# Opposition — Paquin v. Cronk

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URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_1702%3A2

## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition
- **Published:** January 1, 1976
- **Citation:** 425 U.S. 972

## Text

.

Supreme Court of the United States
OCTOBER TERM, 1975

No. 75-1135

CLAUDE Y. PAQUIN, et ux.,
Petitioners,

versus

FOUR SEASONS OF TENN., INC.., et al;
NORMAN H. CRONK,
Respondent.

BRIEF FOR RESPONDENT NORMAN H. CRONK IN OP-
POSITION TO PETITION FOR WRIT OF CERTIORARI

FLOYD E. SIEFFERMAN, JR.
Counsel for Respondent
Norman H. Cronk

OF COUNSEL:

CHAMBERS, SIEFFERMAN,
ROBINSON & COOPER

Suite 464

2200 Century Parkway, N.E.

Atlanta, Georgia 30345

(404) 325-9970

SCOFIELDS’ QUALITY PRINTERS. P O BOX 53096.N O LA 70153 504/822-1611

TABLE OF CONTENTS

Page
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Argument:
I. Alleged “‘Departure from Usual
Course of Judicial Proceedings” ........... 7
II. No Conflict of Decisions ................... 9
III. The Supposed Undecided Question of
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TABLE OF AUTHORITIES
Affiliated Ute Citizens of Utah vs. United
, Sr SD oi ccccccccentdeueiwres i)
Foremost-McKesson, Inc. vs. Provident
Securities Company, 423 U.S. —__, 46
5 RRS Ie Se Rene hy Same pure 10
Interstate Land Sales Full Disclosure Act, 82
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15 U.S.C.A. §§1701-1720 ... 0... cece cc ccccuccecucens 3

24 C.F.R. §1710.105 (1973) 2.0... cece cece ee ceeeeees 2

IN THE
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1975

No. 75-1135

CLAUDE Y. PAQUIN, et ux.,
Petitioners,

versus

FOUR SEASONS OF TENN., INC., et al;
NORMAN H. CRONK,
Respondent.

BRIEF FOR RESPONDENT NORMAN H. CRONK
IN OPPOSITION TO PETITION FOR
WRIT OF CERTIORARI

OPINIONS BELOW

The opinions below are set out in full in the appen-
dices to Petitioners’ Brief, and the opinion of the U.S.
Court of Appeals forthe Fifth Circuit is reported at 519
F.2d 1105 and that court’s opinion on motion for
rehearing at 522 F.2d 1270.

JURISDICTION

The Petition for Certiorari (pp. 2 and 3) adequately
sets forth the jurisdictional requisites.

2
QUESTIONS PRESENTED

Petitioners’ statement of “Questions Presented for
Review” are not at all in accord with the record in this
case. The record would support the following
“questions”:

(1) Ina suit against a land owner and an employee
of the developer involving a land purchase trans-
action occurring some years prior to the December
1973 amendments to 24 C.F.R. §1710.105 [Part II(c)(2)]
would the failure of the developer corporation to
amend its theretofore printed Property Report to
reflect the fact of the filing six weeks prior to the trans-
action of a Reorganization Proceeding by the
developer corporation’s separate corporate parent,
but the Property Report stating, many times:
“Completion is dependent upon the satisfactory sale
of lots ... and the developer's ability to secure ade-
quate financing”, and there being no prejudice result-
ing from such Reorganization Proceeding (because
the developer corporation was promptly purchased by
outside interests), constitute a per se and irrebutable
violation of the Interstate Land Sales Full Disclosure
Act of 1968 thereby causing absolute liability to fall
upon one of the developer's “sales” force having no
knowledge of the Reorganization Proceeding but in-
volved to some degree in the sale transaction?

(2) May the damages recoverable under the In-
terstate Land Sales Full Disclosure Act include pre-
judgment interest on the damages suffered by plain-
tiffs as revealed by the evidence?

