Petition — Behring Corp. v. Bennett

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Supreme Court, U. &

MAR 22 1975

Gnuited States

CASE NO. 375-1352

BEHRING CORPORATION,

a Delaware corporation,

Petitioners,

vs.

WILLIAM R. BENNETT, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

IN AND FOR THE FIFTH CIRCUIT

PREDDY, HADDAD, KUTNER,

HARDY & JOSEPHS, P.A.

Attorneys for Petitioners

5th Floor, Concord Building

66 West Flagler Street

Miami, Florida 33130

GILBERT A. HADDAD, ESQUIRE

MIAMI REVIEW — 371-4853 — 377-3721

TABLE OF CONTENTS

Page

GFinnaee faaee . 2

GROUNDS UPON WHICH JURISDICTION

OF THIS COURT IS INVOKED 3-4

BASIS OF FEDERAL JURISDICTION IN

THE UNITED STATES COURT OF AP-

PEALS FOR THE FIFTH CIRCUIT 5

BASIS OF FEDERAL JURISDICTION IN

THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF

FLORIDA 6

QUESTIONS PRESENTED FOR REVIEW

ON MERITS : 6

STATUTES INVOLVED 7-10

STATEMENT OF THE CASE 11-18

REASONS FOR GRANTING THE WRIT 19-40

CONCLUSION 41

CERTIFICATE OF SERVICE 42

TABLE OF CASES

Case Page

Bailey v. Romney,

359 F.Supp. 596 (D.C.D.C. 1973) | 27

Bailey v. Sabine River Authority,

54 F.R.D. 42 (W.D. La. 1971) 27

Cessna Aircraft Distributorship Anti-Trust

Litigation v. Cessna,

518 F.2d 213 (8th Cir. 1975) 4

Cohen v. Beneficial Industrial Loan Corp.,

337 U.S. 541 69 S.Ct. 1221, 93 L.Ed. 1528

(1949) : 3

Crawford v. Texaco, Inc.,

40 F.R.D. 381 (S.D.N.Y. 1966) 25

Eisen v. Carlisle & Jacqueline,

417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d 732

(1974) 3

General Motors v. The City of New York,

501 F.2d 639 (2d Cir. 1974) 4

Gillespie v. United States Steel Corporation,

379 U.S. 200, 85 S.Ct. 308, 13 L.Ed.2d 199 3

Hagen v. Saba! Palms,

186 So.2d 302 _. * ak 22

Ill

TABLE OF CASES (continued)

Case

Hansberry v. Lee,

311 U.S. 32, 61 Sup.“t. 115, 85 L.Ed 22 (1940)

Herbst v. International Telephone and Telegraph Co.,

495 F.2d 1308 (2nd Cir. 1974)

Japanese Gardens Mobile Estates v. Hunt,

261 So.2d 193 _ _ CE Pa aaa SE Tec

Kohn v. Royall, Koegel & Wells,

496 F.2d 1094 (2d Cir. 1974)

Ott v. Speedwriting Publishing Co. and 1.T.T.,

518 F.2d 1143 (6th Cir. 1975)

Parkinson v. April Industries,

520 F.2d 650 (2d Cir. 1975)

Point East Management Corp. v. Point East One

Condominium Corporations,

258 So.2d 322

Siebert v. Great Northern Development Company,

494 F.2d 510 (2d Cir. 1975)

Sloane v. Dixie Gardens,

278 So.2d 309

Tri Par Land Development Co. v. Henthorn,

241 So.2d 429

Page

eR Ree Se ee

TABLE OF CASES (continued)

Case Page

Ward v. Lutrell,

292 F.Supp. 165 (E.D.La. 1968) 26

Wilkerson v. Coralville,

478 F.2d 709 (8th Cir. 1973) ~ 25

Winokur v. Bell Federal Savings and Loan Assn.,

58 F.R.D. 178 (N.D. Ill. 1972) 27

Wood v. McElvey,

296 So.2d 102 22

OTHER AUTHORITIES

28 U.S.C., $1254 3

28 U.S.C. §2101(c) 3

Supreme Court of the United States Revised Rules,

Effective July 1, 1970, Rule 19/1) (b), Rule 21;

Rule 22(3) | 3

28 U.S.C.A. £1291 aad 5

15 U.S.C. $1719 asivesssatentaigtiinlaiaaaaaain a 6

28 U.S.C. $2201 _~asenenitsinbeiiindnadaiaaaae 6

28 U.S.C. $2202 nisensiiitaigtacaan aa 6

28 U.S.C. £1332 snnsccieieepileaiaaee 6

Federal Rule of Civil Procedure 23... tC 7 7

Supreme Court

United ‘States

CASE NO.

BEHRING CORPORATION,

a Delaware corporation,

Petitioners,

vs.

WILLIAM R. BENNETT, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

IN AND FOR THE FIFTH CIRCUIT

OPINIONS BELOW

The Petitioners, BEHRING CORPORATION, a Del-

aware corporation, seek a writ of certiorari to review the

judgment and decision of the United States Court of

Appeals for the Fifth Circuit in the case of WILLIAM R.

BENNETT, et al., Plaintiffs, Appellees vs. BEHRING

CORPORATION, a Delaware corporation, Defendant,

Appellant [case no. 74-3055] 5 Cir. 1976, 525 F.2d 1202.

Petitioner has not sought a rehearing or a rehearing en

banc. The decision of the Fifth Circuit dismissed Peti-

tioner’s appeal for lack of jurisdiction. The Fifth Circuit

held it lacked jurisdiction to review an order dated January

16, 1976 entered by the United States District Court in

and for the Southern District of Florida which certified a

class and subclass.

Copies of the following decisions, opinions, and judg-

ments are appended hereto:

Appendix A — Order of United States District

Court, in and for the Southern District of Flor-

ida certifying Respondents class and subclass

dated July 3rd, 1974.

Appendix B— Opinion of United States Court

of Appeals for the Fifth Circuit, dated January

16th, 1976.

GROUNDS UPON WHICH JURISDICTION

OF THIS COURT IS INVOKED

The judgment of the United States Court of Appeals

for the Fifth Circuit herein (Appendix B, infra page 13)

was entered on January 16, 1976. No petition for rehear-

ing was filed. The jurisdiction of this court is invoked

pursuant to 28 U.S.C., £1254; and 28 U.S.C., £2101/c);

and Supreme Court of the United States, Revised Rules,

Effective July 1, 1970, Rule 19/1)‘bi; Rule 21; Rule

22:3). The decision of court of appeals has decided a fed-

eral question in a way in conflict with the following appli-

cable decisions of this court:

1. Cohen v. Beneficial Loan Corp., 337 U.S.

5411, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949).

2. Gillespie v. United States Steel Corporation,

379 U.S. 200, 85 S.Ct. 308, 13 L.Ed.2d 199

(1964).

3. Eisen v. Carlisle & Jacqueline, 417 U.S. 156,

94 S.Ct. 2140, 40 L.Ed.2d 732 (1974).

The court of appeals has rendered a decision in con-

flict with the decisions of other court of appeals on the

same matter, viz:

1. Herbst v. International Telephone and Tele-

graph Company, 495 F.2d 1308 (2nd Cir.

1974).

2. Ott v. Speedwriting Publishing Co. and I.T.T.,

518 F.2d 1143 (6th Cir. 1975).

3. Cessna Aircraft Distributorship Anti-Trust

Litigation v. Cessna, 518 F.2d 213 (8th Cir.

1975).

4. Siebert v. Great Northern Development Co.,

494 F.2d 510 (2d Cir. 1975).

5. Parkinson v. April Industries, 520 F.2d 650

(2d Cir. 1975).

6. Kohn v. Royall, Koegel & Wells, 496 F.2d

1094 (2d Cir. 1974).

7. General Motors v. The City of New York,

501 F.2d 639 (2d Cir. 1974).

In the alternative to the above, the court of appeals

has decided an important question of federal law which

has not been, but should be, settled by this court. The court

of appeals has determined categorically that it has no juris-

diction to review a district court order certifying class

status—not that the collateral order rule or the tests

applied by this court and other circuits does not apply.

Hence, the court of appeals has erroneously decided an

important federal question by concluding that irrespective

the prejudice, delay, vagueness or confiscatory nature of

the order below, no jurisdiction to review exists.

oe eee ene

BASIS OF FEDERAL JURISDICTION IN THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

Petitioner asserted below that the United States Court

of Appeals for the Fifth Circuit is vested with jurisdiction

pursuant to 28 U.S.C.A. $1291 to determine upon the

merits whether the United States District Court for the

Southern District of Florida erred in certifying class

Status.

Petitioner respectfully urges that the United States

Court of Appeals for the Fifth Circuit erred in dismissing

Petitioner’s appeal and in failing to apply the collateral

order doctrine as developed under 28 U.S.C.A. $1291 to

the facts of the instant case. There is direct conflict on

the same point of law between prior decision of this court,

other courts of appeals and the decision of the Fifth Cir-

cuit in the instant case.

