CHARLES D. ALLEN, CHARLES D. BECK, JR., BRUCE J. BERG, SYDNEY C. BOUWER, LEONARD CROWLEY, EILEEN ESCOTO, WALTER N. FRANK, JOHN E. GARWOOD, JOY A. GARWOOD, GARLAND G. GRANT, EVELYN GUITREAU, JEFFREY HAZLE, JUDITH KETTERER, LAWRENCE A. LANGE, ELWOOD LIKE, LOIS LIKE, DANIEL C. MEISINGER, LINDA P. NICHOLS, ARTHUR L. O'CONNOR, KENNETH M. RENNEY, PATRICK RILEY, AND LEONARD S. SIEKMEIER, APPELLANTS,
v.
OAKBROOK SECURITIES CORPORATION, AN ILLINOIS CORPORATION, HARBOUR INVESTMENTS, INC., A WISCONSIN CORPORATION, D.E. FREY & COMPANY, INC., A DELAWARE CORPORATION, JAMES FREDERICK GLAZA, KENNETH W. GERMAIN, FRANK A. SEBASTIANO, NELSON MARK WRIGHT, RICHARD S. DIYA, LINDA METAXA, LES B. GOLDSTEIN, CFS INVESTMENT TRUST, AN ILLINOIS TRUST, TIC PARTICIPATIONS TRUST, A TEXAS TRUST, USLC/CFS PARTICIPATIONS TRUST, AN ILLINOIS TRUST, BARBER & BRONSON INCORPORATED, A FLORIDA CORPORATION, COUSINS FINANCIAL SERVICES, INC., AN ILLINOIS CORPORATION, COUSINS SECURITIES CORPORATION, AN ILLINOIS CORPORATION, DOMINION CAPITAL CORPORATION, A TEXAS CORPORATION, KITTLAUS, INC., AN ILLINOIS CORPORATION, SUNPOINT SECURITIES, INC., A TEXAS CORPORATION, TRIDENT INVESTMENT COMPANY, A TEXAS CORPORATION, WA FINANCIAL, INC., A TEXAS CORPORATION, ROBERT ALAN AMATO, GREGORY ALLEN ANDREWS, NICHOLAS JAMES ANDREWS, ERIC HARRIS ARONSON, ERIC H. CARLSON, WILLIAM ROY COUSINS, MICHAEL HENRY DEMUTH, GREGORY MASON EDWARDS, TAMARA MARIE FULLERTON, KARL L. KITTLAUS, EDGAR LEWIS, BRIAN DAMIAN O'TOOLE, HOWARD CHARLES RAPP, MARK SCHULTZ AND DONALD SPINKS, APPELLEES

Fla. 4th DCA | 1999-12-15
No. 98-3390
GUNTHER, FARMER and KLEIN, JJ., concur.
763 So. 2d 1099 Florida District Court of Appeal, Fourth District (1999) Positive Treatment
Cited by 4 cases

AI-generated. These summaries, headnotes, and key points are machine-generated and may contain errors or omissions. Always verify against the full opinion text below. Not legal advice.

Synopsis

Plaintiffs appealed the dismissal of securities fraud claims under Florida's Blue Sky Law (Chapter 517) and negligent misrepresentation claims against various defendants. The court affirmed the dismissal of the Chapter 517 claims because the securities sales occurred entirely in other states, but reversed and remanded the dismissal of the negligent misrepresentation claims because the trial court had subject matter jurisdiction over those tort claims.


Holding

Florida's Blue Sky Law (Chapter 517) does not apply to securities sales occurring entirely in other states, even if the securities involved a Florida-incorporated company, and those claims should be dismissed for failure to state a cause of action. The trial court had subject matter jurisdiction over the negligent misrepresentation claims as tort claims, and the dismissal of those claims should be reversed and remanded.


Headnotes

[1] A state's blue sky law is generally presumed not to apply outside the territorial jurisdiction of the state in which it is enacted.

[2] A state's blue sky law does not apply to securities sales that occurred entirely in other states, even if the issuer is incorporated or has its principal place of busines…

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Key Quotes

“There is, of course, a presumption that a law is not intended to apply outside the territorial jurisdiction of the State in which it is enacted, and that principle is applicable to a Blue Sky Law.”

Establishes the fundamental principle that blue sky laws do not have extraterritorial application, even if the company involved is incorporated in that state.

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Facts & Procedural History

Plaintiffs purchased securities consisting of stock in a company incorporated in Florida with its principal place of business in Florida. However, the…

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Opinion of the Court
PER CURIAM.

PER CURIAM.

Plaintiffs appeal the trial court’s order dismissing their securities fraud and negligent misrepresentation claims against Oakbrook Securities Corporation, Harbour Investments, ínc., D.E. Frey & Co., Inc., and James F. Glaza. We affirm in part and reverse in part.

