What to Know About the Zwicky vs. Diamond Resorts Settlement
The world of timeshares is no stranger to lawsuits and complex litigation. Unfortunately, attorneys are sometimes needed to handle a variety of issues in the industry, from unfair contracts to dishonest business practices and beyond. That said, the case of Zwicky vs. Diamond Resorts — 2:20-cv-02322-PHX-DJH (D. Ariz) — is a big one even by timeshare litigation standards.
Centerstone Group previously discussed the case in the context of Diamond Resorts maintenance fees. Since that time, though, there have been major developments. Hilton took over Diamond Resorts, the Zwicky case was certified as a class action, and now there is a settlement of that class action lawsuit. If you are one of the many people who received a notice of the class action settlement, you might be puzzled about what exactly is going on.
This article will take a look at the history of the Zwicky vs. Diamond Resorts case and its long path through the legal system that started in Phoenix, Arizona, in 2015. We’ll also look at how the case ended up the way that it did as well as the basic terms of the settlement.
What Was the Zwicky vs. Diamond Resorts Case About?
Plaintiff Norman Zwicky, along with several other named Plaintiffs, brought the Zwicky lawsuit as a way to fight back against annual maintenance fees that were far higher than were originally represented by the timeshare company.
The class action complaint explains that Diamond Resorts:
Failed to disclose certain fees to its owners.
Overcharged others.
Misappropriated money in a fraudulent way.
Diamond Resorts International, Inc., also known as DRI, was alleged to have been asserting control over timeshare owner’s associations through a variety of entities in what amounted to a complicated shell game, where it was very difficult to see what they were up to.
The other entities had similar names, like Diamond Resorts Incorporated and a property management company called Diamond Resorts Management Inc. (DRMI). Those companies then used their control to create inflated budgets and collect much higher-than-average maintenance fees and assessments from timeshare owners.
How Did an Arizona State Court Case Get to Federal Court, and Why Was It Sitting There for So Long?
In 2015, Zwicky filed a state lawsuit in Maricopa County Superior Court to inspect Diamond Resorts’ timeshare documents as an owner. Zwicky’s and his attorneys’ inspection of the corporate books and records blew the case wide open.
They alleged that they discovered a massive amount of expenses being wrongfully shifted onto timeshare owners, resulting in fraud and breach of fiduciary duty by Diamond Resorts against its owners. This discovery led to a class action complaint filed in Arizona state court on August 21, 2020, asserting several claims against the developer entities, including claims under the Federal Racketeering Influenced and Corrupt Organization (RICO) Act. Zwicky also made claims under the Arizona RICO Act in addition to federal RICO laws.
Diamond Resorts, eager to obtain what it felt like was an advantage from a more sympathetic court system, removed the class action to United States federal court on December 1, 2020, claiming that the federal Class Action Fairness Act required the case to be heard in United States District Court for the District of Arizona, commonly referred to as “federal court.”
(In corporate culture, it is commonly accepted wisdom that federal court is more favorable for defendants than state court because federal court verdicts tend to be smaller.)
Diamond Resorts was successful in its gambit, and the case stayed there, out of the hands of Arizona state courts, judges, and juries.
After the Zwicky vs. Diamond Resorts case was removed to federal court, there was a lot of litigation regarding the original and multiple amended class action complaints.
Diamond Resorts tried to have the case thrown out entirely — a request that the judge refused. However, the process of whittling down the parties and claims at issue — before even getting into the real merits of the case — lasted for months before the judge made a decision on June 30 of 2021.
Even then, Diamond Resorts did not file their official answer to the complaint until October of 2021, over a year after the original filing of the complaint in Arizona state court!
Only after those months of litigating over tiny details, and tens of thousands (more likely hundreds of thousands) in legal fees and costs, onlythen did Diamond Resorts grudgingly agree to mediate the case, but only once the case itself was stayed (put on pause and stopped completely) for 45 days. That 45-day stay was then lengthened to 120 days, while huge legal fees continued to pile on.
