Flynn v. Marriott Ownership Resorts, Inc.
165 F. Supp. 3d 955
D. Haw.2016Background
- Plaintiffs (two couples and a family trust) are long‑time Marriott timeshare week owners (Weeks-Based Program); one couple also bought interests and points in Marriott’s Points‑Based (Destination) Program. Plaintiffs allege Marriott favors Points Owners and an affiliated trust (MVC Trust), "skimming" the best units/weeks and degrading Weeks Owners’ reservation/use rights.
- Plaintiffs assert breach of contract, breach of implied covenant of good faith and fair dealing, Hawai‘i consumer protection (Ch. 480 and Ch. 481A), Hawai‘i timeshare statutes including the one‑to‑one rule (Ch. 514E), and UDAP claims; they seek damages, injunctive relief, rescission for one purchase, and fees.
- Defendants moved to dismiss arguing statutes of limitations/tolling bar many claims, Plaintiffs lack consumer standing under Ch. 480 for timeshare purchases, numerous claims fail to state plausible claims, and only MORI is the proper defendant.
- The court held many theories deficient but allowed leave to amend: it applied Hawai‘i’s 4‑year limitations rule (Haw. Rev. Stat. § 480‑24) to the Ch. 480/UDAP claims, dismissed older claims as time‑barred, dismissed several claims for failure to plead facts (but often without prejudice), and dismissed the implied‑covenant claim with prejudice as unavailable here.
- Key factual deficiencies: plaintiffs plead skimming and one‑to‑one violations largely on "information and belief" without specific instances (e.g., concrete reservation denials), and fail to plead consumer status or that particular statutory provisions apply to out‑of‑state sales.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicable statute of limitations for Ch. 480/UDAP and related claims | 6‑year catchall (Haw. Rev. Stat. § 657‑1(4)) applies to parts of the consumer/timeshare claims | § 480‑24(a) provides the 4‑year limitations period for actions under Chapter 480; related claims governed by nature of claim | Court: 4‑year limitations under § 480‑24(a) applies to Counts III and V; many claims barred as untimely except portions within 4 years (e.g., 2014 purchase) |
| Continuing violation / tolling of limitations | Points program is an ongoing harm; continuing‑violation tolling saves older claims | Harm accrued at program implementation (2010); plaintiffs cannot show continuing course sufficient to toll | Court: continuing‑violation doctrine does not apply to the systemic 2010 implementation; older claims time‑barred (but leave to amend possible to identify discrete acts within 4 years) |
| Standing as "consumers" under Ch. 480 for timeshare purchases | Timeshare purchases are personal investments or purchases for personal, family, household use; thus plaintiffs are consumers | Timeshare purchase documents emphasize purchase for personal use, not investment; real estate not "goods" under Ch. 480, so plaintiff lacks consumer standing | Court: Complaint insufficient to plead consumer status; dismissal without prejudice (plaintiffs may amend to plead investment motive or other grounds), except some claims precluded where statute applies only to in‑state offers/sales |
| Breach of implied covenant of good faith and fair dealing (tort) | Marriott's reservation and marketing practices intentionally deprived owners of bargained benefits; analogous to innkeeper/cust. special relationship | Hawai‘i law limits tort recovery for bad faith to insurance and special fiduciary contexts; timeshare developer–owner not such a relationship | Court: Hawai‘i would not recognize a separate tort for breach of implied covenant in this context; Count II dismissed with prejudice |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard requires factual plausibility and courts need not accept legal conclusions)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must state a plausible claim; formulaic recitations insufficient)
- Lowther v. U.S. Bank N.A., 971 F. Supp. 2d 989 (D. Haw. 2013) (limitations for UDAP claims accrues upon the alleged violation; continuing‑violation analysis)
- Au v. Au, 63 Haw. 210 (1981) (determine nature of claim by pleadings; nature controls limitations/analysis)
- Joseph v. J.J. Mac Intyre Cos., LLC, 281 F. Supp. 2d 1156 (N.D. Cal. 2003) (continuing‑violation doctrine applied to a pattern of harassing calls)
- Best Place, Inc. v. Penn Am. Ins. Co., [citation="82 Hawai'i 120"] (1996) (discussing implied covenant of good faith and contexts where tort recovery for bad faith is recognized)