                                               [DO NOT PUBLISH]

          IN THE UNITED STATES COURT OF APPEALS

                FOR THE ELEVENTH CIRCUIT           FILED
                 ________________________ U.S. COURT OF APPEALS
                                               ELEVENTH CIRCUIT
                        No. 10-10548            OCTOBER 26, 2011
                                                   JOHN LEY
                  ________________________           CLERK

             D.C. Docket No. 6:08-cv-02120-ACC-GJK

BABY ROBERTA SOLIS BAMERT,
JERRY CRAFT,
JESSICA CRAFT,
JOSEPH DENOIA.
RICHARD FAKADEJ,
KIMBERLY FAKADEJ,
JANOS FARKAS,
THE VISTA TRUST,
THE ISLE TRUST,
WINIFRED FIELDS,
DENNIS FONG,
YVONNE FONG,
KEN HONG,
MEGAN SO MING HUI,
MUK SUM HUI,
RICHARD JASIN,
AIMEE OCHOTORENA,
FRANK PADILLA,
MARY PADILLA,
MARILOU PULMANO,
DARMANDRA RAMDOWE,
TEJMATTEE RAMDOWE,
KRISHNADAT RAMDOWE,
GANMATTEE RAMDOWE,
BARBARA REID,
STEPHEN REID,
DONALD SCRIMGEOUR,
FRANK SCURTI,
THOMAS SCURTI,
PERUVEMBRA SUNDARESAN,
GLORIA SUNDARESAN,
CHERYL TAMADA,
FRANK TAMADA,
DANIEL TRAN,
TOM TRAN,
MICHAEL D. GRAVES,
KINGDON INVESTMENTS OF BRANDON, LLC,

                                                    Plaintiffs - Appellants,

                               versus

PULTE HOME CORPORATION,
a Michigan Corporation,
THE WEAR GROUP, INC.,
JAMES E. WEAR,
OSCEOLA MANAGEMENT & CONSULTING, INC.,
JAMES J. MURPHY,

                                                   Defendants - Appellees.

                   ________________________

             Appeal from the United States District Court
                 for the Middle District of Florida
                   ________________________

                         (October 26, 2011)




                                  2
Before EDMONDSON and MARTIN, Circuit Judges, and HODGES,* District Judge.

PER CURIAM:

       Plaintiffs each purchased at least one condominium unit from Defendant

Pulte Home Corporation (“Pulte”), and entered into a separate management

agreement with Defendant Osceola Management & Consulting, Inc. (“OMC”) for

the short-term rental of those units. Plaintiffs later brought this suit alleging

violations of federal securities law arising from and related to these transactions.

The District Court dismissed these claims because the transactions at issue were

not “investment contract[s]” subject to federal securities law. Plaintiffs now

appeal that ruling. After careful review of the record and the parties’ briefs, and

with the benefit of oral argument, we reverse the District Court’s dismissal of

Plaintiffs’ claims against Pulte, The Wear Group, James E. Wear1, OMC, and

James J. Murphy. We remand the case to the District Court for further

proceedings consistent with this opinion.

                                               I.



       *
         Honorable William Terrell Hodges, United States District Judge for the Middle District
of Florida, sitting by designation.
       1
          On December 3, 2010 this Court was notified of the Voluntary Petition of Bankruptcy
filed by James E. Wear, which filing operates as a stay of this action against him. Thus, while
we mention Wear in setting forth the background of this case, this Order neither takes nor
furthers any action against him.

                                                3
      Plaintiffs purchased condominium units in two connected developments in

Orlando, Florida. The developments—Vista Cay at Harbor Square and The Isles

at Cay Commons—were newly constructed by Pulte. Each plaintiff purchased one

and in some cases two condominiums from Pulte. Plaintiffs contend that they

were not merely condominium purchasers, but instead were investors in a program

in which the units could be rented on a short-term basis. They assert that The

Wear Group and James E. Wear acted as real estate agents in connection with the

transactions, and that OMC and one of its officers, James J. Murphy, provided

management services and functioned “as exclusive rental agent that would

maintain, manage and rent the units at premium rental rates.”

