4th Circuit: Ross v. R.A. North Development (In re Total Realty Management) - Liability under the Interstate Land Sales Act

Summary: The Chapter 7 Trustee alleged that the Debtor, Total Realty Management (“TRM”), with the assistance and knowledge of R.A. North and its affiliates sold property in North and South Carolina at real estate seminars at inflated prices, falsely representing that the properties were owned by TRM, when they were , in fact owned by R.A. North. The Trustee sued R.A. North seeking statutory contribution from R.A. North related to TRM’s alleged liability to aggrieved buyers under the Interstate Land Sales Act provisions that allow for rescission of violative sales and damages stemming from fraudulent and misleading actions. After having the Adversary Proceeding removed to district court, R.A. North successfully moved to dismiss the complaint for failing to state a claim. The Court of Appeals held that R.A. North was a “developer” under the provisions of the Interstate Land Sales Act, see 15 U.S.C. § 1703. That potential liability not withstanding, summary judgment was affirmed as “a party liable under the Interstate Land Sales Act is not entitled to seek contribution as an independent cause of action until it has made payment to injured parties pursuant to that liability.” For a copy of the opinion, please see: Ross v. R.A. North Development (In re Total Realty Management) - Liability under the Interstate Land Sales Act.pdf