# diamond lawsuit against SOME board directors !!!



## teepeeca (Jul 5, 2015)

I have found out that Diamond Resorts filed a lawsuit against only "SOME" of the board of directors of the Tahoe Beach and Ski Club.  Diamond is trying to "take over" our resort, and at least two of the directors apparently favor the takeover.  Therefore, they are not being sued in the filed lawsuit.

Part of the problem, I believe, is that VI (Vacation Internationale) decided to remove all but one of their owned units at TB&S and gave them to a Diamond resort in Las Vegas. Therefore, effectively blocking any VI owners of using the South Lake Tahoe property, BUT wanting to keep a VI person as a board director.

Can someone with knowledge PLEASE fill me in on the lawsuit, and what is actually going on.  Diamond resorts headquarters haven't answered my e-mails to them, trying to get answers.

Tony


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## jbercu (Aug 10, 2015)

Hi Tony:

You can find the full text of the Diamond complaint by going to:

http://tug2.net/timeshare_advice/Diamond-Resorts-Lawsuit/

and reading the 6 PDFs.

There are a number of items in the complaint that Diamond wants under Prayer for Relief.

The only item that has been resolved to date is the Injunctive Relief.
On May 22, 2015 the Judge filed the following Tentative Ruling:

LAW AND MOTION CALENDAR MAY 22, 2015

DIAMOND RESORTS, ET AL. v. TAHOE BEACH, ET AL., SC20150025

Motion for Preliminary Injunction; Motion to Strike

Plaintiffs Diamond Resorts Tahoe Beach & Ski Development, LLC;

Diamond Resorts U.S. Collection Members Association; and Diamond Resorts California Collection Members Association (“Diamond Resorts” or “plaintiffs”) commenced this action February 6, 2015, against 
defendants The Tahoe Beach and Ski Club Owners Association; Alfred Fong; Jacob Bercu; and Sedric Ketchum (“the Association” or “defendants”). Plaintiffs’ complaint asserts causes of action for (1) declaratory relief; (2) injunctive relief; (3) breach of fiduciary duty; and (4) appointment of receiver.

Two matters are now pending. First, plaintiffs move to strike defendants’ affirmative defenses in their answer. Second, plaintiff’s move for a preliminary injunction.

1.      MOTION TO STRIKE

First, plaintiffs move to strike defendants’ nineteen affirmative defenses.

The motion is made on the basis defendants failed to adequately allege ultimate facts in their affirmative defenses.
“The court may … [¶] (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. [¶] (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Code of Civ. Proc. § 436, emphasis added.) A motion to strike is generally used to address defects appearing on the face of
a pleading that are not subject to demurrer. (Pierson v. Sharp Mem. Hosp. (1989) 216  Cal.App.3d 340, 342 [264 Cal.Rptr. 673].)

Here, the basis for plaintiffs’ motion would have been subject to a special demurrer, which plaintiffs did not file. “ ‘[A] motion to strike cannot be made to serve the purpose of a special demurrer. Where a motion to strike is so broad as to include relevant matters, the motion should be denied in its entirety.’ [Citation.]” (Triodyne, Inc. v. Super. Ct. (1966) 240 Cal.App.2d 536, 542 [49 Cal.Rptr. 717].) Because the determination of whether to strike a pleading or portions of a pleading is discretionary, and because plaintiffs’ motion is so broad as to include relevant matter, plaintiffs’ motion is denied in its entirety.

2.      MOTION FOR PRELIMINARY INJUNCTION

Next, plaintiffs move for a preliminary injunction to enjoin defendants “from continuing to prevent Tahoe Development from using and enjoying certain of Tahoe Development’s interests in real property located at the Tahoe Beach & Ski Club timeshare resort in South Lake Tahoe .…” (Mot. At p. 1.) The motion is opposed.

