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Williamson v. Wyndham Vacation Ownership, Inc.

United States District Court, W.D. Missouri, Southern Division

May 15, 2019

JAMES WILLIAMSON, FREDIA WILLIAMSON, Plaintiffs,
v.
WYNDHAM VACATION OWNERSHIP, INC., WYNDHAM VACATION RESORTS, INC., Defendants.

          ORDER GRANTING DEFENDANTS' MOTION TO COMPEL ARBITRATION

          ROSEANN A. KETCHMARK, JUDGE

         Before the Court is Defendants' Wyndham Vacation Ownership, Inc. and Wyndham Vacation Resorts, Inc. (“Defendants”) Motion to Compel Arbitration (“the Motion”). (Doc. 6.) The Motion is fully briefed. (Docs. 7, 9, 14.) After careful consideration and for the reasons below, the Motion is GRANTED, and this case is hereby STAYED.

         Background

         On January 10, 2019, Plaintiffs filed their Petition against Defendants in the Circuit Court of Taney County, Missouri. James Williamson and Fredia Williamson v. Wyndham Vacation Ownership, Inc. and Wyndham Vacation Resorts, Inc., Case No.: 1946-CC00006. On March 1, 2019, Defendants removed this action to this Court on the basis of diversity of citizenship pursuant to 28 U.S.C. § 1332(a)(1).[1]

         The Complaint provides the following allegations. Plaintiffs entered into two separate timeshare agreements with Defendants, and in the execution of these agreements, Defendants made false representations to Plaintiffs to convince Plaintiffs to purchase timeshare interests from Defendants. On October 15, 2017, Plaintiffs entered into a ClubWyndham® Access Vacation Ownership Plan Retail Installment Contract Purchase and Security Agreement - Contract No. 00020-1736444 (“Contract I”). On July 9, 2018, Plaintiffs entered into a ClubWyndham® Access Vacation Ownership Plan Retail Installment Contract Purchase and Security Agreement - Contract No. 19-1813625 (“Contract II”). Also on July 9, 2018, Plaintiffs traded in Contract I for Contract II, applying the equity from Contract I as a down payment for Contract II. After this transaction, Contract II became the operative contract as Contract I was subsumed within Contract II. The Complaint asserts two cause of action against Defendants: (1) violation of the Missouri Merchandising Practices Act (“MMPA”), RSMo. § 407.025[2]; and (2) fraudulent misrepresentation[3] arising from Defendants' alleged deceptive and coercive behavior during contract formation and execution. Contract II contains the following arbitration provision:

PLEASE READ THIS PROVISION OF THE AGREEMENT CAREFULLY. IT PROVIDES THAT CERTAIN DISPUTES MUST BE RESOLVED BY BINDING ARBITRATION. IN ARBITRATION YOU GIVE UP THE RIGHT TO GO TO COURT, INCLUDING THE RIGHT TO A JURY OR SIMILAR PROCEEDING. IN ARBITRATION, A DISPUTE IS RESOLVED BY AN ARBITRATOR INSTEAD OF A JUDGE OR JURY. ARBITRATION PROCEDURES ARE SIMPLER AND MORE LIMITED THAN COURT PROCEDURES AND ARE SUBJECT TO VERY LIMITED REVIEW.
33. DISPUTE RESOLUTION/ARBITRATION: Any Disputes between the Parties shall be resolved as follows:
(a) Definition of Disputes: The Parties agree that any dispute, claim, suit demand or controversy arising out of or relating to this Agreement (any “Dispute”) shall be determined exclusively and finally by individual arbitration, except as specified below. “Dispute” includes, without limitation, any claims regarding any breach, termination, enforcement, interpretation or validity of this Agreement, and claims arising out of or related to the marketing, purchase, and/or use of Owner's Ownership, Owner's use of Seller's properties, and/or Owner's participation, in any activities/events sponsored, organized or made available by Seller or any of its affiliates.

(Doc. 7-2, ¶ 33(a) (bolded italics added)).

         The parties do not dispute that Contract II contained a clause providing that any dispute arising out of the agreement shall be subject to arbitration administered by the American Arbitration Association (“AAA”) in Orange County, Florida.

         Discussion

         Defendants argue Contract II contains a valid arbitration agreement and the terms of the agreement fall within the scope of arbitration; therefore, arbitration is proper. Plaintiffs argue: (1) the arbitration clause is unenforceable because Contract II was procured by fraud, and (2) Plaintiffs' claims are independent torts that fall outside the scope of the arbitration clause. To determine whether this case should be sent to arbitration, the Court must first determine whether a valid arbitration agreement exists. If a valid arbitration agreement exists, the Court must then determine whether the dispute between the parties falls within the terms of the arbitration agreement.

         I. Whether a Valid Arbitration Agreements Exists

         Plaintiffs allege Defendants fraudulently induced Plaintiffs into purchasing timeshare contracts; therefore, the arbitration clause is unenforceable. “[T]he Federal Arbitration Act requires a claim of fraud in the inducement of the entire contract to be submitted to arbitration.” Creson v. Quickprint of America, Inc., 558 F.Supp. 984, 987 (W.D. Mo. Jan. 27, 1983). “Only when there is a claim of fraud in the arbitration clause itself is a court to intervene.” Id. Here, Plaintiffs' Complaint alleges fraud in the inducement of the entire timeshare contract, not fraud in the inducement of the arbitration clause specifically. Therefore, Plaintiffs' claims for fraudulent inducement are proper for arbitration. See PR Group, LLC v. Windmill Int'l, Ltd., 2016 WL 3033617, at *6 (W.D. Mo. Feb. 1, 2016) (“[t]he defense of fraud can defeat the arbitration agreement only if the claim is fraud in the inducement of the arbitration clause itself - an issue which goes to the making of the ...


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