Cutty's Camping Club manages an 82-acre recreational vehicle park and campground resort at 10500 NW 54th Ave. in
Grimes, just north of I-35/80 near Highway 141.
The lawsuit, filed today in Polk Country District Court, alleges that collection efforts by Cutty's Camping Club constitute
an unfair practice under Iowa law. According to the suit, the Club has launched collection actions to collect purportedly
past due amounts of up to $4000 from individual consumers, which represents as much as 12 to 15 years of uncollected
dues - even though many consumers have ceased using the campground and Cutty's policies have made membership shares
"virtually unmarketable" for sale to other consumers.
The campground originally was owned by Cutty's, Inc., which in 1980 decided to create a "camping club" by selling 3000
"shares" in the campground to consumers. Purchase price of the shares ranged from approximately $3000 to $5800.
"Membership dues" originally started at $96 per year but have risen now to approximately $400 per year. Cutty's Inc. is not
named as a defendant in the State's lawsuit.
According to the suit, the Club began taking actions last year to collect back membership dues from hundreds of consumers,
including taking consumers to court.
The Attorney General's lawsuit alleges the collection efforts constitute an unfair practice based on several facts alleged in
the petition, including:
- The purchase contracts are ambiguous as to how purchase relates to
membership dues. Although the contract states that purchasers of the
shares are eligible for membership in the Club, and the Declaration
of Restrictions states that purchasers become members upon approval
of an application for membership, each purchaser is assessed membership
dues without an application process.
- Some consumers report receiving only sporadic notices of dues over
the years, and the Club lacks adequate records to substantiate purported
- Many consumers who purchased shares nearly twenty years ago have ceased
using the campground facilities. "Some have aged, become infirm, moved
away, or otherwise become unable to use or enjoy camping at the campground,"
the suit notes, yet "there is little market for these consumers to sell
their shares privately and terminate the financial obligation."
- The Camping Club and Cutty's, Inc., hold unsold approximately
40% of the shares (1200 of 3000). Because the Club and Cutty's, Inc.,
hold so many unsold shares - for which no membership or dues assessments
accrue - "a relatively small group of consumers must absorb all of the
operational and maintenance costs."
- Membership dues -- which have increased approximately 400 per cent
since the shares were sold originally -- realistically have become a
lifetime obligation. The Camping Club and Cutty's, Inc., continue to
hold the unsold shares and have made no effort to sell additional new
membership shares since about 1986-88 - policies which have made consumers'
shares "virtually unmarketable" for sale to others.
- The Club relies on the statute of limitations applicable under property
law to pursue the members for dues that are long in arrears, even though
the "1/3000th interest" in the campground property sold to consumers
does not convey rights normally associated with property ownership.
Members do not own any specific camp site, don't have guaranteed access
to any specific site, cannot reserve a specific site, are limited to
14-day usage, and must spend at least 6 hours of every 24-hour period
with their recreational vehicle.
The Consumer Protection lawsuit asks the court to issue temporary and permanent injunctions barring Cutty's Camping
Club from engaging in the alleged illegal collection practices, order reimbursement to consumers, and pay a civil penalty
not to exceed $40,000.
UPDATE as of April 2004:
On May 12, 2003, Polk County District Court Judge Darrell Goodhue ruled against the State. Thus, the Attorney
General's efforts to protect consumers from Cutty's collection practices have been blocked so far.
The Attorney General appealed Goodhue's decision, and the Iowa Court of Appeals set oral arguments on the appeal for
May 5, 2004. There can be no additional legal action by the State until there is a final decision on the appeal. The
appellate courts ordinarily issue a decision several months after the oral argument (perhaps in Fall 2004, in this case.)
District Court Judge Goodhue concluded (among other things) that the Iowa Consumer Fraud Act did not apply to the
relationship between Cutty's Des Moines Camping Club and its members. He also found that, even if the Consumer
Fraud Act did apply, the conduct of the Club was not an "unfair practice" as defined in the Consumer Fraud Act and
alleged by the Attorney General. The District Court decision thus blocks efforts by the Attorney General to protect
consumers from Cutty's collection practices.
UPDATE as of April 2005:
On April 1, the Iowa Supreme Court reversed prior lower court decisions
and reinstated a lawsuit by the Attorney General against Cutty's Des Moines
Camping Club, Inc., that alleges "unfair practices" in the collection
of out-dated membership dues. (Click here for AG's
statement and link to the Supreme Court decision April 1, 2005.) The
case was sent back to Polk County District Court for trial, which is likely
to be scheduled some time in late 2005 or early 2006.
In the meantime, any dissatisfied Cutty's consumers who have not yet contacted the
Consumer Protection Division are encouraged to file a complaint so that the consumer's
concerns may be addressed. To file a complaint, call 515-281-5926, call 1-888-777-4590 (toll-free in Iowa), or go to www.IowaAttorneyGeneral.org and click on "protecting
consumers" to obtain a complaint form. New complaints received by the Attorney
General's office will be considered in the current lawsuit against Cutty's Camping Club
but cannot be resolved until the case is concluded.
The rulings on the Attorney General's case have no effect on private attorneys, so
consumers are advised to contact a private attorney if they require immediate
assistance, such as the need to respond to debt collection efforts or a lawsuit by the
[END of UPDATES.]
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