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United States Organizations For Bankruptcy Alternatives, Inc v. Department of Banking and Glenn E. Moyer

August 15, 2011

UNITED STATES ORGANIZATIONS FOR BANKRUPTCY ALTERNATIVES, INC., APPELLEE
v.
DEPARTMENT OF BANKING AND GLENN E. MOYER, IN HIS CAPACITY AS THE SECRETARY OF THE DEPARTMENT OF BANKING, APPELLANT UNITED STATES ORGANIZATIONS FOR BANKRUPTCY ALTERNATIVES, INC., CROSS-APPELLANT
v.
DEPARTMENT OF BANKING AND GLENN E. MOYER, IN HIS CAPACITY AS THE SECRETARY OF THE DEPARTMENT OF BANKING, CROSS-APPELLEE



Appeal from the Order of the Commonwealth Court at 69 MD 2009, dated February 25, 2010 The opinion of the court was delivered by: Mr. Chief Justice Castille

[J-56A&B-2011]

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

ARGUED: May 11, 2011

Appeal from the Order of the Commonwealth Court at 69 MD 2009, dated February 25, 2010 991 A.2d 370 (Pa. Cmwlth. 2010)

SUBMITTED: May 11, 2011

OPINION

We decide the cross-appeals of the Commonwealth Department of Banking and Glenn E. Moyer, in his capacity as the Department's Secretary, (together, the "Department"), and of the United States Organizations for Bankruptcy Alternatives, Inc. ("USOBA"), a trade association. In these direct appeals, the parties challenge different aspects of the Commonwealth Court's decision that the Debt Management Services Act ("Act 117") is unconstitutional in part.*fn1 At this Court's request, the parties also addressed the issue of whether the lower court's disposition is a final order, appealable pursuant to Rule of Appellate Procedure 341. See Pa.R.A.P. 341. For the reasons that follow, we conclude that the Commonwealth Court's order is not appealable and, accordingly, we quash the cross-appeals.

Background

The General Assembly adopted Act 117 in October 2008 to regulate, in relevant part, providers of debt settlement services ("DSS"). A DSS provider negotiates with creditors on behalf of a consumer "for the purpose of the creditor forgiving part or all of the principal of the debt incurred or credit extended to that consumer." 63 P.S. § 2402. Pursuant to Section 3(b) of Act 117, DSS providers are prohibited from operating in Pennsylvania without a license from the Banking Department, and are required to comply with the Department's regulations. 63 P.S. § 2403(b). Licensed DSS providers may not charge a consumer "any fees other than those described in [Section 15 of Act 117] or by regulation promulgated by the [D]department." 63 P.S. § 2415(h). The Department has not yet adopted any fee regulations. Other sections of Act 117 list licensing fees, describe the initial licensing, license renewal, revocation, and reinstatement processes, and create penalties for violations of the statute. See generally 63 P.S. §§ 2401-2421, 2448-2449.

In February 2009, USOBA, whose membership includes DSS providers, filed a Petition for Review in the Commonwealth Court challenging the constitutionality of those parts of Act 117 applicable to DSS providers.*fn2 USOBA claimed that Act 117 violates the non-delegation, equal protection, and due process provisions of the Pennsylvania and U.S. Constitutions, and requested a declaratory judgment, injunctive relief, and compensation for attorneys' fees and costs. The Department denied the allegations, and filed an Application for Summary Relief, claiming that the contentions in the complaint were insufficient as a matter of law to state a claim. Following a hearing, the Commonwealth Court denied the Department's application in an unpublished opinion.

Subsequently, in September 2009, USOBA filed its own Application for Summary Relief seeking a declaration that all provisions of Act 117 relating to DSS providers violate the Non-Delegation Clause of the Pennsylvania Constitution and are unenforceable. USOBA noted that its due process and equal protection claims did not have to be decided at that juncture.

On February 25, 2010, the Commonwealth Court granted USOBA's declaratory judgment application in part and denied it in part, without a hearing. According to the court, the following parts of Act 117 violate the Non-Delegation Clause and, therefore, are unconstitutional and unenforceable: (1) that portion of Section 3(b) which permits the Department to promulgate regulations affecting DSS providers, and (2) Section 15(h), in its entirety, which authorizes the Department to regulate fees that a DSS provider may charge consumers. The Court stated that there was no basis at that time on which to grant USOBA summary relief on claims regarding that part of Section 3(b) which addresses the Department's power to license DSS providers or regarding any other challenged provision of Act 117. The court rejected USOBA's argument that the unconstitutional provisions were inseverable and that, as a result, Act 117 was unenforceable in its entirety.

The Department filed a notice of appeal from the Commonwealth Court's decision on March 19, 2010. USOBA filed its notice of cross-appeal on April 5, 2010. Subsequently, the parties submitted jurisdictional statements regarding their respective appeals, pursuant to Rule of Appellate Procedure 909. See Pa.R.A.P. 909(a)-(b). Upon review of the parties' filings, as to each appeal, we postponed consideration of jurisdiction to the merits stage and ordered the parties to brief the following supplemental issue before addressing their substantive claims:

Whether the Commonwealth Court's Order is a final, appealable order under Pa.R.A.P. 341 for purposes of this appeal; the parties are to include a discussion of Pennsylvania Bankers Ass'n v. ...


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