Court Opinion

ID: 815293
Source: CourtListenerOpinion
Date Created: 2013-01-14 20:16:00+00
Date Added: 2024-06-11T08:03:46.908683
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS
              FOR THE FOURTH CIRCUIT

In Re: TOTAL REALTY                     
MANAGEMENT, LLC,
                             Debtor.

BRYAN S. ROSS, Chapter 7 Trustee
for Total Realty Management,
LLC,
                Plaintiff-Appellant,
                 v.
R.A. NORTH DEVELOPMENT,
INCORPORATED; R. A. NORTH
DEVELOPMENT I, INCORPORATED;
SOUTHEASTERN WATERFRONT                    No. 11-2101
MARKETING, INCORPORATED;
SOUTHEASTERN WATERWAY SALES,
INCORPORATED; WATERFRONT
DEVELOPMENT SERVICES,
INCORPORATED; WATERFRONT
COMMUNITIES, INCORPORATED;
SOUTHEASTERN LAND SALES
INCORPORATED,
             Defendants-Appellees,
                and
UNITED STATES BANKRUPTCY COURT,
Alexandria,
                   Party-in-Interest.
                                        
2                 IN RE: TOTAL REALTY MANAGEMENT
            Appeal from the United States District Court
         for the Eastern District of Virginia, at Alexandria.
                  Gerald Bruce Lee, District Judge.
             (1:11-cv-00684-GBL-JFA; 09-11939-RGM)

                     Argued: October 25, 2012

                     Decided: January 14, 2013

        Before SHEDD, DAVIS, and WYNN, Circuit Judges.

Affirmed by published opinion. Judge Wynn wrote the opin-
ion, in which Judge Shedd and Judge Davis joined.

                              COUNSEL

ARGUED: John Connell Altmiller, Jr., PESNER KAWA-
MOTO CONWAY, PLC, McLean, Virginia, for Appellant.
Michael Wayne Robinson, VENABLE, LLP, Vienna, Vir-
ginia, 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 compa-
nies R.A. North Development, Inc. and R.A. North Develop-
ment I, Inc., and several of their sales and marketing affiliates
(collectively, "R.A. North").1 The Trustee alleges that TRM
    1
   The Trustee’s complaint identifies five sales and marketing affiliates of
R.A. North Development and R.A. North Development I: Waterfront
                  IN RE: TOTAL REALTY MANAGEMENT                           3
and R.A. North jointly engaged in a scheme to sell properties
at inflated prices in recently developed subdivisions in North
Carolina and South Carolina. The Trustee seeks contribution
from R.A. North for TRM’s liabilities under the Interstate
Land Sales Full Disclosure Act ("Interstate Land Sales Act"),
which prohibits developers from making fraudulent and mis-
leading statements to purchasers in the course of real estate
transactions. But TRM is not entitled to contribution as a mat-
ter of law because it has yet to make any payment to
aggrieved purchasers stemming from Interstate Land Sales
Act violations. Consequently, we affirm.

                                     I.

                                     A.

   According to the Trustee, during 2006 and 2007, TRM and
R.A. North engaged in a real estate fraud scheme. R.A. North
Development developed the Cannonsgate subdivision in Car-
teret County, North Carolina, and R.A. North Development I
developed the Summerhouse subdivision in Onslow County,
North Carolina. Maryville Partners, Inc. ("Maryville"), which
is not a party to this appeal, developed the Craven’s Grant
subdivision in Georgetown County, South Carolina. Maryville
contracted with R.A. North to assist in the marketing and
sales of Craven’s Grant properties.

  Under the scheme, TRM purchased a number of Cannons-
gate, Summerhouse, and Craven’s Grant parcels from R.A.
North and Maryville at fair-market value. Within hours of
purchase, TRM resold the parcels to individual purchasers at

Development, Inc.; Waterfront Communities, Inc.; Southeastern Water-
front Marketing, Inc.; Southeastern Land Sales, Inc.; and Southeastern
Waterway Sales, Inc. R.A. North Development, R.A. North Development
I, and the five sales and marketing affiliates are all controlled by brothers
Randolph M. Allen and William G. Allen. For simplicity, we refer to these
entities collectively as R.A. North.
4              IN RE: TOTAL REALTY MANAGEMENT
a substantial premium—and substantially above fair-market
value. TRM then used the proceeds from the sales to finance
its earlier-in-the-day purchases from R.A. North and Mary-
ville.

