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[2016 - Lennen v. Marriott]

Discussion in 'Marriott Vacation Club' started by taffy19, May 21, 2016.

  1. DannyTS

    DannyTS TUG Member

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    "While Marriott, First American, and others have profited greatly from sales of the MVC Product, purchasers of the MVC Product continue to suffer the consequences of the deception. For one, MVC Owners are deprived of any of the benefits of real-property ownership while shouldering all the burdens, costs, and fees as if they had such title. Moreover, purchasers continue to suffer harm as a result of Marriott's opaque and discretionary point-valuation process, which results in significant dilution and lacks any reliable metric for tracking their so-called beneficial interests, as well as Marriott's unfettered process of adding and restricting access to properties in the underlying land trust."

    Hard to argue that the developers are the main beneficiaries of the point systems
     
    CalGalTraveler likes this.
  2. rthib

    rthib TUG Member

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    If you go look at what happened vs the press release from the law firm "A Florida federal judge has partly granted Marriott Ownership Resorts Inc. and related entities’ bid to toss a proposed class action accusing them of duping timeshare purchasers into invalid real estate deals, but he preserved the case’s primary claim that consumer deeds attached to the properties are void."

    Here is the conclusion of the order - Not so good for the Ambulance chaser

    Based on the foregoing, it is ORDERED and ADJUDGED as follows:
    1. Marriott Defendants’ Dispositive Motion to Dismiss (Doc. 134) is GRANTED in part and DENIED in part.
    2. Defendant MVC Trust Owners Association, Inc.’s Dispositive Motion to Dismiss (Doc. 135) and First American Defendants’ Motion to Dismiss (Doc. 136) are GRANTED.
    3. Defendant Orange County’s Motion to Dismiss (Doc. 144) is DENIED.
    4. Counts II and VI, to the extent Plaintiffs assert that timeshare estates cannot be offered in a multisite timeshare plan, are DISMISSED with prejudice.
    5. Counts III, V, VII, VIII, IX, X, XI, XII, XIII, Florida Rico Counts I & II, and Plaintiffs’ punitive damages claim are DISMISSED without prejudice.
    DONE and ORDERED in Orlando, Florida on March 31, 2019.


    What the judge ruled was that on only one count did the lawyer even get close to making a claim. Not that the claim was valid or correct but that there was even something to talk about. From reading the filings, don't think they will win on that one either. And since the County could not get out of Suit that means the lawyers are going against MVCi and the government of a county that gets a lot of money from timeshares.
     
    Last edited: Apr 4, 2019
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  3. rthib

    rthib TUG Member

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    Also, they also messed up on filing

    "C. Leave to Amend Plaintiffs have not requested leave to amend their Amended Complaint. “A district court is not required to grant a plaintiff leave to amend his complaint [sua sponte] when the plaintiff, who is represented by counsel, never filed a motion to amend nor requested leave to amend before the district court.” Wagner v. Daewoo Heavy Indus. Am. Corp., 314 F.3d 541, 542 (11th Cir. 2002). Moreover, Plaintiffs were already given one opportunity to amend their Complaint. Thus, Plaintiffs will not be granted leave to amend"


    Judge has some pretty harsh conclusions too:
    The Court is not required to accept Plaintiffs’ conclusory allegations. Accordingly, Plaintiffs have failed to state a claim as to Count V.

    Plaintiffs do not allege otherwise, and therefore, Count IX fails to state a claim

    Such conclusory allegations are insufficient to state a claim, and therefore, Count X will be dismissed.
     
    Last edited: Apr 4, 2019
  4. rthib

    rthib TUG Member

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    Also, found this order the day after that hearing:

    "This case comes before the Court without a hearing on Plaintiffs’ Motion to Certify Class (Doc. 184) and Motion for Leave to File Class Certification Reply Brief (Doc. 202).
    The motion to certify is no longer seasonable in light of the Order on the motions to dismiss (Doc. 221).
    The motion to certify class and to file a reply brief are therefore DENIED without prejudice to renewal if, and when, appropriate.
    DONE and ORDERED in Orlando, Florida on April 1, 2019.