      More specifically, Plaintiffs allege in their amended complaint, that The

Wear Group’s website contained a promotional statement, under the headline

“TWG joins with Fortune 150 builder Pulte Home for Vista Cay,” which read:

      The Wear Group announced a joint venture with Pulte Homes for Vista

      Cay, a resort development located in Orlando, Florida, directly adjacent

      to the 2nd largest convention center in the U.S. “We are proud to team

      up with Wear Group Realty, their reputation is outstanding” said a Pulte

      Representative. Demand in the area is so strong that a well known




                                         4
      property management company has offered all investors guaranteed

      mortgage, tax and HOA payments up to 5 years.2



      Plaintiffs also assert that The Wear Group distributed promotional materials

that emphasized “effortless” ownership of the properties. In the amended

complaint, Plaintiffs state that

      [a]s part of the investment contract offering, investors were promised
      incentives that would allow them to purchase units in Vista Cay and The
      Isles “risk free.” These incentives promised to pay all the costs of
      owning the condominium units, including mortgage payments,
      condominium association dues, taxes, utilities, insurance, furnishings,
      and other expenses of owning the units. The defendants guaranteed
      these incentives would be fully paid for a period of 24 months with an
      option to renew for up to five years.

Under this program, all bills related to ownership of the property would be paid by

OMC out of rents, which were guaranteed to cover these costs, for a period of 24

months. Any rental profits above the costs of ownership would be enjoyed by

OMC, while Plaintiffs would benefit from any appreciation to the value of the

property during that time. To qualify for this program, the purchasers would have

to use Pulte’s “preferred lender and loan program,” because this ensured that

mortgage payments would be low enough to accommodate the guaranteed offer.


      2
          Plaintiffs contend that OMC was the “well known property management company”
referenced in the article.

                                            5
       Plaintiffs’ purchase agreements with Pulte, and the various addenda to those

agreements, expressly stated that the transaction was limited to the terms of the

agreements and did not include any promotional representations outside of the

agreement. First, the purchase agreements state in bold, capitalized letters at the

very top of the document:

       ORAL REPRESENTATIONS CANNOT BE RELIED UPON AS
       CORRECTLY STATING THE REPRESENTATIONS OF THE
       DEVELOPER, FOR CORRECT REPRESENTATIONS, REFERENCE
       SHOULD BE MADE TO THIS CONTRACT AND THE
       DOCUMENTS REQUIRED BY FLORIDA STATUTES SECTION
       718.503, TO BE FURNISHED BY DEVELOPER TO A BUYER OR
       LESSEE.3

       Each agreement specifies a particular unit, includes an escrow clause

identifying an escrow agent, and provides an anticipated closing date for transfer

of physical possession of the unit. The agreements also include an “Entire

Agreement” clause, which states:

       This is the complete Agreement between Buyer and Seller concerning
       the purchase of the Unit. Any prior agreements, written or oral, are
       superseded by the Agreement. Buyer acknowledges that it is not relying
       upon any promises, agreements or representations made by Seller,
       Seller’s salespersons, agents, subcontractors or other employees
       (“Seller’s Representatives”) concerning the Unit or any land adjacent to
       or near the Unit, except as set forth in this Agreement and the


       3
         The purchase agreements are materially similar. The references in this opinion are to,
and the quotations are from, the purchase agreement for the first named plaintiff, Baby Roberta
Solis Bamert.

                                                6
Prospectus and all its exhibits filed with the Division of Florida Land
Sales, Condominiums and Mobile Homes. Buyer also acknowledges
that none of Seller’s Representatives (other than Seller’s Authorized
Agent who has accepted this Agreement) has the authority to modify
this Agreement or to make any oral promise, agreement or
representation inconsistent or contrary to the terms of this Agreement.
This Agreement may be changed only by a written document signed by
both Buyer and Seller’s Authorized Agent. The invalidity or
unenforceability of any particular provision of this Agreement will not
affect the other provisions and the Agreement will be interpreted in all
respects as if such unenforceable provisions were omitted.

The contract also provides that:

Buyer acknowledges[,] warrants, represents and agrees that this
Agreement is being entered into by Buyer without reliance upon any
representations concerning any potential for future profit, any rental
income potential, tax advantages, depreciation, appreciation or
investment potential and without reliance upon any other monetary or
financial advantage. Buyer acknowledges and agrees that no such
representations, including representations as to the ability or willingness
of Seller or its affiliates to assist Buyer in renting or selling the Unit,
have been made by Seller, or any of its agents, employees or
representatives. This Agreement contains the entire understanding
between Buyer and Seller, and Buyer hereby acknowledges that the
displays, architectural models, artist renderings and other promotional
materials contained in the sales office and model units are for
promotional purposes only and may not be relied upon. All descriptions
of the locations, areas, capacities, and sizes of units and other facilities
are approximations only and are based upon architectural measurements.
Buyer warrants that Buyer has not relied upon any verbal
representations, advertising, portrayals or promises other than as
expressly contained herein and in the Condominium documents,
including specifically, but without limitation, any representations as to:
(a) potential appreciation in or resale value of the Unit, (b) the existence
of any “view” from the Unit or that any existing “view” will not be
obstructed in the future, (c) traffic conditions in, near or around the

                                     7
      Condominium, (d) disturbance from nearby properties, (e) disturbance
      from air or vehicular traffic, or (f) any future use of adjacent properties.
      The provisions of this paragraph shall survive the Closing.