   TRM attracted buyers by holding seminars for would-be
real estate investors. Sales and marketing affiliates of R.A.
North provided electronic and hard-copy marketing materials
to TRM to distribute at the seminars and videos to post on its
website. During the seminars, TRM employees and agents of
R.A. North would give presentations regarding the investment
potential of the three subdivisions, including testimonials
from investors who had previously made money through pur-
chasing and reselling lots in the subdivisions. At the seminars,
TRM falsely represented to prospective buyers that it owned
the lots it was selling and that it purchased the lots at a bulk
discount from R.A. North. R.A. North was aware that TRM
made these false representations at the time they were made.
Sales affiliates of R.A. North also assisted TRM’s Summer-
house purchasers in obtaining financing by telling lenders that
TRM had agreed to buy nearly all of the parcels in the subdi-
vision.

   Richard M. Watts—who served as sales manager for the
subdivisions and was compensated by Southeastern Water-
front Marketing, a sales and marketing unit of R.A.
North—participated in TRM’s scheme. In particular, at
TRM’s seminars, Watts showed videos and made presenta-
tions about the subdivisions, and he informed purchasers that
Southeastern Waterfront Marketing would assist them in
reselling their lots. Watts told purchasers that Southeastern
Waterfront Marketing would charge a 10% brokerage fee for
assisting in resales, making purchasers more likely to buy
from TRM because it only charged a 6% brokerage fee for
resales. Watts also interacted with TRM representatives on a
regular basis to promote sales of lots in the three subdivisions.

  The Trustee contends that R.A. North benefited from this
scheme in at least three ways: (1) TRM’s aggressive sales tac-
              IN RE: TOTAL REALTY MANAGEMENT                 5
tics allowed R.A. North to exhaust its inventory more quickly,
freeing it from blanket mortgages on the subdivisions that
could not be released until a certain percentage of lots were
sold; (2) the premium prices paid by TRM’s purchasers made
R.A. North’s prospective direct purchasers more likely to buy
lots because R.A. North’s prices appeared to be below market
value; and (3) the scheme allowed R.A. North to tout to its
direct purchasers the possibility of reselling their lots to
TRM’s customers, who were paying inflated prices.

                              B.

   This case’s procedural background is somewhat circuitous.
One group of aggrieved purchasers brought actions under the
Interstate Land Sales Act against TRM and R.A. North in the
United States District Court for the Eastern District of Vir-
ginia. See Beth A. Feeley v. Total Realty Management, No.
1:08-cv-1212 (E.D. Va. filed Nov. 20, 2008). That group of
aggrieved purchasers put TRM into involuntary bankruptcy in
2009. R.A. North reached a settlement with all but six of the
Feeley plaintiffs. A separate group of purchasers filed suit in
the Circuit Court of Prince William County, Virginia, assert-
ing essentially the same claims against R.A. North and other
defendants. See Christina Blake v. Michael McCracken, No.
CL0900489800 (Va. Cir. Ct. 2009). The circuit court dis-
missed the complaint without leave to amend on the basis that
the plaintiffs could not pursue claims against R.A. North
under the Interstate Land Sales Act, either directly or via an
agency theory.

   This appeal arises from an adversary proceeding brought by
the Trustee for TRM against R.A. North on April 19, 2011,
in the U.S. Bankruptcy Court for the Eastern District of Vir-
ginia. The action sought statutory contribution from R.A.
North related to TRM’s alleged liability to aggrieved buyers
under Interstate Land Sales Act provisions that allow for
rescission of violative sales (Counts I-VII) and damages stem-
ming from fraudulent and misleading actions taken in the
6              IN RE: TOTAL REALTY MANAGEMENT
course of covered real estate transactions (Counts VIII-XIV).
The allegations in the Trustee’s action are substantially simi-
lar to the allegations in Feeley and Blake.

   R.A. North successfully moved to withdraw and transfer
the Trustee’s action from the bankruptcy court to the United
States District Court for the Eastern District of Virginia.
Thereafter, R.A. North moved to dismiss the complaint under
Federal Rule of Civil Procedure 12(b)(6). The district court
granted R.A. North’s motion on all claims, concluding that:
the statutory contribution claims failed as a matter of law
because R.A. North would not have been liable if sued sepa-
rately; the complaint failed to allege with sufficient particular-
ity that TRM acted as R.A. North’s agent; and R.A. North
could not be sued separately as an agent under the Interstate
Land Sales Act. The Trustee appealed.

