Salameh v. Tarsadia Hotel

726 F.3d 1124 (9th Cir. 2013)

Facts

P brought a putative class action against Tarsadia (D) developer, operator, broker, and related entities for the sale and management of condominiums in the Hard Rock Hotel. The Hotel is a twelve-story, mixed-use development with commercial space and 420 condominium units. The public was offered the opportunity to buy condominiums in the Hotel. Ps each did so and later signed a rental-management agreement. P intended to rent out the condo to third parties. Over a year after the purchase P entered into a management contract with D. Under the management agreement, D was for marketing, renting, and managing the units involved. Ps contend that the Purchase Contract they executed not only sold them their condominiums but also obligated them to enter into the Rental Management Agreement with D. Ps alleged that the asset sale and management agreement together made the entire transaction an investment contract and in violation security regulations. Ds moved to dismiss the suit. The court granted the motion and Ps appealed.