Marbella Club’s Troubles Divide Members : Golf resort: They gather to discuss its bankruptcy filing and financial woes. One group has filed suit against the developer.
Members of the troubled Marbella Golf and Country Club gathered Wednesday night to sort out their troubles.
With one group having filed a lawsuit and another offering a partial solution to the club’s financial woes, club President Stan Sanderson called the closed-door meeting to explain what led the exclusive club’s board to file in September for bankruptcy reorganization. The meeting also focused on “why we think the action we took will help all members and be for the long-term betterment of the club,” Sanderson said.
Marbella is one of Orange County’s most luxurious and well-regarded clubs. Its 836 members include corporate chiefs and local celebrities.
The bankruptcy filing followed a move last month by Marbella Development Corp., the corporate owner of the golf course, which suddenly turned over its title to the members, saddling them with a $50,000-a-month payment that they had not expected until January.
While that amount is relatively small compared to members’ original investment, it has pitted one faction against another. One group, the A class, joined after the club was built and paid initial fees ranging from $50,000 to $85,000, with annual dues of $3,540. They want to force dues on the B class--those who paid $29,000 for stock and lifetime, dues-free memberships before the course was built. The B class wants to keep its no-dues status and force the A class to increase its annual dues.
Meanwhile, a group of nine members, some from each class, have taken a different tack and are accusing the course’s developer of causing the whole problem. On Friday, they filed a class-action lawsuit in U.S. District Court in Los Angeles seeking $10 million in damages.
The suit alleges that principals J. Porter Barton, Jon T. Brown and Phillip R. Jacoby and others “engaged in a pattern of self-dealing and criminal misappropriation” from their Fairway Land Co., which developed Marbella. They then paid hush money, the suit says, to try to cover up misdeeds. Barton converted $100,000 in corporate funds for his own use, according to the suit.
The three developers have split up since, members say, and are no longer involved in the operations of the country club. None of the three could be reached for comment Wednesday.
Daniel J. Callahan, a club member and Irvine lawyer who is a plaintiff in the lawsuit, said he hopes the legal action will point out to members who is really at fault.
“It’s turning the A’s on the Bs and not focusing on the real culprits,” he said of the dispute.
Other groups of members are offering different proposals. One of the largest groups comprises 170 of the 310 B-class members who have agreed to pay extra dues of $150 a month, which would cover about half of the monthly shortfall; in return, they would receive extra guest privileges at the course. The entire membership, however, would still have to come up with the rest.
