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COST CONTROL MKTG. & MGMT. v. PIERCE

October 23, 1987

Cost Control Marketing and Management, Inc., Plaintiff
v.
Samuel R. Pierce, Jr., Secretary of the Department of Housing and Urban Development, Defendant



The opinion of the court was delivered by: CONABOY

 RICHARD P. CONABOY, UNITED STATES DISTRICT JUDGE.

 This is an action for a declaratory judgment brought by an alleged developer of two subdivisions seeking to determine whether the Office of Interstate Land Sales Registration *fn1" has jurisdiction over its business activities, pursuant to the Interstate Land Sales Act as amended and supplemented, 15 U.S.C. § 1701, et seq. Defendant, Samuel R. Pierce, Jr., Secretary of Department of Housing and Urban Development (HUD), has moved to dismiss this action asserting various grounds, inter alia, that Plaintiff has failed to exhaust his administrative remedies and that this court lacks jurisdiction to hear the case. Plaintiff filed a brief in opposition to the Defendant's motion to dismiss. For the reasons that follow we will grant the Defendant's motion to dismiss and order the Clerk of Courts to close this case.

 FACTS

 The Plaintiff alleges in the complaint that it is presently engaged in the business of buying lots, owned by persons or other entities, and reselling them to interested purchasers through a marketing and sales effort. Plaintiff avers that it does not own two subdivisions known as A Pocono Country Place and Wallenpaupack Lake Estates, nor has it ever been involved in the development of those subdivisions. Rather, Plaintiff is constantly acquiring new lots throughout these fully completed developments and sells the lots which it owns.

 Plaintiff admits that it initially filed registrations for certain of the lots which it owned with HUD, however, Plaintiff maintains that the registrations were accomplished solely in an attempt to amicably resolve certain differences between the company and HUD.

 HUD referred the complaints to the plaintiff and asked it to voluntarily submit additional information. Plaintiff maintains that on each of the complaints that HUD advised it of, the Plaintiff, as a matter of good faith, agreed to rescind the transaction and refund any monies paid without regard to the merits of the complaints.

 In 1987, HUD began requesting that Plaintiff supply it with certain information based upon complaints that were not disclosed to the Plaintiff or its representatives. As a result, a meeting was scheduled in Washington, D.C. between the Plaintiff's representatives and HUD in order to discuss exactly what information was being sought. At the meeting, Plaintiff was served with a subpoena directing the Plaintiff to produce certain information and documentation pertaining to the Plaintiff's business activities pertaining to "A Pocono Country Place" and "Wallenpaupack Lake Estates".

 At the meeting, Plaintiff informed the Defendant that it did not believe that the Defendant had any jurisdiction over the Plaintiff or its activities, since it was not a developer within the meaning of the Interstate Land Sales Full Disclosure Act. The representatives of HUD were informed that if an amicable resolution on the subpoena could not be reached, the Plaintiff intended to file suit.

 Since an amicable resolution could not be reached, the Plaintiff has filed this declaratory judgment action seeking to establish that it is not a developer within the purpose and intent of the Interstate Land Sales Full Disclosure Act and, therefore, the Defendant has no jurisdiction over the Plaintiff or its business activities.

 In response to the Plaintiff's action, Defendant has filed a motion to dismiss, arguing that the Plaintiff has not presented a "case or controversy" and has no threatened or actual injury upon which to base his claim. Defendant indicates it has not made a final determination regarding its jurisdiction over the Plaintiff and the Department has taken no action against the Plaintiff based on such a determination. Defendant further notes that Cost Control has never attempted to use the administrative remedies that are available to it. Consequently, Defendant maintains that the Plaintiff lacks standing to bring this suit and the fundamental principles of constitutional and administrative law dictate dismissal.

 ANALYSIS

 The underlying purpose of the Interstate Land Sales Full Disclosure Act is to insure that a buyer, prior to purchasing certain kinds of real estate, is informed of the facts which will enable him to make an informed decision about purchasing the property; and to prohibit and punish fraud in land development enterprises. Law v. Royal Palm Beach ...


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