3

(3) Whether the Findings of Fact, Conclusions of
Law and Judgment of the District Court were clearly
erroneous in finding: That the “Statement of Record”
and “Property Report” met the requirements of law
and that appellants’ evidence failed to show any mis-
representation or omission of material fact therein,
and, thus, appellants failed to meet their burden of
proof? [The trial court in its order of August 16, 1974
correctly observed that: “The issues raised in this
appeal primarily present questions as to the sufficien-
cy of the evidence.’’]

STATUTE INVOLVED

Petitioners have correctly stated that the case in-
volves “The Interstate Land Sales Full Disclosure
Act”, P.L. 90-448 (15 U.S.C.A. §§1701-1720), but they
have omitted material portions thereof from their
petition. Reference should be had to the entire Actas it
was in July, 1970 (prior to the October and December,
1970 and the August, 1974 amendments, but after the
December, 1969 amendment).

STATEMENT OF THE CASE

Petitioners here, plaintiffs below, on July 12, 1970,
contracted to purchase from Four Seasons of
Tennessee, Inc. a single lot in a real estate develop-
ment located in Coweta County, Georgia known as
“Four Seasons of Georgia’. Before the contract of
purchase was signed by Petitioners, they (both hus-
band and wife) had carefully inspected the develop-
ment in person on a personal “guided tour’, driven (in
his personal automobile) by Respondent Norman H.
Cronk, a part time (Sunday afternoons) employee of

4

the developer (Diversified Land Developers, Inc.). At
that time Petitioner Claude Paquin was a graduate ac-
tuary of some distinction, and a law student. Respon-
dent Cronk was a retired Lt. Col. fromthe U.S. Army.

Respondent Cronk steadfastly maintained that he
was nothing more than a guide (termed a “lineman’’)
around the property. Petitioners, on the other hand,
maintained that he played some part in the pricing of
the lot (by telling the petitioners that they could obtain
the lot for less than the printed list price — thus acting
in favor of the petitioners) and by handing to
Petitioners some of the papers concerning the actual
sale thereby became a “salesman” agent of the
developer. It is undisputed that Respondent Cronk
signed no papers, contracts, deeds or the like. All con-
tractual obligations were directly between Four
Seasons of Tennessee, Inc., their sales personnel (as
distinguished from “linemen” such as Cronk) and
Petitioners — Respondent Cronk was in no way in-
volved.

It was not until six (6) weeks after the signing of the
contract [and after the developer, “Diversified Land
Developers, Inc.” became totally disassociated from
the then reorganizing “Whale, Inc.”] that the
Petitioners paid the balance of the purchase price.
Even then they did not pay tothe attorney handling the
matter the deed recording costs and thus there was a
delay (until after Petitioners did pay those charges) in
recording their Warranty Deed. Petitioners’ record-
ing fee check did not clear the bank until November,
1970. Prior to the time Petitioners paid the vast majori-
ty of the purchase price they had been put on actual

notice, by letter, of the Chapter X proceedings as to
“Whale, Inc.”, and the later disassociation of the
Developer from “Whale, inc.” — yet they still paid.
Waiver?

The Petitioners’ statement of facts becomes in-
volved with the Chapter X (and eventual bankruptcy)
proceedings against a corporation known as “Whale,
Inc.”. That corporation was neither the owner nor the
developer of the subject property known as Four
Seasons of Georgia. Though Whale, Inc. did go
through Chapter X and (much after the facts here)
bankruptcy proceedings, and regardless of the
prayers of its bankruptcy petition, neither the proper-
ty owner nor the developer here involved did. Thus the
bankruptcy of Whale, Inc. has no legal bearing on
these proceedings whatsoever. There certainly was no
legal requirement (either by statute or regulation in
force at that time) that Whale, Inc. (or any parent or
subsidiary corporation be brought into the Property
Report.

