Sirmon v. Wyndham Vacation Resorts, Inc.

• Decision Date: 04 February 2013
• Docket Number: No. 7:10–cv–2717–LSC.,7:10–cv–2717–LSC.
• Citation: 922 F.Supp.2d 1261
• Parties: Brannon H. SIRMON, et al., Plaintiffs; v. WYNDHAM VACATION RESORTS, INC., et al., Defendants.
• Court: U.S. District Court — Northern District of Alabama

922 F.Supp.2d 1261

Brannon H. SIRMON, et al., Plaintiffs;

v.WYNDHAM VACATION RESORTS, INC., et al., Defendants.

No. 7:10–cv–2717–LSC.

United States District Court,

N.D. Alabama,

Western Division.

Feb. 4, 2013.

Kent M. McCain, McCain Lawyers LLC, Kevin M. McCain, Pelham, AL, R. Matt Glover, Robert F. Prince, The Prince Glover Law Group PC, Tuscaloosa, AL, Brannon J. Buck, Brett Andrew Ialacci, W. Percy Badham, III, Badham & Buck LLC, Birmingham, AL, for Plaintiffs.

Eugene J. Podesta, Jr., Baker Donelson Bearman Caldwell & Berkowitz PC, Memphis, TN, Sara M. Turner, Baker Donelson Bearman Caldwell & Berkowitz PC, Birmingham, AL, for Defendants.

Memorandum Opinion

L. SCOTT COOGLER, District Judge.

I. Introduction

Before the Court are three motions for summary judgment filed by Defendants on August 10, 2012. (Docs. 124, 127, & 130.) The first seeks summary judgment on claims asserted by Plaintiffs Brannon and Spencer Sirmon. (Doc. 124.) Plaintiffs do not oppose this motion (Doc. 160 at 1 n. 1), and therefore, it is due to be GRANTED. The second motion seeks summary judgment as to all claims asserted directly against Defendant Resort Condominiums International, LLC (“RCI”). (Doc. 127.) This motion is also unopposed (Doc. 160 at 1), and thus due to be GRANTED. The remaining motion (Doc. 130), which challenges the claims asserted by Plaintiffs Richard and Cynthia Sirmon, has been fully briefed and is ripe for decision. For the reasons described below, this Motion for Summary Judgment (Doc. 130) is due to be GRANTED in part and DENIED in part.

II. Facts¹

Defendant Wyndham Vacation Resorts, Inc. (“WVR”) is a wholly-owned subsidiary of Wyndham Vacation Ownership (“WVO”; collectively “Wyndham”), one of the world's largest timeshare companies.²Wyndham develops, markets, and sells vacation ownership interests, and provides consumer financing to owners. Ownership interests are reflected by an allocation of “points” proportionate to each owner's interest. These points can then be used to make reservations at various resorts.

Plaintiffs Richard and Cynthia Sirmon are among Wyndham's top point holders, presently owning approximately 23,000,000 points. Plaintiffs accumulated their points through direct purchases from Wyndham and also by purchasing points from third party owners. Plaintiffs first purchased timeshare interests from Wyndham in August 1999. Over the next eight and a half years, Plaintiffs repeatedly purchased additional timeshare interests. Plaintiffs' last purchase from Wyndham occurred on or about April 26, 2008.

Wyndham has an internal sales compliance manual that establishes standards for sales presentations. That manual explicitly describes a variety of prohibited sales practices. One sales tactic explicitly prohibited is promoting rental of points as a reason for purchasing additional timeshare units. Specifically, the manual provides:

• Discussing the likelihood of an owner being able to rent the product or the amount an owner could expect to receive for the rental of the product is prohibited.

• Providing examples, third party experiences, and opinions regarding the amount an owner could expect to receive, or indicating that owners typically receive a certain amount of money when renting their timeshare is prohibited.

• Suggesting that an owner can rent their timeshare to cover their maintenance fees or that an owner can pay for their purchase by renting out their timeshare is prohibited.

• Recommending or endorsing a particular rental company is prohibited.

(Doc. 146–6 at 3 ³.)

Plaintiffs allege that, notwithstanding these prohibitions, Wyndham sales representatives regularly promoted rental when encouraging them to make additional purchases. Plaintiffs' allegation is supported by the testimony of several former Wyndham employees, who testified that, with encouragement from management, sales representatives would discuss: (1) specific amounts owners could expect to receive from renting (Martin Depo., Doc. 146–7 at 222); (2) the likelihood of being able to rent (Bonds Depo., Doc. 146–11 at 31); (3) third-party experiences about amounts owners could expect to receive from renting ( id. at 53); and (4) that the owner can cover expenses and maintenance fees from revenue generated by renting. ( Id. at 33.) Former Wyndham employee Paul Bonds ⁴ testified that the “rental pitch” was used the entire time he was employed by Wyndham. (Bonds Depo., Doc. 146–11 at 32.) Further, when asked who at Wyndham was aware the rental pitch was being used, Bonds stated: “Everybody, all staff, salespeople, managers, director of sales, vice presidents, that's as far as I know, as high up as that.” ( Id. at 40.) Similarly, former Wyndham employee Tom Martin ⁵ testified that “sales representatives were instructed by their managers to promise rental income to owners, sometimes in the thousandsof dollars.” (Martin Depo., Doc. 146–7 at 222.)

