Hamm v. Wyndham Resort Dev. Corp.
| Decision Date | 13 April 2020 |
| Docket Number | Case No. 3:19-cv-00426 |
| Parties | GARY W. HAMM and LINDA M. HAMM, Plaintiffs, v. WYNDHAM RESORT DEVELOPMENT CORP., WYNDHAM WORLDWIDE OPERATIONS, INC., WYNDHAM VACATION RESORTS, INC., WYNDHAM VACATION OWNERSHIP, INC., WYNDHAM CONSUMER FINANCE, INC., WYNDHAM REWARDS, INC., and JOHN DOES 1-100, Defendants. |
| Court | U.S. District Court — Middle District of Tennessee |
MEMORANDUM
Before the court is the plaintiffs' Motion for Leave to Amend Complaint, filed along with the proposed Amended Complaint. (Doc. Nos. 19, 19-1.) The defendants, collectively, oppose the motion. (Doc. No. 26.) For the reasons set forth herein, the Motion to Amend will be granted in part and denied in part.
Plaintiffs Gary Hamm and Linda Hamm filed suit on May 20, 2019, invoking the court's diversity jurisdiction and asserting claims under Tennessee law for (1) fraud; (2) fraudulent misrepresentation; (3) fraudulent inducement; (4) misrepresentation by concealment; (5) negligent misrepresentation; (6) violation of the Tennessee Timeshare Act ("TTSA"), Tenn. Code Ann. § 66-32-101 et seq.; (7) breach of contract; and (8) unjust enrichment. (Doc. No. 1.) All claims were asserted against all defendants, who are identified as Wyndham Resort Development Corp., Wyndham Worldwide Operations, Inc., Wyndham Vacation Resorts, Inc.,1 Wyndham Vacation Ownership, Inc., Wyndham Rewards, Inc. (collectively "Wyndham" or "Wyndham defendants"), and "John Does 1-100," who are alleged to be individuals employed by one or more of the Wyndham defendants. Very generally, the plaintiffs' claims were premised upon their purchase of timeshare properties and points for resort properties located in Tennessee and Virginia.
In lieu of an answer, the Wyndham defendants sought dismissal of the original Complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure, on the grounds that (1) the claims of fraud, fraudulent misrepresentation, fraudulent inducement, misrepresentation by concealment, and negligent misrepresentation were barred by the three-year statute of limitations set out in Tenn. Code Ann. § 28-3-105; (2) the terms of the parties' written agreements negated the fraud-based claims; (3) the fraud-based claims were not pleaded with sufficient particularity; (4) the plaintiffs' allegations in support of their fraud and misrepresentation claims were contradicted by the merger and integration clauses of the written timeshare contracts the plaintiffs executed and also by the plain terms of those agreements; (5) the Complaint failed to allege facts showing a specific breach of any agreement and therefore failed to state a claim for breach of contract; and (6) the claim for unjust enrichment was subject to dismissal as a matter of law since the parties' relationship is governed by express written contracts. (Doc. Nos. 6, 7.)
On November 25, 2019, the court granted the defendants' Motion to Dismiss, finding that (1) the fraud claims, including the TTSA claim, were not pleaded with the particularity required by Rule 9 of the Federal Rules of Civil Procedure; (2) the negligent misrepresentation claim wastime-barred; and (3) the Complaint failed to allege facts to support the plaintiffs' breach of contract and unjust enrichment claims. (Doc. Nos. 15, 16.) All claims, however, were dismissed without prejudice, and the court expressly granted the plaintiffs the option of filing a motion to amend their pleading along with a copy of an amended complaint that cured the deficiencies in the original Complaint.
The plaintiffs have now filed their Motion for Leave to Amend Complaint and proposed Amended Complaint. (Doc. Nos. 19, 19-1.) The Wyndham defendants oppose the Motion to Amend on the grounds of futility, arguing that the proposed Amended Complaint would be subject to dismissal on largely the same grounds as those raised in the Motion to Dismiss aimed at the original Complaint. (Doc. No. 26.) Specifically, they argue that: (1) the fraud claims are still not pleaded with the particularity required by Rule 9; (2) the fraud-based claims are barred by the statute of limitations; (3) the proposed Amended Complaint makes no effort to revise the factual allegations supporting the negligent misrepresentation, breach of contract, or unjust enrichment claims, so there is no basis for reinstating these claims. The plaintiffs did not seek leave to file a reply brief.
