Newspaper articles regarding recent lawsuits filed against Hilton Head Coral Resorts LLC

As more than 25 consumer-fraud lawsuits against a Hilton Head Island timeshare company inch forward, it's hustling to keep documents that might shed light on its practices from becoming public.

Read more here:

http://www.islandpacket.com/2014/06/07/3152025/consumer-complaints-against-hilton.html

http://www.islandpacket.com/2014/06/07/3152016/coral-resorts-makes-fast-frequent.html

According to reporter Dan Burley ( dburley@islandpacket.comJune 10, 2014 )

The Island Packet and The Beaufort Gazette have moved to intervene in the appeal of a Beaufort County judge's decision to seal records related to Coral Resorts, a Hilton Head Island timeshare company facing more than 25 lawsuits from disgruntled owners.

An attorney for the newspapers filed a motion Tuesday to challenge the company's attempt to seal an appeal of an order by 14th Circuit Court Judge Carmen Mullen. The order closed documents related to the company that were originally public, court records show.

Attorneys for timeshare owners appealed her decision, arguing the sealed documents are public records and might prove the company broke the law, according to court records.

Coral Resorts subsequently moved to seal at least a part of the appeal, according to S.C. Court of Appeals records. The court has tentatively removed the case from the public record.

When a motion is made to seal, the case is "treated as if sealed until the motion is heard," S.C. Court of Appeals clerk of court Jenny Kitchings has said.

The newspapers argue the case is public record and should not be sealed, especially since the motion to seal hasn't been heard.

"There is no such thing as a secret court in South Carolina," said Jay Bender, an attorney for the newspapers.

Coral Resorts' officials say the sealed documents include trade secrets and proprietary information about the company, which operates Port O'Call at Shipyard Plantation, Island Links, Coral Sands and Coral Reef resorts.

"We are disappointed that the newspaper is spending resources in this manner," said Nekki Shutt, an attorney for the company.

"The sealed records have nothing to do with the pending litigation ... It's a lawyer's job to keep private documents like these out of the public domain and to protect their privacy," she wrote in an emailed statement Tuesday.

Attorneys for the owners of the timeshares disagree.

"All of this information is public record," Hilton Head attorney Zach Naert wrote in an emailed statement Tuesday.

The company is trying to make the documents "private and unavailable to the public after they were distributed to the public," he said.

A date to hear the newspapers' motion has not been set, according to Bender.

Follow reporter Dan Burley on Twitter at twitter.com/IPBG_Dan.

Consumer Complaints Against Hilton Head Timeshare Company Shrouded in Secrecy

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By DAN BURLEY dburley@islandpacket.com June 7, 2014

Coral Resorts makes fast, frequent effort to seal once-public information As more than 25 consumer-fraud lawsuits against a Hilton Head Island timeshare company inch forward, it's hustling to keep documents that might shed light on its practices from becoming public.

Coral Resorts LLC, which operates four timeshare properties on Hilton Head and has been hit with numerous consumer complaints over the years, has gone to lengths to suppress what originally were public records, according to court documents. The records include testimony from a Coral Resorts executive that could prove the company broke the law, leaving it vulnerable to a class-action lawsuit, plaintiffs' attorneys allege in a request for such a lawsuit.

Attorneys representing the timeshare company have obtained two court orders to seal the documents. One order, written by Administrative Law Court Chief Judge Ralph K. AndersonIII, forbids those involved from acknowledging the records even exist.

Coral Resorts' lawyers say the documents reveal trade secrets and proprietary information about the firm, which operates Port O'Call at Shipyard Plantation, Island Links, Coral Sands and Coral Reef resorts.

"If you were being sued and someone wanted to get at you, and let's say they filed your tax returns in court records, you would want that private information withdrawn," lead attorney Nekki Shutt said. "It's the same thing for corporations."

Asked what information in the files was so sensitive, she declined to comment, citing the seal on the files.

"There's nothing secret going on," Shutt said. "We've followed civil procedure to protect our client's trademark information."

