Total Realty Management, LLC v. R. A. North Development, Incorporated
2013 U.S. App. LEXIS 950
| 4th Cir. | 2013Background
- TRM bankruptcy trustee sues RA North Development entities and affiliates for contribution under the Interstate Land Sales Act (ILSA) related to Cannonsgate, Summerhouse, and Craven’s Grant developments.
- TRM purchased parcels from RA North and Maryville at fair market value and resold them to buyers at substantial premiums.
- RA North participated in TRM’s sales and marketing efforts, including seminars, materials, and financing assistance to purchasers.
- Buyers allegedly were deceived by TRM and RA North’s joint representations regarding ownership and bulk discounts.
- District court dismissed the entitlement-to-contribution claims, holding no independent liability and no payment by TRM to purchasers; Trustee appeals on damages/agency-pleading theories.
- Court assumes TRM liable to purchasers but holds no statutory contribution absent payment by TRM to injured parties; affirm dismissal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is RA North independently liable under ILSA for fraud in the sales course? | TRM; RA North marketed and advertised. | RA North; liability limited to sellers with respect to sale. | RA North is potentially liable for advertising/marketing fraud. |
| Can TRM obtain statutory contribution under ILSA before TRM has paid any damages? | Yes; contribution allowed when liable, not necessarily paid. | No; payment precondition to contribution claims. | TRM cannot obtain contribution absent payment; claim fails. |
| Should RA North’s advertising role render it a “developer” under ILSA? | Advertising participates in sale; broad liability. | Only sellers are liable under some sections; narrow interpretation. | Advertising/promotional involvement can trigger liability; RA North potentially liable. |
Key Cases Cited
- Olsen v. Lake Country, Inc., 955 F.2d 203 (4th Cir. 1991) (read broadly to protect purchasers in promotional schemes)
- Reiter v. Sonotone Corp., 442 U.S. 330 (1981) (statutory interpretation guidance; development of liability scope)
- PSINet, Inc. v. Chapman, 362 F.3d 227 (4th Cir. 2004) (considers consistency of statutory terms; rejects redundancy concerns)
- Crespo v. Holder, 631 F.3d 130 (4th Cir. 2011) (constitutional statutory interpretation; plain-language analysis)
- Holland v. Big River Minerals Corp., 181 F.3d 597 (4th Cir. 1999) (contextual statutory interpretation; consistency across statute)