# Bowlin v. Diamond Resorts U.S. Collection Development, LLC

> District Court, W.D. Missouri · May 19, 2022

URL: https://www.frixlaw.com/law-library/cases/10242443

## Case

- **Court:** District Court, W.D. Missouri
- **Decided:** May 19, 2022
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

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## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF MISSOURI
SOUTHERN DIVISION

CANDACE MCCULLLOUGH and )
JEREMY BOWLIN, )
)
Plaintiffs, )
)
v. ) Case No. 6:22-CV-03029-MDH
)
DIAMOND RESORTS U.S. COLLECTION )
DEVELOPMENT, LLC, et al., )
)
Defendants. )

ORDER

Before the Court is Plaintiffs’ Motion to Remand (Doc. 18) the above-captioned case.
Defendants filed a response to the Motion (Doc. 23), but Plaintiffs filed no reply. The matter is
now ripe for review. For the reasons set forth herein, the Motion is DENIED.
BACKGROUND
Each of the Defendants is associated with Diamond Resorts (“Diamond”). Diamond
Resorts U.S. Collection Members Association (“DRUSC”) provides timeshare interests in the
form of points, a form of currency to be redeemed for varied accommodations, travel and other
benefits. DRUSC is the contracting party with Diamond timeshare purchasers of the “U.S.
Collection” (or the “Collection”), an array of timeshare resort properties located across the United
States to which members have access. The Suites at Fall Creek Condominium Association, Inc.
(“Fall Creek COA”), the defendant that Defendants argue is fraudulently joined, is the
condominium association at one such resort in Branson, Missouri (“the Resort”).
Plaintiffs are Kansas residents. (Pet. at ¶ 1). They have made three purchases with DRUSC.
On June 18, 2019, while at a Diamond resort in Las Vegas, Nevada, Plaintiffs purchased 7,500
points for use in the Collection at a purchase price of $32,343.00 (the “2019 PSA”). (See Doc. 23
Ex. B; Pet. at ¶ 11). At the time, they acknowledged they were purchasing points. (Doc. 23 Ex. C
at 1).
Less than two months later, on August 7, 2019, while at the Resort in Branson, Missouri,

Plaintiffs made a purchase of what is known as a “Sampler” package, purchasing 20,000 points
that expire within 24 months from the date of purchase for $3,995.00, financed over two years (the
“Sampler Agreement”). (See Doc. 23 Ex. D; Pet. at ¶ 19, Ex. 1). The “Sampler” permits a purchaser
to enjoy certain identified facilities in the “U.S. Collection” for a limited period of time. See id.
On March 10, 2020, Plaintiffs entered into another Purchase and Security Agreement with
DRUSC (the “2020 PSA”). (See Doc. 23 Ex. E; Pet., Ex. 3). In a transaction that was conducted
by phone and mail, with no connection to Missouri, the Plaintiffs agreed to purchase more of what
they first purchased in the 2019 PSA, specifically 4,000 additional points at a purchase price of
$16,213.00. (See id.; Doc. 7-1 at ¶ 8). Again, they acknowledged that what they were purchasing
were points for use in the U.S. Collection. (Doc. 23 Ex. F at 1).

The governing documents for the Collection provide that members of the Collection are
assessed annual maintenance charges used to operate, maintain, and refurbish each resort in the
Collection. In other words, they do not receive statements from each of the associations for the
constituent resorts. Maintenance statements that were mailed to the Plaintiffs were all from or on
behalf of Diamond Resorts U.S. Collection Members Association (“Collection Members
Association”) and all stated that payment was to be made to Collection Members Association.
STANDARD
Defendants may remove to federal court “any civil action brought in a State court of which
the district courts of the United States have original jurisdiction[.]” 28 U.S.C. § 1441(a). A plaintiff
may challenge removal by filing a motion to remand. See 28 U.S.C. § 1447(c). The party seeking
removal bears the burden of establishing subject-matter jurisdiction. In re Bus. Men’s Assurance
Co. of Am., 992 F.2d 181, 183 (8th Cir. 1993). “[A] district court is required to resolve all doubts
about federal jurisdiction in favor of remand.” Transit Cas. Co. v. Certain Underwriters at Lloyd’s

