Full opinion text
INDEX OF OPINION Section Page I. Background.......................................................... 760 II. Breach of Contract Claim Against SSG................................ 761 A. Findings of Fact................................................. 762 B. Conclusions of Law............................................... 765 C. Summary ........................................................ 767 III. Fraud Claims Against Merrill Lynch and SSG......................... 767 A. Complete v. Substantially Complete Fraud Claim................... 768 B. Purchase v. Lease Fraud Claim................................... 769 C. Rule 10b-9 and 15c2-4 Fraud Claims.............................. 769 D. Land Sales Act Claim ............................................ 770 IV. Contract Claims Against Merrill Lynch................................ 771 V. Claims Against Trustbank Mortgage Center........................... 772 A. Contract Claims.................................................. 772 B. Tort Claims...................................................... 772 C. The D’Oench Duhme Doctrine.................................... 773 VI. Claims Against Mortenson and Winsor/Faricy ......................... 775 VII. Midwest Title ........................................................ 775 VIII. Damages Resulting From Breach of FFE Agreement.................. 776 A. The Measure of Damages......................................... 776 1. Plaintiff Class’ Position........................................ 776 2. Defendants’ Position........................................... 776 B. Out-of-Pocket Damages.......................................... 777 Section Page IX. Conclusion ........................................................... 777 X. Orders............................................................... 778 . Furniture, Fixtures and Equipment Lease Claim . Breach of Contract Claims on Closing of Sale . Merrill Lynch’s Motions To Dismiss Complaints . Frank Lavin’s Motion To Dismiss Complaints Martin Cicco’s Motion To Dismiss Complaints Shelter Seagate Group’s Motion For Summary Judgment on Fraud Claims . Trustbank’s Motion For Summary Judgment Mortenson’s Motion For Stay Pending and Directing Arbitration . Winsor/Faricy’s Motion For Stay Pending and Directing Arbitration . Midwest Title’s Motion To Be Dropped As Misjoined Party . Plaintiff Class’ Motion To Join Midwest Title As Defendant . Plaintiff Class’ Cross-Motion For Summary Judgment As To First Amended Complaint XI. Appendices . A — Transcript of April 23, 1990 Hearing B — Opinion/Order of November 20, 1990 C — Order of March 15, 1991 D — Transcript of May 7, 1991 Hearing OPINION FEIKENS, District Judge. I. Background This case began with a lengthy complaint containing sixteen counts. It alleged that a group of 298 investors, who asked to be designated as a class, purchased unit interests in a 474-room resort hotel (The Registry Hotel), herein referred to as “the hotel,” to be located on Pelican Bay in Naples, Florida, for a total price of $89,225,-500. Named as defendants are a group, referred to herein as “the developer,” Can-American Corporation, Can-American Realty Corporation, Shelter Seagate Corporation, Garrett G. Carlson, Graham C. Lount, and Arni Thorsteinson. Also named as defendants are Merrill Lynch, Pierce, Fenner & Smith, Inc.; Frank Lavin; Martin Cicco; Laventhol & Horwath, certified public accountants retained by the developer; Dominion Financial & Investment Corporation; M.A. Mortenson Company; and Winsor/Faricy Architects, Inc. The counts captioned in the complaint are: 1. Violation of the Exchange Act, § 10(b) and Rule 10b — 5; 2. Violations of the Exchange Act, § 20; 3. Violations of the Securities Act, § 12(2); 4. Violation of the Securities Act, § 15; 5. Fraudulent and negligent misrepresentation; 6. Violation of the Land Sales Act; 7. Aiding and abetting/conspiracy; 8. Violation of RICO; 9. Violation of Florida’s RICO statute; 10. Breach of fiduciary duty (against named defendants] ); 11. Breach of fiduciary duty (against named defendants]); 12. Breach of fiduciary duty (against named defendants]); 13. Malpractice/negligence; 14. Respondeat superior; 15. Breach of warranty; and 16. Breach of contract. In managing this case, I concluded that there was a strong need for the adoption of special procedures, since the case involved complex issues, multiple parties, and difficult legal questions (Fed.R.Civ.P. 16(c)(10)). The complaint was filed on August 21, 1989, and there followed a blizzard of motions and briefs. Between August 21, 1989 and April 23, 1990, the date on which the court was able finally to schedule a Rule 16 conference, there were ninety docket entries, comprised of discovery motions, Rule 12 and 56 motions, and supporting and response briefs. Clearly, Rule 16 had to be vigorously applied. A pretrial conference held on April 23, 1990 began this process. With close questioning of parties’ counsel, it appeared that the complaint was bottomed on allegations of fraud and breach of contract. Three occurrences of fraud were alleged: 1. That the Private Placement Memorandum (the “PPM”), which disclosed that the W.B. Johnson Company was interested in erecting a hotel on Pelican Bay, did not say that that hotel was a Ritz-Carlton; 2. That the PPM stated that the hotel was to be furnished with approximately $13.5 million of furniture, fixtures and equipment; and that defendants, or some of them, rather than perform that contractual undertaking, leased the furniture, fixtures and equipment placed in the hotel and thereby burdened the hotel with lease payments; and 3. That fraud surrounded the October 31, 1986 closing date, when the hotel was to be “substantially completed.” That status conference on April 23, 1990, as the record amply demonstrates (see Appendix A), compacted the prolix allegations of fraud in the complaint to three manageable areas and, on May 15, 1990, a detailed order managing initial discovery was entered. In motion hearings, these three occurrences were then addressed. In an Opinion and Order dated November 20, 1990, I granted a motion for summary judgment on plaintiffs’ first fraud claim. I found no fraud in the claim that the investors were not notified that another hotel to be built on Pelican Bay would be a Ritz-Carlton hotel. That Opinion, and the resulting Order, sets forth the reasons for the grant of summary judgment and is attached hereto as Appendix B. On March 15, 1991, I entered an Order for an expedited trial. I determined that the remaining two issues of alleged fraud could be tried as breach of contract claims against the developer Shelter Seagate, Can-American Corporation, Can-American Realty Corporation, and the individual defendants Carlson, Lount and Thorsteinson (referred to collectively as “the Shelter Sea-gate Group”, or as “SSG”, or as “the developer”). In that Order I also certified a plaintiff class (attached hereto as Appendix C). Jury trial was waived. On the second claimed issue of fraud, reformed into a breach of contract claim, i.e., the decision by the developer-defendants to lease furniture, fixtures and equipment for the hotel rather than to purchase them, resulted, following a full hearing, in a grant of partial summary judgment in favor of the plaintiff class and against the developer-defendants. That ruling was made on May 7, 1991. A transcript setting forth the reasons and grounds for that grant of partial summary judgment