By: Rob Harris
For a number of years, many golf clubs have faced challenges in maintaining a strong and vibrant membership base. Without a steady stream of new members, clubs have confronted holes in operating budgets and have had to resort to contractual rights and remedies to maintain revenues.
Sometimes, governing documents will permit departing members to recoup initiation fees only upon the entry of replacement members. Arguably even more draconian, certain clubs prohibit members from resigning until new members join. In those circumstances, recalcitrant members are faced with demands from clubs that they continue to pay dues.
Such is the situation at South Carolina’s Callawassie Island Club, where a South Carolina trial court in 2014 held that the club’s governing documents unambiguously required members to make such payments.
However, with a decision last week, the South Carolina Court of Appeals has reversed the lower court’s ruling, holding that. in fact, there is ambiguity in the documents, which must be sorted out in a full trial.
The Court noted that the 1994 governing club documents provide as follows:
“Any member may terminate membership in the Club by delivering to the Club’s Secretary written notice of termination in accordance with the By-laws. Notwithstanding termination, the member shall remain liable for any unpaid club account, membership dues and charges (including any food and beverage minimums).”
However, the court also noted the existence of other documents, including a 1994 Plan and Bylaws, which “provide resigned members are obligated to continue to pay dues until their memberships are reissued. Further ambiguity is found is in the 2009 [governing club documents], which provide that members who have terminated their club memberships remain liable for unpaid dues until their membership is sold. The term ‘unpaid’ is not defined in the documents. It is unclear whether the language relating to unpaid dues refers to unpaid dues owed at the time of resignation or unpaid dues accruing before and after resignation. Thus, we find the evidence relating to the issue of whether Appellants were obligated to pay dues post-resignation, viewed in the light most favorable to Appellants, leaves a genuine issue of material fact for trial and, thus, precludes judgment for Callawassie as a matter of law.”
The court also found that a trial was warranted as to whether a resigning member’s dues obligation should cease after four months, pointing to this language in the governing documents:
“Any member whose account is delinquent for sixty (60) days from the statement date may be suspended by the Board of Directors. . . . Any member whose account is not settled within the four (4) months’ period following suspension shall be expelled from the Club.”
Acknowledging that expulsion does not necessarily correlate to a voluntary resignation, the court found there to be sufficient ambiguity to warrant a trial on this issue.