On January 14, 2022, the parties arrived at a tentative settlement, but had to get court approval for it. The parties then had tremendous difficulty filing what needed to be filed, and the court was slowly losing patience. As of January 11, 2023, nearly one year later, the settlement still had not been finalized or approved, and the Court demanded answers from the parties.
On February 15, 2023, the motion for approval of the settlement was finally filed, though the Court did not grant that motion until September 6, 2023 — over three years after the filing of the class action complaint and roughly eight years from the filing of Zwicky’s original lawsuit.
Details of the Zwicky vs. Diamond Resorts Settlement and Answers to FAQs
Once the class was certified by the court, every Diamond Resorts timeshare owner from a certain owner association from 2011 to 2022 became a plaintiff in the case. This development made the financial impact on Diamond Resorts (and the company that acquired it, Hilton Grand Vacations) much greater. The court wrote that the maximum allowable award to the class plaintiffs was around $35,000,000.
The intense financial pressure bearing down on Hilton was what really resulted in the settlement agreement and release between the parties being reached. The court granted preliminary approval of settlement, and the settlement was finalized, after a final approval hearing, on February 12, 2024.
What Are the Terms of the Settlement?
The lawyers for both sides agreed to a $13,000,000 settlement fund from which plaintiff class members could be paid. Though it was originally stated that members of the class would need to submit a claim to a settlement administrator, the settlement website currently states that class members will receive payment without having to take any further steps, provided that Diamond Resorts has current contract information for each resident.
One should keep in mind, though, the amount recovered from a class action settlement does not often amount to very much for class plaintiffs. In this case, large chunks of that $13,000,000 will be taken from the settlement fund. A full 25% of that fund — $3,250,000 — will go to attorneys’ fees. Therefore, under the terms of the settlement approved by the parties, owners will only have access to less than $10,000,000.
Will Class Members Get Back All the Money That They Lost?
No, class members will probably not get back all the money they lost. If the total claims of all class members exceed the $10,000,000 amount, the claim amounts will be reduced so that everyone receives a smaller amount of money — at times drastically smaller.
While those amounts may be surprising to non-lawyers, the settlement agreement and release, approved by federal judge Diane J. Humetewa, is not unusual in this respect. The plaintiffs had three separate attorneys (Jon L. Phelps, Robert M. Moore, and Edward Louis Barry) at two law firms representing them, so the legal work performed was substantial and time-consuming. Class action cases are expensive, and that expense is often born by the class members.
Thousands will also be paid to Zwicky and the other named plaintiffs in the action as class representatives: George Abarca, Vikki Osborn, and Elizabeth Stryks-Shaw. Fees will likely also have to be paid to the settlement administrator, who makes sure that the payment process is as fair as possible.
Therefore, by the time the timeshare owners can receive a claim from the fund, it may just be a tiny fraction of what they are owed.
To add insult to injury, the settlement agreement does not release any timeshare owners from their membership, so this is a band-aid that will not solve owners’ true issues with Diamond, or prevent new ones from arising in the future.
When Will I Get Paid?
According to the settlement website, mailed checks should have been received around July 29, 2024. If you haven’t been paid and think you should have, you should contact the settlement administrator at Info@zwickyassessmentsettlement.com.
What Can I Do If I Don’t Like This Settlement? Can I Still Sue Separately?
Unfortunately, if you don’t like the settlement, the court already issued final approval in February 2024, so you can’t challenge it.
One option for unhappy timeshare owners/class members was to “opt-out” of the class action settlement, meaning to not make a claim, and instead sue the timeshare companies with individual lawsuits. According to the court’s order, class members would have needed to opt out no later than December 26, 2023 — a deadline that has long since passed.
Even if opting out were still somehow an option, pursuing new individual lawsuits against Hilton/DRI would require even more money (in the form of legal fees and costs) from those timeshare owners, and they may have a hard time getting any further money from Hilton with a verdict. (Owners who attempt to sue a timeshare company themselves may also hit other roadblocks, like forced arbitration.)
