Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—9th Cir.: Home buyers failed to state misrepresentation claims against homebuilders, (Jan 16, 2014)
Law Firms Mentioned:Hanly Conroy Bierstein Sheridan Fisher & Hayes LLP | Hunton & Williams
Organizations Mentioned:Beazer Homes USA, Inc. | Beazer Homes USA, Inc. and Beazer Homes Holdings Corp. | Hanly Conroy Bierstein Sheridan Fisher & Hayes, LLP | Hunton & Williams, LLP
By Jody Coultas, J.D.
A district court properly held that home purchasers could not state California consumer protection law claims against homebuilders, the U.S. Court of Appeals in San Francisco has ruled (Kelly v. Beazer Homes USA, Inc., January 13, 2014, per curiam). There was no evidence that any amendment could save the claims on the merits.
The district court properly dismissed fraudulent concealment claims because the purchasers failed to plead facts showing that the homebuilders breached a duty to disclose, according to the court. A seller’s duty to disclose may extend to known nuisances on neighboring properties. However, California courts have never suggested that a seller must disclose the financial condition of neighbors to a prospective buyer.
The alleged reliance on the homebuilders’ alleged misrepresentations was unjustifiable, according to the court. References to the “stable,” “traditional,” and “family-based” character of their developments were also too vague to be actionable.
There was also insufficient evidence to support the California consumer protection law claims, according to the court. The California False Advertising Law claim failed because (1) the representations were too vague to be actionable, and the documents on which the purchasers relied would not deceive a reasonable consumer. The Unfair Competition Law (UCL) claim was dismissed for failure to state a claim for any “predicate violations” or any unlawful conduct. The UCL claims under the fraudulent and unfair prongs were also dismissed.
The cases are Nos. 12-55750, 12-55751, 12-55752, 12-55761, 12-55773, 12-55776, 12-55778, and 12-55779.
Attorneys: Andrea Bierstein (Hanly Conroy Bierstein Sheridan Fisher & Hayes LLP) for Solomon Kelly. Lawrence J. Bracken, II (Hunton & Williams) for Beazer Homes USA, Inc. and Beazer Homes Holdings Corp.
Companies: Beazer Homes USA, Inc. and Beazer Homes Holdings Corp.
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