Dean Beaver v. Tarsadia Hotels

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DEAN BEAVER, Husband; LAURIE No. 15-55106
BEAVER, Wife; STEVEN ADELMAN,
an individual; ABRAM AGHACHI, an D.C. No.
individual; DINESH GAUBA, an 3:11-cv-01842-
individual; KEVIN KENNA, husband GPC-KSC
and wife, on behalf of themselves
and all others similarly situated;
VERONICA KENNA, husband and OPINION
wife, on behalf of themselves and all
others similarly situated,
Plaintiffs-Appellees,
v.
TARSADIA HOTELS, a California
corporation; TUSHAR PATEL, an
individual; B.U. PATEL, an
individual; GREGORY CASSERLY, an
individual; 5TH ROCK LLC, a
Delaware limited liability company;
MKP ONE, LLC, a California limited
liability company; GASLAMP
HOLDINGS, LLC, a California limited
liability company,
Defendants-Appellants.
Appeal from the United States District Court
for the Southern District of California
Gonzalo P. Curiel, District Judge, Presiding
2 BEAVER V. TARSADIA HOTELS
Argued and Submitted
January 4, 2016—Pasadena, California
Filed March 10, 2016
Before: MILAN D. SMITH, JR., PAUL J. WATFORD,
and MICHELLE T. FRIEDLAND, Circuit Judges.
Opinion by Judge Milan D. Smith, Jr.
SUMMARY*
California Unfair Competition Law
The panel affirmed the district court’s partial grant of
summary judgment in favor of purchasers of non-residential
condominiums who claimed that a group of developers and
their agents or affiliates committed unlawful business
practices in violation of California’s Unfair Competition Law
(UCL) by failing to make certain disclosures in the course of
sale transactions, as required by the Interstate Land Sales Full
Disclosure Act (ILSA).
Defendants conceded that they failed to comply with
ILSA’s disclosure requirements, but raised a series of
affirmative defenses, which the district court rejected.
The panel held that the UCL’s four-year statute of
limitations applied, and was not preempted, and ILSA’s
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
BEAVER V. TARSADIA HOTELS 3
three-year statute of limitations did not bar plaintiffs’ UCL
claim.
The panel rejected defendants’ argument that ILSA did
not apply because plaintiffs’ condominium units were not
qualifying “lots” under ILSA. Guided by agency
interpretations of ILSA, the panel concluded that plaintiffs
had “exclusive repeated use” of their units, which therefore
qualified as “lots.”
The panel held that the condominium units were not
exempt under ILSA’s Improved Lot Exemption.
The panel held that a 2014 amendment to ILSA, passed
after the commencement of these proceedings, and exempting
condominium sales from ILSA’s disclosure requirements, did
not operate to extinguish defendants’ liability. The panel held
that the amendment was a substantive change in the law,
rather than a clarification, and did not operate retroactively.
COUNSEL
Frederick H. Kranz (argued) and Lynn Therese Galuppo,
Cox, Castle & Nicholson, LLP, Irvine, California; David
Wesley Moon, Stroock & Stroock & Lavan LLP, Los
Angeles, California, for Defendants-Appellants.
Michael Rubin (argued), Altshuler Berzon LLP, San
Francisco, California; Donald E. Chomiak, Talisman Law,
P.C., Glendale, California; Tyler R. Meade, The Meade Firm
P.C., Berkeley, California; Michael L. Schrag, Gibbs Law
Group LLP, Oakland, California, for Plaintiffs-Appellees.
4 BEAVER V. TARSADIA HOTELS
OPINION
M. SMITH, Circuit Judge:
Plaintiffs Dean Beaver, Laurie Beaver, Steven Adelman,
Abram Aghachi, Dinesh Gauba, Kevin Kenna, and Veronica
Kenna are the purchasers of non-residential condominium
units in San Diego’s Hard Rock Hotel & Condominium
Project (the Hard Rock Project). Plaintiffs brought this
putative class action against Defendants,1 a group of
developers and their agents or affiliates who allegedly
participated in the sale of the condominium units. Plaintiffs
claimed, inter alia, that Defendants’ business practices
violated California’s Unfair Competition Law (UCL), Cal.
Bus. & Prof. Code § 17200 et seq.
Specifically, Plaintiffs alleged that Defendants failed to
make certain disclosures in the course of the sale transactions,
as required by the Interstate Land Sales Full Disclosure Act
(ILSA), 15 U.S.C. § 1701 et seq., which applies in this case
by operation of the UCL’s prohibition against “unlawful”
business practices. Cal. Bus. & Prof. Code §§ 17200.
Defendants concede that they failed to comply with
ILSA’s disclosure requirements. They instead raise a series
of affirmative defenses, contending that (1) ILSA’s statute of
limitations, 15 U.S.C. § 1711, bars Plaintiffs’ UCL claim; (2)
ILSA does not apply because Plaintiffs’ condominium units
1
Defendants include the following business entities and individuals: 5th
Rock, LLC; Tarsadia Hotels; MKP One, LLC (MKP); Gregory Casserly;
Tushar Patel; B.U. Patel; and Gaslamp Holdings. Plaintiffs, however, did
not seek summary judgment against Defendants Gaslamp Holdings, LLC,
or B.U. Patel with respect to the issues now on appeal.
BEAVER V. TARSADIA HOTELS 5
are not considered qualifying “lots” under ILSA, see 12
C.F.R. § 1010.1(b); (3) the condominium units are exempt
under ILSA’s Improved Lot Exemption, 15 U.S.C.
§ 1702(a)(2); and (4) a 2014 amendment to ILSA, 15 U.S.C.
§ 1702(a)(2), passed after the commencement of the current
proceedings, operates to extinguish Defendants’ liability in
connection with the condominium sales.
The district court rejected each of these four arguments
and granted partial summary judgment in favor of Plaintiffs
on the portion of their UCL claim that was premised on the
existence of an “unlawful” business practice under ILSA.
Nonetheless, the district court certified these four issues for
interlocutory appeal, pursuant to 28 U.S.C. § 1292(b). We
granted Defendants’ petition for interlocutory appeal, and we
now affirm the district court’s partial summary judgment
order with respect to the certified issues.2
2
Defendants also claim that the district court’s summary judgment order
was in error with respect to Defendants MKP, Gregory Casserly, and
Tushar Patel because they did not exercise the requisite control over the
alleged unlawful conduct. This issue was not certified by the district court
for interlocutory appeal. While we retain jurisdiction to review claims not
certified by the district court, see Yamaha Motor Corp. v. Calhoun,
516 U.S. 199, 204 (1996), we decline Plaintiffs’ invitation to address this
issue on interlocutory appeal. Instead, we direct the district court to
examine the fact-bound question of UCL liability with respect to
Defendants MKP, Tushar Patel, and Gregory Casserly when it resumes
jurisdiction over the proceedings following the conclusion of this appeal.
