The Plaintiffs—Norman Zwicky, George Abarca, Vikki Osborn, and Elizabeth Stryks-Shaw (collectively, the “Plaintiffs”)—filed a class action Complaint alleging that the defendants violated the Racketeering Influenced and Corrupt Organizations Act (“Federal RICO”), the Arizona Anti-Racketeering Act (“Arizona RICO”) and the Arizona Timeshare Owners Association and Management Act (the “Arizona Timeshare Act”) by misrepresenting how much they would have to pay in annual fees (also called “Assessments”) for timeshare interests the  Plaintiffs purchased. See Zwicky v. Diamond Resorts Inc., CV-20-02322-PHX-DJH, 2021 WL 2685585, at *1 (D. Ariz. June 30, 2021).

The Defendants remaining in this case (after dismissal by the Court of others) are Diamond Resorts International, Inc. and Diamond Resorts Management, Inc. (the “Corporate Defendants”); and Troy Magdos and Kathy Wheeler (the “Individual Defendants”). All Defendants have denied and continue to deny all material allegations of the Complaint including, specifically, the allegations that they made any misrepresentations, and have asserted numerous defenses. If this settlement is not approved, the parties will continue to engage in additional discovery, including, without limitation, the review and analysis of thousands of pages of additional documents and the taking of depositions.

After the Court’s ruling on the Defendants’ various motions to dismiss, the parties participated in a full day, private mediation in November 2021, before a retired federal chief magistrate judge serving as mediator. Prior to mediation, each side submitted comprehensive statements setting forth the strengths and weaknesses of their case. The parties reached an agreement-in-principle to settle this matter at that mediation. After further negotiations taking place after the mediation, the parties refined the agreement-in-principle and reached the agreement to settle on the terms set forth herein, which Plaintiffs believe provides additional benefits to the Class.  The Settlement provides for the establishment of a Settlement Fund of $13,000,000.00 to pay Settlement Class Member Payments, Settlement Administration Costs, any attorneys’ fees and litigation expenses awarded by the Court, any Service Awards ordered by the Court, and any cy pres payment due under the Settlement.  The Settlement also includes certain non-monetary benefits.

In this lawsuit, Plaintiffs claimed that Defendants intentionally underestimated certain fees and costs relating to how much Plaintiffs would have to pay the Association (hereinafter, “Assessments”) to maintain the right to use his or her Points. See Zwicky, 2021 WL 2685585 at *1. Specifically, the Plaintiffs alleged that Assessments for each year were forecasted in an annual budget based on an estimation of Association expenses, but the actual Assessments then imposed upon Association members were materially greater than had been predicted. See id. Plaintiffs alleged that their Assessments increased because Defendants allegedly hid certain fees and costs for the management services that they, or their affiliates, provided the Association and/or intentionally excluded them from the annual budgets despite knowing they would result in increased Assessments at the end of the year. See id. at **1–2.

In 2013, Plaintiff Zwicky hired Jon L. Phelps, one of the Class Counsel of this lawsuit to contact the Association and request information why his annual Assessments had increased. When the Association did not release the records he requested, Zwicky, through Attorneys Jon L. Phelps and Edward L. Barry, filed a records inspection action against the Association in an Arizona state trial court in 2015 (“Document Inspection Action”). See Zwicky v. Premiere Vacation Collection Owners Ass’n, 244 Ariz. 228, 230–231, ¶¶ 4–9, 418 P.3d 1001, 1003–04 (App. 2018). The trial court ordered, amongst other relief, that the Association give Zwicky over one thousand pages of documents so he could determine how the Association was calculating Assessments and issued a ruling allowing Zwicky to disclose that information to Members, like yourself, and file this class action lawsuit. See id. The Association appealed the trial court’s decisions. The Arizona Court of Appeals, in January 2018, upheld the trial court’s ruling that the Association had to produce those documents, but held that Zwicky could not disclose the documents to Members and preserved the confidential nature of certain documents. See id. at ¶¶ 30–34. The Arizona Court of Appeals remanded the case back to the Arizona trial court, which determined that Zwicky could only use the information from those records to file this class action Complaint, which he did in August 2020. See Zwicky, 2021 WL 2685585, at *2–4.

