Hi Tony:
You can find the full text of the Diamond complaint by going to:
http://tug2.net/timeshare_advice/Diamond-Resorts-Lawsuit/
and reading the 6 PDFs.
There are a number of items in the complaint that Diamond wants under Prayer for Relief.
The only item that has been resolved to date is the Injunctive Relief.
On May 22, 2015 the Judge filed the following Tentative Ruling:
LAW AND MOTION CALENDAR MAY 22, 2015
DIAMOND RESORTS, ET AL. v. TAHOE BEACH, ET AL., SC20150025
Motion for Preliminary Injunction; Motion to Strike
Plaintiffs Diamond Resorts Tahoe Beach & Ski Development, LLC;
Diamond Resorts U.S. Collection Members Association; and Diamond Resorts California Collection Members Association (“Diamond Resorts” or “plaintiffs”) commenced this action February 6, 2015, against
defendants The Tahoe Beach and Ski Club Owners Association; Alfred Fong; Jacob Bercu; and Sedric Ketchum (“the Association” or “defendants”). Plaintiffs’ complaint asserts causes of action for (1) declaratory relief; (2) injunctive relief; (3) breach of fiduciary duty; and (4) appointment of receiver.
Two matters are now pending. First, plaintiffs move to strike defendants’ affirmative defenses in their answer. Second, plaintiff’s move for a preliminary injunction.
1. MOTION TO STRIKE
First, plaintiffs move to strike defendants’ nineteen affirmative defenses.
The motion is made on the basis defendants failed to adequately allege ultimate facts in their affirmative defenses.
“The court may … [¶] (a) Strike out any irrelevant, false, or improper matter inserted in any pleading. [¶] (b) Strike out all or any part of any pleading not drawn or filed in conformity with the laws of this state, a court rule, or an order of the court.” (Code of Civ. Proc. § 436, emphasis added.) A motion to strike is generally used to address defects appearing on the face of
a pleading that are not subject to demurrer. (Pierson v. Sharp Mem. Hosp. (1989) 216 Cal.App.3d 340, 342 [264 Cal.Rptr. 673].)
Here, the basis for plaintiffs’ motion would have been subject to a special demurrer, which plaintiffs did not file. “ ‘[A] motion to strike cannot be made to serve the purpose of a special demurrer. Where a motion to strike is so broad as to include relevant matters, the motion should be denied in its entirety.’ [Citation.]” (Triodyne, Inc. v. Super. Ct. (1966) 240 Cal.App.2d 536, 542 [49 Cal.Rptr. 717].) Because the determination of whether to strike a pleading or portions of a pleading is discretionary, and because plaintiffs’ motion is so broad as to include relevant matter, plaintiffs’ motion is denied in its entirety.
2. MOTION FOR PRELIMINARY INJUNCTION
Next, plaintiffs move for a preliminary injunction to enjoin defendants “from continuing to prevent Tahoe Development from using and enjoying certain of Tahoe Development’s interests in real property located at the Tahoe Beach & Ski Club timeshare resort in South Lake Tahoe .…” (Mot. At p. 1.) The motion is opposed.
2.1 Legal Standard
In considering a motion for preliminary injunction, “a court must weigh two ‘interrelated’ factors: (1) the likelihood that the moving party will ultimately prevail on the merits and (2) the relative interim harm to the parties from issuance or nonissuance of the injunction.” (Butt v. State of Cal. (1992) 4 Cal.4th 668, 677–678 [15 Cal.Rptr.2d 480], citing Common Cause v.Bd. of Supervisors (1989) 49 Cal.3d 432, 441–442 [261 Cal.Rptr. 574].) The trial court is to weigh “the potential-merit and interim-harm factors; the greater the plaintiff’s showing on one, the less must be shown on the other to support an injunction.” (Butt, supra, 4 Cal.4th at p. 678.) “A trial court may not grant a preliminary injunction, regardless of the balance of interim harm, unless there is some possibility that the plaintiff would ultimately prevail on the merits of the claim.” (Common Cause, supra, 49 Cal.3d at pp. 442–443.)
2.2 Evidentiary Objections
Plaintiffs’ Objection Nos. 1–6 to the Declaration of Alfred Fong are overruled.
Plaintiffs’ Objection No. 1 to the Declaration of Sedric Ketchum is overruled.
Plaintiffs’ Objection Nos. 1–2 to the Declaration of Jacob Bercu are overruled.
2.3 Request for Judicial Notice
Plaintiffs request that the court take judicial notice of (1) Grant Deed, dated December 11, 2014, and recorded in El Dorado County on December 22, 2014 (Decl. of Frank Goeckel, Ex. A); (2) Tahoe Beach and Ski Club Declaration of Vacation Plan and the Amendments thereto, recorded in El Dorado County (Decl. of Frank Goeckel, Ex. B); (3) Bylaws of The Tahoe Beach and Ski Club, recorded in El Dorado County on January 20, 2014 (Decl. of Frank Goeckel, Ex. B); and (4) the Association’s Articles of Incorporation and Rules and Regulations filed with the California Secretary of State’s Office on March 25, 1983 (Decl. of Frank Goeckel, Ex. B).
Plaintiffs’ request for judicial notice is granted in its entirety. (Evid. Code § 452, subd. (h).)
