Redding v. Montana First Judicial District Court, 281 P.3d 189

Redding, a 76-year-old widow with limited property management experience, bought four DBSI TICs in 2004 via 1031 exchanges brokered by Acquiron.
DBSI marketed TICs as investments with a guaranteed 6-7% annual return funded by DBSI’s lease payments, with DBSI acting as master tenant and property manager.
DBSI collapsed in 2008, investors learned of large losses, and DBSI was found to be running a Ponzi scheme by a bankruptcy examiner.
Redding sued AZ (Anderson ZurMuehlen & Co. and related individuals) for various securities-related claims, including unlawful sale of securities and negligent misrepresentation.
The District Court granted partial summary judgment holding the TICs were not securities under Montana law, rendering Redding’s remaining claims problematic.
Redding sought supervisory control in Montana Supreme Court to challenge the District Court’s ruling on whether TICs are securities.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Do the DBSI TICs constitute securities under the Securities Act of Montana?	Redding argues TICs are securities under the Act due to common venture and investor reliance on others' efforts.	AZ contends TICs were not securities in 2004 and that a contract-based fixed return negates common enterprise.	Yes; TICs are securities under the Act.
Was supervisory control appropriate to review the district court ruling?	Supervisory control necessary to correct a legal error causing significant injustice and to avoid costly litigation.	Appeal is a sufficient remedy; supervisory control would flood court dockets.	Yes; supervisory control was appropriate.

Edwards v. United States Supreme Court, 540 U.S. 389 (U.S. 2004) (fixed-rate returns can be securities; investor protection scope)
SEC v. SG, Ltd., 265 F.3d 42 (1st Cir. 2001) (horizontal/commonality framework for common enterprise)
SEC v. Infinity Group Co., 212 F.3d 180 (3d Cir. 2000) (pro-rata profits and pooled funds support common venture)
SEC v. Unique Financial Concepts, Inc., 196 F.3d 1199 (11th Cir. 1999) (broad vertical commonality and reliance on promoter/manager)
Leonard v. United States, 529 F.3d 83 (2d Cir. 2008) (economic reality and investor control analysis)
Mordaunt v. Incomco, 469 U.S. 1115 (U.S. 1985) (discussion of common enterprise and investor control)
Duncan v. Montana, 181 Mont. 382, 593 P.2d 1026 (Mont. 1979) (Montana test for investment contracts under the Act)
Reves v. Ernst & Young, 494 U.S. 56 (U.S. 1990) (broad consideration of instruments within the security definition)
Howey Co. v. SEC, 328 U.S. 293 (U.S. 1946) (economics of investment contracts and reliance on others)