Orange Lake Country Club, Inc. v. Reed Hein & Assocs., LLC

367 F. Supp. 3d 1360
CourtDistrict Court, M.D. Florida
DecidedJanuary 4, 2019
DocketCase No: 6:17-cv-1542-Orl-31DCI
StatusPublished
Cited by2 cases

This text of 367 F. Supp. 3d 1360 (Orange Lake Country Club, Inc. v. Reed Hein & Assocs., LLC) is published on Counsel Stack Legal Research, covering District Court, M.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Orange Lake Country Club, Inc. v. Reed Hein & Assocs., LLC, 367 F. Supp. 3d 1360 (M.D. Fla. 2019).

Opinion

GREGORY A. PRESNELL, UNITED STATES DISTRICT JUDGE

This matter comes before the Court without a hearing on: (1) the Motion for Summary Judgment (Doc. 197) filed by Defendant Mitchell Sussman ("Sussman "); (2) the Response (Doc. 224) filed by the Plaintiffs, Orange Lake Country Club, Inc. ("Orange Lake ") and Wilson Resort Finance, L.L.C. ("Wilson Finance "); and (3) the Reply (Doc. 237) filed by Sussman.

I. Background1

A. Orange Lake and Wilson Finance

Orange Lake and Wilson Finance ("Plaintiffs ") are at the forefront of a legal battle that has emerged in the billion-dollar timeshare industry. Orange Lake develops, finances, manages, and sells timeshare resort properties, and Wilson Finance provides mortgage financing to purchasers of those properties. (Doc. 251, ¶¶ 2, 44, 45). Like many other providers of timeshares and timeshare financing, Plaintiffs have gone on the offensive against companies "whose business models profit from ... disrupting ... valid legal contracts between [timeshare] resorts and their owners." (Id. ¶ 1).

*1364In the instant case, Plaintiffs claim that Defendants - Reed Hein & Associates d/b/a Timeshare Exit Team ("TET "), Thomas Parenteau ("Parenteau "), Brandon Reed ("Reed "), Trevor Hein ("Hein "), Schroeter Goldmark & Bender, P.S. ("SGB "), and Sussman - engaged in a scheme designed to induce timeshare owners, including owners of Orange Lake timeshares ("Orange Lake Owners " or "Owners "), to breach their timeshare agreements for Defendants' pecuniary gain. (Id. ¶ 46).

B. TET, Reed, Hein and Parenteau's Scheme

In 2012, Reed and Hein founded TET, which brands itself as a "consumer protection firm," dedicated to releasing timeshare owners from their contracts with timeshare developers. (Doc. 224-2, ¶ 3; Doc. 189-1; Doc. 189-2). Thereafter, Reed, Hein, and Parenteau (TET's Chief Operating Officer) began enticing timeshare owners to hire TET by making false promises to relieve them of their timeshare obligations. (Doc. 251, ¶¶ 49-51). To do this, Reed, Hein, and Parenteau spend one million dollars per month advertising through TET's website,2 paid celebrity endorsements, and other marketing tools. (See, e.g. , Doc. 189-1; Doc. 189-2; Scott Loughran Dep., Doc. 189-3, p. 97).3

For example, on its website,4 TET advertises that it will utilize its "proprietary process" to get rid of an owner's timeshare contract "Safely. Legitimately. Forever." (See Doc. 189-1; see also Doc. 189-2). As illustrated by the "Frequently Asked Questions" section of the website, TET targets timeshare owners who are:

• Not using their timeshare as much as they intended to
• Frustrated by unexpected "special assessments" and skyrocketing maintenance fees
• Financially set back by their timeshare maintenance fees and special assessments
• Frustrated by their failure to sell the timeshare through a listing company
• Concerned about their children inheriting their timeshare and then consequently becoming financially responsible for it
• Bothered they can't vacation where they want, when they want
• Tired of going to the same place every year
• Aggravated with exchange companies
• Realizing that there are more ways to go on vacation for much less
• Widowed or divorced, or are no longer able to travel with their loved ones
• Inheritors of a timeshare they don't want or use
• Part of resort scams

(Doc. 189-1, p. 1). Through these Frequently Asked Questions, TET "falsely portray [that] timeshare owners do not need any legal[ ] ... basis to terminate [their] timeshare contract[s]." (Doc. 251, ¶ 53).

"This marketing strategy generates in-bound calls through which prospective [clients] contact TET regarding its advertised services." (Tanya Freeman Decl., *1365Doc. 224-2, ¶ 3). The in-bound leads are handled by TET-trained representatives, who gather background information from prospective clients and schedule in-person meetings.5 (Id. ¶ 4). During those meetings, TET representatives advise prospective clients "that TET has a 'proprietary process' through which it can negotiate the termination of timeshare contracts in just three to nine months." (Id. ¶ 5). "This promise is backed by a supposed 100% money-back guarantee." (Id. ).

At the direction of TET, the representatives also instruct prospective clients to cease all communication with their timeshare developers and to stop making payments under their timeshare agreements. (Id. ¶ 6; see, e.g. , Doc. 224-6). Nonpayment is a key component of TET's sales pitch, as it allows TET's representatives to close the sale and collect an upfront fee for TET. (Doc. 224-2, ¶ 6). It is also used as "leverage" when TET attempts to "exit" timeshare owners from their timeshare agreements. (Id. ). "This 'leverage' is crucial as TET does not have a 'proprietary process' and does not conduct an actual investigation into whether a particular timeshare owner has any valid basis to breach his/her timeshare obligations." (Id. ¶¶ 6, 8). In fact, no attorneys participate in TET's client-intake process. (Id. ¶ 9).

TET charges an upfront fee for its services. (Id. ¶ 7). This upfront fee is not based on any specific analysis of the prospective client's timeshare contract or the amount of work that is required for TET to deliver on its promise. (Id. ). Rather, TET deliberately offers a fee that falls below the cost of the prospective client's contractual obligations to his or her timeshare developer. (Id. ).

After a prospective client executes TET's retainer documents, he or she is reminded "to make no further payments to their respective timeshare developer and to cease all communication with the developer." (Id. ¶ 11; Doc. 224-6; Doc. 189-22). Thereafter, TET transfers the client's file to a "vendor attorney"-such as SGB and Sussman-to execute TET's advertised "proprietary process" of getting rid of an owner's timeshare contract. (Doc. 224-2, ¶ 14; Doc. 189-4, pp. 22-23).

C. Sussman's Participation in the Scheme

TET hired Sussman as a vendor attorney on December 12, 2013. (Doc. 197-3, ¶ 4). Pursuant to their client retainer agreement, TET pays Sussman a fixed fee (in most cases, $ 500 per file) in exchange for "proprietary information[ ] regarding the liquidation and return of timeshares" belonging to TET's clients. (Doc. 224-4; Doc. 197-3, ¶¶ 5, 15; Doc. 224-7, p. 34). Sussman is expressly aware that TET's clients, including Orange Lake Owners, have entered into contracts with timeshare developers (Doc. 224-7, p.

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Bluebook (online)
367 F. Supp. 3d 1360, Counsel Stack Legal Research, https://law.counselstack.com/opinion/orange-lake-country-club-inc-v-reed-hein-assocs-llc-flmd-2019.