See Merritt v. Countrywide Fin. Corp., 759 F.3d 1023, 1034 (9th Cir.
2014). Furthermore, Defendants contend, and Plaintiffs agree, that the
district court’s entry of summary judgment against Defendants B.U. Patel
and Gaslamp Holdings, LLC, was in error because Plaintiffs did not move
for partial summary judgment against these two entities. The district court
has not had the opportunity to rectify any alleged error in the liability of
these Defendants because it denied Defendants’ motion to reconsider
6 BEAVER V. TARSADIA HOTELS
FACTS AND PRIOR PROCEEDINGS
A. The Parties
The Hard Rock Project, located at 205 Fifth Avenue in
downtown San Diego, is a mixed-use development that
includes the Hard Rock Hotel and 420 commercial
condominium units. Plaintiffs are a group of individual
purchasers of non-residential condominium units in the Hard
Rock Project. Defendant 5th Rock, LLC (5th Rock) was the
developer of the condominium units and sold these units to
Plaintiffs. Defendant MKP operated as the managing member
of 5th Rock and signed the condominium purchase contracts
on 5th Rock’s behalf. 5th Rock enlisted the assistance of
Defendant Tarsadia Hotels (Tarsadia) in the development and
subsequent management and operation of the properties.
Defendant Greg Casserly served as Tarsadia’s president, and
Defendant Tushar Patel served as Tarsadia’s chairman.
B. The Purchase Transactions
Plaintiffs purchased the condominium units from 5th
Rock before construction of the Hard Rock Project was
completed. The condominium purchase contracts were signed
in May 2006 by one set of Plaintiffs, and in December 2006
by the remaining Plaintiffs. These purchase contracts called
for estimated completion dates between August 2007 and
September 2007, and a closing date of no later than
December 29, 2007. In addition, the purchase contracts
contained clauses specifying that “except for delays caused
by circumstances beyond Seller’s reasonable control or the
pending the outcome of this interlocutory appeal. Accordingly, we direct
the district court to also resolve this issue on remand.
BEAVER V. TARSADIA HOTELS 7
failure to complete due to a permitted excuse, Seller shall use
commercially reasonable efforts to complete the construction
of the Unit by the Estimated Completion Date.”
One of the “permitted excuses” to timely completion was
contained in a pre-sale contingency clause, which gave
Defendants the “unilateral right” to terminate the contract if
less than 75% of the condominium units were sold or under
contract by the closing date. By December 2006, more than
75% of the condominium units at the Hard Rock Project were
under contract.
The purchase contracts also required that Plaintiffs
execute a unit maintenance and operation agreement (UMA)
as part of the sale transaction. The UMA contained several
restrictions on Plaintiffs’ use of the units. The UMA limited
Plaintiffs’ rights to occupy the condominium units to a
maximum of twenty-eight days per year. Moreover, the UMA
mandated that the properties could only be resold as non-
residential condominium units, required that the properties be
managed as part of the Hard Rock Hotel, and granted the
Hard Rock Hotel a right of first refusal in the event that a
Plaintiff wished to sell his condominium unit. Plaintiffs also
agreed that the hotel would control the room furnishings and
other routine housekeeping and maintenance services in the
units.
C. Post-Transaction Events
Separately, in 2007, Plaintiffs entered into Rental
Management Agreements (RMAs) that appointed Tarsadia as
property manager with the “sole and exclusive authority to
manage, operate, market and rent” the condominium units.
The terms of the RMA gave Tarsadia the right to “enter the
8 BEAVER V. TARSADIA HOTELS
Unit, without Notice to Owner, from time to time, and at any
time, for any purpose set forth in this Agreement.”
Construction of the condominium units was completed
around October of 2007. Between October and December of
2007, Plaintiffs closed escrow on their respective
condominium units. Plaintiffs contend that they would have
cancelled the purchase contracts prior to closing escrow had
Defendants complied with their disclosure obligations and
made Plaintiffs aware of their statutory rescission rights
under ILSA.
D. Procedural History
On May 18, 2011, Plaintiffs brought a putative class
action in California state court against Defendants, alleging
violations of federal and state laws, including the UCL, in
connection with the sale of the condominium units.
Defendants later removed the action to federal court in the
Southern District of California under the Class Action
Fairness Act, 28 U.S.C. § 1332(d).
Plaintiffs’ claims were predicated, in part, on allegations
of unlawful conduct through Defendants’ failure to comply
with ILSA. The parties filed cross-motions for partial
summary judgment on those UCL claims arising from
Defendants’ failure to comply with ILSA’s disclosure
requirements. The district court initially granted summary
judgment to Defendants on the basis that Plaintiffs’ UCL
claim was time-barred, but later reversed its holding after
Plaintiffs filed a motion for reconsideration. The district court
ultimately issued a new order, allowing Plaintiffs’ UCL claim
to proceed and awarding partial summary judgment in
Plaintiffs’ favor.
BEAVER V. TARSADIA HOTELS 9
In 2014, while a motion for reconsideration from
Defendants was pending before the district court, Congress
passed an amendment to ILSA (the 2014 Amendment),
codified at 15 U.S.C. § 1702(b)(9). This amendment exempts
condominium sales from the same ILSA disclosure
requirements upon which Plaintiffs had predicated their UCL
claim. After additional briefing from the parties, the district
court concluded that the 2014 Amendment had no
retrospective application in the present action.
Nonetheless, the district court certified the issue, as well
as other issues of law involved in its partial summary
judgment order, for interlocutory appeal pursuant to
28 U.S.C. § 1292(b). We granted Defendants’ petition for
interlocutory appeal.
STANDARD OF REVIEW
We review a district court’s grant of summary judgment
de novo. See Orr v. Bank of Am., NT & SA, 285 F.3d 764, 772
(9th Cir. 2002). We view the evidence in the light most
favorable to the non-moving party. Id. Where disputed facts
exist, the plaintiff’s representations of these facts are assumed
to be correct for the purposes of deciding the summary
judgment motion. Id. The district court’s determinations on
questions of law are reviewed de novo. See Highmark Inc. v.
Allcare Health Mgmt. Sys., Inc., 134 S. Ct. 1744, 1748
(2014).
10 BEAVER V. TARSADIA HOTELS
DISCUSSION
I. The Statute of Limitations
The UCL is a California consumer protection statute that
broadly proscribes the use of any “unlawful, unfair or
fraudulent business act or practice.” Cal. Bus. & Prof. Code.
§ 17200. The UCL operates as a three-pronged statute: “Each
of these three adjectives [unlawful, unfair, or fraudulent]
captures a ‘separate and distinct theory of liability.’” Rubio v.
Capital One Bank, 613 F.3d 1195, 1203 (9th Cir. 2010)
(quoting Kearns v. Ford Motor Co., 567 F.3d 1120, 1127 (9th
Cir. 2009)). Plaintiffs alleged theories of liability under each
of the three prongs, but only moved for partial summary
judgment on the UCL’s “unlawful” prong. The UCL’s
“unlawful” prong looks to other sources of substantive law,
such as ILSA, to proscribe the kinds of unlawful business
practices punishable under the statute. See Prakashpalan v.
