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. The case of Zwicky vs. Diamond Resorts, 2:20-cv-02322-PHX-DJH (D. Ariz) though, 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. Finally, if you are among the timeshare owners who are sick of the constant drama and expense of a timeshare, we invite you to consider a timeshare exit with Centerstone Group, the premier timeshare exit company in the United States.
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. In 2015, Zwicky filed a state lawsuit in Maricopa County Superior Court to assert his inspection right of timeshare documents as an owner.
The current case, Zwicky et al v. Diamond Resorts Incorporated et al, was filed later. It is a racketeering lawsuit brought in August of 2020 under the Federal Racketeering Influenced and Corrupt Organization (RICO) Act and the Arizona RICO Act.
The lawsuit complaint explains that the timeshare company defendants failed to disclose certain fees and overcharged others. 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.
Those other entities had similar names, like Diamond Resorts Incorporated and 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.
The lawsuit was removed to United States District Court for the District of Arizona by the timeshare defendants, which is a strategy that big companies often try when they are facing large judgments. (They often believe that federal court is more favorable for defendants than state court because federal court verdicts tend to be smaller.)
After the Zwicky vs. Diamond Resorts case was removed to federal court, there was a lot of litigation regarding Zwicky and the other plaintiffs’ complaint. The defendants tried, unsuccessfully, to have that complaint dismissed. What happened next (class certification and settlement) would change everything about the lawsuit.
There has been quite a bit of docket activity in the district court in the past two years. In November of 2022, the federal court in Arizona certified the lawsuit as a class action. This is important for a few reasons. First, it greatly expanded the number of people who were plaintiffs in the case.
Once the class was certified by the court, every timeshare owner from a certain owner association from 2011 to 2022 was now 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.
With the intense financial pressure bearing down on Hilton, a settlement agreement and release between the parties was reached. The court has granted preliminary approval of settlement, which will be finalized on February 8, 2024.
The lawyers for both sides agreed to a $13,000,000 settlement fund from which plaintiff class members could be paid. To do so, they would need to submit a claim to a settlement administrator appointed by the court.
One should keep in mind, though, that 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.
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. By the time that the timeshare owners can receive a claim from the fund, it may just be a tiny fraction of what they are owed.
Plus, the settlement agreed to does not include releasing any timeshare owners from their membership, so this is a band aid and not likely solving anyone’s real issues with Diamond.
Timeshare owners/class members who are not thrilled with this settlement had few good options. The most obvious one was the ability 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 45 days before the final settlement approval hearing on February 8, 2024.)
Of course, opting out and 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.)
Thus, while there is a settlement with a great deal of money, it is unlikely that the wronged timeshare owners will achieve much satisfaction from that settlement.
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. That’s why many owners turn to the timeshare exit process to get out of the bad situation permanently.
Centerstone Group is a collection of the leading professionals in the timeshare exit industry with collective decades of experience. 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 if that is what you need. We are an accredited business with the Better Business Bureau (BBB), where we have an 4.75-out-of-5-star and A+ rating. If you are feeling squeezed for cash and like you can never get out of your timeshare, give us the chance to try and help you.
Lawsuits are often far more trouble than they are worth. While they may be 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, it may be worth your time to contact Centerstone Group for a free consultation and case evaluation about getting rid of your timeshare interests. You may find yourself saving time, money, and peace of mind.
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