Country Club Membership

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By: Rob Harris

As reported in a local Florida NBC website, “former members of [Florida's] Riverwood Golf Club are celebrating a judge’s decision to give the deposit back to a former member who sued the golf club.”

According to the report, the plaintiffs “resigned their membership after they could no longer play golf. They said the owners refused to give them their deposit back, claiming that a clause in the contract allowed them to change the terms without prior approval from members.”

I have been unable so far to locate the actual court decision, and eagerly look forward to seeing the court’s analysis.

Thanks to Harvey Weiner, and the Club Advisory Council Internationale LinkedIn Group he hosts through Search America for making us aware of this decision.

By: Rob Harris

Too cute by half. That’s the sentiment underlying a New York appellate court’s refusal to grant summary judgment in favor of the entity that acquired the unpaid debt on New York’s Westport Country Club.

The golf club, unable to make monthly payments on a $1,500,000 loan to First Niagra Funding, Inc., entered into a forbearance agreement with the lender which was designed to buy the club time to market the club for sale.

Surreptitiously, certain members of the club created a new entity and orchestrated purchase of the debt from First Niagra for a substantially discounted purchase price of $825,000. Then, when the club tendered the monthly payment under the forbearance agreement, the new owners said “not so fast,” you’re in default of the loan documents and commenced an action to foreclose on the property.

The court disturbed with the “conduct …. of its members – and the manner in which it declared a default,” refused to grant summary judgment in favor of the new owners. As the court held,

Robert Hall and Hall-Butzer formed plaintiff, which went on to purchase the subject notes from First Niagara at a significantly discounted rate; that plaintiff subsequently rejected the timely September 2013 payment under the forbearance agreement; and that, shortly after rejecting that payment, plaintiff commenced this action to foreclose on the Country Club. The validity of the forbearance agreement is not in dispute, and plaintiff concedes that it is bound by its terms as successor-in-interest to the mortgage and loan documents. While plaintiff accurately points out that, under the terms of the forbearance agreement, First Niagara reserved all of its rights under the mortgage instrument, the express purpose of the forbearance agreement was to provide Westport with a period of time to market the mortgaged property in the hopes of consummating a negotiated (as opposed to a forced) sale, while, at the same time, requiring it to make specified payments on the note. Under these circumstances, it is for a jury to conclude whether plaintiff breached its obligation to act in good faith by surreptitiously purchasing Westport’s debt, rejecting Westport’s September 2013 payment and claiming a default despite Westport’s undisputed compliance with the foreclosure agreement.

Thus, whether the purchasing members will be deemed to be shrewd investors or sneaky turncoats undeserving of a windfall, must await a full trial on the merits.

By: Rob Harris

A fundamental tenet, understood but too often ignored by golfers, is to not make matters worse. Bite the bullet, get out of trouble, don’t go for the miracle shot.

Perhaps Australian doctor Bing Michael Oei should have followed that strategy after he found himself expelled from the Australian Golf Club for cheating. As reported:

“In March this year, the Australian Golf Club board found Dr Oei’s cheating to be ‘unbecoming conduct’ and expelled him after a disciplinary hearing,

“This came after club members reported seeing Dr Oei handling his ball to improve his position, out of sight from his playing partners.

“It was alleged that, in July last year, he picked up his golf ball and threw it underarm three metres in an attempt to improve his position.

“Dr Oei denied that he had done anything in a dishonest fashion…

“In November, it was alleged he moved his ball one metre alongside the fairway bunker.”

Instead of taking his medicine and moving on, Dr. Oei “claimed there would be ‘serious consequences’ if he lost his Australian Golf Club membership, including ‘loss of enjoyment of club amenities’ and ‘damage to his reputation.’”

“If the club did not give his membership back, he wanted compensation for his loss.”

The club said no, and Dr. Oei carried through on his threat and sued the club. To no avail. Now, Dr. Oei not only has the stigma of expulsion, but the publicity of an adverse court decision that recently issued, and has been widely reported, including the following:

“On Thursday, Justice John Sackar found there was  no ‘legitimate basis’for the courts to interfere with the club’s decision to expel Dr Oei. As Judge Sackar further held, “But when pressed further as to what his attitude to the charges was, [Dr. Oei"s] response was that he may have erred in throwing the ball rather than dropping it.”

“The board was entitled to reject the Plaintiff’s account and find reasonably that he deliberately flouted the rules again to place himself in a more advantageous position,” Justice Sackar said.

Dr Oei also tried to argue that his actions did not fall within the definitions of “unbecoming conduct” but Justice Sackar disagreed.

“It seems to me that a deliberate flouting of the rules would reasonably be in context regarded as conduct unbecoming.”

 

By: Rob Harris

USGA Rule of Golf 6-8 addresses discontinuance of play. Here’s what it says:

The player must not discontinue play unless: (i) the Committee has suspended play; (ii) he believes there is danger from lightning; (iii) he is seeking a decision from the Committee on a doubtful or disputed point… or (iv) there is some other good reason such as sudden illness. Bad weather is not of itself a good reason for discontinuing play.

