Lukenas v. Bryce's Mountain Resort, Inc.

66 F.R.D. 69, 19 Fed. R. Serv. 2d 1045, 1975 U.S. Dist. LEXIS 14371
CourtDistrict Court, W.D. Virginia
DecidedJanuary 14, 1975
DocketCiv. A. Nos. 74-85, 74-86, and 74-88
StatusPublished
Cited by4 cases

This text of 66 F.R.D. 69 (Lukenas v. Bryce's Mountain Resort, Inc.) is published on Counsel Stack Legal Research, covering District Court, W.D. Virginia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lukenas v. Bryce's Mountain Resort, Inc., 66 F.R.D. 69, 19 Fed. R. Serv. 2d 1045, 1975 U.S. Dist. LEXIS 14371 (W.D. Va. 1975).

Opinion

MEMORANDUM OPINION AND ORDER

TURK, Chief Judge.

These consolidated suits which have been filed pursuant to the Interstate Land Sales Full Disclosure Act, 15 U.S. C. § 1701 et seq. (“the Act”)' are presently before the court for decision on the motion of plaintiffs for class action certification under Rule 23(c)(1) of the Federal Rules of Civil Procedure.

The background to this suit as appears from plaintiffs’ amended complaint and attached exhibits is as follows. The named plaintiffs are purchasers of lots from the defendant, Bryce’s Mountain Resort, Inc., in a resort development in Shenandoah- County, Virginia; in purchasing the lots the plaintiffs made a down payment to defendant with the balance of the purchase price financed by defendant and secured by a first lien against the property. At the time plaintiffs purchased their lots neither a “Statement of Record” nor a “Property Report” as required by sections 1705-1707 of the Act were in effect for the lots thus making the sales unlawful under section 1703 of the Act.1 On January 23, 1974, defendant informed the plaintiffs by letter mailed at the behest of the Office of Interstate Land Sales Registration of the Department of Housing and Urban Development that at the time of their purchases a “Statement of Record” and “Property Report” were not effective for their lots and that as a result the Act might provide them with certain rights. The letter also stated that an effective “Property Report” had been furnished to them in October, 1972. Thereafter, on January 31, February 1, and February 11, 1974, the several plaintiffs herein notified the defendant of their intention to void their purchase contracts pursuant to their right to do so under the Act. Defendant refused to void the contracts stating by letter that the two-year statute of limitations under the Act had extinguished any right of reeission that they might have once enjoyed.2

Plaintiffs allege that the “Property Reports” which they did receive prior to October, 1972 contained material misrepresentations and omissions which fraudulently misled them to purchase property from defendant. Plaintiffs further allege that defendant engaged in certain affirmative acts designed to fraudulently conceal plaintiffs’ rights against it and to prevent or delay the bringing of lawsuits. With respect to this allegation plaintiffs have submitted [71]*71the affidavit of the Deputy Administrator of the Office of Interstate Land Sales Registration which details the efforts of that office to notify purchasers of lots from defendant of their rights under the Act and the reactions of defendant which delayed these efforts until a letter was finally sent on January 23, 1974.

Defendant has moved to dismiss the plaintiffs’ suit as barred by the two-year statute of limitations set forth in section 1711 of the Act in that the purchases of lots by the plaintiffs occurred more than two years prior to the filing of the lawsuits. Plaintiffs, however, seek to avoid the bar of the two-year limitation period by their allegations that defendant did not furnish an effective property report until October, 1972 and fraudulently concealed its liability to them in order to delay them from bringing suit, which they argue tolled the statute of limitations. Plaintiffs appear to contend that the statute of limitations did not begin to run until an effective Property Report was mailed to them in October, 1972.

Plaintiffs purport to represent a class of some 610 purchasers of lots from the defendant all of whom allegedly purchased their lots at a time when “Statements of Record” pertaining to their purchases were not in force and who did not receive effective “Property Reports” prior to their purchases in violation of section 1703 of the Act. The relief plaintiffs seek this class is a declaratory judgment pursuant to 28 U.S.G. §§ 2201 and 2202 declaring that the purchase agreements entered into between defendant and each member of the class be unilaterally voidable at the option of each class member and that each member so electing to void an agreement be entitled to recover all amount expended pursuant to such agreement. From this primary class of some 610 purchasers plaintiffs estimate that the following subclasses would emerge: a subclass composed of those purchasers desiring to exercise the option of recission which plaintiffs seek to establish; and a subclass composed of those purchasers who “opt out” of the class. For those persons remaining within the class, the following additional subclasses would then be established: a subclass composed of those persons who executed purchase agreements with defendant less than two years prior to the filing of this suit; a subclass composed of persons who executed purchase agreements with defendant prior to the October, 1972 Property Report from defendant; and a subclass of those persons entitled to relief provided by the Soldiers’ and Sailors’ Civil Relief Act, 50 App. U.S.C. § 525.

The issue thus presented is whether in view of plaintiffs’ allegations and the class of persons they seek to represent, the prerequisites of Rule 23 have been met. Rule 23(a) provides:

“Prerequisites to a Class Action. One or more members of a class may sue or be sued as representative parties on behalf of all only if (1) the class is so numerous that joinder of all members is impracticable, (2) there are questions of law of fact common to the class, (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

On the basis of its consideration of pleadings and exhibits submitted, the court does not believe that the third and fourth prerequisites of Rule 23(a) will be satisfied and that class certification should therefore be denied.

The court initially notes that by plaintiffs’ own estimation only approximately 190 of the 610 purchasers would desire to remain within the class and rescind their purchase contracts.3 The interests [72]*72of this minority of purchasers in the suit is clearly antagonistic to that of those purchasers who have a continuing interest in the financial viability of the defendant. Those purchasers who do not desire to rescind their agreements are dependent upon defendant to provide essential services such as roads and sewers as well as recreational services, all of which would be jeopardized by the right to recission which plaintiffs seek to establish. The court agrees with defendant that denial of class certification in this case is supported by those eases in which courts have refused to allow a terminated franchisee to represent a class including current franchisees because of the continuing interest of the current franchisees in the economic viability of the defendant franchisor. E.g., Seligson v. Plum Tree, Inc., 61 F.R.D. 343 (E.D.Pa.1973); Van Allen v. Circle K. Corporation, 58 F.R.D. 562 (C.D.Cal. 1972); Free World Foreign Cars, Inc. v. Alfa Romeo, 55 F.R.D. 26 (S.D.N.Y.1972). The fact that in the present case the plaintiffs as well as the proposed class members are all existing property owners does not alter the fact that there is a serious lack of a common interest in the outcome of the suit.

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Cite This Page — Counsel Stack

Bluebook (online)
66 F.R.D. 69, 19 Fed. R. Serv. 2d 1045, 1975 U.S. Dist. LEXIS 14371, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lukenas-v-bryces-mountain-resort-inc-vawd-1975.