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How do I file a lawsuit against Diamond Resorts?

Usually you actually will have to do something called arbitration instead of a lawsuit: Diamond Resorts generally includes an arbitration clause in its contracts. Virtually every company does this these days. An arbitration clause requires you to bring any legal claims you have before an arbitrator, not a court. Arbitration is kind of like a “mini-lawsuit.” It happens before a non-profit entity that manages the case, and they appoint an arbitrator who is a lawyer who acts like a judge. Often the arbitrators actually used to be judges.

But having to do arbitration isn’t the end of the world. In an arbitration, you get to bring the same legal claims as you would in a lawsuit. If you win, you can turn your arbitration award into a legal judgment in court by “confirming” it, which means the end result is the same as a lawsuit. Our law firm is experienced in arbitrations, and we represent hundreds of clients in arbitration at any given time. If you think you have a legal claim against Diamond Resorts, we may be able to help. Call us at 657-845-3100 or e-mail us at contact@kneuppercovey.com.

Lots of people have tried suing Diamond Resorts in court but have ultimately been sent to arbitration anyway by the judge because of the contract.

For example, in McLychok v. Diamond Resorts U.S. Collection Dev., Ltd. Liab. Co., No. 20-cv-2295-WQH-BLM, 2021 U.S. Dist. LEXIS 29051 (S.D. Cal. Feb. 16, 2021), a federal court in California heard a case where the plaintiff “alleges that Diamond Resorts took advantage of her age and mental and physical condition and intimidated and coerced her into purchasing a large amount of membership points.” The court ended up sending the lawsuit to arbitration to be decided by an arbitrator.

In another case, Imai v. Diamond Resorts Corp., No. 8:20-cv-00116-JLS-KES, 2020 U.S. Dist. LEXIS 88027 (C.D. Cal. Apr. 13, 2020), the plaintiffs alleged that sales representatives working for Diamond Resorts had made a number of false representations, including that “the time-share interest purchased by the plaintiffs was a financial investment,” that “the time-share interest could be rented out and defendants would assist plaintiffs in renting out their interest,” and that “the maintenance fees more or less remain the same and do not increase substantially over time.” The court ordered all of these legal claims to arbitration based on the contract.

In another lawsuit where plaintiffs tried a class action against Diamond Resorts, the plaintiffs alleged that various Diamond Resorts entities sold them points and “falsely represented that the points would increase in value and could be sold for a profit.” Dropp v. Diamond Resorts Int’l, Inc., No. 2:18-cv-00247-APG-GWF, 2019 U.S. Dist. LEXIS 12101 (D. Nev. Jan. 25, 2019). Again, the court sent the claims to arbitration (and wouldn’t allow a class action because of the contract).

Courts these days enforce arbitration clauses most of the time. And with these decisions, you probably would have to bring your lawsuit not in court, but in an arbitration.

But there are some benefits to that. It’s cheaper, and in consumer cases corporations have to pay the arbitrator’s fee. An arbitration also goes much quicker than a lawsuit does. Lawsuits can take years—in an arbitration, usually they are done in our experience within a year or at most a year and a half. Arbitrations are normally done over Zoom now as well. And the end result is the same: a legal judgment that you can enforce in court.

Our attorneys have represented clients in hundreds of arbitrations. If you think you have a legal claim against Diamond Resorts, call us at 657-845-3100 or e-mail us at contact@kneuppercovey.com.

What if I just bought my Diamond Resorts timeshare recently?

First things first: if you just bought your timeshare, you may be able to easily get out of your contract yourself.

This is because many of Diamond Resorts’ contracts contain what is called a rescission period, something that many states require by law. Just as an example, a Diamond Resorts contract that was filed in court as part of a lawsuit says: “ANY PURCHASER HAS, UNDER THE LAW, A SEVEN-DAY RIGHT OF RESCISSION OF ANY TIME SHARING SALES CONTRACT.”

That means if you have a similar contract, and you’re in the seven days, you can demand to “rescind” the contract—or make it legally go away. But the contract also says: “You must give all notices in writing… Written notices may be delivered, emailed or mailed, to each party at its address shown in this Agreement, or other address provided. A written notice is considered given and received when delivered, or emailed, or 3 business days after it is deposited into the mail, properly addressed.”

So if you’re still in the seven day period – don’t wait to go talk to an attorney. It’s not that you can’t talk to one – it’s that this is a very short period of time, and you should get something out the door just in case you can’t speak to an attorney before the clock runs out. Send an e-mail asking to rescind the agreement, and write a letter asking to rescind the agreement and put it in the mail box and mail a copy to any addresses you can find in your agreement or on Diamond Resorts’ website.

And most importantly of all: keep proof. One way (the best way) to do that is to use a service like certified mail where you’ll get a receipt. If you can’t do that for some reason, take a photo or video of yourself on your phone putting it in the mail. Take videos of what’s in the envelope or envelopes. Even if you do this, companies might try to claim you didn’t do it properly. If they do, it helps the lawyers down the line to have proof. Most phones timestamp photos even if you can’t see it, for example, and we can pull that data out if it’s there for use in an arbitration.

Here’s the problem though: we’ve also seen contracts with different terms. For example, a Diamond Resorts contract filed in a different lawsuit only gives five days to rescind, and says this about how to send it: “The notice of cancellation may be delivered personally to the Developer or sent by certified mail, return receipt requested, or by providing notice by express, priority or recognized overnight delivery service, with proof of service, to the business address of the Developer.”

