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Streambend Properties II, LLC v. IVY Tower Minneapolis, LLC

United States District Court, D. Minnesota

March 20, 2014

Streambend Properties II, LLC, and Streambend Properties VIII, LLC, Plaintiffs,
v.
Ivy Tower Minneapolis, LLC, Ivy Tower Development, LLC, Moody Group, LLC, Goben Enterprises, LP, Wischermann Holdings, LLC, Jeffrey Laux, Gary Benson, Burnet Realty, LLC, Commonwealth Land Title Insurance Company, LLC, John Doe, Mary Rowe, and XYZ, Corp., Defendants.

ORDER

JOAN N. ERICKSEN, District Judge.

This action arises out of purchase agreements executed by Plaintiffs Streambend Properties II, LLC, and Streambend Properties VIII, LLC, [1] for two condominiums in a development in Minneapolis, Minnesota. Plaintiffs' Second Amended Complaint asserted claims under the Interstate Land Sales Full Disclosure Act (ILSFDA), 15 U.S.C. § 1703(a)(2)(A)-(C) (2012), as well as state law. In July 2013, the Court struck the Second Amended Complaint insofar as it purported to assert claims against Burnet Realty; dismissed with prejudice the ILSFDA claims against all identified defendants except Commonwealth Land Title Insurance Company, LLC (Commonwealth); concluded that Plaintiffs' state-law claims substantially predominated over the remaining federal claims; declined to exercise supplemental jurisdiction over the state-law claims; and dismissed the state-law claims without prejudice.[2] The case is before the Court on Plaintiffs' objections to an Order issued by the magistrate judge on January 2, 2014; Plaintiffs' motion for summary judgment; and Commonwealth's motion for summary judgment. For the reasons set forth below, the Court overrules the objections, affirms the January 2 Order, denies Plaintiffs' motion for summary judgment, and grants in part and denies in part Commonwealth's motion for summary judgment.[3]

Plaintiffs' objections to the January 2 Order

After the Court's July 2013 Order had issued, the magistrate judge denied Plaintiffs' Third Motion to Amend Complaint and Motion for Leave to Substitute Proposed Amended Complaint. The magistrate judge also struck Plaintiffs' Motion to Compel Discovery of Developer Parties, Motion to Amend Scheduling Order, and Motion to Amend Complaint to Seek Punitive Damages. Plaintiffs objected to the January 2 Order. The Court has reviewed the record. Based on that review, the Court affirms the January 2 Order because it is neither "clearly erroneous" nor "contrary to law." See 28 U.S.C. § 636(b)(1)(A) (2012); Fed.R.Civ.P. 72(a); D. Minn. LR 72.2(a).

Motions for summary judgment

Summary judgment is proper "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). To support an assertion that a fact cannot be or is genuinely disputed, a party must cite "to particular parts of materials in the record, " show "that the materials cited do not establish the absence or presence of a genuine dispute, " or show "that an adverse party cannot produce admissible evidence to support the fact." Fed.R.Civ.P. 56(c)(1)(A)-(B). "The court need consider only the cited materials, but it may consider other materials in the record." Fed.R.Civ.P. 56(c)(3). In determining whether summary judgment is appropriate, a court must view genuinely disputed facts in the light most favorable to the nonmovant, Ricci v. DeStefano, 557 U.S. 557, 586 (2009), and draw all justifiable inferences from the evidence in the nonmovant's favor, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).

Plaintiffs and Commonwealth moved for summary judgment on Plaintiffs' ILSFDA claims. The Act provides that "[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." 15 U.S.C. § 1709(a) (2012). Section 1703(a) provides in part:

It shall be unlawful for any developer or agent, directly or indirectly, to make use of any means or instruments of transportation or communication in interstate commerce, or of the mails...
(2) with respect to the sale or lease, or offer to sell or lease, any lot not exempt under section 1702(a) of this title-
(A) to employ any device, scheme, or artifice to defraud;
(B) to obtain money or property by means of any untrue statement of a material fact, or any omission to state a material fact necessary in order to make the statements made (in light of the circumstances in which they were made and within the context of the overall offer and sale or lease) not misleading, with respect to any information pertinent to the lot or subdivision; [or]
(C) to engage in any transaction, practice, or course of business which operates or would operate as a fraud or deceit upon a purchaser....

Id. § 1703(a)(2)(A)-(C).

Commonwealth moved for summary judgment on the ground that it is neither a developer nor an agent. Commonwealth argued that it did not sell the condominiums to Plaintiffs and that it did not act as a real estate agent for the seller. Instead, it acted as an escrow agent. Plaintiffs asserted that "Commonwealth acted as an agent of the developer by supervising the disbursement of loan ...


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