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Three owners of hotel-condos in Big Sky Resort have sued the resort’s parent company, accusing its rental management company of price gouging and cheating them out of rental revenue.

The lawsuit, filed in U.S. District Court in Butte on Dec. 30, names Boyne USA, Boyne Properties and Summit Hotel — a subsidiary of Boyne — as defendants.

Plaintiffs in the lawsuit — Larry Anderson as trustee for the Lawrence T. Anderson and Suzanne M. Anderson Joint Revocable Living Trust, Robert and Nora Erhart, and Tjarda Clagett — own condo-hotels in Summit Hotel, Shoshone Condominium Hotels and Village Center in Big Sky Resort.

They are represented by Bozeman law firms Crist, Krogh, Alke & Nord and Goetz, Geddes & Gardner.

The plaintiffs seek class action status, saying damages could exceed $5 million and have more than 100 class members.

A phone call and email requesting comment from Boyne was not returned by deadline.

A condo hotel is a hotel where some or all the rooms have been legally transformed into condos which are sold to property owners. The condos remain in the Big Sky Resort’s inventory of rooms to rent to the public.

Condo owners may use the unit as a vacation home and share some of the rental revenue generated by renting to the public.

Under Boyne’s agreement, unit owners sign a rental management agreement to exclusively use Boyne’s program to manage the units upon ownership. Under the agreement, unit owners pay 50% of net rental revenues for management services.

Tying the rental management services to unit ownership allowed Boyne to “improperly charge above market rates” for its management services, according to the lawsuit.

The complaint alleges that the fee is above a market rate of about 25% to 30% for rental management services in Big Sky and that similar resorts which do not require owners to use the developer as a rental manager charge less than 50%.

The lawsuit says the arrangement — selling the condo units with a mandatory management program — is illegal under federal and Montana laws.

The plaintiffs allege Boyne uses the control of being the exclusive management agency to improperly “siphon” rental revenue that should be shared with unit owners and imposed maintenance, repairs and insurance costs on owners.

Some of that revenue includes a 10% “resort fee” for staying in the hotel, a breakfast fee and deposits on canceled reservations. The complaint says Boyne requires owners to make units available for up to five nights of complementary use for Boyne guests and business partners.

The complaint alleges “manipulation of the rental program” results in condo owners receiving far less than 50% of the gross rental revenue generated by their units.

Boyne “conceals its conduct,” including failing to disclose room rates or amounts paid to itself out of revenue generated by the rental management program, the complaint states.

Boyne does not provide monthly statements to unit owners or disclose the gross rental rate, lodging rate, resort fees, taxes or deposits to unit owners, the complaint also said.

Ben Alke, one of the attorneys for the plaintiffs, largely declined to comment on the complaint including specifics on much in damages the plaintiffs were seeking or how much revenue the owners were allegedly cheated out of.

When asked what the plaintiffs hope to achieve from the suit, Alke said they want to change how the business has been done and the relationship between unit owners and Boyne.

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Juliana Sukut can be reached at 582-2630 or jsukut@dailychronicle.com

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