Hilton Head attorneys Zach Naert and Joseph DuBois, who represent 47 owners in 26 lawsuits against the company, say the documents are public record and relevant to their cases. The documents include a transcript from a S.C. Real Estate Commission hearing and business records the resorts have filed with the state.

Furthermore, the documents contain more than proprietary information on Coral Resorts, Naert contends. They would show that the company repeatedly broke the law, he said in a June 17, 2013, hearing in Beaufort. They also might offer a glimpse into an organization that's been hit with about 1,000 complaints from more than 100 owners in just the past three years, according to federal and state agencies, consumer-advocacy websites and the Town of Hilton Head Island.

As many as two dozen of the complaints were sent to Mayor Drew Laughlin. An attorney in private practice, Laughlin represents the resorts' homeowners associations in several lawsuits and Coral Resorts itself in another. Naert and Dubois have argued there is little apparent difference between the resorts and the associations. They say B. Dean Pierce, CEO of the resorts, is also president of the associations.

Laughlin passes along complaints he receives to town manager Steve Riley, to avoid a conflict of interest, he said Thursday.

Earlier in his term, Laughlin seemed sympathetic and interested in helping those who complained about Coral Resorts, emails suggest.

In a September 2011 email to town manager Steve Riley, Laughlin asked, "is there any better response we can give" than merely telling people who complain that regulating timeshares isn't the town's responsibility.

Then Coral hired him, as early as June 2012, according to town emails.

Laughlin said he did not have a change of heart. Instead, he said he merely took on a client in his private practice, separate from his public role as mayor.

"I'm a private, practicing attorney," he said. "This is no different than any case where I represent a client as a lawyer."

Riley said the town has not changed the way it handles complaints about the resorts since Laughlin was hired by the timeshare company.

Hundreds of owners, including retired postal workers, military veterans and school teachers have alleged they were misled by Coral Resorts over the years. Attempts to reach company officials have been unsuccessful. A Coral Resorts spokesman said Saturday that comments by Shutt, the company's attorney, reflect its position. Shutt has maintained that complaints from people who say they were misled by Coral Resorts are without merit.

Many owners assert they were deceived by sales pitches and signed contracts that didn't reflect what they were promised by salesmen, according to lawsuits and official complaints. Others say promises made -- such as a unit by the pool, waived maintenance fees, an available timeshare every year -- didn't come true, according to lawsuits. Some say timeshare staff pledged to rent the units for would-be buyers and buy them back if they ever wanted to sell. Coral Resorts denies such claims. The firm's attorneys argue these owners represent "a small but vocal subset" of the more than 20,000 people who visit the resorts every year.

MAYOR'S INVOLVEMENT

The town has long received complaints about Coral Resorts, according to Riley, the town manager.

But since the state Real Estate Commission is the timeshare industry's regulatory body, there's little the town can do to address those complaints, he said.

"If people are being mistreated, it's highly unfortunate," he said. "But it's not under our jurisdiction ... what we do doesn't give me the right to pass judgment or regulate businesses or their practices."

In the past, town officials, including the mayor, have considered whether they could do more to help those who felt wronged.

In August 2011, Councilman Lee Edwards shared a story about a woman who had told him she was cheated by a timeshare business. Edwards asked town staff to look into what could be done about businesses that generate frequent complaints. Edwards mentioned Coral Sands Resort, a Coral Resorts operation specifically.

Town attorney Brian Hulbertq answered that there were a few options, including mentioning the complaints to the state Department of Consumer Affairs or writing a letter to the business.

"There is no enforcement mechanism or punishment the town may take merely based on one sides' complaint," he wrote to assistant town manager Greg Deloach. "If the town were to now accept complaints against businesses, would we open up a new department to handle this? Are we going to regulate all businesses and investigate all complaints?"

Laughlin weighed in the following month after receiving an email from a Massachusetts man who claimed he was cheated by Coral Sands.

"Do we have any idea what Coral Sands is doing that gives rise to these complaints?" Laughlin emailed Riley on Sept. 26, 2011.

