Opinion ID: 406730
Heading Depth: 2
Heading Rank: 3

Heading: Gordon's Allegations-A Genuine Issue of Fact ?

Text: 21 Gordon argues that Williamson requires our reversal of the summary judgment order. And, indeed, where there exists a factual question as to Gordon's dependency we must reverse. But we begin with the written agreements. They undeniably give Gordon control through his voting powers over the fate of his investments. Such control precludes a finding of a security interest unless dependency in the narrow sense articulated by Williamson could be found to exist. In our opinion, dependency upon the skills of one or more defendants does not establish dependency upon all defendants. Williamson requires an examination of the representations and promises made by promoters or others to induce reliance upon their entrepreneurial abilities. Where representations or promises have not been made or where, if made, they do not involve claims of unique entrepreneurial or managerial abilities, the dependency required by Williamson cannot exist. We therefore examine Gordon's allegations and uncontroverted affidavits as they pertain to each defendant. 22 Green: Green, a central Florida real estate broker, promoted the land investment syndications. Gordon claims that he relied upon Green's skills and expertise, and that Green represented that he was an expert in selecting bargain-priced central Florida properties which could be resold to his pool of developers within two years at large profits; that (t)he investors' property would be used ... to provide the financial basis for the developer he selected and thereby give (the) investors a resale price that involved part of the developer's profit; that he could make such deals because of his contacts and his unique expertise; and that only he knew how to structure the deals. 23 Broberg, the Bank, and Barley: Attorney Broberg drafted the trust agreements and the Bank served as trustee for the four land trusts. Barley was named general partner in the partnership agreement. Gordon claims that Green represented that his team of money managers consisted of Broberg and the Bank; that Broberg and the Bank assured Gordon that Green was brilliant and that Gordon was fortunate to be an investor in the syndications; that Broberg and the Bank claimed great abilities in managing other people's funds; and that all three defendants represented that they would take care of the managerial legal, and resale operation. 24 The Sellers: 7 The sellers owned property which was acquired by the five real estate syndications. 8 Green makes no claim that these defendants ever made any representations. His complaints and his affidavits assert only that the sellers conspired with Green and that Green was their agent. 25 The Inside Investors: 9 These defendants were co-investors in certain of the real estate syndications. Again, no claim is made that these defendants ever represented anything to Gordon. Gordon alleges only that they conspired with Green and that Green was acting under their control. 26 We believe that taking the allegations as supported by affidavits in the light most favorable to Gordon, they are sufficient to preclude summary judgment as to Green only. Gordon has set forth specific statements made by Green which, if proven, demonstrate that Green represented himself to have unique knowledge regarding the real estate market in central Florida and the contacts and expertise to structure highly profitable deals. Whether Green's represented skills created the dependency contemplated by Williamson is a question of fact which cannot be resolved on the present record. Gordon must be given an opportunity to prove his assertions. 27 In contrast, the allegations and claims against the other defendants are far from sufficient to raise a factual question. 28 Regarding the Bank, Broberg, and Barley, Gordon's assertions demonstrate that the Bank and Broberg had confidence in Green's expertise, that they assured Gordon his investments were in good hands, and that they claimed to be skilled in their respective occupations. Last, we are told that all three defendants agreed to manage the syndications. In order to establish a genuine factual dispute, affidavits must set forth facts which are relevant to a viable legal theory. Spectrum Financial Cos. v. Marconsult, Inc., 608 F.2d 377, 380 (9th Cir. 1979), cert. denied, 446 U.S. 936, 100 S.Ct. 2153, 64 L.Ed.2d 788 (1980); First National Bank Co. v. Insurance Co. of North America, 606 F.2d 760, 766 (7th Cir. 1979). The alleged statements and acts of these defendants simply do not raise an issue of dependency under Williamson's narrow exception. Gordon does not contend that the three defendants possessed unique knowledge or skills, nor does he set forth facts from which we could infer such expertise. Summary judgment as to the Bank, Broberg, and Barley is therefore affirmed. 29 Regarding the sellers and the co-investors, the record is, for all practical purposes, non-existent. The complaints and affidavits allege no specific facts or representations pertaining to these defendants. Bare assertions that the defendants conspired, controlled, or retained Green as their agent are insufficient to create an issue as to Gordon's dependency on these defendants or to demonstrate the sort of relationship between the defendants and Green which would create a question as to imputed knowledge or responsibility. 10 Conclusory allegations such as these, without specific supporting facts, have no probative value. SEC v. Bonastia, 614 F.2d 908, 914 (3d Cir. 1980); Broadway v. City of Montgomery, 530 F.2d 657, 660 (5th Cir. 1976); Benton-Volvo-Metaire, Inc. v. Volvo Southwest, Inc., 479 F.2d 135, 139 (5th Cir. 1973). Summary judgment as to the sellers and the co-investors is affirmed. 11 30 Our opinion deals with a very narrow issue, jurisdiction under the federal securities laws. The protection provided by the securities acts is not limitless, not every fraudulent commercial transaction falls within their ambit. Marine Bank v. Weaver, --- U.S. ---- at ----, 102 S.Ct. 1220 at 1223, 71 L.Ed.2d 409 (1982) (Congress, in enacting the securities laws, did not intend to provide a broad federal remedy for all fraud.). The allegations and affidavits in this case are sufficient to raise an issue only as to Gordon's dependency on Green's skills. The plaintiff may have common law and statutory claims against the remaining defendants, but he does not have a securities claim. In selecting the federal securities acts as a means to obtain redress, Gordon has chosen a most difficult route. On remand he will be faced with the burden of proving that his dependency on Green rendered him incapable of exercising the powers the written agreements vested in him. His path would have been more direct and much simpler in a state court. Summary judgment is reversed as to defendant Green and affirmed as to the remaining defendants. 31 AFFIRMED IN PART, REVERSED IN PART, and REMANDED. 32