Murray v. Holiday Isle, LLC

• Decision Date: 25 March 2009
• Docket Number: Civil Action 07-0771-WS-M.
• Citation: 620 F.Supp.2d 1302
• Parties: Richard MURRAY, III, et al., Plaintiffs, v. HOLIDAY ISLE, LLC, Defendant.
• Court: U.S. District Court — Southern District of Alabama

620 F.Supp.2d 1302

Richard MURRAY, III, et al., Plaintiffs, v. HOLIDAY ISLE, LLC, Defendant.

Civil Action 07-0771-WS-M.

United States District Court, S.D. Alabama, Southern Division.

March 25, 2009.

COPYRIGHT MATERIAL OMITTED

A. Carson I. Nicolson, Carson Irvine Nicolson, LLC, Fairhope, AL, for Plaintiffs.

Charles William Daniels, Jr., Thomas Marriott Wood, Burr & Forman LLP, Mobile, AL, for Defendant.

ORDER

WILLIAM H. STEELE, District Judge.

This matter comes before the undersigned on defendant's Motion for Summary Judgment (doc. 58) and plaintiffs' Motion for Partial Summary Judgment (doc. 67). These cross-motions have been the subject of extensive briefing, and are now ripe for disposition.¹ Also pending is defendant's Motion for Leave to Submit Supplemental Evidence (doc. 57). That Motion is granted, and the Affidavit of Paul C. Wesch appended to defendant's Notice of Supplemental Filing (doc. 69) is accepted and will be considered by the Court in adjudicating the cross-motions for summary judgment.²

I. General Background.

Defendant, Holiday Isle, LLC ("Holiday Isle"), is the developer of a condominium project entitled Holiday Isle, a Condominium (the "Project"), located in Dauphin Island, Alabama. The Offering Statement for the Project reflects that it was to consist of 144 residential units located in a seven-story building, plus numerous amenities such as a three-level parking garage, outdoor and indoor swimming pools and decks, tennis courts, hot tub, sauna, exercise room, community room, and other facilities. (Wesch Aff., at Exh. F.) Construction was contemplated to begin in May 2005 and to conclude by April 2007. (Id.)

This dispute relates to five specific condominium units at the Project. The seven plaintiffs (who are all related to each other by blood or marriage) entered into preconstruction purchase agreements with Holiday Isle to purchase such units in early 2005. Despite being repeatedly asked to do so by the developer, none of the plaintiffs ever closed on those units, as a result of which Holiday Isle ultimately drew on letters of credit provided by plaintiffs to take possession of plaintiffs' security deposits. Plaintiffs now want their deposits back, but defendant has refused to reimburse them.

On October 30, 2007, plaintiffs³ filed a Complaint for Declaratory Judgment and Damages (doc. 1) against Holiday Isle in this District Court. The Complaint identifies the following four causes of action: (a) as Count One, a claim under the Interstate Land Sales Full Disclosure Act, 15 U.S.C. §§ 1701 et seq. ("ILSFDA"), for rescission of the purchase agreements and damages based on, inter alia, Holiday Isle's failure to include mandatory statutory language in the agreements concerning plaintiffs' rescission rights;⁴ (b) as Count Two, a claim seeking a declaration that, inter alia, Holiday Isle is obligated to refund plaintiffs' security deposits pursuant to Paragraph 6(B) of the agreements, which required the units to be completed within two years, and Paragraph 11, which identified certain prerequisites to defendant's ability to draw on the letters of credit; (c) as Count Three, a claim for conversion based on Holiday Isle's allegedly unlawful drawing on plaintiffs' letters of credit to possess and control their security deposits; and (d) as Count Four, a claim for declaratory judgment solely on behalf of plaintiff Fitzner that he validly rescinded his offer to purchase a unit at Holiday Isle on June 5, 2007, rendering his purchase agreement of no legal force or effect and necessitating the return of his deposit.

Though one would never guess it from the parties' sprawling summary judgment submissions,⁵ the issues on which the outcome of this action hinges are quite discrete. The critical questions are, for purposes of Count One, whether plaintiffs were damaged by Holiday Isle's omission of mandatory statutory language regarding plaintiffs' rescission rights and, for purposes of Count Two, what meaning is ascribed to the contractual terms "Unit" and "completed," and whether plaintiffs were actually in default. It is on those questions that this Order will focus. Count Three appears closely linked to Count Two, and Count Four may be quickly disposed of on independent grounds.

