Owners of a bankrupt local golf course and country club are calling for a lawsuit they are facing to be dismissed, saying that their past financial support of the Dominion Club does not leave them on the hook to pay $11 million in refundable initiation deposits due to the club’s members.
The response, filed Tuesday by local developer HHHunt Corp. and several other defendants, is the latest round of fighting between the Western Henrico club’s owners and its creditors/members.
The drama began in January when the Dominion Club filed for Chapter 11 bankruptcy protection after it was faced with a $1.7 million tab of initiation deposit refunds due to about 100 members at the end of 2010. Another $10 million of such deposits is due down the road.
This month, a committee of unsecured creditors made up of current and former members of the club filed a suit in federal bankruptcy court seeking $11.6 million from the various entities, all tied to HHHunt Corp., one of the area’s largest real estate developers.
But those entities, which also include Loch Levan Land Limited Partnership, HHHunt/Wyndham Development Corp., Hunting Hawk LLC and Hunt Family Trust II, maintain that refunding those millions is not their obligation and that the task falls the club itself, which is a separate legal entity.
Hunt and the others filed 26 pages of arguments explaining their reasoning.
The gist of their argument: Even though Hunt and the other entities helped supplement the club over the years, that doesn’t mean they are solely responsible for repaying the refundable initiation deposits.
Their response is largely based on the claim that no written contract exists that states they are bound to continue to financially support the club.
“Each of the counts of the complaint is premised upon a common allegation—the existence of an ‘agreement’ between TDC and the collective defendants whereby defendants would pay any debts of TDC that it could not pay,” the response states.
“No such written agreement is attached to the complaint, nor is one even alleged to exist.”
Hunt and its fellow defendants also argue that the agreements related to the initiation deposits were between the members and the Dominion Club itself. Hunt and the other defendants were not part of the membership agreements, they argued.
“Indeed, aside from a reference to the unremarkable fact that Loch Levan owns the club facilities leased to TDC, none of the defendants named in the complaint are even mentioned in the membership plans or membership agreements,” the response states.
“Plaintiff is therefore left to face the fact that that the only documents evidencing any agreement to refund initiation deposits to members place that obligation squarely and solely on TDC itself.”
The relationship between the defendants and the club was also called into question in the defendant’s response.
The Dominion Club, along with the related Wyndham community, was built by HHHunt. HHHunt founder Harry Hunt owns 4.5 percent of the club, according to court records. HHHunt Corp. owns 0.5 percent, and the Hunt Family Trust owns 95 percent.
Loch Levan owns the land on which the club sits and is technically the landlord that receives $1.1 million a year in rent from the club.
As they are all separate entities, Hunt and its co-defendants claims that the committee’s lawsuit cannot simply lump them all into one for the purposes of making a legal argument.
“Plaintiff attempts to throw a blanket over every entity that has had any association with Wyndham and calls them all ‘Hunt,’” the response claims.
“This Court, however, cannot turn a blind eye to the separate legal existence of each of the defendants and must reject plaintiff’s obfuscation in calling them all ‘Hunt.’”
The defendants do recognize the fact that over the years they have supported the club financially. It has never been profitable in its 19-year existence. They claim that past support is being used against them.
“Ironically, this [past support] is portrayed by the Plaintiff as giving rise to a contractual obligation to continue this practice into perpetuity,” the response states. “Unless and until the Committee is able to allege any financial impropriety in the handling of TDC’s funds, or is able to produce a written agreement signed by any of the defendants to pay the debts of TDC, there simply is no case to be pursued, and this court should dismiss the complaint with prejudice.”
Despite the protracted legal battle, Robert Westermann, an attorney with Hirschler Fleischer representing Hunt and the other defendants, said his clients do want to find a solution.
“Loch Levan [and the other defendants] continues to support TDC in its efforts to develop a long-term plan that ensures it has a viable future,” Westermann said.
As to where the fight will go from here, a meeting is supposed to occur within the next week to bring all the interests in the club together, according to Nick Nichols, chairman of the creditors committee and a member of the Dominion Club.
“The parties, including legal counsels, will get together,” said Nichols. “I don’t know whether they’ll issue boxing gloves at the door or what.”
Both sides have said that a court-ordered mediation could eventually take place.
Michael Schwartz is a BizSense reporter. Send news tips to [email protected].