Engstrom, Lipscomb and Lack, 167 Cal. Rptr. 3d 832, 855–56
(Cal. Ct. App. 2014). In doing so, the UCL “borrows
violations of other laws and treats them as unlawful practices
that the unfair competition law makes independently
actionable.” Cel–Tech Commc’ns, Inc. v. L.A. Cellular Tel.
Co., 973 P.2d 527, 539–40 (Cal. 1999) (citations omitted).
A. State or Federal Law?
As a threshold matter, the parties dispute the appropriate
limitations period to be applied to a UCL claim premised on
a violation of federal law, specifically in this case ILSA.
California courts have adopted two principles that inform our
analysis. First, as a general matter, the UCL statute of
limitations will apply to a UCL claim, even when that claim
is based on an underlying law with its own separate statute of
BEAVER V. TARSADIA HOTELS 11
limitations. See Cortez v. Purolator Air Filtration Prods. Co.,
999 P.2d 706, 716 (Cal. 2000).3 Second, a UCL claim
generally accrues when each of the elements of the cause of
action is satisfied. See Aryeh v. Canon Bus. Solutions, Inc.,
292 P.3d 871, 878 (Cal. 2013).
In this case, the district court granted partial summary
judgment on Plaintiffs’ claim under the “unlawful” prong of
the UCL. Plaintiffs’ claim under this particular prong of the
statute is predicated on Defendants’ failure to comply with
ILSA’s disclosure requirements, set forth in 15 U.S.C.
§§ 1703(a)(1)(A), 1703(a)(1)(B), and 1703(d).4 ILSA
includes a three-year statute of limitations, which accrues
from the date the purchase contract is signed. 15 U.S.C.
§ 1711. Were ILSA’s statute of limitations to apply to
Plaintiffs’ UCL claim, their claim would be time-barred
because it was brought on May 18, 2011, approximately five
years after the signing of the purchase contracts in May and
December of 2006. The UCL, however, includes a more
generous four-year statute of limitations. Because Plaintiffs
have pled a claim under the UCL, this four-year period
applies. Cal. Bus. & Prof. Code § 17208; see Cortez, 999 P.2d
at 716.
Importantly, the UCL statute of limitations is “governed
by common law accrual rules.” Aryeh, 292 P.3d at 878.
3
Although the parties were unable to point us to a case that expressly
discussed whether this principle extends to UCL claims predicated on
violations of federal law, we read Cortez as announcing a general rule for
all UCL claims regardless of the source of the law allegedly violated.
4
For brevity, we will refer to Plaintiffs’ UCL claim brought under the
“unlawful” prong of the statute as “the UCL claim.”
12 BEAVER V. TARSADIA HOTELS
Common law rules provide that a cause of action ordinarily
accrues when each of the elements of the cause of action
(wrongdoing, causation, and harm) has been satisified. See id.
at 879. Therefore, under the UCL’s statute of limitations, the
cause of action accrued when the harm was completed.
Plaintiffs allege that the harm became complete in the fall of
2007 when they were required to close escrow on their
respective properties. Because Plaintiffs suffered cognizable
financial harm upon the closing of escrow, we find this
calculation of the accrual date to be sound. Although the
alleged wrongdoing, i.e. Defendants’ failure to disclose,
occurred at or around the date of contract signing, the
financial harm—which gives standing to Plaintiffs under the
UCL—occurred at a later date. Under the UCL, only the
government or “a person who has suffered injury in fact and
has lost money or property as a result” may bring a claim.
Cal. Bus. & Prof. Code § 17204. Plaintiffs’ UCL claim hinges
on their lack of awareness of their two-year recission right
under 15 U.S.C. § 1703(c), a right which was not disclosed to
Plaintiffs prior to closing escrow on their units.
Particularly in light of the remedial purposes of the UCL,
we agree that Plaintiffs’ claim accrued at the time of “injury
in fact”—and not upon the commission of a technical
violation of the underlying ILSA disclosure provision. As the
appropriate statute of limitations and the accrual date are part
and parcel of the same procedural determination, our
resolution of both issues is drawn from the same body of
law—here, state law. As the California Supreme Court
recently confirmed in Rose v. Bank of America, N.A., a UCL
claim based on violations of a federal statute is
“independently actionable” under the UCL, which contains
“its own distinct and limited equitable remedies.” 304 P.3d
181, 185 (Cal. 2013). Because the UCL’s four-year statute of
BEAVER V. TARSADIA HOTELS 13
limitations and its accompanying accrual rules apply, the
district court properly concluded that Plaintiffs’ UCL claim
is not time-barred.
B. Federal Preemption of the State Statute of
Limitations
The remaining question is whether the application of the
UCL’s more generous statute of limitations period is
preempted by federal law. The Supremacy Clause provides
the constitutional foundation for federal authority to preempt
state law. See U.S. Const. art. VI, cl. 2 (federal law “shall be
the supreme Law of the Land . . . any Thing in the
Constitution or Laws of any State to the Contrary
notwithstanding.”); Kurns v. R.R. Friction Prods. Corp.,
132 S. Ct. 1261, 1265 (2012). Preemption of state law, by
operation of the Supremacy Clause, can occur in one of
several ways: express, field, or conflict preemption. Kurns,
132 S. Ct. at 1265–66. Defendants have argued that the
UCL’s statute of limitations presents a case of conflict
preemption. Conflict preemption occurs when a state law
conflicts with federal law, such that the state law “stands as
an obstacle to the accomplishment and execution of the full
purposes and objectives of Congress.” Crosby v. Nat’l
Foreign Trade Council, 530 U.S. 363, 372–73 (2000)
(quoting Hines v. Davidowitz, 312 U.S. 52, 67 (1941)).
Our preemption analysis is driven by the presumption that
“the historic police powers of the States were not to be
superseded by the Federal Act unless that was the clear and
manifest purpose of Congress.” Wyeth v. Levine, 555 U.S.
555, 565 (2009) (quoting Medtronic, Inc. v. Lohr, 518 U.S.
470, 485 (1996)). This presumption carries the “greatest
force” when federal legislation encroaches on an area
14 BEAVER V. TARSADIA HOTELS
traditionally occupied by the states, such as the field of
property law. CTS Corp. v. Waldburger, 134 S. Ct. 2175,
2189 (2014). “The case for federal pre-emption is particularly
weak where Congress has indicated its awareness of the
operation of state law in a field of federal interest, and has
nonetheless decided to stand by both concepts and to tolerate
whatever tension there [is] between them.” Wyeth, 555 U.S.
at 575 (alteration in original) (quoting Bonito Boats v.
Thunder Craft Boats, Inc., 489 U.S. 141, 166–67 (1989)).
