Developer Ian Bruce Eichner has notched a major legal victory against timeshare investors in the swanky Manhattan Club.
A federal judge dismissed a RICO suit filed by 200 timeshare investors at the club against developer Bruce Eichner and Bluegreen Vacations. The lawsuit deals a blow to timeshares investors’ chances of winning future fraud lawsuits against the developers.
Eichner and his affiliated companies have battled the investors over 200 West 56th Street in Midtown for close to a decade.
In 2017, then-New York Attorney General Eric Schneiderman found some merit to the timeshare owners’ gripes and brought a case. The hotel owners settled with the attorney general for $6.5 million over claims that they misled shareholders about the club’s reservations process and their ability to sell back their shares.
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The attorney general’s office also found evidence that the Manhattan Club’s sales tactics amounted to a bait-and-switch scheme. As part of the settlement, the Manhattan Club owners and operators 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 the management.
But litigation continued for years anyway.
In the most recent lawsuit, filed in 2020, timeshare investors allege that Eichner and his affiliated companies fraudulently induced them to buy interests in the Manhattan Club between 1996 and 2013. The investors also allege that Eichner affiliates made investors’ interests worthless so the owners could reacquire the timeshare interest at a fraction of the purchase price.
In addition, the complaint alleged that investors were left in arrears by high maintenance fees. Eichner and his affiliates offered to forgive the arrears and buy back the timeshare interests for $100. This allegedly enabled the defendants to reacquire many units that they had sold for tens of thousands of dollars for that nominal sum, according to the lawsuit.
When the case finally came across the desk of Judge Gregory Woods of the Southern District of New York, he did not mince words.
“This case continues the longstanding, unfortunate tradition of dressing up state claims for common law fraud and breach of contract as violations of the civil RICO statute,” the federal judge wrote in his ruling this week.
He said the plaintiffs “lump[ed] together each defendant for nearly every allegation” in a “type of slapdash group pleading.”
“We are pleased with Judge Woods’ well-reasoned decision,” said Jennifer Recine, a partner at Kasowitz Benson Torres who represented Eichner and affiliated companies, in a statement. “Plaintiffs’ claims are entirely without merit, and we look forward to putting this case behind us.”
The judge ruled the plaintiffs failed to establish the existence of an enterprise or a pattern of racketeering activity. He also said the complaint does not show a pattern of racketeering activity and never identifies when plaintiffs were injured by the alleged RICO scheme. The judge granted the defendants’ motion to dismiss with prejudice.
An attorney for Bluegreen Vacations did not return a request to comment, nor did the timeshare investor’s attorney.