Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—M.D. Fla.: Consumer’s claims against timeshare operator fail, (Nov 17, 2014)

By Linda O’Brien, J.D., LL.M.

In an action by a consumer against a timeshare operator in relation to a timeshare purchase agreement, the operator’s conduct of ceasing to offer an optional timeshare exchange program and instead promote a points based exchange program did not constitute an unfair or deceptive trade practice, the federal district court in Orlando, Florida has ruled. The consumer’s breach of contract claims were also dismissed (Desantis v. Marriott Ownership Resorts, Inc., November 14, 2014, Presnell, G.).

In 2006, consumer Salvatore Desantis purchased a one-week timeshare interest in Horizons resort operated by Marriott Vacation Club (MVC) in Orlando, Florida. Desantis opted to join a timeshare exchange program, Weeks Program, operated by Interval International, which allowed him to exchange his timeshare week with other program participants. In 2010, MVC introduced a points based program. Existing MVC timeshare owners were allowed to enroll in the new program while retaining their benefits under the Weeks Program.

Desantis filed suit against MVC, alleging he had fewer exchange options that he had previously because new purchasers were being enrolled in the points based program and, therefore, his timeshare interest was devalued. He claims that the implementation of the new program constituted a breach of contract and was a violation of the Florida Deceptive and Unfair Trade Practices Act (FDUTPA). MVC moved for dismissal.

FDUTPA. To establish a claim under the FDUTPA, a plaintiff must show a deceptive act or unfair practice, causation, and actual damages. Desantis contended that MVC’s phase out of the Weeks Program and promotion of the points based program was a deceptive and unfair trade practice since MVC created a competing exchange program to the detriment of its customers without offering conversion value. Without specific allegations of unfair or deceptive conduct, Desantis’ assertions that MVC had a contractual obligation to abstain from promoting the points based program in a way that drained the Weeks Program exchange pool were insufficient to show unfair or deceptive conduct under the FDUTPA, according to the court.

Desantis’ argument that MVC’s actions were a per se violation of FDUTPA under a bait-and-switch theory was rejected as meritless. In the court’s view, MVC offered Desantis the opportunity to participate in the Weeks Program and he was still participating in the program. At the time Desantis purchased his timeshare, he was offered and received a strong timeshare trading pool and MVC did not stop offering the Weeks Program until four years after Desantis began participating. It was not logical for MVC to create a robust trading network with a primary aim of baiting consumers like Desantis into a points based program which was not implemented until years later.

Furthermore, a plaintiff must allege misconduct beyond a simple breach of contract and Desantis’ allegations did not rise to the level of deception or malice on the part of MVC. According to the court, Desantis received what he was promised and MVC, responding to a change in the timeshare market, exercised its contractual right to change its exchange program affiliation.

Breach of contract. The timeshare purchase agreement acknowledged the existence of a contract between MVC and Interval for the provision of a reciprocal exchange program that purchasers, such as the plaintiff, could join. However, MVC retained the right to change the exchange program affiliation at a future date. In rejecting Desantis’ argument that the language in the agreement constituted a promise by MVC to forbear any action that would adversely affect his participation in the Weeks Program, the court noted that the agreement contained no promise to continue the Weeks Program or abstain from promoting a new exchange program. Since the agreement expressly reserved the right of MVC to change the exchange program affiliation at a future date, Desantis could not have reasonably expected MVC to maintain a certain level of Weeks Program participants. Thus, the breach of contract claim was dismissed.

The case is No. 6:14-cv-733-Orl-31KRS.

Attorneys: Brian W. Warwick (Varnell & Warwick, PA) for Salvatore Desantis. Dawn Ivy Giebler-Millner (Greenberg Traurig, LLP) for Marriott Ownership Resorts, Inc.

Companies: Marriott Ownership Resorts, Inc.

Cases: StateUnfairTradePractices FloridaNews