The record herein affirmatively states that the order

of the United States District Court for the Southern Dis-

trict of Florida certifying Respondents class action status

is an appealable order under 28 U.S.C.A. §1291 in that

there has been a final determination of claim of right

which is separable from, and collatéral to, rights asserted

in the action too important to be denied review and too

independent of the cause itself to require that appellate

consideration be deferred unti! the whole case has been

adjudicated.

BASIS OF FEDERAL JURISDICTION IN THE

UNITED STATES DISTRICT COURT FOR

THE SOUTHERN DISTRICT OF FLORIDA

Respondents brought the diversity class action com-

plaint on June 6, 1972 in the United States District Court

for the Southern District of Florida. Respondents alleged

jurisdiction pursuant to 15 U.S.C. $1719, 28 U.S.C. $2201,

28 U.S.C, $2202 and 28 U.S.C. §1332. Respondent alleged

damage in excess of $10,000.00. Subsequently the Trial

Court found and issued the order dated July 3rd, 1974

stating that jurisdiction was based solely upon 15 U.S.C.

§1332.

QUESTIONS PRESENTED FOR REVIEW

ON MERITS

I. WHETHER COURT OF APPEALS IM-

PROPERLY DISMISSED PETITIONER’S

APPEAL.

Il. WHETHER COURT OF APPEALS

ERRED IN HOLDING THAT THE ORDER

OF THE DISTRICT COURT IS NOT A FINAL

APPEALABLE ORDER UNDER 28 U.S.C.

$1291,

STATUTES INVOLVED

1. 28 U.S.C. §1291:

The court of appeals shall have jurisdiction of appeals

from all final decisions of the district courts of the United

States, the United States District Court for the District

of the Canal Zone, the District Court of Guam, and the

District Court of the Virgin Islands, except where a direct

review may be had in the Supreme Court, June 25, 1948,

ce. 646, 62 Stat. 929; Oct. 31, 1951, c. 655, $48, 65 Stat. 726;

July 7, 1958, Pub. L. 85-508, §12(e), 72 Stat. 348.

2. Federal Rule of Civil Procedure 23:

(a) Prerequisites to a Class Action. One or more

members of a class may sue or be sued as representative

parties on behalf of all only if (1) the class is so numerous

that joinder of all members is impracticable, (2) there are

questions of law or fact common to the class, (3) the claims

or defenses of the representative parties are typical of the

claims or defenses of the class, and (4) the representative

parties will fairly and adequately protect the interests of

the class.

(b) Class Actions Maintainable. An action may be

maintained as a class action if the prerequisites of subdivi-

sion (a) are satisfied, and in addition:

(1) the prosecution of separate actions by or against

individual members of the class would create a risk of

(A) inconsistent or varying adjudications with

respect to individual members of the class which would

establish incompatible standards of conduct for the party

opposing the class, or

(B) adjudications with respect to individual mem-

bers of the class which would as a practical matter be

dispositive of the interests of the other members not par-

ties to the adjudications or substantially impair or impede

their ability to protect their interests; or

(2) the party opposing the class has acted or refused

to act on grounds generally applicable to the class, thereby

making appropriate final injunctive relief or correspond-

ing declaratory relief with respect to the class as a whole;

(3) the court finds that the questions of law or fact

common to the members of the class predominate over any

questions affecting only individual members, and that a

class action is superior to other available methods for the

fair and efficient adjudication of the controversy. The

matters pertinent to the findings include: (A) the interest

of members of the class in individually controlling the

prosecution or defense of separate actions; (B) the extent

and nature of any litigation concerning the controversy

already commenced by or against members of the class;

litigation of the claims in the particular forum; (D) the

difficulties likely to be encountered in the management of

a class action.

(ce) Determination by Order Whether Class A tion

to be Maintained; Notice; Judgment; Actions Conducted

Partially as Class Actions.

(1) As soon as practicable after the commencement

of an action brought as a class action, the court shall deter-

mine by order whether it is to be so maintained. An order

under this subdivision may be conditional, and may be

altered or amended before the decision on the merits.

(2) In any class action maintained under subdivi-

sion (b) (3), the court shall direct to the members of the

class the best notice practicable under the circumstances,

including individual notice to all members who can be

identified through reasonable effort. The notice shall ad-

vise each member that (A) the court will exclude him

from the class if he so requests by a specified date; (B) the

judgment, whether favorable or not, will include all mem-

bers who do not request exclusion; and (C) any member

who does not request exclusion may, if he desires, enter an

appearance through his counsel.

(3) The judgment in an action maintained as a class

action under subdivision (b) (1) or (b) (2), whether or not

favorable to the class, shall include and describe those

whom the court finds to be members of the class. The judg-

ment in an action maintained as a class action under sub-

division (b) (3), whether or not favorable to the class, shall

include and specify or describe those to whom the notice

provided in subdivision (c) (2) was directed, and who have

not requested exclusion, and whom the court finds to be

members of the class.

(4) When appropriate ‘A) an action may be brought

or maintained as a class action with respect to particular

issues, or (B) a class may be divided into subclasses and

each subclass treated as a class, and the provisions of this

rule shall then be construed and applied accordingly.

(d) Orders in Conduct of Actions. In the conduct

of actions to which this rule applies, the court may make

appropriate orders: (1) determining the course of proceed-

ings or prescribing measures to prevent undue repetition

or complication in the presentation of evidence or argu-

ment; (2) requiring, for the protection of the members of

the class or otherwise for the fair conduct of the action,

that notice be given in such manner as the court may direct

to some or all of the members of any step in the action, or

of the proposed extent of the judgment, or of the opportu-

nity of members to signify whether they consider the rep-

resentation fair and adequate, to intervene and present

claims or defenses, or otherwise to come into the action;

(3) imposing conditions on the representative parties or

on intervenors; (4) requiring that the pleadings be amend-

ed to eliminate therefrom allegations as to representation

of absent persons, and that the action proceed accordingly;

(5) dealing with similar procedural matters. The orders

may be combined with an order under Rule 16, and may

be altered or amended as may be desirable from time to

time.

(3) Dismissal or Compromise. A class action shall

not be dismissed or compromised without the approval of

the court, and notice of the proposed dismissal or compro-

mise shall be given to all members of the class in such

manner as the court directs.

As amended Feb. 28, 1966, eff. July 1, 1966.

STATEMENT OF THE CASE

1. Proceedings Below:

The Plaintiffs ‘respondents here), WILLIAM R.

BENNETT, WALTER L. GALLOWAY, LILLIAN GAL-

LOWAY, AL A. JURSEK, ROSE J. JURSEK, ALEX-

ANDER J. WAGNER, 1 JCILLE G. WAGNER, and

VICTORIA L. WAGNER (hereinafter referred to as

BENNETT), brought suit against the Defendant (peti-

tioner here) BEHRING CORPORATION, a Delaware

corporation (hereinafter referred to as BEHRING), in

the United States District Court, in and for the Southern

District of Florida, for damages and equable relief. Plain-

tiffs filed a multi-count complaint as follows:

Count I — Fraud and Misrepresentation

Count II — Removal of Deed Restrictions

Count III — Specific Performance

Count IV — Damages

Count V — Interstate Land Sales Act Violation

Count VI — Punitive Damages

Count V has been dismissed. Counts II, III, and IV

have been held to be the proper subject for class action

prosecution by an order ef the District Court dated July

3, 1974 (A. 214-220).'

‘All references to appendix refer to the appendix filed with the

United States Court of Appeals for the Fifth Circuit.

12 13

United States Court of Appeals for the Fifth Circuit dis-

missed the appeal by its per curiam order of January 16,

1976. This petition followed.

The District Court certified a class under Count II

and defined that class as follows: (A. 219).

All those persons who reside, or will in the future 2. The Facts Shown Below:

reside within the corporate limits of the City of

Tamarac, Broward County, Florida, and who

have purchased, or will in the future purchase

property located in the City of Tamarac from the

Defendant BEHRING CORPORATION, or who

are or will be obligated to make any payments

under any Declarations of Restrictions which

have been filed by the Defendant BEHRING

CORPORATION, or its subsidiaries and which

purport to apply to properties located within the

corporate limits of the City of Tamarac.

The District Court certified a subclass under Counts

III and IV and defined that subclass as follows: (A. 219).

All those persons who reside within the corporate

limits of the City of Tamarac, Broward County,

Florida, and who have purchased property from

the Defendant, BEHRING CORPORATION and

who entered a contract with the defendant con-

taining a covenant to supply the purchaser with a

“warranty deed conveying title free and clear of

all encumbrances”.

Both classes were certified under Federal Rule of Civil

Procedure 23(b!‘3). .

Petitioners appealed the class certification to the

United States Court of Appeals for the Fifth Circuit. The

By Contract for Purchase and Sale, the Bennetts

and other members of the class agreed to pur-

chase homes in a platted subdivision of Broward

County, Florida known as The Mainlands of

Tamarac Lakes—Third Section.