As Plaintiffs accumulated more and more points, they became eligible for membership in the FairSharePlus VIP Program (“VIP Program”). The VIP Program had three levels—VIP, VIP Gold, and VIP Platinum—with each membership level offering benefits not available at the level below. Plaintiffs assert that Wyndham promised them a variety of benefits associated with their VIP Program status including, but not limited to, VIP benefits for guests, unlimited free guest certificates, favorable cancellation policies, free room upgrades, and the ability to transfer points to other owners. Furthermore, Plaintiffs allege they were repeatedly assured that the promised benefits would always be available, and that any change to the benefits would be for the better. This allegation is supported by the testimony of former Wyndham employees, including the testimony of Paul Bonds, who admitted that he told Plaintiffs they would be grandfathered in to all benefits available at the time of their purchase. (Bonds Depo., Doc. 146–11 at 202; see also Martin Depo., Doc. 146–7 at 161–62; Santore Depo., Doc 146–10 at 105–06.) VIP benefits were particularly advantageous to owners, like Plaintiffs, who were using their points to operate vacation rental businesses, and Plaintiffs contend that the prospect of obtaining these benefits heavily influenced their decision to continue accumulating points.

Every year Wyndham publishes a member's directory, which details program benefits available to Wyndham owners and the rules for membership in Club Wyndham. Plaintiffs acknowledged receipt of the then current directory in 2001, 2005, 2007, and 2008. The member directories are voluminous publications that range between 250 and 400 pages in length, depending on the year. Included within each directory is a one-page table outlining the VIP Program benefits available to VIP owners. In 2003, Wyndham placed a small-print disclaimer at the bottom of the VIP Program benefits table which provided: “[b]enefits are subject to change without notice.” ⁶ (Doc. 132–14 at 29.) In 2006, Wyndham modified the disclaimer to state: “[b]enefits are subject to change or elimination without notice.” (Doc. 132–44 at 18, emphasis added.)

The evidence submitted demonstrates that Wyndham was aware that Plaintiffs, who owned more than 20 million points, were using their points to operate a for-profit rental business. Indeed, sales representatives admitted describing Plaintiffs' rental success when using the rental pitch to convince other owners to purchase additional points. ( See Bonds Depo., Doc. 146–11 at 53.) However, despite Wyndham's knowledge that Plaintiffs' were making investment-oriented purchases, Wyndham drafted documents for Plaintiffs to sign which asserted that the purchases were made for non-investment purposes.⁷ For example, on at least three occasions, the first of which in August 2001, Plaintiffs signed an affidavit stating:

We acknowledge that the purchase of the Property interest dedicated to the Trust Agreement was NOT made for investment purposes but to use for pleasure and vacations.

(Doc. 132–2 at 3 ¶ 5; Doc. 132–2 at 41 ¶ 5; Doc 132–5 at 17 ¶ 5.)

There is evidence that also indicates that Wyndham was aware that Plaintiffs were making purchasing decisions, at least in part, based on promises and representations made by Wyndham sales representatives. Indeed, when asked whether customers relied on the rental pitch when making purchases, Paul Bonds stated: “They totally relied on it 100 percent.” (Bonds Depo., Doc. 146–11 at 31; see also Santore Depo., Doc 146–10 at 106.) Nonetheless, the contract documents provided that such oral representations were not considered part of the purchase agreements. On ten separate occasions, the first of which was in August 2001, Plaintiffs made the following attestation contemporaneous with a purchase from Wyndham:

We ... acknowledge that prior to signing the contract or agreement we were provided [various] documents ... and understand that we should not rely on any representations other than those contained in said documents.

( See Doc. 133 n. 2.)

Additionally, many of the contract documents contained merger clauses stating that oral promises were unenforceable. The following merger clauses are exemplary of clauses found throughout the timeshare contracts:

This agreement supersedes any and all understandings and agreements between You and Us, and You and We mutually agree that this Agreement represents the entire Agreement between You and Us, and any representation or inducement which is not set forth in this Agreement shall be of no force and/or effect. This Agreement may only be amended or modified by an instrument in writing between the parties.

(Doc. 132–7 at 50 ¶ 17.)

The Contract constitutes the entire agreement between Seller and Buyer, and each represents and warrants that no representation, written or oral, has been made by either of them to the other, except as expressly set forth herein. No presentation, warranty, undertaking or promise, whether oral, implied or otherwise, has been made...