Spearman et al v. Wyndham Vacation Resorts, Inc. et al

Filing 31

MEMORANDUM OPINION. Signed by Judge L Scott Coogler on 9/18/12. (KGE, )

FILED
2012 Sep-18 AM 09:34
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
WESTERN DIVISION
WILLIAM SPEARMAN, et al.,
Plaintiffs;
vs.
WYNDHAM VACATION
RESORTS, INC., et al.,
Defendants.

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7:11-cv-3960-LSC

MEMORANDUM OF OPINION
I.

Introduction
Before the Court is Defendants’ “Motion to Dismiss, Transfer Venue or, in the

Alternative, Motion for Summary Judgment” filed on January 24, 2012. (Doc. 8.) For
the reasons described below, the Motion to Dismiss is due to be GRANTED in part
and DENIED in part, the Motion to Transfer Venue is due to be DENIED, and the
alternative Motion for Summary Judgment is due to be DENIED with leave to refile
at the close of discovery.
II.

Factual Background and Procedural History
Defendant Wyndham Vacation Resorts, Inc. (“WVR”) is a wholly-owned

subsidiary of Wyndham Vacation Ownership (“WVO”; collectively “Wyndham”),

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one of the world’s largest timeshare companies. Wyndham 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 are among Wyndham’s top point holders, and belong to the highest
level of a three-tiered VIP Program. They claim to have been enticed to the highest
levels of ownership by Wyndham’s repeated promises about the benefits that would
come with additional points. Plaintiffs complain that Wyndham has altered or
eliminated many of these expected benefits, including the promise of unlimited guest
certificates and the ability to sell or transfer points to other owners. Additionally,
Plaintiffs allege that the merger of Wyndham’s point program with Resort
Condominiums International, LLC (“RCI”), has diluted the value of Wyndham
ownership and has made it difficult or impossible to make some reservations. Plaintiffs
contend that deceptive sales practices, changes to benefits, and devaluing of
ownership are all part of a “systematic scheme”directed at VIP owners like Plaintiffs.
(Doc. 1 at 8.)
Plaintiffs filed a complaint in this case on November 18, 2011, against WVO,
WVR, and RCI (collectively “Defendants”). (Doc. 1.) The complaint contains
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thirteen separate claims for relief: fraud; fraud in the inducement; suppression; breach
of contract; wantonness; breach of fiduciary duty; negligence; negligent hiring,
training, supervision, and retention; wanton hiring, training, supervision, and
retention; unjust enrichment; a claim for an accounting; a claim for injunctive relief;
and a claim for civil conspiracy to commit fraud, fraudulent inducement, and
suppression. (Id.)
The allegations and claims for relief in Plaintiffs’ complaint are virtually
identical to those stated in complaints filed in three other cases currently pending
before this Court: Sirmon v. Wyndham Vacation Resorts, Inc., 7:10-cv-02717-LSC;
Yaeger v. Wyndham Vacation Resorts, Inc., 7:11-cv-3958-LSC; and Brouwer v. Wyndham
Vacation Resorts, Inc., 7:11-cv-3959-LSC. The initial complaint in Sirmon was filed
approximately 13 months before this action, and the complaints in Yaeger and Brouwer
were filed simultaneously with the one in this case. Defendants in this action are also
the named defendants in each of the other three cases. The only paragraphs that differ
among these complaints are the ones identifying the parties on the plaintiff side and
the paragraph identifying specific representations made to the individual plaintiffs.
The Sirmon case has set the tone and tempo for the three cases that followed.
On December 1, 2011, Defendants moved this Court to dismiss all of the claims raised
in the Sirmon complaint. Sirmon v. Wyndham Vacation Resorts, Inc., No. 10-2717, Docs.
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62 & 64. On April 17, 2012, this Court issued an order denying dismissal as to the
fraud-based claims (counts 1-3 of the Complaint), granting dismissal as to the claim
for injunctive relief (count 12), and deferring its ruling on the remaining counts until
the Sirmon plaintiffs had an opportunity to file an addendum to their complaint.
Sirmon, No. 10-2717, Doc. 100. The Court’s order on the remaining counts in Sirmon
is being issued herewith.
On January 24, 2012, while the motions to dismiss were still pending in Sirmon,
Defendants filed the present Motion to Dismiss, Transfer Venue, or in the alternative,
for Summary Judgment. (Doc. 8.) The arguments in the present motion relating to
dismissal are virtually identical to the arguments raised in the pending Sirmon motion.
Thus, the portion of this Opinion addressing Defendants Motion to Dismiss will
pattern and reference the opinion being issued in Sirmon. However, unlike the
motions in Sirmon, which only contained arguments relating to dismissal, the motion
in this case also includes arguments regarding venue and summary judgment. (Doc.
8.) These issues are addressed in the Court’s Opinion below.
III.

Motion to Dismiss
A.

