Wyndham Vacation Resorts, Inc. v. The Consulting Group, Inc. et al

Filing 211

MEMORANDUM. An appropriate order will enter. Signed by District Judge Aleta A. Trauger on 5/14/14. (xc:Pro se party by regular and certified mail.)(DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(tmw)

UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NORTHEASTERN DIVISION
WYNDHAM VACATION RESORTS, INC.,
and, WYNDHAM VACATION
MANAGEMENT, INC.,

)
)
)
)
Plaintiff,
)
)
v.
)
)
THE CONSULTANT GROUP, SMOKEY
)
MOUNTAIN GETAWAYS, LLC, MOUNTAIN )
GETAWAYS, LLC, JEFF EARLE, SUPERIOR )
VACATIONS, INC. d/b/a SUPERIOR
)
TIMESHARE CLOSING, RAY SPIGNER,
)
MICHAEL DEAN SPIGNER, CHARLES
)
SIMERKA, JUDITH McGINTY, DANIEL
)
GARRETT, and CHRISTAL FRANKLIN,
)
)
Defendants.
)

Case No. 2:12-cv-00096
Judge Aleta A. Trauger

MEMORANDUM
On July 25, 2013, the plaintiffs filed an Amended Complaint for Damages (Docket No.
84). Defendants Jeff Earle and Smokey Mountain Getaways at Town Square, LLC (“SMG”),
who were added to the case in the Amended Complaint, have filed a Motion to Dismiss (Docket
No. 105), to which the plaintiffs filed a Response in opposition (Docket No. 128), and SMG filed
a Reply (Docket No. 140).1 Defendants Michael Dean Spigner, Ray Spigner, and The Consultant
Group, Inc. (collectively, the “Spigner Defendants”) have filed a Motion for Judgment on the
Pleadings (Docket No. 144), to which the plaintiffs filed a Response in opposition (Docket No.
160), and the Spigner Defendants filed a Reply (Docket No. 167). In response to the Spigner

1

The caption of the case refers to SMG as “Smokey Mountain Getaways, LLC,” whereas
the brief refers to SMG as “Smokey Mountain Getaways at Town Square, LLC.”
1

Defendants’ Reply, Wyndham simultaneously filed a Sur-Reply (Docket No. 171) and a separate
Motion to Strike the Spigner Defendants’ motion (Docket No. 172), to which the Spigner
Defendants filed a Response in opposition (Docket No. 177), and the plaintiffs filed a Reply
(Docket No. 195). The plaintiffs have also filed a Supplemental Brief concerning damages.
(Docket No. 205.)
For the reasons stated herein, the Motion to Strike will be denied, Earle and SMG’s
Motion to Dismiss will be granted in part and denied in part, and the Spigner Defendants’ Motion
for Judgment will be granted in part and denied in part.
BACKGROUND
Michael Dean Spigner and Ray Spigner own, operate, and/or manage The Consultant
Group (“TCG”), which is a Tennessee partnership. Daniel Garrett and Christal Franklin operate
and/or are employees of Superior Vacations, Inc. d/b/a Superior Timeshare Closings
(“Superior”), which is a Tennessee corporation. Jeff Earle operates and/or is employed by
Mountain Getaways, LLC (“Mountain Getaways”) and Smokey Mountain Getaways (“SMG”),
both of which are Tennessee corporations. This case concerns allegations that these entities
engaged in, and continue to engage in, a conspiracy that targets “Wyndham” timeshare owners
and defrauds both those owners and certain “Wyndham” entities.2
On September 28, 2012, Wyndham Vacation Resorts, Inc. (“WVR”) filed a Complaint

2

The Amended Complaint and the plaintiffs’ merits briefs often refer to “Wyndham”
without distinguishing between the two Wyndham-related plaintiffs in this case. However,
Wyndham Vacation Resorts, Inc. is defined as “Wyndham” within the Amended Complaint, and
the other Wyndham-related entity, Wyndham Vacation Management, Inc., fails to state a claim
for the reasons set forth herein.
2

against the Spigner Defendants, Superior, Charles Simerka, and Judith McGinty.3 On July 25,
2013, with leave of court (and over the existing defendants’ objections), WVR filed an Amended
Complaint (Docket No. 84), which added Daniel Garrett, Christal Franklin, Jeff Earle, Mountain
Getaways, and SMG as defendants, and added Wyndham Vacation Management, Inc. (“WVM”)
as a party plaintiff. (See Docket Nos 81 and 82 (Memorandum and associated Order granting
WVR’s motion for leave to amend).) The plaintiffs have also filed a RICO Case Statement
(Docket No. 26), Supplemental RICO Case Statement (Docket No. 95), a Second Supplemental
RICO Case Statement (Docket No. 191), and a Third Supplemental RICO Case Statement
(Docket No. 193), of which the court takes notice.
Based on its understanding of the proposed Amended Complaint allegations at the time,
the court set forth the basic facts on this case in a previous opinion, familiarity with which is
assumed. (Docket No. 81.) However, (1) the instant motions raise new and/or more focused
arguments concerning the sufficiency of the Amended Complaint allegations,4 and (2) the
Spigner Defendants have introduced additional materials – properly considered at the Rule 12
stage – that place the plaintiffs’ allegations in a new light with respect to some of their alleged
damages. These differences are described and addressed in the relevant sections herein.
RULE 12(B)(6) AND RULE 12(C) STANDARDS

3

Simerka and McGinty allegedly assisted the Spigner Defendants in June 2012. Even if
true, the allegations against Simerka and McGinty suggest that they played only a minor role
(both substantively and temporally) in the alleged conspiracy. Simerka is proceeding pro se and
has not joined in either of the pending motions. McGinty, who is represented by the same
counsel as the Spigner Defendants, has not moved for dismissal of the claims against her.
4

Earle and SMG were not parties to WVR’s motion for leave to amend. Therefore, their
Rule 12(b)(6) motion reflects their first opportunity to challenge the sufficiency of the Amended
Complaint as it applies to them.
3

A motion for judgment on the pleadings under Rule 12(c) is governed by the same
standards that govern a motion to dismiss for failure to state a claim under Rule 12(b)(6). See
Reilly v. Vadlamudi, 680 F.3d 617, 622-23 (6th Cir. 2012).

In deciding a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6),
the court will “construe the complaint in the light most favorable to the plaintiff, accept its
allegations as true, and draw all reasonable inferences in favor of the plaintiff.” Directv, Inc. v.
Treesh, 487 F.3d 471, 476 (6th Cir. 2007); Inge v. Rock Fin. Corp., 281 F.3d 613, 619 (6th Cir.
2002). The Federal Rules of Civil Procedure require that a plaintiff provide “‘a short and plain
statement of the claim’ that will give the defendant fair notice of what the plaintiff’s claim is and
the grounds upon which it rests.” Conley v. Gibson, 355 U.S. 41, 47, 78 S. Ct. 99, 2 L. Ed. 2d 80
(1957) (quoting Fed. R. Civ. P. 8(a)(2)). The court must determine whether “the claimant is
entitled to offer evidence to support the claims,” not whether the plaintiff can ultimately prove
the facts alleged. Swierkiewicz v. Sorema N.A., 534 U.S. 506, 511, 122 S. Ct. 992, 152 L. Ed. 2d
1 (2002) (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974)).
The complaint’s allegations, however, “must be enough to raise a right to relief above the
speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 167 L.
Ed. 2d 929 (2007). To establish the “facial plausibility” as required to “unlock the doors of
discovery,” the plaintiff cannot rely on “legal conclusions” or “[threadbare] recitals of the
elements of a cause of action,” but, instead, the plaintiff must plead “factual content that allows
the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949-50, 173 L. Ed. 2d 868 (2009).
A court deciding a Rule 12 motion may, without converting the motion into a Rule 56

