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European Timeshare Directives

Friday’s Letter from America

Welcome to another edition of Friday’s Letter from America, this week Inside Timeshares Irene Parker reports on day 1 of the trial she attending in Orlando, Florida. This is a case between Diamond Resorts and Aaronson Law Firm, this is yet another law firm being taken to court by the timeshare industry.

So unlike our usual Friday editions, we will forego news from Europe and go straight to Irene’s report.

Diamond Resorts v Aaronson Law Firm Trial

Day 1 of 6: Jury Selection and Opening Arguments

Anatomy of a Timeshare Trial

By Irene Parker

May 3, 2019

Having recently experienced Part I of a deposition that lasted six hours against another law firm that provides timeshare exit assistance, I was motivated to attend a six-day timeshare trial in Orlando District Court that began Tuesday, April 30. The cost of a deposition or a six-day trial is staggering. Ultimately, the timeshare member pays. It’s too bad we can’t just sit down and talk to each other, but I guess attorneys have to make a living.

Diamond Resorts International Inc., Diamond Resorts U.S. Collection Development, Hawaii Collection Development LLC, and Diamond Resorts Management Inc, filed a lawsuit against Austin N. Aaronson and Aaronson, Austin, PA.

Case No. 6:17-1394-ORL-37-DCI

Attorneys Richard W. Epstein, Jeffrey A. Backman, and Olga M Vieira of Greenspoon Marder LLP are plaintiffs’ attorneys. Mr Aaronson is represented by Charles J. Meltz of Grower Ketcham, Eide, Telan & Meltz, P.A.

As reported by ABA Journal January 30, 2018:

The Florida suit was filed against Orlando lawyer Austin Aaronson and his firm Aaronson, Austin. In a Jan. 26 ruling, U.S. District Judge Roy Dalton Jr. of Orlando tossed RICO and malicious prosecution claims by Diamond Resorts but allowed claims for false advertising under the Lanham Act, tortious interference with contract, trade libel and deceptive trade practices.

Diamond Resorts had claimed Aaronson and his law firm solicited timeshare members in an advertising campaign that weaves a false narrative, causing timeshare members to stop contract payments and subjecting Diamond Resorts to baseless arbitration proceedings.

Aaronson had claimed his firm’s advertising was not false or misleading because it constituted opinion or puffery.

http://www.abajournal.com/news/article/judges_refuse_to_toss_suits_claiming_law_firms_interfered_with_timeshare_co

Opening day started with jury selection. Six of the eighteen potential jurors reported a negative timeshare experience:

  1. Lots of pressure from a timeshare presentation in the 80s,
  2. Purchased Marriott 30 years ago, lots of pressure,
  3. Westgate was difficult to exchange and was unsellable. An attorney was contacted. The attorney said Westgate is not sellable. Timeshare is a waste of money.
  4. Negative experience,
  5. Agents are pushy and don’t give up,
  6. An engineer said he had a negative bias.

Judge Dalton explained that Plaintiffs are required to convince the jury that Austin Aaronson is guilty by a preponderance of evidence. Criminal trials require a stricter standard – beyond a reasonable doubt.

The four claims against Austin Aaronson are:

  1. False advertising that harmed the reputation of Diamond Resorts and caused damages,
  2. Tortious interference,
  3. Intentionally publishing disparaging information on a website,
  4. Deceptive and unfair practices.

There are a total of 134 joint exhibits.

Mr Epstein, attorney for Diamond Resorts stated that there are few complaints against Diamond Resorts. He alleged Aaronson accused Diamond of wholesale unsavoury conduct.

Mr Meltz, attorney for Aaronson, reported how maintenance fees had more than doubled from 2007 to 2015 from $.07 per point to $.145 per point and that there is no secondary market for Diamond points. He explained how Diamond Resorts controlled Board of Directors hires Diamond Resorts managers to manage Diamond properties. As to the claim that Diamond misappropriated maintenance fees, both sides will bring in accounting expert witnesses to prove or disprove how maintenance fees were misappropriated.

In a lighthearted moment, Judge Dalton asked one of the Plaintiff attorneys if she was chewing gum. She was. She was asked to leave the courtroom to dispose of her gum.

Judge Dalton instructed the jury not to read newspapers, Facebook posts or blogs about the case. He said in the old day’s reporters attended the trials, but these days they just talk to those who attended as they exit the courtroom. He said he was amazed that when he reads an article about one of his trials, how little of what was reported actually happened in the courtroom. I was proud that Inside Timeshare will be in attendance for the duration of the trial taking copious notes.

