Salameh v. Tarsadia Hotel, No. 11-55479 (9th Cir. 2013)
Annotate this CasePlaintiffs, purchasers of condominiums in the Hard Rock Hotel San Diego, filed a putative class action suit under the Securities Exchange Act of 1933, 15 U.S.C. 78a et seq., and California state law, against the Hotel's developer and others. At issue on appeal was whether plaintiffs have alleged the sale of a security based on their purchase of the condominiums. The court affirmed the judgment of the district court, holding that plaintiffs have not adequately alleged facts showing that they were offered the real-estate and rental-management contracts as a package. Plaintiffs did not allege facts showing that they were induced to buy the condominiums by the rental-management agreement. Accordingly, plaintiffs have not alleged the sale of a security and plaintiffs' claims were properly dismissed.
Court Description: Securities. Affirming the dismissal on the pleadings of a putative class action under the Securities Act of 1933, the Securities Exchange Act of 1934, and California state law, the panel held that the plaintiffs failed to allege the sale of a security based on their purchase of condominiums in the Hard Rock Hotel in San Diego. The panel held that the plaintiffs did not adequately allege facts showing that they were offered real-estate and rental- management contracts as a package. In addition, they did not allege facts showing that they were induced to buy the condominiums by the rental-management agreement. Accordingly, these transactions did not constitute the sale of a security, and the plaintiffs failed to state a claim for relief under federal or state securities law. The panel also affirmed the dismissal of common-law fraud claims.
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