Associated Property Mgmt., Inc. v. PA OAG ( 2018 )


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  •           IN THE COMMONWEALTH COURT OF PENNSYLVANIA
    Associated Property Management,           :
    Inc., d/b/a Associated Realty             :
    Property Management, Mark Bigatel         :
    and Student Housing Association           :
    of Pennsylvania,                          :
    :
    Petitioners   :
    :
    v.                 : No. 280 M.D. 2017
    : Argued: December 4, 2017
    Commonwealth of Pennsylvania,             :
    Office of Attorney General,               :
    :
    Respondent    :
    BEFORE:      HONORABLE PATRICIA A. McCULLOUGH, Judge
    HONORABLE MICHAEL H. WOJCIK, Judge
    HONORABLE BONNIE BRIGANCE LEADBETTER, Senior Judge
    OPINION NOT REPORTED
    MEMORANDUM OPINION
    BY JUDGE WOJCIK                                          FILED: May 29, 2018
    Before the Court are the preliminary objections of the Commonwealth
    of Pennsylvania, Office of Attorney General (OAG) to the petition for review filed
    by Associated Property Management, Inc. d/b/a Associated Realty Property
    Management (Associated), Mark Bigatel, and the Student Housing Association of
    Pennsylvania (SHA) (collectively, Petitioners), seeking declaratory judgment and a
    permanent injunction.       We sustain the preliminary objections and dismiss the
    petition for review.
    On June 20, 2017, Petitioners filed a petition for review in our original
    jurisdiction seeking declaratory relief and a permanent injunction. Associated is a
    property management company that manages rental housing for various tenants,
    including college students, in Pennsylvania. Mark Bigatel serves as the president of
    SHA, which is a non-profit corporation that maintains an office in Harrisburg, but
    provides a forum for Pennsylvania college and university student landlords to
    exchange ideas and information and to advocate for their common interests.
    On or about February 15, 2015, OAG served a subpoena on Associated
    seeking various documents relating to the names and contact information of tenants,
    security deposit information, sample leases, marketing materials, and lawsuits that
    have been filed against it. Associated complied with OAG’s request and provided
    the aforementioned information, including a sample lease, its rental Rules and
    Regulations, and its move-out instructions. Petitioners assert that OAG, acting
    through its Bureau of Consumer Protection, threatened to file suit if Petitioners did
    not execute an Assurance of Voluntary Compliance (Assurance). The proposed
    Assurance alleges that Petitioners violated the Unfair Trade Practices and Consumer
    2
    Protection Law (Consumer Protection Law)1 and/or the Landlord and Tenant Act of
    1951 (Landlord and Tenant Act)2 in the following respects:
    1. Providing insufficient notice to tenants of damages and
    costs;
    2. Assessing administrative fees that were in violation of
    the law;
    3. Disseminating confusing and misleading rules and
    regulations;
    4. Assessing fines for violations of local ordinances;
    5. Using confusing and misleading terms in the lease;
    6. Using terms that governed the landlord’s right to enter
    the premises that were inconsistent with the law;
    1
    Act of December 17, 1968, P.L. 1224, as amended, 73 P.S. §§201-1 – 201-9.3.
    Specifically, Section 5 of the Consumer Protection Law states:
    In the administration of this act, [OAG] may accept an assurance
    of voluntary compliance with respect to any method, act or practice
    deemed to be violative of the act from any person who has engaged
    or was about to engage in such method, act or practice. Such
    assurance may include a stipulation for voluntary payment by the
    alleged violator providing for the restitution by the alleged violator
    to consumers, of money, property or other things received from
    them in connection with a violation of this act. Any such assurance
    shall be in writing and be filed with the court. Such assurance of
    voluntary compliance shall not be considered an admission of
    violation for any purpose. Matters thus closed may at any time be
    reopened by [OAG] for further proceedings in the public interest,
    pursuant to section 4.
    73 P.S. §201-5.
    2
    Act of April 6, 1951, P.L. 69, as amended, 68 P.S. §§250.101 – 250.602.
    3
    7. Limiting the tenant’s right to purchase goods and
    services; and
    8. Reserving the right to change the Rules and
    Regulations.
    Petition for Review at ¶21.
    The proposed Assurance states that the above deficiencies cause a
    likelihood of confusion or misunderstanding as to the source, sponsorship, approval,
    or certification of goods. The Assurance would: (1) require Petitioners to comply
    with the Consumer Protection Law and the Landlord and Tenant Act; (2) prohibit
    the collection of administrative fees associated with tenants’ breaches of the lease
    agreement; (3) prohibit the joint inspection requirement; (4) require advance notice
    of landlord entry for the purpose of maintenance; (5) prohibit the collection of
    attorney’s fees unless the same would be awarded by a court; and (6) require
    payment of $57,824.32 to OAG along with payment of the costs of investigation.