4

motion, consider (1) documents that a defendant attaches to a motion to dismiss, if they are
referred to in the plaintiff’s complaint and are central to her claim; and (2) documents that
constitute public records or are otherwise appropriate for the taking of judicial notice. See
Weiner v. Klais & Co, Inc., 108 F.3d 86, 89 (6th Cir. 1997); New England Health Care
Employees Pension Fund v. Ernst & Young, LLP, 336 F.3d 495, 501 (6th Cir. 2003).
MOTION TO STRIKE
In its Amended Complaint, the plaintiffs repeatedly allege that the defendants caused
them damage by inducing “Wyndham owners” to default on each owner’s contractual obligation
to pay maintenance fees “to Wyndham.” The court’s ruling granting leave to amend was, in part,
premised on this alleged fact.
In support of their Motion for Judgment, the Spigner Defendants attached the following
documents: (1) deeds specifically referenced in the Amended Complaint; (2) Superior documents
allegedly quoting putative transferors $3,000 for attorney’s fees, which were referenced in the
Amended Complaint; (3) an Amended and Restated Declaration of Horizontal Property Regime
Covenants, Conditions and Restrictions for Fairfield Nashville at Music City USA, which was
publicly recorded with the Davidson County Register of Deeds, and which is specifically
referenced in one of the quitclaim deeds itemized in the Amended Complaint; (4) 10 of the 76
liens for unpaid maintenance fees recorded by the Music City USA Property Owners Association,
Inc., which were publicly recorded with the Davidson County Register of Deeds; and (5) a list of
the 76 liens for unpaid maintenance fees recorded by the Music City USA Property Owners
Association, Inc. in the Davidson County Register of Deeds. In support of their motion, the
Spigner Defendants (correctly) argued that these materials were either referenced in the Amended

5

Complaint and/or were public records, thereby permitting the court to consider them at the Rule
12 stage. As described herein, these documents show that, at least in some instances, the
“owners” at issue in this case contractually owed maintenance fees to third party entities – not to
WVR.5
The plaintiffs filed a Response to the Motion for Judgment on the Pleadings that did not
challenge the Spigner Defendants’ position that considering these documents was appropriate at
the Rule 12 stage. Instead, the plaintiffs attached to their Response additional documents,
including (1) “Delinquency Fee Agreements” between WVR and certain trusts or timeshare
owner’s associations at particular facilities, and (2) purchase and sale agreements between WVR
and certain timeshare owners. As discussed in more detail herein, through these documents, the
plaintiffs essentially articulated a new theory of pecuniary liability that was not contained within
its Amended Complaint.
After the Spigner Defendants filed a Reply that drove the hole deeper, the plaintiffs
pivoted by filing the instant Motion to Strike. In the Motion to Strike, the plaintiffs argue, for the
first time, that the Spigner Defendants’ motion improperly relies on materials outside the
Amended Complaint and, therefore, is effectively a premature Rule 56 motion.
To begin with, the plaintiffs’ failure to raise this issue in its Response to the Motion for
Judgment, rather than in connection with its own Sur-Reply (nearly three months after the motion
was originally filed and more than five weeks after filing its own Response) is inexcusable and
contradicts their position in the Response, which both addressed the import of the Spigner

5

As explained herein, because WVM has failed to state a claim, the relevant inquiry
relates to the relationship between WVR, the timeshare owners, and the relevant trusts/timeshare
owners’ associations.
6

Defendant’ additional documents on the merits and introduced even more documents for the
court’s consideration.6 At any rate, on the merits, the plaintiffs simply fail to address the Spigner
Defendants’ valid argument that this court may consider public records and materials referenced
in the Amended Complaint without converting the motion.
In sum, the plaintiffs’ Motion to Strike is “a day late and a dollar short,” and therefore
will be denied.
THE SPIGNER DEFENDANTS’ MOTION FOR JUDGMENT ON THE PLEADINGS
I.

WVM
Although the court granted Wyndham leave to file an Amended Complaint that included

WVM as a plaintiff, the Spigner Defendants convincingly argue that the Amended Complaint
fails to state any claim by WVM. The Amended Complaint states that WVM “provides services
related to contractual fees, homeowners’ associations, and maintenance fees for points-based
products deeded to a trust.” The Amended Complaint does not otherwise reference WVM
specifically, let alone (1) articulate a cause of action asserted by WVM, (2) describe the
relationship between WVM and the “Wyndham owners” at issue in this lawsuit, or (3) assert that
WVM suffered any damages.
In their Response, the plaintiffs provide several paragraphs of detail concerning the
“Wyndham”-related business model that are not contained within the Amended Complaint. They
do not address how the court could appropriately consider that information in the Rule 12(c)
context. At any rate, subject to that purported framework, the plaintiffs argue that an unknown

6

Although not specifically addressed by the parties, the purchase and sale contracts
between WVR and individual timeshare purchases are arguably incorporated by reference into
the Amended Complaint.
7

subset of WVM customers may have been impacted by the Spigner Defendants. The plaintiffs
vaguely allege, without supporting documentation, that the defendants failed to provide (or
otherwise supplement) discovery responses that would have identified any WVM customers in
that category.
The court will not consider statements of counsel that are not contained within the
Amended Complaint. This case was filed in September 2012, and the plaintiffs have had ample
opportunity to include relevant allegations in the pleadings. Furthermore, if Wyndham had an
issue with the defendants’ discovery responses, it should have raised them in a Motion to
Compel, not as an unsupported post hoc justification for (a) naming WVM as a party plaintiff
without necessary contextual allegations, and (b) continuing to defend WVM’s continued
participation in this lawsuit.7
Considering the allegations within the four corners of the Amended Complaint, the court
finds that the Amended Complaint does not even approach stating a cause of action by WVM.
The court will therefore dismiss WVM from this case.8 Hereinafter, the court will refer to
allegations by WVR only.
II.

Claims Specific to Dean Spigner
A.

Breach of Duty of Loyalty

7

In its July 23, 2013 opinion, the court had indicated its assumption that, if discovery
showed that Wyndham’s concerns relating to WVM were unfounded, Wyndham would drop
WVM as a party plaintiff. Leaving aside whether the court was unnecessarily lenient in
permitting WVM’s addition as a party plaintiff at the time, Wyndham has not brought to the
court’s attention any issue pertaining to discovery relating to WVM in the intervening 10
months.
8

Although several defendants did not join the Spigner Defendants’ motion or otherwise
assert the same argument concerning WVM, the grounds for dismissing WVM are the same
relative to all defendants in this case.
8

WVR concedes that judgment on this claim (Count VIII) is warranted. The court will
dismiss the claim without analysis.
B.

Breach of Contract (Breach of Non-Compete)
1.

Amended Complaint Allegations

WVR alleges that Dean Spigner (hereinafter, “Spigner”) violated a restrictive covenant in
his “Salesperson Agreement” with WVR.9 In relevant part, the Salesperson Agreement states
that, for a period of twelve months following his termination, Spigner will not directly or on
behalf of any other entity (a) solicit and/or hire (for business purposes) any current or former
WVR employees or “any person who worked or provided services for WVR;” (b) solicit or
persuade any WVR owner or customer to discontinue its relationship with WVR; or (c) contact
for sales or marketing purposes any person whom Spigner, “as a result of [his] employment with
WVR,” met with or otherwise communicated with.
According to the Amended Complaint, Spigner formerly managed and/or served as a
salesperson at multiple “Wyndham Resorts” over a ten-year period, including locations in
Tennessee, Nevada, and Georgia. WVR alleges that Spigner “developed knowledge and
information during his employment at Wyndham regarding tactics and methods he could utilize
unfairly for purposes of financial gain” (Am. Compl. ¶ 92), that Spigner “developed and/or
cultivated relationships with Wyndham’s timeshare owners while employed at Wyndham” (id. ¶

9

WVR filed a copy of Spigner’s Salesperson Agreement as an exhibit to its proposed
Amended Complaint. After this court granted leave to amend, WVR filed an Amended
Complaint that contained references to, but did not actually attach, any of the referenced
exhibits. This was presumably an oversight by WVR’s counsel. Regardless, the parties have
treated the Salesperson Agreement – in the form introduced as a proposed exhibit – as
incorporated by reference into the Amended Complaint.
9

95), and that “Spigner’s interaction with and service to his Wyndham customers, while employed
at Wyndham, was a vital aspect in furthering the business interests, goodwill and reputation of
Wyndham.” (Id. ¶ 98.) The Amended Complaint does not elaborate on the types of “knowledge
or information” or “relationships” that Spigner allegedly developed through his employment at
WVR. However, in the Salesperson Agreement itself, Spigner explicitly acknowledged that, “as
an employee of WVR, Salesperson may be given or be privy to certain valuable, proprietary or
confidential information, including but not limited to sales, marketing, and training materials and
information, [p]roduct pricing and strategies, and prospect or purchaser lists.” (Salesperson
Agreement ¶ 6 (emphasis added).)
On June 3, 2012, Spigner, who, at that time, was working at the Wyndham Plantation in
Villa Rica, Georgia, voluntarily quit WVR. According to the Amended Complaint, Spigner
immediately (1) set up a competing business, TCG, at the Villa Rica facility; (2) set up a booth
with “Wyndham” logos that gave customers the initial false impression that his company’s sales
pitch was affiliated with WVR;10 (3) through a deceptive “hard sell” sales presentation, solicited
and persuaded WVR customers to transfer their timeshare interests and to purchase a substitute
vacation package instead,11 (4) hired former WVR employees Amanda Farmer and Karen Roque,
and hired or attempted to hire former WVR employee Simerka, as TCG employees; and (5)
10

