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Calling Out Marriott for Discovery Noncompliance

Timeshare Owners Hit Marriott With Sanctions Bid

By Joyce Hanson

Law360 (November 9, 2018, 6:37 PM EST) --

Timeshare owners have asked a Florida federal court to sanction Marriott Ownership Resorts Inc. in a proposed class action claiming the timeshare company and its insurer duped them into invalid real estate deals with Orange County's help, saying it intentionally withheld "massive amounts" of documents during discovery.

The owners, led by named plaintiffs Anthony and Beth Lennen, argued in their Thursday motion against Marriott Ownership Resorts and affiliate Marriott Vacation Club Trust Owners Association Inc. that sanctions are appropriate because they allegedly acted in bad faith when withholding documents. Discovery should be reopened and the Marriott companies should be compelled to produce relevant documents, according to the motion.

“The defendants should be sanctioned because they intentionally and unreasonably failed to produce relevant and material documents identified in their initial disclosures and requested by plaintiffs, failed to conduct a reasonable inquiry into the existence of responsive documents, delayed delivery of a significant portion of their overall production of documents until the last day of discovery while simultaneously arguing against an extension of discovery as requested by plaintiffs … and falsely represented that they had fully complied with discovery obligations,” the owners said.

The Lennens' suit, filed in May 2016, alleges that Marriott Vacation Club and nine co-defendants violated state racketeering and timeshare laws by selling a points-based timeshare product to customers that falsely conveys title to a Florida timeshare estate and a beneficial interest in a Florida land trust.

While those consumers are paying the costs and taking on the burdens associated with property ownership, such as title policy premiums, taxes and maintenance fees, they are not getting the benefits that come with typical timeshare ownership, according to the suit. What they are really getting is just a use license for selected corporate-owned timeshare estates in various locations across the country, the suit claims.

In September 2017, Marriott lost its bid to win a stay in the litigation when U.S. District Judge Carlos E. Mendoza said he would not stop proceedings so a state agency could review the case.

On Jan. 4 of this year, the Lennens fought the county's Dec. 21 motion to dismiss their complaint, arguing that it negligently interprets Florida statute by accepting any documents that come its way. That practice, the Lennens said, has led the county to wrongly record invalid consumer deeds and other unauthorized instruments in the suit accusing a number of Marriott companies, including Marriott Vacation Club Trust Owners Association, as well as First American Title Insurance Co., of carrying out a scheme that deceived timeshare purchasers into invalid and illusory real estate interests.

On Sept. 18, the owners asked the court to deny Orange County’s attempt to escape the suit, saying the county is a properly named defendant in the proposed class action and wrongly claims that the recording of documents is undertaken by its comptroller, not the county itself.

"The county interprets [Florida county recorder statute 28.222] erroneously to mean that it is required to robotically and indiscriminately record any document that appears to connect to real or personal property without regard to the form or content of the document or the location of property," the Lennens said. "The county's interpretation of statute 28.222 conflicts with any reasonable interpretation of the statute, and does not support the recording of thousands of facially invalid and unauthorized [Marriott Vacation Club] trust instruments."

Jeffrey M. Norton, a lawyer for the Lennens, declined to comment Friday, saying the sanctions motion speaks for itself.

Legal counsel for the Marriott companies and MVC Trust Owners Association did not immediately respond to request for comment on Friday.

The Lennens are represented by Christopher S. Polaszek of The Polaszek Law Firm PLLC, Jeffrey M. Norton of Newman Ferrara LLP, and Soomi Kim.

The Marriott companies are represented by Dawn I. Giebler-Millner, Philip R. Sellinger and Ian S. Marx of Greenberg Traurig LLP.

MVC Trust Owners Association is represented by Alfred J. “Bud” Bennington Jr. and James A. Timko of Shutts & Bowen LLP.

The case is Lennen et al. v. Marriott Ownership Resorts Inc. et al., case number 6:16-cv-00855, in the U.S. District Court for the Middle District of Florida.

--Additional reporting by Alex Wolf. Editing by Peter Rozovsky.