Gillespie v. St. Regis Residence Club, N.Y. Inc.
| Decision Date | 21 May 2020 |
| Docket Number | 1:16-cv-9390-GHW |
| Parties | Flora GILLESPIE, et al., Plaintiffs, v. ST. REGIS RESIDENCE CLUB, NEW YORK INC., et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Anne Decker, Sam Ferguson, Seena Forouzan, Tyler Roberts Meade, The Meade Firm P.C., San Francisco, CA, Isabella Martinez, Matthew Whitacre Reiser, Michael Joseph Reiser, Law Office of Michael J. Reiser, Walnut Creek, CA, Linda Lam, Michael L. Schrag, Pro Hac Vice, Gibbs Law Group LLP, Oakland, CA, Matthew Conor Ferguson, The Matthew C. Ferguson Law Firm, Aspen, CO, for Plaintiffs Flora Gillespie, Bruce Gillespie, Bruce Allen Alter, Neil Arnovitz, 2423-0476 Quebec, Inc., Stan Battat, Zmira Battat, Samuel Bercholz, Carol Blackburn, Helene Blackburn, CV Partners, Inc., Francine J. Blum, Resolution Realty Investments, LLC, Cristina S. Buaas, Patricia Duvall, Kent Gray, Michael Z. Blumberg, Ian Casey, Martin Engels, Michael Covarrubias, William Michael Clowes, Steve Blau, Engels, LLC, Steven Dinetz, Daniel Clark, Blau Property, LLC, Brenda Cockerell, Theresa Diao, Andy Evans, Lauri Dinetz, Glenn H. Epstein, Ann Evans, Vivian Dixon, Bernard L. Bryant, Jim Buaas, Orpheus S. L. Crutchfield, Welsh Properties-New York, LLC, CKNY, Inc., Barbara S. Blumberg, John Chapple, Catherine Cantrell, Mark R. Kroll, Ann Christine Clowes, Edward Diao, Dr. Clay Cockerell, Edward W. Easton, Fran Deitrich, Susan T. Kroll, Peter Capolino, Alex Blavatnik, Edward W. Easton Family Limited, Judith Granato, The Hollywood Company, LLC, Jaqua L. Gutsch, D. Fletcher, Junior, Dr. Jerome Granato, Kathleen Patricia Fitzgerald, Ann F. Gotfredson, Robert L. Gotfredson, Dr. Mitchell C. Feinman, Jennifer M. Feinman, Larry S. Gutsch, Thomas L. Gotfredson, Richard Genow, William Friedberg, Christine P. Gotfredson, Linda Geringer, Michael Fitzgerald, Carlos Giraldo, Steve Geringer, Brendan Vincent Fitzgerald, Laurie Feltheimer, Fitze Engineers Limited, Susan Levine, 7804 Yukon, Inc., Sylvia Moisa Hedrick, Michael Levine, Masaichi Hasegawa, Howard Levine, Robert Kaufmann, Lia Iacocca-Assad, Victor Allen Assad, Gale Higgs, Kathy Justice, Walter James Brown, Jr., Maryanne Larsen, Lawrence Hedrick, Pamela Levine, Michael Hechter, Lewis S. Lee, Jr., Robert Hodgkinson, Anne A. Mastain, Cary P. Marshall, Robert Lojkovic, Diana Meyer, Letty Meskin, Evolution Lending, LLC, Robert A. McCabe, Jr., Cindy S. Marshall, Harve Meskin, Jennie T. McCabe, Amethyst Investments, LLC, Meyer Properties, LLC, Kathleen Lojkovic, Ian Mausner, Scott Meyer, RCG Ventures I, LLC, Michael McMillen, James Lustig, Gene Reed, Constance, Ltd., Bruce Newberg, Joanne F. Mosko, Kenneth Ratzan, Dr. Vincent Monticciolo, Jacques Putzeys, Earl W. Powell, Nancy Newberg, Jerry A. Orefice, Peggi C. Mueller, Stoddard Land Company, LLC, Karen G. Orefice, Nancy Ratzan, Valerie Seymour, Dr. Wayne Perron, Whitson Investments, LP, Philip S. Schein, Michael R. Pollak, Victoria B. Saunders, Gary A. Mosko, Robert Reed, Manuel Sacal, Dominique Putzeys-Schiffers, Alejandro Ruiz, Jeffrey Seymour, Dorothy R. Schein, Shereen M. Pollak, Paul H. Saunders, June Pace, Brooks Pace, Harvey H. Mueller, II, Dr. Natalie Monticciolo, Pescador Partners, Ltd., Stephen Sawyer, Roger Wolk, Prism Capital Corporation, Rosalyn F. Stuzin, Ed Snyder, Frank M. Wetchler, William Shenkman, Estelle Ivker Wallach, Robin Gann, Bankers Union Trust Dated 1/16/2011, Sydney Belzberg, Stone, Genow, Smelkinson, Binder & Christopher, LLP, Jack Usdin, Sheila Usdin, Susan Warshaw, William Wade, Marilyn Wolk, Marcia Wade, Phyllis M. Siegel, Wendy L. Wetchler, Julie Wrigley, Henry Warshaw, Baix Developments, Inc., Dennis Wong, Joanne Tymkiw, Jeffrey Taylor, Stephen L. Snyder, Herbert J. Siegel, Charles Stuzin.
