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PFOHL v. PELICAN LANDING

June 13, 1983

ROGER PFOHL, PLAINTIFF,
v.
PELICAN LANDING, ETC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, District Judge.

MEMORANDUM OPINION AND ORDER

Roger Pfohl ("Pfohl") sues Pelican Landing, an Illinois general partnership ("Pelican") and four of its partners,*fn1 alleging violations of:

    1. Section 10(b) of the Securities Exchange Act of
  1934 (the "1934 Act"), 15 U.S.C. § 78j(b), and
  corresponding SEC Rule 10b-5, 17 C.F.R. § 240.10b-5
  (Count I);
    2. Section 17(a) of the Securities Act of 1933 (the
  "1933 Act"), 15 U.S.C. § 77q(a) (Count II);*fn2 and
    3. 1933 Act §§ 12(1) and (2), 15 U.S.C. § 77l
  (Count III).*fn3

Defendants have moved in the alternative (1) to dismiss this action for lack of subject matter jurisdiction or (2) to dismiss Count III as time barred. For the reasons stated in this memorandum opinion and order:

    1. Defendants' motion to dismiss this action is
  denied.
    2. Their motion to dismiss Count III is granted
  only as to its Section 12(1) claim.*fn4

Background*fn5

Pfohl alleges he is a financial lamb fleeced by the wily individual defendants. His self-description of his source of funds is that of a person much like a remittance man in (say) a Maugham short story — in all events, he is wholly unsophisticated as to investment real estate.

Douglass, a close personal friend of long standing, approached Pfohl in June or July 1979 and offered him an investment opportunity in Pelican, apparently organized to acquire and develop as a condominium project certain real estate located in Englewood, Florida. Douglass (1) represented Pelican as a limited partnership and (2) said acquisition of Pfohl's limited partnership interest would require his capital contribution of $50,000 plus his purchase of two finished condominium units at a cost of $45-50,000 each. Douglass assured Pfohl those units would be worth substantially more on resale, inviting Pfohl to anticipate turning a nice profit. Relying on Douglass' representations and what he knew or was told about Palmer's and Sproat's development savvy, Pfohl invested $175,000 in the project, $50,000 cash plus what turned out to be $62,500 for each of the two condominium units.

Pelican evidently had difficulty getting off the ground in Florida, and Pfohl now alleges defendants made various misrepresentations and failed to state various material facts about the project. Most importantly Pfohl learned, only within a year of filing his Complaint, defendants had made untrue statements in (1) describing his interest as that of a limited partner, (2) estimating the cost of his condominium units as between $45-50,000 and (3) assuring his units could be sold for two or three times their cost to him. Defendants also generally failed to state (1) the risky and speculative nature of his investments and (2) their true intentions as to certain securities filings and other regulatory requirements.

Pfohl alleges he was never shown and did not sign the Pelican general partnership agreement (the "Agreement"). ...


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