MEMORANDUM OPINION AND ORDER I. INTRODUCTION Plaintiffs own fractional interests in designated “Club Units” in the building at the corner of Fifth Avenue and East Fifty-Fifth Street in Manhattan that also houses The St. Regis Hotel. Plaintiffs have the right to rent their Club Units when they do not occupy them. Plaintiffs have the option, but not the obligation, to rent their units using the hotel’s reservation management system. The governing agreements permit the hotel to prioritize placing potential guests in its rooms, rather than in Club Units owned by Plaintiffs. Plaintiffs have sued the owners of the hotel and others, claiming that the hotel’s failure to give rentals of Plaintiffs’ property equal priority to the hotel’s own rooms has unjustly enriched the hotel and others. Because Plaintiffs have not plausibly pleaded that the defendants benefitted at their expense, and because it is not unjust to permit the hotel to keep the money it earned from renting its own rooms, Defendants’ motion to dismiss Plaintiffs’ unjust enrichment claims is GRANTED. II. BACKGROUND1 A. The St. Regis Residence Club Offering Plaintiffs are the purchasers of fractional timeshare interests in a landmark building on the corner of Fifth Avenue and East 55th Street in Manhattan. Second Am. Compl. (“SAC”) (Dkt. No. 96) 1. The building is the site of the St. Regis New York Hotel (the “St. Regis”). Id. In 2006, Starwood Hotels and Resorts Worldwide, LLC (“Starwood”), as part of a joint venture with other entities, filed a condominium map on the St. Regis, dividing it into four components: the “Hotel Unit,” the “Retail Unit,” the “Suite Units,” and the “Club Units.” Id. 3. The Retail Unit is primarily a high-end retail space at the intersection of 5th Avenue and 55th Street. Id. That space alone recently sold for $700 million. Id. The “Hotel Unit” consists of all floors of the hotel other than floors 8 through 11. Id. St. Regis The Suite Units and the Club Units are each “governed by an offering plan filed with the New York State Department of Law.” Id. 4. The offering is known as the Fifth and Fifty-Fifth Residence Club (the “Residence Club”). Id. 1. The St. Regis Residence Club, New York, Inc. is the Residence Club Sponsor (the “Sponsor”). Id. 18. B. The Rental Program Plaintiffs’ unjust enrichment claims center on the rental of interests in Club Units. Pursuant to the governing offering plan (the “Offering Plan”), purchasers of interests in Club Units, such as Plaintiffs, have the right to rent out their Club Units when they are not otherwise in use. SAC Ex. 6, Dkt. Nos. 96-6 to 96-27. The Offering Plan states Club Members may rent their Club Week(s) using the rental program operated by Club Manager, using a third party unrelated to Club Manager or may rent their Club Week(s) themselves. Only Fixed Time or Floating Time reserved as a full Club Week may be rented. A Club Member may rent up to fourteen (14) days of time associated with their Club Interest each Use Year using the rental agent affiliated with Club Manager. THE ABILITY OF A CLUB MEMBER TO RENT CLUB WEEKS WILL BE EXTREMELY LIMITED. CLUB MEMBERS WILL BE COMPETING WITH SPONSOR FOR THE RENTAL OF CLUB WEEKS. CLUB MEMBERS SHOULD NOT PURCHASE A CLUB INTEREST WITH ANY EXPECTATION OF RENTAL FOR CLUB WEEKS RESERVED AS PART OF THE CLUB INTEREST. Offering Plan at 90 (emphasis in original). The risk factors contained in the Offering Plan underscored that purchasers should not acquire interests in Club Units with the expectation that they could be rented at a profit, and that their rentals would compete with rentals of the Sponsor’s unsold units. Id. at 3 (“The purchase of a Club Interest should be based upon its value as a vacation experience,…and not considered for purposes of acquiring an appreciating investment or with an expectation that the Club Interest may be rented or resold at a profit…. Any Club Member attempting to rent or resell a Club Interest would have to compete, at a substantial disadvantage, with Sponsor in the rental and sale of its Unsold Club Interests.”). While Plaintiffs acknowledge that the Offering Plan gave Sponsor the right to rent some interests in Club Units, they allege that “the Club Offering Plan granted Defendants a very limited right to rent….” SAC 145. Plaintiffs allege that Sponsor is instead renting retained Club Units on a massive scale — “not only the 217 nights that might be allowed in the Club Offering Plan, but also all 28 nights in each of the 98 Club Interests they own, which equals 2,744 nights.” Id. Plaintiffs assert that the massive rental of unsold, retained Club Interests violated their reasonable expectations under the parties’ contract. That assertion undergirds Plaintiffs’ claims against Sponsor for breach of contract, which are not challenged in this motion. Id. 194. Plaintiffs’ unjust enrichment claims are based upon actions taken by Defendants Starwood Hotel and Resorts Worldwide, LLC (“Starwood”), and its wholly-owned subsidiary, St. Regis New York Operating LLC, the operator of the hotel (“Operator,” and, together with Starwood, the “Hotel”)2, in connection with the rental of interests in Club Units. Id.
