McKnelly v. Wyndham Destinations, Inc. (TV1)

CourtDistrict Court, E.D. Tennessee
DecidedMarch 30, 2020
Docket3:19-cv-00103
StatusUnknown

This text of McKnelly v. Wyndham Destinations, Inc. (TV1) (McKnelly v. Wyndham Destinations, Inc. (TV1)) is published on Counsel Stack Legal Research, covering District Court, E.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
McKnelly v. Wyndham Destinations, Inc. (TV1), (E.D. Tenn. 2020).

Opinion

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TENNESSEE

WILLIAM MCKNELLY and, ) LOUISE MCKNELLY, ) ) Plaintiffs, ) ) v. ) No.: 3:19-CV-103-TAV-DCP ) WYNDHAM DESTINATIONS, INC., ) WYNDHAM VACATION ) RESORTS, INC., ) WYNDHAM VACATION ) OWNERSHIP, INC., and ) JOHN DOE, ) ) Defendants. )

MEMORANDUM OPINION AND ORDER

This civil case is before the Court on defendant Wyndham Vacation Resorts, Inc.’s Partial Motion to Dismiss [Doc. 12].1 Defendant moves, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, for dismissal of plaintiffs’ claims for breach of contract [Doc. 10 ¶ 156–71] and anticipatory breach [Id. ¶ 199–210]. Plaintiffs responded, voluntarily dismissing their claims for breach of oral contract but otherwise opposing the motion [Docs. 16, 17]. Defendant replied [Doc. 18]. Thus, this motion is fully briefed and ripe for disposition. Because plaintiffs have failed to allege facts sufficient to allow the

1. The Court notes that although the motion [Doc. 12] is styled as submitted by all Wyndham defendants, the motion seeks to dismiss claims which are only asserted against defendant Wyndham Vacation Resorts, Inc. [see Doc. 10-1 ¶¶ 156–71, 199–210]. Court to reasonably infer that defendant failed or refused to perform pursuant to an obligation imposed upon it by the parties’ contracts, the motion will be GRANTED. I. Background2

Defendant Wyndham Vacation Ownership, Inc. (“WVO”) is the parent company of defendant Wyndham Vacation Resorts, Inc. (“WVR”) and is a member of defendant Wyndham Destinations, Inc.’s family of companies [Doc. 10 ¶ 19]. Defendants WVR and WVO market, sell, and finance “Vacation Ownership Interests” (“VOIs”), provide property management services to property owners’ associations, and develop vacation ownership

resorts [Id. ¶ 18]. Plaintiffs are individuals who reside in Illinois [Id. ¶ 1]. The amended complaint [Doc. 10] alleges a general scheme created and carried out by defendants to defraud prospective and current owners of timeshare interests [Id. ¶¶ 22– 124]. The alleged scheme included the following: the use of deceptive and high-pressure tactics in the sale of VOIs, including a rushed closing process designed to hide certain

material terms of the contract and cause confusion and misunderstanding among the purchasers; the institution of a “points” system that highly diluted ownership of VOIs; and defendants’ total control of inventory and manipulation of reservations to deny timeshare owners access to accommodations [Id.]. Plaintiffs allege that on or about February 1, 2015, while vacationing in Sevierville,

Tennessee, they were invited to what they were told was a short (no longer than ninety (90)

2. The factual background is discussed in the light most favorable to plaintiffs in accordance with the Rule 12(b)(6) standard. Bishop v. Lucent Techs., Inc., 520 F.3d 516, 519 (6th Cir. 2008) (citing Harbin-Bey v. Rutter, 420 F.3d 571, 575 (6th Cir. 2005)). 2 minute) presentation on defendants’ new ownership program’s features [Id. ¶ 126]. However, the presentation was in fact a multi-hour, high-pressure sales pitch [Id.]. During this event, plaintiffs encountered defendant Doe, an agent of the Wyndham defendants [Id.