is contained in Appendix D attached hereto, the transcript being a record of the ruling made on that date. I reserved for a future hearing a determination of the remedy for that breach. II. Breach of Contract Claim In this section, the third issue, reformed as a breach of contract claim, is addressed. The trial parties are the plaintiff class and the Shelter Seagate defendants, the developer. Beginning in February, 1984, the plaintiff class (“the investors”) entered into contracts with defendant Shelter Seagate Corporation (“SSG”) for the purchase of “Hotel Units” in The Registry Hotel. Investors paid at least 10% of the purchase price as a cash down payment and applied for mortgage financing for the remainder. SSG agreed to deposit investors’ down payments, notes, and executed mortgages with a designated escrow agent until construction of the Hotel Units was “substantially completed” and the sale was closed. Investors were free to cancel their purchase agreements until (1) they were approved for financing, and (2) they received notice from SSG that the “Minimum Subscription Level” had been attained. Thereafter, investors were “irrevocably bound” to complete their purchases. SSG agreed, however, that if they did not “substantially complete” the hotel, and close the sale of Hotel Units, within two years from the date that investors became “irrevocably bound,” investors would be given the option of rescinding their contracts with a return of all deposits, or demanding specific performance by SSG. On October 31, 1986, SSG represented to the escrow agent that the hotel was substantially complete and that it had complied with all conditions precedent to closing the sale. The escrow agent agreed, released investors’ funds ($89,225,500) from escrow and closed the sale. In August of 1989, nearly three years later, six investors brought this lawsuit, individually and on behalf of nearly 300 similarly situated investors, seeking to rescind their contracts with SSG. On March 15, 1991, I entered an Order scheduling an expedited trial on plaintiff class’ contract claims and certifying a plaintiff class (Appendix C, supra). In that Order, I limited the expedited trial to deciding plaintiffs’ class claims against the “Shelter Seagate Group” defendants, since that was the group with which the plaintiff class had contracted. I pointed out that, if there were breaches of contract, such issues could be tried in far less time and “would avoid unnecessary costs of trial.” Plaintiff class filed an amended complaint stating breach of contract claims, but expressly reserved the right to litigate their fraud claims in the future. The expedited trial addressed this issue: Whether SSG, by closing the sale of Hotel Units to the investors, breached its agreement to substantially complete the hotel within two years from the date investors became bound. A. Findings of Fact Between February, 1984, and April, 1985, plaintiff class entered into contracts with SSG for the purchase of Hotel Units in The Registry Hotel, a non-residential, luxury condominium resort complex which SSG planned to develop at Pelican Bay in Naples, Florida. Each Hotel Unit cost between $179,500 and $278,000 and included a fully furnished hotel room or suite, a percentage interest in the hotel’s common areas, and a percentage interest in the hotel’s future profits. Plaintiff class appointed SSG as their agent, authorizing it to rent hotel units, collect pool revenues, pay operating expenses, and distribute cash dividends to plaintiff class at regular intervals. Prior to making their purchases, investors (herein also known as “plaintiff class”) were given a Private Placement Memorandum (PPM) which described the offering in detail. In the PPM, investors were advised that Hotel Units were business investments with distinct tax shelter benefits. As long as investors used their units for not more than 14 days in any taxable year, the units were considered business investments for tax purposes. As such, under the tax laws then in effect, investors were entitled to claim yearly tax deductions based on the “depreciation” value of their units, and for any interest on mortgage financing. To the extent that depreciation and interest deductions for any taxable year exceeded the investors' share of the hotel’s Net Operating Income, an investor would realize a tax “loss” which could be off-set against income from other sources, thus producing tax savings. In short, investors were aware that even if the hotel performed poorly during its first years of operation, the investment was beneficial as a mechanism for sheltering other income from taxation. Testimony at trial demonstrated that the tax shelter aspect of this investment was a significant factor in enticing the investors to purchase hotel units. This is highlighted by the fact that the PPM and its supplements devoted a considerable amount of space to the tax consequences of the investment. Because the tax shelter aspect was a significant factor in this investment, the alleged under-performance of the hotel, of which the investors now complain, would have benefited them by providing greater tax losses to off-set against their other income. Notably, the tax shelter laws changed shortly after the instant sale was closed. Under the new laws, investors are no longer entitled to off-set Registry Hotel losses against their other income. This materially diminishes the tax benefits of plaintiff class’ purchases. The purchase agreement between SSG and each member of plaintiff class is set forth in a document entitled “Unit Sale Agreement,” and in other documents incorporated by reference therein. Pursuant to paragraph 2 of the Unit Sale Agreement, investors agreed to pay SSG a cash down payment equaling at least 10% of the purchase price, and agreed to apply for mortgage financing for the remainder. SSG agreed to place down payments, mortgages, and notes in an escrow account with a designated escrow agent, to be held until SSG fully satisfied the conditions precedent to closing the sale. The following provisions of the Unit Sale Agreement controlled SSG’s right to close the sale: Paragraph 4 states: Completion Date. Seller shall substantially complete construction of the Hotel not more than two years after this Agreement becomes binding on the Purchaser as such two year period may be extended under the Interstate Land Sale Full Disclosure Act. Paragraph 5 states: Closing of Title. The closing of title shall be held within a reasonable time after completion of construction of the Hotel Unit, at the office of the escrow agent____ Paragraph 8 states: Default. Seller shall be in default hereunder if Seller fails to close the sale pursuant to Section 5 within two years after this Agreement becomes binding on Purchaser, as such two year period is defined in the federal Interstate Land Sale Full Disclosure Act and the regulations and guidelines promulgated thereunder. Purchaser’s remedy against Seller for Seller’s default hereunder shall be either to obtain a refund of all deposits made pursuant hereto (together with interest earned thereon, if any) whereupon this Agreement and the parties’ rights hereunder shall terminate,' or to seek specific performance of this Agreement, at the Purchaser’s election. Exhibit B to the Escrow Agreement (incorporated by reference into the Unit Sale Agreement) is entitled “Closing Requirements” and denominates those conditions that had to be satisfied before the