      The contracts also included several addenda. The addendum entitled “Pulte

Rewards Program - Preferred Lender” states “the choice of lender is Your sole

decision and You are not obligated to use our preferred lender or to elect the

PULTE REWARDS PROGRAM.” The “First Addendum to Contract for

Purchase and Sale” provides that “Buyer will not transfer its rights under the

Contract nor enter into any agreement for the sale or other transfer of the Unit that

would prevent Buyer from holding fee simple title interest in the Unit, from and

after the date of Closing for a period of at least one (1) year (the ‘Holding

Period’).” Another addendum provides that “[m]aintenance of the individual units

(interior) will be the responsibility of the unit owner.”

      Finally, the “Short Term Rental” addendum provides:

      YOU ARE HEREBY ADVISED THAT THE Isle at Cay Commons -
      Ventura 4/40 Condos COMMUNITY IS PERMITTED TO CONTAIN
      AND DOES CONTAIN HOMES THAT ARE MARKETED, SOLD,
      AND RESOLD TO INDIVIDUALS AND GROUPS THAT RENT OR
      LEASE SUCH HOMES ON A SHORT TERM BASIS.

      The undersigned acknowledge[s] that neither Pulte Homes nor its
      employees, agents, sales staff, or any other party has induced the
      undersigned to enter into this Agreement with any promises of economic
      benefits available from renting the Condominium Unit or Dwelling after
      the undersigned’s purchase of the Condominium Unit or Dwelling.

                                           8
      The undersigned understands and acknowledges that they are under no
      obligation to participate in or enter into any rental pool agreement,
      which might be available.

      The undersigned hereby acknowledge[s] that they understand the
      potential impacts on the Isle at Cay Commons - Ventura 4/40 Condos
      Community resulting from such short-term rentals.

      The undersigned hereby acknowledges that Pulte Homes has advised
      them, and they understand that Pulte Homes is not affiliated with any
      real estate brokers or managerial companies involved with short term
      rental programs in the Isle at Cay Commons - Ventura 4/40 Condos
      Community.

      THE UNDERSIGNED ACKNOWLEDGES THAT THEY
      UNDERSTAND THAT PULTE HOMES ASSUMES NO LIABILITY
      TO THE UNDERSIGNED OR THEIR SUCCESSORS OR ASSIGNS
      IN CONNECTION WITH THE SHORT TERM RENTALS IN THE Isle
      at Cay Commons - Ventura 4/40 Condos COMMUNITY, AND
      HEREBY RELEASE AND DISCHARGE PULTE HOMES FROM
      ANY AND ALL LIABILITY ARISING FROM SUCH SHORT TERM
      RENTALS.

      Prior to closing, each plaintiff contracted with OMC to rent, operate, and

manage their units. Plaintiffs allege, contrary to the express language in the

purchase agreements, that “OMC was the exclusive rental agent for the units,

which meant that the investors had no control of the rental of the units or the

operation of Vista Cay and The Isles.” Plaintiffs allege that in June 2008, OMC

breached the rental agreements and refused to honor its guarantee to pay all of

Plaintiffs’ carrying costs.

                                          9
                                           II.

      In their amended complaint, Plaintiffs allege that the defendants sold them

“investment contracts” in violation of federal securities law, and seek to rescind

their contracts and recover damages. Specifically, Plaintiffs allege against all

defendants: (1) sale of unregistered securities (federal), in violation of 15 U.S.C.

§§ 77e(a) and (b); (2) sale of securities by unlicensed persons (federal), in

violation of 15 U.S.C. § 77o; (3) securities fraud (federal), in violation of 15

U.S.C. § 78j(b), and Rule 10b-5, 17 C.F.R. § 240.10b-5; (4) sale of unregistered

securities (state), in violation of Fla. Stat. § 517.211; (5) sale of securities by

unregistered persons (state), in violation of Fla. Stat. § 517.211; (6) securities

fraud (state), in violation of Fla. Stat. § 517.301; (7) fraud and fraud in the

inducement; and (8) negligent misrepresentation. Plaintiffs also allege (9) breach

of contract against OMC and Mr. Murphy, and (10) unfair or deceptive acts

against Pulte, in violation of Fla. Stat. § 501.201 et. seq., and seek (11) declaratory

judgment against Pulte for deceptive and unfair trade practices under Fla. Stat.

§ 501.211.

