Amendments to Pennsylvania consumer protection statute will not be applied retroactively

In Johnson v. Phelan Hallinan & Schmieg, LLP, 2019 PA Super 11 (Jan. 8, 2019) the Superior Court of Pennsylvania upheld a finding that a 2008 amendment to state consumer protection which raised the statutory limit for qualifying loans from $50,000 to $217,873.5 will not be applied retroactively.

In this class action case, the mortgagors sued the foreclosure attorneys for violating a Pennsylvania law, section 406 of the Pennsylvania Loan Interest and Protection Law, 41 P.S. §§ 101 et seq. (“Act 6”), by pursuing an award of attorney fees in the mortgage foreclosure action that were not actually incurred. The foreclosure attorneys were initially successful in arguing that Act 6 only applies to “residential mortgage lenders,” and not to their foreclosure counsel. That decision was reversed on appeal.

On remand, the foreclosure attorneys took a different tack. They argued that the mortgagors were barred from pursuing relief under Act 6 because their $74,000 mortgage did not qualify as a “residential mortgage” under the Act, as it exceeded the $50,000 statutory limit in effect at the time it was executed in 2002. The mortgagors maintained that the version of the Act in effect in 2009, at the time the foreclosure action was commenced, should be applied which raised the limit to $217,873.5. The lower court sided with the foreclosure attorneys finding that the legislature did not manifest an intent that the amendment apply retroactively.

The mortgagors appealed and lost. The Superior Court of Pennsylvania affirmed that there was evidence that the legislature intended the amendment to be applied retroactively. The mortgagors’ main contentions were that since the prior version had been repealed and replaced, the trial court was required to apply the amended terms. They further claimed that nothing in the 2008 amendment indicated an intent by the legislature to restrict its effect to mortgages executed after to its effective date. The absence of such language indicates an intention that the 2008 amendment apply to all foreclosure actions upon its effective date.

In support of their position, the mortgagors highlighted the protective provisions contained in other sections of Act 6, which utilize the term “residential mortgage” in concert with the commencement of a foreclosure action, claiming that these provisions suggest that the effective date of the amendment need only precede the commencement of foreclosure proceedings. They further noted that another section which prohibits prepayment penalties specifically exempts mortgages entered into prior to the effective date of the amendment. By including this language, the mortgagors argue this evinced the legislature’s intent that it did not prohibit retroactive application of the amendments.

The court disagreed. It proceeded from the principle that the Pennsylvania legislature has expressly prohibited retroactive application of statutory provisions unless it has clearly and manifestly provided for such application. Further, as this concerned a statutory amendment, it must be construed as merging into the original statute and replacing the part amended. The new provisions shall be construed as effective only from the date when the amendment became effective.

In construing the 2008 amendment to Act 6, the court found no indication by the General Assembly that the increased monetary limit for “residential mortgages” was clearly and manifestly intended to apply retroactively to mortgages executed prior to its effective date. The court was mindful that Act 6 is a remedial statute, which should be liberally construed to effectuate its aims, but there is nevertheless no express legislative intent that the amendment should apply retroactively.


  • James Noonan

    Jim is a founding partner of Noonan & Lieberman. Jim has more than 25 years of experience in civil litigation on behalf of creditors, servicers, business and real estate owners.

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