Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-alsd-1_07-cv-00310/USCOURTS-alsd-1_07-cv-00310-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 28:1332 Diversity-Contract Dispute

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IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF ALABAMA

SOUTHERN DIVISION

RAY STOCKTON, )

 )

Plaintiff, )

 )

v. ) CIVIL ACTION 07-0310-WS-B

 )

MUSTIQUE, L.L.C., et al., )

 )

Defendants. )

ORDER 

This matter is before the Court on the motion for partial dismissal filed by

defendant Mustique, L.L.C. (Doc. 44). The parties have submitted briefs and evidentiary

materials in support of their respective positions, (Docs. 45, 48, 58), and the motion is

ripe for resolution. After carefully considering the foregoing and other relevant materials

in the file, the Court concludes that the motion is due to be denied.

BACKGROUND

According to the complaint, the plaintiff entered an agreement (“the Agreement”)

with the defendant to purchase a condominium unit in a development situated north of the

beach road but with an undeveloped beachfront lot south of the beach road. The central

allegation of the amended complaint is that, “[p]rior to entering said Agreement, and in

order to induce Purchaser to enter said Agreement, Seller represented to him that Seller

had obtained approval from the City of Gulf Shores so as to allow the purchasers of units

in the Development access to the Gulf Beach across West Beach Boulevard,” when in

fact such approval had not been obtained and still has not been obtained. (Doc. 41 at 3,

¶¶ 9-10). Four of the amended complaint’s six counts depend upon this allegation:

Count Two: Interstate Land Sales Full Disclosure Act, (id. at 6, ¶ 21);

Count Three: Fraud, (id. at 6-7, ¶ 24);

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The Agreement is attached to the amended complaint as Exhibit A.

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Count Four: Breach of warranty, (id. at 8, ¶ 30);

Count Six: Alabama Condominium Act, (id. at 9, ¶ 38).

DISCUSSION

The defendant’s motion attacks each of these counts, treating Count Two

separately and the other counts together. The Court follows suit.

I. Count Two.

Count Two alleges that the defendant violated 15 U.S.C. § 1703(a)(2)(B). (Doc.

41 at 6). The defendant argues that this claim is barred by Section 1702(b)(1), which

excludes from certain portions of the Act transactions involving fewer than one hundred

lots. (Doc. 45 at 5). By its own terms, however, this exemption extends only to the

requirements of Sections 1703(a)(1) and 1704-07. To the extent the defendant attempts to

argue in its reply brief that the plaintiff cannot establish the elements of this claim, (Doc.

58 at 5), the argument comes too late to be considered. E.g., Mariano v. Potter, 2006 WL

907772 at *3 & n.6 (S.D. Ala. 2006). 

II. Counts Three, Four and Six.

The Agreement provides in pertinent part as follows: “The Purchaser

acknowledges that ... the Purchaser is not entitled to rely and has not relied upon any oral

representations of the Seller or the agents of the Seller that differ in any respect from the

written material submitted to the Purchaser concerning the Unit.” (Doc. 41, Exhibit A at

3, ¶ 5) (“the Acknowledgment”).1

 The defendant argues that the Acknowledgment

precludes the plaintiff from establishing the element of reliance necessary to his claims

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The defendant presents additional argument concerning a representation that it

“would obtain” city approval to use the beachfront lot for beach access. (Doc. 45 at 2, 

6-7, 10-11). Because the amended complaint does not allege a promise to obtain city

approval but a representation that city approval had already been obtained, the Court

pretermits discussion of the defendant’s argument.

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under these counts. (Doc. 45 at 7-9).2

The defendant’s argument depends upon the threshold assumption that it can

establish, on motion to dismiss, that there was no written representation that it had

obtained city approval for the purchasers to have beach access across the beach road. 

This assumption fails for at least three reasons. First, on motion to dismiss, the Court is

limited to the complaint, attachments to it, and certain other documents that are both

undisputed as to authenticity and central to the plaintiff’s claim. E.g., Day v. Taylor, 400

F.3d 1272, 1276 (11th Cir. 2005). The defendant attaches to its motion two of the seven

documents listed in the Agreement as “the ‘Condominium Documents,’” (Doc. 41,

Exhibit A at 3, ¶ 5), on the grounds that the Agreement “incorporates [them] by

reference.” (Doc. 45 at 7-8). In fact, while the Agreement mentions these documents, the

defendant has not attempted to show that it incorporates them by reference into the

Agreement. (Doc. 41, Exhibit A at 3, ¶ 5). Nor has the defendant attempted to show that

the documents otherwise satisfy Day. 

