Country Club Membership

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By: Rob Harris

The governing boards of golf clubs sometimes are called upon to discipline members for actions deemed in violation of rules or otherwise inappropriate.

Britain’s Whetstone Golf Club recently suspended three female members, including Ladies’ Captain Pam Nutting, competition secretary Lesley Bailey and a third member, Janet Morris, for what has been characterized as “unbecoming behavior.”

And what was this “unbecoming behavior”?  Blatant cheating in a club tournament? Unruly conduct at the holiday social? Not exactly….

Reportedly, after completing their round, the three golfers headed for the club dining room, where they encountered a group of mothers and children, including one mother engaged in breast feeding.  One of the offenders was heard commenting, “gosh, are we running a crèche?” The comment that may have broke the club board’s back, however, may have been the one stating that the breastfeeding mom was putting them “right off their food.”

Following these comments, the three members found themselves on the receiving end of a club suspension. Two of the members subsequently resigned in protest, with the third having opted to challenge her suspension.

All in a day’s work for a club board.

 

By: Rob Harris

Those harboring the fantasy of building a home in a designer golf community in South Carolina’s Lowcountry apparently have an opportunity to pick the land up on the cheap. An informative article published at islandpacket.com says that at least 26 lots are on the market for $1, with dozens more available for less than $10,000.

The catch? Ownership carries with it the obligation to assume mandatory memberships in the golf courses.

The economic decline of a few years ago, together with a reduction in golf popularity, has driven many residents to seek to escape their golf club membership obligations. With a shortage of purchasers eager to assume the memberships, they find themselves forced to give away the land.

The optimists–real estate agents and community officials–claim the market will turn. Said one agent, “if you’re looking to buy, you just hit the lottery.”

On the other hand, others claim the diminished property values are inextricably tied to the rules that force property owners to be club members.

Members at one club, Callawassie Island, are challenging these rules in a federal court action filed last year. (See our prior post here.)

So, for those looking for golf community bargains, with the desire and ability to front membership fees, take a look. But, as always, buyer beware.

 

By: Rob Harris

Who would have thought that the Bruce / Caitlyn Jenner news would have a golf angle? But it does. As reported today:

“Caitlyn Jenner has some tricky day-to-day changes in store, including where she eats, drinks and changes clothes … at the country club which has become her home away from home.

“Bruce Jenner became a member of Sherwood Country Club in Thousand Oaks, CA 15 years ago. He golfed there almost every day and established close relationships with his golfing buddies. It’s a very exclusive, ritzy club with an initiation fee ranging between $150,000 and $300,000.

“But now that Bruce is Caitlyn, the rules partially segregate her from the male members.

“For starters, there’s a grill in the locker room that is male only. The women’s locker room has its own eating area which is way more scaled down.

“Our Sherwood sources say the board will enforce the rules, which means the camaraderie Bruce shared with the other members will be impeded now that she’s Caitlyn.

“But we’re also told the board is open to an appeal by Caitlyn herself. She can attempt to make a case that she can keep the same privileges she had when she was Bruce.

“The club is closed for renovations until December, which means there’s time to sort things out.”

While it’s easy to posit all the rules contortions that Sherwood Country Club and Caitlynn Jenner may need to navigate, doesn’t his transition tee up the more important question of what role gender should play at private clubs in this day and age?
A person who is unwelcome in one eating area on Monday but an invited guest on Tuesday ….. hmmmm

 


By: Rob Harris

Diamante is a residential golf development in Arkansas whose governing documents require homeowners to be dues paying members of the golf club. Several years ago, Gary and Linda Dye brought suit against the club, challenging the enforceability of this membership requirement. The club attempted to derail the litigation by invoking an arbitration provision. The courts rejected the club’s effort, claiming that it waited too long to raise the arbitration issue (“Dilly-Dallying Club Loses Right To Arbitrate Member Dispute“).

In the meantime, Mr. and Ms. Dye opted to attempt to convert their claim into a class action, thereby purporting to assert on behalf of all 450 members of the association that they could not be forced to maintain paid membership in the golf club.

