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Zwicky v. Premiere Vacation Collection Owners Association

Court of Appeals of Arizona, First Division

January 23, 2018

NORMAN ZWICKY, Plaintiff/Appellee,

         Not for Publication - Rule 111(c), Rules of the Arizona Supreme Court

         Appeal from the Superior Court in Maricopa County No. CV2015-051911 The Honorable John R. Hannah, Jr., Judge

          Phelps & Moore PLLC, Phoenix By Jon L. Phelps, Robert M. Moore, Shannon A. Lindner Co-Counsel for Plaintiff/Appellee

          Edward L. Barry Attorney at Law, Christiansted, Virgin Islands By Edward L. Barry Co-Counsel for Plaintiff/Appellee

          Coppersmith Brockelman, PLC, Phoenix By John E. DeWulf, Katherine DeStefano Co-Counsel for Defendant/Appellant

          Baker & Hostetler, LLP, Orlando, Florida By Brandon T. Crossland Co-Counsel for Defendant/Appellant

          Judge Patricia A. Orozco [1] delivered the opinion of the Court, in which Presiding Judge Kenton D. Jones and Judge Jon W. Thompson joined.


          OROZCO, Judge

         ¶1 Premiere Vacation Collection Owners Association, Inc. (the Association) appeals the superior court's rulings in favor of Norman Zwicky. For the following reasons, we affirm the summary judgment in favor of Zwicky enforcing his statutory right to inspect Association records but vacate the order modifying the protective order and directing the Association to send a notice to its members. We remand for further proceedings relating to the protective order.


         ¶2 The Association is an incorporated association of members holding an interest in the Premiere Vacation Collection timeshare plan. See Arizona Revised Statutes (A.R.S.) section 33-2202(13)[2] (defining timeshare plan). Zwicky is a member of the Association.

         ¶3 In 2004, Zwicky paid approximately $26, 000 for his timeshare interest. See A.R.S. § 33-2202(11) (defining timeshare interest). After a subsidiary of Diamond Resorts Corporation acquired a substantial portion of the timeshare assets, Zwicky experienced a significant increase in his annual assessments. Zwicky alleges that the high assessments rendered his membership interest "essentially worthless."

         ¶4 Zwicky filed a lawsuit in superior court seeking "judicial enforcement of his right to inspect the books and records" of the Association pursuant to A.R.S. §§ 10-11602, 33-2209, and common law. See A.R.S. § 10-11602 (providing a statutory right of inspection for members of nonprofit corporations); A.R.S. § 33-2209 (providing a statutory right of inspection for members of timeshare associations). His stated purpose was to determine whether the Association's board "acted reasonably and in good faith in calculating and approving the assessments in question."

         ¶5 In response to discovery, the Association produced some documents. After reviewing the documents, Zwicky's counsel determined they were insufficient to "clearly ascertain and verify the basis for calculating Mr. Zwicky's annual assessments." Accordingly, Zwicky moved for summary judgment seeking inspection of additional documents. The Association cross-moved for summary judgment asserting that it had already provided the documents requested in the complaint and all documents to which Zwicky was entitled under A.R.S. § 33-2209.

         ¶6 Following oral argument on the cross-motions, the superior court granted summary judgment in favor of Zwicky. In a subsequent ruling, the court specified the documents Zwicky could inspect and issued a protective order stating they "shall be maintained in confidence" and disclosed only to Zwicky, his attorneys, accountants, and experts. Thereafter, the Association produced more than one thousand pages of documents, designating some as "confidential, " claiming they contained "sensitive personal information, personnel records, trade secrets, proprietary business information, or other confidential research, development, financial, or commercial information."

         ¶7 After reviewing the documents produced, Zwicky moved to modify the protective order. He explained that the documents revealed a good faith basis for a federal class action lawsuit, and asked the superior court to permit him to "quot[e], refer[] to, or otherwise utiliz[e]" the documents in his proposed lawsuit. At the same time, Zwicky moved for an order requiring the Association to send a letter or notice to Association members informing them that the Association was under court order to produce records in conjunction with Zwicky's lawsuit.

         ¶8 After oral argument, the superior court granted Zwicky's motion and modified its prior order to authorize Zwicky and his attorneys to use the documents produced by the Association "in a complaint or other court filing in the proposed class action litigation." The court also ordered the Association to send a Notice of Court Order (Notice) to timeshare members, pursuant to A.R.S. § 33-2210, advising them of the document production and providing them with contact information for Zwicky's counsel.

         ¶9 Thereafter, the superior court entered final judgment, and the Association timely appealed.[3] We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and -2101(A)(1).


         I. Summary Judgment

         ¶10 The Association first argues the superior court erred in entering summary judgment on Zwicky's claim to inspect its documents. We review the court's grant of summary judgment de novo. See Price v. City of Mesa, 236 Ariz. 267, 269, ΒΆ 7 (App. 2014). We also review ...

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