Nearby lightning strikes usually qualify.

Well, golfers at Springfield (Missouri) Golf & Country Club recently had a more unusual opportunity to potentially invoke Rule 6-8.

Reportedly, club member Donald Weber was packing more than 14 clubs when he purchased a bucket of range balls and rented a golf cart before heading off to the maintenance building. Apparently, Mr. Weber is also a former employee of the club, having lost his job a number of months ago. Upset with his former boss, Weber confronted him with a gun. Fortunately, no shots were fired before police arrived and chased Weber down.

In the meantime, the “golf course had to pull golfers off the course.” Reports don’t indicate that a tournament was in progress, but presumably “man with a gun” would qualify as a reason equally compelling as lighning or sudden illness to warrant discontinuance of play.

Unless, of course, the tournament officials preferred to first review the video tape with the contestants at the end of their round.

By: Rob Harris

Louisiana’s Lakewood Golf Club, former long time home to the New Orleans Open (now, Zurich Classic), finds itself on the receiving end of a lawsuit filed by a former member, claiming that his civil rights were violated by the club’s creation of a hostile and abusive environment.

The member claims that the club’s starter shared with him racist comments about another Louisiana club that the starter recently had played. Having reported the incident to the club manager, the member was advised that the starter was ”sorry for what he said and he did not realize (the member) was black.”

The member filed a grievance with the club, seeking the firing of a “known racist.” As alleged, however, instead of firing the starter, the club terminated the plaintiff’s membership.

Additional information and a copy of the complaint can be found here.

By: Rob Harris

Over the years we have had the opportunity to discuss legal disputes arising between golf clubs and members regarding membership resignation rights and financial issues.

These disputes have gained prominence on the heels of the economic downturn of the late 2000′s and the decline in country club membership.

For those interested, Bloomberg has published an article discussing this issue, generally, and in the context of a lawsuit brought by members of Cape Cod’s New Seabury Country Club, owned by Carl Icahn.

By: Rob Harris

Escalante Golf purchased San Diego’s Crosby National Golf Club in 2009 when it was in the midst of a “financial death spiral.” Within three years, Escalante reportedly turned things around through “aggressive expense management and event sales.”

In 2012, however, governance of the homeowners association of the adjacent gated community changed. The new HOA board found the events hosted by the club–which included concerts, weddings, fashion shows, political fundraisers and corporate receptions–to be “distasteful and a nuisance.” The reconstituted board of directors caused the HOA to file suit against the club, claiming that “attendees of the events caused traffic jams getting into and out of the community, they parked on private streets and the community became ‘inundated with hundreds of members of the general public who wander throughout The Crosby.’”

On March 31, a federal judge sided with the HOA, finding that the zoning laws did not permit the private club to hold public events.

The club contends it needs the events to remain financially stable, but the residents offer a contrary view, contending “that the club will attract new members if it operates strictly as a private club, which will in turn boost its bottom line.”


By: Rob Harris

We noted a few days ago that the class action suit by members of the Club at Black Rock against the foreclosing bank had been submitted to the jury. The jury has now spoken….drum roll, please… the winner is….. the bank. The jury determined that the bank need not reimburse the members for their initiation deposits. The story can be found here.

By: Rob Harris

  • An article entitled “Lawsuit over Black Rock to conclude” reports that jury deliberations have begun in the class action suit brought by members of Idaho’s high end Club at Black Rock. The lawsuit seeks to recover “membership deposits” of up to $125,000 for which the members contend the bank that foreclosed on the property is liable. The bank argues that its pursuit of its legal rights began an ended with the real estate, not with the membership deposits that funded the developer’s limited liability company. Our previous post on the dispute can be found here.
  • The Beijing owner that recently purchased England’s historic Wentworth Club, with plans to cull the membership by imposing stratospheric initiation fees (see our previous post here), has backed down, according to a BBC report. The new owner claims to have engaged in a listening tour, which, together with suggestions that residents threatened to block roads during the European Tour’s PGA championship, held at the course every year, appears to have done the trick
  • As reported in “Lawsuit filed against Farmington golf course over raw sewage,” Arkansas’ Valley View Golf Course faces suit for discharge of untreated sewage. Describing the conditions to a local reporter, one neighbor suggested “wait until its 100 degrees outside. And go sit in an outhouse for about an hour, and you’ll know exactly what this smells like.” Thanks, but we’ll take your word for it.

By: Rob Harris

In May 2013, Golf Dispute Resolution wrote about the class action lawsuit filed by members of Florida’s Trump National Jupiter club, in which members alleged that Trump had unlawfully changed the terms of withdrawing from the club, while withholding from them their membership rights pending resignation.

This weekend, the New York Times’ Joe Nocera has authored a detailed and insightful article about the litigation and the personality behind it. The article, entitled “Golfers Say Trump Reneged on Deal,” can be found here.

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