Bongratz v. WL Belvidere, Inc.
Decision Date | 21 June 1976 |
Docket Number | No. 75 C 3995.,75 C 3995. |
Citation | 416 F. Supp. 27 |
Parties | George J. BONGRATZ and Mary Bongratz, Plaintiffs, v. WL BELVIDERE, INC., a Delaware Corporation, and Lakewood Development Company of Missouri, a Delaware Corporation, as partner d/b/a Candlewick Lake Associates, Defendants. |
Court | U.S. District Court — Northern District of Illinois |
McLennon, Sklodowski & Nelson, Park Ridge, Ill., for plaintiffs.
Robert J. Oliver of Connolly, Oliver, Goddard, Coplan & Close, Rockford, Ill., Samuel J. Betar of Schippers, Betar, Lamendella & O'Brien, Chicago, Ill., for defendants.
Plaintiffs brought this two-count complaint for damages under the Interstate Land Sales Full Disclosure Act, 15 U.S.C. § 1701 et seq. Count I alleges that, in connection with a sale of real property by the defendants on November 26, 1972, plaintiffs were not provided a property report before signing the contract as required by 15 U.S.C. § 1703(a)(1). Count II alleges that defendants made material misrepresentations to the plaintiffs before the contract was signed, in violation of 15 U.S.C. § 1703(a)(2)(B).
Defendants have moved to dismiss on the grounds that the statute of limitations has run and that the complaint asks for an improper measure of damages. In addition, they seek to dismiss Count II because there was no allegation that the representations were in commerce. We will grant the motion as to Count I. As to Count II, plaintiffs will be given leave to amend their complaint to meet defendants' interstate commerce objection; otherwise, their motion will be denied.
The complaint was filed on November 21, 1975, almost three years after the sales contract was signed. Defendants argue that the case is governed by a two-year limitations period beginning with the date of sale and is therefore barred.
The statute of limitations under the Act is 15 U.S.C. § 1711, which reads:
No action shall be maintained to enforce any liability created under section 1709(a) or (b)(2) of this title unless brought within one year after the discovery of the untrue statement or the omission, or after such discovery should have been made by the exercise of reasonable diligence, or, if the action is to enforce a liability created under section 1709(b)(1) of this title, unless brought within two years after the violation upon which it is based. In no event shall any such action be brought by a purchaser more than three years after the sale or lease to such purchaser. emphasis added
In this case, the liability was created under Section 1709(b)(1), which reads:
The relevant portions of Section 1703, which defines the violation, read:
It is clear from Section 1711 that the period of limitations begins to run from the time of the "violation." Therefore, the question we must decide is when the alleged violations took place. For this we must go not to Section 1709, for that merely defines the liability rather than the violation upon which it is based. The violations under that Act are defined by Section 1703. Count I of the complaint alleges a violation of Section 1703(a)(1). In that subsection, Congress provided that the unlawful activity is "to sell or lease." Since the complaint clearly alleges that the sale took place on November 26, 1972, that is the date on which the limitations period began to run. The period, under Section 1711, is two years, and therefore Count I is time-barred.
Count II, on the other hand, alleges a violation of Section 1703(a)(2)(B). The activity which constitutes the violation under that provision is "to obtain money or property." We have found no reported cases involving the question of when the limitations period begins to run in the case of a violation of Section 1703(a)(2)(B).1 Nevertheless, the statute could not state more clearly that the period begins to run on the date of the violation and that the violation is the receipt of money or property. Indeed, had Congress intended that the period begin to run on the date of sale, it undoubtedly would have so provided, since it did provide that in no event shall an action be brought more than three years from the date of sale.
Although plaintiffs have not alleged when the date was on which defendants last received money or property, the running of the limitations is an affirmative defense which must be raised by defendants; plaintiffs need not plead that the complaint is timely filed. Melhorn v. AMREP Corp., 373 F.Supp. 1378, 1380, (M.D.Pa. 1974). Since defendants have not established that the complaint was filed more than two years after they last received money or property from plaintiffs, and since the action was filed within three years of the sale date, we must deny defendants' motion as it relates to Count II.
Defendants contend that plaintiff has not asked...
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