Important Updates: At the Final Fairness Hearing held on May 15, 2013, the Court approved the Settlement as fair, reasonable, and adequate.
Overview of the Settlement
Benedict v. Diamond Resorts Corporation, Case No. CV 12-00183 DAE BMK
A Settlement has been reached in a class action litigation involving Diamond Resorts Corporation, Diamond Resorts Parent, LLC, Diamond Resorts Holdings, LLC, Resort Management International, Inc., Stephen J. Cloobeck, Kathy Wheeler, Frank Goeckel and Jason Toste (collectively, “Defendants”).
On September 30, 2011, the Boards of Directors of the Association of Apartment Owners of Poipu Point (“AOAO”) and Diamond Resorts Hawaii Collection Members Association (“DRHCMA”) approved a Water Intrusion Assessment in the amount of $65,822,529. The Assessment was charged to all Deeded Owners, on an owner-by-owner basis, based on the number of vacation intervals owned, and to all members of the Hawaii Collection, on a member-by-member basis, based on the number of points owned.
On April 7, 2012, certain Deeded Owners and Hawaii Collection members, Bruce Benedict, Joe Williams, Joseph Baglino, James Brown and Adrienne Schmadeke (collectively, “Plaintiffs”) filed a class action lawsuit challenging the Assessment, and alleging that Defendants breached their fiduciary duties and violated applicable Hawaii and Nevada consumer protection laws by approving, implementing and charging the Water Intrusion Assessment.
The Court has not decided the merits of the claims or defenses in the litigation. Defendants deny all liability or wrongdoing alleged in the litigation. Defendants believe the Settlement is desirable to avoid the substantial expense, burden, risk, distraction, and uncertainty of protracted litigation. All parties believe the Settlement confers substantial benefits and is in the best interests of Deeded Owners and DRHCMA members.
Who Is Included in the Settlement Class?
The Settlement Class includes all persons and entities who: (1) are current deeded owners in Poipu Point or former Deeded Owners who received a Water Intrusion Assessment; and/or (2) are current members of the Hawaii Collection or former members of the Hawaii Collection who received a Water Intrusion Assessment. Excluded are the Association of Apartment Owners of Poipu Point; the Diamond Resorts Hawaii Collection Members Association; and Defendants and their parents, affiliates, successors, predecessors, employees, officers, or directors.
What Does the Settlement Provide?
The Settlement will reduce future billings to Deeded Owners and DRHCMA members for the Water Intrusion Assessment, on a person-by-person or pro rata basis, by $4.9 million dollars. Unbilled portions of the Assessment will also be recalculated, so that the maximum amount required to be paid for 2013, 2014, 2015 or 2016 will not exceed 17.5% of the total amount charged to Deeded Owners and DRHCMA members pursuant to the Assessment. Additionally, if amounts collected pursuant to the Assessment for construction or escalation contingencies are not needed, Deeded Owners and DRHCMA members may be entitled to a refund or credit (at the Owner’s or member’s option) of such overpayment. The AOAO and DRHCMA will also implement corporate governance changes.
A summary description of the Settlement is provided in the Class Notice. Full details of the terms and conditions of the Settlement are set forth in the parties’ Settlement Agreement.
What Are My Options?
The following options were available to Class Members:
- If you wanted to stay in the Class, you did not need to take any further action. However, if you did not opt out, you will not be able to sue the Defendants about the same claims being released in this Settlement.
- If you wanted to keep your right to sue the Defendants at your own expense about the same claims being released in this Settlement, you had to exclude yourself from (or “opt out of”) the Settlement. To opt out of the Settlement, you had to send a letter postmarked no later than February 18, 2013, stating that you want to be excluded.
- If you wanted to object to the Settlement or the requested attorneys’ fee and expense award, you had to send a letter stating that you object to the Settlement (or fee application), so that it would have been received no later than February 18, 2013.
Did the Court Approve the Settlement?
The Court held an Approval Hearing at 9:00 a.m. on May 15, 2013, at the United States District Court for the District of Hawaii. At the hearing, the Court approved the Settlement as fair, reasonable and adequate. The Court also approved Class Counsel’s fees and expenses and the service awards requested by the named Plaintiffs.
You did not need to come to the Approval Hearing. Deeded Owners or DRHCMA members who wished to attend the hearing could have done so, at their own expense. If you sent a written objection, you did not have to be present or come to Court to talk about it.
