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Galen v. Avenue of the Stars Associates

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 ...


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