April 18, 2019

Archives for May 7, 2015

The Future of Law (Part 17): How Long Before the Future Gets Here?

rhodesWell, for one thing, the future is already here. The signs of it are everywhere; this blog has been looking at them for a couple years. But for another, we’re talking about a paradigm shift here — a major change in perception and operative dynamics. Paradigm shifts don’t become the new normal until a critical mass of recognition has been reached.

Physicist and philosopher Thomas Kuhn introduced the term “paradigm shift” 53 years ago. His work was itself a paradigm shift in how we view the dynamics of change:

[Kuhn’s] vision has revolutionized the way we think about science, and has given us as well a new way to look at change in all of life.

From this paper published in the early days of the internet (circa. 1992) by Prof. Tim Healy, Santa Clara University

Kuhn created what has come to be known as the Kuhn Cycle to describe how new paradigms replace old ones. Here’s a schematic from an article on Thwink.org, which introduces the cycle as follows:

KuhnCycle_BasicCycle

The Kuhn Cycle is a simple cycle of progress described by Thomas Kuhn in 1962 in his seminal work The Structure of Scientific Revolutions. In Structure Kuhn challenged the world’s current conception of science, which was that it was a steady progression of the accumulation of new ideas. In a brilliant series of reviews of past major scientific advances, Kuhn showed this viewpoint was wrong. Science advanced the most by occasional revolutionary explosions of new knowledge, each revolution triggered by introduction of new ways of thought so large they must be called new paradigms. From Kuhn’s work came the popular use of terms like “paradigm,” “paradigm shift,” and “paradigm change.”

Kuhn used the term incommensurability to describe the clash of old and new paradigms:

Writing in his chapter on The Resolution of Revolutions, Thomas Kuhn states that:

If there were but one set of scientific problems, one world within which to work on them, and one set of standards for their solution, paradigm competition might be settled more or less routinely by some process like counting the number of problems solved by each.

But in fact these conditions are never met. The proponents of competing paradigms are always at least slightly at cross-purposes. Neither side will grant all the non-empirical assumptions that the other needs in order to make its case.

Though each may hope to convert the other to his way of seeing his science and its problems, neither may hope to prove his case. The competition between paradigms is not the sort of battle that can be solved by proofs.

From Thwink.org

Or, as science historian James Gleick said in his bestseller Chaos:  The Making of a New Science, “Ideas that require people to reorganize their picture of the world provoke hostility.”

Continued next time.

A collection of Kevin Rhodes’ Legal Connection blog posts for the past three years is now available in print from Amazon. Also available from Amazon as a Kindle, and as an ebook from Barnes & Noble, iTunes, Smashwords, and Scribd.

Tenth Circuit: Developer Not Liable for Disclosure Failures Under Interstate Land Sales Full Disclosure Act

The Tenth Circuit Court of Appeals issued its opinion in Dalzell v. RP Steamboat Springs LLC on Tuesday, March 24, 2015.

RP Steamboat Springs, LLC, was formed in 2005 to develop a mixed-housing master-planned subdivision in Steamboat Springs called Wildhorse Meadows. RP entered into an agreement with Steamboat to develop Wildhorse Meadows in eight parcels, each originally owned by RP, one of which was Trailhead Lodge. RP entered into a marketing agreement with S&P Destination Properties, and marketed the subdivision as a whole and Trailhead specifically.

A group of investors formed Trailhead Lodge at Wildhorse Meadows, LLC, for the purpose of developing Trailhead Lodge condominiums. RP transferred title to Trailhead LLC in 2007 by special warranty deed. Two days before the deed transfer, a group of buyers entered into substantially similar preconstruction purchase and sale agreements with Trailhead LLC. At the time Trailhead LLC entered into the contracts with Buyers, no one had filed a statement of record with the Department of Housing and Urban Development and Buyers were not provided a property report, both of which were required under the Interstate Land Sales Full Disclosure Act. Buyers had the right to rescind the contracts within two years of signing as a result of these failures, which they did. Trailhead LLC, now insolvent, has not returned the Buyers’ deposits.

Buyers filed an action in the U.S. District Court for the District of Colorado against Trailhead LLC, RP, and S&P, alleging all three qualified as developers under the Land Sales Act and they violated the Act by failing to file a statement of record and failing to provide a property report when Buyers purchased the condominium units. The district court granted summary judgment to Buyers against Trailhead LLC, including a specific award of damages to each Buyer and an order rescinding the contracts, and Buyers settled with S&P. The only claims remaining were Buyers’ Land Sales Act claims against RP, which did not include any allegations of fraud. The district court ultimately concluded RP was not liable under the Land Sales Act because although it qualified as a developer, it did not exercise enough control over the sales to qualify as a direct or indirect seller. Buyers appealed.

The Tenth Circuit analyzed the applicable provisions of the Land Sales Act. Buyers argued RP’s status as a developer made it liable under the disclosure provisions, and even if developer status was not enough to establish liability, RP was liable as an indirect seller. The Tenth Circuit disagreed, finding the use of the term “to sell or lease” in some provisions but not others meant that Congress intended to limit liability of developers in some provisions of the Act. Although RP probably would have been liable under the fraud provisions of the Act as a developer, it was not liable under the disclosure provisions because these were limited to sellers. The issue had not been decided by the Tenth Circuit before, but it found a similar case from the Fourth Circuit instructive.

The Tenth Circuit similarly rejected Buyers’ argument that RP was an indirect seller under the Act, agreeing with the district court that RP did not exercise sufficient control over the sales to qualify as an indirect seller under the definition. The Tenth Circuit found RP was not involved in efforts to sell the Trailhead Lodge condominium units, despite its marketing targeting the Trailhead Lodge subdivision. The Tenth Circuit also found there was not a significant ownership relationship between RP and Trailhead, LLC.

The Tenth Circuit affirmed the district court’s finding that RP was not liable under the Land Sales Act. Judge Lucero dissented.