Would you join a lawsuit to revert DVC's resale restrictions?

[ljmiii]

As many of you already know, DVC has decided to restrict new resale owners from staying at new DVC resorts beginning with Riviera. There have been a number of posts in various threads discussing the legalities of this change and I hope to bring the discussion under one roof. On 5/16/2019 Riveira can be booked by non-Riviera owners and those with post 01/19/19 resale contracts will have substantial standing to begin a process that may lead to a lawsuit.

The exposition that follows is somewhat involved and quotes from the various Declarations of Condominium (aka POS) that can be found in the following link. Basically the complaints break down into two categories - DVD improperly restricted some but not all owners of the original 14 resorts from trading into Riviera and BVTC improperly admitted Riviera to the DVC Resort system since it has different trading rules.

The declarations of condominium for the various resorts can be found (courtesy of crvetter) at the following link...
https://drive.google.com/drive/folders/1XT2x2IvAJhwFT-rME1GxOuNWjNxCQEt4


As I see it the claims we could make are as follows (from weakest to strongest)...

1 - That DVDMC improperly participated in BVTC's decision to associate with DRR

Exhibit H - 3.1 f - That the discretion to associate other resorts as DVC Resorts...belongs solely to BVTC and neither the Association, DVCMC nor the individual Club Members will be entitled to participate in BVTC's decision...

Not a major claim but discovery could yield interesting information on the interplay between DVD, DVCM (nee DVCMC), and BVTC.

2 - That DVDMC/DVD/BVTC committed fraud

The contracts for the original 14 state that Owners are entitled to participate in the DVC Reservation Component - sometimes in accordance with the provisions of the DVC Resort Agreement and elsewhere pursuant to priorities, restrictions and limitation established by BVTC from time to time. 1.24, 12.12.2 (b), and Exhibit H.

The claim here would be fraud plain and simple - that BVTC overstepped the bounds of any reasonable interpretation of the contract and was knowingly abetted in this fraud by DVD (and perhaps DVCMC as well). But while this is the broadest claim to make it is a hard one to make stick.

3 - That DVCMC violated our contracts by making a change which was not one that..

Exhibit G - 7.2 - "improves upon the quality and operations of the Vacation Ownership Plan and furthers the collective enjoyment of its benefits by the Club Members taken as a whole"

A broad and significant claim since DVCMC *does* have a fiduciary duty to represent the owners at every DVC Resort. The chances of this claim hang on the question of how seriously the Florida courts take the obligations of fiduciary duty. In any case, discovery should yield interesting data on the number of resale owners (now and ideally over time) as DVCMC defends its position that its actions have furthered "the collective enjoyment of...Club Members taken as a whole".

4a - That BVTC and DVD are in breach of contract by admitting DRR with a DVC Resort Agreement that was not..."substantially similar to this Agreement in all material respects".

Interestingly enough, DVD made itself a party to this claim against BVTC by adding a previously unseen paragraph to the DRR POS. Exhibit G 5.6 - "As additional consideration for DVD's agreement to enter into this Agreement and add the Riviera Resort to the Club..." .

This I think is the strongest and most straightforward claim.

Exhibit H - 1.15 states that the "DVC Reservation Component shall mean the exchange component of the Club central reservation system through which Vacation Homes in any DVC resort may be reserved... (by all Club members)...while DRR's POS says...

DRR Exhibit G - 1.11 DVC Reservation Component shall mean the exchange component of the Club central reservation system through with Vacation Homes in any DVC Resort may be reserved by certain Club Members...

...and the DVC Resort agreements of VB, BWV and BCV (and I assume the rest of the original 14) restrict BVTC to associating only those new DVC Resorts that have...

Exhibit H - 6.1 - DVC Resort agreements that are "substantially similar to this Agreement in all material respects".

QED, BVTC associated with a DVC resort in violation of the contracts held by owners of the 'original 14' DVC resorts.

I assume BVTC would claim that the DVC resort agreements are substantially similar. But it is difficult to imagine a more material dissimilarity in an Agreement that lays out the rules for trading into other DVC resorts than the inability to do so.

