In GLK and Emanuel Organek v. Four Seasons Hotel and Terremark Brickell II (3D09-591), the Third District affirmed the trial court's dismissal based upon the statute of limitations. The plaintiff alleged the defendant had sole condominium units in the Millennium Tower Condominium Hotel while knowing the plaintiffs intended to use the units for investment income. Because the defendants were not registered securities dealers, the plaintiffs alleged the defendants violated Chapter 517, Florida Statutes. The court stated:
Appellants closed on the purchase of seven condominium units in the Millennium Tower Condominium Hotel owned by appellees on July 23, 2004, for a total of $6,656,640. Appellants allege that appellees knew they intended to use the units as rentals for investment purposes and would not be permanently residing in the units. Appellants also claim that appellees guaranteed a certain amount of rental income on the units. Nearly four years later, on April 6, 2008, Organek read an article in The Wall Street Journal stating that the sale of the condominiums could be considered the sale of securities.
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A court may grant a motion to dismiss based on the statute of limitations “only in extraordinary circumstances where the facts constituting the defense affirmatively appear on the face of the complaint and establish conclusively that the statute of limitations bars the action as a matter of law. . . .”
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Appellants contend that what constitutes a security is not easily recognizable and that their cause of action did not accrue until they knew or should have known that a violation of Chapter 517 occurred, which was on April 6, 2008, when Organek read the article and first learned that the purchase of the units may qualify as the purchase of securities, with certain requirements. We disagree.
Under section 95.11(4)(e), Florida Statutes, the limitations period for Chapter 517 violations is two years “running from the time the facts giving rise to the cause of action were discovered or should have been discovered with the exercise of due diligence. . . .” The operation of the statute of limitations is not postponed where plaintiffs are in possession of all the facts necessary to determine whether they have a cause of action but are ignorant of the law on which their claim is based...The limitations period begins to run as soon as “a plaintiff has actual or constructive knowledge of only ‘the facts forming the basis of his cause of action’ and not that of the cause of action itself.”
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The fact that appellants did not review the documents until after reading The Wall Street Journal article in 2008 does not delay the accrual of their claim. Because appellants had actual notice in 2004 of the facts forming the basis of their claim, the statute began running at that time and bars the suit they brought
four years later.
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Although [the delayed discovery doctrine] has regularly been applied to securities fraud claims, where tortfeasors conceal their fraudulent conduct, it is not applicable to cases where plaintiffs allege the sale of an unregistered security. McCullough v. Leede Oil & Gas, Inc., 617 F. Supp. 384 (W.D. Okla. 1985). “[A] seller of securities cannot conceal the fact that the securities he sells are not registered. . . . Thus, the discovery rule has little justification in the nonregistration setting.” Id. at 397. Accordingly, because appellants had the documents needed to determine whether they had a cause of action in 2004, they cannot be considered blamelessly ignorant and invoke the delayed discovery rule for their nonregistration claim.
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