Inside Timeshare and our readers just want the timeshare industry to admit that unfair and deceptive sales practices exist on the front end of the sale. I have always said half a problem goes away when confronted, but I doubt this will happen.

I have contacted four timeshare exit providers. Two of the larger firms report receiving 3,000 calls a month from members desperately seeking release from a timeshare contract. These firms only accept 100 to 150 cases as they require a strong case of unfair and deceptive practices. This stay vacationed or else strategy has created a timeshare exit industry timeshare developers want to crush, but Social Media is not going to put this Pandora back in her box. The lack of a secondary market is financially devastating family after family.

Greenspoon Marder contends all is well because Diamond Resorts has 460,000 timeshare members with few complaints. I feel 6,000 families reaching out to just two timeshare exit providers monthly is a real problem. There is no other product that has spawned an entire industry devoted to responding to customers with nowhere to turn, desperately seeking release from unused and unwanted timeshares. Many report they learned they were duped just days or minutes past the rescission period.

In Florida, timeshare division reviewers received 1,600 complaints in 2017 and 1,600 complaints in 2018, mostly about the initial sales presentation, 50% seniors. The AG engaged 42, mostly about timeshare resales. That means 1,600 families annually feel they were duped by a timeshare, there is no secondary market, maintenance fees doubled in seven years for at least one timeshare company, and this is not a problem.

Yes, it is.   

We seek to provide timeshare members with a way to proactively address membership concerns; to advocate for timeshare reform; to obtain greater disclosure from the company; to advocate for a viable secondary market, and to educate prospective buyers.

https://www.facebook.com/timeshareadvocategroup/

https://www.facebook.com/groups/DiamondResortsOwnersAdvocacy/

https://tug2.com/Home.aspx

https://everythingabouttimeshares.com/consider-exchange-options/

https://www.facebook.com/groups/180578055325962/

https://www.facebook.com/groups/465692163568779/

https://www.facebook.com/groups/1639958046252175/

Than you Irene, we look forward to further reports on this trial and I’m sure that all Inside Timeshare readers are hoping that the outcome will be in Favour of Aaronson. One thing is certain, Diamond does not like criticism, but Inside Timeshare will continue to publish the “Nightmare on Timeshare Street” stories of our readers, be they Diamond or any other timeshare company.

In Spain, Diamond has lost in the courts for selling illegal contracts, along with other timeshare companies, many of them are the big players in Europe. Spanish timeshare law is based on the European Timeshare Directives but has been strengthened to protect consumers of unfair, misleading, predatory sales tactics and illegal contracts. It leads the way in Europe and we may see other countries following suit.

If you have any comments on this or any article or have a “Nightmare on Timeshare Street” story of your own, then use our contact page and get in touch we look forward to hearing from you.

Have a great weekend and join us again next week.  


Spanish Timeshare Laws Simply Explained

Over the past few months Inside Timeshare has received many enquiries regarding timeshare claims, in this article we look at the law in Spain and what constitutes a valid claim.

In December 1998 Spain passed Law 42/98 which came into effect on 5 January 1999, this was a result of the European Timeshare Directives which were put into place to protect consumers. Under these directives each member state had to put into their own domestic laws regulations governing the sale of timeshare.

Spain was one of the first to do this, as a result they have some of the strongest regulations in Europe.

For a long time many resorts / developers failed to abide by them, continuing to sell the same way as before. This has now resulted in many cases going to court with resorts / developers being penalised for their failure to comply.

At first, many cases taken to court by consumers were being lost as the resorts successfully argued that they were in compliance of the laws. This all changed in March 2015, when the Supreme Court in Madrid ruled on the very first timeshare case.

justice

This case involved a Norwegian lady who had a case against Anfi in Gran Canaria, the case took around 5 years to complete, but it had a profound effect on cases to follow.

The timeshare laws which have been the subject of consistent breaches have been the taking of deposits or any payment within the cooling off period, this also includes by a third party. Many resorts tried to get around this by using Trust Companies, but the court has also ruled that this is indeed a third party.

The other main area of contention was the perpetuity contract, the law states that contracts should be for a minimum of 3 years and a maximum duration of 50 years.

Both of these have been ratified by the Supreme Court on many occasions, which now puts them into jurisprudence. What this means is that they are no longer up for discussion and all courts must abide by them.

There have also been some other significant rulings made by Spain’s Highest Court which have strengthened the law and benefited consumers.

The points and floating week systems is another which the Supreme Court has also ruled on and is now enforceable by all courts in Spain. The reasoning behind this ruling is that these systems have no actual substance, unlike the fixed week fixed apartment system which was the original timeshare model, there is no week number or apartment number attached.