The Wagners agreed to purchase a home in the

subdivision known as The Mainlands of Tamarac

Lakes—Fifth Section. (A. 27).

The Bennetts closed and received a Warranty

Deed excepting “restrictions, reservations and

servitudes”, recorded in the Official Records of

Broward County Book 3620, Pages 727-734.

(A. 41).

The Wagners’ Deed excepted “restrictions, reser-

vations and servitudes”, recorded at Book 3779,

Pages 676-684. (A. 29).

The Bennett subdivision consists of 256 homes

while the Wagner subdivision contains 265 homes.

The Bennett restrictions apply only to their sub-

division. The Wagner restrictions apply only to

their subdivision.

The Bennetts and the Wagners occupied the

houses and apparently still own this property.

The respective Declarations of Restrictions ‘A. 30 and

A. 42) pertain to a variety of subjects, viz:

1. Residential Use.

2. No Trade, Business or Profession, Ete.

3. Lawns, Landscaping, Fences, Hedges, Clothes

Poles, Exterior Radio and Television Anten-

nas, Parking, Hurricane or Storm Shutters.

4. Age Limitation on Permanent Residents.

Reservations for Lawn, Sprinkler System and

Exterior Building Maintenaice, Ete.

6. Recreation Facilities; Operation and Main-

tenance, Lien for Costs, Ete.

7. Recreation Land Lease; Liability For, As-

signment Lien, Etc.

It is clear from the Complaint ‘A. 8-22) that Plain-

tiffs complain only of the provisions of Paragraphs 6 and

7 of the restrictions, and that Plaintiffs’ position is based

entirely upon the argument that the requirement for an

“affirmative act” (payment) renders sections 6 and 7 void

and, hence, the proper subject of a rescission action.

The District Court has certified as a class all persons

who have purchased from Defendant who are obligated to

make payments under Declarations of Restrictions. The

purpose being to adjudicate Plaintiff’s claim for rescission

of paragraphs 6 and 7 of the Restrictions. As a subclass,

the District Court designates all who executed purchase

contracts calling for delivery of deeds “free and clear” of

all encumbrances and who, in fact, received (and presum-

ably accepted) deeds referring to and subject to recorded

reservations.

It is from this certification that Petitioner appeals.

3. The Findings of the Trial Court:

The findings of the trial court are clearly set forth

by its order of July 3, 1974 which states in part as follows:

The court specifically finds that the allegations

in Count II as to the legality of the deed restric-

tions (Paragraphs 22, 23, 24, 25) constitute a

Rule 23(b) (3) class action as to the particular

legal issues presented and that the allegations of

contract breach in Counts III and IV constitute

an appropriate subclass under Rule 23/b) (3) of

which the Bennetts are proper class representa-

tives. The court also finds that a trial of the

issues under Count III and Count IV may be sep-

arated from a trial of the specified issues under

Count II.

The court has determined that pursuant to Rule

23(a)(1) the class under Count II and the sub-

class under Counts III and IV are so numerous

that joinder of all members is impracticable. The

number of Tamarac homeowners are approxi-

mately 10,000 and all ho’ -owners are potentially

class members under Count II. Although the court

is unaware of the number of homeowners consti-

tuting the subclass of all those who received con-

tracts promising to convey title free and clear of

all encumbrances, the court at this time assumes

that the number exceeds fifty so that joinder of

all parties would be impracticable. Cf., Mosca-

relli v. Stamm, supra at 463. Under 23/a) (2),

the court finds that there are questions in com-

mon predominate over any individual questions

of fact. Under Count II, the claim that the deed

restrictions are void because of the affirmative

nature of the obligations and because of the re-

straints on alienation is a legal question common

to every homeowner in Tamarac who has a similar

Declaration of Restriction as an encumbrance on

his or her title. Under Count III and the alter-

native Count IV, the common questions involving

contract construction predominate. In addition,

the defendant’s defense of merger are defenses

that could be raised against any member of the

subclass.

Finally the court finds under 23(a)(3) and (4)

that the plaintiffs are proper class representa-

tives and that the Bennetts are proper subclass

representatives as each named plaintiff is cur-

rently a homeowner in Tamarac possessing title

with the encumbrances complained of and that

each named plaintiff is the original purchaser of

the subject property. The Bennetts as subclass

representatives were recipients of the form con-

tract providing for the delivery of a warranty

deed “free and clear” of all encumbrances.

Therefore, for the foregoing reasons it is

ORDERED AND ADJUDGED that:

1. The allegations of common law fraud con-

tained in Counts I and VI of the complaint can-

not be maintained as a class action under Rule

23, F.R.C.P. and the motion for determination of

class is denied as to those counts.

2. A class action under Rule 23(b) (3) as to the

allegations contained in paragraphs 22, 23, 24,

and 25 of Count II is hereby certified as to the

issues contained therein and the class is defined

as:

All those persons who reside, or wil] in the

future reside within the corporate limits of the

City of Tamarac, Broward County, Florida,

and who have purchased, or wil] in the future

purchase property located in the City of Tama-

rac from the Defendant BEHRING CORPO-

RATION, or who are or will be obligated to

make any payments under any Declarations

of Restrictions which have been filed by the

Defendant BEHRING CORPORATION, or its

subsidiaries and which purport to apply to

properties located within the corporate limits

of the City of Tamarac.

3. A subclass under Rule 23/b)(3) is hereby

certified as to Counts III and IV of the complaint

and the subclass is defined as:

All those persons who reside within the cor-

porate limits of the City of Tamarac, Broward

County, Florida, and who have purchased prop-

erty from the Defendant, BEHRING CORPO-

RATION and who entered a contract with the

defendant containing a covenant to supply the

purchaser with a “warranty deed conveying

title free and clear of all encumbrances.”

4. The motion for a separate trial as to Counts

III and IV is hereby granted.

5. The plaintiff is directed pursuant to Rule 23

(ec) (2) to submit to the court for approval a pro-

posed form of notice to the class and proposed

method of effecting notice to fulfill the require-

ments of Rule 23/c) (2) and the recent dictates

of the Supreme Court in Eisen v. Carlisle, 42 LW

4804 (May 28, 1974) designed to “direct to the

members of the class the best notice practicable

under the circumstances, including individual

notice to all members who can be _ identified

through reasonable effort.” Plaintiff shall submit

the proposed notice and proposed method of notice

within forty-five (45) days of the date of this

order.

4. The Opinion of the Fifth Circuit:

The United States Court of Appeals for the Fifth Cir-

cuit dismissed the petitioners appeal.

The Fifth Circuit held that the order entered by the

District Court was not a final appealable order under 28

U.S.C. £1291.

REASONS FOR GRANTING THE WRIT

The order of the trial court shows that the relief

sought by the Plaintiff below will affect ten thousand

separate real estate transactions on a class basis. These

transactions began after the incorporation of the City of

Tamarac, Florida in 1963 and extend to the present and

will extend on into the future without end in time. No

exception to the class definition is made for second, third

or fourth generations of owners of the disparate pieces of

real estate who have had no contact with the developer

whatsoever. The effort to selectively rescind a portion of

the transaction related to payment for recreational facili-

ties could have a monetary impact in excess of 60 million

dollars.

Nothing could be more confiscatory, inequitable or

inconsistent with the intent of Federal Rule of Civil Pro-

cedure 23.

There must, in so exceptional a case, be at least a

narrow corridor for review of a trial court order finding

class status.

The opinion of the court of appeals categorically re-

jects review of orders fixing class status and is in conflict

with the decisions of this court and other circuits.

We respectfully urge that, absent review and reversal,

the opinion of the court of appeals presents substantial

“danger of denying justice by delay”. Eisen v. Carlisle &

Jacqueline, et al., 417 U.S. 156, 94 S.Ct. 2140, 40 L.Ed.2d

732 (1974).

Stated simply, the District Court has certified as a

class all persons who have purchased from Defendant who

are obliged to make payments under declarations of restric-

tions. The purpose being to adjudicate Plaintiffs’ claim

for rescission of Paragrpahs 6 and 7 of the restrictions.

As a subclass, the District Court designated all who

executed purchase contracts calling for delivery of deeds

“free and clear” of all encumbrances and who, in fact,

received (and presumably accepted) deeds referring to and

subject to recorded reservations.

It is, we believe, not disputed that the Bennetts, the

Wagners and likely all purported class members knew that

a regular monthly payment was required for the recrea-

tional facility (depositions of Bennetts (A. 268-271, 275-

280, 296, 291, 315-318, 328, 339, 340). (See Also: The Con-

tracts for Purchase and Sale, “Purchaser agrees to pay

$33.00 (approx.) monthly maintenance and recreation

facility charge to the Seller, or the City of Tamarac or

Assigns’”’.) (A. 27, 39).