According to the Amended Complaint: “Consultant Group employees provided
individuals with the impression that they are employees of or associated with Wyndham through
the use of the following deceptive practices: the presence of a Wyndham sign or banner; the
presence of Wyndham napkins; and the use of an individual wearing Wyndham clothing and
driving a vehicle marked as a Wyndham vehicle to meet with Wyndham owners.” (Am. Compl.
¶ 62.)
11

Although it is not perfectly clear in the Amended Complaint, it appears that TCG
marketed a Mountain Getaways vacation package as the substitute for WVR’s packages.
According to the Amended Complaint, Earle and/or SMG received a cut of these sales.
10

utilized (then) current WVR employee McGinty to solicit customers away from WVR in June
2012. Spigner allegedly continued to contact WVR owners and to solicit their business through
deceptive practices for the next 12 months.
Assuming these allegations to be true, Spigner flagrantly violated the terms of his noncompete agreement in multiple respects. Nevertheless, Spigner argues that, under Tennessee law,
(1) WVR has not pleaded sufficient facts to establish that WVR had a legitimate business interest
to protect through the non-compete clause in the first place; and (2) even if WVR had such an
interest, the non-compete clause’s terms are overbroad.12
In Murfreesboro Med. Clinic, P.A. v. Udom, 166 S.W.3d 674, 678 (Tenn. 2005), the
Tennessee Supreme Court set forth the following standards for evaluating covenants not to
compete:
In general, covenants not to compete are disfavored in Tennessee. These
covenants are viewed as a restraint of trade, and as such, are construed strictly in
favor of the employee. However, if there is a legitimate business interest to be
protected and the time and territorial limitations are reasonable then non-compete
agreements are enforceable. Factors relevant to whether a covenant is reasonable
include: (1) the consideration supporting the covenant; (2) the threatened danger
to the employer in the absence of the covenant; (3) the economic hardship
imposed on the employee by the covenant; and (4) whether the covenant is

12

Paragraph 14 of the Salesperson Agreement, which is dated August 29, 2011, states that
the agreement “shall be construed according to the laws of the State in which Salesperson [i.e.,
Spigner] was last employed by FRI [Fairfield Resorts, Inc.]” Here, the parties appear to assume
that Tennessee law governs Spigner’s agreement, although no party references ¶ 14 and no party
represents that Spigner was last employed by Fairfield Resorts, Inc. – whatever that entity may be
– in Tennessee. The court will assume for purposes of the motion, as the parties have, that
Tennessee law governs Spigner’s Salesperson Agreement.

Also, with respect to the section relating to WVR’s breach of contract claim against
Spigner, the court is somewhat surprised with WVR’s brief, which at times cites allegations that
do not support the proposition for which they are cited. WVR should assume that the court
always cross-checks references for accuracy.
11

inimical to the public interest. Also, the time and territorial limits must be no
greater than necessary to protect the business interest of the employer.
Id. (internal citations omitted). In determining whether there is a “legitimate interest to be
protected,” Tennessee applies the following framework:
Because an employer may not restrain ordinary competition, it must show the
existence of special facts over and above ordinary competition. These facts must
be such that without the covenant, the employee would gain an unfair advantage
in future competition with the employer. Considerations in determining whether
an employee would have such an unfair advantage include (1) whether the
employer provided the employee with specialized training; (2) whether the
employee is given access to trade or business secrets or other confidential
information; and (3) whether the employer’s customers tend to associate the
employer’s business with the employee due to the employee’s repeated contacts
with the customers on behalf of the employer. These considerations may operate
individually or in tandem to give rise to a properly protectable business interest.
Vantage Tech., LLC v. Cross, 17 S.W.3d 637, 644 (Tenn. Ct. App. 1999) (internal citations
omitted).
Here, construing the terms of the Amended Complaint liberally and drawing all
reasonable inferences in favor of WVR, the court finds that WVR has pleaded facts sufficient to
show that WVR had a legitimate business interest to protect through the non-compete agreement.
Spigner’s actions were precisely the types of activities that the non-compete agreement was
designed to prevent. In the Salesperson Agreement itself, Spigner acknowledged that he would
become privy to several categories of highly sensitive and/or confidential business information,
and the Amended Complaint alleges that he utilized WVR’s “confidential information” to his
own advantage during the 12-month post-termination period. Spigner targeted WVR owners at
the same facility he had just managed, and he immediately recruited WVR personnel (including
his own son) to work for him. Assuming that the Amended Complaint allegations are true, it is
reasonable to infer that Spigner was capitalizing on some type of confidential WVR information

12

in operating the new venture in direct competition with WVR.13
As to Spigner’s argument that the non-compete terms were broader than necessary, the
court finds that, in the context of this case, the issue is fact-dependent and should be addressed at
a later stage. The time limitation of 12 months is not per se unreasonable. See Dabora, Inc. v.
Kline, 884 S.W.2d 475, 478 (Tenn. Ct. App. 1994) (upholding three-year nationwide restrictive
covenant). Furthermore, given the breadth of WVR’s operations nationwide and Spigner’s sales
activity in multiple states, it may be that the nationwide scope of the non-compete was justified
for that 12-month period. See, e.g., id.; William v. Tanner Co., Inc. v. Taylor, 530 S.W.2d 517
(Tenn. Ct. App. 1974) (upholding two-year nationwide restrictive covenant). The reasonableness
of these restrictions may turn on the scope of WVR’s legitimate business interests generally and
facts specific to Spigner specifically. Accordingly, the court finds that judgment on the breach of
contract claim against Spigner is not warranted at this stage.
III.

Damages
The Spigner Defendants contend that WVR has suffered no damages because WVR is not

owed maintenance fees. As an initial matter, as WVR points out in its in brief, it seeks more than
pecuniary damages for the loss of maintenance fees. Among those additional claimed damages
are “[d]amages related to the loss of goodwill” and damages to WVR’s “reputation,” the “loss of
future profits and future business” from the loss of repeat business, referrals, and upgrades by
existing WVR owners, and “costs, losses and fees related to the substantial resources needed to

13

Of course, whether WVR will be able to show that Spigner in fact acquired
“confidential” information, received “specialized” training, or otherwise became the “face” of
WVR to certain segments of WVR’s customer base, are separate questions that are best
addressed on a developed factual record.

13

address” the consequences of the defendants’ actions. As a general matter, these are potentially
cognizable losses.14 The key issue raised by the Spigner Defendants relates to one other category
of damages: whether WVR “lost” any maintenance fees because of the fraudulent transfers and
can legally recover for those losses.
The Spigner Defendants have introduced documents that appear to cast considerable
doubt on WVR’s lost maintenance fees theory of damages. For example, units at the Fairfield
Nashville at Music City USA Resort, which changed its name to “Wyndham” in 2006, are
governed by a Declaration of Covenants, Conditions, and Restrictions (“Restrictions”)
establishing “The Music City Property Owners, Association, Inc.” That association manages the
resort and charges its members/timeshare owners fees for management of the timeshare program
and maintenance of the units. The association is owed the fees, the association has the right to
charge late fees and interest, and the association has the right to record liens and to foreclose on
an owner’s interest in the event of default on payment of the maintenance fees. Public records
introduced by the Spigner Defendants show that the association has, in fact, recorded liens for
unpaid maintenance fees.
In its Response, WVR does not dispute that it is not directly owed maintenance fees as to
certain timeshare interests at issue in this lawsuit. However, WVR has produced copies of an
“Assignment Agreement and Use Restriction” and/or a “Purchase and Sale Agreement” it
executes with customers at the point of sale. These agreements include a promise to pay
maintenance fees to the relevant timeshare owners’ association or trust. For example, one

14

It may be that some classes of damages are available for certain claims by WVR but not
others. Because the parties have not addressed the issue, the court makes no express findings
concerning the availability of these alleged losses relative to particular claims.
14

