My understanding of what
DVC has done and whether it is allowed to (this is quite long) and, like Zavandor, I know others disagree:
To assume DVC has previously done changes that members believe questionable, such as the raising of points year round for the treehouses, means it must have been proper is a legally incorrect assumption. It proves little more than that members failed to sue to challenge the change. The treehouse change actually had far more dangers for Disney if it were sued than simply whether it had the power to raise points year round. Lurking was a possible fraud claim since Disney promoted the treehouse sales by telling potential purchasers that the points were the same as 2BRs and thus you could get a 3BR for the same point cost as a 2BR. Then, as soon as the treehouses reached sell-out level, DVC raised the treehouse points year round by around 15%.
It appears many believe Disney can do virtually anything it wants unless clearly spelled out in the POS documents otherwise. That is not how legal cases usually work in such situations. “Big company” Disney drafted all the POS documents and, when purchasing, the “little guy” members had no ability to negotiate different language. In subsequent legal disputes depending on the meaning of terms in the POS, that would usually mean Disney wins if its alleged meaning of the POS terms is the only reasonable one, but if there is any ambiguity in the language, and the argument for applicable meaning made by the members is also reasonable, the members win. Moreover, the applicable rules are even worse for DVC if the DVC entity authorized to do something on an issue is deemed by law to be a fiduciary when deciding it, which is applicable to DVCM, the management company authorized to make home resort
point chart changes. In cases involving a fiduciary as the defendant, the burden of proving that the plaintiff-members position on the issues is wrong, and of accepting DVCM’s argument that its interpretation is the only reasonable one, would be shifted to DVCM, requiring it to essentially disprove the plaintiff’s case to win.
That would be an argument that bears on the issue of whether DVC, actually DVCM, can actually just raise points year round for studios, potentially by shifting all such points to larger rooms, to solve the problem of excess demand for studios – a problem created, to a substantial degree, by DVD’s modern sales practices which started during the Great Recession, when it lowered new purchase point requirements from 160 to 100, and at times 50 and 75 points, while, over the next 10-year period, it (a) continuously increased the new purchase prices far beyond anything that would be considered reasonable in relation to the inflation rate during that period (prices have risen 100% over that ten years), (b) introduced new resorts with much higher per-point-per-night requirements than the older resorts, thus further increasing the actual price per stay for any new member, and (c) adding high-point cost bungalows and cabins to give it a lot of extra points that could be sold to those buying only enough points to get smaller rooms, including studios, while also giving it many such high-cost rooms to rent during the breakage period for profit, while the members pay almost all the maintenance fees and taxes for those rooms. For DVC to choose raising the annual points applicable to studios to correct DVD’s “oversell” of studios would be a questionable act for a company having a fiduciary obligation to the members.
The POS’s, by legal definition, include almost anything in writing given to new purchasers at the time of sale. It thus includes the DVC Membership Agreement, which is a document that mainly controls what DVC can do to raise or lower points. DVCM, the management company, is the entity responsible for making any home resort point changes. By law, it acts a fiduciary of the members whenever it makes any changes.
The Membership Agreement initially provides the general rule that total points required to reserve all rooms during all days of the use year must always be equal. It then does not specifically say the words that if studios are raised for part of the year, then studios must be lowered for the other parts of the year in an equal amount. That absence of absolute language appears to convince many, who apparently incorrectly believe that all ambiguities are to be construed against the members, that DVCM, the fiduciary, can lower studio demand by moving points year round from studios to other rooms.
But the terms of the Membership Agreement (using BWV as an example) indicate otherwise:
1. The agreement states only that DVCM has that power to raise or lower the points needed for any given Use Day in a Vacation Home ( a term defined as a room such as a studio) due to fluctuations in Use Day demand. Note how it says nothing about a power to change points to correct fluctuations in room-size demand among different-sized Vacation Homes.
2. It then states that “any increase or decrease in the Home Resort Vacation Point reservation requirement for a given Use Day pursuant to DVCM’s right to make this Home Resort Vacation Point adjustment must be offset by a corresponding decrease or increase for
another Use Day or Days.” (Emphais added.) That clearly prohibits DVCM from raising points needed for a studio year round while moving those points to larger-sized rooms for the same periods of time, and implies that any increase of points in one-sized room needs to be offset by a decrease on “other” use days for the same-sized room.