    So don't think Marriott is too worried
     
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  5. ocdb8r

    ocdb8r TUG Member

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    ...I dont know. Granted the firm filing the complaints seemed to have missed the mark on several counts, the claim sustained by the court could attract more (competent) sharks. Out of pure fascination I would love to see this properly litigated. It's a very interesting proposition that as documented, the MVC points trust doesn't properly constitute real property.
     
  6. jmhpsu93

    jmhpsu93 TUG Member

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    Sheraton Vistana Villages (x2)
    I just had this conversation with my mortgage broker; he was asking for the address of my 2nd mortgage property and I had no idea. I looked up the deed in the Orange County FL database and it's real vague and the only address is a PO Box for MVCI. My weeks at Grande Vista are much more clear, "week XX unit XXX".
     
  7. Luvtoride

    Luvtoride TUG Member

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    I haven't gone back and checked my sales documents, but I never felt as if I was buying Real property when purchasing DC points from Marriott. What damages are the Plaintiffs seeking? Recission of the contracts? Seems like alot of trouble to go through to Rescind.
     
  8. ecwinch

    ecwinch Moderator

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    Like all of these type of class action lawsuits.... the lawyers are seeking a settlement payday. The class action members will get some shiny baubles... a free night and better disclosure in the documents.
     
  9. rboesl

    rboesl TUG Member

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    Vidanta Grand Mayan
    Villa del Arco Cobo
    Grandview Las Vegas
    Vacation Village at Bonaventure
    To me what stood out was the following quote from the article:

    "When contacted by Law360 about the decision, Newman Ferrara partner Jeffrey Norton, attorney for the Plaintiffs, explained that “because the MVC consumer deed is the basis for the conveyance of purported timeshare interests in the MVC Trust, a declaration voiding the instrument would mean every conveyance is void and would entitle purchasers to rescission.” "

    If I read that right anyone involved in the class action would have the right to rescind their original purchase. If that's the case, I believe, Marriott would be on the hook to return original purchase dollars and any maintenance fees collected since original purchase.
     
  10. JIMinNC

    JIMinNC TUG Member

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    HGVC:
    HGVC at Sea World
    Just remember what rthib posted above, the link posted by the OP was basically a news release by the plaintiff's law firm, so you are reading their spin on the case, not an objective assessment of the merits of the entire case.
     
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  11. Theiggy

    Theiggy TUG Member

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    Thank you to all of you who have shed some light on this.


    Sent from my iPhone using Tapatalk
     
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  12. rthib

    rthib TUG Member

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    Except the Judge ruled on April against certifying a class, so there is no class action lawsuit.
    Marriott filing on the case state that there is parol evidence that has the exact survey that relates to the filed paperwork and that the county agreed that was easier for them.
    Ambulance chaser have filed a motion to reconsider class. Will see what happens but based on the judge ruling in favor of Marriott on the claim of a shotgun pleading, I wouldn't expect much.
     
  13. jerseyfinn

    jerseyfinn TUG Member

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    Landsharks abound as America is now a Me-Too blame society out for $$ at the drop of a hat. Out here in AZ there's lawyers placing TV ads that literally say if you're in a car accident, call a lawyer first, & then your insurance company as insurers are not trust-worthy. Yeah, right! Sad part is there's plenty of folks who buy into "sue-you."

    No surprise the link takes us to the law firm's self-serving site.

    Marriott of course has thought this thing out before jumping to points. Not sure what Marriott is selling with points, but so long as you get your destination travels in & enjoy the resort, it's a moot point quid pro quo.

