Diamond Resorts Int'l, Inc. v. Aaronson

371 F.Supp.3d 1088

DIAMOND RESORTS INTERNATIONAL, INC.; Diamond Resorts U.S. Collection Development, LLC ; Diamond Resorts Hawaii Collection Development, LLC ; Diamond Resorts Management, Inc., Plaintiffs,

v.Austin N. AARONSON; and Aaronson, Austin, PA., Defendants.

Case No. 6:17-cv-1394-Orl-37DCI

United States District Court, M.D. Florida, Orlando Division.

Signed March 5, 2019

Jeffrey Aaron Backman, Meredith Hamilton Leonard, Richard W. Epstein, Greenspoon Marder, PA, Ft Lauderdale, FL, Olga M. Vieira, Carlton Fields Jorden Burt, PA, Miami, FL, for Plaintiffs.

Charles J. Meltz, Grower, Ketcham, Eide, Telan & Meltz, P.A., Malcolm Patrick Galvin, III, Galvin Law, PL, Stacey Jade Carlisle, McEwan, Martinez, Dukes & Hall PA, George Ryan Dietrich, Laura Marie Kelly, Charles J. Meltz, Grower, Ketcham, Eide, Telan & Meltz, P.A., Orlando, FL, Austin Neil Aaronson, Aaronson, Austin, PA, Longwood, FL, for Defendants.

ORDER

ROY B. DALTON JR., United States District Judge

Plaintiffs Diamond Resorts International, Inc., Diamond Resorts U.S. Collection Development, LLC, Diamond Resorts Hawaii Collection Development, LLC, and Diamond Resorts Management, Inc. (collectively, "Diamond ") sued Defendants Austin N. Aaronson ("Mr. Aaronson ") and Aaronson, Austin, PA ("Aaronson Law Firm ") (collectively, "Defendants ") for claims arising from advertisements on the Aaronson Law Firm website ("Firm Website ") and Mr. Aaronson's representation of clients who are or were Diamond members ("Diamond Clients "). (See Docs. 1, 47.) Defendants moved for summary judgment on all claims (Doc. 115 ("Motion ") ), and Diamond opposed (Doc. 133). The Motion is due to be denied.

I. BACKGROUND ¹

Diamond consists of Las Vegas-based timeshare developers managing over 420 membership resorts worldwide. (Doc. 47, ¶¶ 1, 17–24.) Defendants are an Orlando-based attorney and his law firm focused on soliciting Diamond's and other developers' timeshare members to become clients to free them from financial obligations under their timeshare purchase and financing contracts ("Timeshare Contracts "). (Id. ¶¶ 14, 15, 25.) To induce Diamond members to hire Defendants, Diamond alleges that Defendants put out false advertisements ("Subject Advertisements ") that lead Diamond members to believe they can get out of their Timeshare Contracts. (Id. ¶¶ 2, 26, 29, 32–53.) Thus, timeshare members have ceased payments under their Timeshare Contracts, and occasionally Diamond faced baseless arbitration proceedings. (Id. ¶¶ 4, 31, 37, 39–53.) The Court discusses the Subject Advertisements before turning to Defendants' representation of Diamond Clients.

A. The Subject Advertisements

The Subject Advertisements that Diamond claims are false and misleading all appear or have appeared on the Firm Website in text on webpages, articles, blogs, and videos. (See, e.g. , Doc. 133-5.) One advertisement touting Defendants' approach to timeshare cancellation appeared on the Firm Website's homepage ("Homepage ") from August 2015 until August 2016:

Timeshare ownership often feels like entrapment. How do we know this? Because people tell us. Their stories are remarkably consistent.

....

But reciting this disturbing series of events is not going to help legally. Why? Because it's your word against there's [sic]. Plus, there are a thousand disclaimers and waivers in those closing documents, enough to absolve the developer of almost anything.

But that's not to say that you don't have any leverage, any cards to play. At the Aaronson Firm, we focus on other ways to release your obligation. One in particular: Maintenance. Your developer has a fiduciary duty to manage the resorts in your best interest. Chances are, they're in breach of that duty, in ways that are very obvious and easy to prove.

This is where the developer is most vulnerable. This is where your leverage is. And you owe it to yourself to hire experienced, competent counsel. At the Aaronson Firm, we have over forty years of combined legal experience. And we are willing to sue, if necessary, in the interest of getting you released.

So call us free of charge to discuss your situation, please. Your legal problems are not insurmountable.

(Doc. 133-5, pp. 1, 4; see also Doc. 133-4, pp. 65–66.) This language changed later in 2016:

But the chances are good that your timeshare developer is exposed legally in ways that are relatively straightforward and provable. And you owe it to yourself to hire experienced, competent counsel. At the Aaronson Firm, we have over forty years of combined legal experience. And we are willing to sue, if necessary, in the interest of getting you released.