2.1  Legal Standard

In considering a motion for preliminary injunction, “a court must weigh two ‘interrelated’ factors: (1) the likelihood that the moving party will ultimately prevail on the merits and (2) the relative interim harm to the parties from issuance or nonissuance of the injunction.” (Butt v. State of Cal. (1992) 4 Cal.4th 668, 677–678 [15 Cal.Rptr.2d 480], citing Common Cause v.Bd. of Supervisors (1989) 49 Cal.3d 432, 441–442 [261 Cal.Rptr. 574].) The trial court is to weigh “the potential-merit and interim-harm factors; the greater the plaintiff’s showing on one, the less must be shown on the other to support an injunction.” (Butt, supra, 4 Cal.4th at p. 678.) “A trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim.” (Common Cause, supra, 49 Cal.3d at pp. 442–443.)

2.2 Evidentiary Objections
Plaintiffs’ Objection Nos. 1–6 to the Declaration of Alfred Fong are overruled.
Plaintiffs’ Objection No. 1 to the Declaration of Sedric Ketchum is overruled.
Plaintiffs’ Objection Nos. 1–2 to the Declaration of Jacob Bercu are overruled.

2.3 Request for Judicial Notice
Plaintiffs request that the court take judicial notice of (1) Grant Deed, dated December 11, 2014, and recorded in El Dorado County on December 22, 2014 (Decl. of Frank Goeckel, Ex. A); (2) Tahoe Beach and Ski Club Declaration of Vacation Plan and the Amendments thereto, recorded in El Dorado County (Decl. of Frank Goeckel, Ex. B); (3) Bylaws of The Tahoe Beach and Ski Club, recorded in El Dorado County on January 20, 2014 (Decl. of Frank Goeckel, Ex. B); and (4) the Association’s Articles of Incorporation and Rules and Regulations filed with the California Secretary of State’s Office on March 25, 1983 (Decl. of Frank Goeckel, Ex. B).
Plaintiffs’ request for judicial notice is granted in its entirety. (Evid. Code § 452, subd. (h).)

2.4 Discussion
The Association’s members consist of the Resort owners. (Decl. of Frank Goeckel, Ex. B.) The Association operates the Resort by way of the Board of Directors of the Association. (Ibid.) There are five directors on the Board.  In 2004, the Association contracted with Vacation Resorts International (“VRI”) to be the management company for the Resort. (Id., ¶ 8.) An affiliated
company of VRI, specifically VRI Development & Sales (“VDS”), entered into a sales management agreement with the Association in 2006. (Id., Ex. C.) On September 19, 2009, the Association approved a Corporate Resolution giving “limited power of attorney to Stacey R. Shilling, VRI Chief Operating Officer, and to any person designated by VRI, as VRI deems necessary, to sign all title and escrow documents and deeds of sale of the Association owned
intervals on behalf of the Association .…” (Id., Ex. D.) The purpose of the resolution was “to allow smooth and timely processing of sales documents and deeds for” the Association. (Ibid.) Apparently this resolution was never recorded in the county. (Decl. of Alfred Fong, ¶ 7.)
However, in November 2014, Shannon Krutz, then Secretary of the Board of Directors for the Association, signed an Affidavit of Continuing Authority as to the Corporate Resolution, declaring that the resolution was in full force and effect and had not been withdrawn or rescinded. (Decl. of Frank Goeckel, Ex. G.) The Affidavit was notarized in the State of Washington.
(Ibid.) A majority of the Board of Directors—Alfred Fong, Sedric Ketchum, and Jacob Bercu—all declare that Ms. Krutz did not have the Board’s authorization to execute this Affidavit on behalf of the Association, and they would not have given her such authorization. (Decl. of Alfred Fong, ¶ 14; Decl. of Sedric Ketchum, ¶ 14; Decl. of Jacob Bercu, ¶ 14.)  Just prior to the passage of the Corporate Resolution, in a letter dated September 17, 2009, Michael Vasey, Vice President of VDS, notified the Association that VDS intended to terminate the sales management agreement. (Defs.’ Appendix of Exhibits, Ex. C.) The letter stated the agreement would be terminated effective as of the date of the last signature.
(Ibid.) There is no last signature on the court’s copy, but a copy of the minutes from the September 19, 2009, meeting of the Board of Directors for the Association indicates the Board acknowledged and accepted the letter of termination from VDS. (Id., Ex. B at p. 4.)
Although the sales management agreement was terminated, VRI continued to manage the Resort. Mr. Fong declares that in the summer of 2014, the Association notified VRI that it was terminating the management agreement with VRI effective January 1, 2015. (Decl. of Alfred Fong, ¶ 10.)  Mr. Fong also declares that “[p]rior to November of 2014, the Board advised
VRI that VRI needed advance approval from the Board before selling Association owned Vacation plans to an Owner in any bulk number of ten or more units.” (Id., ¶ 11.)
On December 22, 2014, a Grant Deed was recorded in El Dorado County.  (Decl. of Frank Goeckel, Ex. A.) The Deed was signed by Stacey Shilling (purportedly in the capacity as Vice President of Operations for the Association), granting to Diamond Resorts 241.5 Vacation Plans. (Ibid.)
Based on the foregoing, it appears the sales management agreement with VDS was terminated in or about September 2009. Regardless of the validity of the Affidavit of Continuing Authority signed by Shannon Krutz with regard to the Corporate Resolution, that resolution merely gave limited power to VDS to sign title and escrow documents and deeds of sale for the purpose of timely processing. The resolution says nothing regarding the authorization to sell Vacation Plans.
Additionally, there is nothing in the governing documents to indicate Ms. Krutz had authority to sign that Affidavit. The Restated Bylaws, recorded in January 2004, set forth the duties of the Secretary of the Association. More specifically, the Secretary is to keep a book of minutes of all meetings of the Directors and Members, provide notice of all meetings of the Members and the Board, keep the seal of the Association in safe custody, keep a roster of the Members, and other powers and duties prescribed by the Board or the Bylaws. (Decl. of Frank Goeckel, Ex. B, Restated Bylaws of the Association at p. 13, § 13.) In this regard, a majority of the Board of Directors declare that Ms. Krutz did not have the Board’s authorization to sign the Affidavit.

