Woodward Drake et al v. Wyndham Resort Development Corporation et al

Case Number: 30-2019-01082041

Last Updated: April 16, 2021

Status

Settled

Location

Superior Court of California, Orange County (remanded from US District Court, Central District of California)

Presiding Judge

Judge James Crandall

Date Filed

07/10/2019

Highlights

The Court overruled Wyndham’s statute of limitations challenge to timeshare owners fraud complaint, finding that the delayed discovery rule applies.

Case Posture

Claims:

Timeshare owners allege fraud, intentional concealment, declaratory relief, and breach of fiduciary duty -negligence related to their purchase of a Wyndham timeshare.

Posture:

After successfully remanding their complaint from the US District Court, Central District of California, Woodward and Joann Drake filed their Second Amended Complaint with the Superior Court of California, Orange County. The Drakes survived Wyndham’s statute of limitations challenge to the pleadings, and the case is at issue. The Drake’s Motion to Compel Wyndham’s Responses to Requests for Admissions is scheduled to be heard on February 25, 2021. A jury trial is currently set for May 17, 2021.

Summary:

In their Second Amended Complaint, the Drakes allege that they purchased Wyndham timeshare interests (WorldMark) while visiting Wyndham’s timeshare property in Angels Camp, CA. They claim Wyndham’s sales broker defrauded them; and that the broker failed to advise them of their right to be represented by their own broker or attorney, improperly acting as a dual agent.

Related to the fraud claim, the timeshare owners allege that Wyndham misrepresented that

The timeshare would appreciate and increase resale price and value over time;
The timeshare was freely exchangeable, transferable, and saleable;
The timeshare owners would receive booking exclusivity over non-purchasing vacationers;
The timeshare owners would have access to one or more Wyndham properties and that such properties would be widely available.

Related to the intentional concealment claim, the timeshare owners allege that Defendants failed to reveal to the timeshare owners:

The nature and extent of maintenance fees and taxes that timeshare owners would be obligated to pay;
Wyndham’s undisclosed intention not to maintain a one-to-one purchaser to accommodation ratio;
That Wyndham would hinder timeshare owners from transferring or selling the time-share;
That Wyndham intended to rent the timeshare to the public without knowledge and approval of the owners;
The contract was a “lifetime” contract; and
That Wyndham intended to and would grant priority to the general public making rooms unavailable to the Plaintiffs.

Related to the declaratory relief cause of action, the timeshare owners request that the Court declare that:

At the timeshare purchase and financing agreement by its terms preclude Wyndham from seeking a deficiency judgment as a result of the timeshare owners’ default;
The timeshares are “time-share interests” under Business & Professions Code 11212(x), (1), (2);
The sale of the time-share is subject to regulation by the California Department of Real Estate; and
Civil Code of Procedure 580(b) (anti-deficiency laws) apply to the timeshares.

Selected Events:

11/20/20 – Worldmark, The Club filed its Answer and Affirmative Defenses to the Second Amended Complaint. [108]

10/1/2020 – The Drakes named Worldmark, The Club as an additional defendant.

8/21/2020 – Answer and Affirmative Defenses to the Second Amended Complaint: Wyndham pled fifteen standard affirmative defenses and generally denied all of Plaintiffs’ claims. Additionally, Wyndham requested the Court award its attorney’s fees and costs incurred in defending the action. [91]

8/11/2020 – Notice of Ruling on Demurrer- the Court overruled Wyndham’s demurrer to the first cause of action for fraud, second cause of action for fraud in the inducement and fourth cause of action for breach of fiduciary duty.

The Court found that although the Drakes purchased the timeshare more than three years ago, the Drakes were previously able to book time at the resort and were not aware of the falsity of the representations until October 2018, within the statutory period to bring the claims. The timeshare owners sufficiently alleged that at that time, they attempted to reserve a Monterey timeshare unit but were unable to do so, in spite of the fact that the general public could make a reservation at the same location. They alleged that “prior to the discovery of Defendants’ fraud, ‘plaintiffs were diligent in attempting to book vacations and were able to do so.” Accordingly, the delayed discovery rule applied.

The Court also rejected a challenge to the Declaratory Relief cause of an action because an actual controversy ripe for determination exits: The timeshare owners allege that they “have ceased payments to defendants and are in default under their Purchase Agreement with defendants…As a result of plaintiffs’ non-payment the defendants have declared a default, suspended the plaintiffs [sic] membership and refused them access to the time-share property.” [89]

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Transcripts

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Parties

Plaintiffs: Woodward Drake, Joann Drake

Plaintiffs’ counsel: Mitchell Reed Sussman, Mitchell Reed Sussman Law Office

Defendant: Wyndham Resort Development Corporation; Wyndham Worldwide Operations, Inc. Does 1-10, inclusive

Defendant’s counsel: Jessica N Walker, Tony Tootell of Foley and Lardner LLP