MEMORANDUM OF DECISION AND ORDER GRANTING DEFENDANTS’ MOTION FOR PARTIAL SUMMARY JUDGMENT
GENE CARTER, Chief Judge.
These three civil actions stem from the offer and sale of .units at two real estate condominium projects in . Kennebunkport,
Maine between July 1987 and April 1988. The cases will be referred to as
Pliskin, Vallee,
and
Goldman.
Plaintiffs in
Pliskin
and
Vallee
purchased condominium units at the Shawmut Inn, and Plaintiffs in
Goldman
purchased units at the Inn at Goose Rocks. The purchases at both projects were made from Defendant developers James Waterman
and Mark Kearns. Waterman’s and Kearns’ acquisition and development of these projects, as well as the purchase of units by several Plaintiffs, were financed with loans from subsidiaries of First New Hampshire Banks, Inc.
of which Defendant First New Hampshire Bank (“First NH”) is the successor corporation.
The gravamen of Plaintiffs’ Complaints is that Defendants, in the manner in which they offered and sold these condominium units and in events subsequent to Plaintiffs’ purchases of these units, violated federal and state securities laws as well as breached contractual agreements and fiduciary duties, and that they were negligent.
See
First Amended Complaint,
Goldman
(Docket No. 2), and Third Amended Complaint,
Val-lee
(Docket No. 121a).
These actions originally involved twenty-six Plaintiffs, but through settlement of claims, action of the Court, and attrition, there now remain only five Plaintiffs including Jacqueline and Albert Goldman in the
Goldman
case, and Lorraine Kavanaugh
and Richard and Evelyn Robbins in the
Val-lee
ease.
First NH now moves for Partial Summary Judgment against the above-named Plaintiffs, except Lorraine Kavanaugh, on all counts involving securities law violations, contending that the transactions in which Plaintiffs purchased their condominium units at Shawmut and Goose Rocks do not, as a matter of law, constitute the sale of “securities” under the federal and state acts. Motion by Defendant First NH for Partial Summary Judgment,
Goldman
(Docket No. 87), and
Pliskin
(Docket No. 171). Defendant Kearns has joined First NH’s Motion. Response by Defendant Kearns,
Goldman
(Docket No. 103), and
Pliskin,
(Docket ’No. 201).
The immediate legal predicate for this Motion for Partial Summary Judgment is this Court’s decision, after trial, in a relat
ed action involving the offer and sale of condominium units at the Bellevue Inn, another Kearns-Waterman project located near Wells Beach in Maine.
Lavery v. Kearns,
792 F.Supp. 847 (D.Me.1992).
In
Lavery,
this Court found that the transactions at issue were not securities; hence, plaintiffs could not rely on the protections of federal and state securities laws to obtain relief for what were, in essence, contract claims. As Plaintiffs in the current actions have been unable to point to any genuine issues of material fact to distinguish their transactions from those presented in
Lavery,
the Court finds that, as a matter of law, the offer and sale of condominiums at Goose Rocks and Shawmut do not constitute securities. Hence, Defendants’ Motion for Partial Summary Judgment will be granted, resolving in Defendants’ favor all counts in Plaintiffs’ Complaint that allege federal and state securities law violations.
Under Federal Rule of Civil Procedure 56(c), summary judgment must be granted if “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” As the Court of Appeals for the First Circuit has recently stated:
[T]he movant must adumbrate ‘an absence of evidence to support the nonmoving party’s case.’
Celotex Corp. v. Catrett,
477 U.S. 317, 325 [106 S.Ct. 2548, 2553, 91 L.Ed.2d 265] (1986). When that is aecomplished, the burden shifts to the opponent to establish the .existence of a fact issue which is both ‘material,’ in that it might affect the outcome of the litigation,
Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 [106 S.Ct. 2505, 2510, 91 L.Ed.2d 202] (1986);
Hahn v. Sargent,
523 F.2d 461, 464 (1st Cir.1975),
cert. denied,
425 U.S. 904 [96 S.Ct. 1495, 47 L.Ed.2d 754] (1976), and ‘genuine,’ in that a reasonable jury could, on the basis of the proffered proof, return a verdict for the opponent.
