 Salameh
v. Tarsadia Hotels: An Important Legal Case for Condominium-Hotel
Developers is in the Hands of the Ninth Circuit Court of Appeals, by Jason Taketa
Condominium
hotels are an integral component of the hospitality industry, serving
both the needs of project developers, and the desire of real estate
buyers to own unique vacation properties. In the past decade,
condominium hotel projects became increasingly common throughout the
country. However, in the wake of the financial crisis of 2008 and the
accompanying downturn in commercial and residential real estate, there
have been numerous lawsuits filed by condominium hotel buyers seeking to
rescind their purchases, often arguing that the condominium hotel units
were improperly sold as "securities" under federal and state securities
laws.
To date, based on
current legal precedent, plaintiffs in these cases have had little
success persuading trial courts to agree with their securities law
arguments. However, Salameh v. Tarsadia Hotels, which is
currently pending in the United States Court of Appeals for the Ninth
Circuit, is the first of these cases to reach the federal appeals level.
Although there are many different ways in which the Ninth Circuit
could rule, there is a risk that the Ninth Circuit will issue a broad
opinion with far reaching ramifications on the resort property industry
as a whole.
In this article,
we summarize the current state of the securities laws as they apply to
condominium hotels, as well as the basic issues under consideration in
Salameh. Finally, we analyze the potential ramifications of an adverse
decision by the Ninth Circuit and our thoughts on the case's impact on
the hospitality industry going forward. Read more
The Lessons of Sheraton v. Castillo Grand, By Irvin W. Sandman and Russell C. Savrann, Members of the Global Alliance of Travel, Tourism, & Hospitality Attorneys
Castillo Grand
developed a 5 diamond ocean-front resort and residences project in Fort
Lauderdale and sought to flag it as a St. Regis. Castillo entered into
the usual package of branded management agreements with Starwood’s
management subsidiary, Sheraton Operating Corporation. On November 18,
2011, after 5 years of litigation between Castillo and Sheraton, the
New York state court in Westchester County entered its 83 page
decision. The result: the court ordered judgment for Castillo and
against Sheraton for over $30 million
What happened in the case and what lessons can be learned? Read more
Industry Resources
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