Gentry v. Harborage Cottages-Stuart, LLLP
654 F.3d 1247
11th Cir.2011Background
- Harborage developed and sold the Harborage Yacht Condominiums in Stuart, FL; the Stones and Gentry-Hunt contracted to buy units in May 2005 with deposits of $86,000 and $70,000 respectively.
- Development comprised 126 units; 36 units had two-year construction provisions, while 90 did not.
- Sale relied on Site Plan renderings with a Future Development area and a disclaimer that renderings are subject to change.
- Plaintiffs alleged ILSFDA violations for failure to provide a property report and misrepresentations in the Site Plan; they also asserted Florida statutes claims.
- The district court granted summary judgment for Plaintiffs on ILSFDA §§ 1703(a)(1)(B) and (c) exemptions and damages; the court also addressed § 718.506 and § 501.204 claims, with some rulings vacated on appeal.
- The Eleventh Circuit affirmed in part, vacated in part, and remanded certain ILSFDA anti-fraud claims for reconsideration; damages for the ILSFDA property-report violation were affirmed as equitable relief under § 1709.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Harborage qualifies for ILSFDA exemptions § 1702(a)(2) and (b)(1). | Plaintiffs contend the exemptions do not apply due to evasion. | Harborage argues exemptions apply via two separate contracts. | Exemptions require a legitimate business purpose; no such purpose shown. |
| Whether § 718.506 claims were properly granted for Gentry-Hunt. | Site Plan misled regarding Future Development area. | Disclaimers dilute reliance. | Harborage liable for Gentry-Hunt; Stones’ §718.506 claim improperly granted. |
| Whether the ILSFDA § 1703(a)(2) and Fla. § 501.204(1) claims were properly summary judgmented. | Plaintiffs did not brief these on summary judgment. | District court properly addressed them. | Appeal vacates summary judgment on these claims. |
| Whether damages under § 1709 are appropriate for nondisclosure of revocation rights. | Deposits should be returned as equitable relief. | Deposits not recoverable absent § 1703(c) revocation. | Deposits were recoverable as equitable relief under § 1709(b). |
Key Cases Cited
- Winter v. Hollingsworth Props., Inc., 777 F.2d 1444 (11th Cir. 1985) (ILSFDA remedial purposes; protect purchasers)
- Am. Gen. Fin., Inc. v. Paschen, 296 F.3d 1203 (11th Cir. 2002) (statutory construction of exemptions; plain meaning)
- Gentry v. Harborage Cottages-Stuart, LLLP, 602 F. Supp. 2d 1239 (S.D. Fla. 2009) (district court on evasion standard for exemptions)
- Stein v. Paradigm Mirasol, LLC, 586 F.3d 849 (11th Cir. 2009) (HUD guidelines and deference to guidelines)
- Murray v. Holiday Isle, LLC, 620 F. Supp. 2d 1302 (S.D. Ala. 2009) (equitable relief under § 1709 for nondisclosure of rescission rights)
- Garcia v. Santa Maria Resort, Inc., 528 F. Supp. 2d 1283 (S.D. Fla. 2007) (reliance on promotional materials; contract terms not contradicting)
- Mac-Gray Servs., Inc. v. DeGeorge, 913 So. 2d 630 (Fla. 4th DCA 2005) (express vs. implied reliance defenses under Florida law)