Thus, when these purported sales to Diamond Resorts occurred in or about December 2014, the only authorization VRI was acting under was the management agreement, not the 2009 sales agreement. There is no evidence that, at the time of the sale, VRI had the authority to sell over 200 Vacation Plans to Diamond Resorts.

Accordingly, based upon the evidence before the court at this time, it does not appear likely that plaintiffs will prevail on the merits. With regard to harm to plaintiffs, the possible harm is the loss of revenue from using the Vacation Plans in dispute. Plaintiffs have an adequate remedy at law should they ultimately prevail against defendants. After weighing potential-merit and interim-harm factors, the court finds the factors weigh against the issuance of a preliminary injunction. Plaintiffs’ motion for preliminary injunction is denied.

TENTATIVE RULING:

PLAINTIFFS’ MOTION TO STRIKE AFFIRMATIVE DEFENSES IS DENIED.
PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION IS DENIED.

On June 17, 2015 the Judge heard oral arguments pro and agains the tentative rulling.
On June 19, 2015 the judge declared “The Tentative Ruling becomes the Order of the Court”.

Thanks


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## Ty1on (Aug 10, 2015)

Wow, DRI is getting pummelled here.


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## jbercu (Sep 11, 2015)

*Timesharing Today Article About This Case*



teepeeca said:


> Can someone with knowledge PLEASE fill me in on the lawsuit, and what is actually going on.  Diamond resorts headquarters haven't answered my e-mails to them, trying to get answers.
> 
> Tony



This article titled "Timeshare Election in Lake Tahoe Pits Legacy Board Owners Against Diamond Resorts" was released in an Email broadcast by Timesharing Today Express.

The Article was written by:
Jeff Weir, Chief correspondent
RedWeek.com


*Timeshare Election in Lake Tahoe Pits Legacy Board Owners Against Diamond Resorts*
 By Jeff Weir 

A nasty election contest is taking place on a sunny beach in Lake Tahoe, where a razor-slim 3-2 majority of the board members at Tahoe Beach and Ski Club, a sleepy 140-unit legacy timeshare in the shadows of Heavenly's ski slopes, is fighting Diamond Resorts' attempt to take control of the board and, perhaps, the resort. 

The TBSC-Diamond feud is taking place in the board room and on the beach --- literally, a 420-foot stretch of white sandy lakefront that the resort owns but which Diamond allegedly covets (and denies) because of its proximity to Diamond's Lake Tahoe Vacation Resort right next door. The battle is also boiling in the El Dorado County (CA) Superior Courts, where Diamond is suing the three majority board members, President Alfred Fong, Treasurer Jake Bercu and Vice President Sedric Ketchum, for rejecting Diamond's Dec. 11, 2014, purchase of 241.5 vacation plans arranged by the club's former management company, VRI.

