Court Rules that Diamond Sufficiently Alleged that Carlsbad Law Group and McCroskey Legal Violated State and Federal Law in Offering So-Called Timeshare “Exit” Services
APRIL 29, 2021 (LAS VEGAS, Nev.) — Diamond Resorts®, a global leader in the hospitality, vacation ownership and entertainment industries, announces another legal victory in its lawsuit against Pandora Marketing (d/b/a Timeshare Compliance), Intermarketing Media (d/b/a Resort Advisory Group), Carlsbad Law Group (including Slattery, Sobel & Decamp, Del Mar Law Group, and Sean Slattery), and McCroskey Legal (including Unlock Legal and Miranda McCroskey). A California federal court recently denied the majority of Carlsbad Law Group’s and McCroskey Legal’s motions to dismiss the claims leveled against them by Diamond, allowing Diamond to proceed against these timeshare “exit” lawyers for contributory false advertising under the Lanham Act, violations of California’s Unfair Competition Law, civil conspiracy, and aiding and abetting Timeshare Compliance and Resort Advisory Group’s tortious conduct.
Diamond’s lawsuit details the nationwide consumer scam perpetrated by Timeshare Compliance, Resort Advisory Group, Carlsbad Law Group, and McCroskey Legal. Timeshare Compliance and Resort Advisory Group lure timeshare owners into paying exorbitant upfront fees for timeshare “exit” services, and then assign the owners to Carlsbad Law Group or McCroskey Legal, law firms that merely procure forced defaults on the timeshare contracts. Instead of providing legitimate services, Carlsbad Law Group and McCroskey Legal, with help from Timeshare Compliance and Resort Advisory Group, mislead timeshare owners, delay service to induce additional upfront “exit” fees from owners, and then encourage nonpayment on the timeshare contract. This results in defaulted contracts, damaged credit, and tax liabilities for the timeshare owners.
In their motions to dismiss, Carlsbad Law Group and McCroskey Legal argued that the lawsuit should be dismissed because Diamond failed to state viable claims. The U.S. District Court for the Central District of California disagreed.
As to Diamond’s Lanham Act claim, which addresses false and misleading advertising distributed to the public, the Court highlighted Diamond’s allegations that Carlsbad Law Group and McCroskey Legal encourage and support the “exit” companies’ false advertising with statements on their own websites; continue to accept timeshare owner referrals despite knowing of the false and misleading advertising; and otherwise enable the “exit” companies’ services.
Diamond will also proceed with its claim under California’s Unfair Competition Law, which prohibits unfair, unlawful, and fraudulent business practices. The Court pointed to Diamond’s allegations that Carlsbad Law Group’s and McCroskey Legal’s services are touted by Timeshare Compliance and Resort Advisory Group, and that Carlsbad Law Group’s and McCroskey Legal’s involvement is the main reason owners sign on to the “exit” scheme.
For Diamond’s civil conspiracy claim, the Court was persuaded that Diamond sufficiently alleged that Carlsbad Law Group, McCroskey Legal, and the “exit” companies work closely together and “reached a common understanding as to the objective of the conspiracy.”
Diamond’s claims that Carlsbad Law Group and McCroskey Legal aided and abetted the scheme will also proceed. The court recognized Diamond’s assertions that Carlsbad Law Group and McCroskey Legal are integral to the scheme:
Given the false advertising and the Lawyer Defendants’ relationship with the Exit Company Defendants, it is plausible that the Lawyer Defendants knew of the scheme and gave substantial assistance by agreeing to be the lawyers that the Exit Company Defendants needed to perpetuate the scheme. By accepting referrals the Lawyer Defendants substantially aided the exit scheme as a whole.
“This ruling is yet another important step towards holding nefarious companies accountable for the harm they inflict on our members,” said Mike Flaskey, CEO, Diamond Resorts®. “Lawyers are instrumental to many of the exit schemes, and we will not allow them to prioritize referrals and financial gain over the best interests of our members.”
In addition to this case, Diamond Resorts has pursued more than fifteen actions in courts across the country against numerous companies marketing themselves as third-party exit companies.
While the vast majority of members enjoy their vacation ownership, Diamond Resorts also understands that life circumstances can change and provides options for members seeking to safely modify or leave their vacation ownership behind. To learn more about red flags and report possible fraudulent third-party exit activity, visit Exit.DiamondResorts.com.
About Diamond Resorts
Diamond Resorts® offers destinations, events and experiences to help members make a habit of breaking from the routine. From unforgettable getaways to exclusive concert series to VIP receptions and dinners, members turn to Diamond to recharge, reconnect and remind each other what matters most. Our focus on quality resorts, customer service and flexibility means members can return to a favorite resort, book a cruise to explore new countries or attend a once-in-a-lifetime event with the same level of confidence and anticipation. With access to a world of entertainment and activities, a Diamond membership ensures that people are always looking forward to vacation.