    Then again, lots of us are legacy folks who do indeed own deeded weeks and tangible assets. Of course conveniently written down by Marriott who then pegs the DC points value to the high point of what deeded weeks sold for just before the recession . . . some creative accounting there, but then again it could be worse. If you lived in a high-tax failing state like NJ where govt picks your pocket daily & wastes your money, Marriott looks like an amateur as we do indeed get something for our money. ( one reason we move to AZ). :rolleyes:

    Bottom line for we legacy owners who enroll our weeks ( or even buy some points ) is to learn the new dynamics and keep traveling within the Marriott system. TS points systems were out there long before DC points and like anything else in life it's about buyer beware & keep it moving.

    travel safe & enjoy Life

    barry
     
  14. e.bram

    e.bram Guest

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    Move to AZ and loose your access to NYC!
     
  15. ocdb8r

    ocdb8r TUG Member

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    I agree with the sentiment here. However, this little wrinkle (which as many rightfully point out may fade away or be completely ironed out) could have interesting implications for the other raging raft of (court and other legal) battles going on regarding the "timeshare exit" industry. The developers are taking a very aggressive stance at the many predatory companies that are peddling creative ways to get out of your timeshare. While I applaud their efforts to tackle the shills, I don't see that they're doing anything to address the overall problem - timeshares as structured create a problem when they perpetually obligate owners to maintenance fees without any reasonable form of exit. I don't know any other "real estate" asset that creates such a problem and I think the developers should not just be fighting against these exit companies, but offering some reasonable exit to owners. I at least find the case at discussion in this thread an interesting tactic to push back against the developers (and what I see as a bit of "abuse" in selling of "real estate").
     
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  16. JIMinNC

    JIMinNC TUG Member

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    It's very true that the lack of exit options is one of the biggest issues with timeshares. Having said that, I wonder if it is really the responsibility of the developer to offer the exit options. When you buy a house from Pulte, Lennar, or Toll Brothers, you are obligating yourself to the costs of maintaining that house until you sell it, and none of those companies offer an exit plan. The exit alternative for homes is the robust resale market. The real problem with timeshares, in my opinion, is the lack of an organized and well-known resale marketplace.
     
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  17. CalGalTraveler

    CalGalTraveler TUG Member

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    Completely agree on the need for an organized resale marketplace.

    There are huge differences between home developers and TS developers because TS developers are actively involved AFTER the sale by operating the property and collecting MF. Most importantly they create rules which limit property owner rights and shape the development of the resale market with ROFR, mandatory etc. This would be akin to Pulte or Toll Brothers operating your neighborhood or building HOA, assessing the HOA fees, maintaining your property, and changing the rules every year telling you what you can and cannot do with your property affecting your property owner rights. They also don't buy or take back your property if you don't pay and try to resell it again.
     
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  18. JIMinNC

    JIMinNC TUG Member

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    Very good points. The fact that timeshare developers are so involved after the initial sale, does make it very different than home builders.
     
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  19. BocaBoy

    BocaBoy TUG Member

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    Don't be too quick to discount the seriousness of this case. Forget the counts that Marriott succeeded in getting tossed. It seems to me that the central claim was not tossed and it looks to me to be a sound one. It alone has the potential to destroy the way the business model operates. I am a lawyer by training (although not a real estate lawyer) and I believe Marriott should be sweating bullets about now. This is not a frivolous case and I think it is misguided to call the plaintiffs' lawyers ambulance chasers.
     
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  20. csalter2

    csalter2 TUG Member

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    Personally, I don’t know what to think about this. However, if Marriott goes down, so will Disney, Diamond, Worldmark and others.
     
  21. CalGalTraveler

    CalGalTraveler TUG Member

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    Disney and Mexican resorts are RTU with a fixed time horizon. HGVC has underlying property deeds conveyed to the owner with specific points attached. So none of these will not be affected by this.

    The core of the lawsuit is that MVC characterized and sold the trust as deeded property without conveying the underlying land associated with a deed so it looks like a points based vacation club with access rights to properties (aka RTU or a license to use).

    What has always mystified me about these trusts is that they can change the composition of the underlying trust without explicit owner approval thus affecting maintenance fees. That is like saying, "I am going to automatically add this parcel of land into your property deed and then you will have to pay the real estate taxes and maintenance on this new parcel without gaining your permission." They may have circumvented this by having trust owners sign a limited POA upon purchase to approve these trust changes. But IMO that's shaky ground because you would expect each trust would be issued as a block of fixed properties with owner (shareholder) voting rights for composition changes.

