Paul Santidrian vs Landmark Custom Ranches, Inc. ( 2010 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________
U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
No. 10-11375 DECEMBER 13, 2010
Non-Argument Calendar JOHN LEY
________________________ CLERK
D.C. Docket No. 0:08-cv-60791-JIC
RAUL SANTIDRIAN,
PAULA SANTIDRIAN,
lllllllllllllllllllll Plaintiffs - Appellants,
versus
LANDMARK CUSTOM RANCHES, INC.,
a Florida Corporation,
JOE CAPRIO,
Individually,
lllllllllllllllllllll Defendants - Appellees,
RICK BELL,
Individually,
a.k.a. Richard Bell,
lllllllllllllllllllll Defendant.
________________________
Appeal from the United States District Court
for the Southern District of Florida
________________________
(December 13, 2010)
Before MARCUS, MARTIN and FAY, Circuit Judges.
PER CURIAM:
Raul and Paula Santidrian appeal the grant of summary judgment in favor of
Joe Caprio, an agent in a home buying deal between the Santidrians and the
developer of a housing subdivision. The Santidrians alleged, inter alia, that
Caprio was liable for civil penalties stemming from the developer’s failure to
comply with certain reporting requirements under the Interstate Land Sales Full
Disclosure Act, 15 U.S.C. §§ 1701–1720, (“ILSFDA”). The district court granted
summary judgment in favor of Caprio after concluding that the statute did not
reach Caprio’s conduct. We agree and affirm.
I.
The Santidrians contracted with Landmark Custom Ranches, Inc. (“the
developer”), for the sale and purchase of a single family home in Broward County,
Florida. Caprio served as the listing agent for the property in question. In this
capacity, Caprio “showed the property and acted as a go-between for other
defendants,” but did not negotiate the final contract. Relations ultimately soured
between the parties, and the Santidrians brought this suit to recover their initial
down payment.
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As relevant to this appeal, the Santidrians seek to hold Caprio responsible
for the developer’s alleged failure to comply with certain reporting requirements
of the ILSFDA. The district court granted summary judgment for Caprio. The
court recognized that the plain terms of the ILSFDA apply to both “developers”
and “agents,” and also that policy reasons supported holding Caprio liable, but
nonetheless granted judgment for Caprio, because
the Plaintiffs [did] not come forward with any case law holding real
estate agents liable under [ILSFDA] where the principal was known at
the time of contract, where there was no evidence of any violation of §
1703(a)(2), where the agent did not have authority to set the price, and
where there was no evidence that the agent had personal responsibility
for compliance with the registration and reporting requirements of the
[ILSFDA].
In the absence of any controlling authority, the court relied upon traditional
agency principles, which it held prohibited holding an agent liable who had no
“personal involvement in a violation of the [ILSFDA].” The Santidrians appeal
this outcome.
II.
We review a district court’s grant of summary judgment de novo, “applying
the same legal standards that bound the District Court, and viewing all facts and
reasonable inferences in the light most favorable to the nonmoving party.” Cruz v.
Publix Super Markets, Inc., 428 F.3d 1379, 1382 (11th Cir. 2005) (quotation
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marks omitted). Summary judgment is appropriate “if the pleadings, the discovery
and disclosure materials on file, and any affidavits show that there is no genuine
issue as to any material fact and that the movant party is entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(c); Drago v. Jenne, 453 F.3d 1301, 1305 (11th
Cir. 2006). We review the district court’s construction and application of the law
de novo. Holton v. Thomasville School Dist., 490 F.3d 1257, 1261 (11th Cir.
2007) (citation omitted).
The Santidrians argue that Caprio is liable under the ILSFDA’s “plain and
unambiguous language.” Specifically, they contend that Caprio is an agent as
defined by the Act, and further that the Act imposes strict liability upon agents for
their principal’s reporting failures. This argument fails, however, because even
assuming that Caprio is an agent as defined by the ILSFDA, his conduct did not
violate the Act.
The ILSFDA “is a consumer protection statute ‘that was intended to curb
abuses accompanying interstate land sales.’” Stein v. Paradigm Mirasol, LLC, 586
F.3d 849, 853 (11th Cir. 2009) (quoting Winter v. Hollinsworth Props., Inc., 777
F.2d 1444, 1448 (11th Cir. 1985)). “The underlying purpose of [the ILSFDA] is
that prior to the purchase the buyer must be informed of facts which would enable
a reasonably prudent individual to make an informed decision about purchasing
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the . . . property.” Paquin v. Four Seasons of Tennessee, Inc., 519 F.2d 1105,
1109 (5th Cir. 1979).1 To this end, the Act requires that a party selling regulated
property must prepare property reports and other disclosures prior to conducting a
final transaction. See, e.g., 15 U.S.C. §§ 1703(a), 1707.
Violators of these requirements face civil penalties under section 1709.