4b - There is also a claim to be made under 6.2 b - That in fact BVTC did not, "...use its best efforts, in good faith and based upon all available evidence under the circumstances, to further the best interests of the Club Members taken as a whole..."

As a standalone this claim has the same problems as the claim (3) against DVCMC. But in view of BVTC's being in breach by associating DRR it may have considerable traction.

(NOTE: All Exhibit and Paragraph letters and numbers are those of BWV unless otherwise specified)

 

[crvetter]

I'm adding screenshots of the sections you call out for others to see. Along with other sections that might belong.

1 - That DVDMC improperly participated in BVTC's decision to associate with DRR

Exhibit H - 3.1 f - That the discretion to associate other resorts as DVC Resorts...belongs solely to BVTC and neither the Association, DVCMC nor the individual Club Members will be entitled to participate in BVTC's decision...

Not a major claim but discovery could yield interesting information on the interplay between DVD, DVCM (nee DVCMC), and BVTC.

I personally wouldn't say there has been anything to say DVCMC participated in the approval of adding Riviera. I would say DVD approved it. Section 6.2(b) seems to sugges that DVD is actually the final approver of the terms and conditions of a resort being admitted to the Club.

2 - That DVDMC/DVD/BVTC committed fraud

The contracts for the original 14 state that Owners are entitled to participate in the DVC Reservation Component - sometimes in accordance with the provisions of the DVC Resort Agreement and elsewhere pursuant to priorities, restrictions and limitation established by BVTC from time to time. 1.24, 12.12.2 (b), and Exhibit H.

The claim here would be fraud plain and simple - that BVTC overstepped the bounds of any reasonable interpretation of the contract and was knowingly abetted in this fraud by DVD (and perhaps DVCMC as well). But while this is the broadest claim to make it is a hard one to make stick.

3 - That DVCMC violated our contracts by making a change which was not one that..

Exhibit G - 7.2 - "improves upon the quality and operations of the Vacation Ownership Plan and furthers the collective enjoyment of its benefits by the Club Members taken as a whole"

A broad and significant claim since DVCMC *does* have a fiduciary duty to represent the owners at every DVC Resort. The chances of this claim hang on the question of how seriously the Florida courts take the obligations of fiduciary duty. In any case, discovery should yield interesting data on the number of resale owners (now and ideally over time) as DVCMC defends its position that its actions have furthered "the collective enjoyment of...Club Members taken as a whole".

Exhibit G (Disney Vacation Club Membership Agreement) corresponds to specifically the ownership plan of your home resort and has little to do with the DVC Reservation Component. Also I would like to add that DVD/BVTC made the changes not DVCMC as the DVC Resort Agreement is created by DVD and BVTC and the Disclosure Document is amended by BVTC not DVCMC.

Perhaps Exhibit H (DVC Resort Agreement) that does correspond to the DVC Reservation Component in Section 6.2(b) would be of more interest here.

4a - That BVTC and DVD are in breach of contract by admitting DRR with a DVC Resort Agreement that was not..."substantially similar to this Agreement in all material respects".

Interestingly enough, DVD made itself a party to this claim against BVTC by adding a previously unseen paragraph to the DRR POS. Exhibit G 5.6 - "As additional consideration for DVD's agreement to enter into this Agreement and add the Riviera Resort to the Club..." .

This I think is the strongest and most straightforward claim.

Exhibit H - 1.15 states that the "DVC Reservation Component shall mean the exchange component of the Club central reservation system through which Vacation Homes in any DVC resort may be reserved... (by all Club members)...while DRR's POS says...

DRR Exhibit G - 1.11 DVC Reservation Component shall mean the exchange component of the Club central reservation system through with Vacation Homes in any DVC Resort may be reserved by certain Club Members...

...and the DVC Resort agreements of VB, BWV and BCV (and I assume the rest of the original 14) restrict BVTC to associating only those new DVC Resorts that have...

Exhibit H - 6.1 - DVC Resort agreements that are "substantially similar to this Agreement in all material respects".

