Tamer Salameh v. Tarsadia Hotel

A transaction that looks nothing like a sale of stock and involving such diverse items as citrus groves and vacation homes may qualify as a sale of a security under federal law. See SEC v. W.J. Howey Co., 328 U.S. 293 , 66 S.Ct. 1100 , 90 L.Ed. 1244 (1946); Hocking v. Dubois, 885 F.2d 1449 (9th Cir.1989) (en bane). Here, we must decide whether Plaintiffs-Appellants have alleged the sale of a security based on their purchase of condominiums in the Hard Rock Hotel San Diego. We hold that Plaintiffs have not adequately alleged facts showing that they were offered the real-estate and rental-management contracts as a package. And they have not alleged facts showing that they were induced to buy the condominiums by the rental-management agreement. For these reasons, Plaintiffs have not alleged the sale of a security, and so all of Plaintiffs’ claims were properly dismissed.

I

Plaintiffs-Appellants, purchasers of condominiums in the Hard Rock Hotel San Diego, brought a putative class action against the Hotel’s developer, operator, broker, and related entities. Because the district court dismissed the complaint on the pleadings, the facts come from the second amended complaint,…