Anderson,
477 U.S. at 248 [106 S.Ct. at 2510];
Oliver v. Digital Equipment Corp.,
846 F.2d 103, 105 (1st Cir.1988). It is settled that the nonmovant may not rest upon mere allegations, but must adduce specific, provable facts demonstrating that there is a triable issue. ‘The evidence illustrating the factual controversy cannot be conjectural or problematic; it must have substance in the sense that it limns differing versions of the truth which a factfinder must resolve at an ensuing trial.’
Mack v. Great Atlantic and Pacific Tea Co.,
871 F.2d 179, 181 (1st Cir.1989). As the Supreme Court has said:
[T]here is no issue for trial unless there is sufficient evidence favoring the non-moving party for a jury to return a verdict for that party. If the evidence is merely colorable, or significantly probative, summary judgment may be granted.
Anderson,
477 U.S. at 249-50, 106 S.Ct. at 2511.
Brennan v. Hendrigan,
888 F.2d 189, 191-92 (1st Cir.1989). The undisputed facts which are relevant to the Court’s assessment of Defendants’ Summary Judgment Motion are set forth below.
I. UNDISPUTED FACTS
A
'
Purchase and Marketing of Units at the Shawmut Inn and the Inn at Goose Rocks
Defendants Waterman and Kearns obtained financing for the purchase of the Shawmut Inn (“Shawmut”) in the winter of 1986 from subsidiaries of First NH Banks, Inc. In 1987 and 1988, after the purchase of the Shawmut was completed, they began to market and sell twenty hotel-condo units located in the Chalet building of the Inn. The Inn was located on the ocean in Kennebunkport and included several other buildings, housing a restaurant, lounge, and conference facilities. Kearns and Waterman planned to replace most of the buddings on the property to create a 205-room “world class” resort.
See
Deposition of James Waterman, Nov. 14, 1990 (‘Waterman Deposition”), Exhibit 1,
Vallee.
Their development plans included tearing down the Chalet. Under the terms of their agreement, investors who purchased condo units in the Chalet could select a “buyback” option under'which Defendants promised to repurchase their units at a fixed price before the building was destroyed or they could trade in their units for ones in the newly constructed buildings along with paying for any difference in price.
See
Waterman Deposition, Exhibit 2 (explaining the buyback option) and Contract for the Purchase and Sale of Real Estate, Exhibit B,
Vallee
(Docket No. 1).
Vallee
Plaintiffs Richard and Evelyn Robbins purchased a condo unit at the Shawmut.
In December of 1987, one year after purchasing the Shawmut, Kearns and Waterman obtained additional financing from First NH Banks, Inc. for the purchase of the Inn at Goose Rocks (“Goose Rocks”). Located about a half mile from the beach in Kennebunkport, Goose Rocks included a restaurant and 32 condominium units which Defendants began marketing shortly after fhe purchase. Purchasers at Goose Rocks signed buyback agreements that are similar to the agreements signed by Shawmut investors. Because plans for the resort did not include any major construction, however, unit owners at Goose Rocks could opt out of the buyback option and keep their original units. Contract for the Purchase and Sale of Real Estate, Exhibit B,
Goldman
(Docket No. 1).
Goldman
Plaintiffs Jacqueline and Albert Goldman purchased a unit at Goose Rocks.
In soliciting purchasers at both developments, Defendants’ marketing approach emphasized the coastal location of the projects, the opportunity that the condo units presented for owning real estate at the beach, and the possible appreciation in value that comes with owning real estate:
This concept of the hotel-condo, with a focus on coastal location for a reasonable price and general market appreciation, has always been my sales message to potential buyers of such units.