BWV Exhibit H 6.1 - Part that defines Substantially Similar

DRR Exhibit G 5.6

As shown Section 6.2(b) of BWV DVD did always have the leverage to add terms and conditions to association of resorts to the Club. So they were always a party involved in the association of a resort. I would also say this section screenshotted above is just the definition of those terms and conditions. The question is does the "terms and conditions" that the DVC Resort Agreements gave to DVD/BVTC violate the "substantially similar" clause. They could appear to be two conflicting parts of the document or are the terms and conditions substantially similar because the L14 DVC Resort Agreements gave power to associate a resort with terms and conditions but simply hadn't chosen to do so up until now. Up to a court to decide but both powers were given in the DVC Resort Agreements.
BWV Exhibit H 1.15

DRR Exhibit G 1.11

This (BWV) doesn't say anything about who may access the DVC Reservation Component. Quite the opposite it refers you to other parts of the document and another document. So this section I feel doesn't show the "all Club Members". Simply by the Riviera providing clarity that some may access doesn't necessarily mean this definition implied "all Club Members". But up until this point the system didn't have any setup for differentiating club members when it came to the DVC Reservation Component.

QED, BVTC associated with a DVC resort in violation of the contracts held by owners of the 'original 14' DVC resorts.

I assume BVTC would claim that the DVC resort agreements are substantially similar. But it is difficult to imagine a more material dissimilarity in an Agreement that lays out the rules for trading into other DVC resorts than the inability to do so.

4b - There is also a claim to be made under 6.2 b - That in fact BVTC did not, "...use its best efforts, in good faith and based upon all available evidence under the circumstances, to further the best interests of the Club Members taken as a whole..."

As a standalone this claim has the same problems as the claim (3) against DVCMC. But in view of BVTC's being in breach by associating DRR it may have considerable traction.

BWV Exhibit H 6.2(b) - referenced previously

This argument really depends on if you can argue resale value of your contract or the ability to buy points on the resale market to use at Riviera needs to be considered on the benefit of the Club Members taken as a whole. Currently way more than 50% (likely 95%+) of members can trade into Riviera so the restriction doesn't adversely affect them aside from the resale. So does this need to be considered.... Also can we make this argument on the potential future resale owners, that would be interesting if we could but it is those that the association of Riviera aims to focus on.

For others interested (I can't post them on here too large) this link has all the Declarations of each DVC Resort at WDW. I didn't track down VB, Aulani, HH, and VGC. VGC would have to be paid for as it isn't freely accessible on the Orange County California websites, they charge. https://drive.google.com/drive/folders/1XT2x2IvAJhwFT-rME1GxOuNWjNxCQEt4

 

[ljmiii]

I'm adding screenshots of the sections you call out for others to see...

Thank you.

Exhibit G (Disney Vacation Club Membership Agreement) corresponds to specifically the ownership plan of your home resort and has little to do with the DVC Reservation Component. Also I would like to add that DVD/BVTC made the changes not DVCMC as the DVC Resort Agreement is created by DVD and BVTC and the Disclosure Document is amended by BVTC not DVCMC.

Except that the changes referenced in paragraph 7.2 are not just the home resort component but are instead, "...the use and enjoyment of the Ownership Interest and the appurtenant Club membership." Goodness knows it is Disney's current opinion that the "appurtenant Club membership" has no actual value or significance but the drafters of the document (and arguably those who signed the contracts) did.

As shown Section 6.2(b) of BWV DVD did always have the leverage to add terms and conditions to association of resorts to the Club.

I don't read that from 6.2(b) at all. It think it says pretty straightforwardly that BVTC sets "the terms and conditions under which the DVC Resort is associated (subject to the restrictions in 6.1 and) the express written approval of DVD." Aside from providing the final approval (or not) DVD isn't involved (or at least it shouldn't be).

Then as you noted, 6.2(b) goes on to say that, "In making a decision to associate additional DVC Resorts, BVTC shall use its best efforts, in good faith and based upon all available evidence under the circumstances, to further the best interests of the Club Members taken as a whole..."