Based on the record before it, the trial court found:

The number of Tamarac homeowners are approx-

imately 10,000 and all homeowners (even those

with actual notice of deed restrictions and those

who did not purchase from Behring Corporation)

are potentially class members under Count II.

(A. 218).

The Declarations of Restrictions provide for $10.00

per month per subdivision lot as ground rent on the recre-

ational parcel, (A. 35, 46). On a monetary basis alone the

loss of ground rent from 10,000 potential class members

would be the product of $10.00 < 12 months » 50 years (to

2018 A.D.) < 10,000; or $60,000,000.00.

Based upon the potential loss calculated from the con-

clusions reached in the order of July 3, 1974, coupled with

Defendant’s right to equal treatment, we urge that this

Court undertake to review this matter with the same de-

gree of liberality as accorded class plaintiffs under the

“death knell” theory.

The trial court order of July 3, 1974 does “finally

determine collaterial rights too important to be denied

review and too independent of the cause itself to postpone

appellate review”. Siebert v. Great Northern Development

Co., 494 F.2d 510.

The District Court’s order “certifies” Plaintiffs’ right

to represent a class of 10,000 persons who fit only two

requisites:

a) Purchasers from defendant who are,

b) obliged to make payments under Declarations

of Restrictions.

There is no beginning point or ending point in time.

The adjudication of the claim of the defined class purports

to predetermine the rights and obligations of all purchasers

and the Defendant for all transactions “in the future’.

The class definition as stated, purports (by the phrase

“or who are or will be. . .”) to adjudicate the rights of

subsequent purchasers (not from Defendant) and the

rights of Defendant’s assigns.

Mindful of the rule that class determination is not to

be predicated upon the likelihood that a potential class will

be successful, we know of no clearer proof of prejudice

and economic waste to the Defendant than the burden of

defending the defined class under Count II.

The sole, the only, substantive basis upon which Plain-

tiffs purport to state a cause of action for the only relief

sought by the defined class—rescission—is the argument

that restrictions imposing affirmative obligations are in-

valid. In Florida, there is not the slightest possibility that

Plaintiffs’ theory is viable. It is settled law that charges

imposed by restrictive covenants, squarely as apply here,

are enforceable. See: Point East Management Corp. v.

Point East One Condominium Corporations, 258 So.2d 322;

Sloane v. Dixie Gardens, 278 So.2d 309; Wood v. McElvey,

296 So.2d 102; Japanese Gardens Mobile Estates v. Hunt,

261 So.2d 193; Hagen v. Sabal Palms, 186 So.2d 302; Tri

Par Land Dev. Co. v. Henthorn, 241 So.2d 429.

The Supreme Court’s endorsement of a “practical

rather than a technical construction” of §1291 as noted in

Eisen, supra, together with “equality of treatment as be-

tween plaintiffs and defendants” promote recognition of

the reviewability of the Appellate Court’s order here.

Plaintiffs Bennett and Wagner live in subdivisions

containing 256 and 265 homes, respectively. There is a

recreation hall with recreational facilities and parking in

each section. There are many other such subdivisions, each

with its own recreation facility. No section has any inter-

est in or obligation of any type related to the recreational

facility of any other section. Under Paragraph 6 of the

Restrictions (A. 33 and A. 45), the Bennetts and the Wag-

ners are obligated to pay a reasonable amount as their pro-

portional share of the cost of the maintenance of the recre-

ational facility. Under Paragraph 7, they pay $10.00 per

month as ground rent. (They make no assertion that

charges have been unreasonable or that the facility is any

less than satisfactory and available for the use contem-

plated.)

What the order of July 3, 1974 omits to consider is

the patent conflict between those of the 256 or 265 home-

owners who seek to avoid payment and the interests of

those who use the facility (as do the Bennetts (A. 290,

318) and wish to maintain the recreational program by

paying their fair share. Plaintiffs made no assertion that

all residents desire the end of the recreational program,

hence the District Court’s failure to apply Fed. R. Civ. P.

23(a) (4), a prerequisite bearing on adequate class repre-

sentation, is outside the essential requirements of the law.

Class status, here, is independent of the cause itself.

The prejudicial effect of litigating, on a class basis, 10,000

separate real estate transactions is too important to be

denied review.

There are five controlling reasons why class action

procedure is inappropriate here:

1. There is a conflict of interest between the nominal

Plaintiffs and those residents desirous of paying for the

recreational facility.

2. Each subdivision has its own recreational facil-

ity, and no resident of one subdivision has any interest in

or obligation regarding the facility in any other section.

3. The defense of merger (of the contract of pur-

chase into the deed), under Florida law, is a bar to relief

absent fraud. Fraud is a reply to the defense of merger

which each purchaser would have to establish separately

as alluded to in the cogent discussion of fraud in the Dis-

trict Court’s order. As fraud does undermine the defense

of merger, and fraud cannot be litigated on a class basis,

how then can there be adequate representation of the indi-

vidual rights of purported class members?

4. Plaintiffs seek to have the portion of the Declara-

tions of Restrictions requiring payment of $10.00 per

month ground rent on the recreational parcel rescinded, vet

make no allegation that Defendant is the owner of the rec-

reational parcel or has asserted any right to any collection

from Plaintiffs or Plaintiffs’ purported class. Plaintiffs

clearly are not adequately representing other class mem-

bers where owners of the very subject matter of the liti-

gation (the recreational parcels) are not parties to the

action.

5. The nominal Plaintiffs reside in Sections Three

and Five, respectively. There are 521 homes in those two

sections. The District Court concludes that the class mem-

bers potentially number 10,000; thus, assuming two per-

sons per house, there are some 38 sections, subject to

restrictions unrelated to Sections Three and Five and un-

represented in this acticn.

As stated in 7 Wright & Miller, Federal Practice and

Procedure $1768 at 638 (1972): “It is axiomatic that a

putative representative cannot adequately protect the class

if his interests are antagonistic to or in conflict with the

objectives of those he purports to represent” and we would

add the word “unrelated”.

In Crawford v. Texaco, inc., 40 F.R.D. 381 (S.D.N.Y.

1966), the court held that an action for breach of contract

may not be brought on behalf of a class when a number

of its members do not assert any breach. In Crawford, the

Plaintiff, one of twenty-one co-lessors of mineral rights

to certain land, attempted to maintain a class action claim-

ing that the Defendant breached a covenant in the lease

by entering into an oil drilling pooling agreement with

adjacent operations. Some of the co-lessors had continued

to accept royalty payments under the lease, were satisfied

with the arrangement and asserted no breach. Thus, the

interests of the Plaintiff were held to be adverse to those

of many members of the class, and the prerequisite of Rule

23(a) (4) was not satisfied.

Similarly, in Wilkerson v. Coralville, 478 F.2d 709

‘8th Cir. 1973), where a city refused to annex an impov-

erished residential area consisting of 119 lots, there was a

“serious question” as to whether the Plaintiff would fairly

and adequately represent the class as some members did

not favor annexation. The holding in Wilkerson did not

include the class action issue, however, since the action was

dismissed on the merits.

In the present case, some members of the class which

the Plaintiff purports to represent may not favor the

course of action which the Plaintiff is demanding, and

therefore, under the reasoning of Wilkerson, the action

cannot be maintained as a class action. But more impor-

tant, the two sections (of 38) represented have no nexus

whatsoever with the remaining 36 sections.

In Hansberry v. Lee, 311 U.S. 32, 61 Sup.Ct. 115, 85

L.Ed. 22 (1940), the Plaintiff sought to enforce a racially

restrictive covenant on behalf of landowners, some of whom

wanted the covenant enforced while others wanted to resist

its application. The Court found that the action could not

properly be maintained as a class action since there was

antagonism between the representative and the class

members.

On this same point, see Ward v. Lutrell, 292 F.Supp.

165 (E.D.La. 1968), where a class action to enjoin the

application of a state statute dealing with minimum work

hours for women could not be maintained on behalf of all

working women in the state since the Court could not

“conceive that plaintiffs’ position represents the will of

many other women workers” who enjoyed the protection

of the statute.

Is a class action improper due to varying individual

questions of law and fact under Counts III and IV?

Fed. R. Civ. P. 23(a) (2) provides as a prerequisite to

maintenance of a class action that there must be questions

of law or fact common to the class, and a class action can

be maintained under Rule 23(b)(3) only if questions of

law or fact commen to the members of the class predomi-

nate over any questions affecting only individual members,

and if a class action is superior to other available methods

for the fair and efficient adjudication of the controversy.

In Winokur v. Beli Federal Savings and Loan Assn.,

58 F.R.D. 178 (N.D.IIl, 1972), it was held that Rule 23 (a)

(2) was not satisfied where all Plaintiffs were savings

account holders alleging misrepresentations in violation of

the Securities Exchange Act. Since it would have been

necessary to examine oral agreements, written advertise-

ments, written agreements, savings and loan charters, tele-

phone conversations and letters to depositors, the questions

of fact would have been almost as numerous as the mem-

bers of the Plaintiffs’ class.

