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KAREN CULBRETH v. LAWRENCE J. MILLER (05/11/84)

filed: May 11, 1984.

KAREN CULBRETH, MARIE GOFF, ELBERT WALKER, JR., MILDRED WALKER AND BEATRICE TYNER ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED
v.
LAWRENCE J. MILLER, INC., IRA L. STRAFF, MICHAEL S. STRAFF, PAUL STRAFF AND SETH STRAFF D/B/A INSURANCE ADJUSTMENT BUREAU ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED. APPEAL OF KAREN CULBRETH AND MARIE GOFF ON BEHALF OF THEMSELVES AND ALL OTHERS SIMILARLY SITUATED



NO. 1174 PHILA. 1982, Appeal from the Order in the Court of Common Pleas of Philadelphia County, Civil No. 2748 March Term, 1980

COUNSEL

David A. Scholl, Bethlehem, for appellants.

Alan Kear, Philadelphia, for appellees.

Spaeth, President Judge, and Montemuro and Popovich, JJ.

Author: Spaeth

[ 328 Pa. Super. Page 379]

This is an appeal from an order dismissing appellants' amended complaint for failure to state a claim upon which relief may be granted. The amended complaint alleges, in Count I, that appellees, as licensed public adjusters, violated the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-1 et seq., and, in Count II, the Federal Trade Commission Act, 15 U.S.C. § 41 et seq. We hold that a claim has been stated for violation of the Consumer Protection Law but not for violation of the Federal Trade Commission Act. We therefore reverse in part and affirm in part.

The action is a class action seeking damages and injunctive relief. Appellants' amended complaint alleges that after suffering property losses due to fire, they entered into insurance adjustment contracts with appellees as licensed public adjusters, but that appellees failed to inform them of their right to cancel the contracts, and failed to honor valid cancellations of the contracts. In Count I of the complaint appellants allege that appellees thereby violated section 7 of the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201-7, and in Count II, the Federal Trade Commission Act, 15 U.S.C. § 41 et seq., more specifically, the Federal Trade Commission Rule regarding door-to-door sales, 16 C.F.R. § 429. Appellees filed preliminary objections that appellants had failed to state a claim upon which relief could be granted because, they contended,

[ 328 Pa. Super. Page 380]

    neither the Consumer Protection Law nor the Federal Trade Commission Rule applies to public adjusters or public adjuster contracts. The trial court sustained the preliminary objections and dismissed the amended complaint. (The court denied other preliminary objections, but that ruling is not at issue.)

-1-

Appellants argue that the trial court erred in holding that appellees, as public adjusters, are not subject to the provisions of section 7 of the Consumer Protection Law, 73 P.S. § 201-7. We agree.*fn1

[ 328 Pa. Super. Page 381]

Section 7 of the Consumer Protection Law, 73 P.S. § 201-7, provides a right of recission in favor of a purchaser of goods or services having a sales price of $25 or more when the sale or contract of sale is made in connection with a call at the buyer's residence. 73 P.S. § 201-7(a). Under section 7, when the buyer signs the contract or makes the purchase, the seller must inform the buyer of the right to cancel the transaction at any time before midnight of the third business day after the transaction, id. at § 7(d), and provide the buyer with both a contract or receipt containing notice of the right to cancel and a completed "Notice of Cancellation" form, id. at § 7(b), (c). If the language principally used in the oral sales presentation was other than English, both the contract and the cancellation form must be in that language, as well as in English. Id. at § 7(b). The three-day cancellation period does not begin to run until the buyer is informed of the right to cancel and is provided with the cancellation form. Id. at § 7(e). Within ten business days after receipt of the buyer's Notice of Cancellation, the seller must refund all payments made

[ 328 Pa. Super. Page 382]

    under the contract or sale. Id. at § 7(g). The buyer may waive the right to cancel, but only if the goods or services are needed to meet "a bona fide immediate personal emergency" of the buyer and the buyer makes a handwritten, signed personal statement describing the situation and expressly waiving the right to cancel. Id. at § 7(j).

Section 3 of the Consumer Protection Law, 73 P.S. § 201-3, provides in relevant part: "Unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce . . . are hereby declared unlawful." Section 2(3) of the Consumer Protection Law defines "trade" and "commerce" as "the advertising, offering for sale, sale or distribution of any services and any property . . . ." (emphasis added). This already broad language is to be construed broadly so as to effectuate as fully as possible the Legislature's purpose of preventing unfair or deceptive practices. Thus in Commonwealth v. Monumental Properties, 459 Pa. 450, 329 A.2d 812 (1974), the Supreme Court held that the leasing of residences falls within the Consumer Protection Law. The Court rejected the argument that leasing was not included within the Law's definition of "trade" and "commerce" because the definition explicitly refers only to "sale or distribution." The Court recognized the fact that the Legislature did not use the word "lease," but looked to the breadth of the Legislature's purpose of preventing unfair or deceptive practices.

The business of a public adjuster is to sell to an insured the service of representing the insured in settling with the insured's carrier the insured's claim for loss. See 40 P.S. § 301. Clearly, this business is within the ...


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