    The parties have attempted to, but have not resolved OAG’s
    complaints. Petitioners believe that OAG’s allegations that serve as the basis of the
    Assurance are grounded in an incorrect interpretation of the Consumer Protection
    Law and the Landlord and Tenant Act and an incorrect perception of Petitioners’
    business practices.    Petitioners argue that OAG’s threats are improper and
    detrimental to the well-being of law-abiding landlords in the Commonwealth.
    Petitioners contend that OAG arbitrarily and capriciously seeks to impose fines
    without a basis in fact or law.
    Petitioners also contend that they and the other individual landlords
    must hire counsel to defend against OAG’s allegations and the subpoenas that have
    been issued. They contend that hiring counsel and interposing a defense is costly
    and that similarly situated landlords may be compelled to settle with OAG to avoid
    4
    these costs. As a result, Petitioners seek relief by requesting declaratory judgment
    interpreting the Consumer Protection Law and the Landlord and Tenant Act and a
    permanent injunction to enjoin OAG’s arbitrary and capricious enforcement of those
    statutes.
    Respondent OAG concedes that it initiated an investigation of
    Petitioners for violations of the Consumer Protection Law and the Landlord and
    Tenant Act. As a result, OAG has been in discussions with Petitioners to resolve the
    matter. However, OAG has filed preliminary objections to the petition for review.3
    OAG first asserts that SHA lacks standing because there is no allegation
    that it is investigating SHA. Although there is a blanket averment that OAG’s
    investigation may lead to enforcement actions against SHA’s members, OAG argues
    that a declaratory judgment cannot be obtained in anticipation of events that have
    not and may never occur and can only be obtained when there is an actual case or
    controversy. As a result, OAG contends that SHA should be dismissed as a party
    pursuant to Pa. R.C.P. No. 1028(a)(4).4
    3
    As this Court has explained:
    In reviewing preliminary objections, all material facts averred in the
    complaint, and all reasonable inferences that can be drawn from
    them, are admitted as true. However, a court need not accept as true
    conclusions of law, unwarranted inferences, argumentative
    allegations, or expressions of opinion. “Preliminary objections
    should be sustained only in cases that are clear and free from doubt.”
    Seitel Data, Ltd. v. Center Township, 
    92 A.3d 851
    , 859 (Pa. Cmwlth. 2014), appeal dismissed, 
    111 A.3d 170
     (Pa. 2015) (citations omitted).
    4
    Rule 1028(a)(4) states, “Preliminary objections may be filed by any party to any pleading
    and are limited to the following grounds: . . . legal insufficiency of a pleading (demurrer)[.]”
    5
    Second, OAG argues that Petitioners do not specify which portions of
    the Consumer Protection Law and the Landlord and Tenant Act that the investigation
    violates, so this Court should dismiss the petition for review pursuant to Pa. R.C.P.
    No. 1028(a)(3)5 due to lack of specificity as required by Pa. R.C.P. No. 1019(a).6
    OAG contends that Petitioners’ admission that they are seeking declaratory relief
    that goes beyond the terms of any particular lease seeks an advisory opinion.
    Third, OAG argues that a permanent injunction is a remedy, and not a
    cause of action that can only be issued in response to a legal wrong. Petitioners seek
    to enjoin OAG from prosecuting them or from recovering costs in the absence of
    formal regulations that put them on notice of OAG’s interpretation of the law. As a
    result, OAG requests that we sustain the preliminary objections and dismiss the
    petition for review seeking a permanent injunction.
    On review, it is clear that Petitioners are not entitled to the requested
    declaratory and injunctive relief. “‘Pennsylvania is a fact-pleading jurisdiction. A
    complaint must therefore not only give the defendant notice of what the plaintiffs’
    claim is and the grounds upon which it rests, but it must also formulate the issues by
    summarizing those facts essential to support the claim.’” Unified Sportsmen of
    Pennsylvania v. Pennsylvania Game Commission, 
    950 A.2d 1120
    , 1134 (Pa.
    Cmwlth. 2008) (citations omitted).
    In the petition for review, Petitioners allege that OAG has erroneously
    interpreted the Consumer Protection Law and the Landlord and Tenant Act in
    pursuing its unfounded complaints about Associated’s and Bigatel’s rental practices.
    5
    Rule 1028(a)(3) states, “Preliminary objections may be filed by any party to any pleading
    and are limited to the following grounds: . . . insufficient specificity in a pleading[.]”
    6
    Rule 1019(a) states, “The material facts on which a cause of action . . . is based shall be
    stated in a concise and summary form.”