Also, consider the timeline of the Zwicky litigation above. It took two lawsuits in state and federal courts over the course of eight years to get to a settlement. Hundreds of thousands in fees and costs were spent, and Diamond Resorts was inflexible and difficult to deal with until it had been forced to fight for years. Most timeshare owners can’t afford that kind of fight.
What If You Just Want Out of Your Timeshare Without the Delay and Expense of a Lawsuit?
If you read the above and you’re thinking that very little sounds appealing about the Zwicky vs. Diamond Resorts lawsuit, you’re not alone. Enormously expensive court cases with little to show in the way of a victory are just one more negative to add to the prospect of timeshare ownership.
Lawsuits should be a reliable way to get timeshare developers to pay for their misdeeds. Unfortunately, it often just doesn’t work that way, causing owners grief, expense, and heartache. That’s why many owners turn to the timeshare exit process to get out of the bad situation permanently.
Centerstone Group Can Show You a Better Way
Centerstone Group is a team of experienced professionals in the timeshare exit industry with collected decades of experience. We know the ins and outs of this industry better than anyone else. Whether you need to get out of an old timeshare with costs that are destroying your finances or you’re just trying to get a cancellation of a recently signed contract, we can serve your needs.
We also do so much more. We have a proprietary pressure campaign that we use on timeshare companies as well as an escrow plan. We can even use our professional connections to find you a timeshare attorney or law office if you really need one, and you’ll find that we can negotiate legal fee discounts on your behalf.
We are an accredited business with the Better Business Bureau (BBB), where we have an 4.79-out-of-5-star and A+ rating. If you’re feeling squeezed for cash and like you can never get out of your timeshare, give us the chance to try and help you.
Get Out of Your Timeshare Without Waiting for a Class Action Lawsuit
While they have their uses, lawsuits are often far more trouble than they’re worth. While they often result in a big payday for the lawyers who spend years in court fighting about them, timeshare owners who are already strapped for cash will likely find a class action settlement cold comfort.
Staying out of the courtroom and saving money are goals that most people would agree with. Rather than deal with years of a painful lawsuit that might not result in any appreciable gain, separate from your timeshare interests once and for all. Contact Centerstone Group for a free consultation and case evaluation.
The world of timeshares is no stranger to lawsuits and complex litigation. Unfortunately, attorneys are sometimes needed to handle a variety of issues in the industry, from unfair contracts to dishonest business practices and beyond. That said, the case of Zwicky vs. Diamond Resorts — 2:20-cv-02322-PHX-DJH (D. Ariz) — is a big one even by timeshare litigation standards.
Centerstone Group previously discussed the case in the context of Diamond Resorts maintenance fees. Since that time, though, there have been major developments. Hilton took over Diamond Resorts, the Zwicky case was certified as a class action, and now there is a settlement of that class action lawsuit. If you are one of the many people who received a notice of the class action settlement, you might be puzzled about what exactly is going on.
This article will take a look at the history of the Zwicky vs. Diamond Resorts case and its long path through the legal system that started in Phoenix, Arizona, in 2015. We’ll also look at how the case ended up the way that it did as well as the basic terms of the settlement.
What Was the Zwicky vs. Diamond Resorts Case About?
Plaintiff Norman Zwicky, along with several other named Plaintiffs, brought the Zwicky lawsuit as a way to fight back against annual maintenance fees that were far higher than were originally represented by the timeshare company.
The class action complaint explains that Diamond Resorts:
Diamond Resorts International, Inc., also known as DRI, was alleged to have been asserting control over timeshare owner’s associations through a variety of entities in what amounted to a complicated shell game, where it was very difficult to see what they were up to.
The other entities had similar names, like Diamond Resorts Incorporated and a property management company called Diamond Resorts Management Inc. (DRMI). Those companies then used their control to create inflated budgets and collect much higher-than-average maintenance fees and assessments from timeshare owners.
How Did an Arizona State Court Case Get to Federal Court, and Why Was It Sitting There for So Long?
In 2015, Zwicky filed a state lawsuit in Maricopa County Superior Court to inspect Diamond Resorts’ timeshare documents as an owner. Zwicky’s and his attorneys’ inspection of the corporate books and records blew the case wide open.