Further, in Bailey v. Sabine River Authority, 54

F.R.D. 42 (W.D.La. 1971), where the Defendants con-

tracted to sell land to the Plaintiffs, and where substan-

tially the same phraseology was used in the deeds delivered

to the various Plaintiffs, a class action could not be main-

tained under Rule 23(b) (3) for breach of contract since

it would have been necessary “to examine the circum-

stances surrounding each claimant’s understanding of the

contract”’.

Likewise, in the present case, it would be necessary to

examine the circumstances surrounding each claimant’s

understanding of his contract. Therefore, a Rule 23(b) (3)

class action is improper. See also Bailey v. Romney, 359

F.Supp. 596 (D.C.D.C. 1973), wherein a class action could

not be maintained in an action to enforce a H.U.D. regula-

tion for reimbursement for defects since each individual

case would have to be examined.

The order of the District Court concludes that the

defense of merger raises questions of law common to all

class Plaintiffs. We have pointed out above that this is not

necessarily true lest all class Plaintiffs abandon any con-

tention of fraud. Nevertheless, the District Court omits to

consider the multiple defenses raised, the resolution of

which are patently individualistic and not the subject of

class handling:

1. As this record reflects the existence and scope of

the recreational concept was disclosed to purchasers at the

time of sale. Defendant has raised negligence as a defense

contending that any purchaser who did not read his deed

and examine the public records for recorded encumbrances

is barred from any relief.

2. Defendant asserts that purchasers who have used

the recreational facility in their section are estopped to

accept the benefit of the contract and attempt to vitiate

their obligations thereunder.

3. Defendant asserts that payment coupled with

actual and constructive knowledge of the purpose of the

payment estops relief to such individual purchasers who

have so paid.

4. Defendants asserts “Plaintiffs’ action is barred by

laches as Plaintiffs have had full knowledge of all of the

terms of the transaction of which they now complain; have

used and enjoyed the property, maintenance arrangements,

and recreational! facilities and have delayed action to the

extent that it would be inequitable to grant the relief

sought.”

5. Defendant counterclaims for recision of the

entire transaction between Defendant and all class mem-

bers should class procedure be applied:

Counterclaim

Defendant, BEHRING CORPORATION, a Del-

aware corporation, counterclaims against the

Plaintiffs, WILLIAM R. BENNETT, VIRGINIA

M. BENNETT, AL A. JURSEK, ROSE J. JUR-

SEK, ALEXANDER J. WAGNER and VIC-

TORIA L. WAGNER, and such other presently

unidentified persons as may become Plaintiffs

herein, nominally, or as class Plaintiffs, should

a class be determined by the Court and alleges:

1. BEHRING CORPORATION, a Delaware

corporation, through its predecessor, Behring

Properties, Inc., entered into the transaction for

the sale of house and lot and other considerations

described in the exhibits to Plaintiff’s Complaint.

The transactions are described in materia] detail

in the exhibits to Plaintiff’s Complaint and docu-

ments referred to therein which are a matter of

public record. Such exhibits are adopted by refer-

ence here.

2. The three transactions that are the subject

of this litigation at this time represent nondivis-

ible or unitary contracts, all terms «nd conditions

of which were material considerations and induce-

ments to Counter-plaintif?.

3. Absent the provisions for recreational facili-

ties and payment therefor to perpetuate the avail-

ability of such facilities, Counterplaintiff would

not have sold a house and lot to the Plaintiff, or

would not have sold the house and lot at the price

or on the terms that were part and parcel of the

entire transaction.

4. Absent the provisions for maintenance facili-

ties and payment therefor to perpetuate the avail-

ability of such facilities, Counterplaintiff would

not have sold a house and lot to the Plaintiffs, or

would not have sold the house and lot at the price

or on the terms that were part and parcel of the

entire transaction.

5. Plaintiffs now contend that there was no

meeting of the minds as to the foregoing mate-

rial aspects of the transaction and that Plaintiffs

should be released from the obligations which

attend the recreational and maintenance facili-

ties,

6. Should the Court determine that the recrea-

tional and maintenance aspects of the transac-

tions are not binding obligations of the Plaintiffs,

there would, in fact, have been no meeting of

minds, there would be a failure of consideration

and Counterplaintiff’s sale to Plaintiffs would

have been the result of Plaintiffs’ misrepresen-

tation, misunderstanding or mistake.

7. WHEREFORE, BEHRING CORPORA-

TION, a Delaware corporation, urges the Court

to enter an Order rescinding the entire transac-

tion between Plaintiffs and Defendant and:

1. Order Defendant to repay the full pur-

chase price to the Plaintiffs or the net equit-

able interest of Plaintiffs to be paid to Plain-

tiffs and the balance of such purchase price to

mortgagees, if any.

2. Order that the deeds delivered to Plaintiffs

are null and void.

3. Order Plaintiffs to vacate the premises

within a reasonable time.

4. Order Plaintiffs to pay Defendant the rea-

sonable rental value of house and lot from date

of closing to date of vacation.

It is, thus, clear that absent unanimity among all resi-

dents in a particular section (and no such allegation is

made by these Plaintiffs) antagonistic interests exist as

a matter of law.

Further, residents of Section Three, as an example,

have no interest whatsoever in the recreational concept or

Declarations of Restrictions covering any other section and

in no way can adequately represent the interest of other

sections. The Bennetts and the Wagners can no more, as

putative class representatives, affect the contractual rights

of persons who are contractual strangers to them, than a

resident of section “X” could sue to enforce compliance

with the restrictive covenants by residents of Section Three

or Section Five.

Let us assume that al] 256 residents of Section Three

changed their minds about wanting to live in a subdivision

that had a recreational facility and the owner of the facil-

ity released al] 256 of the Section Three residents from

payment and used his land and building for another pur-

pose. Could a resident of section “X” complain? Could he

sue to enforce a covenant to which he was not a party?

No. No more so than the Bennetts and Wagners can ade-

quately represent the interests of residents of other sec-

tions—or, in point of fact—of residents of Section Three

or Five who either:

(a) want the recreational facility, or

(b) are barred from relief by one of the defenses

which apply individually.

An examination of the record shows that Plaintiffs’

entire position is, in fact, a non sequitur. They seek a

selective rescission of two of the many paragraphs of the

Declarations of Restrictions. The Bennetts use the recrea-

tional facility, pay for its use and do not mind doing so.

Their apparent only objection is that in the event of non-

payment a lien subject to foreclosure is an available rem-

edy for the owner of the recreational facility.

Testimony of Mr. Bennett (A. 318)

Do you use the clubhouse?

Very little.

How many times have you been there since

1969?

Where?

To the clubhouse in your section.

Oh, a lot of tires I have been there when

there is meetings, like that.

ro - O PO

>O FO PP

> ©

Do you ever go there for recreation?

No, can’t say I do.

Have you been to dances there?

Yes,

Have you been to parties there?

A couple.

* * 2

. 326)

Yes sir. Now, the $27.00 a month that you’re

paying now to an Association to take care of

the clubhouse and to cut your lawn, et cetera,

is it your understanding that that includes

painting of your house?

We understand it don’t.

It does not?

Does not, The contract now with the Associa-

tion—

Is just for your lawn and the clubhouse?

Right, and the clubhouse.

al * *

. 327)

Now, let me ask you something. When did you

first meet either Mr. Krupnick or Mr. Esler?

Just when I came to their office.

When was that, sir?

The other day.

Q You mean this week? Have you hired Mr.

Esler and Mr. Krupnick to be your lawyers?

A No.

* * *

(A. 330)

Q Have you ever paid any money to Behring

Corporation other than the purchase price of

the house?

A No.

The Bennetts purport to represent a class of persons,

95% of whom have no contractual interest or obligation in

the Section Three recreational hall. The Bennetts pay

$27.00 a month to an “Association”, use the hall and the

swimming pool anytime they want to, yet, through counsel

employed by the Tamarac Homeowners Association (not a

party to this action) seek to compromise the recreational

program of an entire retirement city.

Under Counts III and IV of Plaintiffs’ Complaint,

they seek specific performance of their purchase contract

and damages. They purport to represent all purchasers

who executed contracts wherein Defendant agreed to

deliver a deed free and clear of all encumbrances. They

complain that the deed delivered (and, again, accepted)

contained reservations and restrictions relating to the rec-

reational facility, thus an encumbrance.

The same impediments to class procedure apply here,

namely:

—- Antagonistic interest related to the subsist-

ence of the recreational concept

— A preponderance of issues not common to

class members viz:

a) Application of the defense of merger.

b) Estoppel.

ce) Unjust enrichment and mitigation of

damages proportional to use or right to

use the recreational facilities.

d) Laches.

e) Defendant’s Counterclaim for rescission

of the entire transaction.

