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KARLSSON v. FDIC

May 2, 1996

CARL ERIK KARLSSON and LUCY C. KARLSSON V. FEDERAL DEPOSIT INSURANCE CORPORATION, and THE PRUDENTIAL PREFERRED PROPERTIES - DEVON OFFICE


The opinion of the court was delivered by: PADOVA

 Padova, J.

 May 2, 1996

 I. BACKGROUND

 Plaintiffs, Carl and Lucy Karlsson, bring this action under the Pennsylvania Unfair Trade Practices and Consumer Protection Law, 73 Pa. Stat. Ann. §§ 201-1 - 201-9.2 (West Supp. 1995) (the "CPL"), for losses allegedly resulting from the purchase of their home. Currently before the court are Defendants' Motions to dismiss pursuant to Fed. R. Civ. P. 12(b)(6) *fn1" . For the reasons that follow, Defendants' Motions will be Granted.

 An agreement of sale was executed between the Plaintiffs and FDIC, and settlement was fixed for January 4, 1994. Some time after executing the agreement of sale, but before settlement, Plaintiffs became suspicious about the size of the lot. On December 17, 1993, Plaintiffs retained Chester Valley Engineers, Inc. ("CVE") to review documents and conduct a survey of the Property. This investigation indicated that while the Property consisted of 1.995 acres, approximately 0.6 acres were located within the public rights of way of three roads. Despite this information, FDIC refused to lower the purchase price for the Property, relying on the agreement of sale which stated that the Property was sold "as is." Plaintiffs went through with the transaction because withdrawal would mean losing their $ 41,000 down payment.

 Plaintiffs filed a Complaint alleging breach of contract and seeking punitive damages. Judge Weiner dismissed the Complaint for failure to state a claim, but granted Plaintiffs leave to amend their Complaint to bring a claim under the CPL. The case was subsequently transferred to my docket. Plaintiffs have now filed their Amended Complaint alleging that advertisements for the Property misrepresented the lot size.

 II. STANDARD OF REVIEW

 A claim may be dismissed under Fed. R. Civ. P. 12(b)(6) only if the plaintiff can prove no set of facts in support of the claim that would entitle it to relief. ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir. 1994). The reviewing court must consider only those facts alleged in the Complaint and accept all of the allegations as true. Id.

 III. DISCUSSION

 The CPL makes unlawful "unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." 73 Pa. Stat. Ann. § 201-3. The law seeks to place consumers and sellers on a more equal footing. In Re Smith, 866 F.2d 576, 581 (3d Cir. 1989); Commonwealth v. Monumental Prop., Inc., 459 Pa. 450, 329 A.2d 812, 816 (Pa. 1974). A liberal interpretation of the CPL best effectuates this purpose. Monumental Prop., Inc., 329 A.2d at 817.

 To state a claim under the CPL, the acts alleged in the Amended Complaint must constitute unfair or deceptive acts or practices as the statute defines those terms. Smith, 866 F.2d at 583. Section 201-2(4) of the CPL sets out seventeen specific acts which constitute unfair or deceptive acts or practices. Plaintiffs' Reply Memorandum indicates that their claims sound under §§ 201-2(4)(v) and 201-2(4)(ix). Section 2(4)(v) states that the conduct prohibited by the statute includes "representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits or quantities that they do not have." Section 2(4)(ix) states that the statute prohibits "advertising goods or services with intent not to sell them as advertised."

 In Commonwealth v. Hush-Tone Indus., Inc., 4 Pa. Commw. 1 (1971), the Pennsylvania Commonwealth Court articulated three elements that a plaintiff must prove in order to state a claim for false advertising under section 201-2(4)(v). The Plaintiff must show: (1) that defendant's advertisement is a false representation of a fact; (2) that it actually deceives or has a tendency to deceive a substantial segment of its audience; and (3) that the false representation is likely to make a difference in the purchasing decision. Id. at 21. Section 201-2(4)(ix) requires the additional element of intent. See id. at 24 ...


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