Diamond Resorts International Faces Class Action Lawsuit

Owners at Poipu Point Resort on Kauai, Hawaii, faced with a special assessment in excess of $5,000 per week for reconstruction to correct water intrusion damage to the buildings, have rebelled against the assessment by filing a lengthy class action Complaint against Diamond Resort International, its CEO Stephen Cloobeck and several directors.

In 163 paragraphs within the 52-page Complaint, the plaintiffs have detailed allegations of intimidation against recalcitrant directors and other methods to gain control of the board of directors by installing Diamond employees as directors. Once in control, according to the Complaint, the Diamond directors increased the management fee paid to Diamond to more than ten times prior levels and imposed the special assessment in violation of the Poipu Point governing documents.

Among the allegations is a claim that the water intrusion damage was known to Diamond before they acquired the resort from Sunterra and that Diamond delayed taking any action until they gained control over the board. Further, Diamond is alleged to have sold points in its collection of Hawaii resorts without disclosing the water intrusion damage and impending assessment.

The Complaint points out that the $65 million total assessment works out to more than $300,000 per unit, and charges that much of the money will be used for renovations unrelated to the water intrusion problem.

Plaintiffs allege the directors committed breaches of their fiduciary duty in assisting CEO Stephen Cloobeck to gain control of the board, voting on matters when they had a conflict of interest and authorizing the water intrusion assessment knowing it was invalid under the governing documents.

Diamond Resorts and Stephen Cloobeck are alleged to have committed consumer fraud and deceptive trade practices in seeking to collect the invalid assessment.

Plaintiffs seek to have the water intrusion assessment declared invalid, all payments already made to be refunded and damages.

Source: Timesharing Today Express
37 Responses
  1. F Hallman Says:

    Get them! I bought about 8 years ago and the maintenance fees have increased dramatically ever since Diamond took over. I will be amongst the class!

  2. D. :Leader Says:

    Stephen Cloobeck and the DRI Employees who are Board Members are dishonest and self serving. Our day in Court has arrived and I hope the Judge nails Cloobeck and this corrupt cronies. We are due restitution for their outrageous 'management fees' and fraudulent 'water intrusion' fees.

  3. Anonymous Says:

    How can we get in on this law suit... My wife and I own at Kaanapali Beach Club and we had to shell out almost an additional 3k ontop of our maintenance fees for this so called water intrusion problem... we didnt have it and it just about killed us to come up with it... unfortunately, we were told that our trip that we had booked would be cancelled if we didnt pay.. we were stuck because we had already book airfare and had taken the time off from work...
    J. Miller

  4. This is a hot topic on the RedWeek forum. You can go to http://www.redweek.com/forums and search for "Diamond Resorts class action" to see all the threads.

    The most active is http://bit.ly/L0ZBIJ

  5. Anonymous Says:

    i am an owner, have paid towards these horrific fee's -- but have not seen or recv'd anything re: lawsuit filed. How can i find out status/updates/ outcome?

  6. JW Says:

    The best advise we can give you is to either go to our forum - http://www.redweek.com/forums - and search for "Diamond Resorts class action" to see all the threads, or try "Googling" the class action lawsuit.

  7. George Hysmith Says:

    I have just recieved a notice of class action settlement from the US District Court for the District of Hawaii. They seem to be giving owners a bone rather than real justice. I am going to send my objections to this settlement in hopes that my voice will give us a chance for real justice. I urge everyone who has had issues with Diamond Resorts to do the same.

  8. F Hallman Says:

    It was too little and way too late. Cloobeck and company came out of this relatively unscathed and I am sure willilng to perform underhandedly in the future...it pays to own lots of lawyers, which means it pays to be rich like Cloobeck and company. Me, I tried to sell my deeded property and all I got was a smaller edition of Cloobeck looking to fleece me out of a chump change instead of actually trying to buy the property and I wasn't asking for a fourth of what I paid for it...

  9. Anonymous Says:

    I am also an owner and we were told we could buy our of Hawaii to stay away from further assesments, I, we own at Kaanapali Beach Club and will add ourselves to the suit. My fear is that we paid thousands and will only get a couple of hunderd instead of all needed to be reimbursed.