The security fraud claims are grounded on section 517.301, Florida Statutes, an anti-fraud provision of the Florida Securities and Investor Protection Act a/k/a The Florida Blue Sky Law. The trial court dismissed the claims brought under Chapter 517 because it is undisputed that the sales of the securities involved were not made in Florida. They occurred entirely in other states. Plaintiffs argue that they should be able to invoke Chapter 517, even though the sales occurred in other states, because the securities consisted of stock in a company which was incorporated in Florida and had its principal place of business in Florida.

The issue as to whether these claims can be brought under Chapter 517 is one of first impression in Florida; however, other courts considering the issue have uniformly rejected applying one state’s blue sky law where the sale of the security occurred entirely in another state.

In Singer v. Magnavox Co., 380 A. 2d 969 (Del.1977), overruled on other grounds, Weinberger v. UOP, Inc., 457 A. 2d 701 (Del.1983), plaintiffs brought a class action alleging violations of the Delaware Securities Act, even though the activity violating the act occurred in another state. The Delaware Supreme Court refused to apply the Delaware Act, stating:

There is, of course, a presumption that a law is not intended to apply outside the territorial jurisdiction of the State in which it is enacted, and that principle is applicable to a Blue Sky Law.

Id. at 981-82 (citations omitted); see also Arizona Corp. Comm’n v. Media Prods., Inc., 158 Ariz. 463, 763 P. 2d 527, 531 (Ct.App.1988)(extraterritorial application of a state’s blue sky law would violate the Commerce Clause of the United States Constitution); Cors v. Langham, 683 F.Supp. 1056 (E.D.Va.1988)(eomplaint did not state a claim under Maryland Securities Act because acts complained of took place in Virginia); McCullough v. Leede Oil & Gas, Inc., 617 F.Supp. 384 (W.D.Okla.1985)(Oklahoma Securities Act not applicable to sale conducted in another state).

The trial court dismissed the Chapter 517 claims on the ground that it did not have subject matter jurisdiction. Because the trial court is a court of general jurisdiction, it did have subject matter jurisdiction over these claims. But, because it is undisputed that the securities sales occurred entirely in other states, and because plaintiffs seek only to allege blue sky violations under Chapter 517, Florida Statutes, those claims should have been dismissed for failure to state a cause of action. We therefore affirm the dismissal, but on a different ground.

The trial court also dismissed the negligent misrepresentation claims, stating that it had no subject matter jurisdiction over those claims as well. Because the trial court is a court of general jurisdiction, it had subject matter jurisdiction over the tort claims. White v. Pepsico., Inc., 568 So. 2d 886, 888 (Fla.1990). And the court had personal jurisdiction over the defendants. We therefore reverse the dismissal of the negligent misrepresentation claims.

AFFIRMED in part; REVERSED in part; and REMANDED.

GUNTHER, FARMER and KLEIN, JJ., concur.


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Citator

Cited By

  • Neely Kountze v. Kountze, 996 So. 2d 246 (Fla. 2d DCA 2008)
    …ntended to produce and producing detrimental effects within it, justify a state in punishing the cause of the harm as if he had been present at the effect, if the state should succeed in getting him within its power.”); Allen v. Oakbrook Sec. Corp., 763 So. 2d 1099 (Fla. 4th DCA 1999) (holding extraterritorial application of Florida security statutes improper); State v. Dudley, 354 S.C. 514, 581 S.E. 2d 171, 180 (2003) (holding extraterritorial jurisdiction was a component of subject matter jurisdiction). Acc…
  • Kahan Novoa v. Safra Nat'l Bank of N.Y., 313 F. Supp. 2d 1347 (S.D. Fla. 2003)
    …condition precedent to liability under the relevant provisions of Florida Statutes, the Promissory Notes must have been sold or offered for sale in Florida. See Fla. Stat. §§ 517.301, 517.07, 517.211; Allen v. Oakbrook Securities Carp., 763 So.2d 1099, 1101 (Fla. 4th DCA 1999) (sales or offers for sale occurring outside of Florida are not actionable under § 517.301); Dokken v. Minnesota-Ohio Oil Corp., 232 So.2d 200, 204 (Fla. 2d DCA 1970) (sales or offers for sale are not actionable under…
  • Zalazar v. Cap. Force LLC (S.D. Fla. 2023)
    …— just like the claims in Counts I and II — should be dismissed because Plaintiff fails to allege “that the transaction at issue occurred in Florida and not extraterritorially.” (Mot. 17 (citations omitted)); see also Allen v. Oakbrook Sec. Corp., 763 So. 2d 1099, 1101 (Fla. 4th DCA 1999) (explaining that Florida’s securities laws do not apply to securities transactions which “occurred entirely in other states”). Having already determined — with respect to Counts I and II — that Plaintiff has plausibly all…

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