Ross v. Amrep Corp.

57 A.D.2d 99, 393 N.Y.S.2d 410, 1977 N.Y. App. Div. LEXIS 10929
CourtAppellate Division of the Supreme Court of the State of New York
DecidedApril 19, 1977
StatusPublished
Cited by17 cases

This text of 57 A.D.2d 99 (Ross v. Amrep Corp.) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ross v. Amrep Corp., 57 A.D.2d 99, 393 N.Y.S.2d 410, 1977 N.Y. App. Div. LEXIS 10929 (N.Y. Ct. App. 1977).

Opinion

Silverman, J.

Defendants appeal from an order made pursuant to CPLR article 9 allowing the action to be maintained as a class action. In our view, the present complaint does not present a proper case for class action status, and therefore the order should be reversed.

Plaintiffs are purchasers of a lot in a real estate development known as Rio Rancho Estates outside Albuquerque, New Mexico. Some 14,000 lots have been sold. Some of these lots have been improved with houses and utilities and are occupied by the owners. Many are unimproved, undeveloped land. The sales have been made to residents of 22 States and 11 foreign countries. Certain of the developers, or persons connected with the developers, have recently been convicted on criminal fraud charges in the United States District Court of the Southern District of New York.

The order appealed from defines the class on whose behalf the action has been brought and the common issues as "all persons similarly situated as plaintiffs who bought land in Rio Rancho Estates, Albuquerque, New Mexico, from the defendants, from February 15, 1972 to October 9, 1975 on the issue of fraud and misrepresentations by the defendants to plaintiffs and members of the class in the sale of land at Rio Rancho, Albuquerque, New Mexico.”

The statute states the following prerequisites to a class action (CPLR 901, subd a):

"§ 901. Prerequisites to a class action.
"a. One or more members of a class may sue or be sued as representative parties on behalf of all if:
"1. the class is so numerous that joinder of all members, whether otherwise required or permitted, is impracticable;
"2. there are questions of law or fact common to the class which predominate over any questions affecting only individual members;
"3. the claims or defenses of the representative parties are typical of the claims or defenses of the class;
"4. the representative parties will fairly and adequately protect the interests of the class; and
[101]*101"5. a class action is superior to other available methods for the fair and efficient adjudication of the controversy.”

There is no dispute that the first requirement—numerousness—is met.

It will be convenient to consider next the third requirement: that "the claims or defenses of the representative parties are typical of the claims or defenses of the class.” (CPLR 901, subd a, par 3.) We do not think it can be said that plaintiffs’ claims are typical of the claims and defenses of the class. Indeed, they are rather atypical.

In general, the most appropriate statute under which purchasers of land in an interstate program such as this would seek relief is the Federal Interstate Land Sales Full Disclosure Act (US Code, tit 15, § 1701 et seq) (hereinafter "the Federal Act”). Plaintiifs at first brought such a suit in the Federal court but discontinued it when it appeared their particular purchase had taken place so early as to be barred by the Statute of Limitations applicable to the Federal Act. (US Code, tit 15, § 1711.) Presumably that is the only reason that plaintiffs are now suing in the State court on common-law fraud and deceit. The claims of purchasers such as plaintiffs who are barred from relief under the Federal Act would not seem to be typical of the class. The class on whose behalf the suit purports to be brought is not limited to persons who are barred from relief under the Federal Act, but includes persons not so barred and who are presumably the largest portion of the class. But plaintiffs do not allege a claim under the Federal Act, although this court apparently has subject matter jurisdiction of such a claim. (US Code, tit 15, § 1719.) (Incidentally, there appears to be no logical reason for limiting the beginning date of the class to those who bought on or after February 15, 1972, which is simply the date plaintiffs bought. There is nothing to indicate that persons who bought on February 14, 1972 have any different rights. The fortuitous circumstance that plaintiffs happened to purchase their lot on February 15, 1972 should not define the class so as to exclude other persons with the same legal rights as plaintiffs.)

Again, plaintiffs inspected the land within six months after their purchase, at a time when they had a contractual right to cancel the purchase, and having so inspected the land, they expressed themselves as satisfied and chose not to cancel their purchase. It may well be that many purchasers included in the purported class did not make such an inspection.

[102]*102Plaintiffs have continued to make payments on the purchase price of the land. Defendants argue that such payments made after knowledge of the alleged misrepresentations bar rescission. Whether or not defendants are correct, the legal situation as to persons who have continued to make payments is not necessarily the same as that of persons who have not continued to make payments.

Plaintiffs are purchasers of undeveloped land. There is a serious question whether their claims can be said to be typical of the members of the class who have built on the land and are living there.

Another of the statutory requirements for class action status is that "there are questions of law or fact common to the class which predominate over any questions affecting only individual members.” (CPLR 901, subd a, par 2.)

In our view, the common questions in the present complaint do not predominate over any questions affecting only individual members. The complaint is apparently modeled on a related Federal Trade Commission complaint (even including allegations of a basis for Federal jurisdiction. See, e.g., par Sixth). Some 20 paragraphs of the complaint are devoted to allegations with respect to defendants’ methods of selling lots and the alleged fraudulent misrepresentations. These misrepresentations are alleged to have been made through advertisements in various publications, promotional materials, booklets, pamphlets, letters, sales presentations by oral and written statements, movies and slides with false and misleading props. The alleged false representations relate to supply and demand for land, the liquidity or marketability of the land, land prices and values, land as an investment, personal and financial security, the stock market, banks and insurance, the direction and extent of population growth and movement in and about Albuquerque, the low-risk investment aspect, the ease of resale of lots, their market value and their comparability with other geographical areas, the future development and useability. of the lots as home sites, the scarcity of lots and the risk of losing the deal, the likelihood of attracting industry and of buyers’ obtaining employment, the right to exchange undeveloped land for parcels of comparable value in developed areas, etc. Although plaintiffs allege that they made their purchase in reliance on the false and misleading statements in these 20 paragraphs, it seems most unlikely that every one of these representations was made to and relied upon by any one [103]*103purchaser, including these plaintiffs who purchased a one-half acre lot for a price of $2,300, on which they have paid $1,600.

The complaint does not show any one misrepresentation, or group of misrepresentations, or common thread that may be applicable to substantially the entire group.

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Bluebook (online)
57 A.D.2d 99, 393 N.Y.S.2d 410, 1977 N.Y. App. Div. LEXIS 10929, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ross-v-amrep-corp-nyappdiv-1977.