Waterman’s and Kearns’ Affidavits,
Vallee
(Docket Nos. 78-9) at 1ÍIV.
B. Lease/Buyback Option
It is undisputed that Plaintiffs purchased their units at Goose Rocks and the Shawmut for investment, not residential, purposes. Defendant First NH Bank’s Statement of Material Facts,
Goldman
(Docket No. 88), and
Pliskin
(Docket No. 172) at 13. In negotiating the purchases, Defendants presented various options to investors for managing their units. Of primary importance was the lease/buyback option because all Plaintiffs remaining in these cases were parties to such agreements.
1. Lease agreements
The lease agreements provided that unit owners would lease their units to Atlantic Hospitality, Inc., a company owned by Kearns and Waterman, which assumed all managerial responsibility. Unit owners, in turn, would receive monthly rental payments
in a fixed amount
calculated to cover their monthly mortgage payments, condominium fees, and real estate taxes. Waterman Deposition, Exhibit 2. The rental payment
was guaranteed
under the terms of the agree
ment regardless of whether Atlantic Hospitality was able to rent out the unit.
See
Lease Agreements, Exhibit A,
Vallee
(Docket No. 1), and
Goldman
(Docket No. 1) at 8. The only difference between the agreements signed by Plaintiffs in
Goldman
and
Vallee
was that leases for unit owners at Goose Rocks would run for a five-year period while leases at Shawmut would run for a two-year period, to end when the construction was scheduled to be completed and the Chalet, with its existing condo units, was slated to be torn down.
See
Waterman Deposition, Exhibit 2.
2. Buyback agreements
The buyback agreement provided that Waterman and Kearns would purchase units back from owners within a two-year period at Shawmut and within a five-year period at Goose Rocks. The buyback purchase price
was set at a fixed amount
calculated to equal the original purchase price paid by the unit owner plus “a 20% annual return on the 20% downpayment of your original purchase.”
Id.,
Option I at ¶ 3.
See also
Contract for the Purchase and Sale of Real Estate, Exhibit B,
Vallee
(Docket No. 1), and
Goldman
(Docket No. 1). Both the lease and buyback agreements included clauses that gave unit owners the option to cancel the agreements upon thirty days notice. But as Plaintiffs note, cancelling the buyback agreement for Shawmut purchasers would not have enabled them to hold on to their existing units because the Chalet building was to be torn down. Instead, purchasers would have to trade in their units for units in the newly constructed buildings
and would have to pay for any difference in the fixed buyback price of their old units and the market value of the new units. See
Waterman Deposition, Exhibit 2.
Purchasers who declined to elect the lease/buyback option were presented with a separate option of signing a management agreement whereby unit owners would split rental proceeds 60/40 with a Kearns/Waterman rental company. Only two Plaintiffs in the original actions chose this latter option; with one of those Plaintiff’s claims having been dismissed and the other having reached .a settlement with Defendants.
C. Financial Collapse of Defendants’ Operations
By the summer and fall of 1988, the real estate market in Southern Maine had fallen into serious decline. ‘ In November of 1988, Waterman and Kearns announced they could no longer pay operating expenses at the projects or adhere to other contractual obligations with unit purchasers.
See
Memorandum of Law in Support of Motion of First NH Bank for Partial Summary Judgment (“First NH Memorandum”),
Goldman
(Docket No. 89), and
Pliskin
(Docket No. 173) at 4.
See also
Jacqueline Goldman Affidavit, Exhibit A,
Goldman
(Docket No. 59). A little over one year later, in January and February of 1990, Plaintiffs filed these actions.
The parties’ statements of material facts, filed pursuant to Local Rule 19(b), include additional information with respect to the financial dealings between Kearns, Waterman, and First NH; the interrelation of the financing of the development projects; the financial condition of Kearns’ and Waterman’s operations; and First NH’s financing of unit purchases. These additional facts are not pertinent to the issues before the
Court — -namely, whether the offer and sale of these condo units can be classified as “securities” — and hence will not be detailed here.
