Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—Minn. App.: Claims against broker dismissed for lack of benefit to the public, (Dec 3, 2013)
Law Firms Mentioned:Foley & Mansfield, PLLP | Wentzell Law Office, PLLC
Organizations Mentioned:Foley & Mansfield | Little Red House Investments, LLC
By Jody Coultas, J.D.
A district court properly dismissed a Minnesota Consumer Fraud Act (CFA) claim filed by condominium purchasers against a real estate broker because the real estate broker had not advertised or made representations to the public, a Minnesota appellate court has held (Adams v. Rosensteel, December 2, 2013, Chutich, M.).
The condo purchasers alleged that the broker made false statements and intentional omissions to convince them to buy the condo units. Specifically, the broker allegedly represented that purchasers would instantly see a 16-percent return on their investment, that a 60-percent occupancy was the break-even point, that the property taxes would not drastically increase, and that they would not have to pay out-of-pocket to make their mortgage payment because of the “lease back” program.
The purchasers brought suit against the broker in a state district court, alleging fraud, negligent misrepresentation, promissory estoppel, and violation of the Minnesota CFA. The district court dismissed all the claims. The CFA claim was dismissed for failure to show that the claim would benefit the public. The purchasers appealed this ruling.
To bring a civil action under the CFA, a plaintiff must act as a private attorney general. The statute applies only to claimants who demonstrate that their cause of action benefits the public. A claim benefits the public when the defendant has presented its program to the public at large, according to the appellate court.
In this case, the purchasers approached the broker for advice, as a friend or as referred by a friend. There was no evidence that the broker was making representations about the property to the public at large. A claim does not benefit the public when it redresses “a single one-on-one transaction,” where the respondent made no attempt to reach the general public, the court held, affirming the dismissal of the CFA claim.
The case is No. A13-0451.
Attorneys: Christopher P. Parrington and Shawn M. Dobbins (Foley & Mansfield, PLLP) for Rebecca J. Adams. Joseph A. Wentzell and James W. Moen (Wentzell Law Office, PLLC) for Thomas Rosensteel.
Companies: Little Red House Investments, LLC
Cases: StateUnfairTradePractices MinnesotaNews