Accordingly, “when the text of a pre-emption clause is
susceptible of more than one plausible reading, courts
ordinarily ‘accept the reading that disfavors pre-emption.’”
CTS Corp., 134 S. Ct. at 2188 (quoting Altria Group, Inc. v.
Good, 555 U.S. 70, 77 (2008)).
In making their conflict preemption argument, Defendants
portray ILSA’s statute of limitations, 15 U.S.C. § 1711, as a
statute of repose, whose purpose was to shield developers and
their agents from liability after a strict cut-off period of three
years. Unlike a statute of limitations, a statute of repose
reflects a congressional “judgment that a defendant should be
free from liability after the legislatively determined period of
time.” See CTS Corp, 134 S. Ct. at 2183 (internal quotations
omitted).
In support of this argument, Defendants point to a
distinction between the language of ILSA’s statute of
limitations for disclosure violations, such as the violations
alleged in this case, and ILSA’s separate statute of limitations
governing claims alleging fraudulent activity. The text of the
limitations statute for ILSA disclosure violations provides
that “[n]o action shall be maintained . . . more than three
years after the date of signing of the contract of sale or lease.”
15 U.S.C. § 1711(a)(1). The statute of limitations for an ILSA
BEAVER V. TARSADIA HOTELS 15
claim alleging fraudulent activity, in contrast, accrues at the
time of discovery of such activity. 15 U.S.C. § 1711(a)(2).
This statutory distinction does not indicate that Congress
wished to turn ILSA’s limitations period into a statute of
repose for disclosure violations.
Rather, this distinction merely suggests that Congress
wished to provide a different accrual period to ILSA’s fraud-
based claims than to ILSA’s disclosure provisions. This
choice is hardly unusual in light of the fact that fraud, by its
very nature, begins unknown to the victim. See Cal. Civ.
Proc. Code § 338(d) (fraud claims do not accrue “until the
discovery, by the aggrieved party, of the facts constituting the
fraud”). Given that we read ILSA as having a limitations
period for disclosure violations, and not a statute of repose,
there is no statute of repose that would potentially preempt
state consumer protection laws’ longer limitations periods.
Nor does ILSA otherwise preempt Plaintiffs’ UCL claim.
Crosby instructs us to consider issues of conflict preemption
“by examining the federal statute as a whole and identifying
its purpose and intended effects.” 530 U.S. at 373. Here, no
congressional purpose to preempt the application of state
consumer protection statutes can be divined from the text or
history of ILSA. To the contrary, ILSA provides that its
“rights and remedies . . . shall be in addition to any and all
other rights and remedies that may exist at law or in equity.”
15 U.S.C. § 1713. ILSA also contains a saving clause, stating
that “[n]othing in this chapter may be construed to prevent or
limit the authority of any State or local government to enact
and enforce with regard to the sale of land any law,
ordinance, or code not in conflict with this chapter.”
15 U.S.C. § 1708(e). Moreover, ILSA offers a procedure
where state disclosure laws that are “substantially equivalent”
16 BEAVER V. TARSADIA HOTELS
to ILSA’s disclosure provisions may be formally certified as
such to facilitate compliance and enforcement. See 15 U.S.C.
§ 1708. These parts of the statute all expressly allow for
states to supplement ILSA’s provisions with their own
requirements. See Williamson v. Mazda Motors of Am., Inc.,
562 U.S. 323, 335 (2011) (finding no conflict preemption in
light of “statutory saving clause that foresees the likelihood
of a continued meaningful role for state tort law”); cf. Geier
v. Am. Honda Motor Co., 529 U.S. 861, 870 (2000) (declining
to “give broad effect to saving clauses where doing so would
upset the careful regulatory scheme established by federal
law”).
Finally, Defendants rely on Silvas v. E*Trade Mortg.
Corp., 514 F.3d 1001, 1007 n.3 (9th Cir. 2008) to argue that
Plaintiffs cannot avoid the application of ILSA’s statute of
limitations by invoking the UCL. Silvas involved a case of
field preemption, in which the court held that the Home
Owners’ Loan Act (HOLA), 12 U.S.C. §§ 1461–1470,
“preempted the entire field of lending regulation” to the
exclusion of any state regulation. Silvas, 514 F.3d at 1008. In
footnote 3 of the opinion, the Silvas Court commented on an
issue that it explicitly stated it was not reaching. Id. at 1006.
The footnote reads: “[T]o take advantage of the longer statute
of limitations under [the] UCL . . . . is an attempt to enforce
a state regulation in an area expressly preempted by federal
law.” Id. at 1007 n.3. This footnote, to the extent it is relevant
at all in this case, appears to be limited to cases involving
field preemption under HOLA.5
5
A number of district courts have adopted an unnecessarily broad
reading of footnote 3 in Silvas by extending its reasoning outside of
HOLA’s field preemption context. See, e.g., Jones v. Wells Fargo Bank,
NA, No. 13-cv-903 NC, 2013 WL 2355447, at *4 (N.D. Cal. May 29,
BEAVER V. TARSADIA HOTELS 17
We conclude that Defendants fail to overcome the strong
presumption against preemption, and that ILSA’s three-year
statute of limitations does not bar Plaintiffs’ UCL claim.
II. ILSA’s Disclosure Provisions
Once Plaintiffs have surpassed the statute of limitations
hurdle, they must show that ILSA’s disclosure provisions
apply to the condominium units they purchased. Collectively,
these provisions mandate that sellers file a statement of
record with the Department of Housing and Urban
Development (HUD); provide buyers with a property report;
include a twenty-day cure provision in the purchase contracts;
and offer buyers a two-year right to rescind the contracts
when sellers fail to meet these statutory disclosure
requirements. 15 U.S.C. §§ 1703(a)(1)(A), 1703(a)(1)(B), and
1703(d)(2).
2013) (holding that TILA claims that are time-barred cannot be recast as
UCL claims subject to a longer limitations period); Rodriguez v. U.S.
Bank Nat’l Ass’n, No. C 12-00989 WHA, 2012 WL 1996929, at *2 (N.D.
Cal. June 4, 2012) (same); Newsom v. Countrywide Home Loans, Inc.,
714 F. Supp. 2d 1000, 1014 (N.D. Cal. 2010) (same); Champlaie v. BAC
Home Loans Serv., LP, 706 F. Supp. 2d 1029, 1045 (E.D. Cal. 2009)
(same); Distor v. U.S. Bank NA, No. C 09-02086 SI, 2009 WL 3429700,
at *8 (N.D. Cal. Oct. 22, 2009) (same); Santos v. Countrywide Home
Loan, No. 1:09-cv-00912-AWI-SM, 2009 WL 2500710, at *7 (E.D. Cal.