¶ 127]. Defendant Doe convinced plaintiffs to purchase a VOI [Id. ¶ 128]. Plaintiffs summarize various misrepresentations made by defendant Doe at the presentation, including saying that she would assist them in using their timeshares in the future, that the deal she was offering was only good for that day, that plaintiffs could rent out their timeshares to cover all their costs, that the “points” associated with their timeshare

interests were useful in buying airline tickets and renting vehicles, and that plaintiffs would be enrolled in a buyback program [Id. ¶¶ 129–33]. Plaintiffs relied upon these statements in purchasing a VOI [Id. ¶¶ 128, 137]. Plaintiffs assert that defendant Doe “tricked [them] into signing documents that often contradicted the sales agents’ statements” [Id. ¶¶ 134, 135] and that defendant Doe’s supervisor and/or a Wyndham executive vice president

directed these statements be made and knew of their falsity [Id. ¶¶ 135–36]. Plaintiffs do not have copies of the contract they entered into with defendant on February 1, 2015, or any other of the “several contracts” to which they refer in their complaint [Id. ¶ 157]. Also, they do not know the exact amount of money they have paid to Wyndham throughout their dealings, but they estimate that they have paid Wyndham at

least $230,000 in the form of mortgages, maintenance fees, and interest [Id. ¶ 125]. In the amended complaint, plaintiffs also discuss defendants’ “retaliation” against them for filing a complaint [Id. ¶¶ 121–24]. Specifically, on February 9, 2017, counsel for 3 defendants sent a letter to plaintiffs’ counsel, apparently in response to “dozens of letters from [plaintiffs’ counsel] on behalf of Wyndham Owners [asserting that the owners] were induced to enter into purchase transactions with Wyndham Vacation Resort, Inc. in reliance

on alleged misrepresentations made to the owners by Wyndham personnel at the time of sale” [Doc. 10-1; see also Doc. 10 ¶¶ 121–22]. In the letter, defendants’ counsel states: Since these owners claim that they would never have made the purchases in question but for Wyndham’s alleged misconduct, in an effort to accommodate these owners, Wyndham intends to place a freeze on their accounts. Likewise, Wyndham will cease automatic withdrawals for outstanding loan payments and fees. Consequently, these owners will no longer be able to book accommodations using their points and all existing reservations will be cancelled. Wyndham will also cease receiving automatic withdrawals to cover outstanding loan payments and maintenance fees. Wyndham will take these steps immediately for all owners for whom Wyndham receives demand letters from you in the future. As to those owners for whom Wyndham has previously received a demand letter, these steps will be taken effective February 28, 2017.

If, despite allegations that these purchases were fraudulently induced, an owner you represent wishes to continue to travel and use his or her points, please let me know so that we may discuss this request.

[Doc. 10-1].

Plaintiffs’ counsel responded in a letter dated February 17, 2017 [Doc. 16-2; see also Doc. 10 ¶ 123], requesting that plaintiffs’ account not be frozen and seeking further assurances that the account in fact would not be frozen [Doc. 16-2; see also Doc. 10 ¶ 123]. Defendants have not responded to plaintiffs with information about the status of plaintiffs’ account [Docs. 10 ¶ 124; 16 p. 4]. Based on the foregoing factual allegations, plaintiffs assert four claims in their amended complaint: (1) fraud in the inducement against all defendants, (2) breach of 4 contract against defendant WVR, (3) violation of the Tennessee Timeshare Act against all defendants, and (4) anticipatory breach against WVR. For the reasons discussed herein, plaintiffs’ claims for breach of contract and anticipatory breach will be DISMISSED.

II. Legal Standard Rule 8(a)(2) of the Federal Rules of Civil Procedure sets out a liberal pleading standard. Smith v. City of Salem, 378 F.3d 566, 576 n.1 (6th Cir. 2004).

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Bluebook (online)
McKnelly v. Wyndham Destinations, Inc. (TV1), Counsel Stack Legal Research, https://law.counselstack.com/opinion/mcknelly-v-wyndham-destinations-inc-tv1-tned-2020.