They alleged that they discovered a massive amount of expenses being wrongfully shifted onto timeshare owners, resulting in fraud and breach of fiduciary duty by Diamond Resorts against its owners. This discovery led to a class action complaint filed in Arizona state court on August 21, 2020, asserting several claims against the developer entities, including claims under the Federal Racketeering Influenced and Corrupt Organization (RICO) Act. Zwicky also made claims under the Arizona RICO Act in addition to federal RICO laws.
Diamond Resorts, eager to obtain what it felt like was an advantage from a more sympathetic court system, removed the class action to United States federal court on December 1, 2020, claiming that the federal Class Action Fairness Act required the case to be heard in United States District Court for the District of Arizona, commonly referred to as “federal court.”
(In corporate culture, it is commonly accepted wisdom that federal court is more favorable for defendants than state court because federal court verdicts tend to be smaller.)
Diamond Resorts was successful in its gambit, and the case stayed there, out of the hands of Arizona state courts, judges, and juries.
After the Zwicky vs. Diamond Resorts case was removed to federal court, there was a lot of litigation regarding the original and multiple amended class action complaints.
Diamond Resorts tried to have the case thrown out entirely — a request that the judge refused. However, the process of whittling down the parties and claims at issue — before even getting into the real merits of the case — lasted for months before the judge made a decision on June 30 of 2021.
Even then, Diamond Resorts did not file their official answer to the complaint until October of 2021, over a year after the original filing of the complaint in Arizona state court!
Only after those months of litigating over tiny details, and tens of thousands (more likely hundreds of thousands) in legal fees and costs, only then did Diamond Resorts grudgingly agree to mediate the case, but only once the case itself was stayed (put on pause and stopped completely) for 45 days. That 45-day stay was then lengthened to 120 days, while huge legal fees continued to pile on.
On January 14, 2022, the parties arrived at a tentative settlement, but had to get court approval for it. The parties then had tremendous difficulty filing what needed to be filed, and the court was slowly losing patience. As of January 11, 2023, nearly one year later, the settlement still had not been finalized or approved, and the Court demanded answers from the parties.
On February 15, 2023, the motion for approval of the settlement was finally filed, though the Court did not grant that motion until September 6, 2023 — over three years after the filing of the class action complaint and roughly eight years from the filing of Zwicky’s original lawsuit.
Details of the Zwicky vs. Diamond Resorts Settlement and Answers to FAQs
Once the class was certified by the court, every Diamond Resorts timeshare owner from a certain owner association from 2011 to 2022 became a plaintiff in the case. This development made the financial impact on Diamond Resorts (and the company that acquired it, Hilton Grand Vacations) much greater. The court wrote that the maximum allowable award to the class plaintiffs was around $35,000,000.
The intense financial pressure bearing down on Hilton was what really resulted in the settlement agreement and release between the parties being reached. The court granted preliminary approval of settlement, and the settlement was finalized, after a final approval hearing, on February 12, 2024.
What Are the Terms of the Settlement?
The lawyers for both sides agreed to a $13,000,000 settlement fund from which plaintiff class members could be paid. Though it was originally stated that members of the class would need to submit a claim to a settlement administrator, the settlement website currently states that class members will receive payment without having to take any further steps, provided that Diamond Resorts has current contract information for each resident.
One should keep in mind, though, the amount recovered from a class action settlement does not often amount to very much for class plaintiffs. In this case, large chunks of that $13,000,000 will be taken from the settlement fund. A full 25% of that fund — $3,250,000 — will go to attorneys’ fees. Therefore, under the terms of the settlement approved by the parties, owners will only have access to less than $10,000,000.
Will Class Members Get Back All the Money That They Lost?
No, class members will probably not get back all the money they lost. If the total claims of all class members exceed the $10,000,000 amount, the claim amounts will be reduced so that everyone receives a smaller amount of money — at times drastically smaller.
