Beaver v. Tarsadia Hotels

Summarized by:

  • Court: 9th Circuit Court of Appeals Archives
  • Area(s) of Law: Civil Procedure
  • Date Filed: 03-10-2016
  • Case #: 15-55106
  • Judge(s)/Court Below: Circuit Judge Smith for the Court; Circuit Judges Watford and Friedland
  • Full Text Opinion

The presumption that state law should not be superseded by federal law can be overcome through conflict preemption if the state law hinders the full purposes and objectives of Congress.

A group of purchasers of non-residential condominium units in the Hard Rock Hotel & Condominium Project brought a class action suit against a group of developers who allegedly sold the condominium units, for violating California’s Unfair Competition Law (“UCL”). The purchasers claimed that the developers did not make the proper disclosures in selling the units, and therefore violated the requirements of the Interstate Land Sales Full Disclosure Act (“ILSA”). The developers responded by contending that (1) ILSA’s statute of limitations barred the UCL claim; (2) ILSA did not apply because the condominium units do not qualify as “lots” under ILSA; (3) the units were exempt under ILSA’s Improved Lot Exemption; and (4) an amendment to ILSA nullified the developers’ liability. The district court rejected those four arguments and gave partial summary judgment in favor of the purchasers. On appeal, the Ninth Circuit held that the UCL’s four-year statute of limitations applied due to the developers’ failure to overcome the strong presumption against preemption, and ILSA’s three-year statute of limitations, which did not bar the purchasers’ UCL claim. The panel next held under 12 C.F.R. § 1010.1(b), a lot refers to “any portion, piece, division, unit, or undivided interest in land if that interest includes the right to exclusive use of the land.” Because the purchasers had exclusive repeated use of their units, the condominiums therefore qualified as lots. Third, the panel held that the condominium units were not exempt under ILSA’s Improved Lot Exemption because of a pre-sale contingency clause that did not obligate the seller to complete construction within the time limit. Finally, the panel concluded by holding that the amendment to ILSA was passed before the beginning of these proceedings, and therefore does not operate retroactively. AFFIRMED.

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