There is specific conflict between decisions of this

court, decisions of other Court of Appeals, and the deci-

sion rendered in the present case by the Fifth Circuit

Court of Appeals.

In Gillespie v. United States Steel Corporation, 379

U.S. 200 (1964), this court held:

Under $1291 an appeal may be taken from any

“final” order of a district court. But as this

Court often has pointed out, a decision “final”

within the meaning of $1291 does not necessarily

mean the last order possible to be made in a

case. Cohen v. Beneficial Industrial Loan Corp.,

337 U.S. 541, 545, 69 S.Ct. 1221, 1225, 93 L.Ed.

1528. And our cases long have recognized that

whether a ruling is “final” within the meaning

of $1291 is frequently so close a question that

decision of that issue either way can be sup-

ported with equally forceful arguments, and that

it is impossible to devise a formula to resolve all

marginal cases coming within what might well

be called the “twilight zone” of finality. Because

of this difficulty this court has held that the

requirement of finality is to be given a “practi-

cal rather than a technical construction.” Cohen

v. Beneficial Industrial Loan Corp., supra, 337

U.S. at 546, 69 S.Ct., at 1226. See also Brown

Shoe Co. v. United States, 370 U.S. 294, 306, 82

S.Ct. 1502, 1513, 8 L.Ed.2d 510; Bronson v. La-

Crosse & M. Railroad Co., 2 Black 524, 531, 17

L.Ed. 347, 359; Forgay v. Conrad, 6 How. 201,

203, 12 L.Ed. 404; Dickinson v. Petroleum Con-

version Corp., 338 U.S. 507, 511, 70 S.Ct. 322,

324, 94 L.Ed. 299, pointed out that in deciding

the question of finality the most important com-

peting considerations are “the inconvenience and

costs of piecemeal review on the one hand and the

danger of denying justice by delay on the other.”

Can one imagine the cost of discovering 10,000 sepa-

rate real estate transactions over many years.

In the case of Eisen v. Carlisle and Jacqueline, et al.,

417 U.S. 156 (1974) this court held:

Restricting appellate review to “final decisions” pre-

vents the debilitating effect on judicial administration

caused by piecemeal appellate disposition of what is,

in practical consequence, but a single controversy.

While the application of $1291 in most cases is plain

enough, determining the finality of a particular ju-

dicial order may pose a close question. No verbal for-

mula yet devised can explain prior finality decisions

with unerring accuracy or provide an utterly reliable

guide for the future. We know, of course, that $1291

does not limit appellate review to “those final judg-

ments which terminate an action . . ., Cohen v. Bene-

ficial Loan Corp., 337 U.S. 541, 545 (1949), but

rather that the requirement of finality is to be given

a “practical rather than a technical construction.” Id.,

at 546. The inquiry requires some evaluation of the

competing considerations underlying all questions of

finality—” the inconvenience and costs of piecemeal

review on the one hand and the danger of denying

justice by delay on the other.” Dickerson v. Petroleum

Conversion Corp., 338 U.S. 507, 511 (1950) (footnote

omitted).

As was the case in Eisen, the instant case does fall

within the small class of cases in which there would be a

danger of denying justice if the decision of the District

Court and the Court of Appeals is not reviewed by this

court. As already pointed out the present case would af-

fect 10,000 separate real estate transactions with a po-

tential monetary impact in excess of $60,000,000.00. See

also Cohen v. Beneficial Loan Corporation 337 U.S. 541

(1949).

In the case of Parkinson v. April Industries 520 F.2d

650 (2d Cir. 1975). The Defendants appealed an order of

the District Court which authorized the Plaintiffs to pro-

ceed as representatives of a class in a class action. The

court denied review but went on to hold that review would

be granted if three requirements were affirmatively satis-

fied. These requirements were:

— —— EE

(1) whether the class action determination is “fun-

damental to the further conduct of the case”;

(2) whether review of that order is “separable from

the merits”,

(3) whether the order will cause “irreparable harm

to the defendant in terms of time and money

spent in defending a huge class action”.

As already shown, the present case does satisfy all

three of these requirements and should be granted review.

See also Ott v. Speedwriting Publishing Co., and ITT 518

F.2d 1143 (6th Cir. 1975).

In Herbst v. International Telephone and Telegraph

Co. 495 F.2d 1308 (2d Cir. 1974) the court held that:

Here the defendant is appealing from an order hold-

ing that a class action can be maintained. Our most

recent statement on whether such an order is appeal-

able is found in Eisen v. Carlisle & Jacquelin, 479

F.2d 1005 (2d Cir.) cert. granted, 414 U.S. 908, 94

S.Ct. 235, 38 L.Ed. 2d 146 (1973) (Eisen III).

Building on Judge Friendly’s concurring opinion in

Korn I, supra, 443 F.2d at 1307, in which he sug-

gested that the court might wish to consider a rule

that would “afford equality of treatment as between

plaintiffs and defendants,” we said that the district

court’s order allowing a class action to be maintained

is appealable. 479 F.2d at 1007 n.].

In so saying we relied on Supreme Court cases that

have given 28 U.S.C. $1291 a “practical rather than

a technical construction.” Cohen v. Beneficial Indus-

trial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221,

1226, 93 L.Ed. 1528 (1949). See also Gillespie v.

United States Steel Corp., 379 U.S. 148, 85 S.Ct. 308,

13 L.Ed.2d 199 (1964); Mercantile National Bank v.

Langdeau, 371 U.S. 555, 83 S.Ct. 520, 9 L.Ed.2d 523

(1963). We stated that an order authorizing a class

action is appealable under Cohen because

[it] clearly involves issues “fundamental to the fur-

ther conduct of the case;”...

{and]| is also separable from the merits of the case;

and [the] irreparable harm to a defendant in terms

of time and money spent in defending a huge class

action when an appellate court may years later decide

such an action does not conform to the requirements

of Rule 23, is evident.

Although other courts of appeals have held that or-

ders authorizing class actions are not appealable, we

believe that Eisen III reached the correct result and

we adhere to it. This circuit has probably been

plagued by more class actions than any other circuit.

As of June 30, 1973 there were 679 class actions

pending in this circuit. Only the Fifth Circuit had

more and most of its class actions were civil rights

suits which usually seek injunctive relief and are

easier to manage. Administrative Office of the United

States Courts, 1973 Annual Report of the Director,

table 36, at II-44 to -45. The Southern District of

New York alone had 523 class actions pending in all

districts. Id. at I]-42. We believe that immediate re-

view of orders authorizing class actions will aid the

districts courts in disposing of these cases and pro-

mote the sound administration of justice.

As in Herbst, immediate review of the order certify-

ing the class in the instant case would aid the District

Court in disposing of this case and would promote the

sound administration of justice. See also Kohn v. Royall,

Koeqel & Wells, 496 F.2d 1094 (2d Cir. 1974), General

Motors Corp., v. The City of New York 501 F.2d 639 (2d

Cir. 1974).

In Cessna Aircraft Distributorship Anti-Trust Liti-

gation v. Cessna 518 F.2d 213 (8th Cir. 1975) the court

recognized that an order certifying class may be a “final

decision” under 28 U.S.C. $1291 when that order falls

within the small class of decisions which finally determine

claims of rights separable from, and collateral to, rights

asserted in the action, too important to be denied review

and too independent of the cause itsef to require that ap-

pellate consideration be deferred until the whose case is

adjudicated. It is respectively submitted that the instant

case does fall within that small class of decisions in that

the rights asserted are too important to be denied review

and too independent of the cause itself to require that ap-

pellate consideration be deferred.

Thus, Petitioners assert that certiorari should be

granted and that this court should review the decision of

the Fifth Circuit Court of Appeals as being in conflict

with the decisions of this court and of decisions of other

courts of appeals on the matter of jurisdiction to review

a certain category of class action orders.

CONCLUSION

As orders denying class action status are reviewable,

“equality of treatment as between plaintiffs and defend-

ants” requires that review for defendants must be at least

possible in at least a smal] category of class action cases.

A categorical rejection of jurisdiction by a court of appeals

in all cases condemns defendants to the confiscatory iner-

tia of class procedure, when in extreme cases, that preju-

dice could be avoiced by early review.

Respectfully submitted,

PREDDY, HADDAD, KUTNER,

HARDY & JOSEPHS, P.A.

Attorneys for Appellant

Fifth Floor Concord Building

Miami, Florida 33130

GILBERT A. HADDAD, Esquire

CERTIFICATE OF SERVICE

WE HEREBY CERTIFY that a true copy of the

foregoing Brief of Appellant was mailed to JON KRUP-

NICK, Attorney for Appellees, 1818 First National Bank

Building, One Financia] Plaza, Fort Lauderdale, Florida

this ___ day of March, 1976.

PREDDY, HADDAD, KUTNER,

HARDY & JOSEPHS, P.A.

