Salameh v. Tarsadia Hotel
9th Circuit
726 F.3d 1124 (2013)
Tamer Salameh (plaintiff) bought condos at the Hard Rock Hotel San Diego from 5th Rock, LLC (defendant) intending to rent them out, and about a year later separately signed a rental management agreement with Tarsadia Hotels (defendant) giving Tarsadia exclusive control over marketing, managing, and operating the units. Salameh sued, alleging the condo sale plus rental agreement together formed an unregistered investment contract in violation of securities laws, since he had no control over his unit and any profit depended on Tarsadia's efforts; the district court granted the defendants' motion to dismiss, and Salameh appealed.
Whether a real estate transaction can constitute a sale of securities if the sale does not include other agreements promising post-sale income to the buyer.