II. REQUIREMENTS FOR CHARACTERIZING .OFFER AND SALE OF CONDO UNITS AS “SECURITIES”
Defendant First NH’s Motion for Partial Summary Judgment focuses this Court’s attention on one issue:
whether the transactions in which Plaintiffs purchased their Shawmut Inn and Inn at Goose Rocks units with the optional leaseback and buyback agreements were investment contracts and constituted the sale of securities, so as to render First NH Bank potentially liable for the violation of federal and state securities laws.
First NH Memorandum at 6. In assessing the nature of the transactions at issue, this Court will look to its most recent pronouncement of the law governing securities as set out in
Lavery
As detailed in that case, a “security” is defined as including an “investment contract” under federal securities laws as well as the state securities laws in question.
Lavery,
792 F.Supp. at 851 & 860. In
S.E.C. v. W.J. Howey Co.,
the Supreme Court has defined an investment contract to include:
[A]ny contract, transaction or scheme whereby a person invests his money in a common enterprise and is led to expect profits solely from the efforts of the promoter or third person.
Howey,
328 U.S. 293, 298-99, 66 S.Ct. 1100, 1103, 90 L.Ed. 1244 (1946). Under
Howey,
Plaintiffs must show (1) an investment; (2) in a common enterprise; (3) with profits generated solely from the efforts of a third party. Plaintiffs clearly satisfy the first prong of the
Howey
definition because it is undisputed that the purchase of condo units was an investment. Satisfying the second part of
Howey
is more problematic. The standards which courts have applied in assessing whether parties have invested in a “common enterprise” are summarized below.
A. “Common Enterprise”
As pointed out in
Lavery,
neither the Court of Appeals for the First Circuit nor the United States Supreme Court have clarified what elements to look for in finding a “common enterprise” under
Howey.
District courts in the First Circuit and elsewhere have applied both a narrow vertical commonality and a horizontal commonality analysis for determining whether various transactions satisfy the definition of an investment contract. Narrow vertical commonality “finds a common enterprise when the investment manager’s fortunes rise and fall with those of the investor.”
Lavery,
792 F.Supp. at 851 (quoting
Savino v. E.F. Hutton & Co.,
507 F.Supp. 1225, 1237 (S.D.N.Y. 1981)). Horizontal commonality, on the other hand, focuses on whether the assets from two or more investors are pooled into a single fund, usually accompanied by a
pro rata
sharing of profits from the joint enterprise.
Hocking v. Dubois,
839 F.2d 560, 566 (9th Cir.1988),
approved en banc,
885 F.2d 1449, 1459 (9th Cir.1989).
This Court found that it need not decide which approach to follow in
Lavery
because the lease/buyback agreements, executed upon the purchase of condo units at the Bellevue, failed to satisfy either test. With respect to vertical commonality, this Court emphasized the fact that investors were guaranteed rental and buyback payments that were fixed in amount regardless of the developers’ profits or managerial expertise. Thus,
Lavery
plaintiffs were sheltered from the vagaries of the market such that their fortunes did not rise and fall with the for
tunes of the developers.
Lavery,
792 F.Supp. at 853.
As for horizontal commonality, the
Lavery
Court found that there was no traditional pooling of investor interests and no
pro rata
sharing of profits and losses. ■
See Howey,
328 U.S. at 295-97, 299-300, 66 S.Ct. at 1101-02, 1103 (where each investor bought a strip of land in an orange grove; all the oranges were pooled and sold; and investors received a share in the profits or absorbed losses equal to their share in land). In contrast, the lease and buyback agreements in
Lavery
cordoned off investors from the sharing of losses or profits amongst themselves and placed the risk on the developers. The fact that Kearns and Waterman may have ultimately pooled receipts from the sales and rental of units was not relevant to a finding of horizontal commonality, because the method in which Defendants ran their operations “was not part of an initial
development
plan that included Plaintiffs and the other purchasers.”