Attorneys for Appellant

Fifth Floor Concord Building

Miami, Florida 33130

GILBERT A. HADDAD, Esquire |

APPENDIX

INDEX TO APPENDIX

Appendix A Order of United States District

Court, Southern District of Flor-

ida certifying Respondents class

and subclass dated July 3, 1974

Appendix B Opinion of United States Court

of Appeals for the Fifth Circuit,

dated January 16, 1976

Appendix C Judgment of United States Court

of Appeals for the Fifth Circuit,

dated January 16, 1976 .

Appendix D Notice of Appeal

A.1-10

A.11-12

A.13

A.14-15

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

Case No. 72-886-CIV-NCR

WILLIAM R. BENNETT, et al.,

Plaintiffs,

Vs.

BEHRING CORPORATION,

a Delaware corporation,

Defendant.

[Filed July 3, 1974]

ORDER

Plaintiff representatives of homeowners in the City

of Tamarac have brought this diversity class action al-

leging, under various legal theories, that certain deed

restrictions filed by defendant developer are invalid be-

cause of defendant’s fraudulent misrepresentations; be-

cause they constitute unreasonable restraints on aliena-

tion; and because the restrictions are in breach of contract

as to a certain subclass of purchasers. The class repre-

sentatives seek alternative equitable or legal relief.

Count I and Count VI are based on common law

fraud; Count II attacks the legality of the deed restric-

tions because the restrictions require affirmative acts of

the purchasers and because of its effect on alienation.

Counts III and IV are based on defendant’s alleged breach

of contract in failing to convey title free and clear of all

App. 2

encumbrances as covenanted. Count V, based on 15 U.S.C.

£1711, has been stricken by court order dated October 3,

1973 because none of the remaining named plaintiffs were

representatives of the subclass. Plaintiffs seek a determi-

nation of class pursuant to Rule 23, F.R.C.P. and a sev-

erance of Counts III and IV for purposes of trial pur-

suant to Rule 42/b), F.R.C.P.

Counts I and VI are solely based on allegations of

common law fraud and as to these two counts the court

determines that a class action cannot be maintained. Al-

though plaintiffs apparently meet all requirements of

tule 23(ai, the court finds that plaintiffs fail to meet

any of the alternative three requirements under Rule

23(b). Plaintiffs do not seriously contend that they could

satisfy 23(b)(2) which requires that appropriate final

relief relate predominantly to injunctive or declaratory

relief rather than to money damages. See Contract Buyers

League v. F & F Investment, 48 F.R.D. 7 (N.D. Ill. 1969) ;

Advisory Committee’s Note, 39 F.R.D. 69, 102 (1966).

The court must further reject the possibility of cer-

tification under 23(bi‘1)‘(A) or (B) because that section

should be “confined to those causes of action in which

there is a total absense of individual] issues.” Tober v.

Charnita, 58 F.R.D. 74, (M.D. Pa. 1973). The standard

for maintenance under Rule 23‘b)(1) is more rigid than

the standard for class certification under Rule 23(b) (3)

and the court must examine the allegations of the com-

plaint carefully since once the class is determined under

either Rule 23'bi (1) or (bi (2), prospective class mem-

bers cannot opt out.

App. 3

Where different results as to adjudications involving

different individuals could be distinguished on the basis

of different facts, the need to meet the threat of incon-

sistent adjudications, which is the thrust of Rule 23(b)

(1), is insubstantial. See Contract Buyers League v. F & F

Investment, supra, at 14. Since the court does not find that

the plaintiffs have met their burden of proving a class

under the less rigid standard of Rule 23(b) (3), it is clear

that plaintiffs could not maintain a 23(b) (1) class action

where individual issues abound.

The court further finds that with respect to consid-

erations under Rule 23(b) (3), common questions of law

or fact do not predominate over individual questions of

fact and that a class action is not a superior method for

a fair and efficient adjudication of the controversy based

on common law fraud. An examination of the allegations

of the complaint and portions of the deposition of the Ben-

netts discloses that the factors inherent in the relationship

between purchaser and salesperson involved in the various

home purchase transactions must of necessity have varied

from individual to individual! especially in the absence of

a dominant, standardized representation.

The court examines the deposition of the Bennetts, not

to forecast the merits of the controversy, but in order to

determine more accurately whether the issues are princi-

pally individual in nature or susceptible of proof equally

applicable to all class members. See Miller v. Mackey In-

ternational 452 F.2d 424, 427, (5th Cir. 1971): Aber-

crombie v. Lum’s Inc., 345 F.Supp. 387, 390 (S.D. Fla.

1972). For example Paragraph 16 of the complaint al-

leges fraud arising from the failure of defendant’s agents

to mention the amount plaintiffs would be obigated to pay

App. 4

for rental of the recreational facilities; however, the depo-

sition of the Bennetts reveals that Mr. Bennett understood

that the $33.00 monthly charge was “for everything” in-

cluding the use of the clubhouse. Moreover, certain of the

form contracts signed by plaintiffs specify the amount of

monthly charge for maintenance and recreational charges.

Paragraph 17 states that defendant fraudulently misrep-

resented that the payments were for the purchase of the

clubhouse; yet, from the deposition of the Bennetts it ap-

pears that the Bennetts were not told that the monthly

charges were purchase payments. These variations between

deposition answers and allegations in the complaint are

noted in order to indicate the potential magnitude of the

factual variations between thousands of homeowners as

to what each homeowner was told or not told by a Behring

salesperson over a series of individual meetings; what each

homeowner understood the nature of his or her individual

obligation to be; and the extent that each individual home-

owner relied on the misrepresentations or omissions in the

purchase of his or her home.

In an action for common law fraud, under the law

of Florida the elements of proof include: a false statement

of fact by defendant; that the statement was made to in-

duce plaintiff to act in reliance; an action by plaintiff in

reliance thereon. See Tonkovich v. South Florida Citrus

Industries 185 So.2d 710 (Fla. App. 1966) ; Entron, Ine. v.

General Cablevision of Palatka, 435 F.2d 995 (5th Cir.

1970).

Based on the alleged facts and law applicable to

Counts I and VI the court is faced with a situation where

there is an absence of standardized written communica-

tions as common representations and where the element

App. 5

of reliance must be proved for each individual homeowner.

As noted in Simon v. Merrill, Lynch, Pierce, Fenner and

Smith, 482 F.2d 880 (5th Cir. 1973), where class action

status was denied because of an absence of standardized

written communications and a predominance of oral

representations:

If there is any material variation in the repre-

sentations made or in the degrees of reliance

thereupon, a fraud case may be unsuited for

treatment as a class action. /d. at 882, citing

Advisory Committee’s Note, 39 F.R.D. 98, 107

(1966).

Where standardized representations such as those con-

tained in a written prospectus for the sale of securities

or standardized written agreements between franchisees

and franchisors exist and provide the predominant factual

issue in the case, the courts have ordinarily allowed class

actions. See Korn v. Franchard Corp., 456 F.2d 1206 (2d

Cir. (1972); Green v. Wolf Corp., 406 F.2d 291 (2d Cir.

1968) ; Siegel v. Chicken Delight, 271 F.Supp. 722 (N.D.

Calif. 1967). However, where oral rather than written

misrepresentations are the subject of the action or where

individual elements of coercion or reliance predominate,

class action status will be denied. See Simon v. Merrill,

Lynch, supra; National Auto Brokers v. General Motors

Corp. 60 F.R.D. 476 (S.D.N.Y. 1973); Abercrombie v.

Lums, supra; Moscarelli v. Stamm, 288 F.Supp. 453

(E.D.N.Y. 1968). “Although having some common simi-

larities, the face to face oral misrepresentations are in-

dividualized and susceptible of material variations . . .”

Moscarelli v. Stamm, supra at 462.

App. 6

In addition to the problem of the variety of oral rep-

resentations the court finds the problem of individual

preof of reliance to be insurmountable and that the prob-

lem makes the class action device less desirable than other

methods for the fair and efficient adjudication of the

controversy. Although one Court of Appeal has suggested

the possibility of separate trials on the issue of reliance,

see Green v. Wolf Corp. supra, this suggestion arose in

the context of a federal securities case where the element

of reliance does not have the same significance as in 4

common law fraud case. As a lower court noted in dis-

missing a class action count based on common law fraud

connected with land sale:

We firmly believe that the process of individual

trials with regard to reliance by several thousand

people is untenable and will result in an unman-

ageable and unduly time-consuming procedure

... [To eliminate the element of reliance] would

not only subvert the principles of law involved,

but would merely achieve economies of time at

the expense of procedural fairness.” Tober v.

Charnita, 58 F.R.D. 74 (M.D.Pa. 1973)

The court obviously rejected the notion that proof of in-

dividual reliance was no longer a required element of

common law and deceit. See also, Hoffman v. Charnita,

58 F.R.D. 86 (M.D.Pa. 1973). Thus the existence of the

requirement of individual proof of reliance and the wide

variety of oral and written representations in each trans-

action compels the court to reject the maintenance of a

class action as to all elements of common law fraud.

