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Reed v. Big Water Resort LLC

United States District Court, D. South Carolina, Charleston Division

February 1, 2016

William Reed, Donna Reed, Bonnie Youmans, Jane Yates, Phillip Caulder all individually and for the benefit and on behalf of all others similarly situated, Plaintiffs,
v.
Big Water Resort, LLC, TLC Holdings, LLC, Richard Clark, James Thigpen, Jimmy “Steve” Lovell, and Ocoee, LLC. Defendants. Big Water Resort, LLC; TLC Holdings, LLC, Richard Clark, James Thigpen, Jimmy “Steve” Lovell; Ocoee, LLC, Third-Party Plaintiffs,
v.
M.B. Hutson, a/k/a M.B. Hudson, Third-Party Defendant.

ORDER APPOINTING CLASS REPRESENTATIVES, CLASS COUNSEL, AND CLAIMS ADMINISTRATOR, AND PRELIMINARILY APPROVING SETTLEMENT CLASS AND CLASS NOTICE

DAVID C. NORTON, UNITED STATES DISTRICT JUDGE

This matter is before the Court on the parties’ Joint Motion and Memorandum in Support of the Motion for Appointment of Class Representatives, Class Counsel, Certification of Settlement Class, and Preliminary and Final Approval of Class Settlement Notice and Class Settlement (Dkt. Entry No. 218) (hereinafter “Joint Motion for Class Settlement”). Having now heard and considered the points and authorities set forth in the Joint Motion for Class Settlement and the oral arguments of counsel, this Court hereby Orders and Directs:

a. The Court gives preliminary approval of the Comprehensive Settlement Term Sheet (“Settlement Agreement”) contingent on final approval at the Final Fairness Hearing;
b. The Court approves the notice and claims procedure proposed by the Parties and described in the Comprehensive Settlement Term Sheet, the Proposed Notice handed up at the hearing and attachments to the Joint Motion for Class Settlement;
c. The Court appoints William Reed, Donna Reed, Bonnie Youmans, Jane Yates, and Phillip Caulder as Class Representatives for the Settlement Class;
e. The Court appoints Richardson, Patrick, Westbrook & Brickman, LLC, and Finkel Law Firm, LLC, together to act as Class Counsel and to administer the settlement; and
f. The Court schedules a Final Fairness Hearing for May 16, 2016 at 10:00 a.m. and a Final Appeals and Distribution Hearing on September 1, 2016 at 11:00 a.m.

I. BACKGROUND

This case involves allegations that Plaintiffs and all Big Water Resort Club members were harmed by the conversion of the Big Water Resort from a private club to a public club. The class representatives are individuals who purchased memberships in the Big Water Club or Big Water Resort, a recreational vehicle park and campground in Summerton, South Carolina. The class representatives each entered into substantially similar membership agreements with Big Water Resort, LLC. Defendant Big Water Resort, LLC was responsible for the daily operations and the marketing of the club. Defendants Clark, Thigpen, and Lovell are the sole members of Defendants TLC Holdings, LLC and Big Water Resort, LLC. Defendant TLC Holdings owns the land and improvements upon which Big Water Resort is situated.

II. SUMMARY OF CLAIMS AND DEFENSES

This is a class action brought by Plaintiffs on behalf of those who purchased memberships in a private club known as the Big Water Resort. The core allegation in the case was that the club was wrongfully converted from a private club to a public establishment. As damages, Plaintiffs sought a refund of the purchase price paid for the memberships on behalf of everyone who was a member of the club when it was converted sometime in or after 2011. This amount totaled in excess of $4 million. Plaintiffs’ First Amended Complaint includes causes of action for (1) Declaratory Relief; (2) Breach of Contract; (3) Tortious Interference with Contract; (4) Fraudulent Conveyance; (5) Violation of the Time Share Statutes; (6) Negligence Per Se; (7) Negligence; (8) Negligent Misrepresentation; and (9) Piercing the Corporate Veil.

The Defendants asserted numerous defenses arguing among other things that the conversion of the club to a public club was not a breach of contract and that the public was allowed onto the property several years prior to 2011 which would render all claims time barred by the statute of limitations. Also, Defendants asserted that the damages at issue should not be the full membership purchase price paid by the members but instead that there should be an offset accounting for the fact that the club members used the property and still have preferential access to the property.

III. TERMS OF CONDITIONAL SETTLEMENT

As a preliminary matter, it appears that the proposed Class Settlement is the result of an arms’ length negotiation between experienced and well-informed counsel. For nearly two years, the parties have litigated this class action. As set out above, Plaintiffs’ counsel has pursued diverse liability theories against the various Defendants.

The parties mediated this litigation in October of 2015. The Parties reached as settlement at the mediation.

In full settlement of the claims of the Named Plaintiffs and each member of the Settlement Class, Defendants will cause to be paid into escrow One Million Dollars ($1, 000, 000.00) for the creation of a Settlement Fund. The Settlement Fund will be paid to Class Members who submit a timely and complete Claim Form in an amount which is a percentage equal to the amount paid by a class member for their membership agreement (as shown on the spreadsheets attached to the Joint Motion for Class Settlement, Dkt Entry Nos. 218-2 and 218-3) divided by the total amount of the Membership Agreement purchase price for all Class Members for all membership agreements of the Class Members including any of the 31 persons who submit proof of 2011 dues payments. Any unclaimed funds after the expiration of the claim period will be refunded to the Defendants from the escrow account. (EXAMPLE: $8, 400 divided by $4, 168, 757 = .002 x $1, 000, 000 = $2, 014.99).

Upon Approval of this settlement by the Court, the Defendants also will provide to Class Members who submit a timely and complete Claim Form a Gift Certificate redeemable for credits to be used for camping at Sandy Shores Resort at the current (general public) rental rate at the time of use. The full terms of the Gift Certificates are set forth in the Comprehensive Settlement Term Sheet, Dkt. Entry No. 218-1. The total dollar amount allotted to Gift Certificates ...


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