3. It also states that the total number of points applicable to a unit (usually a combination of rooms) cannot be changed due to such reallocations, which also indicates that the total annual applicable to a particular sized room must remain the same, e.g., BWV has units that actually consist of only dedicated studios.
4. Then there are the maximum reallocation provisions, which state that a maximum reallocation of points could potentially occur, meaning every day of the year for a particular room size could cost the same points, but it provides a guaranteed number for reserving each given room size for a night if such occurred, e.g., in BWV 15 points for a standard view studio, 18 for a preferred view, etc. higher numbers for larger rooms. Moreover, to participate in an external exchange program, which requires a member to provide a week to get a week in return, the agreement provides weekly total of points needed to be paid for every week of the year if there is a maximum reallocation, e.g., 210 points for a BWV standard 1BR. Those totals numbers for the year add-up, at resorts like BWV, to what the annual points needed to reserve a particular-sized room at the resort have been for the entire year Thus, that provides further evidence that total points applicable to a particular-sized room category for the year needs to remain the same regardless of what point changes are made.
Another document of importance in the POS is Exhibit A to the Master Cotenancy Agreement, entitled Real Estate Interest and Point Formulation, which describes the method to be used by DVCM to determine total points for the year applicable to a Vacation Home, and , in particular, points out that a major factor for determining how many total points apply to a Vacation home for the year depends on its square footage, meaning total points for the year for any particular vacation home had to vary from those for a larger vacation home by a constant factor that is consistent with the different sizes of those rooms. Thus, it is another provision that indicates DVCM cannot be moving points from one-sized vacation home to another. At BWV, for example, it is why 1BRs have always required about double the points of a studio. Note, however, that Poly and CCV POS’s do not have that exhibit, likely because the required difference according to square feet is not consistent with having the super-costly bungalows and cabins which have only 2BRs.
Added to the above evidence are: (a) oral statements made at time of sale, particularly involving the earlier resorts, that point changes would occur only to meet changes in seasonal demand and if points were raised for one season they would be lowered by an equal amount for the same room in another season; (b) written representations provided at the time of sale, called a Product Understanding Checklist (or similar) to give DVD’s own summary of the major terms of the POS, which, particularly during the sales of earlier resorts, such as BWV, clearly limited such point-shifting to doing those that address changes in seasonal demand, not room-size demand; (c) the fact that DVC itself, for more than two decades, followed the understanding that it could not shift points among different-size rooms.
All of the above are points that I mentioned in correspondence to, and a phone call with DVC, in January 2019 to support my belief that its decision to adopt 2020
point charts that raised points year round for studios and 1BRs was improper. Others made similar arguments and DVC reversed its decision, while asserting it believed it still had the right to do what it did.
In above posts are references to changes to the units at Vero with the implication that DVC could do that and rearrange points. I am unaware of any actual unit changes, which would require actual changes to the POS documents, and cannot find any applicable public records. If they can be found, please let me know where.
At Vero, DVC did fairly recently create standard and preferred view booking categories for inn rooms. The same happened not long ago at SSR for all rooms other than treehouses. I personally believe DVC may have improperly performed both those Vero and SSR changes for a reason in addition to anything mentioned above that might apply, but no one has challenged those changes, probably because many think them beneficial. It appears DVC made the changes by doing nothing to the POS documents. They are just changes made to the reservation system with no reference to any document that allows it, calling into question whether DVC even asked its outside lawyers to be involved.
The DVC Membership Agreements for those resorts are supposed to tell you (a) whether there are standard and preferred view rooms, (b) set out the applicable differences for such rooms in the maximum reallocation provisions, and (c) determine for which vacation homes DVCM actually has the right to make point changes. Other resorts with standard and preferred room categories set out that difference in the membership agreements. No changes were made to the Vero or SSR agreements to reflect the change to standard and preferred vacation homes, and, since points actually did change for those booking categories, that is unlike when DVC created boardwalk view at BWV or near Hospitality House at OKW, which left points the same for the rooms, and thus could be made merely as a reservation booking change, not requiring a change to the POS documents. But the changes for Vero and SSR raise an issue as to whether DVCM had any arguable power at all to do what was done.
