Meliá Hotels sued over breach of vacation ownership contracts
The plaintiffs are seeking about $280 million in damages.
Four individuals have filed a class-action lawsuit against Meliá Hotels International S.A., its subsidiary Sol Meliá V.C. Puerto Rico Corp., and the newly formed entity Coco Condominium 1 LLC, seeking $280 million in damages related to alleged breach of contract, fraud and violations of Puerto Rican law.
The lawsuit follows Meliá’s abrupt cancellation of vacation ownership agreements tied to its property in Puerto Rico.
Plaintiffs Wendy Shaw, Susan Owens, Javier González and James Harnar — members of the Sol Meliá Vacation Club, a program initially promoted by Meliá Hotels International — filed their complaint in the U.S. District Court for the District of Puerto Rico last week.
The plaintiffs, along with numerous other consumers, purchased vacation ownership rights between 2005 and 2016, with the promise of enjoying a world-class vacation experience within Meliá’s network of luxury resorts.
These rights granted them membership in the Sol Meliá Vacation Network (SMVN), which provided access to Meliá’s properties worldwide.
Collectively, the plaintiffs invested more than $65 million in these memberships, with each member paying between $18,500 and $57,600 depending on the package. Members also paid annual maintenance and network fees. According to the plaintiffs, these memberships were marketed as long-term investments in family vacations, with contracts spanning 50 years.
The plaintiffs’ complaint centers around the 2018 sale of the Hotel Gran Meliá in Río Grande to Coco Condominium 1 LLC. The plaintiffs allege that this sale was conducted without their knowledge or consent.
As part of the sale, Meliá International and its subsidiary allegedly canceled the plaintiffs’ vacation ownership rights, including their access to the SMVN, effectively terminating their memberships. The plaintiffs argue this constitutes a breach of their 50-year contracts with Meliá.
The lawsuit further accuses Meliá of using Hurricane María, which devastated Puerto Rico in 2017, as a pretext to close the Hotel Gran Meliá and justify the subsequent sale.
The plaintiffs contend that Meliá had already decided to exit the Puerto Rico market as part of a broader corporate strategy to divest non-strategic assets, a plan allegedly set in motion as early as 2016.
They claim that this decision was financially motivated by the rising value of beachfront properties in Puerto Rico and favorable currency exchange rates, rather than by the storm’s impact.
The plaintiffs are seeking compensation under several legal frameworks, including the Puerto Rico Multi-Property and Vacation Clubs Act (Act 252), the Puerto Rico Vacation Ownership Act (Act 204), and the Puerto Rico Civil Code.
Act 204 was enacted to protect consumers from deceptive practices in the vacation ownership industry, which the plaintiffs claim Meliá violated by failing to disclose its plans to sell the property and cancel the memberships.
Additionally, the lawsuit cites the Consumer Class Action Statute under Puerto Rican law, which allows consumers to file class-action lawsuits against businesses for deceptive practices. The plaintiffs argue that Meliá’s actions were not only a breach of contract but also a violation of the principles of good faith and fair dealing, which are foundational to the legal and business environment.
The plaintiffs argue that the cancellation of their memberships has deprived them of the promised vacation experiences and significantly diminished the resale value of their vacation ownership rights. They contend that no other vacation exchange network matches the scope and prestige of Meliá’s, making their memberships virtually worthless following the cancellation.
Moreover, the plaintiffs allege that Meliá and its subsidiary continued to collect maintenance fees after the sale of the hotel, exacerbating the financial harm to the class members. They argue that this demonstrates the defendants’ disregard for their contractual obligations and the rights of consumers who trusted in the Meliá brand.
The lawsuit seeks compensatory damages, the restoration of the plaintiffs’ vacation ownership rights, and punitive damages to deter similar conduct in the future, totaling approximately $280 million.
he plaintiffs argue that the cancellation of their memberships has not only deprived them of the promised vacation experiences but has also significantly diminished the resale value of their vacation ownership rights. They contend that no other vacation exchange network matches the scope and prestige of Meliá’s network, making their memberships virtually worthless following the cancellation.
Moreover, the plaintiffs allege that Meliá and its subsidiary continued to collect maintenance fees even after the sale of the hotel, further exacerbating the financial harm to the class members. This, they argue, demonstrates the defendants’ disregard for their contractual obligations and the rights of the consumers who had trusted in the Meliá brand.
The lawsuit seeks compensatory damages, the restoration of the plaintiffs’ vacation ownership rights, and punitive damages to deter similar conduct in the future totaling some $280 million.
The plaintiffs argue that the cancellation of their memberships has deprived them of the promised vacation experiences and significantly diminished the resale value of their vacation ownership rights. They contend that no other vacation exchange network matches the scope and prestige of Meliá’s, rendering their memberships virtually worthless following the cancellation.
Moreover, the plaintiffs allege that Meliá and its subsidiary continued to collect maintenance fees even after the hotel sale, further exacerbating the financial harm to the class members. They argue that this demonstrates the defendants’ disregard for their contractual obligations and the rights of consumers who trusted in the Meliá brand.
The lawsuit seeks compensatory damages, the restoration of the plaintiffs’ vacation ownership rights, and punitive damages to deter similar conduct in the future, totaling approximately $280 million.