This (BWV) doesn't say anything about who may access the DVC Reservation Component. Quite the opposite it refers you to other parts of the document and another document...

I think the Declaration of Condominium is quite clear that the appurtenant Club membership allows access to the DVC Reservation Component (and that the writers of these documents intended for this to be so). BVW's 1.15 didn't need to explicitly say 'all owners' because the entire declaration is written assuming such. That the current executives disagree is sadly why litigation may be necessary.

This argument really depends on if you can argue resale value of your contract or the ability to buy points on the resale market to use at Riviera needs to be considered on the benefit of the Club Members taken as a whole....

I agree that this is a weaker claim...but resale value isn't the only argument. It can also be argued that an "Owner" - resale or direct - who buys resale after 01/19/19 has had the value of their previously purchased points diminished because the opportunities for them to be used in conjunction with the new points have been limited.

For others interested (I can't post them on here too large) this link has all the Declarations of each DVC Resort at WDW. I didn't track down VB, Aulani, HH, and VGC. VGC would have to be paid for as it isn't freely accessible on the Orange County California websites, they charge. https://drive.google.com/drive/folders/1XT2x2IvAJhwFT-rME1GxOuNWjNxCQEt4

Thank you again.

 

[crvetter]

I don't read that from 6.2(b) at all. It think it says pretty straightforwardly that BVTC sets "the terms and conditions under which the DVC Resort is associated (subject to the restrictions in 6.1 and) the express written approval of DVD." Aside from providing the final approval (or not) DVD isn't involved (or at least it shouldn't be).

I read it the way I suggested simply because the deal is with DVD explicitly being one of the four parties of the deal (the others being DVCMC, BVTC, and the association--which the association is controlled 100% by DVD at time of association since they own it all). So DVD can simply tell BVTC if you don't want to admit the resort under our Terms and Conditions we will walk thus they have leverage over the agreement.

I agree that this is a weaker claim...but resale value isn't the only argument. It can also be argued that an "Owner" - resale or direct - who buys resale after 01/19/19 has had the value of their previously purchased points diminished because the opportunities for them to be used in conjunction with the new points have been limited.

Correct I tried to highlight your latter point asking if they argument could extend to hypothetical future resale owners today. The majority of the current Club Owners have not been impacted by the change outside the resale value (which is hard to argue IMO) so does DVD/BVTC have an obligation to consider future resale owners? That to me is the question ultimately the courts will be really answering.

 

[glamdring269]

Yes.

(Sorry, no poll and I have nothing to add to the discussion at this time.)

 

[Drewferin]

You should add a poll and or request PM for those interested parties.

 

[ljmiii]

Yes.

(Sorry, no poll and I have nothing to add to the discussion at this time.)

No worries. I am hoping to follow in the footsteps of the "Would you join a lawsuit against DVC to stop/revert the 2020 reallocation?" thread and to spark conversations and gather information - so no need for a poll (yet).

 

[katdralion]

I am a direct owner but feel that this devalues and destabilises the club as a whole so yes, I would be willing to join a lawsuit depending on costs.

 

[Frederic Civish]

I own Direct, and Resale, but it is all before January 2019, so I should still be able to book Riviera and Reflections. However, I think the restrictions affect resale value, and if restrictions are allowed on resale, then what is really to stop them from applying this to resale purchasers before January 2019?

I do believe that the restrictions are in violation of the previous agreements and, sadly, I think legal action may be necessary. I would be willing to join a lawsuit if one ever actually gets going.

 

[beercity]

I own pre-2019 resale, so this would effect me in the event that I ever decided to sell. I would support legal action if there was enough members to justify the expenses.

 

[TK-Tampa]

I own pre-2019 resale, so this would effect me in the event that I ever decided to sell. I would support legal action if there was enough members to justify the expenses.

Their actions affect every single DVC owner. Only one owner is positively impacted by Disney's actions. All others are negatively impacted.