So call us free of charge to discuss your situation, please. Your legal problems are not insurmountable. If you are looking to cancel your timeshare Aaronson Law Group can help.

(Doc. 133-5, pp. 1, 5.) In 2017 and 2018, the language changed again:

But chances are good that your timeshare developer is exposed legally in ways that are relatively straightforward and provable. You owe it to yourself to hire experienced, competent counsel. At the Aaronson Law Firm, we have over 80 years of combined legal experience. And we are willing to sue, if necessary, in the interest of getting your timeshare cancelled.

So please contact us using one of our three convenient methods to receive a free consultation to discuss your situation. You can:

1. Call us free of charge,

2. Use our Contact Form above, or

3. Live Chat with a person ready to assist you.

YOUR LEGAL PROBLEMS ARE NOT INSURMOUNTABLE!

If you need to cancel your timeshare, the Attorneys of the Aaronson Law Firm stand ready and able to help you!

(Id. at 2, 6–7.)

Another advertisement appeared on the Firm Website's "How It Works" page. In early 2016, that page read:

Quite often, one's signature on a timeshare contract is obtained by fraud. And the debt that it creates generally outweighs any benefit to the owner. But to address it properly, it is imperative that you retain a licensed attorney.

....

But experienced, competent counsel will know how to exploit other points of vulnerability. For example, the developer may well be perpetrating an ongoing conflict of interest. Improper handling of trust funds are [sic] also a major issue.

This is where the developer is most vulnerable. This is where your leverage is. And by far the best way to leverage this is through a licensed attorney, who will have subpoena power over books and records.

So call us free of charge to discuss your situation, please. Your problems are not insurmountable.

(Id. at 2, 8.) The "How It Works" page updated later to include a diagram of the Aaronson Law Firm's process of getting individuals out of their Timeshare Contracts. (Id. at 2, 9.) The language from the Homepage and "How It Works" page also appears in videos on the Firm Website in which a man wearing a gray suit recites the same information. (Doc. 132, ¶ 4 (video available from August 2015 to August 2016); id. ¶ 5 (current video).)

These advertisements generally espouse Defendants' view of common practices of the timeshare industry as a whole. (See Doc. 133-5.) But other advertisements on the Firm Website discuss Diamond specifically. (See Docs. 133-23, 133-24.) An example is the "article" entitled "Timeshare Traps" dated May 5, 2015:

Diamond Resorts International, Inc., is an incredibly profitable company. They are also publicly traded, so that one can gain a certain amount of insight into how they operate. And they appear willing to stop at nothing to maintain this profitability.

Diamond's modus operandi recently has not been about building new resort facilities. Rather, it is inclined to acquire existing facilities from previous developers, many of which were set up on the deed system. In some cases, these resorts were substantially sold out to deeded owners. Undeterred, Diamond has then endeavored to ‘revoke’ the deeds, a unilateral act utterly without legal authority, and impose a ‘points’ system conferring greater access based upon amount of points purchased.

In this fashion, Diamond can accomplish several things that it could not do otherwise: 1. It can again commence the sale of new timeshare interests without having to build new facilities; 2. It can do so without recording deeds in public records, which was a public disclosure substantially impeding it from overbooking resorts. This practice is incredibly unfair to owners of existing interests in these resorts, deeded or otherwise.

So don't be too surprised if, next time you try to book your vacation, you are told that you have insufficient points to access any of the accommodations, and that you'll have to buy more.

If you are disappointed with your Diamond timeshare, please don't hesitate to call us concerning your legal options, including rescission of the contract, free of charge.

(Doc. 133-23.) Another targeted advertisement appeared on the "Diamond Resorts Timeshare Cancellation" page:

Rescinding your Diamond Resorts International Timeshare Contract

Unlike some other timeshare developers, Diamond Resorts International has never been a ‘hotelier’ per se.

Why are timeshares often more profitable than hotels? Simply that selling you space in their facilities is more profitable than renting them to you, for several reasons:

1. It creates a more predictable cash flow

2. They can still rent the same facilities as a hotel if they're not fully booked

3. On the ‘points’ system, they can overbook, and deny you access on the basis that you don't have enough of them. (No one said that any of this is necessarily lawful)

4. They can just plain charge you more money. (See our blog on the ‘true cost of a timeshare’).

If you've been hoodwinked into ‘purchasing’ your vacation, please feel free to contact us.

(Doc. 133-24.)

Last, this blog post titled "Timeshare Conflict of Interest":

Simply put, a conflict of interest exists when one's duty to act in your best interest is compromised by some other factor, typically money. In the case of Diamond Resorts International, such a conflict is

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