Legal Standard

A defendant may move to dismiss a complaint pursuant to Federal Rule of Civil
Procedure 12(b)(6) if the plaintiff has failed to state a claim upon which relief may be
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granted. “When considering a motion to dismiss, all facts set forth in the plaintiff’s
complaint ‘are to be accepted as true and the court limits its consideration to the
pleadings and exhibits attached thereto.’” Grossman v. Nationsbank, N.A., 225 F.3d
1228, 1231 (11th Cir. 2000) (quoting GSW, Inc. v. Long County, 999 F.2d 1508, 1510
(11th Cir. 1993)). In addition, all “reasonable inferences” are drawn in favor of the
plaintiff. St. George v. Pinellas County, 285 F.3d 1334, 1337 (11th Cir. 2002).
To survive a 12(b)(6) motion to dismiss for failure to state a claim, the
complaint “does not need detailed factual allegations;” however, the “plaintiff’s
obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than
labels and conclusions, and a formulaic recitation of the elements of a cause of action
will not do. Factual allegations must be enough to raise a right to relief above the
speculative level, on the assumption that all the allegations in the complaint are true
(even if doubtful in fact).” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)
(internal citations omitted).1 The plaintiff must plead “enough facts to state a claim
that is plausible on its face.” Id. at 570. Unless a plaintiff has “nudged [his] claims

1

In Bell Atlantic Corp. v. Twombly, the U.S. Supreme Court abrogated the oft-cited standard
that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt
that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief”
set forth in Conley v. Gibson, 355 U.S. 41 (1957). Bell Atl. Corp., 550 U.S. at 560-63. The Supreme
Court stated that the “no set of facts” standard “is best forgotten as an incomplete, negative gloss
on an accepted pleading standard: once a claim has been stated adequately, it may be supported by
showing any set of facts consistent with the allegations in the complaint.” Id. at 563.
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across the line from conceivable to plausible,” the complaint “must be dismissed.”
Id.
“[U]nsupported conclusions of law or of mixed fact and law have long been
recognized not to prevent a Rule 12(b)(6) dismissal.” Dalrymple v. Reno, 334 F.3d 991,
996 (11th Cir. 2003) (quoting Marsh v. Butler County, 268 F.3d 1014, 1036 n.16 (11th
Cir. 2001)). And “where the well-pleaded facts do not permit the court to infer more
than the mere possibility of misconduct, the complaint has alleged—but it has not
‘show[n]’—‘that the pleader is entitled to relief.” Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009) (quoting Fed. R. Civ. P. 8(a)(2)). Therefore, the U.S. Supreme Court
suggested that courts adopt a “two-pronged approach” when considering motions to
dismiss: “1) eliminate any allegations in the complaint that are merely legal
conclusions; and 2) where there are well-pleaded factual allegations, ‘assume their
veracity and then determine whether they plausibly give rise to an entitlement to
relief.’” American Dental Ass’n v. Cigna Corp., 605 F.3d 1283, 1290 (11th Cir. 2010)
(quoting Iqbal, 556 U.S. at 664). Importantly, “courts may infer from the factual
allegations in the complaint ‘obvious alternative explanation[s],’ which suggest lawful
conduct rather than the unlawful conduct the plaintiff would ask the court to infer.”
Id. (quoting Iqbal, 556 U.S. at 682).
B.

Discussion
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There is a great deal of homogeneity between this case and Sirmon v. Wyndham
Vacation Resorts, Inc., No. 10-2717, which is also pending before this Court. Indeed,
hundreds of pages of the briefs filed by both parties in this action have been replicated
word for word from briefs and other documents previously filed in Sirmon. The Court
recognizes that going to great lengths to reproduce the same analysis already
expressed elsewhere is not in the best interest of judicial economy. Given the
similarity between these two actions, the portion of this Opinion relating to
Defendants’ Motion to Dismiss parallels the equivalent opinion being simultaneously
issued in Sirmon. See Sirmon, No. 10-2717, Doc. 149. This Opinion, however,
expresses the ultimate decision without repeating the underlying reasoning.
Therefore, for the same reasons expressed in this Court’s Order of April 17,
2012, in Sirmon, Defendants’ Motion to Dismiss is due to be DENIED as to Plaintiffs’
fraud based claims (counts 1-3 of the complaint), and due to be GRANTED as to
Plaintiffs’ claim for injunctive relief (count 12). See Sirmon, No. 10-2717, Doc. 100.
Likewise, for the reasons expressed in the Sirmon opinion being issued herewith,
Defendants’ Motion to Dismiss is due to be DENIED as to the remaining counts of
Plaintiffs’ complaint. See Sirmon, No. 10-2717, Doc. 149.
The Court acknowledges the omission of a procedural step in this action which
it required in Sirmon. In both Sirmon and the present action, Defendants’ motions to
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dismiss argue that the respective complaints utilized impermissible “shotgun” style
pleading. In Sirmon, this Court remedied this problem by requiring the plaintiffs to file
an addendum to their complaint “identifying which specific factual paragraphs [were]
being offered in support of which specific claims.” Sirmon, No. 10-2717, Doc. 100 at
14. It was only after that addendum was filed that this Court concluded Defendants’
motions to dismiss were due to be denied. See Sirmon, No. 10-2717, Doc. 149. The
Court finds no need to repeat this procedural step in the instant action. The only
difference between the Sirmon complaint and the one in this case are the parties listed
in the initial paragraphs. Given this similarity, it will be relatively easy for Defendants
to use the addendum to the complaint in Sirmon to clarify any questions raised by the
blanket incorporations used in the pleadings in this case. See Sirmon, No. 10-2717,
Doc. 110.
IV.