Assignment Agreement states as follows: “Owner hereby agrees to pay to the Trust on behalf of
the Association an annual [assessment] for certain expenses attributable to the Plan in accordance
with the provisions of the Trust Agreement, . . . which annual [a]ssessment includes Owner’s
share of the expenses associated with the operation and maintenance of the Plan, . . . and may
include Owner’s proportionate share of Owner’s POA maintenance fees and common expenses
attributable to his Property[.]” That Assignment Agreement also provides that, “[i]n the event
Owner defaults on his obligation under the Contract resulting in the termination of said Contract,
this Assignment Agreement shall be deemed terminated and cancelled and all rights of the Owner
hereunder shall cease.” (¶ 15.) These terms appear to obligate an owner to pay those expenses to
a homeowner’s association (or trust) as a condition of the purchase and sale
agreement/assignment agreement between WVR and a particular owner.15
WVR contends that it is damaged by the failure of timeshare owners (or the sham
transferees) to pay maintenance fees to the homeowners’ associations because WVR has a
separate contractual relationship with those associations, whereby it pays the associations
somewhere between 75% and 100% of the value of aggregate delinquencies. As an initial matter,
this contractual relationship is not alleged in the Amended Complaint. More importantly, the
Spigner Defendants argue that the agreements appear to be voluntary contracts between WVR
and the associations, whereby WVR actually profits by receiving the right to re-sell the spaces
corresponding to the delinquent homeowners. WVR contends that it is a so-called “lost volume”
seller and that, under Tennessee law, its efforts to mitigate damages and to keep the homeowners’

15

Although neither party here characterizes it as such, it appears that the homeowner’s
association may be a third-party beneficiary under these agreements.

15

associations solvent (as it characterizes the delinquency fee agreements) do not preclude it from
claiming breach of contract and/or from claiming damages for the lost maintenance fees.
The Spigner Defendants have made a cogent argument that WVR is not entitled to
recover the unpaid maintenance fees because WVR was not entitled to those fees in the first
place. Nevertheless, the court finds that it would be premature to render a partial judgment at this
stage relating to this category of claimed pecuniary damages by WVR. First, the relationships
among WVR, timeshare owners, and the timeshare owners’ associations are, in a word,
complicated. While it may be that WVR cannot recover those fees based on a separate, voluntary
contract between itself and a particular association, the issue requires more context and
explanation than the Rule 12 restrictions afford. Second, the record before the court on this issue
is incomplete; indeed, WVR argues that, in some instances, it does have contracts under which
timeshare owners owe WVR the maintenance fees directly. Thus, even if it were appropriate for
the court to draw conclusions regarding the Music City USA Restrictions, it is not clear that
extrapolating those conclusions to all of the timeshare interests at issue in this lawsuit would be
appropriate. Under the circumstances, the court will not dismiss WVR’s pecuniary damages at
this stage, although the court is now cognizant that, relative to timeshare interests at certain
facilities corresponding to some (likely most) of the timeshare interests at issue in this case, WVR
may have an uphill climb to show that it is legally entitled to those damages.16
IV.

Other Claims17
16

The court reserves judgment on whether WVR may even recover under this alternative
theory of damages, which was not set forth in the Amended Complaint.
17

The court observes that the Spigner Defendants answered the original Complaint, which
asserted the foregoing claims against them. The Spigner Defendants now contend that the
Amended Complaint, which actually contains more detailed allegations than the Complaint, is

16

A.

Intentional Interference with Current and/or Prospective Business
Relations, and Interference with Contractual Relations

To show intentional interference with business relations, a plaintiff must show: (1) an
existing business relationship with specific third parties or a prospective relationship with an
identifiable class of third persons; (2) the defendant’s knowledge of that relationship and not a
mere awareness of the plaintiff’s business dealings with others in general; (3) the defendant’s
intent to cause the breach or termination of the business relationship; (4) the defendant’s
improper motive or improper means; and (5) damages resulting from the tortious interference.
Trau-Med of Am. Inc. v. Allstate Ins. Co., 71 S.W.3d 691, 701 (Tenn. 2002). The Spigner
Defendants argue that WVR has not alleged a business relationship with the timeshare owners or
the termination of a business relationship, arguments that are essentially flip-sides of the same
coin.
WVR apparently entered into agreements with some customers that were conditioned on
the customer’s continued payment of maintenance fees to a timeshare owner’s association.
WVR also alleges that some of its business comes from upgrades and other packages that existing

insufficient to state the additional claims discussed in this section against them.

The court also notes that WVR continues to cite WVR v. VP Transfers, LLC, 2013 WL
4510954 (M.D. Tenn. Aug. 27, 2013), in which another judge within this district granted an
unopposed Motion for Summary Judgment in a somewhat similar case. Given that the motion
was unopposed, the sufficiency of the claims at issue in VP Transfers went unchallenged,
thereby reducing the persuasive value of the legal conclusions reached by the court in that case
significantly. Finally, WVR at times cites indiscriminately to cases in other jurisdictions
involving timeshare “consultants,” without explaining how the factual circumstances in those
cases are analogous to those presented here (indeed, at least in some instances, they are not) and
what inferences the court should draw from the fact that claims have been filed and/or settled in
other jurisdictions without a finding or admission of liability. In the absence of any meaningful
attempt to address the relevance of those cases to this lawsuit, the court has not relied on them in
any fashion in addressing the instant motions.
17

WVR timeshare owners purchase from WVR. The alleged conspiracy was designed to facilitate
fraudulent transactions that inevitably resulted in 1) the transferor ceasing to pay maintenance
fees (to whomever those fees were owed directly), (2) the transferor not continuing to do any
business with WVR related to that timeshare interest, such as purchasing upgrades, and (3) the
transferee (always a judgment-proof sham purchaser, sometimes without knowledge) not paying
maintenance fees, with no prospect of doing future business with WVR related to that timeshare
interest.
In an argument that only a lawyer could love, the Spigner Defendants also argue that, if
WVR is correct that the fraudulent conveyances that the Spigner Defendants procured are legally
void, then the business relationship between WVR and the (none-the-wiser) transferors never
actually terminated in the first place, meaning that WVR should be suing the innocent transferors.
The Spigner Defendants cite no legal authority for the proposition that a de facto termination of
the business relationship between WVR and the transferor – which the Spigner Defendants
precipitated – falls outside the Trau-Med formulation. Moreover, the Amended Complaint
alleges that Spigner/TCG’s sales pitch specifically touted TCG’s ability to assist customers in
terminating their continued relationship with WVR in favor an alternative vacation club package
(the Mountain Getaways package, apparently) that purportedly would offer the same benefits at
lower cost. In other words, the Spigner Defendants’ business model allegedly was premised on
drawing customers away from WVR, or at least convincing customers that the deed transfers and
purchase of a substitute Mountain Getaways package would accomplish that result. Accordingly,
the court finds that WVR has sufficiently alleged a business relationship with existing third
parties and has sufficiently alleged that the Spigner Defendants sought to interfere with or

18

terminate that relationship (or the prospect of a continuing relationship). The court therefore will
not dismiss the claim for interference with business relations against the Spigner Defendants.
To show tortious interference with the performance of a contract (also referred to as
“procurement of the breach of a contract”), a plaintiff must show (1) that there was a legal
contract; (2) that the defendant knew of the existence of the contract; (3) that the defendant
intended to induce a breach of the contract; (4) that the defendant acted maliciously; (5) that the
contract was actually breached; (6) that the defendant’s acts were the proximate cause of the
breach; and (7) that the plaintiff suffered damages resulting from the breach. See Polk &
Sullivan, Inc. v. United Cities Gas Co., 783 S.W.2d 528, 543 (Tenn. 1989) (citing Dynamic Hotel
Mgmt., Inc. v. Erwin, 528 S.W.2d 819, 822 (Tenn. Ct. App. 1975)).18 “Interference with an
existing contract is without justification if it is done for the indirect purpose of injuring the
plaintiff or benefiting the defendant at the plaintiff’s expense.” Freeman Mgmt. Corp. v.
Shurgard Storage Ctrs., LLC, 461 F. Supp. 2d 629 (M.D. Tenn. 2006) (brackets omitted)
(quoting Crye-Leike Realtors, Inc. v. WDM, Inc., 1998 WL 651623, at *6 (Tenn. Ct. App. Sept.
24, 1998)).
Here, the Spigner Defendants argue that WVR cannot maintain an action for procurement
of breach of contract because WVR did not have a direct contractual relationship with timeshare
owners relating to maintenance fees. The Spigner Defendants’ position appears to be premised