                               II.

   We review a district court’s dismissal of an action under
Rule 12(b)(6) de novo. Am. Chiropractic Ass’n v. Trigon
Healthcare, Inc., 367 F.3d 212, 230 (4th Cir. 2004). We also
review questions of statutory construction de novo. In re Sun-
terra Corp., 361 F.3d 257, 263 (4th Cir. 2004). "To survive
a motion to dismiss, a complaint must contain sufficient fac-
tual matter, accepted as true, to state a claim to relief that is
plausible on its face." McCorkle v. Bank of America Corp.,
688 F.3d 164, 171 (4th Cir. 2012) (quoting Ashcroft v. Iqbal,
556 U.S. 662, 678 (2009)) (internal quotation omitted). This
Court may affirm a district court’s dismissal of a complaint
under Rule 12(b)(6) "on any basis fairly supported by the
record." Am. Chiropractic, 367 F.3d at 232-33 (quotation
omitted).

   On appeal, the Trustee challenges the district court’s deci-
sion regarding the damages claims, but not the rescission
claims. The Trustee argues that the district court failed to
directly address its damages claims, incorrectly determined
               IN RE: TOTAL REALTY MANAGEMENT                    7
that TRM’s purchasers had no recourse against R.A. North
under the Interstate Land Sales Act as a matter of law, and
erred in holding that the complaint failed to satisfy the federal
pleading standards.

   The Interstate Land Sales Act provides that "[e]very person
who becomes liable to make any payment under this section
may recover contribution as in cases of contract from any per-
son who, if sued separately, would have been liable to make
the same payment." 15 U.S.C. § 1709(d). Therefore, to state
a claim for contribution under the Interstate Land Sales Act,
a complaint must allege that (1) the plaintiff has "become[ ]
liable" under the statute, (2) the defendant is independently
liable for the same conduct, and (3) the plaintiff is entitled to
"contribution" from the defendant. Id.

   Following the district court’s approach, we will begin by
assuming, without deciding, that TRM is liable to purchasers
of properties in the subdivisions. Thus, to state a claim for
statutory contribution, the Trustee’s complaint must establish
both that R.A. North is independently liable under the Inter-
state Land Sales Act to TRM’s purchasers and that TRM is
entitled to contribution from R.A. North.

                                A.

   The Trustee contends that R.A. North is independently lia-
ble to TRM’s purchasers under the Interstate Land Sales Act’s
provision barring developers from engaging in fraudulent or
deceitful acts in the course of covered real estate transactions.
In particular, Section 1703 makes it "unlawful for any devel-
oper . . . directly or indirectly . . . with respect to the sale or
lease, or offer to sell or lease . . . to employ any device,
scheme, or artifice to defraud [or] to engage in any transac-
tion, practice, or course of business which operates or would
operate as a fraud or deceit upon a purchaser . . . ." 15 U.S.C.
§ 1703(a)(2)(A), (a)(2)(C); see also 15 U.S.C. § 1709(a)
(allowing purchasers to bring damages actions for sales made
8              IN RE: TOTAL REALTY MANAGEMENT
in violation of Section 1703(a)). The statute broadly defines
"developer" as "any person who, directly or indirectly, sells or
leases, or offers to sell or lease, or advertises for sale or lease
any lots in a subdivision." 15 U.S.C. § 1701(5).

   The Trustee asserts that R.A. North is individually liable
for TRM’s sales because R.A. North participated in the sales
and marketing efforts for the properties at issue. By contrast,
R.A. North contends that even if it participated in TRM’s
sales and marketing efforts, it cannot be liable because TRM’s
purchasers "must look to the developer from whom [they]
purchased the lot." Appellee’s Br. at 17. In particular, R.A.
North maintains that such a limitation conforms to the Inter-
state Land Sales Act’s definition of "developer" and require-
ment that a defendant’s fraudulent action be made "with
respect to [a] sale." Id.

   This Court has not had occasion to address whether liability
under the Interstate Land Sales Act extends to entities that
were not party to a challenged real estate transaction but
engaged in fraudulent advertising or marketing activities in
the course of that transaction. However, we have said that the
language of the Interstate Land Sales Act should "be read
broadly to effectuate" its goal of "protect[ing] purchasers of
land which is part of a common promotional scheme." Olsen
v. Lake Country, Inc., 955 F.2d 203, 205 (4th Cir. 1991) (per
curiam).

