Nolen v. Fairshare Vacation Owners Ass'n

591 F.Supp.3d 1191

Carolyn NOLEN, Windy Kelley, Cara Kelley and Paula Litton, Plaintiffs,

v.FAIRSHARE VACATION OWNERS ASSOCIATION, Defendant.

Case No. 6:20-cv-330-PGB-EJK

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

Signed March 10, 2022

Bradford D. Barron, Pro Hac Vice, The Barron Law Firm, PLLC, Claremore, OK, James M. Terrell, Pro Hac Vice, Rodney E. Miller, Methvin, Terrell, Yancey, Stephens & Miller, PC, Birmingham, AL, Patrick A. Barthle, John Allen Yanchunis, Morgan & Morgan, PA, Tampa, FL, for Plaintiffs.

Chris S. Coutroulis, David Matthew Allen, Kevin P. McCoy, Nathaniel G. Foell, David Robert Wright, Carlton Fields, PA, Tampa, FL, for Defendant.

ORDER

PAUL G. BYRON, UNITED STATES DISTRICT JUDGE

This cause comes before the Court on Defendant's Motion for Summary Judgment (Doc. 94 (the "Motion ")) and the parties’ respective responses and replies thereto (Docs. 105, 109). Upon consideration, the Motion is due to be granted.

I. BACKGROUND

A. Factual Background: The Trust and Related Parties¹

This class action dispute flows from the alleged self-interested mismanagement of a timeshare trust by its trustee. The timeshare trust, the Fairshare Vacation Plan Use Management Trust (the "Trust "), was settled by Wyndham Vacation Resorts, Inc. ("WVR "), a developer of resort communities and vacation plans which WVR sells as timeshare interests ("Use Rights "). (Doc. 103, ¶ 1). The Trust forms the foundation of the Club Wyndham Plus Program (the "Program "), a timeshare program that allows Use Right owners to exchange their "home resort" Use Rights with other owners in the Program. (Doc. 45, ¶ 10). When a consumer purchases a property interest, they can assign their Use Rights to the Trust; only through this assignment can an owner participate in the Program. (Doc. 45, ¶ 10). Indeed, WVR established the Trust for the express purpose of "permit[ting] the Beneficiaries to use and exchange the Use Rights available through the Trust." (Doc. 103, ¶ 2). The Program effectively expands a timeshare owner's vacation options and allows owners to stay at various Wyndham-connected resorts, not just their "home resort."

Fairshare Vacation Owners Association ("Defendant-Trustee Fairshare ") is a nonprofit corporation that serves as Trustee of the Trust. (Id. ¶ 4). Defendant-Trustee Fairshare does not compensate itself for acting as the Trustee, does not have employees, and does not compensate the individuals who sit on its board of directors. (Id. ¶¶ 35–36, 47). Defendant-Trustee Fairshare does not possess any ownership share of WVR. (Doc. 94, ¶ 8). The Trust is governed by the Second Amended and Restated Fairshare Vacation Plan Use Management Trust Agreement (the "Trust Agreement "), which became effective on March 14, 2008. (Doc. 103, ¶ 3). WVR sells and markets interests in its various property portfolios, without participation from Defendant-Trustee Fairshare; purchasers of these interests, such as Plaintiffs, become Beneficiaries of the Trust after assigning the Use Rights in their purchased ownership interests to the Trust. (Id. ¶¶ 32, 50). Other listed Beneficiaries of the Trust include Defendant-Trustee Fairshare, the Plan Manager, and WVR. (Id. ¶¶ 8–9).

Defendant-Trustee Fairshare could not fulfill its duties as Trustee without hiring a Plan Manager. (Id. ¶ 53). Currently, the Trust Agreement names WVR as the Plan Manager. (Id. ¶ 17). Specifically, the Trust Agreement states "[t]he initial Plan Manager shall be Wyndham, its successors or assigns ...." (Id. ¶ 14). At the same time, both the Trust Agreement and Defendant-Trustee Fairshare's bylaws provide a procedure to replace the Plan Manager. (Id. ¶ 31). Plaintiffs have never tried to replace WVR as Plan Manager. (Id. ¶ 33).

Moreover, Defendant-Trustee Fairshare's only agreement with any other Wyndham entity is a Management Agreement regarding WVR's role as the Plan Manager. (Id. ¶¶ 5–6). Section 6.03 of the Trust Agreement states that the "Management Agreement is incorporated [into the Trust Agreement] by reference and made a part [of the Trust Agreement] as though set forth word for word." (Id. ¶ 15). Section 6.02 of the Trust Agreement further states that the Trustee may "delegate any or all of its duties ... to the Plan Manager." (Doc. 45-1). Section 9.02 of the Trust Agreement states that "[t]he Trustee ... [is] relieved of any and all liability to any Beneficiary ... from the Trustee ... acting in accordance with the terms" of the Trust Agreement. (Id. ). Pursuant to the Management Agreement, WVR in its role as Plan Manager has "all the powers and authority, and limitations thereon, which the Trustee has, pursuant to the Trust Agreement...." (Doc. 103, ¶ 52). The Management Agreement entitles WVR to compensation of "five percent (5%) of the Program Fees,[ ] special and other assessments (other than the [Owners Association] Fees) collected from Members ...." (Id. ¶ 55). In addition, Defendant-Trustee Fairshare must reimburse WVR for "all costs and expenses (including without limitation, a reasonable profit at the prevailing market rate) arising from various identified matters encompassing the spectrum of management, operation, and maintenance of the [ ] timeshare program." (Id. ¶ 56). To that end, WVR has billed the Trust for expenses separate from the Management fee that it earns. (Id. ¶ 61). Relatedly, Defendant-Trustee Fairshare has acknowledged at times reimbursing other Wyndham subsidiaries used by WVR for services rendered to maintain the Program as part of its role as Program Manager. (Id. ¶ 57). Finally, WVR owns property interests that are subject to the Trust but can also use those for its own purposes. (Id. ¶ 51).

