Trial court ruled in favor of timeshare owners on their claim of common law fraud and consumer protection statutes. Appellate court affirmed reasonableness of a punitive damages award (as modified by the statutory cap) in the sum of $500,000 based on Westgate’s “reprehensible” conduct; trial court order correctly refused to enforce Westgate’s forum selection clause.
Bench trial resolved in favor of timeshare owners, punitive damages award and affirmed on appeal.
Nathan and Patricia Overton sued Westgate to rescind their timeshare contract and return their payment of $39,280, claiming fraud and violations of the Tennessee Consumer Protection Act and the Tennessee Timeshare Act.
The Overtons testified at a bench trial conducted on June 19 and 20, 2013 that — in the course of a nearly eight hour long sales presentation — a Westgate sales manager promised in consideration of a timeshare purchase:
The Overton’s testified that after the sale:
After a hearing, the trial court found that Westgate was guilty of fraud, and that Westgate had trained its salespersons to promise unlimited Owners’ Nights, even knowing that no such program existed in the written documents related to sales of the Westgate timeshares.
The trial court ordered the contract rescinded, and required Westgate to refund the Overtons’ payment of $39,280. The judge additionally ordered Westgate to pay attorney’s fees in the sum of $117,082 and costs in the sum of $19,198, as well as punitive damages in the sum of $600,000 based on Westgate’s financial position and its “reprehensible” conduct.
Westgate argued that the punitive damages award was improper or excessive, and challenged the trial court’s refusal to enforce a forum selection provision requiring any litigation to be filed in Orange County, Florida.
On appeal, the reviewing court affirmed the trial court’s award of punitive damages as reasonable, but reduced the award to $500,000, citing the state’s statutory cap. The court also affirmed the trial court’s refusal to enforce the forum selection clause, reasoning that fraud in the underlying transaction rendered the forum selection clause in the contract unenforceable.
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Nathan and Patricia Overton
John O. Belcher and Curtis R. Harrington
Westgate Resorts, Ltd., L.P.
Gregory Logue and Robert L. Vance