App. 7

The court specifically finds that the allegations in

Count II as to the legality of the deed restrictions ‘ Para-

graphs 22, 2°. 24, 25) constitute a Rule 23(b)(3) class

action as to the particular legal issues presented and that

the allegations of contract breach in Counts III and IV

constitute an appropriate subclass under Rule 23(b) (3)

of which the Bennetts are proper class representatives.

The court also finds that a trial of the issues under Count

III and Count IV may be separated from a trial of the

specified issues under Count II.

The court has determined that pursuant to Rule 23

(a)(1) the class under Count II and the subclass under

Counts III and IV are so numerous that joinder of all

members is impracticable. The number of Tamarac home-

owners are approximately 10,000 and all homeowners are

potentially class members under Count II. Although the

court is unaware of the number of homeowners constitut-

ing the subclass of all those who received contracts prom-

ising to convey title free and clear of all encumbrances,

the court at this time assumes that the number exceeds

fifty so that joinder of all parties would be impracticable.

Cf., Moscarelli v. Stamm, supra at 463. Under 23/a) (2),

the court finds that there are questions of law’ or fact

common to the class. These questions in common predomi-

nate over any individual questions of fact. Under Count

II, the claim that the deed restrictions are void because

of the affirmative nature of the obligations and because

of the restraints on alienation is a legal question common

to every homeowner in Tamarac who has a similar Dee-

laration of Restriction as an encumbrance on his or her

title. Under Count III and the alternative Count IV, the

common questions involving contract construction pre-

App. 8

dominate. In addition, the defendant’s defense of merger

are defenses that could be raised against any member of

the subclass.

Finally the court finds under 23(a) (3) and (4) that

the plaintiffs are proper class representatives and that

the Bennetts are proper subclass representatives as each

named plaintiff is currently a homeowner in Tamarac

possessing title with the encumbrances complained of and

that each named plaintiff is the original purchaser of the

subject property. The Bennetts as subclass representatives

were recipients of the form contract providing for the

delivery of a warranty deed “free and clear” of all

encumbrances.

Therefore, for the foregoing reasons it is

ORDERED AND ADJUDGED that:

1. The allegations of common law fraud contained

in Counts I and VI of the complaint cannot be maintained

as a class action under Rule 23, F.R.C.P. and the motion

for determination of class is denied as to those counts.

2. A class action under Rule 23(b) (3) as to the al-

legations contained in paragraphs 22, 23, 24 and 25 of

Count II is hereby certified as to the issues contained

therein and the class is defined as:

All those persons who reside, or will in the future

reside within the corporate limits of the City of

Tamarac, Broward County, Florida, and who

have purchased, or will in the future purchase

property located in the City of Tamarac from the

——

App. 9

Defendant BEHRING CORPORATION, or who

are or will be obligated to make any payments

under any Declarations of Restrictions which

have been filed by the Defendant BEHRING

CORPORATION, or its subsidiaries and which

purport to apply to properties located within the

corporate limits of the City of Tamarac.

3. A subclass under Rule 23'b)(3) is hereby cer-

tified as to Counts III and IV of the complaint and the

subclass is defined as:

All those persons who reside within the corporate

limits of the City of Tamarac, Broward County,

Florida, and who have purchased property from

the Defendant, Behring Corporation and who

entered a contract with the defendant containing

a covenant to supply the purchaser with a “war-

ranty deed conveying title free and clear of all

encumbrances.”

4. The motion for a separate trial as to Counts III

and IV is hereby granted.

5. The plaintiff is directed pursuant to Rule 23(c)

(2) to submit to the court for approval a proposed form

of notice to the class and proposed method of effecting

notice to fulfill the requirements of Rule 23(¢)‘2) and

the recent dictates of the Supreme Court in Eisen v.

Carlisle, 42 LW 4804 (May 28, 1974) designed to “direct

to the members of the class the best notice practicable

under the circumstances, including individual notice to

all members who can be identified through reasonable

App. 11

App. 10

effort.” Plaintiff shall submit the proposed notice and United States Court of Appeals, Fifth Circuit.

proposed method of notice within forty-five (45) days of ;

the date of this order.

No. 74-3055.

William R. BENNETT et al.,

DONE AND ORDERED this 3d day of July 1974. Plaintiffs-A ppellees,

NORMAN C. ROETTGER, JR. , BEHRING CORPORATION, a Delaware Corporation,

United States District Court Judge | Defendant-Appellant.

Jan. 16, 1976.

CC: Jon E. Krupnick Esq. |

/ALSH, DOLAN & KRUPNICK ;

— [CORRECTED]

Mori Esa.

— ee A real estate developer appealed from an order of

Gilbert A. Haddad the United States District Court for the Southern District

PREDDY HADDAD. KUTNER & HARDY of Florida, at Fort Lauderdale, Norman C. Roettger, Jr.,

J., granting class action certification under certain counts

of a complaint against it and defining the appropriate

class and subclass. The Court of Appeals held that the

order was not a final appealable order.

Appeal dismissed.

Courts —405 (12.7)

Order granting class action certification and defining

appropriate class and subclass was not final appealable

order. 28 U.S.C.A. § 1291.

Appeal from the United States District Court for the

Southern District of Florida.

App. 12

Before WISDOM, GEWIN and AINSWORTH, Cir-

cuit Judges.

PER CURIAM:

Appellant Behring Corporation, a real estate devel-

oper, appeals from an order of the district court granting

class action certification under certain counts of a com-

plaint against it, and defining the appropriate class and

subclass. The district court denied appeilant’s motion for

certification pursuant to 28 U.S.C. § 1292(b), and appel-

lant now seeks to appeal under 28 U.S.C. § 1291.

We have carefully considered the briefs, record, and

contentions of the parties on oral argument. It is our con-

clusion that the order entered by the district court is not

a final appealable order under § 1291 and that the appeal

should be dismissed. See, e. g., Blackie v. Barrack, 524

F.2d 89) (9th Cir. 1975) ; Seiffer v. Topsy’s International,

Inc., 520 F.2d 795 (10th Cir. 1974); In re Cessna Air-

craft Distributorship Antitrust Litigation, White Indus-

tries, Inc. v. Cessna Aircraft Co., 518 F.2d 213 (8th Cir.

19751; General Motors Corp. v. City of New York, 501

F.2d 639 (2d Cir. 1974); Thill Securities Corp. v. New

York Stock Exchange, 469 F.2d 14 (7th Cir. 1972); Walsh

uv. City of Detroit, 412 F.2d 226 (6th Cir. 1969).

Appeal dismissed.

App. 13

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

October Term, 1975

No. 74-3055

D. C. Docket No. FL-72-886-CA

WILLIAM R. BENNETT, ET AL.,

Plaintiffs-Appellees,

versus

BEHRING CORPORATION, a Delware Corporation,

Defendant-Appellant.

Appeal from the United States District Court for the

Southern District of Florida

Before WISDOM, GEWIN and AINSWORTH, Cir-

cuit Judges.

JUDGMENT

This cause came on to be heard on the transcript of

the record from the United States District Court for the

Southern District of Florida, and was argued by counsel;

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the appeal in the

above styled and numbered cause be, and the same is

hereby, dismissed ;

It is further ordered that defendant-appellant pay to

plaintiffs-appellees, the costs on appeal to be taxed by the

Clerk of this Court.

January 16, 1976

Issued as Mandate:

App. 14

IN THE

SUPREME COURT OF

THE UNITED STATES

CASE NO.

BEHRING CORPORATION, a Delaware corporation,

Petitioners, Appellant

Vs.

WILLIAM R. BENNETT, et al.

Respondents, Appellee

NOTICE OF APPEAL

PREDDY, HADDAD, KUTNER,

HARDY & JOSEPHS, P.A.

Attorneys for Petitioners/

Appellants

5th Floor Concord Building

Miami, Florida 33130

GILBERT HADDAD, ESQ.

COMES NOW, BEHRING CORPORATION, a Del-

aware corporation, Petitioner named above, by and through

its undersigned attorneys, and respectfully presents this,

its Notice of Appeal.

The Petitioner is appealing the Judgment of the

United States Court of Appeals for the Fifth Circuit

entered on January 16, 1976.

App. 15

Petitioner is appealing pursuant to 28 USC Section

1254; 28 USC Section 2101(c); and Supreme Court of

the United States, Revised Rules effective July 1, 1970,

Rule 19(1) (b) ; Rule 21; Rule 22(3).

WE HEREBY CERTIFY that a true copy of the

foregoing was mailed to JON KRUPNICK, Attorney for

Respondents, Appellees, One Financia] Plaza, Fort Laud-

erdale, Florida, this 12th day of March, 1976.

PREDDY, HADDAD, KUTNER,

HARDY & JOSEPHS, P.A.

Attorneys for Petitioners/

Appellants

5th Floor Concord Building

Miami, Florida 33130

By GILBERT A. HADDAD

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.