sale closing could take place. Exhibit B provides in relevant part: The requirements for closing or escrow and title under the Agreement and the applicable contract [identified as the Unit Sale Agreement], which must first be completely satisfied or met are: 2. Receipt of Developer’s written assignment of all existing warranties, books and records of the condominium owners association, plans, specifications, and all certificates or permits obtained or required with respect to the construction, occupancy and operation of the Hotel, to the condominium owners association and to the Purchaser, as appropriate. I find that investors became “irrevocably bound” to complete their purchases on February 15, 1985, the day their funds were delivered into escrow by SSG, and that SSG therefore had until February 15, 1987 to substantially complete the hotel and close the sale. Because SSG elected to close the sale on October 31, 1986, I find that SSG waived whatever time remained in the two-year completion period and obligated itself to deliver a substantially complete hotel by the closing date, October 31, 1986. See Appendix D (Transcript of May 7, 1991 hearing). Photographic, documentary and testimonial evidence of the physical and operational condition of the hotel on or about October 31, 1986, the date of the closing of sale and title, demonstrated that the hotel was not substantially complete at that time. Heavy construction was proceeding on the top floors of the hotel; some rooms on the top floor had no walls while others had metal studs; some rooms in the hotel lacked carpeting, wall coverings, and furniture, fixtures and equipment; on some floors, metal studs and drywall were just being erected. There was an absence of fully assembled furniture from the top floors down through floors 4 and 5, and any furniture that was present was in boxes or stacked throughout the rooms and in the corridors. The ballrooms, restaurants, nightclub and commercial areas of the hotel were still in an incomplete state of construction on the date of the sale closing. On the closing date, SSG had not obtained all certificates necessary to operate the hotel. It had obtained a partial certificate of occupancy and a partial certificate of fire compliance, but these certificates were predicated on SSG’s assurance that no guests would be allowed in the hotel. Similarly, although SSG had obtained an Architect’s Certificate of Substantial Completion, this certificate was limited to the work of the general contractor, and did not pertain to the entire hotel. After the October 31, 1986 closing, construction and finishing work continued. On December 2, 1986, Deputy Fire Chief Rodgers issued a Notice of Fire Compliance which permitted guests to occupy certain limited areas of the hotel, including the rooms on floors 3-14. On December 5-6, 1986, the hotel received its first guests, a meeting of the Naples Board of Realtors. At that time, one of the hotel’s three restaurants was open; the nightclub, Garrett’s, was not open. Approximately 50-75 guest rooms were used during the weekend of December 5-6, 1986. On or about December 15, 1986, 24 more guest rooms on floors 3-11 were made available. In early January, 1987, there was a function for approximately 75-100 investors at the hotel. In March, 1987, the hotel hosted a large gathering of “meeting planners” with approximately 150-200 overnight guests. By that time the hotel was substantially complete. Plaintiff class retained' Phillip Levin, a management consultant, to determine whether the hotel lost money due to the delay in substantial completion. Levin testified that he (1) reviewed the financial statements of The Registry Hotel for December, 1986, and the quarterly statements for 1987 to ascertain the hotel’s performance during these periods; (2) reviewed SSG’s projections in the PPM and supplements thereto to determine how the developer predicted the hotel would perform; (3) reviewed the performance of competitive hotels in the Naples area to see how they performed during this period; (4) reviewed the economy in Naples during that period of time; and (5) reviewed the reputation of The Registry Hotel Corporation which was managing the hotel for SSG. Levin testified that the hotel under-performed during the first quarter of 1987 because it only achieved a 53% occupancy rate. He testified that it should have achieved a 72% occupancy rate during this period, given the strong demand for hotel rooms in the area (Levin noted that the Ritz Carlton Hotel at Pelican Bay was 100% occupied during this period), and given the competent management of the Registry staff. Levin testified that the hotel did not perform as he would have expected for one of two reasons. “Either the rooms weren’t available for the guests, or guests for some reason chose not to stay at this hotel.” He concluded that because of the delay in substantial completion, and attendant construction problems, the hotel was unable to attract the number of guests it otherwise could have. Based on Levin’s analysis, plaintiff class claims an aggregate loss of over $7 million. Levin’s testimony was contradicted by several witnesses. Philip Wood, a guest on December 5 and 6, 1986, testified that his stay at the hotel was very pleasant. Terri Autrey and Jim Knauff of the Registry’s sales staff testified that no prospective guest, group or transient, was turned away during this period. Moreover, sales figures for the hotel show that its gross revenues for the first five months of 1987 were $11,850,000, while gross revenues for the same months of 1988 were $13,357,000. The relative similarity of these figures suggests that if the hotel did “under-perform” in 1987, it also under-performed in 1988, at a time when it was substantially complete. In fact, the hotel actually generated more revenue in January of 1987 ($2,039,070), when it was not substantially complete, than it did in January of 1988 ($1,877,649), when it was. These facts negate plaintiff class’ argument that the hotel lost money in 1987 due to the delay in substantial completion. Levin conceded that he did not compare The Registry Hotel’s performance during its first months of operation to the performance of other local hotels, such as the Ritz Carlton, during their first months of operation. I find that Levin’s testimony is not credible. His analysis is based on assumptions that are not adequately supported by factual data and was refuted by the testimony of Registry sales staff. B. Conclusions of Law This court’s jurisdiction and venue over the subject matter of this trial are based on Section 27 of the Securities Exchange Act of 1934; the federal securities law subject matter of the original complaint, as amended by the First Amended Complaint (for breach of contract); ancillary and pendent jurisdiction; and the court’s Opinion and Order dated December 14, 1990. The Shelter Seagate Group defendants, through SSG, entered into a series of contracts with each member of the plaintiff class for the sale of one or more Hotel Units in The Registry Hotel. The terms and conditions of the agreement are contained in Unit Sale Agreements executed between plaintiff class and SSG, and the documents incorporated therein by reference. Pursuant to paragraph 19 of the Unit Sale Agreement, the agreement is to be construed according to Florida law. Pursuant to paragraph 1 of the Unit Sale Agreement, SSG agreed to sell and convey, and plaintiff class agreed to