The club challenged the class action effort, claiming that, even though the club could not require Mr. and Ms. Dye to arbitrate their claims against the club, the claims of the other members were subject to arbitration. The club’s right to have the members’ disputes arbitrated would be undermined by a class action.

The trial court rejected the club’s argument, and trial proceeded. Last week, after the evidence was presented, but before the trial court issued a decision, the Arkansas Supreme Court held that the club is entitled to a new hearing on its arbitration claim. As the court explained, the lower court–while deciding the issue of the arbitrability of the claims brought by Mr. and Ms. Dye–has not decided the issue of whether the other 450 class members are subject to an enforceable arbitration provision.

One justice, however, offered a lone dissenting voice, having none of the club’s argument about arbitration. As he explained:

“This case is an example of what is happening around the country from the United States Supreme Court’s rulings on the enforcement of arbitration agreements under federal law. Courts everywhere are trying to reason through the legal morass of class action law when confronted with arbitration agreements. This issue will not go away any time in the near future unless and until Congress makes changes to the forced arbitration requirements.In the instant case, there are approximately 450 purchasers of land on a golf course whose original contracts did not contain an arbitration clause but had a provision that the purchasers would be subject to by-laws of the golf course even as amended in the future. After the original purchase agreement, the by-laws were amended to contain an arbitration clause…

“The bottom line in this case is this—if the Appellant obtains the relief that it desires on the motion to compel arbitration of the unnamed class members, all of the class members other than the class representatives will be required to arbitrate and there will be no class action even though it has already been certified as a class action…

“One of the prime objectives of arbitration is to achieve ‘streamlined proceedings and expeditious results.’…  Arbitrations for the 450 individual land owners is not as streamlined nor expeditious as a class action which has already been certified.”


 

By: Rob Harris

With over 95 per cent of civil lawsuits never being tried to conclusion, litigation primarily is an effort at generating bargaining chips to be opportunely played by a party as it pursued an optimal settlement.

A great example of this is presented by the dispute between the owner of California’s Ridgemark Golf & Country Club and the Board of Directors of the homeowners’ association where the club is situated.

Last year, the course owner closed 18 of the facility’s 36 holes, indicating plans to turn the real estate into housing. That precipitated a lawsuit by the homeowner’s association, who alleged that the club owner’s easement over the roadways would not extend to such a real estate development. The course owner counterclaimed.

The resulting litigation, according to a published report, imperils the course owner’s contract to sell the remaining 18 holes to a third party purchaser. If the sale were to fall through, the owner has hinted it will close the remaining eighteen holes as early as this summer.

Entering the fray are the home owners themselves, many of whom are members of the golf club, and who also are concerned about their property values should the course close.

As the constituents of the homeowners association Board of Directors, a number of the home owners are upset that the Board commenced the litigation without taking a vote of the members. Thus, the Board finds itself in the uncomfortable position of either losing the litigation or ostensibly driving off the contract purchaser of the golf course, and then having to rationalize the result to the home owners. Thus, the Board has announced that, before it will settle the litigation, it will seek the approval of the home owners.

Meanwhile, the contract purchaser holds the legal right to abandon the project if the litigation is not settled by May 15, with this right providing the purchaser with leverage to negotiate better terms, if it chooses to do so.

The presence of so many diverse, yet intertwined, interests is fertile territory for settlement and the parties are saying the right things. According to the attorney for the homeowners’ association, “there have been some meetings and potential settlement discussions between the parties in the last couple of months.Unfortunately, as  of this point in time, we have not been able to resolve the case. However, [the association] remains optimistic that a mutually beneficial resolution to this matter that ensures the long term health of the Ridgemark Estates community can be reached.”

The golf course owner echoed these sentiments in referring to the settlement negotiations: ”It’s ongoing. Knowing that a buyer is trying to step in and wanting to move forward, there seems to be an effort to work something out.”

In all likelihood, there will be a settlement within days. If not, and if the buyer walks, the litigation will be long, messy and expensive.