Owners of a bankrupt local golf course and country club are calling for a lawsuit they are facing to be dismissed, saying that their past financial support of the Dominion Club does not leave them on the hook to pay $11 million in refundable initiation deposits due to the club’s members.
The response, filed Tuesday by local developer HHHunt Corp. and several other defendants, is the latest round of fighting between the Western Henrico club’s owners and its creditors/members.
The drama began in January when the Dominion Club filed for Chapter 11 bankruptcy protection after it was faced with a $1.7 million tab of initiation deposit refunds due to about 100 members at the end of 2010. Another $10 million of such deposits is due down the road.
This month, a committee of unsecured creditors made up of current and former members of the club filed a suit in federal bankruptcy court seeking $11.6 million from the various entities, all tied to HHHunt Corp., one of the area’s largest real estate developers.
But those entities, which also include Loch Levan Land Limited Partnership, HHHunt/Wyndham Development Corp., Hunting Hawk LLC and Hunt Family Trust II, maintain that refunding those millions is not their obligation and that the task falls the club itself, which is a separate legal entity.
Hunt and the others filed 26 pages of arguments explaining their reasoning.
The gist of their argument: Even though Hunt and the other entities helped supplement the club over the years, that doesn’t mean they are solely responsible for repaying the refundable initiation deposits.
Their response is largely based on the claim that no written contract exists that states they are bound to continue to financially support the club.
“Each of the counts of the complaint is premised upon a common allegation—the existence of an ‘agreement’ between TDC and the collective defendants whereby defendants would pay any debts of TDC that it could not pay,” the response states.
“No such written agreement is attached to the complaint, nor is one even alleged to exist.”
Hunt and its fellow defendants also argue that the agreements related to the initiation deposits were between the members and the Dominion Club itself. Hunt and the other defendants were not part of the membership agreements, they argued.
“Indeed, aside from a reference to the unremarkable fact that Loch Levan owns the club facilities leased to TDC, none of the defendants named in the complaint are even mentioned in the membership plans or membership agreements,” the response states.
“Plaintiff is therefore left to face the fact that that the only documents evidencing any agreement to refund initiation deposits to members place that obligation squarely and solely on TDC itself.”
The relationship between the defendants and the club was also called into question in the defendant’s response.
The Dominion Club, along with the related Wyndham community, was built by HHHunt. HHHunt founder Harry Hunt owns 4.5 percent of the club, according to court records. HHHunt Corp. owns 0.5 percent, and the Hunt Family Trust owns 95 percent.
Loch Levan owns the land on which the club sits and is technically the landlord that receives $1.1 million a year in rent from the club.
As they are all separate entities, Hunt and its co-defendants claims that the committee’s lawsuit cannot simply lump them all into one for the purposes of making a legal argument.
“Plaintiff attempts to throw a blanket over every entity that has had any association with Wyndham and calls them all ‘Hunt,’” the response claims.
“This Court, however, cannot turn a blind eye to the separate legal existence of each of the defendants and must reject plaintiff’s obfuscation in calling them all ‘Hunt.’”
The defendants do recognize the fact that over the years they have supported the club financially. It has never been profitable in its 19-year existence. They claim that past support is being used against them.
“Ironically, this [past support] is portrayed by the Plaintiff as giving rise to a contractual obligation to continue this practice into perpetuity,” the response states. “Unless and until the Committee is able to allege any financial impropriety in the handling of TDC’s funds, or is able to produce a written agreement signed by any of the defendants to pay the debts of TDC, there simply is no case to be pursued, and this court should dismiss the complaint with prejudice.”
Despite the protracted legal battle, Robert Westermann, an attorney with Hirschler Fleischer representing Hunt and the other defendants, said his clients do want to find a solution.
“Loch Levan [and the other defendants] continues to support TDC in its efforts to develop a long-term plan that ensures it has a viable future,” Westermann said.
As to where the fight will go from here, a meeting is supposed to occur within the next week to bring all the interests in the club together, according to Nick Nichols, chairman of the creditors committee and a member of the Dominion Club.
“The parties, including legal counsels, will get together,” said Nichols. “I don’t know whether they’ll issue boxing gloves at the door or what.”
Both sides have said that a court-ordered mediation could eventually take place.
Michael Schwartz is a BizSense reporter. Send news tips to [email protected].
How long ago did TDC board realize it would not be able to repay the initiation deposits? This didn’t happen overnight and the board members that looked the other way are complicit in the train wreck. If the board is entirely HHHunt related, then that raises fraudulent conveyance issues.