Haarstick’s story is perhaps a metaphor for the recent financial crisis in which AIG played a key role: Smart, knowledgeable people were lured into investments they did not completely understand, and got burned. In the run-up to the crisis, AIG sold complex financial instruments that ensnared the global financial system, and almost brought it to the point of collapse.
In this case, the financial instruments were 500-plus page documents that committed owners to pay much higher fees than expected. Many of the homeowners are savvy and sophisticated buyers, including a former Citibank executive, a former senior vice president of the Duane Reade drugstore, and a powerful real estate investor.
The homeowners, led by seven plaintiffs, recently sued Spruce Peak Realty LLC and Stowe Mountain Lodge LLC, both owned by AIG, in federal court in Burlington, Vt., calling the condo agreement an “incomprehensible and ultimately unlawful monstrosity of a development scheme.’’
AIG owns 90 percent of Stowe Mountain Lodge, which owns the resort.
Last week, AIG through lawyers for its subsidiary Chartis asked the court to dismiss the lawsuit calling the claims “flimsy.’’ Describing the plaintiffs as a group of highly educated buyers, AIG said in court documents that if the homeowners disagreed with the terms, they could have refused to sign the agreement or refused to close on the properties. They also could have sought to amend the terms and consulted lawyers.
“What they could not do,’’ AIG said, “is what they are doing now - agree to the document’s terms and then, because of buyer’s remorse, sue three years later claiming a ‘fraud’ on the basis that the document was hard to comprehend before they agreed to it.’’
