Delaware Business Litigation Report

Court of Chancery Dismisses Attorney General's Claims under the Consumer Fraud Act and the Deceptive Trade Practices Act as Being Time Barred, but Sustains Claim under the Health Spa Regulation

State ex rel. Brady v. Pettinaro Enterprises, 870 A.2d 513 (Del. Ch. 2005). Attorney General brought consumer protection action under the Consumer Fraud Act, the Deceptive Trade Practices Act, and the Health Spa Regulation against developer of condominium complex, alleging, among other things, that developer misled condominium purchasers into believing that clubhouse was part of the complex. Developer moved to dismiss action on the basis that the statute of limitations barred the Attorney General's claims and for failure to state a claim under the Deceptive Trade Practices Act. The court granted in part and denied in part Defendants' motion to dismiss.

The court dismissed the State's claims under the Consumer Fraud Act and Deceptive Trade Practices Act based on acts before March 8, 1999, as untimely under the five-year statute of limitations because of the statute's retroactive effect. The court declined to toll the statute of limitations under the doctrine of inherently unknowable injury, on the basis of fraudulent concealment, or on the ground that the Attorney General was not on inquiry notice of violations until it received complaints from condominium purchasers. The court also found that the State failed to state a claim for injunctive relief under the Deceptive Trade Practices Act. The Attorney General was given the option to transfer the case to a court of law under 10 Del. C. - 1902 within thirty days or the case would be dismissed. The court sustained the State's claims under the Health Spa Regulation. Defendants argued that 6 Del. C. - 4219 imposes a three-year statute of limitation on private parties bringing such a cause of action, by virtue of 10 Del. C. - 8106, which applies to causes of action arising under a statute. The court disagreed because "- 8106 does not refer to statutory enforcement actions asserted by the State itself, and the Health Spa Regulation is silent on the subject of when the State may bring claims under its provisions. By implication, therefore, the three-year statute set forth in - 8106 does not apply to the State. Further, because no provision of the Health Spa Regulation explicitly creates a limitation period applicable to State enforcement, the general rule exempting state action from statutes of limitation on the basis of sovereign immunity applies." Therefore, Defendants' motion to dismiss this claim was denied.

Share