 

By: Rob Harris

Nine Palm Beach County (Florida) country clubs unsuccessfully challenged their property tax assessments last week.

The clubs’ argument focused on the fact that membership was limited to those homeowners who live in the golf community. Thus, according to the clubs, the homeowners’ were being doubly taxed. Why?

Well, as the argument went, the homeowners’ property values reflect the benefits of their golf course location, resulting in them paying higher taxes.

Thus, according to the clubs, the property taxes for the golf course property–which get passed onto the club members through usage fees–should be reduced. Otherwise, the members/home owners are doubly taxed for the value of the golf course–once on their homes and once through the club’s usage fees.

The Palm Beach County Value Adjustment Board rejected this argument, with one of the magistrates explaining, “if you were to sever the ownership from being only open to the members of the community, and make it a private golf course for outside owners, you would still have the enhanced value for these homes by virtue of being on the golf course.”

 

By: Rob Harris

Sometimes I struggle to find an appropriate post for the blog. Occasionally, a story drops like candy from the sky.

Sharing today’s candy, which comes to us from Australia’s Royal Sydney Golf Club, and begins as follows:

“A member of an exclusive Sydney golf club had his membership suspended after his girlfriend was caught sun-baking topless by the lap pool.The Royal Sydney Golf Club in Rose Bay took an unnamed player’s membership off him for three months after the incident which apparently shocked onlookers.”

By: Rob Harris

Certain members of Michigan’s recently closed Maple Hill Golf Club have brought suit against the two men in purchased the club in late 2014, alleging, essentially, that the purchasers effected a bait and switch on the members.

The members, joined in their complaint by another prospective purchaser, allege that the defendants convinced the members to select them as the purchasers based on unconditional promises that they would reopen the club. According to the complaint, the defendants’ intentions all along were to liquidate the club’s assets, harvest the sod and sell or redevelop the land.

The defendant owners dispute the claims, asserting that they failed to generate sufficient new memberships to make the club viable. They further deny that the documents memorializing the purchase transaction contain anything that constitutes a commitment to continue operating the golf club.

By: Rob Harris

In 2006, James Doroshow forked over $100,000 for a “full equity membership” in a California country club that the California Court of Appeal has chosen not to identify in an opinion released earlier this month.

According to the court, in January 2012, Mr. Doroshow was expelled from the unnamed club “by a [board of directors] vote of 11-0, with one abstention.” The club arranged for the sale of Mr. Doroshow’s membership at a reduced price, and he received $10,000.

Mr. Doroshow brought suit against the members of the board, asserting that the club’s actions constituted a host of claims, including conversion, defamation, intentional and negligent infliction of emotional distress, trespass to personal property, negligence, and intentional and negligent interference with contractual relations.

The trial court ruled in favor of the board members, holding, without the benefit of a trial, that “the process for expelling Plaintiff from the Club ‘does not have to be perfect; it has to be fair and the court finds that it was.’” The trial court’s decision has been reversed on appeal, with the Court of Appeal holding that there are disputed issues of material fact that will need to be sorted out at trial.

Among the factual claims are the following, as set forth by the court in its opinion:

Three alleged rule violations preceded Plaintiff’s expulsion from the Club. In July 2011, Plaintiff was involved in an altercation with another member, Drew Grey. The incident began on the golf course and spilled over to the Club patio, where Grey continued to verbally assault Plaintiff and his guests while they dined. After repeatedly asking Grey to stop, Plaintiff momentarily held Grey against a wall with his hand on Grey’s chest. Grey filed a complaint with the Club, which the rules committee investigated. After completing its investigation, the committee notified Plaintiff that it would hold a hearing concerning the alleged incident. The committee did not provide Plaintiff with a copy of Grey’s written complaint. Plaintiff nevertheless attended the hearing and had an opportunity to present evidence. Both Plaintiff and Grey received 90-day suspensions for the incident.

Following the Grey incident, Defendants took a secret vote to expel Plaintiff from the Club. At the time, Defendants concluded they did not have “a sufficient ‘paper record’ ” to take the desired action. Plaintiff maintains Defendants thereafter conspired to “fabricate reasons” to justify his expulsion.