Venue
Defendants argue that venue in the Northern District of Alabama is

inappropriate because a choice-of-forum clause in the FairShare Vacation Plan Use
Management Trust Agreement (“Trust Agreement”) mandates a Florida forum. The
referenced clause, entitled “Construction of Trust Agreement,” provides in
pertinent part:

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Any action brought to enforce the terms or interpret any provision of this
Trust Agreement or any other action in any manner relating to the Trust,
the Trustee, the Trust Properties or the Plan shall be brought in the State
Courts in Orange County, Florida or the Federal District Courts for the
Middle District of Florida.
(Doc. 13-1, § 14.01.)
As an initial matter, for the same reasons stated in the opinion being
simultaneously issued in Sirmon, see Sirmon, No. 10-2717, Doc. 149, the Court does
not agree that the FairShare Vacation Plan Use Management Trust (the “Trust”) is
an indispensable party to this litigation. Indeed, the Court finds no reason why
complete relief cannot be accorded among the current parties to the lawsuit without
the inclusion of the Trust. The Trust Agreement, therefore, is arguably irrelevant to
this dispute. Nonetheless, even if the Trust Agreement is applicable, the forum
selection clause is drafted in a manner that excludes the conduct comprising the crux
of Plaintiffs’ complaint.
The forum selection clause is included within a paragraph captioned
“Construction of Trust Agreement” and appears to be directly targeting disputes
about the interpretation or enforcement of the Trust Agreement. This dispute, in
contrast, is about the allegedly fraudulent and deceptive sales tactics employed by
Defendants to entice Plaintiffs into higher levels of ownership. While Plaintiffs’
complaint mentions the Trust Agreement, the heart of this dispute relates to
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fraudulent oral representations that have nothing to do with the “Construction” of
the Trust Agreement.
Defendants assert a broader interpretation of the forum selection clause than
the one accepted by this Court. Specifically, Defendants contend that this action falls
within the catchall provision of the forum selection clause which reaches “any other
action in any manner relating to the Trust.” This language, however, does not appear
to include claims for fraudulent misrepresentation and suppression, particularly since
the heading of the paragraph limits the scope to “Construction of [the] Trust
Agreement.” If the forum selection clause was intended to have a broader application,
that intention should have been clearly stated. Furthermore, Alabama law directs that
any ambiguity is to be construed against the drafter. See Southtrust Bank v. Copeland
One, L.L.C., 886 So. 2d 38, 43 (Ala. 2003) (“It is a well-established rule of contract
construction that any ambiguity in a contract must be construed against the drafter of
the contract.”). Accordingly, Defendants’ request that the Court transfer this action
to Florida is due to be denied.
V.

Motion for Summary Judgment
Defendants asked this Court to convert their motion into a Motion for

Summary Judgment to the extent any claims challenged in the Motion to Dismiss are
otherwise not disposed of by the Court. Plaintiffs responded by attaching to their
responsive brief an affidavit filed pursuant to Federal Rule of Civil Procedure 56(d),
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arguing that summary judgment is inappropriate without further discovery. (Percy
Badham Aff., Doc. 23-24.)
Rule 56(d) of the Federal Rules of Civil Procedure provides a mechanism for
relief where a party faced with a summary judgment motion does not have the facts
necessary to respond to it. The rule provides:
(d) When Facts Are Unavailable to the Nonmovant
If a nonmovant shows by affdavit or declaration that, for
specified reasons, it cannot present facts essential to justify
its opposition, the court may:
(1) defer considering the motion or deny it;
(2) allow time to obtain affidavits or declarations or to take
discovery; or
(3) issue any other appropriate order.
Fed. R. Civ. P. 56(d). In the present case, Plaintiffs seek further discovery regarding
(1) the creation, purpose and success of Extra Holidays, a division of Wyndham
dedicated to helping owners rent their points; (2) the creation, purpose, features and
implementation of Voyager, the new reservation system which may play a part in
inventory allotment and cancellations, and (3) the inventory allotment criteria and
priority. (Doc. 23 at 46.)
Plaintiffs have sufficiently established that, as of the date Defendants’ motion
was filed, further discovery was needed to develop the issues related to this matter.
The Court acknowledges that substantial discovery has occurred since the filing of
Defendants’ motion, and it fully anticipates that Defendants will soon file an actual
motion for summary judgment. Nevertheless, at this time, Defendants’ Motion for

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Summary Judgment is premature, and thus due to be DENIED with leave to refile at
the conclusion of discovery.
VI.

Conclusion
For the reasons previously stated, the Motion to Dismiss is due to be

GRANTED in part and DENIED in part, the Motion to Transfer Venue is due to be
DENIED, and the alternative Motion for Summary Judgment is due to be DENIED
with leave to refile at the close of discovery. A separate order will be entered
consistent with this Opinion.
Done this 18th day of September 2012.

L. Scott Coogler
United States District Judge
[170956]

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