purchase, fully furnished, non-residential resort condominium Hotel Units of The Registry Hotel at Pelican Bay, including an appurtenant interest in the income-producing Commercial Units of the hotel, percentage ownership interest in fee simple in the land on which the hotel is situated and the other common elements of the hotel, and a management agreement appointing SSG as the agent of the Hotel Unit Purchaser to manage and operate such Hotel Units and investors’ undivided interest in the Commercial Units as part of the hotel. Pursuant to paragraph 4 of the Unit Sale Agreement, defendants agreed to substantially complete construction of each Hotel Unit not more than two years after each Unit Sale Agreement became binding on purchasers “as such two year period may be extended under the Interstate Land Sales Full Disclosure Act.” Pursuant to paragraph 20 of the Unit Sale Agreement and page 42 of the PPM, I found that the agreement became binding on purchasers on February 15, 1985, the date their down payments, mortgages, and notes were closed into escrow. I found that defendants thus had until February 15, 1987 to substantially complete the hotel, but waived that right by electing to close on October 31, 1986. In order to comply with paragraph 4 of the Unit Sale Agreement, the hotel had to be substantially complete by October 31, 1986. Pursuant to paragraph 5 of the Unit Sale Agreement, defendants agreed to “complete” construction of the hotel before closing the sale. I find that the word “complete” means “substantially complete” when read together with paragraphs 4 and 8 of the Unit Sale Agreement. Therefore, I find that in order to comply with paragraph 5 of the Unit Sale Agreement, defendants had to substantially complete the hotel prior to closing the sale. . Substantial completion of the hotel meant that the Unit Owners could utilize the property in accordance with its intended use, ie., a working business ready to be occupied and used by guests and to generate rent. See J.M. Beeson Co. v. Sartori, 553 So.2d 180 (Fla.App. 4 Dist.1989). Plaintiff class has the burden of proving that the hotel was not substantially complete at the time of closing on October 31, 1986, and that they were damaged thereby. SSG has the burden of proving that, in the event the hotel was not substantially complete as of October 31, 1986, their breaches of contract were not material. See Transcript of May 7, 1991 hearing. As a result of closing the sale of the hotel on October 31, 1986, defendants breached the contract in the following manner. Paragraph 4 of the Unit Sale Agreement was breached because on October 31, 1986, the hotel was not capable of use for its intended purpose, ie., a working business ready to be occupied by guests, and therefore was not substantially complete within two years after each investor’s Unit Sale Agreement became binding. Paragraph 5 of the Unit Sale Agreement was breached because defendants closed title prior to substantially completing construction of the Hotel Unit. Paragraph 2 of Exhibit B to the Escrow Agreement (“Closing Requirements”) was breached because defendants failed to obtain by closing date all “certificates or permits ... required with respect to the construction, occupancy and operation of the hotel.” These conclusions lead inevitably to the question: How were the members of the plaintiff class damaged? I conclude that plaintiff class did not carry their burden of proving that they were damaged as a result of the aforementioned breaches. In a case such as this, where the damages claimed are lost profits, plaintiff class cannot rely on speculation and conjecture, but must prove with reasonable certainty the amount of their actual loss. Royal Typewriter Co. v. Xerographic Supplies, 719 F.2d 1092 (11th Cir.1983). See, also, Beverage Canners, Inc. v. Cott Corp., 372 So.2d 954, 956 (Fla.Dist.Ct.App.1979). Additionally, plaintiff class must prove with reasonable certainty that their damages “flowed as the natural and proximate result of the claimed breach.” See Royal Typewriter, 719 F.2d at 1105 (quoting Aldon Industries, Inc. v. Don Myers & Associates, Inc., 517 F.2d 188, 191 (5th Cir.1975). This, plaintiff class cannot do, as I point out in my findings of fact. Florida law, which governs this dispute, recognizes two methods of proving lost profits: (1) the before-and-after theory and (2) the yardstick test. See G.M. Brod & Co., v. U.S. Home Corp., 759 F.2d 1526, 1539 (11th Cir.1985). The before-and-after theory requires a comparison between the profits generated by a business before and after the claimed breach. Id. at 1536. The yardstick test consists of a study of the profits of business operations that are closely comparable to plaintiff class’ to determine whether plaintiff class indeed lost profits as a result of the claimed breach. Id. Here, there is a lack of comparability; and, since the estimates depend on too many variables, plaintiff class cannot rely on the yardstick rule, as they have not met their burden of showing lost profits to a reasonable degree of certainty. See, supra, Beverage Canners, 372 So.2d at 956; Royal Typewriter, 719 F.2d at 1105. Application of the “before-and-after” test to this case requires a comparison of the hotel’s performance during its first few months of operation (when it was not substantially complete) and its performance during an analogous subsequent period (when it was substantially complete). Defendants presented evidence at trial which showed that the hotel generated $11,850,-000 in revenues for the first five months of 1987, and $13,357,000 for the first five months of 1988, a difference of only $1,507,000. It was also shown that the hotel actually generated more revenue in January, 1987 than it did in January, 1988. This evidence refutes plaintiff class’ claim that the hotel’s poor performance in 1987 was due to the delay in substantial completion. Plaintiff class similarly fails to prove lost profits under the so-called “yardstick” test. Plaintiff class’ expert, Levin, compared The Registry Hotel’s actual performance during its first months of operation with the performance of other luxury hotels in and around Naples during the same months, and found that hotels such as the Ritz Carlton were 100% percent occupied while The Registry Hotel was only 53% occupied. He concluded that given the obvious local demand for luxury hotel rooms, The Registry Hotel should have achieved a minimum occupancy rate of 72% in the first quarter of 1987. Its failure to do so, he concluded, was due to either the lack of available rooms or to the fact that The Registry Hotel was not in “first class” condition at the time. Levin’s assessment was refuted by Registry hotel staff persons who testified that no prospective guest was turned away during this period for lack of available rooms. Levin’s analysis also fails to give sufficient weight to The Registry Hotel’s status as a newcomer to the local market. In order to assess whether The Registry Hotel actually under-performed during its first months of operation, Levin should have compared The Registry’s initial performance with the initial performance of other luxury hotels in the Naples area. For example, if Levin had shown that the Ritz Carlton’s initial performance significantly exceeded The Registry Hotel’s initial performance, and that both opened under similar market conditions, he may have come considerably closer to raising an inference that The Registry Hotel