In December 2011, another member, Michael Prince, submitted a written complaint to the rules committee alleging that Plaintiff intentionally hit a golf ball in his direction, endangering his personal safety. Plaintiff and other members stated Prince hit an errant shot from the fourth fairway onto the fifth fairway where Plaintiff and his group were playing. Before Plaintiff saw Prince, who was several hundred yards away attempting to retrieve his ball, Plaintiff hit a shot from the fifth tee. Though Plaintiff had no intention of endangering Prince, Plaintiff’s shot landed near him.

The committee investigated the incident, interviewed witnesses and reviewed Plaintiff’s written statement concerning the matter. The committee then notified Plaintiff that it had scheduled a hearing to address Prince’s complaint. Plaintiff did not receive a copy of Prince’s written complaint in advance of the hearing.

Despite notifying Plaintiff that the hearing would be limited to the Prince incident,the rules committee also questioned Plaintiff concerning his alleged violations of the Club’s rules regarding the use of cell phones. Plaintiff explained to the committee that,due to the recent untimely death of his wife, the Club’s general manager had given him permission to use his cell phone in emergencies to speak with his children.Notwithstanding the accommodation, and Plaintiff’s subsequent showing that the triggering phone call had been from his son concerning a car accident, the committee suspended Plaintiff for a total of 120 days for the Prince incident and cell phone violations.

On January 17, 2012, the rules committee submitted a memorandum to the board of directors detailing the foregoing rule violations and recommending Plaintiff’s expulsion from the Club. Plaintiff received a copy of the memorandum and written notice that the board would consider his expulsion at a subsequent hearing. The notice advised Plaintiff that he was “invited to appear [at the hearing] to present any evidence or reasons as to why [he] should not be expelled.”

In advance of the hearing, Plaintiff submitted a written statement and petition by several Club members opposing his expulsion. In communications preceding the hearing, Defendants called Plaintiff a “liar” and referred to him as a “poster boy” for cellphone violations, notwithstanding the accommodation the Club’s general manager had granted to Plaintiff.

Mr. Doroshow claims that he was unfairly expelled, especially when his conduct is compared to two members who “deliberately struck a golf ball at another member’s wife,” but received only a thirty day suspension due to their friendship with a member of the board.

By: Rob Harris

Jeffrey and Judee Donner claim that Jack Nicklaus hoodwinked them into spending $1.5 million to  become charter members in an anticipated golf course development that went bankrupt. Perhaps wanting to “be like Mike” (I mean Jack) or to “keep up with the Joneses” (I mean Nicklauses), Mr. and Ms. Donner allegedly bought into the development on the strength of the following statements attributed to Nicklaus in a press release and a marketing brochure:

  • “When I walked Mt. Holly Club, I was so captured by its potential [that] I thought through all 18 holes. In fact, I have been so impressed with the club and its management team that I became a founding charter member.”
  • “Mt. Holly Club enjoys the ideal alpine setting. I knew from my first visit there that we had been given a canvas on which to design a truly spectacular golf course. I am so impressed with the Mt. Holly Club and its management team that I became a founding charter member. I look forward to seeing you there.”

Mr. and Ms. Donner alleged that, by virtue of these statements, they reasonably believed that Jack, too, had paid $1.5 million for a charter membership.

According to the complaint, however, Jack was not $1.5 million poorer and one charter membership richer. Instead, he was the owner of an “honorary Founder Membership” for which he paid nothing.

In upholding the Donners’ right to pursue this claim of intentional misrepresentation, the three judge appellate court explained that, “[t]he golf course would be designed by legendary golfer Jack Nicklaus, who would have a house in the development and serve as a member. Mr. Nicklaus joined the developer to solicit investors, lending his name in exchange for millions of dollars.”

As the court’s opinion addressed only a preliminary motion to dismiss the claims, Mr. and Ms. Donner still must prove to a judge or jury that their claims of intentional misrepresentation are meritorious and that, but for the statements attributed to Jack, they would have opted not to invest in the Mt. Holly Club.

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