18

“Tennessee recognizes both a common law and statutory action based on unlawful
inducement of breach of contract.” Carruthers Ready-Mix v. Cement Masons Local Union No.
520, 779 F.2d 320, 323 (6th Cir. 1985) (citing Tenn. Code Ann. § 47-50-109). Both causes of
action have the same seven elements. Carruthers, 79 F.2d at 323. The court also notes that
some cases characterize the causes of action as having five elements, although this “five”
element test appears to incorporate the same requirements as the seven-factor test.
19

on two assumptions: (1) the maintenance fee obligation is the only basis for WVR’s tortious
procurement claim, and (2) WVR did not attach agreements to the Amended Complaint showing
a direct relationship with timeshare owners and did not produce any such agreements in
discovery, “for a reason:” namely, that no such agreements exist. The court rejects the first
premise, which ignores the other damages claimed by WVR. The court also finds that it is
premature to address the second premise, which essentially asks the court to weigh the evidence
(or lack thereof) for a particular allegation. Indeed, WVR has filed agreements reflecting
contracts with WVR related in part to maintenance fee payments, which the Spigner Defendants
arguably persuaded timeshare owners to breach.19 For both of these reasons, the court finds that
judgment on the tortious procurement claims, as pleaded, would be premature.
B.

Fraud

To establish a claim for fraud, a plaintiff must show: (1) the defendant made a
representation of an existing or past fact; (2) the representation was false when made; (3) the
representation was in regard to a material fact; (4) the false representation was made either
knowingly or without belief in its truth or recklessly; (5) plaintiff reasonably relied on the
misrepresented fact; and (6) plaintiff suffered damage as a result of the misrepresentation. PNC
Multifamily Capital Institutional XXVI Ltd. P’ship v. Bluff City Cmty. Dev. Corp., 387 S.W.3d
525, 548 (Tenn. Ct. App. 2012). Unlike WVR’s RICO cause of action (addressed herein), its
fraud claims necessarily relate to fraudulent misrepresentations made directly to WVR.

19

Again, the court expresses no opinion as to whether breach of a term in contracts
between WVR and timeshare owners that references payments to a third-party (the homeowners’
association) constitutes a breach for which WVR may legally recover. That issue will be best
addressed on a developed record.
20

Although the Amended Complaint identifies fraudulent statements allegedly made by the
Spigner Defendants to the timeshare owners themselves, the Amended Complaint does not
identify any allegedly fraudulent statements made by the Spigner Defendants to WVR, let alone
how WVR relied on those statements. WVR’s response essentially attempts to fudge this
distinction by pointing out that Count III (the fraud claim) incorporates various
misrepresentations alleged elsewhere in the Amended Complaint. While that is true, WVR does
not explain how those misrepresentations square with the relevant factors under Tennessee law;
indeed, the referenced misrepresentations by the Spigner Defendants were made to timeshare
owners, not WVR. The gravamen of Count III concerns conduct by Superior (along with Garrett
and Franklin) for knowingly submitting fraudulent transfer documentation to WVR, on which
WVR relied. Accordingly, although the Amended Complaint allegations show that the Spigner
Defendants may have defrauded the owners, the court finds that WVR has not adequately alleged
that the Spigner Defendants (as opposed Superior, et al.) defrauded WVR for purposes of a
Tennessee common law fraud claim.20
C.

RICO
1.

Elements of RICO Claims Under § 1962(c) and (d)

The Amended Complaint asserts claims under 18 U.S.C. § 1962(c) and § 1962(d).

20

The court need not reach the Spigner Defendants’ arguments concerning whether the
transfer documentation submitted by Superior to WVR actually contained any
misrepresentations and/or whether WVR reasonably relied on the alleged misrepresentations.
Although it has no bearing on the instant motions, the court does note that WVR’s Third
Supplemental RICO Statement and its Motion for Preliminary Injunction attach documents that
strongly suggest that Superior was forging signatures, falsely notarizing signatures, and
processing deed transfers to purported transferees (Howard Hamilton, for one) who had no
knowledge of the transactions.
21

Section 1962(c) makes it unlawful “for any person employed by or associated with any enterprise
engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or
participate, directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of
racketeering activity or collection of unlawful debt.” Wallace v. Midwest Fin. & Mortg. Servs.,
Inc., 714 F.3d 414 (6th Cir. 2013) (quoting 18 U.S.C. § 1962(c)). To show a claim under §
1962(c), a plaintiff must show “(1) conduct (2) of an enterprise (3) through a pattern (4) of
racketeering activity.” Wallace, 714 F.3d at 422 (quoting Sedima, S.P.R.L. v. Imrex Co., Inc.,
473 U.S. 479, 496 (1985)). “To plausibly state a claim for a violation of [] § 1962(d), plaintiffs
must successfully allege all the elements of a RICO violation, as well as alleg[e] the existence of
an illicit agreement to violate the substantive RICO provision.” Heinrich v .Waiting Angels
Adoption Servs. Inc., 668 F.3d 393, 411 (6th Cir. 2012) (internal quotation omitted). “An
agreement can be shown if the defendant objectively manifested an agreement to participate
directly or indirectly in the affairs of an enterprise through the commission of two or more
predicate crimes.” Id.
A “pattern of racketeering activity” requires at least two predicate acts of racketeering
activity. Id. § 1961(5). To show a pattern, the racketeering predicate acts must be related and
must pose a threat of continued criminal activity. Brown v. Cassens Transp., 546 F.3d 347, 354
(6th Cir. 2008). A relationship among predicate acts is established when they “have the same or
similar purposes, results, participants, victims, or methods of commission, or otherwise are
interrelated by distinguishing characteristics and are not isolated events.” Id. Mail fraud (18
U.S.C. § 1341) and/or wire fraud (18 U.S.C. § 1343) are federal offenses that can constitute
predicate offenses for a civil RICO claim. See 18 U.S.C. § 1961(1); In re ClassicStar Mare

22

Lease Litig, 727 F.3d 473, 487 (6th Cir. 2013).
Mail fraud consists of “(1) a scheme to defraud, and (2) use of the mails in furtherance of
the scheme.” Heinrich, 668 F.3d at 404. “The elements of wire fraud are essentially the same
except that one must use the wires in furtherance of the scheme to defraud.” Id. “A scheme to
defraud includes any plan or course of action by which someone else uses false, deceptive, or
fraudulent pretenses, representations, or promises to deprive someone else of money,” to part
with property, and/or “to surrender some legal right, and which accomplishes the end designed.”
Id.; Riverview Health Inst. LLC v. Med. Mutual of Ohio, 601 F.3d 5050, 513 (6th Cir. 2010).
“Because RICO claims require proof of mail or wire fraud as an element, the plaintiffs must also
satisfy the heightened particularity requirements of [Rule 9(b)] with respect to the elements of
fraud.” Jackson v. Sedgwick Claims Mgmt. Servs., Inc., 699 F.3d 466, 476 (6th Cir. 2012).
A plaintiff must also establish scienter to establish a scheme to defraud, which is satisfied
by showing that the defendant acted either with a specific intent to defraud or with recklessness
with respect to potentially misleading information. Heinrich, 668 F.3d at 404.
Although a plaintiff must establish proximate cause between the injury asserted and the
injurious conduct alleged, a plaintiff asserting a RICO claim predicated on mail fraud need not
show that it relied on the defendant’s alleged misrepresentation. Bridge v. Phoenix Bond &
Indem. Co., 553 U.S. 639, 661 (2008); ClassicStar, 727 F.3d at 487. For pleading purposes, it is
sufficient to plead that a defendant’s fraud was a “substantial and foreseeable cause” of the
injuries alleged by the plaintiff and that the relationship between the wrongful conduct and the
injury is “logical and not speculative.” ClassicStar, 727 F.3d at 487.
2.