Diamond is also pushing its case at the ballot box. Frank Goeckel, a Diamond corporate executive, and Cathy Ryan, a former board member who wants to work with Diamond, are running to unseat Fong and Bercu at the resort's annual HOA meeting Sept. 26. If one or both of them succeed, the board's majority will swing in favor of a pro-Diamond future at TBSC. The other two board members, Shannon Krutz and Steve Williams, are considered pro-Diamond votes. 

"For us, it's all or nothing," Bercu said. "If we lose one seat on the board, the whole resort is gone." 
Bercu owns 14.5 weeks and has spent nearly every summer at the resort during the past 20 years. He is a business consultant adept at using social media to build owner discussion forums. He is an intensely passionate defender of the resort's original owners and also extremely skeptical of all things Diamond. In a July 3 letter to fellow board members, Bercu described Diamond as a "Goliath" making biblical threats to the Association's 'David.' As the board's lightning rod --- he and other board members call Goeckel a 'bully'--- Bercu is willing to ramp up the negative rhetoric about Diamond's timeshare practices in order to galvanize owners to vote for himself and Fong. Their concern, he says, is that Diamond will not only take over the resort, but transform it into a Diamond-like entity that will treat original deeded-owners like second-class citizens, raise maintenance fees and change the reservation system in favor Diamond Club members.

Goeckel, Diamond's senior VP of Management Services Development, is equally forthright about his company's objectives. "Diamond's here to stay. We're not going anywhere. If we don't win this election, we will win next year. But there's a lot of hostility here I don't understand." 

*Classic Example of Changes in the Industry* 
The case --- pitting longtime owners resisting a giant timeshare company's attempt to take control of a resort by buying up delinquent units on the secondary market --- is a real-time example of changes within the timeshare industry: Consolidation of resorts and inventory by major conglomerates, such as Diamond, who target legacy resorts in high-value markets for acquisition; compared to the challenges faced by a stand-alone legacy resort --- in a prime location --- trying to stay financially afloat and independent despite double-digit delinquency rates caused by original owners who are older, unable to travel, and/or unwilling to keep paying maintenance fees. 
Diamond recently completed a massive renovation project at the Lake Tahoe Vacation Resort, which sits 100 yards away from TBSC, but which has no beach of its own. The company also has reservation and usage options at four Tahoe resorts, including TBSC. During the past two years, Diamond has methodically acquired TBSC timeshares at tax sales and foreclosures --- and now owns 25 percent of the resort's timeshares. By any yardstick, it is already the majority owner of the resort. 
Those purchases set off alarms on the TBSC board. Last fall, the board informed its then management company, VRI, not to process any more bulk transfers without advance board authorization. It also terminated VRI's longtime contract, effective Jan. 1. 

Despite that admonition, VRI processed the sale of 241.5 additional Vacation Plans to Diamond in December, based on an affidavit from Krutz, the board secretary and an executive with Vacations Internationale. She said that VRI had continuing legal authority to pursue the sale. 

*The Legal Case Goes Ballistic *
Board President Fong, a retired postal worker who owns eight weeks at the resort, repudiated the sale in a Jan. 9 letter to Diamond on grounds that the board "did not and would not have authorized" the transaction. Worse, Fong said, "the transaction is fundamentally wrong" because Diamond knew, ahead of the sale, that the board was opposed to bulk transfers that could give corporate entities an undue influence over the board, and resort, programs. Fong offered to work with Diamond to resolve the dispute and put the issue to arbitration, plus refund Diamond's $228,200 purchase. 

Instead, one week later, Diamond's lead litigation attorney, Florida lawyer Robert Webb, who also serves as treasurer of the American Resort Development Association (ARDA), sent Fong a stinging rebuke, demanding immediate recognition of Diamond's grant-deed as well as its right to use and reserve the units for members of Diamond's travel club. 