In a class action, one or more people called Class Representatives—in this case, Norman Zwicky, George Abarca, Vikki Osborn, and Elizabeth Stryks-Shaw—sue for themselves and on behalf of a group of people (or a “Class”) who have similar claims. Here, the Class consists of all persons who are current or former Members of the Association who were assessed Assessments during the Class Period.

The Court has not decided in favor of Plaintiffs or Defendants. To avoid the cost, risk, and delay of litigation, and the uncertainty of trial, the parties agreed to settle this Action. Plaintiffs and Class Counsel believe the settlement is fair, reasonable, and adequate.

The Court has decided that everyone falling under the following criteria is a Class Member:

[A]ll current and former members of the Association who were assessed Assessments for any Calendar year(s) from 2011 through and including 2022.

ILX Acquisitions, Inc. and any entity that received any bulk transfer/assignment of ILX’s Bulk Membership Interest in the Association are excluded from the Class, as are DRI, DRM, their parents, subsidiaries, successors, affiliates, current officers and directors and all judges assigned to the Action and their immediate family members.

 
There are approximately 26,500 Class Members.

Everyone who did not exclude themselves from the Class will become a Settlement Class Member and will receive a cash payment. The amount you receive will depend on, among other things, the number of “Points” you owned, the Assessments assessed on those Points, the length of time you owned such Points, and how many Class Members elected to be excluded from the Class. 

Please note that this settlement does not affect the validity of your agreements with the Association and/or the Corporate Defendants or your responsibility for any existing payment obligations under those agreements.

If you did not exclude yourself, you will receive these cash benefits within approximately ninety (90) days of the Final Approval Order, which was entered on April 16, 2024. 

In addition to the $13,000,000.00 Settlement Amount, Defendants have also agreed to adopt the following standards governing future dealings with the Association and its members (“Non-Monetary Terms”):

1. During any period of time in which the Association, as the 'Managing Entity', engages DRM or any of its affiliates as the 'Manager' to provide some or all of the management services to the Collection and or the Club Accommodations contemplated by the PVC Membership Plan, such engagement shall be pursuant to a written management contract (the "PVC Management Contract") that complies with and contains all applicable provisions of the (a) Arizona Timeshare Owners' Association and Management Act (A.R.S. § 33-2201 et. seq.), (b) Arizona Real Estate Timeshares Act (A.R.S. § 33-2197 et. seq.), and (c) all Collection Instruments including, the PVC Membership Plan ((a) - (c) are collectively, the "Management Requirements," as such may be amended from time to time).
2. DRM intends to propose an amended PVC Management Contract to the Association Board on or before February 28, 2024 that, in addition to the Management Requirements and other customary terms, provides for the items set forth below.
3. The amended PVC Management Contract shall contain a complete disclosure of the calculation of the "Management Fee" and of any additional material amounts payable by the Association to the Manager or to any affiliate of the Manager, whether designated as a "fee," reimbursement or absorption of expenses of the Manager or affiliate, or direct or indirect corporate costs thereof. 
4. The amended PVC Management Contract shall provide that the Management Fee shall not exceed 15% of the total Assessments assessed upon Members of the Association in each Fiscal Year (the "15% Cap"), except as provided for in Article IV, Section 4.03 of the Premiere Vacation Club Membership Plan (restated) dated February 14, 2008, as such may be amended from time to time, provided that in all events: 
   1. any Management Fee exceeding the 15% Cap must comply with standards of commercial reasonableness; and
   2. any intent to increase the Management Fee above the 15% Cap must be disclosed to current Members of the Association in advance in clear, conspicuous, and understandable terms and in a manner calculated to provide actual notice to each Member.
5. The amended PVC Management Contract shall further provide that DRM shall perform or cause the Manager to perform (if other than DRM) its duties under the amended PVC Management Contract in compliance with the Management Requirements including, without limitation, with respect to the preparation of itemized annual operating and reserve budgets and the provision of such budgets to Members of the Association.
6. Without limiting the generality of the foregoing, the budgets shall contain a complete disclosure as to the common expenses and operating costs of the Collection, including all of the variable costs of operation, management and reserves, and method of assessment, and shall also contain any related party transaction disclosures that appear in any audited financial statements of the Association and the Manager for the previous budget year.
7. The annual budgets and the audited financial statements shall disclose any material reimbursement or absorption or allocation of internal expenses of the Manager or affiliate, and/or direct or indirect corporate costs thereof, in a clear, specific, conspicuous, and readily understandable manner.

