101 of the Act are defined in the context of mortgage loans. For example, thе Act defines “Actual Settlement Costs” as including “[a] single service charge, which shall include any consideration paid by the residential mortgage debtor,” and the service charge generally “shall not exceed one per cent of the original bona fide principal amount of the loan.”
Additionally, the substantive provisions of the Act all contemplate loans. Section 201, titled “Maximum lawful interest rate,” provides “the maximum lawful rate of interest for the loan or use of money in an amount of fifty thousand dollars ($50,000) or less in all cases where no express contract shall have been made for a less rate shall be six per cent per annum.”
Section 501, titled “Excessive interest need not be paid,” provides:
When a rate of interest for the loan or use of money, exceeding that provided by this act or otherwise by law shall have been reserved or contracted for, the borrower or debtor shall not be required to pay to the creditor the excess over such maximum interest rate and it shall be lawful for such borrower or debtor, at his option, to retain and deduct such excess from the amount of such debt providing the borrower or debtor gives notice of the asserted excess to the creditor.
Moreover, and as noted above, the title of Act 6 is the “Loan Interest and Protection Law,” and the preamble to Act 6 describes the Act as follows:
An Act regulating agreements for the loan or use of money; establishing a maximum lawful interest rate in the Commonwealth; providing for a legal rate of interest; detailing exceptions to the maximum lawful interest rate for residential mortgages and for any loans in the principal amount of more than fifty thousand dollars and federally insured or guaranteed loans and unsecured, uncollateralized loans in excess of thirty-five thousand dollars and business loans in excess of ten thousand dollars; providing protections to debtors to whоm loans are made including the provision for disclosure of facts relevant to the making of residential mortgages, providing for notice of intention to foreclose and establishment of a right to cure defaults on residential mortgage obligations, provision for the payment of attorney’s fees with regard to residential mortgage obligations and providing for certain interest rates by banks and bank and trust companies; clarifying the substantive law on the filing of an execution on a confessed judgment; prohibiting waiver of provisions of this act, specifying powers and duties of the secretary of banking, and establishing remedies and providing penalties for violations of this act.
Act of Jan. 30, 1974, P.L. 13, No. 6. The title and the language of this preamble clearly contemplate an act applying to claims arising from the loan or use of money. See
Even assuming, however, that Taxpayers’ interpretation of
Where the words of a statute are not explicit, and there is an ambiguity, we may consider, inter alia, the object of the statute; the mischief to be remedied; and the contemporaneous legislative history.
As discussed above, the language of the preamble to Act 6, its definitional sections, and its substantive provisions clearly demonstrate that Act 6 is a usury law, designed to protect borrowers against improper mortgage lending practices. This conclusion is further supported by the remarks of Senator Zemprelli regarding the purpose of the statute and the problems the statute was designed to remedy. See supra note 6.
Moreover, although this Court has not previously addressed the issue of whether, and to what extent, Act 6 may be used as the basis for claims not related to the loan or use of money, the Superior Court, in 1994, addressed the scope of Act 6 in In re Estate of John Francis Braun:
[Act 6] was designed to protect the citizenry of this Commonwealth from being exploited at the hands of unscrupulous individuals seeking to circumvent the law at the expense of unsuspecting borrowers who may have no other avеnue to secure financial backing. By its own terms, [Act 6] only governs transactions relating to the loan or use of money.41 P.S. § 201 (fixing the maximum lawful rate of interest for the loan or use of money). See also 20 P.L.E. § 22 (usury contemplates the existence of a loan; when there is no loan, usury cannot arise), citing Seltzer v. Sokoloff,302 Pa. 449 , 451,153 A. 724 , 724 (1931) (usury arises between borrower and lender).
In 2000, the Third Circuit, in a case involving, inter alia, an action by a group of homeowners to recover excess interest paid for assigned delinquent municipal tax and utility claims, predicted this Court would follow the approach taken by a number of our sister courts, including those in Connecticut, Idaho, and Minnesota, which have held that “usury laws apply only when a crеditor agrees to take interest in exchange for making a loan or promising to forbear from the immediate collection of
The phrase “paid a rate of interest for the loan or use of money” undersection 502 of [Act 6] implies that there is some consensual arrangement between the parties; that is, an agreement by the lender or creditor to make a loan, or to grant the debtor the “use” of money by promising to forbear from taking immediate action to collect a debt, in exchange for interest. We believe there has been no “loan or use of money” undersection 502 when a debtor simply detains money which the creditor wishes to receive immediately.
