Condo owners sue over timeshares

LIHUE — Two luxury condo owners are claiming they were mislead and overcharged as their development surrounded by blight was converted into a timeshare resort.

The case charging material misrepresentation and breach of contract was filed in 5th Circuit Court on Dec. 16 by the firm of Revere & Associates. The plaintiffs Steven and Stephanie Johnson, and Donald Demers, are both owners at Kalanipuu Condominium in Kauai.

The Johnson’s are California residents and co-trustees of the Johnson Family Trust. They own a three-bedroom unit. Demers is trustee of the Donald Demers Trust. He is an Illinois resident and owner of a two-bedroom unit.

They are suing co-defendants Kauai Lagoons, Marriott International, Inc., Ritz-Carlton Development Company, Marriott Vacations Worldwide Corporation, and Association of Owners of Kalanipuu Condominium, in addition to timeshare developers Marriott Resorts Hospitality Corporation, Kauai Lagoons Community Association, and Kalanipuu Vacation Owners Association.

The complaint charges material misrepresentation in violation of the Hawaii Condominium Property Act. It alleges failure to maintain minimum standards or meet obligations in good faith, and for failing to inform the plaintiffs of the intent to convert to timeshare.

At the time the plaintiffs purchased their units with “Grand Residences by Marriott” in 2007, it was still under construction as a joint condominium development of Kauai Lagoons and Marriott International. The purchase agreement with the broker, Ritz Carlton, says it was to be an upscale condominium project with exclusive access to amenities within the larger Kauai Lagoons Resort.

The promised amenities included a premiere golf course, fishing and boating lagoons, vintage boat taxi service, an on-site restaurant, and ocean front walking paths to Running Waters beach. The plaintiffs allege the promised amenities were not built, or not built to the extent promised as with the golf course and lagoon.

The complaint charges unfair and deceptive trade practices for failure to develop luxury amenities and failing to notify of a transition to a timeshare destination that materially altered the nature of Kalanipuu Condominiums. It alleges that Marriott International and Kauai Lagoons intended to convert Kalanipuu into a timeshare project at the time an amended developers report was published in 2008.

This was not disclosed to the plaintiffs, who claim they were led to believe an upscale project would be developed as stated in the 2006 report.

The third charge, unjust enrichment, alleges charges for costs associated with the development, construction, and marketing of Kauai Lagoons and Kalanipuu Condominiums for which the plaintiffs received no benefit for costs associated to management and operation of the timeshare development.

The monthly maintenance fees to the plaintiffs were established at the time of purchase as less than $17,700. The AOAO charged Demers $21,907 in 2009, and $29,652 in 2014, while the Johnson’s were assessed $28,472 in 2010 and $34,595 in 2014, according to the complaint.

The case was assigned to Judge Kathleen Watanabe. The defendants have yet to file a response to the complaint and no appearances have been scheduled.


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