When You Do Not Need To Prove Fraud By Clear And Convincing Evidence

In Boehm v. Riversource Life Insurance Company and James Day II, 117 A.3d 308( Pa Super. 2015), the Pennsylvania Superior Court decided a case of first impression in Pennsylvania dealing with a fraud claim under the Unfair Trade Practices and Consumer Protection Law (UTPCPL).  The Court was asked to determine whether such a claim had to be proven by clear and convincing evidence used for common law fraud cases or the lesser standard of a preponderance of the evidence for all claims under the UTPCPL, including fraud claims.

After hearing all the evidence, the trial court determined the defendants violated the UTPCPL by applying a preponderance of the evidence standard, rather than the higher burden of clear and convincing evidence, as is required in a common law fraud case.  In affirming the trial court’s decision, the Superior Court noted that the UTPCPL is to be liberally construed to allow the law’s purpose of protecting consumers from unfair and deceptive business practices to be applied as broadly as possible.  It also noted that the remedies under the UTPCPL are not exclusive, but are in addition to any other causes of action that an individual may have.  Finally, the Court noted that the UTPCPL’s underlying foundation was fraud prevention.

Boehm, while decided after 1996, was premised on actions that took place prior to 1996.  (The UTPCPL was amended in 1996 to include the phrase “or deceptive conduct” in the current “catchall” provision that prohibits “fraudulent or deceptive conduct which creates a likelihood of confusion or misunderstanding.”  The pre-1996 catchall provision only identified “fraudulent conduct.”)  The Court noted the parties agreed that all of the elements of common law fraud needed to be proven; however, the plaintiff argued fraud only needed to be proven by a preponderance of the evidence under the UTPCPL, and the defendants argued it needed to be proven by clear and convincing evidence since it was a “fraud” claim.

The Superior Court also looked at the reasoning in the case of Eck v. Metropolitan Life Insurance Company, 2006 W.L. 6346564 (Allegheny County 2006).  The Court adopted Judge Wettick’s reasoning in Eck, finding that no claims under the UTPCPL would require a burden of proof greater than a preponderance of the evidence, even if it was a fraud claim not under the catchall provision.

Judge Wettick’s basic reasoning was that there was no language in the UTPCPL or other consumer protection acts, nor any legislative history nor any Pennsylvania appellate court case law to support the construction that a fraud claim under the UTPCPL would require proof based on more than a preponderance of the evidence.  He held that simply because a claim is fraud based would not change the standard of proof, with or without the catchall provision.  To do so, he held, would be in clear contravention of the legislative intent.  Finally, Judge Wettick noted that private actions based on consumer protection legislation should be governed by a preponderance of the evidence standard of proof, which would be consistent with the appellate court case law in other jurisdictions and with federal law.

The Pennsylvania Superior Court, relying heavily on Judge Wettick’s opinion for its rationale, determined that the trial court in Boehm correctly applied a preponderance of the evidence standard of proof to the plaintiff’s UTPCPL fraud claims.

This is a major factor for a plaintiff to consider when bringing claims of fraud, since if a claim can be made under the UTPCPL, it should be brought as such a claim rather than a common law fraud claim, with a higher burden of proof.