Id. at 394-95.
In support of its conclusion, the court cited the Superior Court’s decision in Equip. Fin., supra, as well as this Court’s decision in In re Kenin’s Trust Estate,
Following the Superior Court’s decision in In re Estate of John Francis Braun, and the Third Circuit’s predictions in Pol-lice, the legislature amended Act 6, in 2008. Notably, despite the Braun and Pollice decisions, at that time, the General Assembly made no changes to
Accordingly, we conclude that, contrary to the Commonwealth Court’s determination, the plain language of
In light of our determination that Act 6 is a usury statute that provides remedies only for claims involving the loan or use of money, and, therefore, does not provide a separate cause of action by which delinquent taxpayers may recover improperly imposed fees, we need not address Portnoffs second claim on appeal that the Commonwealth Court erred in concluding Taxpayers’ claims under Act 6 could be brought in a class action.
In her final issue, Portnoff argues that the Commonwealth Court erred in upholding the trial court’s determination that she lacked authority under Section 7103 of the MCTLA to recover from Taxpayers an “administrative cost” fee of $35. Taxpayers, in Count III of thеir Complaint, challenged Portnoffs collection of this fee by framing their claim as one of unjust enrichment.
All taxes which may hereafter be lawfully imposed or assessed on any property in this Commonwealth ... shall be and they are hereby declared to be a first lien on said property, together with all charges, expenses, and fees added thereto for failure to pay promptly; and such liens shall have priority to and be fully paid and satisfied out of the proceeds of any judicial sale of said property, before any other obligation, judgment, claim, lien, or estate with which the said property may become charged or for which it may become liable, save and except only the costs of the sale and of the writ upon which it is made.
Section 7101 (“Definitions”) of the MCTLA currently provides, in part:
The word “taxes,” as used in this act, means any county, city, borough, incorporated town, township, school, bridge, road, or poor taxes, together with and including all penalties, interest, costs, charges, expenses and fees, including reasonable attorney fees, as allowed by this act and all other applicable laws.
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The words “charges, expenses, and fees,” as used in this act, include all sums paid or incurred by a municipality to file, preserve and collect unpaid taxes, tax claims, tax liens, municipal claims and municipal liens, including, but not limited to, prothonotary and sheriff fees, postage expenses, and title search expenses. A [municipality] may also recover as “charges, expenses, and fees” the charges, expenses, commissions and fees of third-party collectors retained by the [municipality], provided that the charges, expenses, commissions and fees of such third-party collectors are approved by legislative action of the [municipality] which levies the unpaid taxes, tax claims, tax liens, municipal claims and municipal liens.
In holding Portnoff was not entitled to recover the $35 administrative cost fee from Taxpayers, the trial court concluded “[t]he only ‘costs’ that [Portnoff] was entitled to recover under
However, with respect to the ordinances and resolutions, or lack thereof, the instant appeal concerns Portnoffs actions between November 2000 and November 2002. The provision of
Nevertheless, in affirming the trial court’s holding that Portnoff was not authorized to collect the $35 administrative cost fee because it was not a “cost” she was entitled to recover under
This Court held in Pentlong Corporation. v. GLS Capital, Inc.,780 A.2d 734 (Pa.Cmwlth.2001) [aff'd in part, rev’d in part, Pentlong Corp, v. GLS Capital, Inc., 573, Pa. 34,573 Pa. 34 ,820 A.2d 1240 (2003)], that under [Section 7103 of the MCTLA], the term “costs”[9] specifically refers to charges, expenses or fees that “were actually incurred and could have been taxed as costs” by the taxing authority. Id. at 749, (stating that a tax lien assignee “is not entitled to any costs that the County did not actually incur”). Here, the administrative fee charged by Portnoff was not such a cost because the related costs, i.e., the expenses Portnoff incurred, were incurred by Portnoff directly and never incurred by the taxing authority. Accordingly, the trial court did not err in finding that the administrative fees were not recoverable from Taxpayers.