   When interpreting a statute, we begin with the plain lan-
guage. Crespo v. Holder, 631 F.3d 130, 133 (4th Cir. 2011).
In doing so, "we give the terms their ordinary, contemporary,
common meaning, absent an indication Congress intended [it]
to bear some different import." Id. (internal quotation omit-
ted). To determine a statute’s plain meaning, we not only look
to the language itself, but also "the specific context in which
that language is used, and the broader context of the statute
as a whole." Holland v. Big River Minerals Corp., 181 F.3d
597, 603 (4th Cir. 1999) (quotation omitted).
               IN RE: TOTAL REALTY MANAGEMENT                   9
   Principles of statutory construction require "a court to con-
strue all parts to have meaning" and, accordingly, avoid con-
structions 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 possi-
ble, 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
TRM’s purchasers, we first look to the definition of "devel-
oper" under the Interstate Land Sales Act. Here, the definition
of developer encompasses entities that "sell[ ] . . . or adver-
tise[ ] 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 lia-
bility 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 dis-
junctive be given separate meanings, unless the context dic-
tates 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." Appellee’s Br. at 17.
However, when one compares Section 1703(a)(2) with the
Interstate Land Sales Act’s 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 sup-
port 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             IN RE: TOTAL REALTY MANAGEMENT
     (A) to sell or lease any lot unless a statement of
     record with respect to such lot is in effect . . . ;

     (B) to sell or lease any lot unless a printed property
     report . . . has been furnished to the purchaser . . . in
     advance of the signing of any contract or agreement
     ...;

     (C) to sell or lease any lot where any part of the
     statement of record or the property report contained
     an untrue statement of a material fact or omitted to
     state a material fact required to be stated therein
     . . . ; or

     (D) to display or deliver to prospective purchasers
     . . . advertising or promotional material which is
     inconsistent with information required to be dis-
     closed in the property report . . . .

15 U.S.C. § 1703(a)(1) (emphasis added). By using the term
"to sell" in Sections 1703(a)(1)(A)-(C), Congress limited lia-
bility under those clauses to the sellers of property. This is
particularly apparent when Sections 1703(a)(1)(A)-(C) are
compared to Section 1703(a)(1)(D), which deals with adver-
tising and promotion and prohibits "display[ing] or deliver-
[ing]" rather than "sell[ing]," indicating that Congress
intended to hold advertisers and promoters liable for certain
acts, even if they did not sell a property. Were we to construe
the phrase "with respect to the sale" in Section 1703(a)(1) as
limiting liability to sellers, we would render the term "to sell"
in Sections 1703(a)(1)(A)-(C) meaningless. Principles of stat-
utory construction require that we reject such an interpreta-
tion. See PSINet, 362 F.3d at 232. A better reading of the
phrase "with respect to the sale," which gives meaning to all
of the terms in the statute, is that the phrase is intended to
limit liability to claims stemming from prohibited actions
taken in relation to consummated sales.
               IN RE: TOTAL REALTY MANAGEMENT                 11
   Therefore, since the phrase "with respect to the sale" in
Section 1703(a)(1) cannot reasonably be interpreted as limit-
ing liability to sellers, we should not interpret the identical
phrase in Section 1703(a)(2) as requiring such a limitation.
See Healthkeepers, 642 F.3d at 472. The fact that Congress
effectively distinguished in Section 1703(a)(1) between con-
duct for which only sellers would be liable and conduct for
which all developers would be liable only reinforces this
interpretation. Had Congress wanted to limit liability under
Section 1703(a)(2) to sellers it simply could have used the
same limiting language it used in Sections 1703(a)(1)(A)-(C).

   Furthermore, the legislative history of the statute does not
support limiting liability under Section 1703(a)(2) to sellers.
The Interstate Land Sales Act was enacted in 1968 during the
rapid expansion of the interstate land sales industry and in
response to a number of high-profile cases of misleading and
fraudulent marketing and sales of properties to out-of-state
buyers, particularly retirees. See 113 Cong. Rec. S315 (daily
ed. Jan. 12, 1967) (statement of Sen. Williams). In introduc-
ing the bill, Senator Williams noted that the bill was intended
to broadly address the "promotion" of land sales across state
lines because out-of-state buyers generally rely on "what they
are told in advertising, telephone conversations, ‘sales par-
ties,’ and by salesmen . . . " id., indicating that Congress was
just as concerned with the promotion and advertising of prop-
erties as it was with the selling of properties.