      Pulte moved to dismiss the amended complaint. It argued that federal

securities law did not apply because there was no sale of securities (and therefore




                                           10
the court could not exercise supplemental jurisdiction over the state-law claims).4

OMC and Mr. Murphy next moved to dismiss the amended complaint,

incorporating Pulte’s arguments and providing a supplemental memorandum. The

Wear Group and Mr. Wear also filed a motion to dismiss, and likewise adopted the

arguments of Pulte, OMC and Mr. Murphy.5 The District Court granted the

defendants’ motions to dismiss, upon concluding that the transaction was not an

investment contract, and therefore federal securities law did not apply. The court

declined to exercise supplemental jurisdiction over the remaining state-law claims

under 28 U.S.C. § 1367(c)(3),6 and entered final judgment in favor of the

defendants. Plaintiffs now appeal that judgment.

                                                 III.

       This Court reviews de novo the District Court’s dismissal of Plaintiffs’

amended complaint under Federal Rule of Civil Procedure 12(b)(6). Berman v.


       4
           Alternatively, Pulte argued: (1) that the sale of unregistered securities (federal) claim
was time barred; (2) that there was no private right of action for a violation of 15 U.S.C. § 77o;
(3) that the 10b-5 securities fraud claims were time-barred and failed to meet the heightened
pleading standard for fraud under Federal Rule of Civil Procedure 9(b); and (4) that the state-law
claims failed on the merits as well.
       5
          The Wear Group and Mr. Wear argued in addition that Plaintiffs had sued the wrong
entity, noting that the article identified by the Plaintiffs in their complaint referred to Wear Group
Realty, an entity distinct from The Wear Group.
       6
        The District Court did not reach or discuss any of the alternate grounds for dismissal
advanced by the defendants.

                                                 11
Blount Parrish & Co., Inc., 525 F.3d 1057, 1058 (11th Cir. 2008). The Supreme

Court has explained that

      a court considering a motion to dismiss can choose to begin by
      identifying pleadings that, because they are no more than conclusions,
      are not entitled to the assumption of truth. While legal conclusions can
      provide the framework of a complaint, they must be supported by factual
      allegations. When there are well-pleaded factual allegations, a court
      should assume their veracity and then determine whether they plausibly
      give rise to an entitlement to relief.

Ashcroft v. Iqbal, --- U.S. ---, 129 S. Ct. 1937, 1950 (2009).

      Plaintiffs argue that the District Court erred in its conclusion that the

transactions at issue in this case were not “investment contracts” subject to federal

securities laws. Under both the Securities Act of 1933 and the Securities

Exchange Act of 1934, Congress defined the term “security” to include an

“investment contract.” SEC v. Edwards. 540 U.S. 389, 393, 124 S. Ct. 892, 896

(2004); see also 15 U.S.C. § 77b(a)(1) (“The term ‘security’ means any . . .

investment contract . . . .”); 15 U.S.C. § 78c(a)(10) (“The term ‘security’ means

any . . . investment contract . . . .”). “‘Investment contract’ is not itself defined.”

Edwards, 540 U.S. at 393, 124 S. Ct. at 896. “The meaning of ‘investment

contract’ is a question of law reviewed de novo.” SEC v. Merchant Capital, LLC,

483 F.3d 747, 754 (11th Cir. 2007).




                                           12
       In SEC v. W.J. Howey Co., the Supreme Court explained that “an

investment contract for purposes of the Securities Act means a contract,

transaction or scheme whereby a person invests his money in a common enterprise

and is led to expect profits solely from the efforts of the promoter or a third party.”

328 U.S. 293, 298–99, 66 S. Ct. 1100, 1103 (1946). “This Court has divided the

Howey test into the three elements: (1) an investment of money, (2) a common

enterprise, and (3) the expectation of profits to be derived solely from the efforts

of others.” SEC v. Unique Fin. Concepts, Inc., 196 F.3d 1195, 1199 (11th Cir.

1999). This appeal centers on the third prong—whether the Plaintiffs “expect[ed]

. . . profits to be derived solely from the efforts of others.”

       “Although the [Supreme] Court used the word ‘solely’ in the Howey

decision, it should not be interpreted in the most literal sense.” Williamson v.

Tucker, 645 F.2d 404, 418 (11th Cir. 1981).7 Instead the test is “‘whether the

efforts made by those other than the investor are the undeniably significant ones,

those essential managerial efforts which affect the failure or success of the

enterprise.’” Id. (quoting SEC v. Glenn W. Turner Enters., 474 F.2d 476, 482 (9th

Cir. 1973)). “An interest thus does not fall outside the definition of investment


       7
          In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), this
Court adopted as binding precedent all decisions of the former Fifth Circuit handed down before
the close of business on September 30, 1981.