Roethlein,
Moreover, to the extent the Commonwealth Court relied on Pentlong in support of its holding, we find such reliance to be misplaced. In Pentlong, the Commonwealth Court considered, inter alia, the issue of what costs and/or fees the assign-ee of a county’s property tax liens was entitled to recover from the delinquent taxpayers. The delinquent taxpayers argued that
The second type of “costs” at issue appears to be charges that GLS says it can impose pursuant to [Section 7103 of theMCTLA], even though they were never paid by the County.
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The trial court never directly answered this issue but only stated that the Pro-thonotary was authorized to impose certain fees under Section 1 of the Second Class County Prothonotary Fеe Act, Act of June 18, 1982, P.L. 547,42 P.S. § 21061 . While it is clear that GLS is entitled to recover all record costs that the County incurred and could legally impose if it owned the lien, [Section 7103 ] only allows the collection of “charges, expenses, and fees’’ that were actually incurred and could have been taxed as costs. Consequently, GLS is not entitled to any costs that the County did not actually incur.
Id. at 749 (emphasis added).
The Commonwealth Court’s decision in Pentlong was based on the principle that the assignee was not entitled to recover any costs which were not actually incurred. Indeed, in affirming, in part, the Commonwealth Court’s decision in Pent-long, this Court reiterated that “
Moreover, although the trial court did not find Portnoff s testimony that she remitted the administrative cost fee to the municipalities to be credible, suggesting the municipalities may have a cause of action for breach of contract against Port-noff, the trial court’s finding in this regard does not alter the fact that, under the plain language of the MCTLA, the $35 administrative cost fees incurred by the municipalities in their effort to collect delinquent taxes were recoverable from Taxpayers. See
Based on our determination that (1) Taxpayers do not have a cause of action against Portnoff under Act 6, and (2) Port-noff was not unjustly enriched by her collection of a $35 administrative cost fee, we reverse the decision of the Commonwealth Court, and remand the matter to thе Com
Case remanded. Jurisdiction relinquished.
Former Justice ORIE MELVIN did not participate in the consideration or decision of this case.
Chief Justice CASTILLE and Justices SAYLOR, EAKIN, BAER and McCAFFERY join the opinion.
Notes
. Act of Jan. 30, 1974, P.L. 13, No. 6, as amended
.
. A writ of scire facias is a statutory action in rem; the term scire facias refers to both the writ and the proceeding. See Pentlong Corp. v. GLS Capital, Inc.,
. In addition to counts alleging unjust enrichment and viоlations of Act 6, Count 1 of the Complaint alleged violations of the Consumer Protection Law (‘‘CPL”),
. The additional named Appellees, Jerry Koni-daris and Theodora Konidaris, reside in McKeesport, Pennsylvania. Additional named Appellee, Robert Albanese, resides Lower Mount Bethel Township, Pennsylvania.
. The trial court initially entered an order in favor of Taxpayers in the amount of $5,213,670.08 on March 11, 2008. Thereafter, on August 18, 2008, this Court held that the 2003 retroactive amendment to the MCTLA, which authorized municipalities to recover their attorneys’ fees and costs of collection from their delinquent taxpayers, was constitutional. See Konidaris, supra note 3. In accordance with our holding, the trial court granted, in part, Portnoff’s pending post-trial motions and modified the award.
. Specifically, Portnoff quotes the following remarks by Senator Edward Zemprelli:
Mr. President, I think it is important for me to say this. This bill was intended as a mortgage interest bill. At the same time that we studied this bill and went to great lengths in the Committee, we recognized that there is a need to do something about the fourteen statutes that deal with the lending of money in the Commonwealth of Pennsylvania. This was not intended to be an omnibus bill that addressed itself to every type of lending, it was intended to be a facet bill that addrеssed itself to one particular type of lending. It was actually something that needed to happen because of the emergencies of the situation.
Portnoff's Brief at 27 (quoting Pa. Senate Journal, January 15, 1974, p. 1334) (emphasis omitted).
. Unjust enrichment is the retention of a benefit conferred by another, without offering
9. The Commonwealth Court mischaracterizes the Pentlong court's use of the term "costs,” suggesting the term is defined and/or limited by the express language of