Second, even had these two documents been properly presented on motion to

dismiss, the defendant incorrectly assumes that they constitute the universe of “written

material submitted to the Purchaser.” This cannot possibly be so, since the Agreement

lists other documents provided the plaintiff as the Condominium Documents. (Doc. 41,

Exhibit A at 3, ¶ 5). Moreover, the term “written material submitted to the Purchaser” is

presumably broader than the seven documents the Agreement identifies as constituting

the “Condominium Documents,” (id.), likely extending to all written promotional

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Because the Acknowledgment states only that the plaintiff does not rely on “any

oral representations,” it appears to allow him to rely on any written representation,

wherever contained. 

4

Although unnoted by the defendant, one of the cases it cites in turn cites an

Alabama case that did involve a clause similar to the Acknowledgment. Haygood v. Burl

Pounders Realty, Inc., 571 So. 2d 1086, 1089 (Ala. 1990). Haygood does not obviously

control here, because: (1) it involved a used home; (2) there was an “as is” clause as well;

and (3) the Court’s discussion of both clauses was dicta. Since the defendant does not

rely on Haygood, the Court need not consider it further. 

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material.3 The defendant of course cannot support its argument that it provided no

written representation of city approval to use the beachfront lot for beach access unless it

presents to the Court all “written material submitted to the Purchaser.” It has not done so. 

 Third, the amended complaint alleges that the defendant made “written

representations produced to Plaintiff” that it had obtained city approval. (Doc. 41 at 8, ¶

30). On motion to dismiss, in light of that allegation the defendant could not establish

that it made no such written representation.

The defendant’s argument next depends on the proposition that Alabama law

precludes the plaintiff from prevailing in the face of the Acknowledgment. The

defendant, however, cited no authority in its principal brief addressing this issue. In its

reply brief (again, too late), the defendant for the first time cited authority, but each of

these three cases involved the purchase of used homes sold “as is.” (Doc. 58 at 7). 

Alabama follows the rule of “caveat emptor” in the sale of used homes, and the defendant

has not attempted to explain why a rule developed in such cases applies here, in a case

involving a new home and a different contractual clause. See generally Clay Kilgore

Construction, Inc. v. Buchalter/Grant, L.L.C., 949 So. 2d 893, 897 (Ala. 2006) (“Under a

growing body of Alabama caselaw involving circumstances in which the rule of caveat

emptor is applicable, a fraud or fraudulent-suppression claim is foreclosed by a clause in

a purchase contract providing that the purchaser of real property accepts the property ‘as

is.’”).4

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The defendant also suggests that the Agreement’s merger clause precludes any

claim based on a misrepresentation lying outside the Agreement. (Doc. 45 at 8). A

merger clause, however, limits only claims for breach contract; it does not preclude other

claims based on misrepresentations lying outside the contract. E.g., Infiniti of Mobile,

Inc. v. Office, 727 So. 2d 42, 46 (Ala. 1999). 

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The defendant argues that, independent of the Acknowledgment, the plaintiff could

not rely on its alleged representation that it had obtained city approval to use the

beachfront lot for beach access, because the two documents it attaches to its motion to

dismiss advised the plaintiff that “[a]ll valid laws, zoning ordinances and regulations of

all governmental bodies having jurisdiction shall be observed.” Thus, the defendant

concludes, the plaintiff was “on notice that [use of the lot for beach access] could be

[a]ffected by” a later law or ordinance. (Doc. 45 at 3, 9). Again, however, the defendant

has not demonstrated that the Court can review these documents on motion to dismiss. At

any rate, the plaintiff’s claim is that he was induced to enter the Agreement by a false

representation that city approval had already been obtained, not by a false representation

that city approval could never be rescinded. 

The defendant’s remaining arguments — including without limitation its argument

under Rule 9(b) — were raised for the first time in reply and so will not be considered.

CONCLUSION

Whatever the ultimate resolution of these claims, the defendant’s briefing is

inadequate to meet its burden of showing that the amended complaint fails to state a claim

upon which relief can be granted. For the reasons set forth above, the motion for partial

dismissal is denied.

DONE and ORDERED this 28th day of August, 2007.

s/ WILLIAM H. STEELE

UNITED STATES DISTRICT JUDGE

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