  10. Anonymous Says:

    Is there a Class action Lawsuit in other Diamond Resort areas like Orlando, Fla. I urge everyone who has had issues with Diamond Resorts in the Florida area with paying two maintenance fees to let me know . I'm a owner at Mystic Dunes and got caught up in the point system scam.

  11. Anonymous Says:

    The point system GOT us also. Now we own nothing but points that when we try to cash them in, are not worth a "hill of beans" . We can never seem to get anything for our now inflated maintenance fees which went from $300 to $1700. I just called Donateforacause.com and they want me to use them to donate my timeshare but then I have to pay them for their costs to acquire it. Are they a legit company or is it another scam. Please email me your thoughts if you have any about them at goldmomnt@aol.com Thanks,

  12. Anonymous Says:

    I listed with donateforacause.com. Six months have gone by and nothing at all has happened.

  13. JW Says:

    You might want to mention that on our forum and see if anyone has any suggestions.

  14. Has anybody found an answer. There must be an out clause somewhere in the contract. Started with sunterra. Have not used since 2005 because I am unable to schedule vacations far enough in advance and when I tried no opening for my destination. Now I owe extensive maintenance fees on a product I cannot use. I cannot knowingly cheat people by paying them to take this.

  15. Anonymous Says:

    I would love to sue them as well. they took over my monarch resort timeshare without any formal information given to me.

  16. Anonymous Says:

    I want to join the class action suit against diamonds resorts. Evelyn

  17. Anonymous Says:

    how do I join the class action suit

  18. Anonymous Says:

    I would like to join the class action suit against diamond resort we have been lied to since the beginning they gave us freebie for this and I have emails for proof my name is Deborah segars my cell phone number is 9139516056 email address is segars1956@hotmail.com

  19. Anonymous Says:

    I would hope that all people who were subjected to change from weeks to points without prior approval of DRI should be notified if/when there is a class action lawsuit brought against DRI. The maintenance fees have doubled. This whole setup seems to be a scam. I lost $500 trying to sell my Timeshare through a sales company and will not go there again.

  20. Anonymous Says:

    I am stuck between a rock and a hard place. Last year DRI tried to foreclose on my property in Sedona Arizona. I declined their offer to "settle" so they sent their hounds after us, but we were prepared. They claimed that we owed them thousands of dollars for unpaid maintenance but we claim that we were up to date on our payments. We have been denied use of the time share dating back to when they were owned by Sunterra. We have been debating with these people for over 10 years. To this date even though we are current in our maintenance and the unit is paid for, we have not been able to use it. We are about $15,000.00 in the hole with this people. They contracted a local law office to come after us and after several months of exchanging documentations and copies of cancelled checks, we were able to prove beyond any doubt that we had been harmed by their incompetence. Their law firm declined any other communications with us. I am considering filing a lawsuit against this firm to retrieve the monies they have misappropriated by negating us the use of the property for so many years.

  21. RedWeek Says:

    Sounds SO frustrating! There is quite an active discussion about DRI on our forums at this link -- good way to band together with other owners: http://www.redweek.com/forums/messages?thread_id=14638

  22. Anonymous Says:

    I have been very unhappy with the availability of my timeshare in Sedona. its either under construction or just not available when we need to go. Also the fees have increased and I really haven't seen any real improvement, we stayed in Las Vegas and they stuck us in a studio with a Murphy bed that we had to move a sofa and table on its end in front of the window just to put the bed down, hardly luxury at the Polo Towers, I just want my money back and be done with them, Anonymous

  23. Anonymous Says:

    This is the WORST Tirmeshare company we have ever deal with... and bullying companies such as this must be stop... What is communicated which is the actual is a big difference from the reality. We will continue to move forward with legal matters. You paid more for less

  24. Anonymous Says:

    please let me know if and when we can file a law suit against this company. all of the above comments are true and we need to secure a very good lawyer that is honest and can fight this kind of corruption! I am on board to sue.

  25. Anonymous Says:

    I am also befuddled - I paid off my Club Navigo timeshare and "upgraded" to Diamond International. My checks for Maintenance to Club Navigo were cashed, but there is no record of the payments. This is a scam. I want to sue too.

  26. Anonymous Says:

    I would like to join the class action suit.