 

[zavandor]

Yes, I'd happily join a lawsuit on this topic. And maybe we can ask also back the money paid for the grocery delivery fee? And package handling fee.

 

[Jay S]

I own pre 2019 resale and am actually purchasing an add on at DRR now. I would be happy to join as well if cost were reasonable.

 

[Bing Showei]

First, thank you ljmiii for your efforts to organize this. I haven't looked closely enough at the legal basis of these claims, committed enough mental energy to read through the Riviera POS, or shared with my own legal counsel the contents of the disparities to know whether or not there we have reasonable grievances on the matter, but I did want to encourage you to explore this further if you feel the case exists.

I think there are a lot of steps that should precede getting lawyers involved (read: $$$$). Having a conversation with DVC may be one. That would not only help inform you on their position on the matter first hand (as opposed to relying on what others have posted here). This would also provide the members here who tend to take these sort of things more seriously a foundation upon which to get more involved.

I credit zavandor and crvetter as being two very vocal, proactive forces speaking to Disney prior to any legal movement around the reallocation. Their early efforts helped others to say something as well. zavandor in particular, put a lot of effort into the matter (including pushing against a lot of headwind even here on the boards), and his work gave a lot of people the confidence to speak up as well.

While it would be easy for me to post "Yeah, go for it! I'm in!", a lot of people did exactly that on the other thread and never even bothered to call to express to Disney their concerns on the topic. I'll be honest, right now I'm having difficulty seeing how Disney doesn't have a right to do whatever the hell it wants with the new resorts. What's the endgame? That Disney roll back resale restrictions as whole? That Disney backpedal and exclude Riviera from the the club? That Disney create a second, isolated timeshare system starting with Riviera and Reflections? I'm honestly wondering what you see as an end goal.

Do keep us updated on your findings, and thanks again for putting in this effort.

 

[ljmiii]

First, thank you ljmiii for your efforts to organize this....I credit zavandor and crvetter as being two very vocal, proactive forces speaking to Disney prior to any legal movement around the reallocation.

You are most welcome...and I am very much following in their footsteps. In particular, I thank crvetter for inspiring me to actually take the time to read the various declarations of condominiums (and other docs) instead of relying on the various snippets I had seen.

I think there are a lot of steps that should precede getting lawyers involved (read: $$$$). Having a conversation with DVC may be one....

Absolutely. And it has been interesting to read the responses others have received from DVC about their concerns on the various resale restrictions. But it is just now that I'm really coming up to speed on the issue and was hoping to get feedback from other DIS members before speaking with DVC.

I'll be honest, right now I'm having difficulty seeing how Disney doesn't have a right to do whatever the hell it wants with the new resorts. What's the endgame? That Disney roll back resale restrictions as whole? That Disney backpedal and exclude Riviera from the the club? That Disney create a second, isolated timeshare system starting with Riviera and Reflections?

DVD absolutely had the right to do whatever the hell it wanted to with the new resorts. What it (actually BVTC) didn't have the right to do is add a new resort to the DVC Reservation System with a DVC Resort Agreement that was not..."substantially similar to [the original 14's] Agreement in all material respects". Which is why many people assumed Riviera was the beginning of a DVC2 family of resorts.

I'm honestly wondering what you see as an end goal.

DVD wrote the desired endgame into DRR's Declaration of Condominium. Exhibit G 5.6 d - "DVD reserves the right, in its discretion to modify or revoke implementation of any of these prohibitions...by requiring BVTC to make such an amendment to the Disclosure Document...". This allows them to rollback the restrictions on trading into DDR.

There is also Exhibit F 4.10 a/c - which more or less says DVD may at any time implement, stop, and re-implement any restrictions, limitations, or changes to the Home Resort Component...by requiring DVCM to make an amendment to the Home resort Rules and Regulations. Which would allow DVD to rollback the restrictions on owners of DDR.

It's almost as if they put Riviera into DVC as a trial balloon to see if it would fly. Hopefully it won't. And if it doesn't fly I would expect Reflections to be the first DVC2 resort. One that trades into DVC through BVTC under different rules. But since they chose to make Riviera a DVC resort our Declarations of Condominiums say it is ours.

