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Hilton Resorts Corp. v. Sussman

United States District Court, M.D. Florida, Orlando Division

June 28, 2019

HILTON RESORTS CORPORATION, LV TOWER 52, LLC, TUSCANY VILLAGE VACATION SUITE S OWNERS ASSOCIATIONS, INC., ORLANDO VACATIO N SUITES II C O ND O MINIU M AS S O C IATIO N, INC ., LV TOWER 52 CONDOMINIUM ASSOCIATION, INC., LAS VEGAS BOULEVARD VACATION SUITE S OWNERS ASSOCIATION, INC., LAS VEGAS VACATION SUITES OWNERS ASSOCIATION, INC., HTLV OW NERS ASSOCIATION, INC. and KT VACATIO N O W NERS ASSOCIAT IO N, INC., Plaintiffs,
v.
MITCHELL REED SUSSMAN, Defendant.

          ORDER

          PAUL G BYRON UNITED STATES DISTRICT JUDGE.

         This cause comes before the Court without oral argument upon Defendant Mitchell Reed Sussman's Motion to Dismiss (Doc. 23 (the “Motion”)) and Plaintiffs' Response in Opposition (Doc. 24). With briefing complete, the Motion is ripe. Upon consideration, the Motion is due to be granted in part and denied in part.

         I. BACKGROUND[1]

         This action is one of many recent suits brought against Defendant Mitchell Reed Sussman by timeshare companies based on alleged false advertising and deceptive trade practices. Plaintiffs are affiliated businesses that sell, service, and maintain ownership stakes in “Hilton Grand Vacations” branded timeshare properties. (Doc. 1, ¶¶ 1, 36-41). Plaintiffs offer mortgage financing to purchasers of timeshare interests and initially hold promissory notes executed in connection with mortgaged timeshare interests. (Id. ¶¶ 42- 45). Plaintiffs have valid contracts with their timeshare-owner customers (“Owners”) requiring Owners pay mortgages, maintenance fees, and property taxes. (Id. ¶¶ 36-45). Plaintiffs also enjoy a right of first refusal to purchase timeshare interests from Owners that wish to sell, transfer, assign, or hypothecate their interest. (Id. ¶ 38).

         Defendant is an attorney who advertises to consumers-including Owners- “proprietary” services to cancel their ownership interests and be released from their payment obligations. (Id. ¶¶ 4, 25-28). Defendant advertises his services online and is referred clients from “Timeshare Exit Companies” that (like Defendant) solicit their timeshare cancellation services to Owners. (Id. ¶¶ 22-24, 46-47). Defendant advertises a specialty in “timeshare exit, cancellation[, ] and relief for embattled timeshare owners no longer interested in paying the ever escalating fees.” (Doc. 1-1). He claims to have developed techniques that cause timeshare companies to absolve timeshare owners of their liabilities if they give up or transfer their ownership interest. (Doc. 1, ¶¶ 48-61). Defendant also offers a “100% MONEY BACK GUARANTEE.” (Doc. 1-1).

         Defendant's techniques for exiting timeshares begin with Owners paying Defendant and end with a legally and factually ineffective termination of their payment obligations to Plaintiffs. After Owners pay Defendant a “substantial up-front fee, ” Defendant instructs them to stop paying Plaintiffs. (Doc. 1, ¶¶ 62-70). Thereafter, Defendant sends generic representation letters to Plaintiffs: (i) alleging misrepresentations and abusive tactics, (ii) stating that Owners are no longer liable, and (iii) citing “irrelevant and/or inapplicable” legal bases for the changed status. (Id. ¶¶ 71, 73). Next, Defendant executes invalid deeds, on the Owners' behalves, supposedly conveying their interests either back to Plaintiffs or to a straw person. (Id. ¶¶ 76-92) . These deeds fail to convey any interest, though; the conveyances to Plaintiffs fraudulently represent that Plaintiffs willingly accept transfer, and the strawman deeds violate Plaintiffs' right of first refusal. (Id. ¶¶ 81-82, 88-89). Thus, the Owners are not relieved of their financial obligations to Plaintiffs by Defendant's services, and so they next default.

         The Complaint avers seven Counts arising out of this conduct: false advertising and unfair competition under the Lanham Act, 15 U.S.C. § 1125(a) (Count I); declaratory judgment (Count II); violation of Fla. Stat. § 817.535 (Count III); violation of Fla. Stat. § 721.17 (Count IV); tortious interference with existing contracts (Count V); violation of Florida's Deceptive and Unfair Trade Practices Act (“FDUTPA”), Fla. Stat. § 501.201 et seq. (Count VI); violation of Nevada Deceptive Trade Practices Act (Count VII). Defendant moves to dismiss. (Doc. 23).

         II. STANDARD OF REVIEW

         To survive a motion to dismiss made pursuant to Rule 12(b)(6), the complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face when the plaintiff “pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. Legal conclusions and recitation of a claim's elements are properly disregarded, and courts are “not bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). Courts must also view the complaint in the light most favorable to the plaintiff and must resolve any doubts as to the sufficiency of the complaint in the plaintiff's favor. Hunnings v. Texaco, Inc., 29 F.3d 1480, 1483 (11th Cir. 1994) (per curiam). In sum, courts must (1) ignore conclusory allegations, bald legal assertions, and formulaic recitations of the elements of a claim; (2) accept well-pled factual allegations as true; and (3) view well-pled allegations in the light most favorable to the plaintiff. Iqbal, 556 U.S. at 67.

         III. DISCUSSION

         A. Count I: Lanham Act

         Defendant moves to dismiss Count I for: (i) failure to allege “false or misleading” statements, and (ii) failure to allege cognizable injury to Plaintiffs. (Doc. 24, pp. 4-7). To survive a Rule 12(b)(6) motion, a Lanham Act claim must plead:

(1) the defendant's statements were false or misleading; (2) the statements deceived, or had the capacity to deceive, consumers; (3) the deception had a material effect on the consumers' purchasing decision; (4) the misrepresented service affects interstate commerce; and (5) [the plaintiff] has been, or likely will be, injured as a result of the false or misleading statement.

Sovereign Military Hospitaller Order of St. John of Jerusalem of Rhodes & of Malta v. Fla. Priory of Knights Hospitallers, 702 F.3d 1279, 1294 (11th Cir. 2012). Accepting the Complaint's allegations as true, Plaintiffs adequately alleged that Defendant's advertisements were false or misleading-Defendant promises to absolve Owners of their financial obligations to Plaintiffs and he knows he cannot deliver. See Diamond Resorts Int'l v. Aaronson, No. 6:17-cv-1394-Orl-37DCI, 2018 WL 735627, at *3 (M.D. Fla. Jan. 26, 2018). Though Defendant quibbles over whether the “guarantee” is false (since Defendant offers a money-back, not a success, guarantee) and points to language from the website stating that success is not ...


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