Aug. 14, 2009) (same); Adams v. SCME Mortg. Bankers Inc., No. CV F
09-0501 LJO SMS, 2009 WL 1451715, at *10 (E.D. Cal. May 22, 2009)
(same); see also O’Donovan v. Cashcall, Inc., No. C 08-03174 MEJ, 2012
WL 2568174, at *3 (N.D. Cal. July 2, 2012) (UCL claim predicated on
violation of the Electronic Funds Transfer Act was subject to federal
statute of limitations). But see Sonoda v. Amerisave Mortg. Corp., No. C-
11-1803 EMC, 2011 WL 2690451, at *8–9 (N.D. Cal. July 8, 2011)
(holding that Silvas was properly limited to cases of HOLA preemption).
18 BEAVER V. TARSADIA HOTELS
Defendants do not dispute that they failed to satisfy
ILSA’s disclosure requirements. Rather, they maintain that
ILSA is inapplicable, and thus no disclosures are required,
because Plaintiffs did not have “exclusive use” of the
properties pursuant to 12 C.F.R. § 1010.1(b), and because the
condominiums were exempted from ILSA’s requirements
pursuant to the Improved Lot Exemption, 15 U.S.C.
§ 1702(a)(2). We address each of these arguments in turn.
A. Exclusive Use
ILSA’s disclosure requirements apply to “lots,” a term not
defined by the statute itself. See, e.g., 15 U.S.C. § 1701. The
companion regulations to ILSA, promulgated by HUD in
1973, and later adopted by its successor agency, the
Consumer Financial Protection Bureau, provide that a “lot”
refers to “any portion, piece, division, unit or undivided
interest in land . . . if the interest includes the right to the
exclusive use of a specific portion of the land.” 12 C.F.R.
§ 1010.1(b) (emphasis added); see Berlin v. Renaissance
Rental Partners, LLC, 723 F.3d 119, 121 n.2 (2d Cir. 2013).
For decades, a long line of cases has consistently held that
condominiums may be considered “lots” under ILSA. See
Berlin, 723 F.3d at 126–27; Winter v. Hollingsworth Props.,
Inc., 777 F.2d 1444, 1447 (11th Cir. 1985). Indeed, “‘the
application of [ILSA] to condominiums has been consistent
[with HUD] policy since the issue was first raised in
1969’—the year that ILSA took effect.” Berlin, 723 F.3d at
124 (first alteration in original) (quoting Land Registration,
Formal Procedures, & Advert. Sales Practices, & Posting of
Notices of Suspension, 38 Fed. Reg. 23,866 (Sept. 4, 1973)
(to be codified at 24 C.F.R. pts. 1700, 1710, 1715, 1720)).
BEAVER V. TARSADIA HOTELS 19
Under Chevron, we must defer to an administering
agency’s “reasonable interpretation of an ambiguous statute”
when that interpretation is the result of the agency’s formal
rulemaking procedures. See Chevron, U.S.A., Inc. v. Nat. Res.
Def. Council, Inc., 467 U.S. 837, 843–44 (1984). Here, the
agency regulation requiring “exclusive use” is a reasonable
interpretation of the word “lot,” and it is entitled to Chevron
deference. Indeed, the agency’s regulation gives effect to
Congress’s purpose in enacting ILSA to protect general
“interests in realty,” which included condominiums. See
Winter, 777 F.2d at 1448.
In 1996, HUD issued additional guidance clarifying its
earlier definition of “exclusive use” in the context of lots:
If the purchaser of an undivided interest or a
membership has exclusive repeated use or
possession of a specific designated lot even
for a portion of the year, a lot, as defined by
the regulations, exists. For purposes of
definition, if the purchaser has been assigned
a specific lot on a recurring basis for a defined
period of time and could eject another person
during the time he has the right to use that lot,
then the purchaser has an exclusive use.
61 Fed. Reg. 13,596, 13,602 (Mar. 27, 1996) (to be codified
at 24 C.F.R. pts. 1700, 1710, 1715)).
Because this interpretative guidance was not subject to a
formal agency adjudication or rulemaking process, it is
entitled to a lesser form of deference under Skidmore,
according to its power to persuade. See Skidmore v. Swift &
Co., 323 U.S. 134, 139–40 (1944). Under Skidmore, the
20 BEAVER V. TARSADIA HOTELS
persuasiveness of the agency’s interpretation is determined in
part by “the thoroughness evident in its consideration, the
validity of its reasoning, [and] its consistency with earlier and
later pronouncements.” Id. Here, the agency’s detailed
clarification of the term “exclusive use” conforms to the
historic purposes of ILSA by extending its disclosure
protections to certain real estate interests, provided that the
owner possesses a right to use the unit “on a recurring basis
for a defined period of time” during the year. Moreover, the
agency’s understanding of “exclusive use,” as demonstrated
through the core right of a property owner to “eject another
person,” is fully consistent with the statutory text. As a result,
we find the agency’s gloss on the meaning of “exclusive use”
to be persuasive under Skidmore, and entitled to deference on
review.
Guided by these agency interpretations, we next examine
whether Plaintiffs had “exclusive repeated use” of their units.
61 Fed. Reg. 13,602. Defendants contend that Plaintiffs’
specific purchase contracts did not provide Plaintiffs with
exclusive use of the condominiums due to a series of use
restrictions on the properties. They cite Becherer v. Merrill
Lynch, Pierce, Fenner & Smith, Inc., a Sixth Circuit case, in
support of their claim. 127 F.3d 478 (6th Cir. 1997). In
Becherer, the court held that ILSA’s disclosure provisions did
not apply when buyers purchased commercial condominium
units as investment properties that were so laden with use
restrictions that the owners could not be said to have had
“exclusive” use of those properties. Id. at 482. Specifically,
the Becherer Court relied on facts indicating that, “when the
units were purchased, they were already restricted for use as
a hotel as a business investment, and thus were never
available for use at the discretion of the unit owners.” Id. In
particular, the owners in Becherer were only given
BEAVER V. TARSADIA HOTELS 21
permission to occupy the units for fourteen days per year. Id.
Moreover, their rights to eject tenants were assigned to the
property manager through the purchase contracts and so
“never truly resided with the unit owners.” Id.
Defendants attempt to analogize the facts of the present
case to those in Becherer. First, Defendants point to
contractual restrictions that limited Plaintiffs’ rights to stay in
the condominiums to a maximum of twenty-eight days per
year. In addition, the condominiums could only be resold as
non-residential condominium units, managed as part of the
Hard Rock Hotel, which possessed a right of first refusal in
case of sale. These use restrictions were memorialized in the
UMAs. Under the terms of the UMAs, the Hard Rock Hotel
also controlled the room furnishings as well as routine
maintenance and cleaning services in the units.
Nonetheless, the provisions of the purchase contracts did
entitle Plaintiffs to the use of a “specific lot on a recurring
basis for a defined period of time.” 61 Fed. Reg. 13,602. The
use restrictions were of a more limited nature than in
Becherer and, importantly, did not directly interfere with
Plaintiffs’ ownership right to eject tenants during the
designated period of use.
