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MOSHER v. SOUTHRIDGE ASSOCS.

December 1, 1982

ROBERT T. MOSHER, and MARY LOU MOSHER, his wife
v.
SOUTHRIDGE ASSOCIATES, INC.



The opinion of the court was delivered by: WEBER

 This matter is before the court on defendant's motion to dismiss plaintiffs' amended complaint.

 This dispute arose from an aborted transaction involving the sale of a condominium located in South Florida to the plaintiffs. Plaintiffs allege that the defendant entered into an agreement to construct and sell a condominium in exchange for a down payment of $7,290. The Agreement For Sale was contingent upon the plaintiffs' ability to obtain financing and the defendant agreed to assist in making mortgage financing available to the buyer. When plaintiffs were unable to obtain financing, the defendant exercised an option to provide the alternate mortgage financing themselves. The arrangement took the form of a balloon mortgage with incremental payments of $843 over five years capped by a final payment of $63,855, due and payable one month after the final installment. It is the nature of this financing arrangement that prompted this lawsuit.

 On October 12, 1982, plaintiffs filed an Amended Complaint in three counts seeking return of its down payment with interest and costs. Plaintiffs allege, first, a violation of the Interstate Land Sales Act based on defendant's failure to disclose a material term or condition of the Agreement For Sale, namely, the alternate mortgage financing arrangement (Count I); second, a violation of various provisions of the Securities Act of 1933 by virtue of defendant's alleged failure to disclose certain material facts concerning the balloon-nature of the financing arrangement (Count II); and third, that defendant knowingly misrepresented the terms of the contract so as to induce the plaintiffs to enter into the Agreement For Sale and the Supplemental Mortgage Addendum (Count III).

 The defendant has challenged the foregoing complaint by its motion to dismiss both the original and the amended complaint. Accordingly, we will consider each of the grounds interposed by the defendant to challenge plaintiffs' complaint. We note that the defendant has attached an exhibit to its motion and the plaintiffs have formed their response by relying on materials outside the pleadings. Accordingly, this court will treat defendants' motion as one for summary judgment. Carter v. Stanton, 405 U.S. 669, 31 L. Ed. 2d 569, 92 S. Ct. 1232 (1972); Blonder-Tongue Laboratories, Inc. v. University of Illinois Foundation, 402 U.S. 313, 28 L. Ed. 2d 788, 91 S. Ct. 1434 (1971).

 As to Count I we consider defendant's arguments in support of the motion. Defendant first challenges the jurisdiction of this court and cites the Interstate Land Sales Act, which provides:

 
Any such suit or action may be brought in the district wherein the defendant is found or is an inhabitant or transacts business, or in the district where the offer or sale took place, if the defendant participated therein, . . . 15 U.S.C.A. § 1719.

 Plaintiffs aver in para. 4 of Count I of their amended complaint that the offer or sale of the subject realty occurred in this jurisdiction. We find this averment, in the context of this motion, sufficient to sustain this court's jurisdiction because it raises issues of fact that preclude a dismissal.

 The defendant further challenges Count I and asserts that the Interstate Land Sales Act contains an exemption applicable to the transaction between the parties. Section 1702 of the Act provides in relevant part:

 
Exemptions
 
(a) Unless the method of disposition is adopted for the purpose of evasion of this chapter, the provisions of this chapter shall not apply to -- . . . (2) the sale or lease of any improved land on which there is a residential, commercial, condominium, or industrial building, or the sale or lease of land under a contract obligating the seller or lessor to erect such a building thereon within a period of two years; . . . (emphasis added) 15 U.S.C.A. § 1702.

 The Agreement for Sale executed by the parties on August 5, 1981 provides at para. 6 of the section entitled Construction (page 3 of the agreement) the following:

 
Notwithstanding the foregoing, in accordance with the Interstate Land Sales Full Disclosure Act (sic) and the Florida Uniform Sales Practices Law, the Developer acknowledges its unconditional obligation to complete and deliver the Unit to Buyer within not more than twenty-four (24) months from the execution of this Agreement. (emphasis added).

 The requirement that completion of the unit was to be made within two years by the terms of the agreement, according to the defendant, takes this case out of the Interstate Land Sales Act. The defendant argues that this count fails to state a claim upon which relief can be granted because the transaction between plaintiffs ...


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