Coral Resorts lawsuits move forward; federal judge refuses to dismiss
CHARLESTON -- Seven federal lawsuits alleging a Hilton Head Island timeshare company committed fraud have moved forward -- for now.
At a hearing Wednesday, U.S. District Court Judge Sol Blatt Jr. denied Coral Resorts' request to dismiss the lawsuits filed by angry timeshare purchasers.
But four of the cases could be tossed in the next few months for other reasons.
Timeshare buyers allege they were misled by sales pitches and signed contracts that didn't reflect what they were told when they bought a timeshare, according to lawsuits.
The company denies these claims and says the buyers signed binding contracts that included a five-day right to cancel.
The seven lawsuits are among 62 cases brought against the company by disgruntled timeshare buyers. Five other federal lawsuits have moved to arbitration. The rest are pending in state court.
At issue Wednesday was whether the lawsuits have enough money in controversy to be allowed in federal court. Federal law requires at least $75,000 in possible damages for these disputes.
Attorneys for the company wanted five of the cases dismissed because purchasers spent less than $25,000 on timeshares and fees.
"These amounts don't even equate to a third of the amount needed to give (federal) jurisdiction," said attorney Kathleen McDaniel, who was part of Coral Resorts' 11-member legal team at the U.S. District courthouse in Charleston. Others included former Hilton Head mayor Drew Laughlin and state Rep. James Smith of Columbia.
In response, the attorneys for the buyers, Joe DuBois and Zach Naert of Hilton Head, told the judge the alleged fraud was "so egregious" that the damages exceed what the buyers paid. The buyers are asking for a minimum of $500,000 for each case.
In lawsuits, buyers allege salesmen made false promises, such as an extra annual week of vacation at the company's properties on Hilton Head: Port O'Call at Shipyard Plantation, Island Links, Coral Reef and Coral Sands resorts.
During court, Naert mentioned buyers who bought a different unit than they were led to believe. For example, one buyer was told he bought a new unit at Coral Sands on Pope Avenue. But his contract said he bought a different unit at an older resort, according to the attorneys.
"This is well-coordinated, calculated fraud. It's bait-and-switch," Naert said. "Thousands of people have lodged complaints against this company for identical claims."
Judge Blatt agreed the allegations could lead to more than $75,000 in damages if the cases go to trial.
"If what they said in the complaints is true, then I can understand how you would get in excess of that amount," he said before denying the company's motion to dismiss the cases.
WHAT'S NEXT?
Blatt's decision doesn't mean the cases are headed to trial.
Questions linger about the status of four lawsuits that the timeshare company says were not filed within the three-year statute of limitations.
Blatt told the company it had one month to question the buyers and find out when the statute of limitations began for each case. If the lawsuits weren't filed within the three-year period, the judge could dismiss all or part of the cases.
Another issue that went undecided is whether the judge will allow the buyers' attorneys to enter what they say is a key piece of evidence.
Naert and DuBois want to use a transcript of a Jan. 23, 2013, hearing the company had before the S.C. Real Estate Commission, a state regulatory body.
The attorneys say the transcript proves the company's registration to sell timeshares had lapsed. Such a lapse could invalidate the buyers' contracts, they say.
The company argues its registration never lapsed and says this position was held up in decisions by the commission and two state courts.
Blatt said the next hearing won't be for at least 30 days. He did not provide a specific date.
Follow reporter Dan Burley on Twitter at twitter.com/IPBG_Dan.
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This story was originally published April 29, 2015 at 9:08 AM with the headline "Coral Resorts lawsuits move forward; federal judge refuses to dismiss."