The Hard Rock Hotel’s provision of routine maintenance,
cleaning, and management services is not dispositive either.
In this respect, Plaintiffs’ position is akin to that of an
apartment owner who retains exclusive use of the apartment,
but contracts with a third party for the provision of room
furnishings and maid service, or engages a third party to rent
out the unit for a portion of the year. The “exclusive use”
inquiry focuses on the basic right of the owner to “eject
another person during the time he has the right to use that
22 BEAVER V. TARSADIA HOTELS
lot.” Id. Under the terms of the purchase agreements,
Plaintiffs retain the exclusive use of the units during that
“defined period of time.” Id.6
Finally, Defendants point to Plaintiffs’ separate
agreements in an RMA. The RMA delegated to Tarsadia the
“sole and exclusive authority to manage, operate, market and
rent” the units. The RMA also gave Tarsadia the right to
“enter the Unit, without Notice to Owner, from time to time,
and at any time, for any purpose set forth in this Agreement.”
These use restrictions were relatively sweeping, permitting
Tarsadia to “vary the frequency and length of the rental of the
Unit for any reason.”
However, the RMA was a voluntary agreement that
Plaintiffs executed in 2007, subsequent to the closing of the
condominium sales. As a result, its use restrictions are not
determinative of whether Plaintiffs had “exclusive use” under
the relevant purchase contracts. Becherer, in contrast,
involved curtailed rights of ownership to which the buyers
had agreed in the original sale contracts, rather than
provisions that were voluntarily adopted at a later date. In the
present case, Plaintiffs could freely choose whether to
execute the RMA. Because the RMA was not executed until
later, and because none of the use restrictions embedded in
the original purchase contract interfered with the owner’s
6
Defendants did not argue in their opening brief that an owner
occupying a unit lacked the authority to eject cleaning personnel, or that
any such lack of authority deprived owners of a right to exclusive use. We
decline to make that argument for them. See Int’l Union of Bricklayers &
Allied Craftsman Local Union No. 20, AFL-CIO v. Martin Jaska, Inc.,
752 F.2d 1401, 1404 (9th Cir. 1985) (“[M]atters on appeal that are not
specifically and distinctly raised and argued in appellant’s opening brief,”
“will not ordinarily [be] consider[ed].”).
BEAVER V. TARSADIA HOTELS 23
exclusive use of the property “on a recurring basis for a
defined period of time,” we conclude that Plaintiffs’ units are
“lots” and therefore subject to ILSA’s disclosure
requirements. 61 Fed. Reg. 13,602.
B. The Improved Lot Exemption
Defendants argue that even if the condominiums are lots,
the Improved Lot Exemption applies. The Improved Lot
Exemption provides an exception to ILSA’s disclosure
provisions in cases involving “the sale or lease of any
improved land on which there is a residential, commercial,
condominium, or industrial building” or “the sale or lease of
land under a contract obligating the seller or lessor to erect
such a building thereon within a period of two years.”
15 U.S.C. § 1702(a)(2). As the relevant contracts involved the
sale of properties under construction, we must determine
whether the purchase contracts “obligated” the seller to
complete construction of the condominiums within two years,
such that the promise to build was not at the discretion of the
seller, or otherwise “illusory.” See Baroi v. Platinum Condo.
Dev., LLC, 874 F. Supp. 2d 980, 984 (D. Nev. 2012).
Defendants argue that this requirement was met because
the purchase contracts provided estimated completion dates
that occurred prior to December 2007. The purchase contracts
were signed in May and December of 2006. The estimated
completion dates for each of the relevant contracts therefore
preceded the two-year deadline set by the Improved Lot
Exemption. Defendants further highlight specific language in
the purchase contracts, providing that “Seller shall use
commercially reasonable efforts to complete the
construction” by the estimated completion dates.
24 BEAVER V. TARSADIA HOTELS
Importantly, however, the purchase contracts contained a
pre-sale contingency clause that allowed the seller to
terminate the contract “without liability” if less than 75% of
the condominium units to be constructed were sold, or under
contract to be sold, by the closing date. This provision
therefore allowed Defendants to potentially rescind the
agreements on the closing dates, which took place about one
year after Plaintiffs signed the purchase contracts.
According to agency regulations, pre-sale contingency
clauses are permissible under the Improved Lot Exemption,
so long as they are operative for 180 days or less. See 12
C.F.R. § 1010.5. Specifically, HUD guidelines clarify that
“[t]he presale period cannot exceed 180 days from the date
the first purchaser signs a contract in the project.” 61 Fed.
Reg. 13,603.
The agency’s interpretation of the statute is reasonable, as
it allows sellers a modest period in which to make a final
business determination on whether to construct the property,
rather than automatically subject all sellers to ILSA’s
disclosure regime. Under these circumstances, the agency
reasonably determined that the use of a limited pre-sale
contingency clause would not render the seller’s commitment
to construct illusory. Because the regulations promulgated by
HUD are a reasonable interpretation of an ambiguous
provision in a statute HUD is charged with administering, we
accord it Chevron deference on review. See Chevron,
467 U.S. at 843. Furthermore, the agency’s interpretive
guidelines, setting the beginning of the pre-sale period as the
date of contract signing, are consistent with the timeframes
adopted in the rest of the statute, cf. 15 U.S.C. § 1711 (a)(1),
and serve as persuasive guidance under Skidmore. See
Skidmore, 323 U.S. at 140.
BEAVER V. TARSADIA HOTELS 25
Here, the relevant pre-sale contingency clause does not
limit the cancellation period to 180 days after the signing of
the contract, as required by 12 C.F.R. § 1010.5. Defendants
argue, however, that they never had reason to exercise the
pre-sale contingency clause after this period because the
condominium units were nearly all under contract by
December 2006. Nonetheless, we analyze the rights
Defendants possessed at the time of the signing of the
contracts to determine whether the terms of the contract
obligated construction of the properties within two years,
pursuant to 15 U.S.C. § 1702(a)(2). The purchase contract
contained a pre-sale contingency clause that could be invoked
at the time of the closing if 75% or more of the units
remained unsold. Therefore, by its terms, the contract failed
to limit the pre-sale contingency period to 180 days or less, as
provided by agency regulation. 12 C.F.R. § 1010.5.
Accordingly, the Improved Lot Exemption does not
extinguish Plaintiffs’ claims because the pre-sale contingency
clause is not limited to a period of 180 days or less and the
purchase contracts do not obligate the seller to complete
construction within two years pursuant to 15 U.S.C.
§ 1702(a)(2).