    6
    Petition for Review at ¶¶26, 27. Although they request a declaration that their leases
    do not violate the relevant law, Petitioners do not identify any section of any actual
    lease or the relevant sections of the Consumer Protection Law or the Landlord and
    Tenant Act at issue in this matter.7                 Instead, Petitioners assert their own
    interpretations of the terms in a “specimen” lease and conclude that they do not
    violate those statutes. Petition for Review at ¶¶29, 36. Petitioners claim that these
    “kinds of provisions” satisfy the pleading requirements because their challenge is
    “stated more broadly than to a specific lease in itself” and that they are seeking a
    “declaration that goes beyond the terms of any given lease so that the matters may
    be settled generally and not in piecemeal litigation involving different parties and
    7
    As this Court has explained:
    Pa. R.C.P. No. 1028(a)(3) permits a preliminary objection
    based on insufficient specificity of a pleading. To determine if a
    pleading is sufficiently specific, a court must ascertain whether the
    facts alleged are sufficiently specific to enable a defendant to
    prepare his defense. Preliminary objections in the nature of a motion
    for a more specific pleading raise the sole question of whether the
    pleading is sufficiently clear to enable the defendant to prepare a
    defense. Further, in pleading its case, the complaint need not cite
    evidence but only those facts necessary for the defendant to prepare
    a defense.
    Additionally, in determining whether a particular paragraph
    in a complaint is stated with the necessary specificity, such
    paragraph must be read in context with all the allegations in the
    complaint. Only then can a court determine whether the defendant
    is put on adequate notice of the claim against which it must defend.
    Unified Sportsmen of Pennsylvania, 
    950 A.2d at 1134-35
     (citations omitted).
    7
    different leases.” Answer to Preliminary Objections at ¶¶24, 25.8 Thus, Petitioners
    are not asking this Court to declare that the provisions of an executed lease are not
    unlawful under the Consumer Protection Law or the Landlord and Tenant Act or that
    OAG may not pursue an enforcement action under those statutes based on any
    particular lease.
    As the Supreme Court has explained:
    Only where there is a real controversy may a party
    obtain a declaratory judgment. . . . A declaratory judgment
    must not be employed to determine rights in anticipation
    of events which may never occur or for consideration of
    moot cases or as a medium for the rendition of an advisory
    opinion which may prove to be purely academic.
    Gulnac by Gulnac v. South Butler School District, 
    587 A.2d 699
    , 701 (Pa. 1991)
    (citations omitted).       Moreover, “[i]t is well settled that ‘[i]n Pennsylvania,
    declaratory relief is unavailable when it is sought merely in anticipation of an action
    at law by another party.’ Similarly, as here, where a declaratory judgment action
    has been filed in anticipation of an administrative enforcement proceeding, a court
    should decline to exercise jurisdiction.” GGNSC Clarion LP v. Kane, 
    131 A.3d 1062
    , 1068-69 (Pa. Cmwlth.), aff’d, 
    152 A.3d 983
     (Pa. 2016). Further, “[i]njunctive
    relief is not available to eliminate a possible remote future injury or invasion of
    rights.” Jamal v. Department of Corrections, 
    549 A.2d 1369
    , 1371 (Pa. Cmwlth.
    1988), appeal denied, 
    554 A.2d 512
     (Pa. 1989) (citations omitted).
    As a result, we will not grant the requested declaratory and injunctive
    relief in anticipation of any OAG enforcement proceeding. Petitioners can and may
    raise any claims regarding OAG’s purported misapplication of the Consumer
    8
    Petitioners’ assertions “in [their] answer to the preliminary objections is clearly binding
    and cannot be ignored.” University of Dominica v. Pennsylvania College of Podiatric Medicine,
    
    446 A.2d 1339
    , 1341 (Pa. Super. 1982) (citation omitted).
    8
    Protection Law or the Landlord and Tenant Act in any enforcement actions that may
    be filed against them. Petitioners can refuse to execute the Assurance without
    liability, OAG may or may not proceed under the Consumer Protection Law, and
    Petitioners may raise any or all of these claims in any future enforcement
    proceedings, if any occur.9
    Accordingly, the preliminary objections are sustained, and the petition
    for review is dismissed.
    MICHAEL H. WOJCIK, Judge
    9
    Petitioners’ reliance on Arsenal Coal Company v. Department of Environmental
    Resources, 
    477 A.2d 1333
     (Pa. 1983), and its progeny is misplaced. In those pre-enforcement
    cases, the statutory authority of the governmental entity to act in the first instance was at issue,
    which is not present in the instant appeal. See, e.g., Pennsylvania Dental Hygienists’ Association,
    Inc. v. State Board of Dentistry, 
    672 A.2d 414
    , 417 (Pa. Cmwlth. 1996) (“[C]osts incurred to
    challenge the regulations in a case-by-case post-enforcement proceeding are not the type of direct
    and immediate harm justifying this Court’s exercise of its original jurisdiction.”) (citation omitted).
    9
    IN THE COMMONWEALTH COURT OF PENNSYLVANIA
    Associated Property Management,        :
    Inc., d/b/a Associated Realty          :
    Property Management, Mark Bigatel      :
    and Student Housing Association        :
    of Pennsylvania,                       :
    :
    Petitioners     :
    :
    v.                    : No. 280 M.D. 2017
    :
    Commonwealth of Pennsylvania,          :
    Office of Attorney General,            :
    :
    Respondent      :
    ORDER
    AND NOW, this 29th day of May, 2018, the preliminary objections of
    the Office of Attorney General are SUSTAINED, and the petition for review is
    DISMISSED.
    __________________________________
    MICHAEL H. WOJCIK, Judge