This provision states, in relevant part:
(a) Violations; relief recoverable
A purchaser or lessee 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 or leasehold; the amount the purchaser or lessee
actually paid; the cost of any improvements to the lot; the fair market
value of the lot or leasehold at the time relief is determined; and the fair
market value of the lot or leasehold at the time such lot was purchased
or leased.
(b) Enforcement of rights by purchaser or lessee
A purchaser or lessee may bring an action at law or in equity against the
seller or lessor (or successor thereof) to enforce any right under
subsection (b), (c), (d), or (e) of section 1703 of this title.
15 U.S.C. § 1709.
1
In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (en banc), we adopted as
binding precedent all decisions of the former Fifth Circuit handed down before October 1, 1981.
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The Santidrians contend that because section 1709 applies to both
“developer[s] or agent[s],” the statute by its plain terms authorizes them to hold
Caprio liable for the developer’s malfeasance. In support of this construction, they
also point to amendments made by Congress years after the statute was first
enacted. Specifically, before 1979, the ILSFDA imposed liability on “[a]ny
developer or agent, who sells or leases a lot in a subdivision . . . ” See Paquin, 519
F.2d at 1109 (discussing 15 U.S.C. 1709(b) (1974)) (emphasis added). The
Paquin court concluded that under this language, an agent could not be held liable
where she lacked authority to execute a sale. Id. at 1111. In 1979, however,
Congress removed the clause “who sells or leases,” which the Santidrians submit
indicates Congressional intent to expand the ILSFDA’s scope and hold agents
liable agents even if they do not actually effect a sale. As the district court
recognized, the Santidrians thus interpret the statute to impose strict liability upon
an agent for the principal’s failure to comply with section 1703's reporting
requirements.
We do not agree that the ILSFDA imposes this sort of strict liability for
failure to meet the reporting requirements. The Santidrians’s argument fails
because, even after the 1979 amendments, the statute still distinguishes between
agents who effect a sale, as opposed to those involved in the transaction in other
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ways. Specifically, section 1703(a)(1) imposes disclosure requirements upon
“any developer or agent” who, “with respect to the sale or lease of any lot not
exempt under section 1702,” fails to provide certain reports and records regarding
the property. 15 U.S.C. § 1701(a)(1). Section 1703(a)(2), by contrast, prohibits
certain fraudulent practices and applies to “any developer or agent . . . with respect
to the sale or lease, or offer to sell or lease, any lot not exempt under section
1702(a) of this title . . .” 15 U.S.C. § 1703(a)(2) (emphasis added). Thus, by its
own terms the ILSFDA imposes more extensive liability on agents who engage in
fraud than upon those involved in transactions that fail to comply with the
statute’s reporting requirements.2
Determining the proper scope of the statute’s liability regime in turn
resolves this appeal. First, it is undisputed that Caprio did not personally violate,
supervise, or otherwise take part in any violations of section 1703(a)(1). Rather,
his role was that of salesperson. He showed the property, marketed it, prepared
and distributed promotional materials, and otherwise took steps to favorably
represent the property, but did not actually sell the property. Caprio thus did not
2
Although Congress surely could have enacted a strict liability regime, our conclusion
that they did not do so in the ILSFDA is supported by the fact that such strict liability is foreign
to common law agent liability in analogous circumstances. See Meyer v. Holley, 537 U.S. 280,
285 (2002) (“[W]hen Congress creates a tort action, it legislates against a legal backdrop of
ordinary tort-related . . . liability rules and consequently intends its legislation to incorporate
those rules.”).
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violate section 1703(a)(1). Second, we find no evidence that Caprio acted in a
fraudulent or otherwise misleading manner in his role as salesperson. We also
agree with Caprio that the Santidrians have not established materiality or
detrimental reliance regarding any possible misrepresentations by Caprio. See
Kalil v. Blue Heron Beach Resort Developer, LLC, - - - F. Supp. 2d - - -, 2010 WL
2611738, *11 (M.D. Fla. June 28, 2010). Thus, the Santidrians do not allege, nor
does the record support, holding Caprio liable under section 1703(a)(2).
Having concluded that Caprio is not liable under the ILSFDA, we turn to
whether he may be liable under the common law. Under longstanding principles
of agency law, an agent is not liable for a principal’s malfeasance where the
principal’s identity was disclosed. See Windward Traders, Ltd. v. Fred S. James
& Co. of New York, Inc., 855 F.2d 814, 820 & n.9 (11th Cir. 1988); Chung Yong
Il v. Overseas Navigation Co., 774 F.2d 1043, 1056 (11th Cir. 1985) (“[o]ne who
acts in the capacity of an agent for a disclosed principal is not liable for claims
arising out of a contract executed by the agent on behalf of the principle [sic].”).
Because the principals were disclosed to the Santidrians at all times throughout
this litigation, they thus cannot hold Caprio liable for torts related to the property
transaction that he did not personally commit.
For these reasons, the judgment of the district court is AFFIRMED.
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