Lavery,
792 F.Supp. at 858. As the Court stated, the determinative factor was that:
[e]aeh owner had his own unit, with its separate contracts with Kearns and Waterman, and each owner could make profits or sustain losses independent of the fortunes of the other purchasers.
Id.
If Kearns and Waterman failed to adhere to their obligations, then each owner would have a remedy for contractual breach.
B. Application of Lavery Principles to the Facts of the Goldman and Vallee Cases
First NH argues that the lease/buyback agreements in the current actions do not differ in any material respect from the agreements found not to constitute securities in
Lavery.
First NH Memorandum,
Goldman
(Docket No. 89), and
Pliskin
(Docket No. 173) at 9-10. They point out that the lease and buyback agreements in these actions are virtually indistinguishable from those at issue in Lavery
, and that the guaranteed payments preclude a finding that investors’ fortunes were intertwined with that of Defendants or that their investments were pooled for a
pro rata
sharing in profits or losses. They argue that Plaintiffs are unable to identify any genuine issues of material fact to distinguish the present transactions from those at issue in
Lavery
and conclude that the precedent established in
Lavery
compels this Court to grant their Motion for Partial Summary Judgment on the securities claims.
Id.
at 11.
Plaintiffs counter that genuine issues of material fact distinguish the current actions from
Lavery,
and they urge the Court to “look beyond the four corners of the written documents in determining the existence of an investment contract____” Plaintiffs’ Objection to First NH Bank’s Motion for Partial Summary Judgment and Incorporated Memorandum.of Law (“Plaintiffs’ Memorandum”),
Goldman
(Docket No. 91), and
Pliskin
(Docket No. 175) at 3 (quoting
Rodriguez v. Banco Central,
777 F.Supp. 1043, 1059 (D.P.R.1991),
aff'd,
990 F.2d 7 (1st Cir.1993)). Plaintiffs argue primarily that they invested in Defendants’ larger development plans and that the buyback option at the Shawmut differed significantly from the buyback option considered by this Court in
Lavery.
The Court will consider Plaintiffs’ arguments in turn.
III. The Offer and Sale of Condo Units at the Shawmut Inn and the Inn at Goose Rocks
A. Investment in Overall Development Plans at the Shawmut
Plaintiffs in
Vallee/Pliskin
argue that investors did not simply purchase individual condominium units but invested in Defendants’ overall plans to renovate the Shawmut Inn. While no significant development was underway at Goose Rocks,
Goldman
Plaintiffs argue that they, too, invested in development at the Shawmut because Defendants planned to provide shuttle buses between the two resorts such that renters at Goose Rocks could enjoy the restaurant and other facilities at the Shawmut located only a half mile away. Plaintiffs state, “[t]he value of the units at the Shawmut and the Inn at Goose Rocks was inherently bound up in the developers’ and Banks’ plan for reconstructing the Shawmut Inn.” Plaintiffs’ Supplemental Memorandum in Opposition to Defendant First NH Banks’ Motion for Partial Summary Judgment (“Plaintiffs’ Supplemental Memorandum”),
Goldman
(Docket No. 102), and
Pliskin
(Docket No. 200) at 8. By asserting that Plaintiffs risked their investments in a larger venture controlled by Defendants, Plaintiffs attempt to characterize the transactions as a “common enterprise.”
It is undisputed that Kearns and Waterman were planning to undertake major renovations at the Shawmut at the same time as they began marketing units at the Chalet and at the Inn at Goose Rocks. This factor, as Plaintiffs argue, may cast a different light on the transactions in question. In a recent ease, the Court of Appeals for the First Circuit stated:
A security
might
exist if the defendants had promised, along with the land sales, to develop the community themselves. Then each buyer might be acquiring an interest not only in land but in a package of commitments that, taken together, could comprise a business venture harnessing the entrepreneurship of the promoter ... The promoter’s commitment to build the community, in turn, could constitute the ‘common enterprise’ financed jointly by the buyers.
