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Harding v. Diamond Resorts Holdings, LLC

United States District Court, D. Nevada

December 7, 2017

ILONA HARDING, an individual; LESTER THOMAS HARDING, an individual, all on behalf of themselves and all similarly-situated individuals, Plaintiffs,
v.
DIAMOND RESORTS HOLDINGS, LLC, a Nevada limited liability company; DIAMOND RESORTS INTERNATIONAL, INC., a Delaware corporation; DIAMOND RESORTS U.S. COLLECTION, L.L.C., a Delaware limited liability company; DIAMOND RESORTS INTERNATIONAL MARKETING, INC., a California corporation; DIAMOND RESORTS INTERNATIONAL CLUB, INC., a Florida corporation; DIAMOND RESORTS MANAGEMENT, INC., an Arizona corporation; DIAMOND RESORTS U.S. COLLECTION MEMBERS ASSOCIATION, a Delaware corporation; DIAMOND RESORTS DEVELOPER & SALES HOLDING COMPANY, a Delaware company; DIAMOND RESORTS FINANCIAL SERVICES, INC., a California corporation; and DOES 1 THROUGH 100, INCLUSIVE, Defendants.

          DEFENDANTS' MOTION TO COMPEL, PLAINTIFFS' MOTION TO STRIKE, AND PLAINTIFFS' MOTION FOR LEAVE TO FILE

          RICHARD F. BOULWARE, II UNITED STATES DISTRICT JUDGE

         I. INTRODUCTION

         Before the Court is Defendants Diamond Resorts Holdings, LLC; Diamond Resorts International, Inc.; Diamond Resorts U.S. Collection, L.L.C.[1]; Diamond Resorts International Marketing, Inc.; Diamond Resorts International Club, Inc.; Diamond Resorts Management, Inc.; Diamond Resorts U.S. Collection Members Association; Diamond Resorts Developer & Sales Holding Company; Diamond Resorts Financial Services, Inc., a California corporation; and Does 1 through 100, Inclusive (collectively, “Diamond”)'s Motion to Compel Arbitration and to Stay or Dismiss this Action (ECF No. 18), Plaintiffs Ilona Harding and Lester Harding (collectively, “Plaintiffs”)' Motion to Strike Reply (ECF No. 27), and Plaintiffs' Motion for Leave to File Supplemental Exhibit (ECF No. 34). For the reasons stated below, Defendants' Motion to Compel is granted, and Plaintiffs' Motion to Strike and Motion for Leave to File are denied.

         II. BACKGROUND

         On January 29, 2017, Plaintiffs filed a Class Action Complaint with Jury Demand against Defendants. (ECF No. 1).[2]

         Magistrate Judge Cam Ferenbach granted the parties' Stipulation to extend time on Defendants' response on February 27, 2017. (ECF No. 17). On April 3, 2017, the day Defendants' response was due, Defendants filed the instant Motion to Compel. (ECF No. 18). The same day, Defendants also filed a Motion to Stay, pending the Court's decision on the Motion to Compel. (ECF No. 19).

         Plaintiffs filed Responses to the Motion to Compel and Motions to Stay on April 17, 2017. (ECF Nos. 22, 23). Defendants Replied on April 24, 2017. (ECF Nos. 24, 25).

         On May 1, 2017, Plaintiffs filed a Motion to Strike the [24] Reply. (ECF No. 27).

         On September 14, 2017, Plaintiffs filed a First Motion for Leave to File a Supplemental Exhibit in support of their opposition to the Motion to Compel. (ECF No. 34). Defendants Responded on September 28, 2017 (ECF No. 35) and Plaintiffs Replied on October 9, 2017 (ECF No. 36).

         III. FACTUAL ALLEGATIONS

         The Court finds the following facts to have been properly alleged and undisputed.

         a. Plaintiffs' Relationship with Defendants

         Since December 31, 2012, Plaintiffs have been timeshare owners with Diamond. In the intervening years, Plaintiffs have entered several different timeshare purchase and security agreements (“PSAs”) with Diamond. Plaintiffs allege that Diamond uses sales tactics that take advantage of elderly customers.

         The most recent PSA Plaintiffs entered, and the PSA that is the main subject of this Motion, was entered on December 12, 2015. Plaintiffs contend that on October 1, 2016, they formulated the intent to opt-out of the arbitration provision as well as other provisions of the PSA. On October 11, 2016, Plaintiffs, through counsel, sent a letter to Diamond giving notice of their wish to opt-out of the December 12, 2015 PSA as well as all previous PSAs.

         b. Arbitration Provision The first lines of text that appear in the December 12, 2015 PSA state in bold text: “This is a binding contract by which you agree to purchase an interest in a time-share project. You should examine this statement of your right to revoke this contract within 5 days which is contained elsewhere in this contract.” (ECF No 18-1 at 8) Section 18 is titled “ARBITRATION PROVISION” and states in relevant part:

• (a) Opt-Out Right IF PURCHASER DOES NOT WANT THIS ARBITRATION PROVISION TO APPLY, WITHIN 30 DAYS PURCHASER MUST SEND A SIGNED LETTER TO SELLER STATING THAT THE ARBITRATION PROVISION DOES NOT APPLY[.] OPTING OUT OF ARBITRATION WILL NOT AFFECT ANY OTHER PROVISION OF THIS AGREEMENT[.] (ECF No 18-1 at 14).
• (b) Arbitration Terms Defined in this Arbitration Provision, the term “Company Party” means Seller and/or the Association, their affiliates and the agents, representatives, members, employees, officers and/or directors of such entities, if and to the extent that any Claim is asserted by or against such entity or person[.] “Bound Parties” means each Company Party and Purchaser[.] “Claim” means any legal claim, dispute or controversy between any Company Party and Purchaser, including statutory, contract and tort disputes of all kinds and disputes involving requests for declaratory relief, injunctions or other equitable relief[.] However, “Claim” does not include any individual action brought by a Purchaser in small claims court or an equivalent court, unless such action is transferred, removed, or appealed to a different court, and does not include any dispute concerning the validity and effect of Section 18(h) below, the ban on class actions and certain other proceedings (the “Class Action Ban”)[.] “Administrator” means the American Arbitration Association (“AAA”), 1633 Broadway, 10th Floor, New York, NY 10019, http ...

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