of London, 119 F.3d 619, 625 (8th Cir. 1997) (citation omitted).
DISCUSSION
Plaintiffs’ argument that this case should be remanded is two-fold. Plaintiffs assert that this
Court does not have subject matter jurisdiction pursuant to 28 U.S.C. s. 1441(b)(2), because (1)
the amount in controversy at the time of removal is less than $75,000, and (2) the lawsuit names a
Missouri Citizen as a defendant which violates the “forum defendant” rule. Defendants in turn
argue that the amount in controversy exceeds $75,000 if attorney fees are considered, and
Defendants further contend that Fall Creek COA is a fraudulently joined party.
1. The amount in controversy exceeds $75,000
“When the two parties to an action are citizens of different states … a federal district court’s

jurisdiction extends to ‘all civil actions where the matter in controversy exceeds the sum or value
of $75,000, exclusive of interest and cost.’” Kopp v. Kopp, 280 F.3d 883, 884 (8th Cir. 2002). In
determining if the amount in controversy requirement is met, courts look to the amount in
controversy at the time of removal. Cary v. All State Insurance Company, No. 4:19 CV 17 RWS,
2019 WL 414718 at *1 (E.D. Mo. Feb. 1, 2019).
Plaintiffs’ claimed damages claims are actual damages of $29,293.37, punitive damages
for $15,000, and for statutory attorney’s fees under Count I for violations of MMPA, or Count III
for violations of the Missouri Usury statute. This Court has found that, “[w]hile the Eighth Circuit
has not yet addressed the issue, the majority of district courts within this circuit have held that
attorney fees incurred post-removal are includable in the amount in controversy calculation so long
as they are reasonable.” Stanley v. Lafayette Life Ins. Co., No. 3:13-CV-05137-MDH, 2015 WL
2062568, *3 (W.D. Mo. May 4, 2015) (collecting cases). Thus, “the true amount in controversy at
the commencement of the action” properly includes “a reasonable estimate of future attorney

fees…” Stanley, 2015 WL 2062568 at *4-5. Defendants’ Notice of Removal states that “it is more
than reasonable to conclude as a conservative assessment that this case will require at least $50,000
in attorneys’ fees that must be included in the amount in controversy.” (Doc. 1).
“Once the removing party has established by a preponderance of the evidence that the
jurisdictional minimum is satisfied, remand is only appropriate if the plaintiff can establish to a
legal certainty that the claim is for less than the requisite amount.” Hargis v. Access Capital
Funding, LLC, 674 F.3d 783, 790 (8th Cir. 2012). Plaintiffs do not show to a legal certainty that
reasonable attorneys’ fees cannot reach the $50,000 amount Defendants posit or even the
$30,706.73 that Plaintiffs concede would suffice to satisfy the $75,000 threshold if actual damages
and punitive damages are limited to $29,293.57 and $15,000, respectively. The Court finds that

the amount in controversy in this case is met for purposes of establishing subject matter
jurisdiction.
2. Fall Creek COA is a fraudulently joined party
Defendants argue that the diversity of citizenship requirement is met because named
Defendant Fall Creek COA is fraudulently joined. 28 U.S.C. § 1441(b)(2) prohibits removal of a
civil action “if any of the parties in interest property joined and served as defendants is a citizen of
the State in which such action is brought.” Plaintiffs name Defendant Fall Creek COA, which is a
Missouri citizen.
Defendants contend that Fall Creek COA’s joinder is fraudulent and should be disregarded.
“Joinder is fraudulent where state law precludes or otherwise does not support a cause of action
against the defendant.” Wivell v. Wells Fargo Bank, N.A., 773 F.3d 887, 893 (8th Cir. 2014). Thus,
“[a] defendant alleging fraudulent joinder must prove that the plaintiff’s claim against the

diversity-destroying defendant has no reasonable basis in fact and law.” Halsey v. Townsend Corp.
of Indiana, 20 F.4th 1222, 1226 (8th Cir. 2021) (internal quotation omitted).
In their Motion, Plaintiffs’ main argument is that Fall Creek COA supposedly “is a
necessary party to the action as a beneficiary of the sales agreement and the progenitor of
assessments for maintenance and operation of the Resort…As the timeshares marketed by
Defendants include its Branson Resort, the maintenance fees assessed to Plaintiffs were necessarily
promulgated by Defendant Association.” (Doc. 19) Thus, Plaintiffs continue, because they allege
Fall Creek COA “issued assessments, and that Plaintiffs’ [sic] paid assessments to [it],” “[i]n
accomplishing rescission . . . necessarily Defendant Association would be a party as it has received
payment from the transaction at issue…” Id.