significantly under-performed during its early months. He would still have to show that the under-performance was due to the delay in substantial completion, and not to other possible factors, such as poor management by Registry staff. Based on the testimony adduced at trial, I find that Levin did not present sufficient evidence to make the latter finding. Because plaintiff class has not shown that they were damaged by defendants’ breach, and defendants have shown that the breach is not material, plaintiff class is not entitled to either rescission or damages. “It is elementary that the mere breach of an agreement which causes no loss ... will not sustain a suit for damages, much less rescission.” See, e.g., Burger King v. Mason, 710 F.2d 1480, 1489-90 (11th Cir.1983) (quoting Block v. City of West Palm Beach, 112 F.2d 949, 952 (5th Cir.1940). Plaintiff class argues that paragraph 8 of the Unit Sale Agreement gives them an unqualified right to rescission. I do not agree. As the U.S. Court of Appeals for the Eleventh Circuit stated: [Although as a general rule parties to a contract may strictly enforce its [termination] terms, and the courts will not rewrite an agreement to undo the consequences of a bad bargain, see, e.g., Sapienza v. Bass, 144 So.2d 520 (Fla.Dist.Ct.App.1962), the Florida Courts do not blindly sanction unilateral termination of contracts when a default causes no harm to the party seeking to avoid performance. Burger King, 710 F.2d at 1490. The hotel which plaintiff class purchased may not be as profitable as they expected, nor the tax shelter they envisioned, but that is an investment risk they knowingly took. This court will not relieve them of a bargain they now consider unwise. C. Summary I conclude that the SSG defendants breached their contracts with plaintiff class by closing the sale of Hotel Units to the investors before the hotel was substantially complete. However, because plaintiff class had no ascertainable economic loss as a result of defendants’ breach, plaintiff class is not entitled to damages or to rescission. III. Fraud Claims Against Merrill Lynch and Shelter Seagate — Motions To Dismiss and For Summary Judgment Plaintiff class alleges three fraud claims against Merrill Lynch and SSG pursuant to Rule 10b-5 of the Securities Exchange Act, common law fraud, and negligent misrepresentation. In addition, plaintiff class alleges that Merrill Lynch, SSG, Mortenson, and Winsor/Faricy violated the Land Sales Act. These allegations are now addressed in response to motions to dismiss and for summary judgment. A. Complete v. Substantially Complete Fraud Claim Plaintiff class claims that Merrill Lynch and SSG made material misrepresentations of the requirements for closing of title. They allege that Merrill Lynch and SSG represented to the investors that the hotel had to be fully completed prior to closing. In support of this fraud claim, they point to the Private Placement Memorandum, Merrill Lynch Marketing Guide, and affidavits of former Merrill Lynch sales agents. The short answer to this claim is that I have already held that the Unit Sale Agreement only required SSG to substantially complete the hotel prior to closing. These defendants could not have defrauded the investors by representing the transaction could only be closed upon the complete completion of the hotel because they, in fact, represented the opposite, that the closing could occur upon substantial completion. Plaintiff class nevertheless points to the PPM, and argues that it states the closing would not occur until the hotel was completely complete. The PPM says no such thing. Page 3 of the PPM states that the “closing of the sale of the Hotel Interests is subject to various conditions including completion of the Hotel____” However, this statement falls under the heading “MEMORANDUM SUMMARY,” which indicates reference should be made to the table of contents for direction to more detailed information in the body of the memorandum. The table of contents, under “closing of sale,” directs the reader to page 42. Page 42 of the PPM makes only an oblique reference to the degree of completeness required prior to the closing, but it is telling: “After all required funds and documents have been deposited with Escrow Agent, the deed for Investor’s Hotel Unit from SSG to Investor ... shall be recorded and ... copies of ... the Architect’s Certificate of Substantial Completion ... shall be forwarded to Investor, which will complete the closing of the sale as far as the Investor is concerned.” Plaintiff class next points to the 79 form affidavits they submitted that essentially say that if each investor had discovered prior to the closing that SSG was only required to substantially complete the hotel, each would have terminated his or her subscription. However, when the plaintiff class signed Unit Sale Agreements, they did indeed “discover” what the requirements were regarding completeness, since paragraph 4 contains the operative “substantially complete” language. Plaintiff class also claims that these defendants, through the Merrill Lynch sales representatives, orally misrepresented that the closing could not occur unless the hotel was completely complete. Plaintiff class ignores the fact that the Unit Sale Agreement they signed contains a merger and integration clause (paragraph 13), stating explicitly that the purchaser acknowledges he or she has not relied on any other representations made by the seller or seller’s agent; and that the PPM, in bold letters, states that oral representations cannot be relied upon, and that any representation not contained in or beyond the statements in the PPM is made without authority. See Acme Propane, Inc. v. Tenexco, Inc., 844 F.2d 1317 (7th Cir.1988) (oral statements are irrelevant if adequate written disclosures are given prior to closing). Last, I point out again that even though I find there was no fraud in the representations made as to the closing requirements regarding completeness, I have already held that the breach of contract in this regard in no way damaged the plaintiff class. I conclude that there is no evidence whatever of fraud in the closing of the sale of the hotel, even though the hotel was not substantially complete at that time. Accordingly, motions to dismiss and for summary judgment as to these claims must be granted. B. Purchase v. Lease FFE Fraud Claim Plaintiff class claims that Merrill Lynch and SSG materially misrepresented to investors that SSG would purchase the furniture, fixtures, and equipment (“FFE”) for the hotel, when both knew that SSG intended to lease certain FFE items. They allege that this conduct violated Rule 10b-5 of the Securities Exchange Act, common law fraud, and negligent misrepresentation. On May 7, 1991, I granted partial summary judgment in favor of plaintiff class on the breach of contract issue. (See Appendix D). I found, as a matter of law, that SSG breached its agreement to convey a fully furnished hotel to investors. A hearing, in order to determine damages for that breach, was held on July 16, 1992. A discussion of those damages is found in Section VIII. of this Opinion. The FFE fraud claim is not cognizable. Under both the securities law and state common law there can only be one recovery for one injury. In this case, plaintiff class was awarded damages for SSG’s breach of the agreement to convey a fully furnished hotel to investors. They cannot now claim additional damages for the