Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

Galen v. Avenue of the Stars Associates

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA


August 24, 2010

HELENE V. GALEN, AS TRUSTEE FOR THE LOUIS J. GALEN REVOCABLE TRUST OF 1983, UDT DATED MAY 23, 1983, PLAINTIFF,
v.
AVENUE OF THE STARS ASSOCIATES, LLC, DEFENDANT.

The opinion of the court was delivered by: Honorable Ronald S.W. Lew Senior, U.S. District Court Judge

ORDER

Re: Plaintiff's Motion for Summary Judgment [11] and Defendant's Motion for Summary Judgment [15]

Plaintiff Helene V. Galen filed her Motion for Summary Judgment [11] on July 1, 2010. Defendant Avenue of the Stars Associates, LLC filed its Motion for Summary Judgment [15] on July 26, 2010. Both matters were originally set for hearing on August 23, 2010. Having taken both matters under submission on August 20, 2010, and having reviewed all papers submitted pertaining to these motions, the Court NOW FINDS AND RULES AS FOLLOWS:

The Court hereby DENIES Plaintiff's Motion for Summary Judgment in its entirety. With regard to the Defendant, the Court DENIES IN PART AND GRANTS IN PART Defendant's Motion for Summary Judgment.

Summary judgment is appropriate when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). A genuine issue is one in which the evidence is such that a reasonable fact-finder could return a verdict for the non-moving party. Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986). The evidence, and any inferences based on underlying facts, must be viewed in a light most favorable to the opposing party. Diaz v. American Tel. & Tel., 752 F.2d 1356, 1358 n.1 (9th Cir. 1985).

Plaintiff asserts four grounds for Summary Judgment based on her Complaint: (1) regarding the Second Claim for Rescission, Defendant allegedly violated the federal Interstate Land Sales Full Disclosure Act (hereinafter, "ILSA") by failing to provide Plaintiff with a valid Property Report before she signed the Purchase and Sale Agreement (hereinafter, "Agreement"); (2) regarding the Third Claim for Rescission, Defendant allegedly violated the ILSA by failing to include a required disclosure in the Agreement; (3) regarding the Fourth Claim for Rescission, Defendant allegedly violated the California Subdivided Lands Act (hereinafter, "SLA") by failing to provide a valid Property Report and by failing to secure a signed Property Report Receipt before Plaintiff signed the Agreement; and (4) regarding the Seventh Claim for Declaratory Relief, Defendant's alleged violation of the ILSA and the SLA entitles Plaintiff to the return of her deposit, with interest.

1. Second Claim for Relief for Rescission The Court DENIES Summary Judgment for Plaintiff's Second Claim for Rescission

The ILSA prohibits the sale or lease of any lot unless a printed property report "has been furnished to the purchaser or lessee in advance of the signing of any contract or agreement for sale or lease by the purchaser or lessee". 15 U.S.C. § 1703(a)(1)(B). Where the required property report "has not been given to the purchaser or lessee in advance of his or her signing such contract or agreement, such contract or agreement may be revoked at the option of the purchaser or lessee within two years from the date of such signing . . ." 15 U.S.C. § 1703(c).

Plaintiff fails to meet the burden of proof for Summary Judgment. Plaintiff, as the moving party, must show an "absence of evidence" to support the non-moving party's case. Celotex v. Catrett, 477 U.S. 317, 325 (1986). Plaintiff argues that the binder she received on March 25, 2008, could not have included the most current Property Report, which is dated March 28, 2008 (hereinafter, "March Property Report"). These facts fail to refute Defendant's assertions that its staff sent a subsequent package of materials that included the March Property Report before Plaintiff signed the Agreement.

Defendant also lacks evidence that proves it sent Plaintiff the March Property Report. But Defendant, as the non-moving party has gone beyond the pleadings and designated specific facts showing that there is a genuine issue for trial. See Celotex, 477 U.S. at 324. In the instant case, the evidence demonstrates that a genuine issue of fact remains such that a reasonable fact-finder could return a verdict for the non-movant. See Anderson, 477 U.S. at 248.