Petitioners’ “Statement of the Case” is utterly
without foundation in the evidence in stating (p. 9)
“[t]he developer went bankrupt ”" Nor are
Petitioners correct in stating that the trial court
“refused to acknowledge the evidence of bankruptcy”
[of ‘Whale, Inc.’’] as the only evidence tendered on the
subject was admitted into evidence by thetrial court.

The Petitioners mislead when theyindicate that the
developer was a defendant — it is not. Only Respon-

dent Cronk and the realty owner “Four Seasons of
Tennessee, Inc.’’ were ever named defendants — and

6

the majority of the Court of Appeals was correct in
stating that that defendant was two corporations
removed from “Whale, Inc.”.

The many caveats contained in the Property Report
(admittedly thoroughly read by Petitioner Paquin}
pointed out to the public that:

“No assurances of completion can be given...
Completion in these, as in other areas of the
development, will be dependent upon the
satisfactory sale of lots at Four Seasons of
Georgia and the developers ability to secure
adequate financing.” (emphasis added)

It is correct that the developer was one step removed
from “Whale, Inc.”’, but it was not named as a defendant
in this action.

[In addition to the absolute lack of evidence as to any
false or misleading statement in the Property Report,
it now appears that the lot of which Petitioners com-
plain is not the lot as to which Respondent Cronk had
his dealings with Petitioners. It appears that
Petitioners, in some way and at sometime unknown to
Respondent Cronk elected to purchase a lototherthan
the lot shown to them by this Respondent, but the
record is completely silent on the matter and,
therefore, cannot be discussed further.]

Respondent does not agree with Petitioners
“Questions Presented for Review”, because the real
question here posed is whether the findings of fact by
the trial court were clearly erroneous. The Court of

—- —T

Appeals held not. This is not a question for the
Supreme Court of the United States — it was a ques-
tion of evidence.

SUMMARY OF ARGUMENT

Petitioners’ statement of “Questions Presented”
raises “straw-man”™ issues which are not at all in the
case.

This is a case which turned solely on the evidence.
There is no conflict of decisions of Circuit Courts in-
volved. The Regulations under which this case was
decided have since been changed and a decision under
the old regulations controlling in this case would have
no beneficial ““guide-line” effect for the lower courts.
In short, the petition presents nothing warranting this
Court's consideration.

ARGUMENT

I. Alleged “Departure from Usual Course of
Judicial Proceedings”

What is urged by Pecitioners to be a mis-statement
(at one point — it isclearly correctly stated elsewhere)
in the decision of the Court of Appeals as to who the
developer was (it wasn’t a party anyway!) forms the
basis of this portion of the petition. The Developer was
a corporation named “Diversified Land Developers,
Inc.”"’ — its only part in this action was the fact that the
statute makes it (a non-party here) primarily respon-
sible for complying with the requirements of the Act.
It was also the employer of Respondent Cronk. It was

8

the corporate “son” of “Whale, Inc.” and it was the cor-
porate parent of the owner of the land, “Four Seasons
of Tenn., Inc.” the only other defendant (other than
Respondent Cronk) named and served in this case. It
was this other defendant — “Four Seasons of Tenn.,
Inc.’’ — which was the corporation two steps removed
from the Reorganizing “Whale, Inc.”. The Court of
Appeals, in this myriad of “Four Seasons” and other
corporations, in division III of its opinion, put the
burden of the Property Report preparation on the
owner — “Four Seasons of Tenn., Inc.” rather than on
the developer — which really aided petitioners’ case
rather than harming it, since petitioners failed to
name the Developer as a defendant.

Petitioners are plainly in error in indicating to this
Court that the trial court rejected the tendered
evidence of the “bankruptcy” of “Whale, Inc.” :actual-
ly a Chapter X proceeding at all times material
hereto). The evidence was received by the trial court
over this Respondent's objection. The trial court sim-
ply did not find the “bankruptcy” to be controlling in
view of the two corporation gap between a named cor-
porate defendant and “Whale, Inc.” — especially in
view of the fact that both the Developer and the Owner
were “divorced” from “Whale, Inc.” by purchase by
outside owners very early in the Chapter X
proceedings.