same injury. Section 28(a) of the Securities Exchange Act, 15 U.S.C. § 78bb(a), prevents a party from receiving double recovery for a security law violation. That section provides: The rights and remedies provided by this chapter shall be in addition to any and all other rights and remedies that may exist at law or in equity, but no person permitted to maintain a suit for damages under the provisions of this chapter shall recover, through satisfaction of judgment in one or more actions, a total amount in excess of his actual damages on account of the acts complained of. Similarly, the common law fraud and negligent misrepresentation claims are also not cognizable because a party is only entitled to one recovery for one injury. That is: A plaintiff who alleges separate causes of action is not permitted to recover more than the amount of damage actually suffered. There cannot be double recovery for the same loss even though different theories of liability are alleged in the complaint. Thus, a plaintiff who recovers the full amount of damages for the breach of contract cannot recover damages in tort unless he alleges and proves the existence of additional damages attributed solely to the tort. 22 Am.Jur.2d, Damages § 35. See also Kewin v. Mass. Life Ins. Co., 79 Mich.App. 639, 653, 263 N.W.2d 258, 265 (1977), aff'd in part and rev’d in part on other grounds, 409 Mich. 401, 295 N.W.2d 50 (1980) (“If a plaintiff seeks to recover in both contract and tort, he may not recover the same damages under both theories.”) This is not a case where plaintiff class is entitled to additional damages. Even if the FFE fraud claim was cognizable, plaintiff class is not entitled to rescission or punitive damages. Rescission is not an appropriate remedy where, as here, the remedy at law is adequate. 37 Am.Jur. 2d, Fraud and Deceit § 323, § 325. Similarly, punitive damages are only allowed where the alleged fraud is malicious, deliberate, gross, or wanton. Id. at § 347. There is no evidence of malicious, deliberate, gross, or wanton fraud in this case. Thus, since plaintiff class will recover damages for the breach of contract claim with respect to FFE, they cannot recover damages pursuant to the securities law, common law fraud, or on negligent misrepresentation theories of liability. Thus, the FFE fraud claims must be dismissed on both motions to dismiss and for summary judgment. C. Rule 10b-9 and 15c2-4 Fraud Claim Plaintiff class claims that Merrill Lynch violated Rule 10b-9 and 15c2-4 of the Securities Exchange Act, by allowing the closing of title to take place on October 31, 1986 despite their knowledge that all conditions for closing were not met. They argue that Rules 10b-9 and 15c2-4 require a broker participating in a distribution, in which payments are not to be made until certain events or contingencies occur, to take specific steps to ensure that the issuer does not receive any. funds from investors until all contingencies are fully satisfied. Here, they claim that these rules require Merrill Lynch to ensure that investors’ funds were not released from escrow until all closing requirements were met, including completion of the hotel. Plaintiff class misconstrues the applicability of these rules. They relate to “all or nothing” or “part or nothing” offers. According to the terms of an “all or nothing” offering, if within a specified period there is not a full subscription to all shares being offered, the offer is cancelled. Similarly, in a “part or nothing” offering, a refund will be made to subscribers if less than a specified portion of the offering has been subscribed to. Thomas Lee Hazen, Treatise on the Law of Securities Regulation § 6.3, at 273 (2d Ed.1990). Rule 10b-9 provides that an issuer entering into one of these types of offerings must be specific as to the offering price, duration of the offer, and the amount of the securities that must be sold to make the offering effective, or the offering is considered a “manipulative or deceptive device” in violation of Section 10(b) of the Securities Exchange Act. Rule 15c2-9 provides that it is unlawful for a broker or dealer to engage in these offers unless the funds are placed into a separate bank account until all relevant contingencies have occurred, i.e., the minimum subscription level is met. Thus, Rules 10b-9 and 15c2-4 protect investors’ funds when securities are sold subject to a minimum sales condition. Merrill Lynch satisfied these rules on February 15, 1985, when the minimum sales conditions were met and the escrow was closed, thus irrevocably binding the investors. The conduct that plaintiff class claims violated these rules occurred at or near the October 31, 1986 closing of title. Rule 10b-9 and 15c2-4 do not apply to Merrill Lynch’s conduct, which occurred after the February 15, 1985 closing of escrow. Thus, plaintiff class’ Rule 10b-9 and 15c2-4 fraud claim must be dismissed on Merrill Lynch’s motion to dismiss. D. Land Sales Act Claims In their complaint, plaintiff class alleges a violation of the Federal Interstate Land Sales Full Disclosure Act (“Land Sales Act” or “the Act”), 15 U.S.C. § 1701, et seq. The Land Sales Act, section 1703(a)(2), makes it unlawful for any developer or agent to defraud to deceive a purchaser with respect to the sale of any nonexempt lot. Plaintiff class also alleges a violation of section 1707 for the failure to provide them with a property report prior to their signing of the Unit Sale Agreements and prior to their receipt of the deeds at the closing of sale and title on October 31, 1986. Defendants assert that sale of the Hotel Units is exempt from the Land Sales Act under section 1702(a)(2), which provides that the Act does not apply to “the sale or lease of land under a contract obligating the seller or lessor to erect [a residential, commercial, condominium, or industrial] building thereon within a period of two years.” Thus, the sale of the Hotel Units is exempt from the Land Sales Act if SSG is obligated to complete the hotel within two years of the sale of the units. Plaintiff class argues that the two-year period begins to run when the sale of the hotel interests occurred, and that the sale occurred when the purchasers signed the Unit Sale Agreements. But case law provides that the two-year period during which the seller must complete the building begins when the contract becomes legally binding upon both parties. The U.S. Housing and Urban Development (“HUD”) Guidelines provide that the section 1702(a)(2) exemption requires the seller to finish the building within two years from the date the purchaser signed the contract. Guidelines for Exemptions Available Under the Interstate Land Sales Full Disclosure Act, 44 Fed.Reg. 24,010, 24,012 (April 23, 1979). However, HUD Guidelines equate “signing” the contract with “entering a contract and incurri ng an obligation” for purposes of this exemption. In Winter v. Hollingsworth Properties, Inc., 777 F.2d 1444, 1449 (11th Cir.1985), the court held that “for the purposes of the ILSFDA [Land Sales Act] the ‘sale’ takes place at the time the purchaser signs the contract and incurs an obligation.” (emphasis added). See also Markowitz v. Northeast Land Co., 906 F.2d 100, 104 (3rd Cir.1990). (“[F]or the purposes of the Act the sale occurs when the purchaser signs the sale agreement and incurs an obligation.”) The position that the time of the “sale” for purposes of the Land Sales Act is the time the contract becomes legally