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
53 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:

    I used the Timeshare Exit Team to get out of my SunTerra/Diamond timeshare also. What they explained made sense and they guaranteed they'd get me out. I didn't want to continue paying my inflated fees waiting for this to happen...Good luck to those staying in!

  37. 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.

  38. Anonymous Says:

    can I still be part of this lawsuit?contact me at mdt2939@aol.com

  39. ming Says:

    I have been a club member with Diamond Resorts, and was happy with it until Diamond management decided that they could downgrade and reduce membership benefits unilaterally without members' consent, which took effect 1/1/14. So many members are unhappy and complaining about the reduction of benefits that were advertised during sales presentation, but Diamond is not doing anything about it. I totally agree on the class action lawsuit. Hopefully it will change Diamond's malpractice. Count me in on the class action lawsuit.

  40. Anonymous Says:

    After reading all of the above comments, we're wondering now if we should cancel. We signed up last Wednesday with DRI, for a sample packet for two years, just to try it out, for15,000 points, no maintenance fees, all the figures they showed us are frozen, if we change our minds later, and we can do the sample again, if we wanted to do that. Now we don't feel too comfortable about this. We have five business days to cancel a contract, according to Nevada laws.

  41. Anonymous Says:

    I own time shares with DRI those people are monster, the charge me so much maintenance fee, I want to get it the law suit, I own at FLORIDA CYPRESS. Can someone please help me get out of this mess.
    HELP!!!!!!!!!!!!!!!!. 347-960-8887

  42. Anonymous Says:

    My wife and I requested customer service representative from the Las Vegas corporate offices the procedure to stop the automatic :sure pay: monthly deduction from our bank account. CSR advised us to send the request in writing. The deductions have stopped. We also went to our bank and a stop-payment was initiated for anything that might be presented from Diamond mortgage. We have missed two monthly payments.. Additionally, we did not make the maintenance payment due January 1. So far we have adjusted the ring volume on our phones. My wife and I are not too concerned if they ruin our credit rating. We are preparing for their pitbulls to come after us. We have filed complaints with the BBB and are ready to forward documents to the State Attorney General. We are in our late 70s, not in the best of health, and no longer willing to travel to the resorts in Scottsdale,AZ in the dog days of summer or to Santa Fe in the dead of winter. Most times there was nothing else available to us (unless we paid RCI $90 for an exchange). Wish us luck.

  43. Anonymous Says:

    I am interested in joining a class action, concerning the exorbient maintainence fees. Also the Dri Club fees, if you want to use any thing besides your home unit.
    Carl Trammell, owner at Bent Creek Golf Resort

  44. Anonymous Says:

    I own in williamsburg, virginia. (Greensprings plantation). When Sunterra owned the resort my maint. fees were $550.00. Now that Diamond owns the resort my maint. fees have gotten up to $1,460.00 with no obvious improvements to the resort. Plus club dues have gone from $150.00 a year to $550.00 a year. I think Diamond resrts is a crooked company.

  45. Anonymous Says:

    were can i get information on the class action law suit agenst diamond resorts international thay have just laughted in are face every time we call i also tried to cancle with in 72 hrs left messages no anser and they said if we wanted to sell that they would sell it for us and now they say that we have to sell it on are own that they dont do that and there are so many other things we were promised we had a matence fee befor we owned in for to weeks of over 950 dollars please some one help us

  46. Anonymous Says:

    I own in Williamsburg, VA, as well. Yes, the fees are absorbent. I guarantee if every owner knew about this lawsuit they would be in. KJP

  47. Anonymous Says:

    I live near San Diego . Where is this law suite at today ? Has it been filed ?

  48. Anonymous Says:

    A friend, who also owns MGV points, and I are interested in joining in a class action suit. Although currently listed with an agent, I have been told that MGV has no resale value and that DRI has a reputation for being difficult to deal with. We are both nearing retirement and cannot afford the fees.

  49. Anonymous Says:

    Need info on joining lawsuit as Hawaii group owners that paid up the big assessment for the water damages. russcfisher@aol.com

  50. Anonymous Says:

    I would like information to join this lawsuit. What are the complaints in it besides maintenance. I am in Los Angeles and have access to 9 resorts plus Escape Time that Diamond is trying to take away. Getting reservations is a major problem with or without points (Escape Time). I'm dealing with corporate on this as I type this. I am glad I found this site. I am very much interested in joining a lawsuit against Diamond. I just want to use my contract which they are trying to change. I hope to hear from someone as soon as possible. Thank you.

  51. Anonymous Says:

    I too would like to join a class action lawsuit against Diamond. I bought a
    timeshare from ILX at Sedona, Ariz. in 2002, and have never been able to
    use the resort because of "non-availability or not enough points". Have had
    numerous phone calls from Diamond urging me to buy more points for $5,000
    for much better accessibility with all their resorts, as well as others. They were
    unwilling to put anything in writing to me! I almost forgot, once they did let me
    use a hotel room in Sedona rather than a unit at Los Abrigados Resort. In
    retrospect, the hotel room probably cost me $5,000 for the 4 nights. I would
    appreciate hearing from someone.

  52. Anonymous Says:

    Recently, I called to check on my vacation spot location, which I have to return to the home place each vacation due to always not being able to pick and choose my vacation area after paying a high maintenance fee for property that is rented monthly by a number of people, that was purchased in 2003 and paid in full. I have not been able to speak to supervision only different employees and each time it is the same information over and over. They misuse your information. Rent out your property and don't follow up with the information you receive during the showing and purchase of your timeshare. The unit we purchased has not been upgrade with furniture but the newer models have much better furniture. No renovations are done and the maintenance cost increases annually. What can I do to join this law suit? I would appreciate hearing from someone as well.

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