Bluegreen

Smith v Bluegreen

Case Number: 3:18-cv-429

Last Updated: April 9, 2021

Status

On March 6, 2020, the parties jointly stipulated to dismiss the case with prejudice after the Parties successfully mediated the case and agreed to settle.

Location

Eastern District of TN Knoxville

Presiding Judge

Judge Debra C Poplin

Date Filed

10/01/2018

Highlights

Case Posture

Claims:

In their Amended Complaint, Plaintiffs John and Beverly Smith (the “Smiths”) brought nine causes of action against Defendant Bluegreen Vacations Unlimited, Inc. (“Bluegreen”) for (1) violations of the Tennessee Timeshare Act; (2) constructive fraud; (3) fraud- intentional misrepresentation/fraud in the inducement; (4) fraudulent concealment; (5) breach of contract; (6) negligent misrepresentation; (7) unconscionability; (8) contract of indefinite duration; and (9) civil conspiracy. One cause of action for civil conspiracy was alleged against defendants Bluegreen Corporation, Inc., Vacation Trust, Inc., and Bluegreen Vacation Club, Inc. [22]

Posture:

Bluegreen’s Motion to Dismiss was granted as to the one charge of civil conspiracy against all defendants. As civil conspiracy was the only cause of action against defendants Bluegreen Corporation, Inc., Vacation Trust, Inc., and Bluegreen Vacation Club, Inc. those defendants were dismissed entirely from the action. At the Motion to Dismiss hearing, the Court also dismissed the Smiths claims against Bluegreen for unconscionability and contract of indefinite duration. The case was successfully mediated and a Joint Stipulation was filed on March 6, 2020 dismissing the case with prejudice.

Summary:

The Smiths are senior citizens who are residents of Tennessee. They purchased Bluegreen points and timeshares at the Bluegreen office in Sevier County, Tennessee. The Smiths purchased timeshares/points on October 2, 2014 in Sevierville, Tennessee for $30,350.00. The Smiths purchased another timeshare on November 11, 2014 in Sevier County, Tennessee in the amount of $20,300.

The Smiths realized they had been defrauded by Bluegreen when they discovered that the rooms were always booked whenever they repeatedly tried to make reservations to use the timeshares. During two high pressure sales meetings in October and November 2014, the Smiths relied on the sales agents’ false representations in deciding whether or not to purchase the timeshares.

At the sales meetings the Bluegreen sales agents told the Smiths the timeshares would greatly increase the amount of rental income they would receive because the Bluegreen timeshares were in very high demand. The Smiths alleged Bluegreen deliberately restricts the quantity and quality of the inventory available for rent so that the average timeshare owner does not get a big price for their rental. This was never explained to the Smiths. The Smiths were never told by Bluegreen that they would be competing with Bluegreen who rents out the resorts on the open market. Bluegreen also requires the timeshare owners to sign a document that states they were not told or promised rental income as part of the sales presentation.

During the “closing” the Smiths signed documents that state fraudulent statements were not made to them by sales agents and that no violations of the Tennessee Timeshare Act occurred during the sales process. Bluegreen also required the Smiths to sign documents without legal or financial counsel. Additionally, Bluegreen required the Smiths to sign documents that referred to separate and additional documents that were hundreds of pages long that could not have reviewed in one sitting. The Smiths signed all of the documents without having the opportunity to read all of them due to being tired, hungry, pressured, harassed and/or bullied into signing.

The Smiths allege they were victims of Bluegreen’s fraudulent and deceptive practices such as difficulties in canceling vacation packages and being denied refunds for cancelled trips, resorts never being available when they contacted Bluegreen, and when booking, almost all nights are “high red” or “ultra high red” seasons. Meaning, a person can only use 5,000 points from this year. When booking in these “red” seasons, Bluegreen would take the Smiths’ newest points and leave them with old points only allowing them to stay no more than 3-4 nights using Bluegreen points.

The Smiths also alleged Bluegreen’s sales agents used high pressure sales tactics such as applying extreme pressure to act quickly after the Smiths were worn down by hours of sales pitches, pressure not to read the documents, giving brief, inadequate descriptions of the documents and telling the Smiths where to sign on the documents when it was clear that the Smiths lacked an understanding of what each document meant.
The Smiths requested the Court award them compensatory and punitive damages, attorneys’ fees and costs, discretionary cost, costs of the suit, injunctive relief, and declaratory relief.

Selected Events:

9/25/2019 Order Regarding Bluegreen’s Motion to Dismiss the Amended Complaint [40]

The Court denied in part and granted in part Bluegreen’s Motion to Dismiss the Amended Complaint. Bluegreen claimed that the Tennessee venue statute and Erie doctrine abrogated the Court’s jurisdiction to hear the Smiths’ claims. The Court denied Bluegreen’s motion to dismiss on the issue that Tennessee was not the correct venue for the litigation.