    The fact that owners/shareholders don't even know what specific property units are in the trust they own and cannot vote on what's in it is problematic.

    This points to another lawsuit which could follow arguing that the MVC Trust should be under the auspices of the SEC because this is an REIT (Real Estate Investment Trust) with shareholder access rights because trust owners are fundamentally shareholders in a TS REIT.

    An argument could be made that REIT shares were sold to consumers without the proper disclosure of historical investment performance and risk of capital loss i.e. MVC failed to follow SEC shareholder reporting disclosing the properties in the trust (REIT), investment risks, holding annual meetings and compliance with shareholder annual voting requirements.

    I agree with @BocaBoy. This is a big deal. (I am not a lawyer nor expert on REITs, but have been involved in many business and real estate transactions.) Watch this space.
     
    Last edited: Apr 7, 2019
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  22. rthib

    rthib TUG Member

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    If you read Marriott’s response in the lawsuit, there is an actual piece of property associated with every trust unit. The one standing claim is on a legal technicality that the deed the owner gets points to another document that has the actual listing for the property and if that is proper under Florida law. Since the county agreed to it, doubt the plaintiff will get much relief and doubt it will every get certified as a class.
     
  23. davidvel

    davidvel TUG Member

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    The point the lawsuit and bocaboy are making is that they purport to give DC points buyers a deed to real property, but the deed given is not to real property. The properties are owned by the trust, who holds the deeds. You simply have a beneficial interest in the trust, but no direct ownership of the underlying land.

    It's like someone selling stock in Microsoft (who owns land) and then issuing a document called a deed to shareholders for the land that Microsoft actually owns.

    Some will think this is form over substance, but it's hard to argue that the "deeds" that are given to DC buyers are legitimate.
     
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  24. CalGalTraveler

    CalGalTraveler TUG Member

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    What's the difference between the MVC Trust and an REIT? Both own shares of a portfolio of real estate holdings that are sold by a management company. Both have risk and rewards with owning real estate holdings to share in the upside and downside. Why shouldn't owners/shareholders be given the same rights to SEC mandated reporting and voting as an REIT owner?

    If MVC Trust is designated as a private REIT, they have violated SEC rules because those are only allowed to be sold to institutional or accredited investors.
     
    Last edited: Apr 7, 2019
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  25. ocdb8r

    ocdb8r TUG Member

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    I agree that the remaining claim could be a big deal for Marriott. Yes, there is an element of form over substance here. But let's be clear, the Orange County Recorder of Deeds does NOT make the law. Just because they've interpreted the the law in a way that legitimized the MVC Points scheme does not make any claim bulletproof. This is the precise reason the plaintiff's firm is also going after the County in its claim. The Courts could very well conclude that the scheme does not comport with law and that both Marriott and the OC recorder of deeds erred. Short term this would have serious consequences for the trust. Long term, it is likely something will be resolved to legitimate the scheme. I would guess the FL legislature is likely to be just as friendly to Marriott as the Orange County Recorder of Deeds has been and would make whatever statutory changes necessary to allow the trust to exist as structured (or with minor adjustments). However, the case could still provide an "out" for anyone who purchased to date.

    I'll return again to the comment I made before - part of what makes this interesting to me is the context of the broader debate on timeshares. IF courts were to invalidate the trust under the current law and IF the battle surrounding timeshare "exits" heats up, it could result in a shift in attitude toward developers like Marriott (which could make legitimizing the trust more difficult).

    Finally, complete agree with many of the previous comments about the unique nature of these timeshares and why I think there is some responsibility for developers to create a legitimate out. There is an enormous imbalance in power the way timeshares are structured; developers often maintain the largest single block of voting power used to determine how the property is used, improved and what fees are incurred. This, coupled with the lack of a viable market mechanism for exit, creates a real long term problem. I would venture to say that as the baby boomers retire in big numbers, their shift to fixed incomes will exacerbate this issue.
     
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