With the old fixed week system you were guaranteed the week and apartment assigned, this could be changed using either the internal exchange system or one of the major exchange companies. So it was actually flexible. It also made it impossible for the resort to oversell membership, as they could only sell 51 weeks of each apartment.

With the points and floating systems you actually own nothing, you are a member of a vacation club with the right to use subject to availability. This also allowed the resorts to oversell the membership as they were not governed by the 51 weeks in each apartment. This has obviously led to many complaints of not being able to book the weeks that members actually wanted.

Another major breakthrough came in January 2017, when the Supreme Court ruled against Silverpoint. This came about due to many cases against Silverpoint for selling packs of weeks as an investment.

The theory behind these sales was purchasers would buy a series of weeks, which the company promised to sell within 2 years, with the purchaser making a profit. Very few if any ever achieved this, usually the story was that what they had purchased was not selling well and they would need to upgrade to a better resort in order to sell. This has left many with huge loans as these were financed mainly by Barclays Partner Finance, with the loan agreements being completed by the sales staff.

There were many cases taken through the courts but Silverpoint successfully argued that the purchasers were investors not consumers.

The first case involving a UK purchaser ended up at the Supreme Court, the total time from start to finish was around 5 years. This court ruled that these purchasers were indeed consumers of a timeshare product and not investors. The thinking behind this ruling was that maintenance fees were also part of the purchase, also the court believed that to be classified as investors, this must be a primary source of income. This resulted in these consumers having full protection of the timeshare law, which also maintains that timeshare should not be sold as an investment.

Since the first ruling in March 2015, there have been 84 rulings made by the Supreme Court, each and everyone backing up the previous one. At present there are still around 100 cases pending and waiting to be heard by this court, some of these will also bring new changes and clarification to the laws.

cropped-TRIBUNAL_SUPREMO_DE_ESPAÑA4

There has also been an update to the 42/98 law with the introduction of Law 4/12 which has included the changes brought in the Timeshare Directive of 2008.

So unless you purchased or upgraded in Spain after January 1999, have at least one of the major points ruled by the Supreme Court you may not have a valid claim. You will also need to employ the services of a Spanish Registered lawyer, preferably one with the experience of timeshare claims.

At Inside Timeshare we have heard from one consumer who decided they wanted to employ the services of a lawyer registered to practice in Spain but of their own nationality. His claim failed. The lawyer did not have the knowledge or experience of this complex area of law, believing that because of the Supreme Court rulings it would be an easy case to win. This client has now taken on the services of another lawyer with the experience in this field to lodge an appeal as he was not given the correct legal advice. This has obviously cost him more, hopefully he will win the appeal.

This does go to show that just because the Supreme Court has made these rulings, it is in the end down to the lawyer or law firm that you engage, if they do not have the knowledge or experience in this field then you may end up losing a lot more.

If you have any question on this subject or wish to check if you have a valid claim contact Inside Timeshare and we will give you the facts.

Diamond Resorts or A Nightmare on Timeshare Street.

sunterradri logo

Diamond Resorts were unknown in Europe until the takeover of Sunterra in 2007, for many members, they believed it was going to be a new start. Sunterra formerly Grand Vacation Club had a reputation that was to say the least heavy handed, the sales side was aggressive and showed no quarter to those pulled in from the streets. Long standing members with fixed weeks refused to change as they had originally been sold their timeshares as “investments” in property. They also had the right to vote on maintenance fees and other matters which affected the resort they owned.

 

When Sunterra filed in the US for Chapter 11, which is the equivalent to filing for bankruptcy, many owners wondered what would happen to their “investment”. For those on holiday the talk around the pools and bars was what would happen next, rumours abounded. Information was non existent, the sales decks had been closed with all the reps being laid off. There were still a few of the in-house reps but they had no idea what was going on.

 

It was then announce that a new company from the States was looking at taking over from Sunterra. The takeover was announced in the Las Vegas Review Journal 28 April 2007. Steven Cloobeck´s privately owned Diamond Resorts paid around $700 million, and also took on responsibility of Sunterra´s debt of $375 million. Was this the new beginning the owners had been waiting for?

 

Unfortunately, as time has moved on, it has turned into a nightmare for many.

 

The points system was marketed very aggressively, more so than under Sunterra, owners were basically forced into converting. Around 2008 the first additional levy was introduced, Diamond claimed it was due to the state of the Euro to the Pound. This was only the start, in the first three years management fees increased by around 20-25% annually, for many owners this was a huge burden and they wanted out.


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