Coral Resorts makes fast, frequent effort to seal once-public information

dburley@islandpacket.comJune 7, 2014 

The Coral Sands Resort property at 66 Pope Avenue on June 11, 2014.

JAY KARR — Staff photo Buy Photo

A review of court records and minutes of state Real Estate Commission meetings shows an energetic, extensive and effective effort by Coral Resorts' attorneys to keep secret once-public information.

Some sealed documents include business records filed with the commission that map the internal structure of Coral Resorts, its differentproperties, its property-management company, Reba Management, and its sales and marketing company, Sunrise Vacation Properties Ltd.

These documents were obtained -- before they were sealed -- by attorneys for disgruntled timeshare owners through a Freedom of Information Act request.

Other sealed documents include a transcript of a Real Estate Commission hearing on Jan. 23, 2013 that could add weight to the owners' lawsuits, their attorneys say.

According to the agenda for the hearing -- one of the few documents in the case available to the public -- a timeshare firm obscurely identified as "C.R." appeared before the commission that day. The hearing was called to discuss "documentation issues and unpaid renewal fees," records show. Commission officials later confirmed "C.R." was Coral Resorts.

The commission called it an application hearing, a term that's usually used when a company registering to sell timeshares has an application that "raises a red flag," commission member Manning Biggers, a real estate agent in York, said on Tuesday. Biggers could not recall details of the Jan. 23 hearing.

During the hearing, a Coral Resorts employee acknowledged that the company had not paid fees to renew its state registration to sell timeshares since at least 2008, records show.

The two Hilton Head Island attorneys who are representing the unhappy timeshare owners, Zach Naert and Joseph DuBois, did not attend the hearing because they didn't know it was scheduled.

Someone mailed Naert and DuBois a copy of the transcript, they said. They say they don't know who that person was, but a judge involved in the case said "an anonymous LLR employee impermissibly mailed" the transcript. LLR is the state Department of Labor, Licensing and Regulation, the agency under which the Real Estate Commission operates.

The lawyers declined to provide the transcript to The Island Packet and The Beaufort Gazette, citing two court orders that sealed the information.

The attorneys claim that if the testimony by the Coral Resorts' employee is true, it would nullify contracts signed by owners from when the company last paid registration fees in 2008 until January 2013, when the commission hearing was held.

Coral Resorts "categorically denies any lapse" of registration to sell timeshares, Nekki Shutt, the company's attorney, said Thursday.

EFFORTS TO SEAL

During the Jan. 23 hearing before the Real Estate Commission, Coral Resorts attorneys tried to keep the conversation off the public record. The commission pushed back, saying the hearing was an open forum and "a matter of public concern."

At the end of the hearing, the commission allowed Coral Resorts to pay its past-due fees. But the commission also declared that although the hearing had been public, its decision was private. That meant the transcript of the hearing might be accessible to the public, so Coral Resort attorneys appealed to the state's Administrative Law Court.

Twomonths later, the court's chief judge, Ralph K. Anderson III, described the Real Estate's Commission's actions as "bewildering," and sharply criticized it for making "parts of the proceeding public and parts of it private," with no legal basis.

Anderson ruled to seal the transcripts from the Jan. 23 hearing. He reasoned that because the commission made its decision private, the discussion during the hearing also should be private. Anything otherwise would be "arbitrariness and caprice," he wrote.

Further, Anderson ordered that documents related to the hearing "in the hands of any third party should be returned to department of Labor, Licensing and Regulation, and the commission immediately."

A Real Estate Commission spokesperson declined to answer questions about the hearing, citing a letter from Anderson that forbids discussing whether "this matter even exists."

ANOTHER JUDGE, ANOTHER SEAL

Before Anderson relegated the transcript to legal oblivion -- that is, while it was still a public document -- Naert and DuBois had added it along with some of Coral Resorts business records to their lawsuits against Coral Resorts, according to court files.

Two weeks afterward, Shutt, Coral Resorts' attorney, asked 14th Circuit Court Judge Carmen Mullen to seal the transcript and the accompanying Coral Resorts business records. Mullen granted the order on June 10, the same day Shutt asked for it.

At a subsequent hearing, Mullen decided to keep the transcript and other information sealed, ordering the attorneys "not talk to the paper" about the information, according to court records from that hearing.

"We're going to keep it sealed," she said, according to the records from the June 26 hearing. Attempts Friday to reach Mullen were unsuccessful.

Naert and DuBois appealed both Mullein's and Anderson's rulings to the S.C. Court of Appeals.

In their appeal of Anderson's ruling, the attorneys claimed their cases hinge, in part, on the documents under seal.

Their appeal of Anderson's ruling was dismissed by the court on Thursday, so the documents remain sealed.The appeals court ruled that Naert and DuBois didn't have the proper standing to be involved in the case.

Likewise, Mullen's ruling sealing Coral Resorts' records stands for the time being.

When Naert and DuBois challenged her decision in the appeals court, Coral Resorts attorneys promptly responded. They asked the appeal court to keep the file sealed, and the court did so.

When a motion is made to seal, the case is "treated as if sealed until the motion is heard," according to S.C. Court of Appeals clerk of court Jenny Kitchings.

Follow reporter Dan Burley on Twitter at .

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