binding is also supported by a reasonable construction of other provisions of the Act. Under section 1703(b), the purchaser can revoke the sale of a lot within 7 days of the signing of the contract. In addition, under section 1703(c), the purchaser can revoke the sale up to two years after the signing of the contract if the Act is violated. The phrase “signing of the contract” means the time that the purchaser becomes legally bound, or these revocation provisions would be meaningless. In this case, paragraph 4 of the Unit Sale Agreement provides that: Delivery of the hotel units will be made no more than two years after the Investor’s subscription for his hotel units becomes binding as such two year period is defined in the Federal Land Sales Full Disclosure Act and the regulations promulgated thereunder. Plaintiff class signed the Unit Sale Agreements between February and October of 1984. These agreements did not become legally binding until February 15, 1985, when the investors became irrevocably bound according to the terms of the Unit Sale Agreement. Because neither party was legally bound under the Unit Sale Agreements until February 15, 1985, there was no “sale” for the purposes of the Land Sales Act until that date. Because the Unit Sale Agreement obligated the Seller SSG to erect the hotel within two years of that date, this transaction is exempt from the Land Sales Act. Thus, plaintiff class’ Land Sales Act claims must be dismissed. IV. Contract Claims Against Merrill Lynch — Motions To Dismiss Plaintiff class’ First Amended Complaint raises two contract claims against Merrill Lynch. First, they allege that Merrill Lynch violated an implied covenant of good faith and fair dealing. Specifically, they claim that Merrill Lynch breached this covenant by wrongfully closing units into escrow on February 15, 1985 before the investors received notice of their mortgage approval from Dominion Financial & Investment Corp. (n/k/a Trustbank Mortgage Center, Inc.), and by wrongfully closing title on October 31, 1986 because SSG had not substantially completed the hotel. The implied covenant of good faith and fair dealing is not applicable in this case. It applies only “where a party to a contract makes the manner of its performance a matter of its own discretion”. Burkhardt v. City National Bank, 57 Mich.App. 649, 652, 226 N.W.2d 678 (1975). Where the contract itself defines the manner of performance, the performance is not subject to the implied covenant of good faith and fair dealing. General Aviation, Inc. v. Cessna Aircraft, 703 F.Supp. 637 (W.D.Mich.1988), aff'd in part and rev’d in part on other grounds, 915 F.2d 1038 (6th Cir.1990). In this case, Merrill Lynch did not exercise any discretion with respect to closing the units into escrow on February 15, 1985. The Unit Sale Agreement outlined the conditions that had to be met before investor funds could be released into escrow. Because Merrill Lynch did not have discretion regarding the performance of this agreement, the implied covenant of good faith and fair dealing is not applicable. The same reasoning applies with regard to the closing of title on October 31, 1986. It was Midwest Title Guaranty Company of Florida (“Midwest Title”), the escrow agent, who performed the duties related to the closing of title. Merrill Lynch did not exercise discretion in performing duties related to the closing of title. Thus, the implied covenant of good faith and fair dealing contract claim is dismissed. Second, plaintiff class alleges that Merrill Lynch entered into a joint venture with SSG, making it vicariously liable for their breaches of contract. The elements of a joint venture are: 1. An agreement reflecting an intention to engage in a joint venture; 2. a joint undertaking of; 3. a single project for profit; 4. a sharing of profits as well as losses; 5. a contribution of skills or property by the parties; and 6. a community of interest in and control over the subject matter of the enterprise. Pinnacle Port Community Association v. Orenstein, 872 F.2d 1536, 1539 (11th Cir.1989) (Fla. law). See also Meyers v. Robb, 82 Mich.App. 549, 557, 267 N.W.2d 450 (1978). I hold that there was no joint venture between Merrill Lynch and SSG. Where the parties’ agreement is embodied in a written contract, the parties’ intent is determined from that contract. Hyman v. Regenstein, 258 F.2d 502, 512 (5th Cir.1958) (Fla. law), cert. denied, 359 U.S. 913, 79 S.Ct. 589, 3 L.Ed.2d 575 (1959). See also Moore v. Campbell Foundry, 142 Mich.App. 363, 367, 369 N.W.2d 904 (1985). The agency agreement between Merrill Lynch and SSG does not indicate any intent on the part of either party to form a joint venture. To the contrary, the clear and unambiguous intent of the agency agreement is to make Merrill Lynch the exclusive sales agent of the offering. There is no evidence of an agreement between Merrill Lynch and SSG reflecting an intention to engage in a joint venture. Thus, the joint venture contract claim against Merrill Lynch is dismissed on its motion. V. Claims Against Trustbank Mortgage Center — Motion For Summary Judgment Plaintiff class argues they have adequately alleged and submitted evidence to support their claims of separate, independent tort and contract actions against Dominion Financial & Investment Corp., n/k/a Trustbank Mortgage Center, Inc., (“TMC”). TMC has moved for summary judgment on plaintiff class’ original complaint and first amended complaint. A. Contract Claims Plaintiff class contends that a contractual obligation existed between them and TMC regarding how and when the escrow would be closed. Pursuant to the Unit Sale Agreement and the PPM, each investor agreed to apply for financing with TMC for the purchase of his or her hotel interest. Accordingly, each investor submitted a mortgage loan application to TMC. To this point, plaintiff class’ argument is sound. However, they then take a remarkable leap and assert that pursuant to the PPM, TMC agreed that it would not fund investors’ mortgage loans until such time as all the closing requirements set forth in the PPM and escrow agreement were fully satisfied. What is missing, of course, is any allegation that TMC was a contractual party to the PPM or escrow agreement. They were not; and the leap from the mortgage loan applications and loan commitments — where TMC was a contractual party — to the PPM and escrow agreement — where TMC was not a contractual party, is one of faith only, and one that this court is unwilling to make. B. Tort Claims Plaintiff class also asserts they have valid claims against TMC for the torts of securities fraud, Land Sales Act fraud, common law fraud, negligent misrepresentation and conversion. The Land Sales Act fraud claim as to all defendants has already been addressed and dismissed. As for the remaining claims, there are equally insurmountable obstacles to plaintiffs’ recovery, and I now turn my attention to the principal one, the D’Oench, Duhme doctrine. C. The D’Oench Duhme Doctrine Simply put, D’Oench and its progeny completely bar plaintiff class’ claims against TMC. In D’Oench, Duhme v. FDIC, 315 U.S. 447, 62 S.Ct. 676, 86 L.Ed. 956 (1942), a borrower gave a promissory note to a bank, but received no loan in return. The parties orally agreed the bank would not enforce the note. When the bank failed, the Federal Deposit Insurance Corporation (“FDIC”) acquired the note and attempted to enforce it. The borrower defended on the basis of lack