Rodriguez v. Banco Central Corporation,
990 F.2d 7, 11 (1st Cir.1993) (citation omitted) (holding that the offer and sale of undeveloped lots in swamp land does not constitute securities where sellers did not represent to purchasers that they would directly undertake development of the area and where most purchasers bought the'land for residential, not investment, purposes).
In
Rodriguez,
the Court of Appeals referred favorably to several cases that have taken this view including
McCown v. Heidler,
527 F.2d 204 (10th Cir.1975). In
McCown,
the Court of Appeals for the Tenth Circuit held that summary disposition was not appropriate where the facts asserted by Plaintiffs might allow them to prove at trial “the sale of a contractual promise by [the developer] to improve the project, including the construction of a country club, an 18-hole championship golf course, stables, equestrian center, tennis courts, clubhouse and swimming pools.”
McCown,
527 F.2d at 209. The
McCown
court also noted that “without the substantial improvements pledged by [the
developer] the lots would not have a value consistent with the price which purchasers paid.”
Id.
at 211 (citing
Continental Marketing Corp. v. SEC,
387 F.2d 466, 470-71 (10th Cir.1967),
cert. denied,
391 U.S. 905, 88 S.Ct. 1655, 20 L.Ed.2d 419 (1968).
Plaintiffs point to these cases to support their assertions, but they fail to provide any affidavits or other factual evidence indicating that Defendants’ plans to develop the Shawmut played a role in Plaintiffs’ decision to invest in the project. They simply state in briefs that “development of the Shawmut Inn .'.. played a far greater role in the purchase of the units” and that the value of the condo units at Goose Rocks and the Shawmut “was inherently bound up in the developer’s ... plans for reconstructing the Shawmut.”
See
Plaintiffs’ Memorandum at 4 and Plaintiffs’ Supplemental Memorandum at 8. Such “[factual assertions by counsel in motion papers, memoranda, briefs, or other such ‘self-serving’ documents, are generally insufficient to establish the existence of a genuine issue of material fact at summary judgment.”
Nieves v. University of Puerto Rico,
7 F.3d 270, 276 n. 9 (1st Cir.1993) (citing
Fragoso v. Lopez,
991 F.2d 878, 887 (1st Cir.1993), and
Transurface Carriers, Inc. v. Ford Motor Co.,
738 F.2d 42, 46 (1st Cir.1984)).
The simple fact that Defendants were planning to undertake major development is not enough, standing alone, to support a finding that investment in condo units at the projects constitute securities.
Instead, Plaintiffs must point to facts detailing the manner in which the transactions were presented “by the terms of the offer, the plan of distribution, and the economic inducements held out to the prospect.”
SEC v. C.M. Joiner Leasing Corp,
320 U.S. 344, 352-53, 64 S.Ct. 120, 124, 88 L.Ed. 88 (1943). These additional facts must provide Plaintiffs with an evidentiary basis allowing them to prove that Defendants
represented their future development plans
in a manner calculated to induce investment in the projects and, in essence, sold to Plaintiffs
a contractual promise
to carry through with their development plans to augment the value of their investments.
McCown,
527 F.2d at 208-09.
See also Aldrich v. McCulloch Properties,
627 F.2d 1036, 1039 (10th Cir.1980) (holding that complaint, which states that defendants encouraged purchases by promising investors that their lots would increase in value because of defendants’ development activities, sufficiently alleges the existence of. an investment contract for the purposes of maintaining an action under federal securities laws). As the Court of Appeals for the First Circuit stated in
Rodriguez,
“[a] security
might
exist if the defendants
had promised
... to develop the community themselves.”
