In re Cay Clubs

Cay Clubs purportedly developed and sold condominiums at the Las Vegas Cay Club resort. Real estate developer Jeffrey Aeder created and managed JDI Loans, LLC, and JDI Realty, LLC (the JDI entities), to extend financial support to develop Cay Clubs properties. Forty purchasers (plaintiffs) entered contracts to purchase Las Vegas Cay Club condominiums and related transactions with Flamingo Palm Villas, LLC, an entity Cay Clubs allegedly created and controlled. The purchasers sued alleging Cay Clubs, Aeder, JDI Loans, JDI Realty, and about 30 others (collectively, defendants) abandoned the plan to improve Las Vegas Cay Club and took the purchasers’ money. The purchasers said they had reviewed marketing materials, including Cay Clubs’ website, which promised Las Vegas Cay Club would be developed into a luxury resort. The website said Cay Clubs was “a partnership of professionals” and “partnership in excellence” with “strategic partner[s]” JDI Loans and JDI Realty on Cay Clubs’ development team and used JDI Realty’s logo alongside Cay Clubs’ logo. The purchasers claimed reliance on those partnership representations when purchasing their condominiums, stating in affidavits that they believed the JDI entities provided the necessary financial strength and experience to manage their investments and make the promised improvements. Aeder and the JDI entities countered that the purchasers did not credit a purported partnership with Cay Clubs because they contracted only with Flamingo Palm Villas, but an auditor’s report showed Cay Clubs comprised multiple limited-liability companies (LLCs) for each of its properties, including Flamingo Palm Villas. Flamingo Palm Villas’ manager had also signed a deed of trust relating to one Las Vegas Cay Club property and was identified in other documents as forming and being involved in other Cay Clubs properties. The trial court granted Aeder and the JDI entities summary judgment, finding insufficient evidence of a partnership under Nevada’s partnership-by-estoppel statute. The purchasers appealed.