of consideration. The U.S. Supreme Court held the borrower could not raise this defense against FDIC because the “secret agreement” was not part of the bank’s records. The Court held as a matter of public policy that FDIC must be able to rely on a bank’s records to make quick, accurate evaluations of a bank’s financial condition. See Langley v. FDIC, 484 U.S. 86, 108 S.Ct. 396, 98 L.Ed.2d 340 (1987). This ability is essential to properly regulate and safeguard the nation’s banking system. Id. The D’Oench doctrine bars borrowers from asserting virtually any claim arising out of agreements not appearing in a contract the bank executed and maintained in its records. See Beighley v. FDIC, 868 F.2d 776 (5th Cir.1989). The doctrine applies whether or not the borrower intended to deceive banking authorities or acted in good faith. See FDIC v. Investors Associates X, 775 F.2d 152 (6th Cir.1985). The doctrine even applies if the bank examiners had notice of the alleged agreement prior to taking control of the bank. See Hall v. FDIC, 920 F.2d 334 (6th Cir.1990). Finally, the doctrine applies to agreements made with bank subsidiaries, such as TMC, as well as with those made with banks themselves. See Astrup v. Midwest Federal Savings Bank, 886 F.2d 1057 (8th Cir.1989); Victor Hotel v. FCA Mortgage Corp., 928 F.2d 1077 (11th Cir.1991). Plaintiff class’ claims all rely on representations, omissions, agreements and/or undertakings allegedly emanating from sources outside of TMC’s express contract documents, and therefore fall squarely within the D’Oench prohibition. There is no express, written agreement establishing TMC’s involvement with a “joint venture.” See Savers Federal Savings & Loan Assn. v. Amberley Huntsville, 934 F.2d 1201 (11th Cir.1991). Therefore, this claim must fail. Neither is there an express, written agreement between TMC and investors (now the plaintiff class) regarding “how and when the escrow would be closed.” Investors here rely on the PPM and the escrow agreement, agreements to which TMC was not a party. They also argue that TMC has within its records numerous documents (such as credit applications, sales materials, offering documents, construction loan documents, etc.) that, “when viewed together, will satisfy the requirements ... and/or eliminate D’Oench 'secret’ agreement considerations.” Plaintiffs’ Combined Cross-Motion for Summary Judgment and Response to Defendants’ Motions To Dismiss and Motions for Summary Judgment, pp. 117-118. However, the obligations allegedly flowing from these documents are not clearly evidenced in any express, written agreement, as D’Oench requires, but at best can only be inferred. These claims must therefore fail as well. See Beighley, 868 F.2d at 784; Bell & Murphy and Assoc. v. Inter First Bank Gateway, N.A., 894 F.2d 750 (5th Cir.1990), cert. denied, — U.S. —, 111 S.Ct. 244, 112 L.Ed.2d 203 (1990); Fair v. NCNB Texas National Bank, 733 F.Supp. 1099 (N.D.Tex.1990). Plaintiff class’ fraud claims can be easily dispensed with as well. They all boil down to a contention that TMC falsely warranted the hotel as complete when it funded the investor loans. However, such a representation nowhere exists on any TMC contract. In Hall, supra, the plaintiffs had obtained a loan to finance the construction of a motel. A dispute arose, and plaintiffs sued the bank for breach of the loan agreement, alleging the bank’s funding of the loan constituted a representation that the terms of the loan agreement had been satisfied. The U.S. Court of Appeals for the Sixth Circuit held that the plaintiffs were precluded from “presenting proof of any representations made by [the bank] beyond the terms of the loan agreement.” Hall, 920 F.2d at 338. See also Beighley, supra; Langley, supra; FDIC v. Cardinal Oil Well Servicing Co., Inc., 837 F.2d 1369 (5th Cir.1988); FSLIC v. Lafayette Investment Properties, Inc., 855 F.2d 196 (5th Cir.1988). In an effort to salvage their tort claims against TMC, plaintiff class argued at the June 25, 1992 hearing, and in their most recent brief, that D’Oench is inapplicable because TMC tortiously converted, by fraud or theft, plaintiff class’ mortgages and notes from escrow, and thus never acquired legal title to the instruments. Plaintiff class argued that when TMC funded the investors’ mortgages in October 1986, it really was not funding those mortgages; that, instead, it was fulfilling an agreement it had to take out SSG’s construction loan with a permanent loan. Plaintiff class asserted at the June 25,1992 hearing that they had in their possession an express, written TMC document evidencing this scheme. I gave them an additional two weeks to produce this document for my inspection; but, it now appears that no such document exists. In the absence of such a document, their conversion claim still relies on alleged misrepresentations, omissions, side agreements and/or conspiratorial undertakings between TMC and other defendants that render plaintiff class’ notes and mortgages something other than what they appear to be — a claim clearly barred by D’Oench, no matter how labeled. Accordingly, TMC’s motions for summary judgment on plaintiff class’ original complaint and First Amended Complaint must be granted. VI. Winsor/Faricy Architects, Inc. and M.A. Mortenson Company Plaintiff class’ claims against both Winsor/Faricy and Mortenson must be stayed to permit arbitration pursuant to Sections 2 and 3 of the Federal Arbitration Act, 9 U.S.C. §§ 2-3. If, as plaintiff class alleges, they are direct third-party beneficiaries of both the construction contract between SSG and Mortenson, and the architect contract between SSG and Winsor/Faricy, they are bound as a matter of law by the arbitration clauses contained in those respective contracts (Article 16.1 of the construction contract and Article 9.1 of the architect contract). See Morrie Mages and Shirlee Mages Foundation v. Thrifty Corp., 916 F.2d 402 (7th Cir.1990); Interpool Limited v. Through Transport Mutual Ins. Assoc. Ltd., 635 F.Supp. 1503 (S.D.Fla.1985); Laborers International Union of North America v. HSA Contractors, Inc., 728 F.Supp. 519 (E.D.Wis.1989). Thereafter, if necessary, this court may review and confirm, modify, correct or vacate the arbitrators’ award. 9 U.S.C. §§ 9-11. VII. Midwest Title Guaranty Company Motion Midwest Title Guaranty Company of Florida (“Midwest”) has moved to drop itself as a misjoined party, while plaintiff class has moved to join Midwest as a defendant. The . circumstances surrounding these motions are as follows. When this litigation began in August, 1989, Midwest was not a named defendant. I issued the Order authorizing plaintiff class to file an amended complaint on January 7, 1991. That Order did not authorize plaintiff class to add additional party defendants, nor did plaintiff class seek leave from this court to add Midwest. Nevertheless, in plaintiff class’ amended complaint, Midwest was named as a defendant. Plaintiff class argues that they properly added Midwest as a defendant without an order of this court pursuant to Federal Rule of Civil Procedure (“FRCP”) 15(a), which provides: A party may amend the party’s pleading once as a matter of course at any time before a responsive pleading is served____ However, they admit that at least one responsive pleading had been served by the time their amended complaint was filed. There is no alternative but to hold that Midwest was not properly joined pursuant to FRCP 15(a). Plaint