                                              13
contract merely because the purchaser has some nominal involvement with the

operation of the business. Rather, the focus is on the dependency of the investor

on the entrepreneurial or managerial skills of a promoter or other third party.”

Merchant Capital, 483 F.3d at 755 (quotation marks omitted). “An investor who

has the ability to control the profitability of his investment, either by his own

efforts or by majority vote in a group venture, is not dependant upon the

managerial skill of others.” Gordon v. Terry, 684 F.2d 736, 741 (11th Cir. 1982).

      “Under the precedent of this circuit, the crucial inquiry is the amount of

control that the investors retain under their written agreements.” Albanese v. Fla.

Nat. Bank of Orlando, 823 F.2d 408, 410 (11th Cir. 1987). But “Williamson v.

Tucker . . . articulates a narrow exception to the general rule” that an investment

contract does not exist where “[t]he written agreements . . . place control over all

significant decisions in the hands of the investors.” Gordon, 684 F.2d at 741.

“[U]nder certain circumstances an investor may be incapable of exercising a

power given by a written agreement.” Id. Thus, this Court has recognized that the

third prong of the Howey test may be satisfied where any control apparently

exercised by the investor under the terms of the agreement is merely illusory.

Albanese, 823 F.2d at 412 (“Even if the agreements’ words did grant the investors

sufficient potential control [over the management of their investments] to prevent

                                          14
the agreements from being securities, the record demonstrates that, in fact, any

such control was illusory because plaintiffs had no realistic alternative . . . .”). So,

“[c]onsistent with Howey’s focus on substance over form, we look at all the

representations made by the promoter in marketing the interests, not just at the

legal agreements underlying the sale of the interest.” Merchant Capital, 483 F.3d

at 756.

      We begin with the “crucial inquiry” of “the amount of control that the

investors retain under their written agreements.” Albanese, 823 F.2d at 410. The

purchase agreements here reveal that Plaintiffs retained a great deal of control. In

fact, the only significant limitation specified in the purchase agreements

themselves is the one-year holding period. In all other respects the agreements

treat Plaintiffs as ordinary real estate purchasers. Plaintiffs are free, under the

terms of the contract, to reside in the units or to rent them out. If they choose to

rent out the units, the agreements in no way obligate Plaintiffs to contract with

OMC or any other property manager. Given the otherwise extensive control

Plaintiffs enjoy under the agreements, we cannot say that the holding period alone

would be sufficient to establish Howey’s third prong.

      Plaintiffs argue that the control over the management of the properties

afforded to them by the purchase agreements is merely illusory. To support this

                                           15
contention, they point to their allegation in the complaint that OMC was “the

exclusive rental agent for the units, which meant that the investors had no control

of the rental of the units or the operation of Vista Cay and The Isles.” But, as set

out above, the purchase agreements state in no uncertain terms that Plaintiffs are

under no contractual obligation to join the rental pool or otherwise contract with

OMC. In articulating the exception for illusory control, Williamson carefully

“emphasize[d] . . . that a reliance on others does not exist merely because the

[investors] have chosen to hire another party to manage their investment. The

delegation of rights and duties—standing alone—does not give rise to the sort of

dependence on others which underlies the third prong of the Howey test.” 645

F.2d at 423. That is the situation here, where Plaintiffs have not alleged that no

reasonable alternative to OMC existed for the rental management of the units.8

Absent some allegation that purchase of the units was conditioned, either

contractually or by practical necessity, on the entry into the rental agreements with

OMC, these rental agreements constitute a separate, voluntary delegation of

managerial control by Plaintiffs—that is, an exercise of the control over the

investment which Plaintiffs expressly retained under their purchase agreements.



       8
           Indeed, to the contrary, Plaintiffs’ amended complaint reveals that they were able to
enlist the services of another property manager after OMC’s alleged breach of the agreement.

                                                16
Considering all of this, we agree with the District Court that the separate rental

agreements with OMC were not indicative of a lack of control, but rather

reflective of Plaintiffs’ voluntary exercise of the control they retained under the

agreements. As a result, we conclude that under the purchase agreements

Plaintiffs did not relinquish control over their investment to the point that they

were “dependent upon the managerial skill of others.” Gordon, 684 F.2d at 741.9


       9
         Plaintiffs argue that this conclusion conflicts with existing SEC guidelines. Those
guidelines state:

       [T]he offering of condominium units in conjunction with any one of the following
       will cause the offering to be viewed as an offering of securities in the form of
       investment contracts:
       1. The condominiums, with any rental arrangement or other similar service, are
       offered and sold with emphasis on the economic benefits to the purchaser to be
       derived from the managerial efforts of the promoter, or a third party designated or
       arranged for by the promoter, from rental of the units.
       2. The offering of participation in a rental pool arrangement; and
       3. The offering of a rental or similar arrangement whereby the purchaser must hold
       his unit available for rental for any part of the year, must use an exclusive rental agent
       or is otherwise materially restricted in his occupancy or rental of his unit.
       In all of the above situations, investor protection requires the application of the
       federal securities laws.