    DS in Iowa

  27. Anonymous Says:

    I just cancelled my contract. There was a 10 day clause in the contract and when I came home from Florida and started reading all this, I typed the letter up instantly.
    I hope you all saved me and my wife from this doom and gloom. Thanks

  28. horseguy Says:

    How do I join in??

  29. Anonymous Says:

    We are owners of 2 units what is now the Mystic Dunes Resort (was The Palms when we purchased them) in Celebration Florida for over 13 years. We were approached 2 separate times with high pressure sales people during our stays in the last 2 years to switch over to Diamond Resort Internation point system. Our maintenance fees have climbed to unreasonable amounts and our unit was not upgraded since we bought there. We have not moved over to DRI point system and refused to. We paid enough money to the 2 units and to dish out another $30K plus and double the maintneance fees is totally unacceptable and a rip off!!! This needs to stop!

  30. Thanks for the updates we also own at mystic dune two units week 52 and refuse to go to point system. Please advise if can stop high maintence fees ??? Legally ....what are our rights as owners ???

  31. Anonymous Says:

    Typically these class action lawsuits don't go anywhere...at least not quickly...and you are stuck paying your fees every year waiting for a conclusion. The only way to get out that I have has success with is through companies like Timeshare Exit Team, but make sure you have a guarantee that they will get you out!

  32. Anonymous Says:

    Former Orlando Owner
    I got caught as well, paid up to "own" in Naples. Of course I can never get in there. Have not yet. I want to be part of a class action suit if there is one.

  33. Anonymous Says:

    Thanks for these warnings. Sure wish we had seen them years ago when we purchased. It all looked so good while we were sitting with the salesmen. Now it is frustrating and expensive. Finding the time to go and the availability of the timeshare location is a challenge. Wish we had never fallen "sucker" to the high pressure salesmen/women. We will certainly discourage others from joining this "circus".

  34. Anonymous Says:

    My husband and I are interested in joining in on, or starting, a new suit, either independently, or class action. In a nutshell, we bought 10 points in 2007, in Avila Beach, CA. We were told that we would be able to use those points anywhere within the Diamond family. We cannot get into Avila Beach (even when we try to book 13 months out) due to the site allotting a small percentage of the rooms to time share owners. Next, staying at Kaanapali, Hawaii this past July, we were told that, due to Diamond going "public", it would be virtually impossible to book because of the increased demand UNLESS we purchased a minimum 5000 more points AND switched our home base to the Hawaii collection at a cost of $17k (in addition to the cost of the extra 5k points.) This smacks of extortion to me. The once infamous and disgraced televangelist, Jim Bakker, got in HUGE trouble for OVERSELLING his time shares for a theme park he was to open in the Midwest somewhere. Of course, those who gave us this sales pitch will deny what they said, or state that we misunderstood their proposal. We didn't. We have in good faith paid off our timeshare, pay enormous maintenance fees, and have tried in vain to access Avila Beach and are now shut out of Kaanapali. Diamond is very savvy at what they do. I wanted to run up to those poor potential buyers in Kaanapali and tell them to run for their lives and never look back! We're (and future buyers) are just average folks who want to have a nice vacation from time to time, and we're being taken advantage of. The owner of Diamond should be ashamed of the way he projects himself and his company. He appeared on "Undercover Boss" and was portrayed as a kind caring person. I say, "beware of those in sheeps clothing".

  35. Anonymous Says:

    I'm interested, How do I join in?

  36. Anonymous Says:

    This might be considered a "tale from DRI employee" but it is the honest truth from a person who has seen the "down side of DRI practices". However on the whole we have been happy w/our membership. That said, this thread DOES NOT take away from the warnings of others folks so sad experiences. We are braced for our slight inconvenience to turn into a nightmare. To cite our one bad experience: DRI had a salesman lie to us on the presentation. We went to Platinum from Gold. He lied and the truth was eventually found out. It took us 5 months to be restored to Gold. We were quite happy w/Gold. Later we were persuaded to "keep our foot in the door" by buying minimal points to approach Platinum. Within the three day legal time, we cancelled. It took the salesperson 5 MINUTES to give us a call. "What is going on" she said. "We told you we were happy w/Gold. You are too good of a saleperson". I guess we are fortunate to be swimming amongst sharks and have not been bitten, just brushed by the big monsters.

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