Defendant-Trustee Fairshare does not own an office and instead uses the offices of Wyndham Vacation Ownership, Inc. ("WVO "), a parent company of WVR. (Doc. 92-1, 29:12–20; Doc. 103, ¶ 48). Throughout the class period, all those individuals serving on Defendant-Trustee Fairshare's Board of Directors have also been employees of WVO, including board member Jodi Rogers. (Doc. 103, ¶ 49, 60). Jodi Rogers and her team create the Program budgets after reviewing input from WVR in its role as Program Manager. (Id. ¶ 60). These Program budgets directly influence the calculation of the Program Fees charged to Members, including Plaintiffs. (See id. ¶¶ 12, 54).

WVR sold Plaintiffs their respective "home-resort" ownership interests in a club or property. (Id. ¶ 18). For Plaintiffs Windy & Cara Kelley and Paula Litton, that "home-resort" ownership interest was in PTVO Owners Association, Inc. (Id. ). For Carolyn Nolen, that "home-resort" ownership interest was in certain units at Fairfield Orlando at Bonnet Creek Resort. (Id. ). Defendant-Trustee Fairshare had no say in the terms WVR offered to Plaintiffs when WVR sold them their timeshare property interests. (Id. ¶ 32). While conditional on participation in the Program, Plaintiff's purchase of these property interests and assignment of their Use Rights was otherwise voluntary. (Doc. 94, ¶ 32; Doc. 94-7, p. 2). Plaintiffs acknowledged that, first, they purchased an ownership interest in a club or property and that, second, they assigned the Use Rights in their ownership interests to the Trust. (Doc. 103, ¶ 28). During this process, Plaintiffs received copies of the Trust Agreement, the Management Agreement, and Defendant-Trustee Fairshare's Bylaws. (Id. ¶ 29). Plaintiffs further signed assignment agreements which disclosed WVR as Plan Manager of the Trust. (Id. ¶ 30). Section 14.07 of the Trust Agreement provides that Members are deemed to have agreed to be bound by the Trust Agreement and the Management Agreement by assigning their Use Rights to the Trust, paying [a] Program Fee, and otherwise using the benefits of the Trust. (Id. ¶ 16).

"Each Member [of the Trust] other than [WVR] is required to pay the Fairshare Plus Assessment," which "consists of the sum of the Program Fee and the Owners’ Association Fee ...." (Id. ¶ 10). The Program Fee is the fee "payable to the Trustee under Article X ... by the Members for the expenses incurred in connection with the operation and administration of the [Program]," the amount of which "is determined by the Trustee" to cover the cost of the operation and administration of the Program. (Id. ¶¶ 12, 54). Ultimately, Defendant-Trustee Fairshare's Board of Directors must approve the Program Fee. (Id. ¶ 58). The Owners’ Association ("OA ") Fee is the "annual fee or fees due from each Member in respect of his Property Interest which fees shall be paid by the Member to, and held in escrow ... by, the Trustee." (Id. ¶ 13). The OA Fee "shall be equal to the sum of all annual amounts ... that each ... Member agreed to pay the OA which governs the Property Interest which [the] Member used as the basis of his Membership," the amount of which is "determined by" the respective OAs, "not by the Trustee." (Id. ). WVR "is not required to pay any OA Fees or Program Fees except as provided by Section 11.08" of the Trust Agreement. (Id. ). Section 11.08 requires WVR to pay "occupancy related expenses" when WVR reserves a property subject to the Trust, and Plaintiffs put forward no evidence these payments were not made. (Doc. 45-1, ¶ 11.08).

Plaintiff Litton does not know what the OA or Program Fees are, how they are calculated, or whether she pays them and has never investigated why they have increased. (Id. ¶¶ 37–40). Nevertheless, she testified to her belief that the fees are excessive. (Doc. 105, p. 11). Plaintiff Nolen does not know what the Program Fee is, how much it is, how it compares to other timeshare programs, or how Defendant-Trustee Fairshare sets its annual budget. (Doc. 103, ¶¶ 42–43). Nevertheless, she testified to her belief that "if there are profits, those profits could be used to reduce the prices, reduce the fees, reduce the expenses of" being a participant in the Program. (Doc. 105, pp. 10–11). Plaintiffs Cara and Windy Kelley do not know what the...