Guidelines as to the Applicability of the Federal Securities Laws to Offers and Sales of
Condominiums or Units in a Real Estate Development, Securities Act, Release No. 33-5347,
1973 WL 158443 (Jan. 4, 1973). The District Court noted the potential conflict between these
guidelines and the case law, and explained that

       [a]lthough the SEC’s guidelines purport to be Howey-based, in some respects they
       seem more liberal than the Howey test (as developed by the lower courts) for
       determining when an investment contract exists. In particular, literal application of
       the first numbered paragraph in the SEC guidelines . . . could conceivably yield a
       finding that an investment contract exists irrespective of whether the investor retains
       control over the property. To the extent that the SEC guidelines conflict with
       Howey, the Court is duty-bound to follow Howey.

                                                  17
       But, as Plaintiffs correctly contend, we may not look only to the purchase

agreements, but must instead consider the whole transaction or scheme, including

the other representations made by the defendants. See Merchant Capital, 483 F.3d

at 756. Plaintiffs argue that the “exclusive rental agreements” with OMC combine

with the condominium purchase from Pulte to form a single scheme under which

Plaintiffs were left with no significant control over their investment. Plaintiffs are

correct that this Court’s precedents require examination of representations made

by promoters beyond the actual contract itself. In asserting their claims against

Pulte, Plaintiffs cannot create an investment contract by bootstrapping their

separate voluntary transaction with OMC to their condominium purchase from

Pulte. Plaintiffs, on the other hand, repeatedly allege that The Wear Group and

Mr. Wear were agents of Pulte. Of course, “conclusory allegations . . . or legal

conclusions masquerading as facts will not prevent dismissal.” Davila v. Delta Air



        We agree with the District Court. The guidelines are not entitled to deference under
Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S. Ct. 2778
(1984). See Christensen v. Harris Cnty., 529 U.S. 576, 587, 120 S. Ct. 1655, 1662–63 (2000)
(“Interpretations such as those in opinion letters—like interpretations contained in policy
statements, agency manuals, and enforcement guidelines, all of which lack the force of law—do
not warrant Chevron-style deference.”). They “are entitled to respect under . . . . Skidmore v.
Swift & Co., 323 U.S. 134, 140, 65 S. Ct. 161[, 164] [] (1944), but only to the extent that those
interpretations have the power to pursuade.” Christensen, 529 U.S. at 587, 120 S. Ct. at 1663
(quotation marks omitted). To the extent that Release 5347 would suggest a different outcome in
this case, it is only because it ignores Howey and its progeny’s focus on the control retained by
the condominium purchaser. Thus, to the extent the release conflicts with the controlling case
law, the District Court properly rejected it as unpersuasive.

                                               18
Lines, Inc., 326 F.3d 1183, 1185 (11th Cir. 2003); see also Sinaltrainal v. Coca-

Cola Co., 578 F.3d 1252, 1260 (11th Cir. 2009) (“Although it must accept

well-pled facts as true, the court is not required to accept a plaintiff’s legal

conclusions.”). However, Plaintiffs have alleged sufficient facts to render it

facially plausible that Pulte participated in promoting, or was affiliated with, the

rental pool so that an agency relationship was therefore present.

      First, Plaintiffs allege that Pulte offered a preferred lender program that

accommodated the rental program. While this conduct is consistent with the

promotion of the rental pool, it is also consistent with the promotion of its

purchase agreements standing alone, which would not give rise to securities

liability. See Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 553–57, 127 S. Ct.

1955, 1964–66 (2007) (explaining that there is a “need at the pleading stage for

allegations plausibly suggesting (not merely consistent with) agreement” to state a

claim under § 1 of the Sherman Act, where liability depends on proof of an

agreement). Second, Plaintiffs allege that a promotional article on The Wear

Group’s website purported to quote “a Pulte Representative” as stating that Pulte

was “proud to team up with Wear Group Realty.” Third, Plaintiffs include as an

exhibit in their amended complaint a document bearing the corporate insignias of

both The Wear Group and Pulte, stating “[i]nvestments like this come along once


                                           19
in a lifetime. The Wear Group, Pulte Homes (NYSE: PHM) and Osceola

Management have teamed up for what could be the best opportunity in history for

Real Estate Investors.” Finally, Plaintiffs allege that “PULTE enlisted . . . WEAR