   Additionally, we observe that though we have not
addressed this issue, our district courts have found that parties
can be held liable under the Interstate Land Sales Act as "de-
velopers" if they are engaged in the sales and marketing of a
development, even if they are not the sellers. For example, in
Nahigian v. Juno Loudoun, LLC, 684 F. Supp. 2d 731 (E.D.
Va. 2010), the Eastern District of Virginia found that Ritz-
Carlton could be held liable as a "developer" under the Inter-
state Land Sales Act when it leant its name to a develop-
ment’s marketing materials and participated in marketing
12               IN RE: TOTAL REALTY MANAGEMENT
efforts, despite the fact that the plaintiff-buyer did not pur-
chase 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 advertise-
ments 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 Act’s plain language, Con-
gress’s 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 Act’s fraud pro-
vision 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 trans-
action. The Trustee’s complaint alleges that R.A. North repre-
sentatives spoke at TRM’s sales seminars for the subdivisions
and that R.A. North marketing materials were widely dissemi-
nated at those seminars and on TRM’s website. These allega-
tions are sufficient to establish that R.A. North is potentially
liable to TRM’s purchasers under the Interstate Land Sales
Act’s 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. Appellant’s Br. at 13. Because we hold that R.A. North is poten-
tially liable for assisting TRM with advertising and sales, we need not, and
therefore do not, determine whether R.A. North was an "indirect seller."
               IN RE: TOTAL REALTY MANAGEMENT                 13
of advertising and promoting TRM’s sales, we further must
determine whether TRM is entitled to statutory contribution
from R.A. North. As noted previously, the Interstate Land
Sales Act provides that "[e]very person who becomes liable
to make any payment under this section may recover contri-
bution as in cases of contract from any person who, if sued
separately, would have been liable to make the same pay-
ment." 15 U.S.C. § 1709(d).

   R.A. North contends that the Trustee’s complaint fails to
plead a claim for contribution because it does not allege that
TRM has made any payment related to its Interstate Land
Sales Act liability—a necessary element for a contribution
claim at common law. By contrast, the Trustee argues that
because the right to contribution under the Interstate Land
Sales Act is created by statute, the plain language of the stat-
ute controls, rather than the common law understanding of
contribution. Since the statute allows for contribution when a
party "becomes liable," the Trustee contends payment by the
party seeking contribution is not a precondition of recovery.
Appellant’s R. Br. at 4-5.

   As always, we begin by looking at the statute’s plain lan-
guage. Crespo, 631 F.3d at 133. In doing so, we consider not
only the language at issue but also the language’s context in
the statute as a whole. Holland, 181 F.3d at 603. In construing
a statute, to the extent possible, we seek to give meaning to
every word and "reject constructions that render a term redun-
dant." PSINet, 362 F.3d at 232. If the plain language is unam-
biguous, we need look no further. Holland, 181 F.3d at 603.
However, "[i]f the statutory language is ambiguous, we look
beyond the language of the statute to the legislative history for
guidance." Id. (internal quotation omitted).

   Here, despite the Trustee’s contention, the language of the
Interstate Land Sales Act’s contribution clause is at least
ambiguous as to whether payment is required before a party
may bring an independent action for contribution. While the
14             IN RE: TOTAL REALTY MANAGEMENT
use of the phrase "becomes liable" suggests that the right to
contribution may arise with liability rather than payment, the
phrase must be read in the context of the entire contribution
clause, which also provides that a party "may recover contri-
bution as in cases of contract." 15 U.S.C. § 1709(d). At com-
mon law, a party can bring a claim for contribution against a
jointly liable party only if the party bringing the claim has
already paid more than its share of liability. Restatement (Sec-
ond) of Torts § 886A(2) (1979); see also 18 Am. Jur. 2d,
Contribution § 11 (2004) ("The right to contribution is incho-
ate or subordinate from the time of the creation of the rela-
tionship giving rise to the common burden until the time of
payment by a co-obligor of more than his or her proportional
share."). The Trustee asserts that limiting the scope of the
Interstate Land Sales Act’s contribution clause to cases where
a joint obligor has already paid more than its share of liability
would effectively render the term "becomes liable" redundant.
However, were we to adopt the Trustee’s reading, we would
violate the same principle by failing to give "contribution" its
common meaning. In light of this conflict, the plain language
of the statute is ambiguous.