Being a necessary party for purposes of Federal Rule of Civil Procedure 19 is insufficient
to render a defendant properly joined: “before a party will be joined…as a defendant the plaintiff
must have a cause of action against it.” Vieux Carre Prop. Owners, Residents & Assocs., Inc. v.
Brown, 875 F.2d 453, 457 (5th Cir. 1989). “[W]hile Rule 19 provides for joinder of necessary
parties, it does not create a cause of action against them.” Davenport v. Int'l Bhd. of Teamsters,
AFL-CIO, 166 F.3d 356, 366 (D.C. Cir. 1999). Thus, “[i]t is not enough that plaintiffs ‘need’ [the
equitable relief of rescission] against [Fall Creek COA] in order to obtain full relief,” (id.), which
is what Plaintiffs argue in their Motion. “They must also have a right to such [relief], and Rule 19
cannot provide such a right.” Davenport, 166 F.3d at 366. To avoid a finding of fraudulent joinder,
Plaintiffs were required to show that their allegations “support a cause of action against” Fall Creek
COA. Wivell, 773 F.3d at 893.
However, there is no indication that Plaintiffs were ever assessed maintenance fees by Fall
Creek COA or paid it any maintenance fees. Plaintiffs purchased a timeshare interest or

‘Membership’ in the Diamond Resorts U.S. Collection, which made them members of the
Diamond Resorts U.S. Collection Members Association. The Sampler Agreement also specifies
that Plaintiffs purchased “Sample Point” that can only be used for accommodations at participating
Sampler destinations. Plaintiffs used points to reserve accommodations at resorts, once of which
was the Defendant Fall Creek COA’s resort.
Plaintiffs’ allegations that they were assessed fees by Fall Creek COA are contradicted by
Plaintiffs’ submissions to the Court. The 2020 PSA expressly states that the $705.00 amount is the
“Initial Use Year’s Association standard Assessments (estimated),” and that “You will be billed
for Assessments separately by the Association.” (Pet., Ex. 3 at 1) (emphasis added). On the same
page, the Agreement defines the term “Association” as “Diamond Resorts U.S. Collection

Members Association . . . .” Id. Moreover, Section 3 of the PSA states, “You must pay Assessments
(also known as ‘Maintenance Fees’) annually to the Association for as long as You own your
Membership.” Id. at § 2 (emphasis added). It further provides in Article 11 that the maintenance
fees are determined and assessed by the Association, upon each of the Members of the Association
(such as Plaintiffs), for the upkeep and operation of all resorts in the Collection. The maintenance
assessment, that is, the “Standard Assessment,” is part of the “Collection Costs” that are levied
Collection-wide by the Association – not Fall Creek COA or any other “Component Site Owners
Association” – upon all Members. At no point is Fall Creek COA mentioned or referred to.
As shown in the statements sent to the Plaintiffs during their time as members of the
Collection, starting in 2019, the statements are sent on behalf of the Association and inform the
recipient to “Make Check Payable to: Diamond Resorts U.S. Collection Members Association.”
(Second Harris Decl., Exs. 2-4, 7 at 1). On the opposite side, in the answer to the question, “What

are assessment fees and who determines them?,” the reader is told that two types of assessments
are levied by the Collection Members Association to cover the expenses of “each resort in the
Collection,” and they include expenses budget by “the associations of each resort in the
Collection.” Id. 2.
Accordingly, the purported joinder of Fall Creek COA as a defendant by Plaintiffs does
not satisfy Rule 19. Plaintiffs rely on the allegations that they were assessed fees and paid feeds to
Fall Creek COA to assert that Fall Creek COA is a necessary party to this action. However,
Plaintiffs’ allegations do not demonstrate that Plaintiffs have any cause of action against Fall Creek
COA. Therefore, the Court finds that Fall Creek COA was fraudulently joined in this case. The
party’s Missouri citizenship can therefore be disregarded for purposes of the “forum defendant”

rule. The Court concludes that the parties meet the diversity requirement.
CONCLUSION
As discussed above, the Court finds that the diversity of citizenship and amount in
controversy requirements needed to establish subject matter jurisdiction pursuant to 28 U.S.C. s.
1332 are satisfied in the above-captioned case. Accordingly, Plaintiffs’ Motion to Remand (Doc.
18) is DENIED.
IT IS SO ORDERED.
Dated: May 19, 2022 /s/ Douglas Harpool______
DOUGLAS HARPOOL
United States District Judge

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10242443. Public record. Not legal advice.