Rodriguez,
990 F.2d at 11 (emphasis added).
Plaintiffs fail tó point to facts indicating that Defendants made any such promise. Instead, the evidence before the Court strongly indicates that guarantees provided in the lease/buyback agreements, which tended to fully insulate the investor from any economic risk resulting from the purchase of units, not promises of future development, were at the core of the parties’ bargain. Plaintiffs’ Complaints make no mention of development plans but describe the transactions in the following terms:
[Defendants] ... represented and promoted [Goose Rocks/the Shawmut Inn] condominiums to Plaintiffs as being an investment opportunity whereby Plaintiffs would purchase condominiums ... then immedi- ■ ately lease the condominiums back to Atlantic Hospitality, Inc. (an entity owned and controlled by Kearns and Waterman) ... and would also then execute an agree
ment to in the future sell the condominiums back to Kearns and Waterman----
First Amended Complaint,
Goldman
(Docket No. 2) at ¶ 11, and Third Amended Complaint,
Vallee
(Docket No. 121a) at ¶ 10.
There is evidence in the record indicating that Defendants sent a letter to potential investors describing their plans to create a “world class” resort on the property and inviting investors to purchase units at the Chalet “as an opportunity to buy at the ‘ground floor’ in an exciting and unique project.” Waterman Deposition, Exhibit 1. Those who responded to this mailing were given additional materials that detailed the lease/buyback' options at the Shawmut.
Id.,
Exhibit 2. Plaintiffs, themselves, assert that Kearns and Waterman
used these latter materials
that discussed the two management options “as the basis for the sales pitch” at all scheduled meetings with potential- purchasers. Plaintiffs’ Objection to Defendant’s Statement of Material Facts (“Plaintiffs’ Objection”),
Goldman
(Docket No. 92), and
Pliskin
(Docket No. 176) at 4-5. An affidavit in the record submitted by Plaintiff Richard Robbins further supports this assertion. Affidavit of Richard Robbins,
Vallee
(Docket No. 63). Robbins states that he decided to purchase a unit at the Shawmut based .on conversations that he had with Defendant Kearns. Robbins describes these conversations as involving Kearns’ descriptions of the lease/buyback agreements with no mention of any future development plans. As the affidavit indicates:
With assurances from Kearns' that
this was a no lose, all win investment opportunity,
I purchased a unit at the Shawmut Inn ... I would not have purchased the unit without the Rental and Buy Back Agreements. I considered the two Agreements to be part of one investment package.
Affidavit of Richard Robbins at ¶¶ 4-5 (emphasis added). In summary, Plaintiffs’ allegations in the Complaints, their statement of material facts, and other evidence in the record highlight the centrality of the very elements of these transactions that were found in
Lavery
to bar a conclusion that the purchases constituted securities.
Further, Plaintiffs fail to object to Defendants’ characterization of their marketing of units at the Shawmut and Goose Rocks in which- future development plans played no role. Kearns and Waterman describe their strategy for attracting investors as focusing on the coastal location of the projects, the reasonable price of the hotel-condo units, and appreciation in value of the individual units from general market appreciation. Waterman’s and Kearns’ Affidavits,
Vallee
(Docket Nos. 78-9) at ¶ IV, as referred to in Defendant First NH Bank’s Statement of Material Facts,
Goldman
(Docket No. 88), and
Pliskin
(Docket No. 172) at 3-4. Defendants’ use of future development plans to induce investment is wholly absent from this description. Pursuant to Local Rule 19(b)(2), the Court deems this assessment to be admitted because Plaintiffs have failed to controvert it. Hence, while Plaintiffs claim that they were investing in Defendants’ larger development plans, the record before the Court provides no basis for a fact finder to conclude anything other than that such plans were of incidental concern in these transactions. The only conclusion possible on the record made is that the parties focused almost exclusively on the guarantees against risk provided by the lease/buyback agreements.