Nine months later, Laughlin was representing Coral Resorts in a business case against a marketing firm. More recently, he's taken on Coral Resorts' homeowners associations as clients. Owners allege the associations have failed to protect them from fraud and are complicit in the scams, according to complaints filed by Naert and DuBois.

Laughlin said he's received about 25 complaints about Coral Resorts since being hired by the company in 2012. He forwards them to the town manager, he said.

He said he typically doesn't inform owners who complain to the town that he represents the homeowners associations.

"I had one guy call me on the phone," Laughlin said. "I told him."

Asked if his involvement with Coral Resorts prevents the town from being more proactive toward a company that could potentially harm Hilton Head's image, Laughlin said that if the town decided to do more, he "wouldn't be involved."

Riley said the mayor's involvement hasn't changed the position of the town on Coral Resorts.

"Once we found out the mayor was involved, we left him out of it," he said. "It doesn't mean if we needed to do something we wouldn't do it, but the mayor wouldn't be a part of the conversation."

MOVING FORWARD

A decision last month by S.C. Supreme Court Chief Justice Jean Toal assigned more than 25 pending and all future court cases against the company to one judge, Circuit Court Judge Ernest Kinard. The order gives him jurisdiction over all courts in which cases are filed against the company.

On Thursday, Kinard sent 13 of the lawsuits to arbitration. The rest were put on hold until appeals that question the suppression of once-public documents are heard. Despite putting the cases on hold, Kinard said he expects three magistrate court lawsuits filed by Naert and DuBois to be tried in August.

"It's highly unlikely I'll grant motions to dismiss," he said Thursday, in response to requests by Coral Resorts.

Sondra Ettlinger, an owner suing the company for unfair trade practices, drove from University Park, Fla., to attend the hearing in Beaufort.

She said she's owned timeshares for 25 years in places like Florida, Barbados and Spain. Coral Resorts is the only one to have given her problems.

"How this organization is able to operate like this is beyond comprehension," she said.

The bundle of lawsuits are similar to cases filed against Coral Resorts by 66 Island Links owners in 2004.

The owners sued Coral Resorts after it levied a one-time assessment to raise $3.7 million for improvements to the property, according to court records. They claimed the assessment was illegal and that Coral Resorts changed the master deed without the owners' approval.

Those cases were settled in 2008, according to court records. Columbia-based attorney George McMaster, who represented the owners, declined to discuss the lawsuits last week.

Naert and DuBois' law firm also has butted heads with Coral Resorts in federal court.

In December, the timeshare company sued the law firm over its alleged use of Coral Resorts registered trademarks to generate hits on the law firm's website. The company accused the law firm of purchasing keywords related to the resorts through search engines such as Google. Those purchases drive the law firm's website to the top of the list when the resorts are searched, Coral Resorts' complaint said.

The resorts lost business because potential customers were led to assume there was an affiliation between the law firm and the timeshares, according to the lawsuit.

Naert and DuBois' motion to dismiss the suit is pending, according to court records.

Follow reporter Dan Burley on Twitter at twitter.com/IPBG_Dan.

Coral Resorts make fast, frequent effort to seal once-public information

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By DAN BURLEY dburley@islandpacket.comJune 7, 2014

A review of court records and minutes of state Real Estate Commission meetings shows an energetic, extensive and effective effort by Coral Resorts' attorneys to keep secret once-public information.

Some sealed documents include business records filed with the commission that map the internal structure of Coral Resorts, its different properties, its property-management company, Reba Management, and its sales and marketing company, Sunrise Vacation Properties Ltd.

These documents were obtained -- before they were sealed -- by attorneys for disgruntled timeshare owners through a Freedom of Information Act request. Other sealed documents include a transcript of a Real Estate Commission hearing on Jan. 23, 2013 that could add weight to the owners' lawsuits, their attorneys say.

According to the agenda for the hearing -- one of the few documents in the case available to the public -- a timeshare firm obscurely identified as "C.R." appeared before the commission that day. The hearing was called to discuss "documentation issues and unpaid renewal fees," records show.

Commission officials later confirmed "C.R." was Coral Resorts.