Mail or Wire Fraud

23

In its Memorandum granting leave to amend, the court previously addressed the
sufficiency of the mail and wire fraud allegations against the Spigner Defendants, and the court
finds no reason to revisit its conclusions here. Briefly, the Spigner Defendants contend that the
Amended Complaint does not satisfy the requirements of Rule 9(b). However, the Amended
Complaint (and the associated RICO Case Statements) identify numerous specific instances in
which the Spigner Defendants allegedly (1) quoted certain individuals $3,000 for a “lawyer” to
handle their outstanding payment obligations, with knowledge that no lawyer would actually be
involved, and electronically communicated that misrepresentation to Superior for processing; (2)
falsely gave the impression they were affiliated with WVR, made misrepresentations about the
nature of the Wyndham timeshare assets to induce owners to seek to transfer them, signed
documents as “authorized agents” of Superior in procuring customers, and transmitted those
documents to Superior through the mail and/or electronically with the knowledge and
understanding (not conveyed to the transferor) that Superior would not actually process a
legitimate transfer to a bona fide third-party purchaser. The Amended Complaint states the dates
of these mail and/electronic communications in furtherance of the alleged conspiracy, which,
combined with the other allegations in the Amended Complaint, are sufficient to satisfy the Rule
9(b) particularity requirements.21
D.

TCPA

Under the TCPA, “any person who suffers an ascertainable loss of money or property,

21

Herein, the court also analyzes the claims by Earle and SMG that the plaintiffs have
failed to plead predicate acts of mail and/or wire fraud with adequate particularity. The
additional legal authority cited therein regarding the type of showing required to link predicate
acts of mail and/or wire fraud to an overarching RICO conspiracy applies with equal force to the
predicate acts of mail and wire fraud alleged against the Spigner Defendants
24

real, personal, or mixed, or any other article, commodity, or thing of value wherever situated, as a
result of the use or employment by another person of an unfair or deceptive practice described in
§ 47-18-104(b) and declared to be unlawful by this part, may bring an action individually to
recover actual damages.” Therefore, to maintain a private cause of action under the TCPA, a
plaintiff must allege a violation of one of the acts specifically enumerated in Tenn. Code Ann. §
47-18-104(a).22 The court previously held that the (then-proposed) Amended Complaint
sufficiently stated a TCPA claim against several defendants.
As the court previously found, the alleged conduct by the Spigner Defendants plausibly
falls within one or more enumerated practices under § 104(b). See, e.g., Tenn. Code Ann. §§
105(b)(5) (“[r]epresenting that goods or services have . . . characteristics . . . that they do not have
. . . .”), (b)(8) (“[d]isparaging the goods, services, or businesses of another by false or misleading
representations of fact”), and (b)(12) (“Representing that a consumer transaction confers or
involves rights, remedies or obligations that it does not have or involve or which are prohibited
by law.”). For example, WVR alleges that the Spigner Defendants falsely charged certain
timeshare owners (apparently those whose interest in the timeshare had not been fully paid to
WVR) $3,000 to enlist an attorney’s help, despite knowing that no attorney would be involved.
Similarly, WVR alleges that the Spigner Defendants intentionally utilized “Wyndham” branding
to solicit customers at the Villa Rica, Georgia facility, thereby creating the false impression (at

22

Although the TCPA contains a “catch-all” provision for “engaging in any other act or
practice which is deceptive to the consumer or to any other person,” that specific provision is
enforceable only by the Tennessee Attorney General’s office. Tenn. Code Ann. § 47-18104(b)(27). Thus, § 104(b)(27) does not confer a private cause of action for unfair or deceptive
practices that do not fit within one of the specific acts or practices enumerated in § 104(b). See
Brewer v. Kitchen Designs & Cabinetry, 2013 WL 14000618, at *7 n.11 (Tenn. Ct. App. Apr. 3,
2013).
25

least initially) of an affiliation with WVR in order to attract clients. WVR also alleges that the
Spigner Defendants convinced timeshare owners that they would facilitate legally binding deed
transfers, despite knowing that the conveyance would in fact be fraudulent and, therefore, not
legally binding.
The Spigner Defendants also argue that WVR does not have standing to assert TCPA
claims because WVR is not a “consumer” with respect to the transactions issue. Among other
forms of relief, the TCPA provides that “anyone affected by a violation of this part may bring an
action to obtain a declaratory judgment that the act or practice violates this part and to enjoin the
person who has violated, is violating, or who is otherwise likely to violate this part[.]” Tenn.
Code. Ann. § 47-18-109(b) (emphasis added). As noted above, the TCPA affords an individual
right of action to “any person who suffers an ascertainable loss of money or property, real,
personal, or mixed, or any other article, commodity, or thing of value wherever situated, as a
result of the use or employment by another person of an unfair or deceptive practice described in
§ 47-18-104(b) . . . .” Id. § 47-18-104. A “person” is defined as “a natural person, . . .
corporation, trust estate, . . . and any other legal or commercial entity however organized.” Id. §
47-18-103(13). Thus, the statute provides that corporations can have standing to bring claims
under the TCPA. See Affinion Benefits Grp., LLC v. Econ-O-Check Corp., 784 F. Supp. 2d 855,
879 (M.D. Tenn. 2011) (citing ATS Se., Inc. v. Carrier Corp., 18 S.W.3d 626, 630 (Tenn. 2000)).
The TCPA states that it “shall be liberally construed . . . to protect consumers and legitimate
business enterprises from those who engage in unfair or deceptive acts or practices in the conduct
of any trade or commerce in part or wholly within this state.” Tenn. Code Ann. § 47-18-102(2).
Here, the Spigner Defendants rely on Wagner v. Fleming, 139 S.W.3d 295 (Tenn. Ct.

26

App. 2004), which had a peculiar set of facts. In Wagner, the plaintiff sought to sell his house at
auction, cognizant of an ongoing public policy debate about whether an energy company might
exercise eminent domain over property in the area as part of a new project. On the date of the
auction, the plaintiffs’ neighbor and the neighbor’s colleague, both of whom were affiliated with
an organization that opposed the energy company’s project, placed signs on the access road to
both properties (the neighbor’s and the plaintiff’s) stating something to the effect of, “Don’t let
the company take my land by eminent domain.” For that and several other reasons, the plaintiff
received lower bids than he had expected at the auction of his property, after which he sued the
neighbor and the neighbor’s friend under the TCPA. On appeal, the Tennessee Supreme Court
analyzed TCPA § 102(2), which states that the TCPA should be liberally construed to protect
“consumers and legitimate business enterprises.” Presumably because all of the parties to
Wagner were individuals and the case involved a real estate transaction, the court focused only
on the term “consumer,” which is defined to include only a “natural person who,” among other
things, “seeks or acquires by purchase, rent, lease, [or] assignment . . . any goods, services, or
property . . . .” Under a straightforward application of the statutory language, the court found that
the plaintiff was not a “consumer” as the term was utilized in § 102(2), because the plaintiff in the
case had not sought to acquire or purchase the real estate at issue; in fact, it was the other way
around – the plaintiff was seeking to sell it.
Wagner sheds little light on the issue presented here, because it did not address the
construction of the term “legitimate business enterprise” within § 102(2), which is not otherwise

27

defined in the statute.23 Indeed, § 102(2) says that the statute protects consumers and legitimate
business enterprises: here, the Spigner Defendants have not explained why the court should read
the definition of “consumer” (a natural person) into the separate term “legitimate business
enterprise.”
Furthermore, many of the enumerated deceptive business practices in TCPA § 104 apply
more naturally to an entity “affected . . . as a result of” the deceptive practice (§ 109(a)(1)), even
where the affected entity was not a “consumer” with respect to the transaction at issue. For
example, § 104(8) makes it unlawful to “[d]isparag[e] the goods, service or business of another
by false or misleading representations of fact.” Presumably, where Business A disparages
Business B in an effort to procure a relationship with a potential customer, the more natural
plaintiff in a TCPA action would be Business B, not the consumer herself, who presumably could
care less about whether Business A is disparaging Business B and, therefore, has no inherent
incentive to file suit to protect Business B. If Business B sued Business A under this hypothetical
scenario, it would be consistent with the TCPA’s statutory purpose to protect “legitimate business
enterprises” (§ 102(2)) and the definition of a “person” in § 103(13) to include a “corporation” as
an entity entitled to bring suit. It would also be consistent with the TCPA’s intent to protect that
business from deceptive disparagement by another person (or business) (see § 103(8)) and the
TCPA’s broad grant of a cause of action to any business that is “affected” “as a result of” that
deceptive and unlawful practice (see § 109(a)(1)). The court is therefore persuaded that, under

23

At least one scholar has endorsed the notion that the TCPA and other similar statutes
should only apply to corporations (or businesses) that are acting as “consumers” with respect to
the transactions at issue. See Bryant, Kenneth J., The Tennessee Consumer Protection Act and
Business Standing to Sue: “Acting in a Consumer-Oriented Manner.” 35-SEP Tenn. B. J. 13,
16-18 (1999) (collecting and summarizing cases).
28

appropriate circumstances, the TCPA countenances claims by corporations against defendants
alleged to have engaged in unlawful business practices, even where the unlawful practices by a
defendant were directed at third parties – here, the timeshare owners – rather than at that
corporation.
Based on these considerations, the court is not persuaded by the Spigner Defendants’
position that WVR’s cause of action must fail at the Rule 12 stage because WVR was not a
“consumer” with respect to the Spigner Defendants. Although there may be other reasons why
WVR’s claims against the Spigner Defendants under the TCPA may be limited (or fail) based on
the facts of the case, that is an issue for another day.
E.

