Aspen lawsuit: Marriott affiliation dilutes Ritz-Carlton brand
January 5, 2016
The owners of a fractional unit at Ritz-Carlton Club at Aspen Highlands are suing a collection of hotel operators and affiliates alleging their property's value has plummeted 80 percent because of new membership terms.
California residents Jennifer Kaplan and Alexander Busansky are the sole plaintiffs in a lawsuit their attorneys hope will eventually become a class-action case with roughly $160 million potentially at stake. The suit suggests that the fractional-units, which are deeded and come with condo association fees, are now more like timeshare units because of the Ritz-Carlton Club's recent affiliation with Marriott Vacations Worldwide Corp. That has watered down a product that once boasted exclusivity, the suit implies.
"The losses are about $200,000 per fractional unit, and there's 800 of them," said attorney Michael J. Reiser of Walnut Creek, California.
Reiser, along with two other California law firms, as well as Aspen attorney Matthew Ferguson, filed the suit Thursday in Pitkin County District Court. It was made public Monday.
"The common dilution of value and the number of owners who have been harmed makes this lawsuit a clear fit for class-action status," Ferguson said in a statement.
The Ritz-Carlton's club brand debuted at Aspen Highlands in 2001. Similar fractional clubs later opened in Bachelor Gulch and Vail, San Francisco, Maui, Hawaii; North Lake Tahoe, California; Jupiter, Florida; St. Thomas, U.S. Virgin Islands; and Abaco, Bahamas.
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The Aspen Highlands fractional units have sales prices ranging from $200,000 to $400,000 each. Approximately 800 one-twelfth shares have been sold, Reiser said.
Their values have dropped considerably, however, ever since the Ritz-Carlton Club established an affiliation with Marriott Vacation Club Destinations. Aspen Highlands owners were notified of the possible affiliation in August 2012. The Aspen Highlands Condominium Association, a defendant in the suit, also informed local Ritz-Carlton members that same month, "it has been our position that our members bought into a Ritz-Carlton brand and do not want the brand diluted. The board has concerns that … the nature of our club will change by opening the club to (Marriott) timeshare/points members who have a much lower cost of entry."
The notice is an exhibit to the suit, which also says members of the Bachelor Gulch and Jupiter club cut ties with the Ritz-Carlton in 2013 and 2014, respectively, because of its affiliation with Marriott.
Members of the Aspen Highlands Ritz, however, didn't have a say on the affiliation with Marriott Vacation Club, and learned in April 2014 that they could exchange a week of their fractional interests for points with the Marriott exchange program, the suit says.
That also meant that members of Marriott Vacation Club can stay at the Aspen Highlands Ritz-Carlton, and by doing so, have diminished the value of the fractional units.
"People can now stay at the Ritz by purchasing Marriott points," Reiser said. "That's not the basis of our lawsuit, but that is happening."
Ritz-Carlton members also pay homeowners dues, which Marriott point holders don't, he noted.
"They (the Ritz-Carlton members) paid for a better product," Ferguson said. "If you make a reservation for the Four Seasons and they put you in a Holiday Inn, that's what's happening here."
Messages to the corporate offices of the Ritz-Carlton and Marriott were not returned Monday.
Ferguson and Reiser said the next step is to achieve class-action certification for the suit, which requires a judge's approval. Hundreds of fractional owners of the Aspen Highlands Ritz-Carlton are eligible to join, they said.
The suit is exclusive to the Aspen Highlands members, Reiser said.
Among the suit's claims are unjust enrichment, conspiracy and breach of fiduciary duty.