While those amounts may be surprising to non-lawyers, the settlement agreement and release, approved by federal judge Diane J. Humetewa, is not unusual in this respect. The plaintiffs had three separate attorneys (Jon L. Phelps, Robert M. Moore, and Edward Louis Barry) at two law firms representing them, so the legal work performed was substantial and time-consuming. Class action cases are expensive, and that expense is often born by the class members.
Thousands will also be paid to Zwicky and the other named plaintiffs in the action as class representatives: George Abarca, Vikki Osborn, and Elizabeth Stryks-Shaw. Fees will likely also have to be paid to the settlement administrator, who makes sure that the payment process is as fair as possible.
Therefore, by the time the timeshare owners can receive a claim from the fund, it may just be a tiny fraction of what they are owed.
To add insult to injury, the settlement agreement does not release any timeshare owners from their membership, so this is a band-aid that will not solve owners’ true issues with Diamond, or prevent new ones from arising in the future.
When Will I Get Paid?
According to the settlement website, mailed checks should have been received around July 29, 2024. If you haven’t been paid and think you should have, you should contact the settlement administrator at Info@zwickyassessmentsettlement.com.
What Can I Do If I Don’t Like This Settlement? Can I Still Sue Separately?
Unfortunately, if you don’t like the settlement, the court already issued final approval in February 2024, so you can’t challenge it.
One option for unhappy timeshare owners/class members was to “opt-out” of the class action settlement, meaning to not make a claim, and instead sue the timeshare companies with individual lawsuits. According to the court’s order, class members would have needed to opt out no later than December 26, 2023 — a deadline that has long since passed.
Even if opting out were still somehow an option, pursuing new individual lawsuits against Hilton/DRI would require even more money (in the form of legal fees and costs) from those timeshare owners, and they may have a hard time getting any further money from Hilton with a verdict. (Owners who attempt to sue a timeshare company themselves may also hit other roadblocks, like forced arbitration.)
Also, consider the timeline of the Zwicky litigation above. It took two lawsuits in state and federal courts over the course of eight years to get to a settlement. Hundreds of thousands in fees and costs were spent, and Diamond Resorts was inflexible and difficult to deal with until it had been forced to fight for years. Most timeshare owners can’t afford that kind of fight.
What If You Just Want Out of Your Timeshare Without the Delay and Expense of a Lawsuit?
If you read the above and you’re thinking that very little sounds appealing about the Zwicky vs. Diamond Resorts lawsuit, you’re not alone. Enormously expensive court cases with little to show in the way of a victory are just one more negative to add to the prospect of timeshare ownership.
Lawsuits should be a reliable way to get timeshare developers to pay for their misdeeds. Unfortunately, it often just doesn’t work that way, causing owners grief, expense, and heartache. That’s why many owners turn to the timeshare exit process to get out of the bad situation permanently.
Centerstone Group Can Show You a Better Way
Centerstone Group is a team of experienced professionals in the timeshare exit industry with collected decades of experience. We know the ins and outs of this industry better than anyone else. Whether you need to get out of an old timeshare with costs that are destroying your finances or you’re just trying to get a cancellation of a recently signed contract, we can serve your needs.
We also do so much more. We have a proprietary pressure campaign that we use on timeshare companies as well as an escrow plan. We can even use our professional connections to find you a timeshare attorney or law office if you really need one, and you’ll find that we can negotiate legal fee discounts on your behalf.
We are an accredited business with the Better Business Bureau (BBB), where we have an 4.79-out-of-5-star and A+ rating. If you’re feeling squeezed for cash and like you can never get out of your timeshare, give us the chance to try and help you.
Get Out of Your Timeshare Without Waiting for a Class Action Lawsuit
While they have their uses, lawsuits are often far more trouble than they’re worth. While they often result in a big payday for the lawyers who spend years in court fighting about them, timeshare owners who are already strapped for cash will likely find a class action settlement cold comfort.
Staying out of the courtroom and saving money are goals that most people would agree with. Rather than deal with years of a painful lawsuit that might not result in any appreciable gain, separate from your timeshare interests once and for all. Contact Centerstone Group for a free consultation and case evaluation.