III. The 2014 Amendment
In September of 2014, during the pendency of the district
court proceedings, Congress passed an amendment to ILSA,
exempting condominium sales from ILSA’s disclosure
requirements, but allowing condominiums to remain subject
to ILSA’s fraud provisions. See Pub. L. No. 113-167,
128 Stat. 1882. The 2014 Amendment, codified at 15 U.S.C.
§ 1702(b)(9), did not purport to amend the definition of a
“lot,” as that word is used throughout the statute. Instead, it
26 BEAVER V. TARSADIA HOTELS
created a statutory carve-out by including “the sale or lease of
any improved land on which there is a . . . condominium” or
“the sale or lease of land under a contract obligating . . . [the
construction of] such a building thereon within a period of
two years” among a list of exemptions to ILSA’s disclosure
provisions. 15 U.S.C. § 1702(a)(2).
ILSA was designed to regulate unfair practices in the sale
of unimproved parcels of land. See Winter, 777 F.2d
1446–47. It offers procedural safeguards, including pre-sale
disclosures, to protect buyers against unscrupulous
developers and their agents. The term “lot,” as it is used in the
statute, has come to include condominiums. See id. at 1447.
As discussed earlier, supra Section II.A, this reading is the
product of a longstanding interpretation of ILSA adopted for
decades by the governing agencies and by the courts. See
38 Fed. Reg. 23,866. We regard this agency interpretation of
the word “lot” as a reasonable one and subject to Chevron
deference on review.
The Eleventh Circuit reached the same result in Winter,
finding the agency’s definition of the word “lot” to be “the
only defensible interpretation given subsequent events.”
Winter, 777 F.2d at 1448. The court went on to state that:
It is reasonable to conclude, as HUD did, that
the term “lot” was used to refer generally to
interests in realty. The legislative history
supports this construction, employing the
terms “lot,” “land,” and “real estate” in
discussing the Act. This construction is also
reasonable in terms of the purpose of the
statute. A fraudulent out-of-state sale of land
BEAVER V. TARSADIA HOTELS 27
is not rendered any less fraudulent if the
condominium form of ownership is utilized.
Id.
Moreover, a second clue that ILSA’s protections extended
to condominiums is the specific mention of “condominiums”
in the Improved Lot Exemption, 15 U.S.C. § 1702(b)(9),
which was added in 1978. See id. at 1447 n.7. As the Winter
court reasoned, the fact that Congress specifically listed
“condominiums” as among those types of improved lots that
may be exempt from ILSA’s disclosure requirements strongly
implies that Congress had envisioned condominiums to be
within the original scope of the statute. Id. at 1448–49.
Otherwise, the use of such language in the exemption would
be superfluous. See Lamie v. U.S. Tr., 540 U.S. 526, 536
(2004).
Cumulatively, therefore, the text and interpretive history
of the statute lead to the conclusion that the agency’s
interpretation of “lot” is reasonable and entitled to deference
under Chevron. See Berlin, 723 F.3d at 126–27.
A. A Substantive Change Rather than a Clarification
of the Law
Despite this legislative history, Defendants claim that the
2014 Amendment, exempting condominiums from ILSA’s
disclosure provisions, should apply to the present action,
which was commenced in 2011. If this were true, Plaintiffs’
UCL claim would fail as a matter of law. The retroactive
application of a new law to events that transpired prior to its
passage requires that we conduct an analysis under Landgraf
to ensure that such application reflects longstanding
28 BEAVER V. TARSADIA HOTELS
principles of fairness and respect for the parties’ settled
expectations of the law. Landgraf v. USI Film Prods.,
511 U.S 244, 265 (1994).
However, no Landgraf analysis is required if an
amendment merely serves to clarify rather than change the
substance of existing law. See ABKCO Music, Inc. v. LaVere,
217 F.3d 684, 689–90 (9th Cir. 2000). Defendants argue that
the 2014 Amendment is a clarification of the original
meaning of the statute, and not a substantive change in the
law. Defendants cite to Beverly Community Hospital
Association v. Belshe, 132 F.3d 1259 (9th Cir. 1997), for the
proposition that Congress acts to clarify the meaning of the
law when courts have found “extraordinary difficulty . . . in
divining the intent of the original Congress.” Id. at 1266. Yet
this is not the case here, as the agency’s interpretation of “lot”
prevailed for decades and was readily adopted by both courts
and policymakers during this interval. See supra Section II.A.
Defendants also emphasize remarks made by the bill’s
sponsor, Representative Carolyn Maloney, and other
members of Congress prior to a vote in the House of
Representatives. While we place little value on the statements
of individual legislators in connection with the enactment of
a bill, we nevertheless consider them in our analysis. See
Brock v. Pierce Cty., 476 U.S. 253, 263 (1986) (“[S]tatements
by individual legislators should not be given controlling
effect, but when they are consistent with the statutory
language and other legislative history, they provide evidence
of Congress’ intent.”).
Representative Maloney declared that the 2014
Amendment was meant to provide a “technical fix” for
condominium sales. 159 Cong. Rec. H5822 (daily ed. Sept.
BEAVER V. TARSADIA HOTELS 29
25, 2013) (statement of Rep. Maloney). Other legislators
claimed that the amendment would help align the statute to its
intended purposes, as some of ILSA’s disclosure
requirements did not make sense when applied to
condominium properties, but instead permitted owners
suffering from “buyer’s remorse” to rescind their purchase
agreements after the properties plummeted in value during
the economic recession. Id. at H5822 (statement of Rep.
McHenry). As Representative Maloney noted, “during the
economic downturn in 2008, some buyers used the recording
requirements of ILSA to rescind otherwise valid contracts for
economic reasons, an unintended consequence of the act and
its intent.” Id. at H5822. Echoing the title of the act, one
legislator stated that the bill provides a “commonsense
clarification to [ILSA] to preserve consumer protections
while keeping our economic recovery on track.” Id. at H5822
(statement of Rep. Nadler).
Considered in the light of recent events, the 2014
Amendment serves to address a new issue that arose
concerning the proper scope of ILSA disclosure. As one
legislator acknowledged, “ILSA was rarely an issue in private
condo sales until the economy collapsed in 2008.” Id. at
H5823 (statement of Rep. Nadler). Subsequent changes in the
economic and business landscape following the recession and
real estate market crash of the late 2000s led purchasers to
engage in overzealous use of ILSA’s disclosure provisions to
cure cases of condominium buyer’s remorse. A change in the
law was therefore required to address the new realities of the
real estate market and to tailor ILSA’s scope to “the unique
conditions under which these units are sold in today’s
market.” Id. at H5822 (statement of Rep. Maloney).
30 BEAVER V. TARSADIA HOTELS
Because the bill passed unanimously in both houses
without debate, such remarks constitute the “legislative
history” of the 2014 Amendment, such as it is. Post-hoc
labeling as a “clarification” by bill supporters of what
otherwise appears to be a change, however, is not controlling
given the long interpretative history of the statute.
