St. Louis Record

Friday, September 20, 2019

Federal court upholds arbitration clause in timeshare owners' dispute with Wyndham Vacation Ownership


By Charmaine Little | May 27, 2019

KANSAS CITY – A well-known vacation resort prevailed in its motion to compel arbitration after being sued over allegations of false representations in relation to timeshare purchases.

Judge Roseann A. Ketchmark of the U.S. District Court for the Western District of Missouri in the Southern Division granted Wyndham Vacation Ownership Inc. and Wyndham Vacation Resorts Inc. their motion on May 15.

Plaintiffs James and Fredia Williamson took legal action against the Wyndham defendants in January after signing two different timeshare agreements with them. The Williamsons alleged the defendants violated the Missouri Merchandising Practices Act and accused it of fraudulent misrepresentation “arising from defendants’ alleged deceptive and coercive behavior during contract formation and execution,” according to Ketchmark's ruling.

Judge Roseann A. Ketchmark

The second contract signed included a provision that any legal matters would have to be settled via arbitration in Orange County, Florida. This clause caused the court to side with Wyndham and grant its motion to compel arbitration. While the plaintiffs alleged the clause can’t be enforced because the defendant committed fraud and also argued that their claims serve as independent torts that aren’t included in the arbitration clause, Ketchmark disagreed.

Ketchmark said that despite the fraud claims, the case is viable for arbitration. 

“'Only when there is a claim of fraud in the arbitration clause itself is a court to intervene.’ Here, plaintiffs’ complaint alleges fraud in the inducement of the entire timeshare contract, not fraud in the inducement of the arbitration clause specifically. Therefore, plaintiffs’ claims for fraudulent inducement are proper for arbitration,” Ketchmark said.

As for the plaintiffs’ second argument that their claims aren’t within the scope of the arbitration agreement, Ketchmark disagreed with that as well. The ruling states the clause itself says that “all disputes ‘arising out of or relating to this agreement’ as well as the ‘marketing, purchase and/or use’ of plaintiffs’ ownership in Club Wyndham generally,” is to be subject to arbitration, the ruling states, which includes this particular lawsuit.

While Ketchmark said arbitration was proper, she also said there could still be issues after arbitration. So instead of dismissing the case altogether, the judge stayed the case it until arbitration is finished.

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