Developer Ian Bruce Eichner won a major legal victory against timeshare investors in the posh Manhattan Club.
A federal judge has dismissed a RICO lawsuit filed by the club’s 200 timeshare investors against developer Bruce Eichner and Bluegreen Vacations. The lawsuit is a blow to the chances of timeshare investors to win future developer fraud lawsuits.
Eichner and his affiliates have battled investors at 200 West 56th Street in Midtown for nearly a decade.
In 2017, then New York Attorney General Eric Schneiderman found some merit in the claims of timeshare owners and filed a complaint. The owners of the hotel settled $ 6.5 million with the attorney general for misleading shareholders about the club’s reservation process and their ability to resell their shares.
The attorney general’s office also found evidence that the Manhattan Club’s sales tactics amounted to a bait-and-trade scheme. As part of the settlement, the owners and operators of the Manhattan Club were required to sell their stakes and relinquish management control.
In 2018, Boca Raton-based Bluegreen Vacations entered into an agreement to purchase the timeshare inventory and the future right to control management.
But the litigation continued for years anyway.
In the most recent lawsuit, filed in 2020, timeshare investors allege that Eichner and its affiliates fraudulently tricked them into buying interests in the Manhattan Club between 1996 and 2013. The investors also allege that the affiliates of the ‘Eichner rendered investor interests worthless so that owners could redeem the timeshare interest at a fraction of the purchase price.
In addition, the complaint alleged that the investors were in arrears due to the high maintenance fees. Eichner and his affiliates offered to forgive the arrears and buy out the timeshare interest for $ 100. This would have allowed the defendants to buy back many units they had sold for tens of thousands of dollars for that face sum, according to the lawsuit.
When the case finally fell on the office of Judge Gregory Woods of the Southern District of New York, he didn’t mince words.
“This case is part of the unfortunate and long-standing tradition of disguising the state’s claims for common law fraud and breach of contract as violations of RICO civil law,” the federal judge wrote in his ruling this morning. week.
He said that the plaintiffs “lump-sum[ed] together each defendant for almost all of the allegations “in a” type of sloppy group pleading. “
“We are delighted with Justice Woods’ well-reasoned decision,” said Jennifer Recine, partner at Kasowitz Benson Torres who represented Eichner and the affiliates, in a statement. “The Complainants’ claims are completely unfounded, and we look forward to putting this case behind us.”
The judge ruled that the plaintiffs had not established the existence of a racketeering business or business model. He also said the complaint does not show a pattern of racketeering activity and never identifies when the complainants were harmed by the alleged RICO scheme. The judge allowed the defendants’ motion to dismiss with prejudice.
A lawyer for Bluegreen Vacations did not return a request for comment, nor did the timeshare investor’s lawyer.