Thursday, November 12, 2020

timeshare exit lawyer wins a round: no harm causation shown

Club Exploria, LLC v. Aaronson, Austin, P.A., No. 18-cv-576-Orl-28DCI, 2020 WL 6585802 (M.D. Fla. Nov. 10, 2020)

Another timeshare v. timeshare exit lawyer case that goes much better for the defendant than some others. Briefly, the plaintiff seems to have relied heavily on favorable precedents without developing enough evidence that this specific firm did the same bad things.

Defendant law firm specializes in timeshare owner grievances against developers; its websites contain colorful statements and media aimed at optimizing internet visibility, and clients are emailed a link to one of the sites when their retainer agreement is sent to them. Exploria alleged that Aaronson uses false and misleading website advertisements to convince timeshare owners that they can easily cancel their timeshare contracts if they hire Aaronson. Aaronson allegedly then advises owners to stop paying their loan and fee obligations.

An example of the website statements:

Timeshare ownership often feels like entrapment. At the Aaronson Law Firm, we know this because we hear our Clients’ stories.


But chances are good that your timeshare developer is exposed legally in ways that are relatively straightforward and provable. You owe it to yourself to hire experienced, competent counsel. At the Aaronson Firm, we have over 80 years of combined legal experience. And we are willing to sue, if necessary, in the interest of getting your timeshare cancelled….


If you need to cancel your timeshare, the timeshare Attorneys of the Aaronson Law Firm stand ready and able to help you!

The sites also explained that they would use formal demand letters to “initiate” recission, with an attached proposed civil complaint in a carrot/stick arrangement.

Its blog stated that “[q]uite often, one’s signature on a timeshare contract is obtained by fraud.… But to address it properly, it is imperative that you retain a licensed attorney.” Experienced counsel, it stated, “will know how to exploit other points of vulnerability. For example, the developer may well be perpetrating an ongoing conflict of interest. Improper handling of trust funds are [sic] also a major issue.”

Its websites contained videos purporting to be testimonials of Aaronson’s clients, but actors and Aaronson employees played the roles of lawyers and owners. “In both instances, the role players read statements of actual unhappy timeshare owners.” [Generally ok, if disclosed.] However, “[o]ne of the websites also included two printed testimonials that were written by the web designer and an Aaronson employee but attributed to timeshare owners.” [Not ok.] The websites did mention some timeshare developers by name, but not Exploria, and the court indicated that the focus of the criticism was the timeshare industry in general.

Aaronson represented at least 22 Club Exploria owners attempting to cancel their timeshare contracts, but Exploria sought damages for six in particular. The court found, based on deposition testimony, that the owners who stopped making payments did so of their own accord, without instruction from the firm or before hiring the firm.

Tortious interference: Aaronson knew of the contract between the parties, but Exploria didn’t show that defendants intentionally caused the contract to be breached. Whether Aaronson’s legal theories were good ones didn’t matter without causation. Exploria’s primary evidence was testimony given by a different person in an unrelated litigation who testified that Aaronson advised him to cease making payments as part of a legal strategy to terminate a timeshare with Diamond Resorts. The fact that two of the six owners stopped paying after hiring Aaronson wasn’t enough for a reasonable jury, especially given the testimony of the only owners deposed that no one from the law firm told them to stop paying, that they chose to stop paying for other reasons, and that letters Aaronson sent to Exploria on their behalf did not lead them to believe that they had been relieved of their payment obligations. Many Aaronson retainer agreements stated: “To avoid the possibility of a counterclaim, it is important that you remain current on your payments with the developer.”  Prior cases involved very different evidence, and indeed Aaronson fixed one mess made in the unrelated Westgate litigation.

FDUTPA prohibits “unfair or deceptive acts or practices in the conduct of any trade or commerce.” The court concluded that, though nonconsumers do have standing under FDUTPA, the practice of law was not “trade or commerce.” While lawyers are not per se exempt from FDUTPA, lawyers acting to exercise a legal remedy are typically not considered to be engaged in trade or commerce. That was the case here with Aaronson’s website ads and representation of clients. Aaronson actually went to litigation on a regular basis, unlike the lawyer in Westgate who, the court there found, “actively avoid[ed] judicial involvement through all of his work.”

Lanham Act: No showing of proximate causation: there wasn’t evidence that the website ads caused owners to withhold business from Exploria.

The court nonetheless addressed other elements of the Lanham Act claim. There were genuine issues of material fact on falsity/misleadingness. Rather than deeming the accusations against the timeshare industry as a whole to be puffery (“fraud,” “pack of lies,” “improper handling of trust funds,” sociopathic sales associates, “ongoing conflicts of interest,” and the owners “being taken for a ride”) the court found it couldn’t determine the truth of those statements at this stage. And there was record evidence that the sites’ claims that the timeshare developers are likely “exposed legally in ways that are relatively straightforward and provable” and that Aaronson’s strategies give timeshare owners “the best chance to have [their] timeshare successfully rescinded” were false. The evidence was that, of the 100–150 timeshare cases the lawyer has taken to litigation, the contracts were found unenforceable roughly six times. And there was no record evidence that any of the Affected Owners’ contracts were successfully rescinded. That didn’t show there were no legal grounds to dispute the agreements or that Aaronson was never successful, but a jury could find that Aaronson’s website “falsely or misleadingly stated timeshare developers’ legal vulnerability as well as the availability of remedies like rescission.” [There is a line of cases about when legal claims are falsifiable v. puffery, but the court does not cite them and might not have been directed by the parties to them.]

Likewise, a jury might find the claims literally false; if they found them misleading, the case would fail because Exploria had no evidence of consumer reaction.

However, Exploria’s failure to show materiality was fatal regardless. There was no expert testimony or other evidence that the website advertisements were likely to be material to consumer purchasing decisions. The record didn’t even show that every owner found Aaronson through its websites; only one of the 6 named did so, and she wasn’t deposed. The rest were referred by another lawyer. One had no recollection of visiting the site, and another’s spouse told her nothing about the site. “Clearly the website statements were not material to these owners even if they did indeed view them.”

Trade libel: also failed for want of materiality.

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