II. Summary Judgment Standard.

Summary judgment should be granted only if "there is no genuine issue as to any material fact and ... the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The party seeking summary judgment bears "the initial burden to show the district court, by reference to materials on file, that there are no genuine issues of material fact that should be decided at trial." Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). Once the moving party has satisfied its responsibility, the burden shifts to the nonmovant to show the existence of a genuine issue of material fact. Id. "If the nonmoving party fails to make `a sufficient showing on an essential element of her case with respect to which she has the burden of proof,' the moving party is entitled to summary judgment." Id. (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)) (footnote omitted). "In reviewing whether the nonmoving party has met its burden, the court must stop short of weighing the evidence and making credibility determinations of the truth of the matter. Instead, the evidence of the non-movant is to be believed, and all justifiable inferences are to be drawn in his favor." Tipton v. Bergrohr GMBH-Siegen, 965 F.2d 994, 999 (11th Cir.1992) (internal citations and quotations omitted). "Summary judgment is justified only for those cases devoid of any need for factual determinations." Offshore Aviation v. Transcon Lines, Inc., 831 F.2d 1013, 1016 (11th Cir.1987) (citation omitted).

"The applicable Rule 56 standard is not affected by the filing of cross-motions for summary judgment." Godard v. Alabama Pilot, Inc., 485 F.Supp.2d 1284, 1291 (S.D.Ala.2007); see also May v. A Parcel of Land, 458 F.Supp.2d 1324, 1333 (S.D.Ala.2006) (same). Indeed, the Eleventh Circuit has explained that "[c]ross-motions for summary judgment will not, in themselves, warrant the court in granting summary judgment unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely disputed." United States v. Oakley, 744 F.2d 1553, 1555 (11th Cir.1984) (citation omitted); see also Wermager v. Cormorant Tp. Bd., 716 F.2d 1211, 1214 (8th Cir.1983) ("the filing of cross motions for summary judgment does not necessarily indicate that there is no dispute as to a material fact, or have the effect of submitting the cause to a plenary determination on the merits"). Nonetheless, "cross-motions may be probative of the absence of a factual dispute where they reflect general agreement by the parties as to the dispositive legal theories and material facts." Godard, 485 F.Supp.2d at 1291; see also May, 458 F.Supp.2d at 1333.⁶

III. ILSFDA Cause of Action (Count One).

A. Plaintiffs' Motion for Summary Judgment as to Liability.

"The ILSFDA was intended to curb abuses accompanying interstate land sales." Winter v. Hollingsworth Properties, Inc., 777 F.2d 1444, 1448 (11th Cir. 1985).⁷ Indeed, "[t]he underlying purpose of the [ILSFDA] is to insure that a buyer, prior to purchasing certain kinds of real estate, is informed of facts which will enable him to make an informed decision about purchasing the property." Law v. Royal Palm Beach Colony, Inc., 578 F.2d 98, 99 (5th Cir.1978); see also Winter, 777 F.2d at 1449 (statute requires that buyer receive information necessary to make his decision prior to entering into purchase agreement); United States v. Steed, 674 F.2d 284, 287 (4th Cir.1982) (ILSFDA "is a comprehensive statute requiring subdivision developers, unless exempt, to furnish prospective purchasers pertinent information about lots offered for sale"). In light of its remedial objectives, the ILSFDA "must be applied liberally in favor of broad coverage," with exemptions being construed "narrowly, in order to further the statute's purpose of consumer protection." Pigott v. Sanibel Development, LLC, 576 F.Supp.2d 1258, 1267 (S.D.Ala.2008) (citations omitted); see also Schatz v. Jockey Club Phase III, Ltd., 604 F.Supp. 537, 541 (S.D.Fla.1985) (explaining that ILSFDA "should be construed not technically, but flexibly to effectuate its remedial purposes").

Plaintiffs have unquestionably made a prima facie showing that their transactions with Holiday Isle fall within the ambit of the ILSFDA. The Holiday Isle condominium development was marketed as a 7-story building consisting of 144 residential units. (Doc. 65, Plaintiffs' Exh. 1, at ¶ 3.) Those units were, by all appearances, subject to a "common promotional plan" within the meaning of the ILSFDA. See 15 U.S.C. § 1701(4) (defining "common promotional plan" as "a plan, undertaken by a single developer or a group of developers acting in concert, to offer lots for sale or lease"). Moreover, such units were marketed and sold in interstate commerce, including marketing efforts by a Florida real estate broker. (Doc. 65, Plaintiffs' Exh. 2, at HI-000268; Wesch Dep., at 106.) One or more purchasers (albeit not the plaintiffs in this case) signed their purchase agreements at the broker's offices in Destin, Florida. (Doc. 73, Exh. B, at 22-23.) Against this showing that the Project lies within the scope of the ILSFDA, Holiday Isle has identified no countervailing facts, has invoked no specific exemptions, and has advanced no arguments that the Project is for any reason exempt from the disclosure requirements of the ILSFDA.⁸

Having found (based on the parties' summary judgment submissions) that the Project was covered by the ILSFDA, the Court now turns to the specific aspects of that statute germane to these proceedings. One of the ILSFDA's requirements is that a developer selling a nonexempt lot must furnish the purchaser...