The commission called it an application hearing, a term that's usually used when a company registering to sell timeshares has an application that "raises a red flag," commission member Manning Biggers, a real estate agent in York, said on Tuesday. Biggers could not recall details of the Jan. 23 hearing.

During the hearing, a Coral Resorts employee acknowledged that the company had not paid fees to renew its state registration to sell timeshares since at least 2008, records show.

The two Hilton Head Island attorneys who are representing the unhappy timeshare owners, Zach Naert and Joseph DuBois, did not attend the hearing because they didn't know it was scheduled.

Someone mailed Naert and DuBois a copy of the transcript, they said. They say they don't know who that person was, but a judge involved in the case said "an anonymous LLR employee impermissibly mailed" the transcript. LLR is the state Department of Labor, Licensing and Regulation, the agency under which the Real Estate Commission operates.

The lawyers declined to provide the transcript to The Island Packet and The Beaufort Gazette, citing two court orders that sealed the information.

The attorneys claim that if the testimony by the Coral Resorts' employee is true, it would nullify contracts signed by owners from when the company last paid registration fees in 2008 until January 2013, when the commission hearing was held.

Coral Resorts "categorically denies any lapse" of registration to sell timeshares, Nekki Shutt, the company's attorney, said Thursday.

EFFORTS TO SEAL

During the Jan. 23 hearing before the Real Estate Commission, Coral Resorts attorneys tried to keep the conversation off the public record. The commission pushed back, saying the hearing was an open forum and "a matter of public concern."

At the end of the hearing, the commission allowed Coral Resorts to pay its past-due fees. But the commission also declared that although the hearing had been public, its decision was private. That meant the transcript of the hearing might be accessible to the public, so Coral Resort attorneys appealed to the state's Administrative Law Court.

Two months later, the court's chief judge, Ralph K. Anderson III, described the Real Estate's Commission's actions as "bewildering," and sharply criticized it for making "parts of the proceeding public and parts of it private," with no legal basis.

Anderson ruled to seal the transcripts from the Jan. 23 hearing. He reasoned that because the commission made its decision private, the discussion during the hearing also should be private. Anything otherwise would be "arbitrariness and caprice," he wrote.

Further, Anderson ordered that documents related to the hearing "in the hands of any third party should be returned to department of Labor, Licensing and Regulation, and the commission immediately."

A Real Estate Commission spokesperson declined to answer questions about the hearing, citing a letter from Anderson that forbids discussing whether "this matter even exists."

ANOTHER JUDGE, ANOTHER SEAL

Before Anderson relegated the transcript to legal oblivion -- that is, while it was still a public document -- Naert and DuBois had added it along with some of Coral Resorts business records to their lawsuits against Coral Resorts, according to court files.

Two weeks afterward, Shutt, Coral Resorts' attorney, asked 14th Circuit Court Judge Carmen Mullen to seal the transcript and the accompanying Coral Resorts business records. Mullen granted the order on June 10, the same day Shutt asked for it.

At a subsequent hearing, Mullen decided to keep the transcript and other information sealed, ordering the attorneys "not talk to the paper" about the information, according to court records from that hearing.

"We're going to keep it sealed," she said, according to the records from the June 26 hearing. Attempts Friday to reach Mullen were unsuccessful. Naert and DuBois appealed both Mullein's and Anderson's rulings to the S.C. Court of Appeals.

In their appeal of Anderson's ruling, the attorneys claimed their cases hinge, in part, on the documents under seal.

Their appeal of Anderson's ruling was dismissed by the court on Thursday, so the documents remain sealed.The appeals court ruled that Naert and DuBois didn't have the proper standing to be involved in the case.

Likewise, Mullen's ruling sealing Coral Resorts' records stands for the time being.

When Naert and DuBois challenged her decision in the appeals court, Coral Resorts attorneys promptly responded. They asked the appeal court to keep the file sealed, and the court did so.

When a motion is made to seal, the case is "treated as if sealed until the motion is heard," according to S.C. Court of Appeals clerk of court Jenny Kitchings.

Follow reporter Dan Burley on Twitter at . Related content:

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