"The association and its officers and directors will be liable to Diamond--for any and all loss or damage suffered --arising as a result of the Association's disavowal and repudiation of the grant deed," Webb wrote. Moreover, Webb scolded Fong for beaching his fiduciary responsibilities, stating that the Association had "inexplicably turned its nose up at approximately $365,000 of Diamond Tahoe's money for the purchase of the 287 timeshare interests (241.1 Vacation Plans) and the related 2015 common expense assessments. This is money that the Association has no immediate prospects of collecting from another source, resulting in assessments to Association members that are higher than they would otherwise be if Diamond Tahoe's funds were accepted." 
The TBSC board refused to budge. So on Feb. 6, Diamond made good on Webb's threats, filing a lawsuit for damages and requesting an injunction that would force the board to immediately recognize Diamond's ownership of the disputed timeshares. 

Since then, despite many motions and several hearings, Diamond has lost every round in court. In July, Superior Court Judge Steven C. Bailey denied Diamond's bid for an injunction and opined that Diamond would eventually lose the case at trial. 

"There is nothing in the governing documents to indicate Mrs. Krutz had authority to sign that affidavit (authorizing the sale to Diamond)," Bailey said in his ruling. "There is no evidence that, at the time of the sale, VRI had the authority to sell over 200 Vacation Plans to Diamond Resorts. Additionally, based upon the evidence before the court at this time, it does not appear likely that (Diamond) will prevail on the merits (of the lawsuit)." 
Unfazed by the judge's rebuke, Diamond filed motions for a second injunction attacking the upcoming election process. Diamond asked Judge Bailey to bring in an independent trustee to monitor the election alleging, in effect, that Fong and Bercu board would otherwise rig the election process on their behalf. The board fired back in kind, accusing Diamond of trying to manipulate the election process to guarantee Goeckel's victory on Sept. 26. The board also filed a counter-suit against VRI for processing the disputed sale. 
Last Friday, Sept. 4, Bailey denied Diamond's motions. The judge authorized Grand Pacific Resorts, the new management company for TBSC, to oversee the board election and ensure a fair counting of the proxies. 

*Timeshare Election Day 2015 Straight Ahead *
Barring another challenge of the election process, the stage is set for election day Sept. 26. Bercu, Fong and Ketchum plan to turn the vote-counting event into an owners' party on the beach. 
We'll follow up after the election and will report on new developments relative to the litigation. Email comments to staff@tstoday.com Subject: TBSC


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## Maple_Leaf (Sep 11, 2015)

*DRI up to their old tricks again*

DRI have a long history of trying to take over owner-controlled resorts.  You can find their successes in their resort catalogue.  Their defeats include Cypress Pointe in Orlando, Royal Dunes in Hilton Head and Bluegreen Resorts.  For now.  Like terrorists, DRI keep coming at you and only have to get lucky once.


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## jbercu (Sep 14, 2015)

*Who Pays the Legal Costs?*

Most Club members believe that DRI uses whatever means they have to acquire additional inventory, and then as consumers purchase additional points, DRI transfers timeshares to the Trust.  The Trust allows each of the Collections to use the timeshares based on the Collection paying the dues to the Trust.

It is sad to see that in this case the US Collection and the California Collection are taking part as plaintiffs so they can share the legal costs even though they have no horse in this race. 

It is also interesting to note that the Hawaii Collection also has some Tahoe Beach and Ski units but is not part to this suit.  Either the Hawaii Collection is maxed out on legal fees, or it cannot withstand additional increases in dues.


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## Maple_Leaf (Sep 18, 2015)

*Good luck Bercu, Fong and Ketchum*



jbercu said:


> *Timeshare Election Day 2015 Straight Ahead *
> Barring another challenge of the election process, the stage is set for election day Sept. 26. Bercu, Fong and Ketchum plan to turn the vote-counting event into an owners' party on the beach.



We hope enough owners vote to kick the DRI lackeys to the curb!


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## jancpa (Sep 27, 2015)

*A Win for the "little" guy*

Jake Bercu and Al Fong were re-elected Sept 26 over DRI candidates Frank Goeckel and Cathy Ryan.  Congratulations for keeping local control of the Board as opposed to the Corporate control of DRI.


