Business Monday: Aspen Highlands Ritz-Carlton owners’s suit clears legal hurdle

More than 240 owners of timeshares at the Ritz-Carlton Club at Aspen Highlands scored a recent legal victory in their litigation claiming their properties’ values dropped by more than 80 percent.

Last month a federal judge denied in part an April 2017 motion to dismiss the lawsuit against defendants Aspen Highlands Condominium Association and Marriott Vacations Worldwide Corp., as well as four other defendants. The March 29 ruling means they must face the five surviving claims brought on them by plaintiffs, whose suit alleges the values of their units plummeted after the Ritz-Carlton Club established an affiliation with Marriott Vacation Club Destinations in April 2014.

Once the Marriott affiliation was hatched, the 1/12 fractional ownership interests — which originally were bought for between $200,000 and $400,000, lost their cachet of exclusivity and became less marketable, the suit contends.

Previous Aspen Times research shows that some of the fractional units have sold for less than six figures in the wake of the affiliation. One share changed ownership for $28,000 in April 2017, after once being sold for $432,250 in October 2006.

The defendants include the condo association, Marriott Vacations, Marriott Ownership Resorts, Ritz-Carlton Management Co., Cobalt Travel Co., and Lion & Crown Travel Co. All are accused of calling the shots for the condo association and stripping them of some of their exclusive membership benefits.

The Aspen Highlands Ritz-Carlton owners say they must pay condo association fees ranging from $12,000 to $16,000 a year, while Marriott point-holders do not. They also contend they had no influence on the affiliation with Marriott, though they were informed nearly two years before the affiliation was made official that it was being negotiated.

U.S. District Judge Philip A. Brimmer’s ruling notes that wheels for the affiliation were set in motion on July 17, 2012. That’s when Cobalt’s general manager sent a letter to the Highlands owners that “additional benefits and experiences will be available through a new affiliation with Marriott Vacation Club.” Fractional owners at other Ritz-Carltons also were notified of the change, including those at Bachelor Gulch in Beaver Creek, whose members voted to cut off the affiliation, the judge’s ruling noted.

However, Brimmer noted that Aspen Highlands Condominium Association “acted arbitrarily by declining to hold a vote before agreeing to the (Marriott Vacation Club) affiliation. Plaintiffs allege that the Association promised such a vote and told its members that such a vote was legally required, before acting contrary to these statements without disclosure or explanation.”

Brimmer also ordered that the defendants will remain on the hook for the breach of fiduciary claim because Ritz-Carlton Management was “entrusted” with control over the fractional owners’ property.

Other surviving claims include aiding and abetting, as well as a portion of the plaintiff’s constructive fraud claim, a legal term for deception without intent.

“Plaintiffs’ allegations of different outcomes at similar resorts where a vote was held, along with allegations of the Marriott defendants’ efforts, with the cooperation of the association, to avoid such a vote at Aspen Highlands are sufficient to state a claim for construction fraud,” the judge’s order says.

The case originated in Pitkin County District Court with two plaintiffs in January 2016, before being transferred to Denver federal court that May.

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.

California attorney Michael J. Reiser and Aspen lawyer Matt Ferguson, who could not be reached for comment Friday, filed the suit.

rcarroll@aspentimes.com