You’ll notice a couple of differences there: (1) you can’t just use regular mail, (2) you have to send it to the “business address of the Developer” (which in this particular lawsuit wasn’t even filled out on the signature page).

You have to watch for those details and read the whole thing. Generally, more notice is better: it’s better to send the notice three or four different ways in writing than to not do it at all.

Ideally, if you’re still in this period and ask to rescind the contract, you won’t even have to hire an attorney. But make sure to closely read your contract. We’ve seen several different versions of contracts with Diamond Resorts, and they can always change. That’s particularly true in terms of how long your rescission period lasts and in how you’re supposed to send the request to rescind.

What should you do before hiring a lawyer to deal with Diamond Resorts?

At a minimum, you should try to contact Diamond Resorts directly and see if you can negotiate a way out. If a timeshare company is willing to negotiate with you in good faith, then it’s far cheaper than hiring a lawyer. Diamond Resorts does have a program called “Transitions,” but it has various conditions, and ultimately they get to decide whether they want to let you out or not.

One thing to be careful of is waiting for long periods of time. If you have valid legal claims against Diamond Resorts for some reason (for example, a salesperson working for them made a misrepresentation to you in a presentation) then those claims will be subject to a statute of limitations. How long you have will vary based on state law. So if you get stuck on a waiting list, or no one is promptly talking to you, be aware that you risk losing the ability to sue for some kinds of claims if too much time passes.

However, sometimes timeshare companies do let you out if you call them. Make sure to also e-mail them and put you request in writing so there’s proof you asked.

Also be very careful about reading any other contracts you’re asked to sign. Make sure you’re not signing up for something you didn’t want to, like another replacement timeshare or agreeing to something hidden in the contract.

Can a timeshare exit company help me get out of my Diamond Resorts timeshare?

We want to make very clear: we are not a timeshare exit company. We are a consumer protection law firm, and we regularly represent consumers as their attorneys in both lawsuits and arbitrations. Many of these are totally unrelated to timeshares.

Many “timeshare exit” companies are just as scammy as the worst timeshare salespeople. They often charge roughly the same amount as a lawyer would cost, but they don’t actually do anything that will help you with your problem. For example, some of them will advise you to write a letter or letters to the company you bought your timeshare from, and then to stop paying the timeshare resort and start paying them every month instead.

Just writing a letter alone generally does not legally do anything. You have to actually file an arbitration or lawsuit, and then you have to either proceed to the end and get a legal judgment, or settle it with the timeshare company. The legal issues are complex and they do not get officially resolved until a judge or an arbitrator resolves them.

The scam being run by many timeshare exit companies is to tell you that you have “exited,” then just let your credit get ruined when the timeshare company either reports you to the credit bureaus or forecloses on your timeshare. Many of these companies will then try to sell you credit repair services to fix the problem they just caused, which may not even work.

Some of these “timeshare exit” companies have been shut down by attorney generals in various states for running their own high sales pressure sales presentations where they drag out the presentation, try to wear people down, and make false representations. This unfortunately may sound familiar to some people who have bought timeshares.

There are even lawyers who will tell you that they can just write a letter or engage in a gimmick to get out of your timeshare. Unfortunately, other than in the rescission period if the contract or law provides for it, this is generally not true. Unless the other party voluntarily settles, or you get a judgment through a legal process, you haven’t really exited your timeshare.

What should a good lawyer be doing to help me get out of a Diamond Resorts timeshare?

You have to actually sue or arbitrate, and you have to be willing to go to the end. You also have to have a good case. That could be proving a misrepresentation in the sale, or showing a breach of the contract, or using various statutes that will be specific to either the state you live in or where you bought the timeshare.

As to Diamond Resorts specifically, their contracts require arbitration to resolve any disputes. If a lawyer or anyone else is telling you that they will just write a letter for you, that is not enough. Writing a letter is the beginning of the process, not the end. And your lawyer needs to know how to arbitrate, and how to win. They will have to file legal briefs and make legal arguments about which laws might have been violated. An arbitration is just a “mini-lawsuit.” It goes more quickly, and you usually can’t do many depositions or other things you can do in a lawsuit to gather evidence. But it’s also a lot cheaper than a full blown lawsuit.

Our law firm has hundreds of arbitrations pending at any given time. We cannot promise that you will win (which a good lawyer should not be doing anyway, because no matter how good your case is, you could get an arbitrator who doesn’t agree with you). But we generally find that clients who have legitimately been treated badly or lied to by a company have a good chance of success. The more proof you have, the better that chance. Companies often settle before the arbitration ends as well, both because of the risk of a loss and because with consumer arbitrations, the company has to pay the vast majority of the arbitrator’s fees.

You will want to gather any proof that you have that shows that you were misled in any way. An example is if you’re having problems using your points to book a vacation – you should document this. Take a video on your phone of you trying to do it. Take pictures of the screen. Get proof that you can’t use your points the way you were promised. Every piece of evidence you collect helps the lawyers try to win your case.

There are also likely contractual challenges that we can make regardless of whether there has been a breach of contract or not. This depends on your state, and could depend on whether your contract with Diamond Resorts selected another state’s law to apply. Every state has different basic rules about contracts. One general common law rule that applies in most states is that contracts cannot be so one-sided as to be “unconscionable,” or shocking to the conscience. But different states have very different rules about what that means. And every arbitrator will have their own ideas about what kind of contract shocks their conscious.

Our attorneys have represented clients in hundreds of arbitrations. If you think you have a legal claim against Diamond Resorts, call us at 657-845-3100 or e-mail us at contact@kneuppercovey.com.

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