Professional Documents
Culture Documents
No. 11-2101
Affirmed by published opinion. Judge Wynn wrote the opinion, in which Judge Shedd and Judge Davis joined.
COUNSEL
ARGUED: John Connell Altmiller, Jr., PESNER KAWAMOTO CONWAY, PLC, McLean, Virginia, for Appellant.
Michael Wayne Robinson, VENABLE, LLP, Vienna, Virginia, for Appellees. ON BRIEF: William D. Dolan, III,
VENABLE, LLP, Vienna, Virginia, for Appellees.
OPINION
WYNN, Circuit Judge:
The bankruptcy trustee (the "Trustee") for debtor Total
Realty Management, LLC ("TRM") appeals the dismissal of
his adversary action against real estate development companies R.A. North Development, Inc. and R.A. North Development I, Inc., and several of their sales and marketing affiliates
(collectively, "R.A. North").1 The Trustee alleges that TRM
1
Principles of statutory construction require "a court to construe all parts to have meaning" and, accordingly, avoid constructions that would reduce some terms to mere surplussage.
PSINet, Inc. v. Chapman, 362 F.3d 227, 232 (4th Cir. 2004).
Canons of construction also require that, to the extent possible, identical terms or phrases used in different parts of the
same statute be interpreted as having the same meaning.
Healthkeepers, Inc. v. Richmond Ambulance Auth., 642 F.3d
466, 472 (4th Cir. 2011). This "presumption of consistent
usage . . . ensure[s] that the statutory scheme is coherent and
consistent." Id. (quotation omitted).
To determine whether R.A. North is potentially liable to
TRMs purchasers, we first look to the definition of "developer" under the Interstate Land Sales Act. Here, the definition
of developer encompasses entities that "sell[ ] . . . or advertise[ ] for sale" properties in covered subdivisions. 15 U.S.C.
1701(5) (emphasis added). Expressly including advertising
as a basis for treating an entity as a "developer" indicates that
Congress intended to extend the Interstate Land Sales Act liability beyond just those entities that sell properties. See Reiter
v. Sonotone Corp., 442 U.S. 330, 339 (1979) ("Canons of
construction ordinarily suggest that terms connected by a disjunctive be given separate meanings, unless the context dictates otherwise . . . .").
Nevertheless, R.A. North maintains liability is limited to
the party that sold the property to the buyer bringing suit
because Section 1703(a)(2) only covers fraudulent acts taken
by a developer "with respect to [a] sale." Appellees Br. at 17.
However, when one compares Section 1703(a)(2) with the
Interstate Land Sales Acts preceding clause, 15 U.S.C.
1703(a)(1), which deals with disclosure requirements, it is
readily apparent that the language of the statute does not support such a limitation. Section 1703(a)(1) provides:
It shall be unlawful for any developer . . . directly or
indirectly . . . with respect to the sale or lease of any
lot . . .
10
11
12
efforts, despite the fact that the plaintiff-buyer did not purchase the property from Ritz-Carlton. Id. at 746-47. Similarly,
in Hammar v. Cost Control Marketing & Sales Management
of Virginia, 757 F. Supp. 698 (W.D. Va. 1990), the Western
District of Virginia held that a bank could be held liable as a
"developer" under the Interstate Land Sales Act, even though
it had not sold the properties at issue, explaining that "[w]hen
a financial institution allows its name to be used in advertisements or announcements for a development, it is in effect
lending its prestige and good name to the sales effort." Id. at
702-03.
Given the Interstate Land Sales Acts plain language, Congresss intent to address fraudulent promotion in enacting the
statute, and our precedent stating that the Interstate Land
Sales Act should be read broadly, we agree with the district
courts and hold that the Interstate Land Sales Acts fraud provision encompasses entities that participated in the advertising
and promotional efforts leading to a challenged real estate
transaction, even if they ultimately were not party to the transaction. The Trustees complaint alleges that R.A. North representatives spoke at TRMs sales seminars for the subdivisions
and that R.A. North marketing materials were widely disseminated at those seminars and on TRMs website. These allegations are sufficient to establish that R.A. North is potentially
liable to TRMs purchasers under the Interstate Land Sales
Acts antifraud provisions.2
B.
Having determined that R.A. North is potentially liable, as
a matter of law, for any fraudulent acts it took in the course
2
The Trustee also contends that R.A. North is a "developer" under the
Interstate Land Sales Act as an "indirect seller" of the properties sold by
TRM. Appellants Br. at 13. Because we hold that R.A. North is potentially liable for assisting TRM with advertising and sales, we need not, and
therefore do not, determine whether R.A. North was an "indirect seller."
13
14
15
Section 77k(f) of the 1933 Act provides: "[E]very person who becomes
liable to make any payment under this section may recover contribution
as in cases of contract from any person who, if sued separately, would
have been liable to make the same payment . . . ."
4
Section 78i(f) of the 1934 Act provides: "Every person who becomes
liable to make any payment under this subsection may recover contribution as in cases of contract from any person who, if joined in the original
suit, would have been liable to make the same payment."
5
Section 78r(b) of the 1934 Act provides: "Every person who becomes
liable to make payment under this section may recover contribution as in
cases of contract from any person who, if joined in the original suit, would
have been liable to make the same payment."
16