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## Egret1986 (Sep 27, 2015)

*Great news on the re-elections*



jancpa said:


> Jake Bercu and Al Fong were re-elected Sept 26 over DRI candidates Frank Goeckel and Cathy Ryan.  Congratulations for keeping local control of the Board as opposed to the Corporate control of DRI.



Just having become a recipient of a DRI acquisition, it's nice to hear that those putting up the good fight were actually successful. 

Thanks for sharing the news!


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## anne63 (Sep 30, 2015)

Maple_Leaf said:


> DRI have a long history of trying to take over owner-controlled resorts.  You can find their successes in their resort catalogue.  Their defeats include Cypress Pointe in Orlando, Royal Dunes in Hilton Head and Bluegreen Resorts.  For now.  Like terrorists, DRI keep coming at you and only have to get lucky once.


I experienced DRI's muscle when they took over Cypress Pointe Grande Villas in Lake Buena Vista.  Dealing with DRI has severely depressed my time sharing experience to the point that I want out.


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## TUGBrian (Oct 20, 2015)

looks like a win for the owners here!

http://blog.redweek.com/2015/10/timeshare-owners-deny-diamond-takeover.html


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## Ty1on (Oct 20, 2015)

TUGBrian said:


> looks like a win for the owners here!
> 
> http://blog.redweek.com/2015/10/timeshare-owners-deny-diamond-takeover.html



Congrats jbercu!


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## jbercu (Oct 21, 2015)

*This Battle was Won by the Traditional Deeded Owners*

Thanks Ty1on.

It was a great battle of philosophies.

There were many issues in the election including Non-Profit VS. For Profit organizations, ownership at a specific resort VS. Club Ownership in a pool of resorts, owner overall satisfaction, and Points VS. Deeded Ownership.

An owner asked “If I spend $650 at Tahoe Beach and Ski I get a One Bedroom Two Bathroom partial kitchen Summer week 7 nights at a resort with a private beach on Lake Tahoe.  If I spend the equivalent money as a member of Diamond Resorts, and get equivalent points of $650, where can I go?

This was a “stump the Band” moment.  The Diamond Resorts Board candidate tried the “Well, you can’t get 7 nights”, “Well, you can’t get Summer”, Well, you can get a Studio”, The owner repeated the question “Where can I go for $650?”.  Diamond candidate explained that Diamond Resorts is mostly based on Two Bedroom Units.  The owner repeated the question where can I go for $650?
The answer came from the crowd: “Nowhere, nowhere, nowhere”.

The Diamond Candidate sat down.

Legacy resorts have a terrible time trying to get owners that have been disenfranchised for over 20 years, to come back and believe that they have a stake in the Resort and a seat on the Board to represent them.  But, the experience at Tahoe Beach and Ski has been that once owners are re-engaged, their contribution to the well-being of the resort is priceless.
The Board seats at the 2015 elections were won by 2200 votes out of 7140 with no cumulative voting.

30% + of the owner base voted by proxy for the Traditional Deeded owners.  Less than 40 proxy votes were given to the Board, for the Board to vote as the Board desired.

This Battle was won by the Traditional Deeded owners, not by any specific candidate.

Thanks


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## TUGBrian (Oct 21, 2015)

Such a rarity that the owners get a win over the developers...kudos to all involved!


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## carl2591 (Nov 1, 2015)

*Tahoe Beach and Ski Club, Diamond Resorts DRI, article.*

There is a good article in the latest *TimeShare Today* magazine about the beat back of Diamond Resorts at this fine older resort on the shore of Lake Tahoe. 

It shows with effort, time and folks that are willing to do the hard stuff, the likes of Diamond Resorts can be reined in as needed. 

This info need to be forwarded to every person that reads or buys or is thinking about buying into a Diamond Resort and how they have abused the power of the HOA to inflict pain on the owners as we have seen in other resorts they have " taken" over, all with good intent so they say.  

I can tell you the info I have gotten for this forum and others on DRI have changed my mind on buying into a DRI resort and hoping the ones I do own at are NEVER taken over by DRI..

I know the DRI fanboys/girls will come on saying how great it is now in the club and how great the resorts are but i know that is mostly smoke and mirrors paid for by over inflated MF's.  but flame on..


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## WBP (Jun 2, 2016)

Diamond Resorts International is up to similar shenanigans at Club Intrawest.


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