Conspiracy

The Spigner Defendants have not specifically addressed the conspiracy claims against
them. At any rate, having found that several underlying causes of action will proceed, the court
finds that the conspiracy claims against the Spigner Defendants will also proceed.
V.

Summary
The Spigner Defendants’ Motion for Judgment will be granted in part and denied in part.

All claims by WVM against all defendants will be dismissed. WVR’s claim against Dean
Spigner for breach of duty of loyalty (Claim VIII) and WVR’s fraud claims against the Spigner
Defendants will be dismissed. The remaining claims against one or more of the Spigner
Defendants will proceed.
SMG’S MOTION TO DISMISS
I.

Claims at Issue
WVR asserts claims against Earle and SMG for violations of RICO (Claims I and II),

29

common law fraud (Claim III), tortious interference with business and/or contractual relations
(Claims IV and VI), procurement of breach of contract (Claim VII), violations of the TCPA
(Claim IX), and civil conspiracy (Claim X).24
II.

Dispute Concerning Delay
Earle and SMG argue that WVR untimely delayed in adding them to the lawsuit. They

argue that, based on that delay, the court should infer that WVR’s claims are unfounded. Based
on the chronology of events identified by WVR – including difficulties relating to service and/or
attempted service of subpoenas on Earle and SMG, and ongoing discovery regarding the
relationship among Earle/SMG/Mountain Getaways, the Spigner Defendants, and Superior, the
court finds no indication of an untimely delay. Moreover, WVR filed the Rule 15 motion to add
Earle and SMG within the Rule 15 deadline set forth in the Case Management Order. The timing
of Earle and SMG’s addition as defendants therefore plays no role in the court’s analysis.
III.

Specific Claims
A.

RICO

Earle and SMG argue that the RICO claims must fail because the plaintiffs have not
alleged that (1) Earle or SMG engaged in “any improper act under the federal RICO law” vis-avis Wyndham, (2) Earle or SMG engaged in any actions that caused Wyndham damage, and (3)
Earle or SMG had the requisite knowledge of illegal activity by Superior.
1.

Predicate Acts

Earle and SMG’s first position is without merit for multiple reasons. First, Earle and

24

Earle and SMG purported to seek dismissal of the remaining counts. As WVR has
pointed out, WVR did not assert those claims against Earle and SMG in the first place.
30

SMG appear to assume that they cannot have committed mail fraud unless they themselves
transmitted a fraudulent communication by mail or wire. However, the offense of mail fraud
requires only “a scheme to defraud, the mailing of a letter for the purpose of executing the
scheme and proof that the defendant caused the mailing.” United States v. Wuliger, 981 F.2d
1497, 1504 (6th Cir. 1992). Within the Sixth Circuit, an individual “causes” a mailing where “1)
one acts with knowledge that use of the mails will follow, or 2) where such use can reasonably
be foreseen, even though not actually intended.” Id. (emphasis in original); see also Pereira v.
United States, 347 U.S. 1, 8-0 (1954). Indeed, “[i]t is not necessary that the scheme contemplate
the use of the mails as an essential element.” Pereira, 347 U.S. at 8-9 (“Where one does an act
with knowledge that the use of the mails will follow in the ordinary course of business, or where
such use can reasonably be foreseen, even though not actually intended, then he ‘causes’ the
mails to be used.”).
Here, the allegations, if true, show that Earle and SMG targeted and accosted Wyndham
owners, convinced them to transfer those assets and to pay up-front fees to Earle and/or SMG,
and made false representations to Wyndham owners that a legitimate third party would purchase
the deeds with assistance from Superior. Earle and SMG purported to execute agreements with
customers as “authorized representatives” of Superior, agreements that Earle and/or SMG
transmitted by mail and/or electronically to Superior. According to the Amended Complaint,
Earle and SMG knew that there was no bona fide third-party purchaser and that Superior would
instead fabricate a fraudulent conveyance to a sham purchaser, who would inevitably default on
the deed-related obligations. The entire scheme is premised on the assumption that Superior
could transmit the fraudulent conveyance documents to WVR’s’s property group without raising

31

any red flags. As alleged, this integrated operation constitutes a scheme to defraud both the
consumers and Wyndham, and the scheme includes – and indeed requires – the use of mail
and/wire communications (between Earle/SMG and Superior in the first instance, and between
Superior and Wyndham in the second instance) to operate successfully. Construing the
allegations in the light most favorable to the plaintiffs, Earle and SMG “caused” the mailings
and/or electronic communications because they knew or reasonably foresaw that use of the mail
or wires would occur.25
The Amended Complaint contains numerous examples of fraudulent deed transfers that
SMG and/or Earle facilitated. For example, on February 19, 2012, presumably acting as an
“authorized representative” of Superior, SMG executed a “Superior” contract for Earl and Francis
Turner. SMG transmitted that paperwork to Superior. On March 3, 2012 and July 17, 2012,
Superior in turn submitted fraudulent transfer documentation to Wyndham. As would be
expected given the other allegations in the Amended Complaint, the account corresponding to the
transferee is now in default. Similarly, on December 12, 2010, SMG executed a “Superior”
contract with Kenneth Moffett, quoted him up-front fees (which Moffett paid) for the transfer of
Moffett’s deed, and sold him a substitute Mountain Getaways vacation club package. As with
other transactions, Superior did not actually process a fraudulent conveyance in the first place.
Moffett, presumably not realizing that his deed had never been transferred, defaulted on his
maintenance fee obligations. Moffett is now saddled with both the Wyndham deed obligations

25

WVR asserts this theory of RICO liability for mail or wire fraud in its Supplemental
RICO Case Statement. (See, e.g., Supplemental RICO Case Statement at p. 24 (stating that
‘[t]hese acts constitute wire fraud and mail fraud and/or facilitate the acts of wire fraud and mail
fraud committed by Superior.”) (emphasis added).)
32

and the Mountain Getaways vacation club package.
Furthermore, the Amended Complaint alleges that SMG and Earle convinced some
Wyndham owners to pay $3,000 for a “lawyer” to facilitate the transfer, even though SMG and
Earle knew that neither SMG nor Superior had a lawyer or planned to use a lawyer for that
purpose. In other words, SMG and Earle transmitted documents to Superior by mail or wire that
contained a representation that SMG and Earle knew to be false.
The Amended Complaint also alleges that the entire scheme, both with respect to SMG
and TCG, was essentially designed and implemented by Jeff Earle. In substance, the Complaint
alleges that Earle (through Mountain Getaways) enlists other entities to perpetrate fraudulent
conveyances in coordination with Superior. In addition to whatever money Earle and/or
Mountain Getaways can procure on its own by defrauding Wyndham customers and facilitating
sham purchases through Superior, Mountain Getaways receives a 10% cut of the TCG’s sales
from the same scheme. In that sense, SMG (which appears to be under Earle’s direct control) and
TCG act as “spokes” of the broader conspiracy, of which Earle is the hub. Construing these
allegations in the light most favorable to the plaintiffs, the allegations show that Earle and SMG
both knew and intended that TCG would utilize Superior to defraud consumers and Wyndham
using mail and electronic communications, thereby establishing potential mail and/or wire fraud.
2.

Knowledge

Taking the allegations as true, both the Amended Complaint and the Supplemental RICO
Case Statement expressly and repeatedly allege that Earle and SMG had the specific intent to
defraud both consumers and Wyndham through the alleged racketeering activity. Earle and SMG
allegedly knew and intended that Superior would process fraudulent conveyances for SMG and

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TCG and that Superior, in fact, did so hundreds of times with respect to Wyndham owners whom
Earle, SMG, and/or TCG successfully duped. Moreover, the fact that Superior processed and
submitted to Wyndham nearly 200 (and likely more) sham transactions relating to SMG,
Mountain Getaways, and/or TCG “customers” – with respect to which Superior allegedly forged
signatures, forged notarizations, and often transferred title to third parties without their
knowledge or consent – supports an inference that the entities were conspiring to coordinate these
transactions.
3.