B. Buyback Agreements at the Shawmut Inn
The
Vallee
Plaintiffs also argue that the nature of the buyback agreements at the Shawmut differed in a material respect from the buybacks in
Lavery
when viewed in the context of Defendants’ overall development plans at the Shawmut. Plaintiffs point out that Defendants planned to- tear down existing condo units at the Chalet by the time they exercised the buyback option. Plaintiffs’ Objection,
Goldman
(Docket No. 92), and
Pliskin
(Docket No. 176) at 5. If
Vallee
Plaintiffs opted out of the buyback, they could not keep their original units, but would have had to trade them in for units at newly renovated buildings while paying any price differential between them.
Construing these facts most favorably to Plaintiffs
might
support a finding of vertical commonality because investors at the Chalet
were dependent upon the success of Defendants’ future development plans to create valuable units in the new buildings in order to make opting out of the buyback plan a valid option. But Plaintiffs give no indication that they paid more than market value for their Chalet units and they were not guaranteed an even exchange for the units in the new development when the changeover would take place. These facts militate against a finding that they invested in Defendants’ speculative venture in a manner satisfying the requirements of vertical commonality. Even though the nature of the buybacks differed, Plaintiffs’ fortunes were still not interwoven with Defendants’ financial success. If the development was successful and Defendants’ profits went up, Plaintiffs would have to pay the differential in price between their Chalet units and the new units. If the development was unsuccessful and Defendants’ losses mounted, Plaintiffs could still exercise the buyback option at a guaranteed price.
This Court is unable to determine any other manner in which the differences in the buyback option would support a finding that the transactions of
Vallee
Plaintiffs constituted a security. Plaintiffs give the Court no direction in this matter. Plaintiffs state merely that:
the necessity of having control over the Chalet building when the time came to tear it down
might cause
the Court to construe Kearns’ and Waterman’s rights under the buyback contracts differently with respect to the Shawmut Plaintiffs.
Plaintiffs’ Memorandum at 4 (emphasis added). The possibility that tearing down the Chalet building “might cause” this Court to construe Defendants’ rights differently is not sufficient for withstanding this Motion for Partial Summary Judgment in which First NH has argued that no genuine issues of material fact distinguish the transactions in
Goldman
and
Vallee
from the transactions in
Lavery.
Once the movant has pointed to “an absence of evidence to support the nonmoving party’s case,”
Celotex,
477 U.S. at 325, 106 S.Ct. at 2554, the burden shifts to Plaintiffs, who “must adduce specific, provable facts demonstrating that there is a triable issue”:
‘The
evidence
illustrating the factual controversy
cannot be conjectural or problematic;
it must have substance in the sense that it limns differing versions of the truth which a factfinder must resolve at an ensuing trial.’
Brennan v. Hendrigan,
888 F.2d at 191-92 (emphasis added) (quoting from
Mack v. Great Atlantic and Pacific Tea Co.,
871 F.2d at 181). Given this burden, Plaintiffs have failed to prove that distinctions between the buyback agreements in
Vallee/Pliskin
raise a genuine issue of material fact that should be decided at trial. Plaintiffs in
Goldman
and
Vallee/Pliskin
have been unable to point to any . genuine issues of material facts to distinguish these lease/buyback agreements from the agreements at issue in
Lavery.
Based on the legal analysis in
Lavery,
the recent
Rodriguez
decision issued by the Court of Appeals for the First Circuit, and a host of other cases dealing with the definition of investment contracts under the securities laws, this- Court finds that as a matter of law, the transactions in the current actions, with the optional lease and buyback agreements, do not constitute the sale of securities under federal or state law.
Accordingly, it is
ORDERED
that Defendants’ Motion for Partial Summary Judg.ment on Counts I, II, III, V, VI, VII, and VIII in
Goldman
and
Vallee/Pliskin,
which base liability on the violation of federal and state securities laws, be, and it is hereby,
GRANTED.
So
ORDERED.