2. Third Claim for Relief for Rescission

The Court DENIES Plaintiff's Third Claim for Relief for Rescission. The ILSA gives the purchaser additional grounds for revocation of a nonexempt contract or agreement pursuant to 15 U.S.C. § 1703(d)(3). See 15 U.S.C. § 1703(d)(3). Although Defendant undisputably did not include the breach of contract provision under 15 U.S.C. § 1703(d), the section merely requires that the Agreement "provide" for the terms as specified under the section. 15 U.S.C. § 1703(d). In the Agreement signed by Plaintiff, Defendant meets this requirement by complying with Cal. Civ. Code § 1675.

Since both 15 U.S.C. § 1703(d) and Cal. Civ. Code § 1675 address the issue of how much of the buyer's payment constitutes liquidated damages to the seller should the buyer fail to complete the purchase of the property, Defendant does not need to include both statutory provisions in the Agreement. See 15 U.S.C. § 1703(d); Cal. Civ. Code § 1675. Furthermore, as California law mandates that "any contractual provision which calls for disbursement or a charge against Purchase Money based on Buyer's alleged failure to complete the purchase of the subdivision . . . must conform with Civil Code Sections 1675 . . .," Defendant properly followed the more stringent requirements of Cal. Civ. Code § 1675 in drafting the Agreement's liquidated damages provision. Cal. Code of Regs. § 2791(c)(1) (emphasis added).

3. Fourth Claim for Relief for Rescission The Court also DENIES Plaintiff's Fourth Claim for Rescission based on whether Defendant provided a valid Property Report and secured a Property Report Receipt

The SLA also requires a copy of the property report be given to the prospective purchaser "prior to the execution of a binding contract or agreement for the sale or lease of any lot or parcel in a subdivision." Cal. Bus. & Prof. Code § 11018.1. As stated above, Plaintiff's evidence does not unequivocally demonstrate that Defendant failed to provide her with a valid Property Report prior to her signing the Agreement. Thus, the Court cannot reach Summary Judgment because a genuine issue of fact remains such that a reasonable fact-finder could return a verdict for the non-movant. See Anderson, 477 U.S. at 248.

Second, the California Code of Regulations require that a prospective purchaser "be given a copy of the public report for which a receipt must be completed and retained." Cal. Code Regs. tit. 1, § 2795.1. The use of the term "prospective purchaser" in the Receipt's terms does not establish that Defendant violated the SLA. The Receipt clearly provides for situations such as the one at hand, where a "prospective purchaser" has signed a purchase and sale agreement but has yet to close escrow. The Receipt's language acknowledges that the Receipt's signatory may have already signed a purchase and sale agreement based on a conditional property report, and subsequently may be signing the Receipt for a final property report. Thus, Defendant did not violate the SLA by obtaining Plaintiff's signature for the Receipt after Plaintiff signed the Agreement.

While the Court finds that the use of the term "prospective purchaser" in the Property Report Receipt's language does not prove that the Receipt must be signed before the purchaser signs a purchase and sale agreement, genuine issues of material fact still exist as to whether Defendant provided Plaintiff a valid Property Report before she signed the Purchase and Sale Agreement.

4. Seventh Claim for Declaratory Relief Accordingly, as the Court DENIES Summary Judgment for Plaintiff's claims under the ILSA and the SLA, the Court also DENIES Summary Judgment for Plaintiff's Seventh Claim for Declaratory Relief

With regard to Defendant's Motion, Defendant asserts six grounds for Summary Judgment: (1) As to Plaintiff's claim for Damages and Rescission, Defendant asserts that it is exempt from ILSA under the "100 Lot Exemption" and, even if not exempt, that Plaintiff cannot meet her burden of proving that Defendant violated ILSA by failing to provide her with the most current Property Report before she signed the Purchase and Sale Agreement; (2) as to Plaintiff's claim for Rescission under ILSA, Plaintiff cannot meet her burden in proving that Defendant violated ILSA by failing to include specific language in the Agreement's liquidated damages clause; (3) as to Plaintiff's claim for Rescission under SLA, the Act does not require that Defendant provide the most current copy of the Property Report and secure a signed Receipt for the Property Report; (4) as to Plaintiff's claim for Unfair Competition, Defendant complied with ILSA and SLA and there is no statutory authority justifying such claim;

(5) as to Plaintiff's claim for Constructive Trust, Defendant complied with ILSA and the SLA and there is no grounds to grant restitution or injunctive relief; and

(6) as to Plaintiff's claim for declaratory relief, Defendant did not violate ILSA or the SLA and there is no basis by which Plaintiff can rescind the contract.

