Dalzell v. Trailhead Lodge at Wildhorse Meadows, LLC
1:09-cv-02614
D. Colo.Jan 4, 2013Background
- RP Steamboat Springs LLC developed Wildhorse Meadows; Trailhead Lodge parcels were allocated to Trailhead LLC for condominium development.
- Resort Ventures West managed RP and Trailhead LLC; principals overlapped across RP, Trailhead LLC, and Resort Ventures.
- S&P Destination Properties marketed Wildhorse Meadows and Trailhead Lodge; RP assigned the Trailhead project to Trailhead LLC via an assignment with S&P consent.
- Plaintiffs purchased Trailhead Lodge units in 2007 without HUD/ILSA property reports; contracts lacked required ILSA disclosures.
- Stipulations streamlined some issues; remaining disputes centered on RP’s status as an indirect seller and on revocation/damages under ILSA.
- Court ultimately concluded RP was not an indirect seller under § 1703 and awarded rescission/damages against Trailhead LLC to the plaintiffs: SAM Properties V, LLC, Cindy Rogers, and others.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is RP liable as an indirect seller under ILSA §1703(a) | Plaintiffs contend RP controlled sales via marketing and creation | RP did not exert significant control over Trailhead LLC’s sales | RP not liable as indirect seller; exemptions apply |
| Remedies for SAM and Rogers for ILSA violations (1703(c), (e), (b)) | SAM/Rogers seek rescission and damages for lack of property report, plus contract terms | Trailhead LLC argues limited remedies and timeliness | SAM/Rogers entitled to equitable rescission and damages; Rogers not timely revoked but contract-term violation supports damages |
| Effect of failure to include contract revocation language on §1703 rights | Without mandated language, rights to revoke should be enforceable under §1709 | Two-year window fixed, independent of contract language | §1709(b) permits damages to enforce contract-terms requirement; rescission and related damages awarded |
Key Cases Cited
- Bartholomew v. Northampton Nat. Bank of Easton, N.J., 584 F.2d 1288 (3d Cir. 1978) (indirect seller requires selling to occur through agents or similar means)
- Hammar v. Cost Control Marketing and Sales Management of Virginia, Inc., 757 F. Supp. 698 (W.D. Va. 1990) (indirect seller evidence via sales procedural documents)
- Hester v. Hidden Valley Lakes, Inc., 495 F. Supp. 48 (N.D. Miss. 1980) (control over sales personnel may establish indirect-seller status)
- McCown v. Heidler, 527 F.2d 204 (10th Cir. 1975) (control-person liability under ILSA analogous to securities liability)
- Venezia v. 12th & Division Properties, LLC, 679 F. Supp. 2d 842 (M.D. Tenn. 2009) (affirmative, subjective materiality for contract-terms in 1703(c) rescission)