In the Memorandum entered on November 25, 2019 (Doc. No. 15), the court summarized fairly comprehensively the plaintiffs' factual allegations in the original Complaint and will not restate all of those allegations here. Very generally, the plaintiffs there and in the proposed Amended Complaint allege that, over the course of several decades, beginning in the 1980s, they purchased Wyndham timeshares and vacation-club membership points and/or properties and signed timeshare contracts in Virginia and Tennessee; that they were continuously pressured by Wyndham employees to purchase additional points and/or properties; that Wyndham employees, pursuant to their training, intentionally and/or negligently misled the plaintiffs, through affirmatively untrue statements or fraudulent omissions, to induce them to stay in a relationship with Wyndham and to increase their stake; and that Wyndham employees misled them as to the value of their purchases, the costs associated with them, whether the purchases were a sound financial investment, and whether the plaintiffs would be able to sell their points and properties.
In dismissing the fraud claims set forth in the original Complaint for failure to allege the facts supporting the claims with the requisite particularity, the court found that the plaintiffs failed to allege when or where the allegedly fraudulent conduct took place or who made the actionable statements and omissions. In the proposed Amended Complaint, the plaintiffs now specify that they purchased Wyndham timeshares and signed timeshare contracts in Williamsburg, Virginia on September 28, 2014 and May 21, 2015. They purchased the "Pathways" program on September 28, 2014. (Doc. No. 19-1 ¶ 2.) They purchased Wyndham resort vacation units at Wyndham resorts located in Tennessee. (Id. ¶ 3.)
The proposed Amended Complaint identifies the various defendants but still does not indicate the basis for the plaintiffs' decision to sue all of them as if they comprise a single entity. Wyndham Resort Development Corp. ("WRDC") operates under the name "WorldMark by Wyndham" and is registered to conduct business in Tennessee. (Id. ¶ 4.) The plaintiffs do not allege what business WRDC is engaged in or what, if any, contact the plaintiffs had with WRDC. Wyndham Worldwide Operations, Inc. is, and has at all material times been, in the "hospitality business, franchising and managing hotels through the United States" and "control[ing] the acts and practices of its subsidiaries." (Id. ¶ 5.) The plaintiffs do not allege that they had any contacts or communications with WWO and only imply that it is a remote parent of the entity they did deal with—Wyndham Vacation Resorts, Inc. ("WVR").
The plaintiffs entered into timeshare contracts with defendant WVR. (See id. ¶ 10; Doc. Nos. 7-1, 7-2, 7-3.) Wyndham Vacation Ownership, Inc. is the direct parent company of WVR. (Doc. No. 19-1 ¶ 7.) Wyndham Rewards, Inc. operated Wyndham Rewards, "a mechanism regarding timeshare maintenance fee, as part of Defendants' transaction(s) with Plaintiffs." (Id. ¶ 8.) Beyond stating that they contracted with WVR and participated in the Wyndham Rewards program, the plaintiffs do not explain the basis for their suit against the other Wyndham defendants. Instead, they allege broadly that "the corporate structure [of the various Wyndham entities] is unknown to Plaintiffs and will have to be clarified through discovery." (Id. ¶ 10.)
The plaintiffs allege that the John Doe defendants are employees of one or more of the Wyndham defendants. (Id. ¶ 9.) The plaintiffs do not know the names of each sales representative with whom they dealt, nor do they name as defendants the three whose names they do remember, Orlando Vincent, Shauntae Covington,2 and Lori Lewis. (Id. ¶¶ 44, 102.) They believe the sales representatives are employed by WVR, but "that information is not within Plaintiff[s'] knowledge but is within Defendants' knowledge." (Id. ¶ 44.)
The plaintiffs alleged very generally in the original Complaint that "Wyndham" engaged in "bait and switch" tactics and advertising, made false or misleading statements to them, and engaged in multi-hour long, high-pressure sales tactics. These same allegations in the proposed Amended Complaint are now prefaced with the phrase, "[i]n each sales presentation." (Id. ¶¶ 49-54, 56, 59-61, 70-75, 83-84, 87-94, 97.) The proposed Amended Complaint also includes a new section in which the plaintiffs provide some chronological background. They allege that, in the 1980s, they participated in a promotional two-night stay at a Wyndham property, Fairfield Glade,and, after that stay, purchased a "fixed-week timeshare" at that property for $4,600. They were told that this was an investment the value of which would increase over time and that the plaintiffs would save money on future vacations. The maintenance fee then was $80 per year. The plaintiffs allege that they were not told about assessment fees or that the maintenance fees could increase; they were not told about other fees like programming and booking fees. However, the maintenance fee increased to $298 in 2001 and then to $1,092 in 2006 because of an assessment for a new pool, gym, and other amenities. The fee was $699 in 2012. The plaintiffs assert that "[n]on-owners could easily reserve a Wyndham place and time for a week for about $300; however, Plaintiffs were required to pay high fees and assessments on top of the purchase price." (Doc. No. 19-1 ¶ 98.)
Despite the fact that the...
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