Damages

The court discusses WVR’s alleged damages in more detail with respect to TCG’s Rule
12(c) motion herein. For substantially the same reasons, the court finds that the Amended
Complaint has sufficiently alleged activity that Earle and SMG’s actions proximately caused the
plaintiffs to suffer at least some damages.
Earle and SMG also argue with some force that this case involves, at most, “incidental” or
“but for” damages that cannot recovered by WVR, because RICO embodies a direct injury
requirement. See, e.g., Holmes v. Securities Investor Protection Corp., 503 U.S. 258 (1992); PikCoal Co. v. Big Rivers Elec. Corp., 200 F.3d 884, 889 (6th Cir. 2000); Firestone v. Galbreath,
976 F.2d 279, 285 (6th Cir. 1992). First, the Amended Complaint alleges direct injury to WVR,
and WVR posits that at least some of the transactions at issue (albeit only a few) may have
caused it direct injury from the failure to pay maintenance fees. Second, the allegation in this
case is that the defendants specifically targeted WVR owners in an effort to substitute the
Mountain Getaways vacation club package for that offered by WVR. Whether this conduct,
when successful, causes recoverable “direct injury” to WVR – as opposed to injuries that “flow[]

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merely from the misfortunes allegedly visited upon [the WVR timeshare owners] by the
defendants, Firestone, 976 F.2d at 285 – will be evaluated at a later stage with a developed
record.26
In sum, the court finds that WVR has adequately alleged the elements of its § 1962(c)
RICO claim. The Amended Complaint also contains allegations establishing an agreement
among Earle, SMG, Superior, and TCG (including the Spigners) to violate § 1962(c).
The court is sensitive to the notion that the fraudulent transactions involved in this case
are numerous and (according to the Amended Complaint allegations) intentionally difficult to
discover and track, and that Rules 8 and 9(b) do not require a plaintiff’s omniscience.
Accordingly, the court will not dismiss the RICO claims at this stage. Nevertheless, WVR
should anticipate that the court will be more stringent at the Rule 56 stage, when the parties and
the court will have the benefit of a developed record.
B.

Fraud

For substantially the same reasons that WVR failed to plead sufficient facts to establish
fraud claims against the Spigner Defendants, the allegations concerning Earle and SMG are also
insufficient to state a fraud claim. Briefly, WVR has failed to plead with particularity that Earle

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The court recognizes that its reticence to dismiss the RICO claims requires Earle and
SMG to defend claims on which it may ultimately be entitled to judgment because of the
causation issue it has raised here. Be that as it may, this case involves a sprawling set of
transactions involving multiple entities across multiple facilities, hundreds of transactions (at
least), and complex contractual relationships that do not appear to be uniform across all of the
facilities at issue. Following discovery, it may be that WVR’s RICO claims against SMG and
Earle, among other claims, will fail as a matter of law and that Earle and SMG’s position that the
claims against them are absolutely baseless will prove to be correct. Nevertheless, deciding this
case on the issue of causation would be premature and would risk inappropriately applying a
“one-size-fits-all” holding to the diverse transactions at issue.
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and/or SMG made any fraudulent to statements to WVR and/or that WVR relied to its detriment
on any fraudulent statements by Earle and/or SMG.
C.

Intentional Interference with Current and/or Prospective Business
Relations, and Procurement of Breach of Contract

Here, Earle and SMG argue that there are “no facts” alleged in the Amended Complaint to
support this claim. To the contrary, the Amended Complaint contains allegations establishing
each element. The first three elements are plainly satisfied: the plaintiffs had an existing business
relationship with WVR owners, Earle and SMG not only knew about that relationship but
specifically targeted WVR owners, Earle and SMG intended to convince those owners to divest
their WVR asset in favor of a substitute Mountain Getaways vacation club package. As to the
fourth element, Earle and SMG allegedly (1) made misrepresentations to WVR owners about the
nature of the WVR timeshare deeds and the associated maintenance fee obligations to convince
the owners that they should relinquish those deeds, (2) represented to each owner, as authorized
representatives of Superior, that Superior would facilitate a transaction with a legitimate thirdparty purchaser, despite knowing that no bona fide third-party purchaser was in place; (3) knew
that, in connection with new SMG “customers,” Superior would fabricate a conveyance; and (4)
made misleading representations to WVR owners about the nature of the Mountain Getaways
vacation club package and how it compared to the owners’ existing WVR package, in an effort to
induce owners to cease their business relationship with WVR. If true, these facts fall within one
or more of the enumerated categories of “improper means” of competition, including fraud,
misrepresentation, deceit, and unethical conduct. See Trau-Med, 71 S.W.3d at 701 n.5. As to the
fifth element, the court incorporates its analysis of the plaintiffs’ damages in other sections

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herein.27
For essentially the same reasons as the intentional interference claims, the court finds that
the plaintiffs have adequately pleaded a claim for procurement of breach of contract. Whether
SMG and/or Earle “maliciously” intended to induce a breach of contract is a matter of scienter
best addressed on a developed record. Also, although Earle and SMG argue that, at most, the
allegations establish that they meant to harm timeshares owners generally, rather than WVR
specifically, that distinction similarly will be tested on a developed factual record.
D.

TCPA

In some respects, the allegations supporting the TCPA claims against Earle and SMG are
less specific than those asserted against the Spigner Defendants. Although the Amended
Complaint identifies specific time frames and dates on which the Spigner Defendants allegedly
deceived Wyndham owners by giving a false appearance of association with Wyndham and by
conducting high pressure sales presentations containing misleading representations about the
Wyndham assets, the Amended Complaint does not contain similar specificity with respect to
Earle and SMG.
However, the Amended Complaint does allege that Earle and SMG procured $3,000
payments for an “attorney” with knowledge that no attorney would involved, that they executed
contracts with WVR owners on behalf of Superior, and that they forwarded those contracts to

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The court notes that most courts within the Sixth Circuit, including opinions from other
judges in this court, have found that the Rule 9(b) heightened particularity requirements do not
apply to Tennessee tortious interference claims. See Price’s v. Collision Ctr., LLC v.
Progressive Hawaii Ins. Corp., 2013 WL 5782926, at *4 (M.D. Tenn. Oct. 28, 2013) (collecting
cases). This court has adopted the same assumption and applied only the Rule 8 standard to
these claims.
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Superior with the understanding and intention that Superior would process a fraudulent
transaction that might be legally void or voidable with respect to the transferor. (See, e.g., Am.
Compl. ¶ 148.) The Amended Complaint also alleges that Earle and SMG utilized these tactics
with respect to numerous specific transactions. (See id. ¶ 149.) As WVR states in its response
brief, these allegations are sufficient to bring the conduct arguably within the ambit of TCPA §§
104(b)(5) and/or (b)(12). See, e.g., Tenn. Code Ann. §§ 47-18-104(b)(5) (“Representing that
goods or services have . . . characteristics . . . that they do not have . . . .”); and (b)(12)
(“Representing that a consumer transaction confers or involves rights, remedies or obligations
that it does not have or involve or which are prohibited by law.”). The court finds that these
allegations are sufficient to state TCPA claims against Earle and SMG at this early stage. At a
later stage in this case, based on a developed record, the court will revisit whether the facts can
support TCPA claims against Earle and SMG.
E.

Conspiracy

Having found that the underlying torts will proceed, the court finds that the conspiracy
claims against Earle and SMG will proceed.
F.

Summary

WVR’s fraud claims against Earle and SMG will be dismissed. WVR’s remaining claims
against Earle and SMG will proceed.
CONCLUSION
The Spigner Defendants’ Motion for Judgment and Earle/SMG’s Motion to Dismiss will
both be granted in part and denied in part. WVM will be dismissed as a party plaintiff relative to
all defendants. WVR’s fraud claims against the Spigner Defendants and Earle/SMG will be

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dismissed. WVR’s breach of the duty of loyalty claim against Spigner will be dismissed.
WVR’s remaining claims will proceed.
An appropriate order will enter.

______________________________
ALETA A. TRAUGER
United States District Judge

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