1250 Broadway, 27th Floor New York, NY 10001

Law360 covers firm's challenge to Marriott's lobbying ploy to change Florida timeshare law retroactively to avoid liability

Portfolio Media. Inc. | 111 West 19th Street, 5th floor | New York, NY 10011 | www.law360.com
Phone: +1 646 783 7100 | Fax: +1 646 783 7161 | customerservice@law360.com

Time-Share Owners Bash Marriott New-Law 'Ploy' To Toss Suit

Law360, New York (June 29, 2017, 6:15 PM EDT) -- Time-share purchasers accusing Marriott and a title insurance company of duping them into invalid real estate deals have rebuffed the hotelier’s attempt to use a new state-law amendment to toss the suit, telling a Florida federal court Wednesday the measure was pushed through the Legislature specifically as a defense tactic.

Anthony and Beth Lennen, lead plaintiffs in the proposed class suit against a number of Marriott companies and First American Title Insurance Co., alleged that the amendment signed into law by Florida Gov. Rick Scott on May 23 was a ploy engineered by the defendants, which on June 7 filed a notice with the court saying the amended Florida Vacation Plan and Timesharing Act revised the definition of “interestholder” and thus supported their motions to dismiss the complaint.

“Because defendants could not justify the legality of their conduct under existing law, they endeavored to change the rules,” the Lennens said in their opposition to the notice. “The notice is tantamount to an admission that plaintiffs’ claims are meritorious and that defendants’ conduct violated the laws that actually were in effect during the relevant time period.”

The Lennens’ suit,filed in May 2016, accuses the Marriott companies and First American of carrying out a scheme that deceived points-based time-share purchasers into invalid and illusory real estate interests.

Named defendant Marriott Vacation Club Trust Owners Association on June 12 asserted in a joinder to the Marriott and First American noticethat the suit should be dismissed not only because the Lennens failed to state a claim, but because the amendment resolved the matter at issue.

“The recent clarifications signed into law by Governor Scott with respect to the Florida Vacation Plan and Timesharing Act that are discussed in the notice result in the elimination of multiple, if not all, counts reflected in the complaint,” MVC Trust Owners Association said. “To the extent any of the counts remain, because the alleged statutory underpinnings of the plaintiff’s claims are not viable, the complaint is replete with irrelevant allegations. As a result, determining which remaining allegations apply to the Trust Owners Association becomes even more difficult.”

The suit, which also ropes in Orange County, Florida, and its comptroller as defendants, alleges that Marriott Vacation Club and the co-defendants violated state racketeering and time-share laws by selling a points-based time-share product to customers that falsely conveys title to a Florida time-share estate and a beneficial interest in a Florida land trust.

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

On Sept. 15, Marriott moved to dismiss the putative class action, calling the complaint a “mish-mash” of unsupported and unlikely claims. The next day, First American Title also moved to dismiss, calling the complaint a “shotgun pleading.”

Marriott also moved in September for the court to stay the case to allow the Florida Department of Business and Professional Regulation's Division of Florida Condominiums, Timeshares and Mobile Homes to issue a declaratory statement on whether its contracts violate state racketeering and time-share laws, as the suit alleges.

The Lennens responded on Oct. 6, urging the Florida federal court to deny Marriott's request to stay, arguing the agency isn't allowed to do so because state agencies are prohibited from issuing declaratory statements on pending litigation.

Jeffrey M. Norton, a lawyer representing the Lennens, told Law360 in an email on Thursday that he believes Marriott and First American have gone to great lengths “to further the scheme” of their points-based time-share product sold as a real estate transaction.

“As these latest filings demonstrate, their efforts include leveraging political clout to change a discrete, two-decade-old provision of the Florida time-share law — unique to their defense in this action,” Norton said. “As we argue in our opposition, we believe this is tantamount to a concession that their conduct was not in compliance with existing Florida law.”

Counsel for MVC Trust Owners Association declined to comment on Thursday. Counsel for Marriott and First American did not respond immediately to requests for comment on Thursday.

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

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

The Marriott companies are represented by Philip R. Sellinger, Ian S. Marx and Roger B. Kaplan of Greenberg Traurig PA.

First American is represented by Douglas B. Brown and W.L. Kirk of Rumberger Kirk & Caldwell PA and Jeffrey L. Willian, Donna M. Welch and Leslie S. Garthwaite of Kirkland & Ellis LLP.

The case is Anthony 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 Rick Archer, Nathan Hale and Alex Wolf. Editing by Bruce Goldman.