By Joyce Hanson
Law360 (September 28, 2021, 6:49 PM EDT) — A Florida federal judge has largely handed a win to an attorney sued by Wyndham Vacation for his part in a purported “timeshare exit” scheme, tossing the company’s claims that the lawyer engaged in false advertising while persuading owners to illegally default on their contracts.
U.S. District Judge Gregory A. Presnell on Monday granted attorney Mitchell R. Sussman’s motion for summary judgment on Wyndham Vacation Ownership Inc.’s claims against him for contributory false advertising in violation of the Lanham Act and for tortious interference with existing contracts under Florida law. The judge also denied Wyndham’s cross-motions for partial summary judgment on those two claims.
The judge noted that Wyndham’s false advertising claim was brought against Sussman, of Palm Springs, California, as part of the vacation timeshare company’s larger suit against Reed Hein & Associates LLC, doing business as Timeshare Exit Team. Wyndham’s claim was based solely on TET’s oral sales presentations, alleging that the OSPs were misleading and harmed Wyndham because they “directed timeshare owners to stop payments or strongly suggested they do so,” according to Judge Presnell.
But the judge favored Sussman’s argument for summary judgment on the false advertising count because Wyndham produced no direct evidence of the content of any specific oral sales presentations. One timeshare owner, Christina Esslinger, did testify that she was told to stop making timeshare payments during a sales presentation, but Wyndham “blatantly” misrepresented the testimony of three other owners who were deposed, according to Judge Presnell.
“Wyndham must show that the OSPs directly caused its owners to stop making payments and Wyndham cannot do this if it cannot prove that the OSPs contained the alleged false statements,” the judge wrote in his Monday order. “Therefore, Sussman is entitled to summary judgment on Wyndham’s Lanham Act claim and Wyndham’s motion for partial summary judgment here will be denied.”
As for Wyndham’s claim that Sussman tortiously interfered with existing contracts under Florida law, Judge Presnell also favored Sussman while tossing the company’s motion for partial summary judgment.
The judge found that Sussman convincingly argued he never had any actual communication with the timeshare owners, while every owner deposition that Wyndham submitted revealed that they had stopped paying maintenance fees, property taxes or mortgage payments because of TET, not Sussman.
“Wyndham’s evidence only supports a finding that TET, not Sussman, directed Wyndham’s owners to stop making payments,” Judge Presnell wrote
Sussman also partially won his bid for summary judgment on claims of civil conspiracy and violations of Florida’s Deceptive and Unfair Trade Practices Act. Judge Presnell said only three of 250 timeshare owners stated that they had stopped paying on their contracts because they were advised to do so by Timeshare Exit Team, which is not a law firm.
Wyndham wants to go to trial on 247 individual contracts involving at least 247 individual owners, but the company has only presented testimony from the three owners, according to the judge.
“Thus,” Judge Presnell concluded, “Sussman is entitled to summary judgment on the civil conspiracy claim with respect to any owner whose testimony Wyndham cannot present at trial.”
Previously, on June 24, Wyndham Vacation gave notice that it had settled its suit against Washington state-based Reed Hein & Associates over its alleged scheme to persuade timeshare owners to default on their contracts, saying Timeshare Exit Team had resolved all claims asserted against it. The two sides said they reached a confidential settlement agreement to resolve the suit’s claims and moved that the court enter a final permanent injunction order.
Judge Presnell granted the injunction motion on June 28, specifying that the Timeshare Exit Team defendants agreed to be permanently enjoined from using any Wyndham trademark in any advertising, sales presentations or marketing statements. In addition, TET agreed not to advise or induce any Wyndham timeshare owner “to stop paying or to breach any financial obligation associated with a Wyndham interest, including without limitation any timeshare contract, loan, mortgage or maintenance fees.”
Another attorney in the suit, Ken B. Privett of Pawnee, Oklahoma, was dismissed with prejudice in March 2020 by Judge Presnell following a joint stipulation of dismissal.
Also last year, on Nov. 17, Seattle law firm Schroeter Goldmark & Bender LLC reached an agreement to exit Wyndham Vacation’s suit, according to a joint filing approved by the Florida federal court. Judge Presnell granted the motion. The joint stipulation and motion for dismissal applied only to Schroeter Goldmark in Wyndham Vacation’s suit, which had initially named as defendants Reed Hein, its three Timeshare Exit Team controlling directors, as well as Sussman and Privett.
Judge Presnell in August 2019 denied motions to dismiss the suit by Schroeter Goldmark, Privett and Timeshare Exit Team. At the time, the judge found solid support for claims that TET and the lawyers had falsely advertised their services.
But in their July 2019 motions to dismiss, Schroeter Goldmark and Privett disputed Wyndham’s allegations, noting that Judge Presnell previously dismissed the original complaint’s attempt to state a cause of action for contributory false advertising under the Lanham Act.
The complaint alleged that Timeshare Exit Team profits from deceiving timeshare owners into paying thousands of dollars with the expectation that the company will help them get out of their contracts. The company intentionally publishes false and misleading advertisements in an effort to convince owners that they can safely and legitimately exit their contracts, the suit said.
Sussman did not respond immediately to a request for comment Tuesday. Counsel for Wyndham Vacation and Sussman also did not respond to requests for comment.
Wyndham Vacation Ownership is represented by Alfred J. Bennington Jr., Glennys Ortega Rubin, Christian M. Leger and Eric C. Christu of Shutts & Bowen LLP.
Sussman is represented by Michael A. Nardella and John J. Bennett of Nardella & Nardella PLLC.
The case is Wyndham Vacation Ownership Inc. et al. v. Mitchell R. Sussman, case number 6:18-cv-02171, in the U.S. District Court for the Middle District of Florida.
–Editing by Alex Hubbard.