As an initial matter, the Court has determined that the Defendant does not qualify for the "100 Lot Exemption" and is therefore not exempt from the ILSA requirements. The policy behind ILSA is to protect consumers and ensure that prior to purchasing certain types of real estate, a buyer is apprised of the information needed to make an informed decision. As such, the Court finds that the applicability of the exemption has to be contemporaneous with the sale of a particular lot and not at some point after the signing of the contract.

1. Plaintiff's First and Second Causes of Action for Damages and Rescission Under ISLA

The Court DENIES Defendant's Motion for Summary Judgment on the first and second causes of action for Damages and Rescission for violations of the Interstate Land Sales Full Disclosure Act. Genuine issues of material fact still exist as to whether Defendant violated the Interstate Land Sales Full Disclosure Act. Based on the facts presented, the Court cannot determine whether Plaintiff received the Property Report amended on March 28, 2008 before she signed the Purchase and Sale Agreement.

Additionally, the Court finds that a developer is required to give a prospective buyer a copy of a property report that is in effect prior to buyer's execution of the purchase agreement. Therefore, it is whether Plaintiff was in actual receipt of the March 28 Report as opposed to the December 17 Report that is controlling on the issue of whether Defendant violated ISLA.

2. Plaintiff's Third Cause of Action for Rescission Under ISLA Regarding Liquidated Damages Clause With regard to Defendant's Motion for Summary Judgment on the third cause of action for Rescission, the Court GRANTS Summary Judgment because Defendant meets the liquidated damages terms mandated under 15 U.S.C. § 1703(d)(3) by using the breach of contract language in Cal. Civ. Code § 1675.

While Defendant undisputably did not include the breach of contract provision under 15 U.S.C. § 1703(d), the section merely requires that the Agreement "provide" for the terms as specified under the section. 15 U.S.C. § 1703(d). In the Agreement signed by Plaintiff, Defendant meets this requirement by complying with Cal. Civ. Code § 1675.

3. Plaintiff's Fourth Cause of Action for Rescission Under the California Subdivided Lands Act

The Court DENIES Defendant's Motion for Summary Judgment on the fourth cause of action for Rescission under the California Subdivided Lands Act. While the Court finds that the use of the term "prospective purchaser" in the Property Report Receipt's language does not prove that the Receipt must be signed before the purchaser signs a purchase and sale agreement, genuine issues of material fact still exist as to whether Defendant provided Plaintiff a valid Property Report before she signed the Purchase and Sale Agreement.

4. Plaintiff's Fifth Cause of Action for Unfair Competition

The court DENIES Defendant's Motion for Summary Judgment on the fifth cause of action for Unfair Competition. Genuine issues of material fact still exist as to whether Defendant failed to provide Plaintiff with a valid Property Report before she signed the Purchase and Sale Agreement, in violation of ILSA and the SLA.

5. Plaintiff's Sixth Cause of Action for Constructive Trust

The court DENIES Defendant's Motion for Summary Judgment on the sixth cause of action for Constructive Trust. Genuine issues of material fact still exist as to whether Defendant failed to provide Plaintiff with a valid Property Report before she signed the Purchase and Sale Agreement, in violation of ILSA and the SLA

6. Plaintiff's Seventh Cause of Action for Declaratory Relief

Since the Court has DENIED Summary Judgment on six out of the seven preceding claims under the ILSA and the SLA, the Court also DENIES Summary Judgment on Defendant's Claim for Declaratory Relief.

IT IS SO ORDERED.

20100824

© 1992-2010 VersusLaw Inc.



Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.