and WEAR GROUP [ ] to sell the investment contracts to investors,” and that The

Wear Group earned a “commission from each sale of those units.” Indeed, the

purchase agreements between Pulte and plaintiffs Jerry and Jessica Craft inform

the purchasers that “[s]eller will pay a commission of 15% + $30,000 Marketing

Fee plus $10,000 Bonus of the purchase price to The Wear Group . . . . Buyer

agrees that Broker [The Wear Group] is acting as an agent on behalf of Seller

[Pulte].” Similar language can be found in the purchase agreements with other

plaintiffs. While Plaintiffs’ allegations may not establish that Pulte was complicit

in promoting a larger investment scheme, in the context of a 12(b)(6) Motion to

Dismiss, Plaintiffs need only “nudge[ ] their claims across the line from

conceivable to plausible.” Twombly, 550 U.S. at 570, 127 S. Ct. at 1974.

Plaintiffs have succeeded in pleading enough facts to make it plausible, despite the

numerous disclaimers in Pulte’s purchase agreements, that Pulte was linked to the

other defendants in the promotion of the properties as investment opportunities.

      Thus, when we view the transaction through the lens of the purchase

agreements with Pulte, Plaintiffs retained control over the management of the


                                         20
property and exercised that control by contracting with OMC. However, viewing

the larger scheme through the lens of the representations made by The Wear

Group, as Pulte’s alleged agent, and the rental agreements with OMC—which

were entered into before closing on the condominium units—the transaction as

alleged does have the elements of an investment contract. OMC argues that “[a]t

best, this arrangement could be described as some form of lease-back agreement

not between the owner and the original developer, . . . but between the Plaintiff[s]

and [their] property manager, OMC.” Accepting Plaintiffs’ factual allegations, as

we must, we agree with this characterization of the transaction. The alleged

promotional representations of The Wear Group and the rental program alleged to

be administered by OMC required that each plaintiff purchase a condominium unit

from Pulte and then, in effect, lease that unit to, or at least through, OMC. In

Edwards, the Supreme Court held that a lease-back agreement for payphones

could qualify as an investment contract under the Securities Act, even though the

investment would produce a fixed rather than variable return and the investors

were contractually entitled to that return. 540 U.S. at 391–97, 124 S. Ct. 895–98.

      OMC attempts to distinguish Edwards because “OMC was not using the

funds of subsequent purchasers to pay returns to earlier purchasers and Plaintiffs

in this case retained substantial control over their condominium units.” But the


                                         21
fact that “OMC was not using the funds of subsequent purchasers to pay returns to

earlier purchasers” does not suffice to distinguish Edwards. Certainly, in

describing how the payphone lease-back agreements at issue in that case went bad,

the Edwards Court explained that “[t]he payphones did not generate enough

revenue for [the company leasing the phones] to make the payments required by

the leaseback agreements, so the company depended on funds from new investors

to meet its obligations.” Id. at 392, 124 S. Ct. at 896. But, this description of the

eventual breach of the agreements and alleged violations of securities laws was

merely background information in that case, and in no way relevant to the Court’s

analysis of whether the transaction itself constituted an investment contract. See

id. at 394–97, 124 S. Ct. 897–98.

      We also reject OMC’s argument that Plaintiffs retained substantial control

over the condominium units. Certainly, as described above, Plaintiffs did retain

extensive control over the units under the purchase agreements. But to participate

in the scheme allegedly promoted by The Wear Group, Plaintiffs needed to

contract with OMC for the management of the properties as short-term rental




                                          22
units. And once they had so contracted with OMC, Plaintiffs no longer retained

significant control over their units, and in turn, over their investments.10

       We emphasize again that the allegations as to Pulte’s purchase agreements

alone are not sufficient to state a claim under securities laws, because the

transaction with Pulte did not require Plaintiffs to participate in any rental

agreement or contract with OMC for the management of the property. If this were,

like Edwards, a case involving payphones rather than condominiums, Pulte would

have been nothing more than an exclusive third-party supplier of the brand of

payphones that the promoter required for participation in a modified lease-back

scheme. The use of a third-party supplier would neither insulate the promoter

from securities liablity, nor by itself transform the purchase of equipment from the

third-party supplier into an investment contract that would bring that supplier’s



