TimeShare Today article

The following article is reprinted here by permission of the magazine TimeSharing Today, from their Jul/Aug issue.
Their website is www.tstoday.com

------------------------------------------------------------------------

This is the right article at the right time for us!

Please read through to see how similar this is to our situation. Perhaps we can use this info towards a successful outcome to our complaints

----------------------------------------------------------------------------------------

Ousted Directors Fight Back,
Seeking Help from State, Court

Hanalei Bay Resort owners and four directors
ousted by Celebrity Resorts Management
have sought help from Hawaiian Senate Majority
Leader Gary Hooser and the Court in
seeking to regain control of the resort.
According to the Petition filed by the ousted directors,
their removal from the Board of Directors was
masterminded by Celebrity in response to the directors
raising “issues and concerns” alleging Celebrity’s
mismanagement and self-dealing.

The luxury oceanfront resort was built in 1975 and
managed in recent years by Quintus Vacation Management,
headed by Gary Grottke. Grottke, who owns a unit
at the resort, was one of five Board members, with the
other four having been elected by the owners. However,
at the time the management contract was made with
Quintus, Grottke controlled the Board. As a result, the
management contract is automatically renewed annually
unless a majority of owners authorize the
Board to cancel the agreement.

In August, 2008, Grottke sold the
management rights to Celebrity Resorts
Management. Prior to the sale, Peter
Somerville, Richard Schweickert, David
Nicholl and Don Finch had been elected
to the Board and, according to their court
Petition, their standing as duly elected
directors had never been questioned by
Grottke or Quintus, which had administered
the elections.

In April, 2009, Celebrity and Grottke
notified the other four directors that they
had not been properly elected and that four
new directors (all connected to Celebrity)
had been appointed. Somerville, Schwe-
ickert, Nicholl and Finch then filed a Petition
in the Hawaii Circuit Court seeking
to have the court remove all five directors
and oversee an election of the directors.
In addition, the ousted directors and other
owners sought help from Senate Majority
Leader Gary Hooser, who wrote to the
Department of Commerce and Consumer
Affairs and the Attorney General, urging
them to look into the siutation:

“Your prompt review and evaluation
of the below information is greatly
appreciated. The below data and allegations
originate from numerous telephone
and email communications with interval
owners at the Hanialei Bay Resort. I have
not spoken directly with the owner of the
management company or others involved
and named below, nor have I verified any
of the a11egations.

“However; it seems clear to me that
there is serious conflict going on between
parties that involve ownership rights that
arc governed by state law. It is further
obvious that this situation is of an urgent
nature as the financial impacts to all parties
involved may be significant.

“It has come to my attention that the
management company of the Hanalel
Bay Resort, Quintus Resorts LLC and
its successor. Celebrity Resorts, may
have, apparently without owner notice
or approval, replaced the members of
the Hanalei Bay Resort Vacation Owners
Association Board of Directors (VOA
Board), and installed its own board.
Timeshare owners, many of whom
maintain their own businesses and have
owned their properties for years, are
understandably upset, and have sought
my assistance.

“Pilikea [Hawaiian for trouble] such
as this affects not only our reputation as a
tourist destination but Kaua’i owners and
residents who work at the Resort.

“I understand from my constituents
that they have peppered your offices with
inquiries and requests for assistance to resolve
these matters, and to restore control
of Hanalei Bay Resort to its owners.

“Though I do not have firsthand
knowledge and I have not verified the
statements and allegations stated in the
above letter, it is clear to me that there is
an urgent need for an independent evaluation
of this situation by the Attorney
General’s office and or the Department of
Commerce and Consumer Affairs.”

An investigation by the Department
of Commerce and Consumer Affairs is
now reportedly under way.

The “issues and concerns” alleged by the Hanalei Bay Resort Board
included the following actions and failures by Celebrity:
(a) Without authorization from the Board, cancelled the contract with the longterm
insurance broker and signed a contract for insurance brokerage services with
an affiliate of Celebrity Resorts Management located in Florida;
(b) Failed, neglected and refused to prepare the 2009 budget In a timely manner;
(c) Failed, neglected and refused to provide information requested by the Board
regarding the location and amounts of all bank accounts and only provided such
information after repeated requests over several months;
(d) Failed, neglected and refused to provide to the Board an accurate and complete
list of Interval Owners, including their contact information;
(e) Rented out the intervals of delinquent or defaulted interval Owners and collected
the rent for its own account rather than the account of the owners association
(f) Failed neglected and refused to provide the Board with detailed condition
reports with respect to all Interval Units, as promised;
(g) Failed, neglected and refused to provide the Board with any Information
regarding a substantial tax audit involving the Hawaii general excise tax payable
for the resort;
(h) Failed, neglected and refused to create and generate the Project website as
promised to the Board;
(i) Contrary to the direction of the Board, prepared and sent mailings to Interval
Owners without first providing a draft to the Board and failed to include in such mailings
and items the Board had specifically instructed Celebrity to include;
(j) Subsequently sent additional mailings without even providing any copies
thereof to the Board;
(k) Failed, neglected and refused to send out the 2009 Annual maintenance fee
bills to the interval Owners on a timely basis and when it did send out such bills in
an untimely manner, it failed to include any deadline for payment by the Interval
Owners;
(1) Hired an assistant manager at the time the resort was operating at an annual
deficit without the approval of, or without even providing prior notice to, the
Board;
(m) Paid the real property taxes on the Interval Units after the due date, incurring
penalties and interest;
(n) Failed to aggressively pursue the collection of delinquent maintenance fees
from Interval Owners despite Instructions from the Board; and
(o) Unilaterally changed the rules without the approval of the Board or the Interval
Owners to prohibit interval Owners from reserving a specific Unit with their
reserved week, which is contrary to the Declaration and the long-standing custom
and practice of the owners association.