Nickell v. Beau View of Biloxi, L.L.C.
636 F.3d 752
| 5th Cir. | 2011Background
- Beau View of Biloxi developed a 456-unit, four-tower condo project; Tower I sales occurred in 2005.
- Reservations were non-binding; purchasers could cancel and recover deposits before closing.
- Hurricane Katrina hit in 2005; market declined; Beau View only closed 62 of 87 Tower I units; 50 remained unsold.
- Four named plaintiffs purchased Tower I units in 2005; they closed in 2007 after construction.
- On June 27, 2008, plaintiffs sought rescission, alleging ILSA disclosure violations; four related suits filed in district court.
- District court granted summary judgment for Beau View, ruling units exempt from ILSA; plaintiffs appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether 100-lot exemption applies to Budg/Beau View | Nickell/Bodi argue exemption limited by time. | Beau View contends exemption applies while marketing fewer than 100 lots and in agreement with a future building. | No; 100-lot exemption does not apply when development overall exceeds 100 units at sale time. |
| Whether the 100-lot exemption can be combined with the 1702(a)(2) exemption | Exemption cannot be stacked to cover pre-100 sales. | Exemption could be used in tandem to cover later units. | Not applicable; analysis shows both exemptions require present contractual obligations and do not support Beau View here. |
| Whether Beau View violated ILSA by failing to provide disclosures | Disclosures were required and not provided before signing contracts. | Disclosures exempted due to 100-lot/other exemptions. | Beau View violated ILSA; no disclosures provided at time of sale. |
| What is the controlling interpretation of ILSA exemptions | Statutory text dictates outcome at time of sale. | HUD Guidelines guidance could permit different construction. | Court adheres to literal text; rejects reliance on non-binding Guidelines; adopts present-tense interpretation consistent with statute. |
Key Cases Cited
- Law v. Royal Palm Beach Colony, Inc., 578 F.2d 98 (5th Cir.1978) (focus on time of purchaser's contract execution for ILSA compliance)
- Winter v. Hollingsworth Props., Inc., 777 F.2d 1444 (11th Cir.1985) (defines ILSA's 'lots' to include condominiums)
- Christensen v. Harris Cnty., 529 U.S. 576 (S. Ct. 2000) (agency interpretations carry power to persuade, but not Chevron deference when no notice-and-comment process)
- Freeman v. Quicken Loans, Inc., 626 F.3d 799 (5th Cir.2010) (deference limits for agency guidelines lacking formal rulemaking)