   Given this ambiguity, we next turn to the legislative his-
tory. Congress intended to pattern the Interstate Land Sales
Act after the Securities Act of 1933 (the "1933 Act"). See 113
Cong. Rec. S316 (daily ed. Jan. 12, 1967) (statement of Sen.
Williams) (noting that the Interstate Land Sales Act "is based
on the full disclosure principle established in the Securities
Act of 1933"). In fact, much of the Interstate Land Sales Act’s
language "parallels" provisions in the 1933 Act. Id.; see also
Flint Ridge Dev. Co. v. Scenic Rivers Ass’n of Okla., 426 U.S.
776, 778 (1976) ("[The Interstate Land Sales Act] is based on
the full disclosure provisions and philosophy of the Securities
Act of 1933 . . . which it resembles in many respects.").

  While federal courts have not interpreted the Interstate
Land Sales Act’s contribution clause, the language in Section
1709(d) is virtually identical, in pertinent part, to the contribu-
                 IN RE: TOTAL REALTY MANAGEMENT                          15
tion clauses in the 1933 Act, 15 U.S.C. § 77k(f),3 and the
Securities and Exchange Act of 1934 (the "1934 Act"), 15
U.S.C. §§ 78i(f)4 & 78r(b),5 which frequently have been con-
strued by federal courts. Courts interpreting the contribution
language in the Securities Acts consistently have found that
payment by a potentially liable party is a precondition to that
party seeking contribution from a jointly liable party. See,
e.g., Asdar Group v. Pillsbury, Madison & Sutro, 99 F.3d
289, 295-96 (9th Cir. 1996); Employers Ins. of Wausau v.
Musick, Peeler & Garret, 954 F.2d 575, 578-79 (9th Cir.
1992) (holding that when contribution is brought as a separate
cause of action, rather than through third-party practice, the
plaintiff/joint-tortfeasor must allege that it has paid more than
its fair share of the liability), aff’d on other grounds, Musick,
Peeler & Garrett v. Employers Ins. of Wausau, 508 U.S. 286
(1993); Heizer Corp. v. Ross, 601 F.2d 330, 335-36 (7th Cir.
1979); In re Cendant Corp. Deriv. Action Lit., 96 F. Supp. 2d
394, 398 (D. N.J. 2000) (explaining that contribution is an
"inchoate right" until a party has made payment); Wassel v.
Eglowsky, 399 F. Supp. 1330, 1370-71 (D. Md. 1975),
adopted by Wassel v. Eglowsky, 542 F.2d 1235 (4th Cir.
1976), abrogation on other grounds recognized by Baker,
Watts & Co. v. Miles & Stockbridge, 876 F.2d 1101 (4th Cir.
1989).
  3
     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 contribu-
tion 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                IN RE: TOTAL REALTY MANAGEMENT
   Based on the foregoing interpretations of identical language
and Congress’s intent to draw on precedent from the Securi-
ties Acts in drafting the Interstate Land Sales Act, we hold
that a party liable under the Interstate Land Sales Act is not
entitled to seek contribution as an independent cause of action6
until it has made payment to injured parties pursuant to that
liability. Because the Trustee’s complaint does not allege that
TRM has made any payments to purchasers stemming from
its potential Interstate Land Sales Act liability, it fails as a
matter of law.7

                                    III.

   In sum, R.A. North is potentially independently liable to
TRM’s purchasers because it participated in TRM’s sales and
marketing efforts. But, because TRM is not entitled to statu-
tory contribution, the Trustee’s action fails as a matter of law.
Consequently, we affirm.

                                                             AFFIRMED

  6
     We take no position on whether an Interstate Land Sales Act defendant
may bring a claim against a potentially jointly liable party under Federal
Rule of Civil Procedure 14(a) when the defendant has not yet paid more
than its share of liability under the Interstate Land Sales Act to the plain-
tiff.
   7
     Because the Trustee is not entitled to seek contribution from R.A.
North, we need not reach R.A. North’s alternative claims that it is entitled
to a contribution set-off based upon language in its settlement agreement
in the Feeley action and that the Trustee’s complaint is insufficient under
federal pleading standards.