       10
            OMC argues that the Plaintiffs did have significant control because they were
“encouraged . . . to participate in the process of obtaining guests and bookings for their unit.”
Specifically, OMC informed Plaintiffs that they could use OMC’s website to “to see [their]
future reservations and make reservations [themselves].” We reject OMC’s suggestion that this
is a sufficient amount of control to prevent Plaintiffs from satisfying Howey’s third prong. In
Albanese, for example, we concluded that the investors’ power to decide where to place the ice
machines they had purchased from and leased back to the seller-lessee was “too insubstantial to
disqualify the agreements as securities,” because “the investors were dependent upon [the seller-
lessee’s] expertise and labor in arranging the placement,” and the seller-lessee “offered its
expertise in finding locations, contracting with the hotels and other institutions, servicing the
machines, and accounting for the profits.” 823 F.2d at 412. Similarly, Plaintiffs here relied on
OMC’s expertise and efforts in locating and securing tenants and managing the properties. We
conclude that Plaintiffs’ ability to make reservations through OMC’s website is “too insubstantial
to disqualify the [rental] agreements as securities.”

                                               23
conduct within the scope of federal securities laws.11 But, Plaintiffs successfully

allege that Pulte was affiliated with The Wear Group’s promotion of OMC’s rental

agreements.

       For these reasons, we conclude that while Plaintiffs have not alleged facts

necessary to establish an investment contract as to Pulte’s purchase agreements

standing alone, they have sufficiently alleged the existence of an investment

contract as to OMC, Mr. Murphy, The Wear Group, and Pulte as an affiliate of

those defendants.

                                                IV.

       Plaintiffs also argue that the District Court erred in considering the purchase

agreements, which were not attached to the amended complaint, but rather were

attached to Pulte’s motion to dismiss. Under the “incorporation by reference”

doctrine, “a document attached to a motion to dismiss may be considered by the

       11
           We observe that this case arises from facts somewhat similar to those at issue in
Hocking, 885 F.2d 1449. In that case, the plaintiff relied on the expertise and representations of
a real estate agent to purchase a condominium unit from private sellers on the secondary market
and contracted with another company for the management of the unit and participation in a rental
pool. Id. at 1452–53. The Ninth Circuit, sitting en banc, determined that the district court erred
in granting summary judgment in favor of the defendant real estate agent on the grounds that the
transaction did not constitute an investment contract. Id. at 1462. The Ninth Circuit stated that
“[t]here is no doubt that, had [the plaintiff] purchased the condominium and the rental pool
directly from the developer and an affiliated rental pool operator, and had the rental pool been for
a long term without any provision for early termination, [the plaintiff] would have purchased a
security.” Id. at 1456 (emphasis added). In this case, Plaintiffs have adequately alleged that the
rental pool managed by OMC and promoted by the Wear Group was affiliated with Pulte.


                                                24
court without converting the motion into one for summary judgment only if the

attached document is (1) central to the plaintiff’s claim; and (2) . . . . the

authenticity of the document is not challenged.” Horsley v. Feldt, 304 F.3d 1125,

1134 (11th Cir. 2002). As the authenticity of the purchase agreements is not

challenged, the only issue is whether the purchase agreements are “central to the

plaintiff[s’] claim[s].”

      Plaintiffs argue that the agreements were not central to their claims, which

were based on an investment contract arising from a broader scheme consisting of

a variety of representations outside of the purchase agreements. Thus, Plaintiffs

argue that their “securities claims did not rely on a violation of the Purchase

Agreements nor did [they] allege that the Purchase Agreements alone constituted

investment contracts.” We disagree with Plaintiffs’ contention that the purchase

agreements were not central to their claims. Without considering the agreements,

it would be impossible for the District Court to evaluate properly how much

control Plaintiffs exercised over their investments, which turns out to be a crucial

issue in this case. See Albanese, 823 F.2d at 410 (explaining that “the crucial

inquiry is the amount of control that the investors retain under their written

agreements”); see also SFM Holdings, Ltd. v. Banc of Am. Sec., LLC, 600 F.3d

1334, 1337 (11th Cir. 2010) (holding that “relationship-forming contracts are


                                           25
central to a plaintiff’s claim”). Moreover, Plaintiffs attempt to establish the

“investment of money” prong of the Howey test on the basis of their purchase of

the condominium units, and the relief they seek includes recision of these

contracts. We conclude that the District Court did not err in considering the

purchase agreements because those agreements are central to Plaintiffs’ securities

claims.

                                              V.

       For all of these reasons, we reverse the District Court’s dismissal of the

remaining federal and state claims against Pulte, OMC, Mr. Murphy, and The

Wear Group, and we remand this case to the District Court for further proceedings

consistent with this opinion.12

REVERSED and REMANDED.




       12
            We observe that the defendants moved to dismiss the claims on various alternate
grounds that were not reached by the District Court. See supra notes 3–5 and accompanying text.
We do not decide these issues, but instead remand to the District Court to consider them in the
first instance.

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