Defendants’ heavy reliance on the title of the 2014
Amendment, “An act to amend the Interstate Land Sales Full
Disclosure Act to clarify how the Act applies to
condominiums,” is similarly misplaced. Although the title
notes that this is a clarification, the lapse between the
enactment of the bill and the bill’s effective date (180 days),
coupled with the bill’s silence on the issue of retroactivity,
suggests that this was actually a change in the law. See Logan
v. U.S. Bank Nat’l Ass’n, 722 F.3d 1163, 1172 (9th Cir. 2013)
(“Though a statute’s title ‘can be used to resolve[]
ambiguity,’ it ‘cannot control the plain meaning of a statute.’”
(quoting Or. Pub. Util. Comm’n v. Interstate Commerce
Comm’n, 979 F.2d 778, 780 (9th Cir. 1992)).
In the present case, Congress appears to have adopted a
substantive change in the law by discarding an old application
that no longer served ILSA’s purposes, or that was
outweighed by considerations arising from changed
circumstances. This reading of the 2014 Amendment is borne
out by the text and interpretive history of the statute.
Congress’ decision to “legislatively overrule” earlier
interpretations of a statute does not necessarily imply that
these earlier interpretations were inconsistent with
congressional intent at the time or even “wrongly decided.”
Rivers v. Roadway Express, Inc., 511 U.S. 298, 304–05
(1994). Rather, “[a]ltering statutory definitions, or adding
new definitions of terms previously undefined, is a common
BEAVER V. TARSADIA HOTELS 31
way of amending statutes” so that Congress can refine and
sharpen old statutory meanings. Id. at 308.
B. The Landgraf Analysis
Since the amendment is a substantive change in law, and
not just a clarification of existing law, we must determine
whether its application to the present case is proper under
Landgraf. Landgraf provides a framework for deciding when
the retroactive application of the law is warranted and when,
conversely, it would violate principles of “fairness dictat[ing]
that individuals should have an opportunity to know what the
law is and to conform their conduct accordingly.” 511 U.S. at
265. “[T]he presumption against retroactive legislation is
deeply rooted in our jurisprudence, and embodies a legal
doctrine centuries older than our Republic. . . . In a free,
dynamic society, creativity in both commercial and artistic
endeavors is fostered by a rule of law that gives people
confidence about the legal consequences of their actions.” Id.
at 256–66.
The first step in the Landgraf analysis is a determination
of whether the statute contains an express statement on its
proper temporal reach. Id. at 280. The district court correctly
found that no such pronouncement is contained in the bill
itself. Indeed, the 180-day delay in the bill’s effective date
suggests that the amendment ought to be applied
prospectively, so that actors may adjust their behavior to
conform to the new legislation. See Fitzgerald v. Century
Park, Inc., 642 F.2d 356, 359 (9th Cir. 1981).
Second, when the law contains no “express command”
concerning its temporal scope, we must examine whether its
application would have a retroactive effect in this case.
32 BEAVER V. TARSADIA HOTELS
Landgraf, 511 U.S. at 280. Retroactive effect, in this context,
refers to an application that would “impair rights a party
possessed when he acted, increase a party’s liability for past
conduct, or impose new duties with respect to transactions
already completed.” Id. Here, the 2014 Amendment would
have retroactive effect because it would extinguish
Defendants’ liability under ILSA, and by extension the UCL,
thus depriving Plaintiffs of a pre-existing cause of action. In
TwoRivers v. Lewis, 174 F.3d 987 (9th Cir. 1999), we held
that the application of a new amendment to shorten the statute
of limitations would “deprive [Plaintiff] of his right to file
suit” by “foreclosing a cause of action which existed prior to
the amendment.” Id. at 995. Similarly, in Scott v. Boos,
215 F.3d 940 (9th Cir. 2000), we concluded that a statute had
retroactive effect when “the intent was substantive—to
deprive plaintiffs of the right to bring securities fraud based
RICO claims.” Id. at 945. There, we noted that such an effect
would “impair[] rights a party once possessed.” Id. at 946.
Defendants’ argument that Plaintiffs’ rights are not
subject to Landgraf because those rights have not vested is
unavailing. In Scott, we rejected a similar argument, stating
that “[t]his reading of the Landgraf test is misleading.” Id. at
947. We instead held that the Landgraf Court did not restrict
its analysis of “rights a party possessed” to “vested rights”
only. Id. If applied to the present case, the 2014 Amendment
would impair Plaintiffs’ right to bring suit—a right that
Plaintiffs possessed and exercised prior to the amendment’s
passage—which is enough to show the Amendment would
BEAVER V. TARSADIA HOTELS 33
have retroactive effect within the meaning of Landgraf
whether or not this qualifies the rights as “vested.”7
If a statute is determined to have retroactive effect, we
proceed to the final step of the Landgraf analysis and assess
whether “clear congressional intent” nonetheless counsels in
favor of retroactive application. See Landgraf, 511 U.S. at
280. We employ a presumption that Congress did not intend
for legislation to operate retroactively. Id. This presumption
has particular weight in the circumstances of the present case,
which concerns “contractual or property rights, matters in
which predictability and stability are of prime importance.”
Id. at 271.
As we determined earlier, there is no clear congressional
intent to have the 2014 Amendment apply retroactively to
events prior to its passage. See supra Section III.B. The
Landgraf Court concluded that “[a] statement that a statute
will become effective on a certain date does not even
arguably suggest that it has any application to conduct that
occurred at an earlier date.” Id. at 257. Neither are the title of
the statute, or the statements of its supporters, adequate to
conclude that Congress specifically intended to reach prior
conduct, or that it “affirmatively considered the potential
unfairness of retroactive application and determined that it is
7
Defendants also cite to Lyon v. Augusta, S.P.A., 252 F.3d 1078 (9th
Cir. 2001), for the proposition that retroactive application would not
impair Plaintiffs’ rights under Landgraf because a “property right in any
cause of action does not vest until a final unreviewable judgment.” Id. at
1086 (quoting Grimesy v. Huff, 876 F.2d 738, 743–44 (9th Cir. 1989)).
The Lyon Court’s statement, however, was made in the context of a
substantive due process analysis, conducted to determine whether the
plaintiffs had been “deprived of a vested property right in their cause of
action.” Id.
34 BEAVER V. TARSADIA HOTELS
an acceptable price to pay for the countervailing benefits.” Id.
at 272–73. In light of the lengthy interpretative history of the
statute and the use of the 180-day effective date provision, we
hold that Congress did not express a clear intent that the 2014
Amendment operate retroactively to deprive Plaintiffs of a
pre-existing cause of action.
Accordingly, ILSA’s disclosure requirements apply to the
condominium units purchased by Plaintiffs. Since Defendants
concede that they have failed to comply with those disclosure
requirements, the district court properly granted summary
judgment to Plaintiffs on their UCL claim.
CONCLUSION
The district court’s grant of partial summary judgment is
AFFIRMED with respect to those issues certified for
interlocutory appeal.8
8
We express no opinion, however, as to whether the district court
properly included all Defendants within the scope of its partial summary
judgment order. See supra n.2.