Opinion ID: 2452878
Heading Depth: 1
Heading Rank: 8

Heading: Damages for the ILSFDA Violation

Text: As we have explained, Defendants violated 15 U.S.C. § 1703(a)(1)(B) and (c) because they failed to furnish a property report in advance of signing the purchase agreement and they failed to inform Plaintiffs of their right to revoke the contract within two years of signing the purchase agreement. [6] It is undisputed in this case that both Gentry-Hunt and the Stones did not attempt to revoke their contracts within two years of signing their purchase agreements. As a result, Plaintiffs are not entitled to the automatic statutory revocation remedies provided in 15 U.S.C. § 1703(c). Plaintiffs nonetheless contend that they are entitled to the return of their deposits as equitable relief under 15 U.S.C. § 1709. Section 1709 reads, in pertinent part: (a) Violations; relief recoverable A purchaser ... may bring an action at law or in equity against a developer or agent if the sale or lease was made in violation of section 1703(a) of this title. In a suit authorized by this subsection, the court may order damages, specific performance, or such other relief as the court deems fair, just, and equitable. In determining such relief the court may take into account, but not be limited to, the following factors: the contract price of the lot ... [and] the amount the purchaser ... actually paid.... (b) Enforcement of rights by purchaser or lessee A purchaser ... may bring an action at law or in equity against the seller ... to enforce any right under subsection (b), (c), (d), or (e) of section 1703 of this title. (c) Amounts recoverable The amount recoverable in a suit authorized by this section may include, in addition to matters specified in subsections (a) and (b) of this section, interest, court costs, and reasonable amounts for attorneys' fees.... 15 U.S.C. § 1709. Plaintiffs argue that the plain language of § 1709 contemplates that an action in equity may be brought against Harborage, notwithstanding that § 1703(c) affords a right of rescission for a developer's failure to provide the required property report. In support of this contention, Plaintiffs point out that § 1709 authorizes the district court to grant such legal and equitable relief as the court deems just, fair, and equitable. We agree with Plaintiffs that the district court's damages award is permitted under § 1709. Even though Plaintiffs are not entitled to the automatic statutory revocation remedies provided in 15 U.S.C. § 1703(c) because they did not attempt to revoke their contracts within two years from the date of signing the purchase contracts, they may still be entitled to the return of their deposits as equitable relief under § 1709. Where, as here, a developer violates § 1703(c)'s notice requirement obligating the developer to disclose to Plaintiffs their right to rescind, the purchaser may be entitled to relief under § 1709(b). See Murray v. Holiday Isle, LLC, 620 F.Supp.2d 1302, 1312 (S.D.Ala. 2009) (Where a purchaser has been damaged by nondisclosure of these rescission rights as required by § 1703(c), the purchaser plainly has an actionable ILSFDA claim pursuant to § 1709(b).). Defendants argue that permitting Plaintiffs to claim their deposits as equitable relief under § 1709(b) effectively reads the time requirements of § 1703(c) out of that subsection. We disagree. The two-year limitation period in § 1703(c) governs those circumstances in which an aggrieved purchaser seeks to enforce an automatic, unconditional right to revoke if the requirements of the subsection are met. On the other hand, the three-year limitation period in 15 U.S.C. § 1711 governs those circumstances in which a purchaser seeks rescission that is not automatic, but must be supported by proper proof. In other words, the automatic revocation or recision remedy in § 1703(c) itself is not the only revocation or recision remedy. In addition to that remedy, § 1709(b) permits a purchaser to obtain the deposit as an equitable remedy if the purchaser shows that the remedy is justified by the facts of a specific case. In this case, the district court concluded that Plaintiffs were entitled to recoup their deposits as equitable relief under § 1709(b). We find no error in this conclusion. Plaintiffs filed affidavits stating that they would have timely revoked their contracts had they been notified of the two-year window within which they could rescind. (Dkt. 86-1: ¶ 17; 93-1: ¶ 5; 94-1: ¶ 15.) Plaintiffs' testimony in this regard was not disputed by Harborage. Also undisputed is the amount paid by Plaintiffs to Harborage as deposits that were not returned. We therefore agree with the district court that the return of Plaintiffs' deposits is a logical and appropriate remedy for Harborage's unlawful failure to disclose that Plaintiffs had a right to rescind the purchase agreements within two years of signing them. And, having found no error in the return of the deposits as equitable relief, we reject Harborage's contention that the attorneys' fees award is not supported by a valid damages award.