Anne Decker, Sam Ferguson, Seena Forouzan, Tyler Roberts Meade, The Meade Firm P.C., San Francisco, CA, Isabella Martinez, Matthew Whitacre Reiser, Reiser Law, P.C., Walnut Creek, CA, Michael L. Schrag, Gibbs Law Group, LLP, Oakland, CA, for Plaintiffs Marc Kortlander, Jeryl Kortlander.
Chris Michael LaRocco, Ashley L. Reicher, Jonathan Eric Ginsberg, William Jonas Hibsher, Bryan Cave Leighton Paisner LLP, New York, NY, for Defendant St. Regis Residence Club, New York Inc.
Chris Michael LaRocco, Ashley L. Reicher, Jonathan Eric Ginsberg, Bryan Cave Leighton Paisner LLP, New York, NY, for Defendants Starwood Hotels and Resorts Worldwide, Inc., Marriott International, Inc., Vistana Vacation Ownership, Inc.
Plaintiffs own fractional interests in the Fifth and Fifty-Fifth Residence Club (the "Club"), a collection of luxury suites in the St. Regis New York Hotel. Plaintiffs purchased their interests starting in 2006—a time of relative economic prosperity. When the Great Recession began in 2008, however, sales slowed and eventually stopped altogether. Defendants—the owners and operators of the Club—effectively abandoned their effort to sell interests in the Club and instead rented out the Club units to the public for overnight use, as was permitted under the contracts executed by the parties. Defendants failed to restart their efforts to sell Club Interests even after the economy recovered.
Eventually, Plaintiffs sued, alleging that Defendants had denied them the benefits associated with their Club membership by ceasing the sale of Club Interests. Plaintiffs also seek to rescind their Purchase Agreements based on a clause in the Club's offering plan that states that they have a right to rescind in limited circumstances. Because the parties’ contracts specifically disclaim that Defendants have a responsibility to support the rental or resale value of Plaintiffs’ Club Interests, and because Plaintiffs lost their right to rescind when their transactions closed, Defendants’ motion for summary judgment is GRANTED.
The Fifth and Fifty-Fifth Residence Club (the "Club") is a fractional vacation ownership offering developed by St. Regis Residence Club New York, Inc. (the "Sponsor"). Defendants’ Local Rule 56.1 Statement ("Defs 56.1") ¶ 1; see also Fractional Offering Plan for the Fifth and Fifty-Fifth Residence Club ("Plan"), Ex. 1 to Declaration of Robin Suarez ("Suarez Decl."), Dkt Nos. 141-1–141-16, at 435-76 ("Club Declaration"). The Club is part of a condominium located within The St. Regis, New York Hotel (the "Building"). Defs 56.1 ¶ 2; see also Plan at 11 ("Introduction"), 591-636 ("Condo Declaration"). The Sponsor first sold fractional interests (the "Club Interests") in the Club in early 2006 and recorded the deeds related to those transactions in August 2006. Defs 56.1 ¶ 3; see also Ex. A to Declaration to Thorp Thomas ("Thomas Decl."), Dkt No. 159-1. Plaintiffs are purchasers of Club Interests. The Club operates like a timeshare. Each owner of a Club Interest owns a fraction of a Club Unit that entitles her to stay at the Club for a certain amount of time in any given year.
Initially, the Club consisted of 22 rooms (the "Club Units"), which are located on eighth and ninth floors of the Building. Defs 56.1 ¶ 4; see also Plan at 35. Each Club Unit was divided into 52 weeks ("Club Weeks"), and the Interests sold by the Sponsor were comprised of four Club Weeks each. Defs 56.1 ¶ 5; see also Plan at 12. The Sponsor made twelve Interests available for sale to the public in each Club Unit; thus, 264 total Club Interests were available for sale to the general public at the Club's inception. Defs 56.1 ¶ 6; see also Plan at 12, 35.
The Club Units are governed by the Fractional Offering Plan for the Fifth and Fifty-Fifth Residence Club (the "Plan"). The Plan states that "each Purchaser of a Club Interest will acquire a 4/52 undivided interest in a Club Unit, as tenant-in-common with all other Purchasers of Club Interests in such Club Unit." Defs 56.1 ¶ 66; see also Plan at 12 ("Introduction-The Club"). The Plan defines a "Purchaser" as "a purchaser of a Club Interest under a Purchase Agreement with Sponsor." Defs 56.1 ¶ 73; see also Plan at 24 ("Definitions"). A "Purchase Agreement" is defined as "the agreement to purchase a Club Interest entered into between Sponsor and Purchaser." Defs 56.1 ¶ 72; see also Plan at 24. Each Plaintiff entered into a Purchase Agreement with the Sponsor. See Exs. 23-131 to the Declaration of Chris LaRocco ("LaRocco Decl."), Dkt Nos. 150-23–152-26 (the "Purchase Agreements"). The Purchase Agreements incorporate the Plan by reference. See Purchase Agreements at 1 § 1. If there is a conflict between the Plan and the Purchase Agreements, the Plan controls. See Plan at 81 § ff.
Each Plaintiff also executed a Buyer's Certification as part of his or her Purchase Agreement. See, e.g. , Purchase Agreement of Flora and Bruce Gillespie, Dkt No. 150-23, at 11. The Buyers’ Certifications state that "[t]he Seller believes that Club Members need to fully understand certain key points about their rights and duties as a Club Member" and lists eighteen points that a purchaser must certify she has read and understands. See, e.g. , id. The Buyer's Certifications state that and that See, e.g. , id. (emphasis omitted); see also Defs 56.1 ¶¶ 119-20.
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