In this same section of their brief, petitioners raise a
hitherto non-issue — the applicable statute of
limitations. This is purely a “straw-man”. There was
no plea of the statute — no question but that it had not
run — nothing until this very moment when

petitioners set it up in some vain attempt to obtain this
Court’s Writ of Certiorari.

II. No Conflict of Decisions

Petitioners state that the decision in the case sub
judice conflicts with the decision of this Court in Af-
filiated Ute Citizens of Utah vs. United States, 406 U.S.
128, 153-54 (1972). The truth is that the cases are entire-
ly different, but if anything that case supports the
decision of the lower courts here. Ute Citizens was a
fraud case under S.E.C. Rule 10b-5 in which it was held
that a bank-market maker-transfer agent-virtual
trustee has a duty to disclose to its principals (the
stock owning Utes) the fact known to it that the stock
could be sold for prices higher than that at which the
bank actually sold on behalf of its stockholders-
principals. It is a fraud case.

The case sub judice is not a fraud case. It is nota
10b-5 case. It is an Interstate Land Sales Act case in
which the petitioners received a verdict against the
owner, but did not receive a verdict against the
“lineman” (a guide around the property) — Lt. Col.
Cronk. There was no evidence of any mis-statement of
material fact — much less fraud. Petitioners com-
plaint rests solely on an alleged failure to disclose a
then recent change as to the financial status of a
related, but uninvolved, corporation — which, before
the transaction was completed, was no longer even
related.

10

III. The Supposed Undecided Question of
Federal Law

The trial court held that Respondent Cronk was sub-
ject to the Act (which is exactly what petitioners say
should be decided by this Court). Thus petitioners’
“important question” has already been decided in
their favor. This Court can go no further. The Court of
Appeals said that the trial court’s ruling was more
tavorable to petitioners than that court would be, in
view of Cronk’s relatively minor role in the purchase
by petitioners — but petitioners have not been harmed
by that statement of the Court of Appeals since the
judgment rests on the proposition that Cronk was sub-
ject to the Act.

In the recent case of Foremost-McKesson, Inc. vs.
Provident Securities Company, 423 U.S. _., 46
L.Ed. 2d 464, 96 S. Ct. 508 (January 13, 1976) this Court
held that the analogous S.E.C. Act of 1934 does not im-
pose absolute liability on everyone who has anything
to do with every transaction, saying: “It is inap-
propriate to reach the harsh result of imposing...
liability without fault on the basis of unclear
language. If Congress wishes to impose such liability,
we must assume it will do so expressly or by un-
mistakable inference.” (46 L.Ed. 2d at 478). Petitioners
seek to impose absolute liability on every person
made subject to the Act. Here, on consideration of the
evidence, the trial court properly held that to impose
liability on Respondent Cronk who was completely in-
nocent of any wrongdoing would be too harsh aresult.

This Court. we believe, would agree. The result was
correct and is not in need of review by this Court.

11

WHEREFORE, Respondent Cronk prays that the
petition be denied.

Respectfully submitted,

FLOYD E. SIEFFERMAN, JR..,
Counsel for Respondent Cronk

Of Counsel:

CHAMBERS, SIEFFERMAN,
ROBINSON & COOPER

Suite 464

2200 Century Parkway, N.E.

Atlanta, Georgia 30345

(404) 325-9970

CERTIFICATE OF SERVICE

I hereby certify that three (3) copies of the above and
foregoing Brief have this date been served upon op-
posing counsel of record by placing the same in the
United States mail, postage prepaid and properly ad-
dressed to:

Mr. Claude Y. Paquin
Attorney at Law

1224 Canton Street
Roswell, Georgia 30075

This ___ day of April, 1976.

FLOYD E. SIEFFERMAN, JR.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385003_1702%3A2. Public record. Not legal advice.