These non-cash benefits will benefit all current Members, even those Members who chose to exclude themselves from receiving cash benefits.

If you are a member of the Class and entitled to receive a payment, you did not need to submit anything to receive a Settlement Class Member Payment. To make sure that you receive your cash benefits at your current address and all other notices regarding this settlement, you should log into your Diamond Resorts account at loginsso.diamondresorts.com and verify that you have provided your current contact information, including mailing address, physical address, email account, and phone number.

If you did not exclude yourself from the Settlement (“opt-out”), you released all claims related to any and all improper or excessive charges or fees, including Assessments, and any actions taken by any of the Defendants relating to the charging or assessing of any and all charges or fees to the Association or its members. A release means that you can’t sue or be part of any other lawsuit against the Defendants, the Association, or other parties specified in the Settlement Agreement and Release (“Settlement Agreement”) regarding the claims or issues in this lawsuit. The Settlement Agreement is available for review on the Important Documents page.

If you wished to exclude yourself from the Settlement, you must have written to the Settlement Administrator about why you wished to exclude yourself from the Settlement by December 26, 2023. The deadline to exclude yourself has passed.

You will not receive the cash benefits from this Settlement if you excluded yourself from this Settlement. However, if you are a current Member of the Association, you will receive the non-monetary benefits described above.

Yes, the Court has named the law firm of Phelps & Moore, PLC, and counsel Edward L. Barry as Class Counsel. Their information is provided below. If you want to be represented by your own lawyer, you may hire one at your own expense.

The Court granted Plaintiff’s request for Service Awards.  Plaintiffs George Abarca, Vikki Osborn, and Elizabeth Stryks-Shaw will each receive $1,500.00 out of the $13,000,000.00 Settlement Amount for their services as Class Representatives since 2020 or 2021 in addition to their Settlement Class Member Payments. Plaintiff Zwicky will receive $10,000.00 out of the Settlement Amount for his services related to and in the Document Inspection Action since 2013 and as a Class Representative in this Action. Class Representatives have not received any prior payment for their services related to this Action and have not received, and will not receive, any additional or prior benefits from Defendants or anyone else regarding this litigation.

The Court granted Class Counsel’s request for an award of attorneys’ fees of 25% of the $13,000,000.00 Settlement Fund, for a total of $3,250,000.00, and an additional $22,335.45 for reasonable costs and expenses to be paid out of the Settlement Fund. You will not be charged for these lawyers; they will receive these fees and expenses out of the Settlement Fund, subject to the Court’s approval.

With the exception of $1,661.00 paid by Zwicky to Jon L. Phelps for sending an initial demand letter in 2013-14, which was refunded, Class Counsel have not received any prior payment for their work investigating these allegations, prosecuting this litigation, or negotiating the Settlement; they have paid all prior fees, expenses, and costs themselves. This Settlement and their requested award of fees and expenses is the first and only monetary benefit Class Counsel receive for their work in this case.

If you wished to object, you must have written to the Settlement Administrator about why you do not agree with the entire Settlement or any part of the Settlement by December 26, 2023. The deadline to object has passed.

The Final Approval Hearing was held on February 12, 2024, and the Court granted final approval of the Settlement. You can view the Court’s Order Granting Motion for Final Approval of Class Action Settlement, filed on April 16, 2024, on the Important Documents page of this website.

This notice is only a summary of the proposed Settlement of this Action. All pleadings and documents filed with the Court, including the Settlement Agreement, may be reviewed, or copied in the Clerk of Court, United States District Court for the District of Arizona at the following address:

Clerk of Court
United States District Court for the District of Arizona – Phoenix Division
Sandra Day O’Connor U.S. Courthouse, Suite 130
401 West Washington Street, SPC 1
Phoenix, Arizona 85003-2118

Please do not call the Judge about this case. Neither the Judge, nor the Clerk of Court, will be able to give you advice about this case. Furthermore, Defendants’ attorneys do not represent you and cannot give you legal advice.

If you have any questions regarding this case or the Settlement, you can obtain information through the Settlement’s Website. You can also contact Class Counsel at:

Before doing so, please read the full Notice of Settlement carefully and review this Settlement Website, which includes the complete Settlement Agreement; your question(s) may have been answered herein.