Bluegreen also requested the Court dismiss the Smiths’ claims because Sevier County Chancery Court previously dismissed the Smiths’ state law action for lack of proper jurisdiction. As such, all the Smiths’ claims should be barred by the legal principles of res judicata and collateral estoppel. The court denied Bluegreen’s Motion on the grounds that Smiths’ claims were never adjudicated. The claims were not dismissed on their merits. The claims were only dismissed for a lack of jurisdiction. A state court judgment based on lack of jurisdiction only does not bar the Smiths’ current claims.

As to the principle that the Smiths’ claims are barred by collateral estoppel, this principle also does not apply in this situation as the issues raised in this proceeding are not identical to the issues decided in an earlier proceeding. The only issue the prior court decided was whether or not it had jurisdiction to hear the Smiths’ claims. The court also denied Bluegreen’s Motion on these grounds.

The Court also denied Bluegreen’s Motion to dismiss the Smiths’ fraud claims against it. The Smiths adequately plead that they were pressured into signing contracts without the opportunity to consult with an attorney or read the contracts prior to signing them.

Bluegreen’s additional assertion that the fraud claims for intentional and negligent misrepresentations were time barred by the three-year statute of limitations was also unfounded. The Smiths had one year after their claims were dismissed by the Chancery Court to commence a new action which tolled the statue of limitations.

Bluegreen argued that the Smiths’ claims for fraudulent concealment should be dismissed because neither Bluegreen nor the agents had a duty or obligation to disclose material facts to the Smiths because non-disclosures were included in the terms of the contracts. The Smiths alleged that Palmer, Maples, Speanburgh and Coker were all licensed real estate agents who have a duty to disclose all adverse facts to all parties in a real estate transaction. The Court denied Bluegreen’s Motion to dismiss the fraudulent concealment claim as the Smiths adequately alleged all four elements required to sustain an action for fraudulent concealment.

The Court denied Bluegreen’s Motion to Dismiss the constructive fraud claim as the claim was adequately plead. The Smiths plead Bluegreen did not disclose facts such as the actual value of the timeshares, the lack of investment potential, inability to refinance, the non-value of “equity”, whether the Smiths received a special offer and the valuation of points.

Bluegreen’s Motion that the Smiths claim for violations of the Tennessee Timeshare Act should be dismissed on the basis that the timeshare was located in Massachusetts was also denied because the Timeshare Act regulates any timeshare advertisement that it is disseminated within the state regardless of where the timeshare is located.

The Court granted Bluegreen’s Motion to Dismiss the Smiths’ breach of contract claim on the basis that the Smiths were denied reservations when rooms were available but marketed out on the open market when the Smiths had a right to reserve did not breach the timeshare contract.
The Court also granted Bluegreen’s Motion to Dismiss as to the Smiths’ unconscionability claim as the timeshare agreements are not devoid of any value and that the costs of the agreement do not far outweigh the timeshare agreements utility.

The Smiths’ claim that the timeshare contract was void as a perpetual contract was also dismissed as the timeshare agreement is terminable at will and the Smiths would not incur obligations to pay maintenance fees indefinitely.

As the Smiths voluntarily agreed to nonsuit their claim against Bluegreen for civil conspiracy, Bluegreen’s Motion to Dismiss that claim was granted. As the civil conspiracy claims against defendants Bluegreen Corporation, Vacation Trust, Inc., and Bluegreen Vacation Club, Inc. were for civil conspiracy only, the Court dismissed those defendants from the lawsuit.

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Docket link

Operative Complaint

Critical Orders

Critical Briefs

Transcripts

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Parties

Plaintiffs: John Smith

Plaintiffs’ counsel: Aubrey T Givens of Aubrey Givens & Associates

Plaintiffs: Beverly Smith

Plaintiffs’ counsel: Aubrey T Givens of Aubrey Givens & Associates

Defendants: Bluegreen Vacations Unlimited, Inc.

Defendants’ counsel: George H Cate , III, Russell Brandon Bundren, Patricia Head Moskal of Bradley Arant Boult Cummings LLP

Defendants: Bluegreen Corp.

Defendants’ counsel: George H Cate , III, Russell Brandon Bundren, Patricia Head Moskal of Bradley Arant Boult Cummings LLP

Defendants: Vacation Trust, Inc.

Defendants’ counsel: George H Cate , III, Russell Brandon Bundren, Patricia Head Moskal of Bradley Arant Boult Cummings LLP

Defendants: Bluegreen Vacations Club, Inc.

Defendants’ counsel: George H Cate , III, Russell Brandon Bundren, Patricia Head Moskal of Bradley Arant Boult Cummings LLP

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