 

[Bing Showei]

@ljmiii, would you mind editing your first post with links to the various documents you’re looking at? I know others have posted it around, but it would be great to have it in one place. Thanks.

 

[crvetter]

@ljmiii, would you mind editing your first post with links to the various documents you’re looking at? I know others have posted it around, but it would be great to have it in one place. Thanks.

I'm adding screenshots of the sections you call out for others to see. Along with other sections that might belong.


View attachment 398547

I personally wouldn't say there has been anything to say DVCMC participated in the approval of adding Riviera. I would say DVD approved it. Section 6.2(b) seems to sugges that DVD is actually the final approver of the terms and conditions of a resort being admitted to the Club.
View attachment 398549

View attachment 398550

View attachment 398551

View attachment 398552
Exhibit G (Disney Vacation Club Membership Agreement) corresponds to specifically the ownership plan of your home resort and has little to do with the DVC Reservation Component. Also I would like to add that DVD/BVTC made the changes not DVCMC as the DVC Resort Agreement is created by DVD and BVTC and the Disclosure Document is amended by BVTC not DVCMC.

Perhaps Exhibit H (DVC Resort Agreement) that does correspond to the DVC Reservation Component in Section 6.2(b) would be of more interest here.
View attachment 398549

BWV Exhibit H 6.1 - Part that defines Substantially Similar
View attachment 398566
DRR Exhibit G 5.6
View attachment 398565
As shown Section 6.2(b) of BWV DVD did always have the leverage to add terms and conditions to association of resorts to the Club. So they were always a party involved in the association of a resort. I would also say this section screenshotted above is just the definition of those terms and conditions. The question is does the "terms and conditions" that the DVC Resort Agreements gave to DVD/BVTC violate the "substantially similar" clause. They could appear to be two conflicting parts of the document or are the terms and conditions substantially similar because the L14 DVC Resort Agreements gave power to associate a resort with terms and conditions but simply hadn't chosen to do so up until now. Up to a court to decide but both powers were given in the DVC Resort Agreements.
BWV Exhibit H 1.15
View attachment 398567
DRR Exhibit G 1.11
View attachment 398568
This (BWV) doesn't say anything about who may access the DVC Reservation Component. Quite the opposite it refers you to other parts of the document and another document. So this section I feel doesn't show the "all Club Members". Simply by the Riviera providing clarity that some may access doesn't necessarily mean this definition implied "all Club Members". But up until this point the system didn't have any setup for differentiating club members when it came to the DVC Reservation Component.

BWV Exhibit H 6.2(b) - referenced previously
View attachment 398549
This argument really depends on if you can argue resale value of your contract or the ability to buy points on the resale market to use at Riviera needs to be considered on the benefit of the Club Members taken as a whole. Currently way more than 50% (likely 95%+) of members can trade into Riviera so the restriction doesn't adversely affect them aside from the resale. So does this need to be considered.... Also can we make this argument on the potential future resale owners, that would be interesting if we could but it is those that the association of Riviera aims to focus on.

For others interested (I can't post them on here too large) this link has all the Declarations of each DVC Resort at WDW. I didn't track down VB, Aulani, HH, and VGC. VGC would have to be paid for as it isn't freely accessible on the Orange County California websites, they charge. https://drive.google.com/drive/folders/1XT2x2IvAJhwFT-rME1GxOuNWjNxCQEt4

In my post you will see a link to all the Declarations (at the very bottom).

 

[ljmiii]

In my post you will see a link to all the Declarations (at the very bottom).

Thanks (and I added the link to the first post).

 

[ljmiii]

@ljmiii, would you mind editing your first post with links to the various documents you’re looking at? I know others have posted it around, but it would be great to have it in one place. Thanks.

Great idea...I added crvetter's link

 

[_auroraborealis_]

I think you'll find crowdsourcing the retainer, let alone the discovery costs, challenging. This is not the kind of case a firm takes on contingency.