2.4 Discussion
The Association’s members consist of the Resort owners. (Decl. of Frank Goeckel, Ex. B.) The Association operates the Resort by way of the Board of Directors of the Association. (Ibid.) There are five directors on the Board. In 2004, the Association contracted with Vacation Resorts International (“VRI”) to be the management company for the Resort. (Id., ¶ 8.) An affiliated
company of VRI, specifically VRI Development & Sales (“VDS”), entered into a sales management agreement with the Association in 2006. (Id., Ex. C.) On September 19, 2009, the Association approved a Corporate Resolution giving “limited power of attorney to Stacey R. Shilling, VRI Chief Operating Officer, and to any person designated by VRI, as VRI deems necessary, to sign all title and escrow documents and deeds of sale of the Association owned
intervals on behalf of the Association .…” (Id., Ex. D.) The purpose of the resolution was “to allow smooth and timely processing of sales documents and deeds for” the Association. (Ibid.) Apparently this resolution was never recorded in the county. (Decl. of Alfred Fong, ¶ 7.)
However, in November 2014, Shannon Krutz, then Secretary of the Board of Directors for the Association, signed an Affidavit of Continuing Authority as to the Corporate Resolution, declaring that the resolution was in full force and effect and had not been withdrawn or rescinded. (Decl. of Frank Goeckel, Ex. G.) The Affidavit was notarized in the State of Washington.
(Ibid.) A majority of the Board of Directors—Alfred Fong, Sedric Ketchum, and Jacob Bercu—all declare that Ms. Krutz did not have the Board’s authorization to execute this Affidavit on behalf of the Association, and they would not have given her such authorization. (Decl. of Alfred Fong, ¶ 14; Decl. of Sedric Ketchum, ¶ 14; Decl. of Jacob Bercu, ¶ 14.) Just prior to the passage of the Corporate Resolution, in a letter dated September 17, 2009, Michael Vasey, Vice President of VDS, notified the Association that VDS intended to terminate the sales management agreement. (Defs.’ Appendix of Exhibits, Ex. C.) The letter stated the agreement would be terminated effective as of the date of the last signature.
(Ibid.) There is no last signature on the court’s copy, but a copy of the minutes from the September 19, 2009, meeting of the Board of Directors for the Association indicates the Board acknowledged and accepted the letter of termination from VDS. (Id., Ex. B at p. 4.)
Although the sales management agreement was terminated, VRI continued to manage the Resort. Mr. Fong declares that in the summer of 2014, the Association notified VRI that it was terminating the management agreement with VRI effective January 1, 2015. (Decl. of Alfred Fong, ¶ 10.) Mr. Fong also declares that “[p]rior to November of 2014, the Board advised
VRI that VRI needed advance approval from the Board before selling Association owned Vacation plans to an Owner in any bulk number of ten or more units.” (Id., ¶ 11.)
On December 22, 2014, a Grant Deed was recorded in El Dorado County. (Decl. of Frank Goeckel, Ex. A.) The Deed was signed by Stacey Shilling (purportedly in the capacity as Vice President of Operations for the Association), granting to Diamond Resorts 241.5 Vacation Plans. (Ibid.)
Based on the foregoing, it appears the sales management agreement with VDS was terminated in or about September 2009. Regardless of the validity of the Affidavit of Continuing Authority signed by Shannon Krutz with regard to the Corporate Resolution, that resolution merely gave limited power to VDS to sign title and escrow documents and deeds of sale for the purpose of timely processing. The resolution says nothing regarding the authorization to sell Vacation Plans.
Additionally, there is nothing in the governing documents to indicate Ms. Krutz had authority to sign that Affidavit. The Restated Bylaws, recorded in January 2004, set forth the duties of the Secretary of the Association. More specifically, the Secretary is to keep a book of minutes of all meetings of the Directors and Members, provide notice of all meetings of the Members and the Board, keep the seal of the Association in safe custody, keep a roster of the Members, and other powers and duties prescribed by the Board or the Bylaws. (Decl. of Frank Goeckel, Ex. B, Restated Bylaws of the Association at p. 13, § 13.) In this regard, a majority of the Board of Directors declare that Ms. Krutz did not have the Board’s authorization to sign the Affidavit.
Thus, when these purported sales to Diamond Resorts occurred in or about December 2014, the only authorization VRI was acting under was the management agreement, not the 2009 sales agreement. There is no evidence that, at the time of the sale, VRI had the authority to sell over 200 Vacation Plans to Diamond Resorts.
Accordingly, based upon the evidence before the court at this time, it does not appear likely that plaintiffs will prevail on the merits. With regard to harm to plaintiffs, the possible harm is the loss of revenue from using the Vacation Plans in dispute. Plaintiffs have an adequate remedy at law should they ultimately prevail against defendants. After weighing potential-merit and interim-harm factors, the court finds the factors weigh against the issuance of a preliminary injunction. Plaintiffs’ motion for preliminary injunction is denied.
TENTATIVE RULING:
PLAINTIFFS’ MOTION TO STRIKE AFFIRMATIVE DEFENSES IS DENIED.
PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION IS DENIED.
On June 17, 2015 the Judge heard oral arguments pro and agains the tentative rulling.
On June 19, 2015 the judge declared “The Tentative Ruling becomes the Order of the Court”.
Thanks
